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UPDATE 1-Minefinders says production at Dolores mine to rise

* Q1 gold production stood at 14,169 ounces

* Says gold and silver leaching rates exceeding expectations

April 7 (Reuters) - Minefinders Corp Ltd (MFL.TO: Quote, Profile, Research, Stock Buzz) said it expects metal production at its flagship Dolores mine in Mexico to continue increasing in the second quarter helped by improved gold and silver extraction.

In the month of March, gold production rose 26.3 percent compared to February, while silver production rose 9 percent at the mine. The mine is expected to commence commercial operations in the second quarter, the company said.

The company's production for the first quarter was 14,169 ounces of gold and 282,429 ounces of silver. The first quarter was Dolores' first full quarter of pre-production since production was started in Nov. 2008, Minefinders said.

"With more than five months since the start of leaching operations, gold and silver recovery rates are exceeding expectations," said the company in a release.

Leaching is the process by which metals are separated from ore using chemicals.

Minefinders Chief Executive Mark Bailey, in an interview with Reuters, had said the company planned to buy struggling small gold producers and also expand the Dolores mine. It was also looking at South America for expansion, he had said.

Vancouver, British Columbia-based Minefinders, which had posted a higher loss in 2009 due to rising expenses in Dolores, had $26 million in cash and cash equivalents as of Dec. 31, 2008.

Shares of the company closed at C$8.80 Monday on the Toronto Stock Exchange.

For the alerts, please double click [ID:nWNAB1440] (Reporting by Arup Roychoudhury in Bangalore, Editing by Dinesh Nair) (arup.roychoudhury@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: arup.roychoudhury.reuters.com@reuter...

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