Peru miner Volcan sees 2008 output up

By Maria Luisa Palomino and Dana Ford

LIMA (Reuters) - Volcan (VOL_pb.LM: Quote, Profile, Research, Stock Buzz), Peru's chief zinc, lead and silver producer, said on Friday its output of silver and zinc will increase in 2008 from a year ago, but that profits will likely grow less than last year.

Chief Executive Jacob Timmers said silver output should increase by up to 2 million troy ounces in 2008 compared with a year earlier, while zinc production should rise 6 percent and levels of lead output will remain roughly the same this year compared with 2007.

"After the dramatic growth last year, we still continue to grow," said Timmers, speaking at the Reuters Latin America Investment Summit in Lima, Peru.

"It won't be that spectacular this year, but we still plan to expand further," he said.

Last year, Volcan increased its zinc output by 18 percent and its silver production 33 percent compared with a year earlier. The company's net profit grew by some 65 percent to $403 million in 2007, from $245 million in 2006.

"I don't think 2008 will be a better year. I think we'll be very good if we can duplicate those results," Timmers said, referring to the profit results of 2007.

Timmers said global demand for metals will stay strong through 2008, but that prices for metals should stabilize this year, after skyrocketing to near-record levels in 2007.

He expects 2008 zinc prices MZN3 to be "more or less" the same as in 2007.

Timmers stressed the potential of developing new and existing projects in Peru, where Volcan plans to invest some $12 million this year, in explorations apart from existing operations. Besides lead, zinc and silver, Volcan mines some copper and gold.

Peru is second only to China in the world's zinc production, and is first in silver output.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Maria Luisa Palomino and Dana Ford; Writing by Dana Ford; Editing by Gunna Dickson)