VANE Minerals (LON:VML) expects its Mexican gold and silver assets to make a bigger contribution towards financing its copper and uranium exploration efforts going forward.

Updating investors on its producing gold and silver operations in Mexico, VANE said it is on track to achieve its production targets for the financial year ending December 31 2011 in terms of tonnes of ore processed.

Following a switch towards utilising production from the joint venture with the Ruiz Brothers, higher grade gold-silver production has been achieved during the three months to September 30 2011. These results demonstrate the improvement from switching feedstock solely from VANE’s wholly-owned Diablito Mine to the Ruiz JV. Diablito is scheduled to be closed in 2012.

Whilst gold and silver prices remain considerably ahead of their levels a year ago, prior to August 2011, the grade of gold and silver realised and the actual recovery rates achieved were lower than expected, the company said.

However, during August and September actual grades of gold and silver saw steady improvement. Should this improvement of actual grades prove to be sustainable then the board expects them to continue to have a positive impact on VANE’s revenue for the current financial year.

VANE achieved total revenue of US$433,691 in the three months to end-September. In addition, due to the temporary closure of the Peñoles smelter, the company had a concentrates inventory awaiting smelting of approximately US$1 million as at September 30 which has been smelted and the revenue accounted for post-period.

VANE is foremeost an exploration company focused on its copper and uranium exploration programmes in the US, and is using its Mexican gold and silver assets to help fund its exploration work.

Chief executive David Newton said: “To date, this financial contribution has been lower than anticipated, primarily because our Diablito mine has produced less gold and silver than was originally expected as a result of dilution of grade. Today’s announcement demonstrates that the company’s JV with Ruiz is starting to produce better quality ore to meet our goal of improving the financial contribution from Minerales VANE towards the group’s exploration and running costs.”