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Gammon Gold Q1 profit dips

The group also said it will restate numbers for 2008 and 2009 to correct an accounting error

Posted: Friday , 14 May 2010

(Reuters) - 

Gammon Gold Inc (GAM.TO) reported a dip in quarterly earnings on lower production, and said it will restate its results for 2008 and 2009 to correct an accounting error related to its acquisition of Mexgold Resources Inc.

For the first quarter, net income was $1.8 million, or 1 cent per share, compared with $2.5 million, or 2 cents per share, a year ago.

Revenue rose 16 percent to $54.7 million.

Gold production for the quarter fell 23 percent to 28,431 gold ounces. Silver production was down 5 percent to 1,284,071 ounces.

Analysts on average were expecting the company to earn 6 cents per share on revenue of $62.3 million, according to Thomson Reuters I/B/E/S.

The restatement was needed as future income tax liability from the acquisition of Mexgold was not translated into Mexican pesos at the time of the deal, the mid-tier gold and silver producer said.

The restatement increases the company's 2009 net income by $6.5 million. Earnings per share increased to 7 cents from 1 cent.

For 2008, net income decreased by $1.3 million and earnings per share decreased to 32 cents from 33 cents.

Shares of the company closed at C$7.84 Wednesday on the Toronto Stock Exchange. (Reporting by Abhiram Nandakumar in Bangalore; Editing by Prem Udayabhanu)