Gammon Gold Inc. reports its fourth-quarter profit was $23.5-million (U.S.), up 73 per cent from the year-earlier period and ahead of analyst estimates by a wide margin.
The profit amounted to 17 cents per share, up from 10 cents per share or $13.6-million in the fourth quarter of 2009.
Analysts had been expecting 12 cents per share, according to figures compiled by Thomson Reuters.
Gammon's revenue for the three months ended Dec. 31, reported in U.S. currency, was $71-million, up from $68.2-million in the fourth quarter of 2009.
The company, which has all of its mining operations in Mexico, is currently attempting to acquire Capital Gold Corp. in a friendly deal worth about $322-million (Canadian).
Capital Gold owns the producing El Chanate gold mine in Sonora, Mexico, which is a low-cost producer. Gammon's flagship Ocampo property is in Chihuahua State. Gammon also owns the suspended El Cubo mine and the Guadalupe y Calvo development property in Mexico.
However, Gammon faces stiff competition for Capital Gold from Timmins Gold Corp. of Vancouver, which owns the San Francisco Mine in Sonora, Mexico.
Gammon said on Wednesday that Ocampo produced the equivalent of 51,199 ounces of gold in the fourth quarter, including 29,384 ounces of gold and 1.2 million ounces of silver.
"The Ocampo team has delivered a set of record results for the mine and the company including $116-million (U.S.) in operating cash flow in 2010," said Rene Marion, Gammon's president and chief executive officer.
"In 2011, we anticipate Ocampo's strong performance will continue where we will not only benefit from the expected strong gold price environment but will continue to leverage our considerable silver production to the strongly appreciating silver price.
"In the coming months, we will also recommence production at El Cubo and advance our portfolio of development and exploration properties for the benefit of our shareholders."
The company announced a new collective agreement for workers at the El Cubo mine in February. Gammon said it expects the union contract will allow for improved productivity and lower costs.
For the full year, Gammon had a $147.5-million net loss, or $1.06 per share, with $238.3-million of revenue in 2010. In 2009, it had $8.2-million or 6 cents per diluted share of net income with $206.8-million of revenue.