VANE Minerals (LON:VML) got a boost to its latest quarter as grades and recovery rates jumped at its Mexico gold and silver operations.

Revenues jumped to US2.69 million in the three months to December as it produced 1,352 ounces of gold at a cost of US$585 per ounce compared to 628 ounces at a cost of US$628 in the preceding three months.

VANE also produced 19,410 ounces of silver at a lower cost per ounce.

The cash generated was enough to cover all of the company’s costs (both its operational costs and its exploration costs) for the fourth quarter, VANE added.

VANE is pushing ahead with the closure of the Diablito mine and work has started to remove 3,200 tonnes of high grade ore.

David Newton, chief executive, said: “These results are very encouraging and underpin the company’s decision to switch its focus to ore produced at the La Colorada Mine”

“Whilst there can be no guarantee that these results will be replicated in the future, they demonstrate that if these production levels can be maintained then the company’s Mexican operations will continue to make a significant cash contribution to the total running costs of the group,” he added.

VANE said 7,802 tonnes of ore was processed by SDA Mill during the three months to December (Q3: 8,022 tonnes) with average grades 8.06 g/t gold (Q3: 5.17g/t) and 127g/t silver (Q3: 105g/t).

The average recovery rate was 78.2% for gold (Q3: 75.9%) and 70.9% for silver (Q3: 69.9%).

Dr Ryan Long, at broker Northland, said today’s statement, following on from Friday’s positive announcement of the discovery of a porphyry deposit in the Southwest USA, could provide another boost for the company’s shares.

“As the Diabilto Mine reaches the end of its life, VANE’s focus will switch to the La Colorada Mine, which is part of its JV with the Ruiz Brothers,” he said.

“The terms of the JV mean 80 per cent of revenues generated are attributable to VANE until 150 per cent of the capital costs are recovered after which 60 per cent will be attributable to VANE.

“The production from La Colorada should continue to fund the company’s key projects in porphyry exploration in the Southwest USA and uranium deposits in Northern Arizonia and Utah.”

As at 2.10pm this afternoon, shares in VANE Minerals stood up 4.26 per cent, at 1.23 pence.