Latin American silver and gold miner Hochschild Mining Plc (HOCM.L) bought out a joint venture partner at its existing San Felipe project in Mexico for $51.5 million in cash, the firm said on Thursday.

The project has total resources of 2.32 million tonnes and is expected to launch production in 2010, a statement said.

The San Felipe Project has the potential to be our largest and most important project since listing and will contribute significantly to our growth strategy to 2011 and beyond, Executive Chairman Eduardo Hochschild said.

The firm signed a deal in 2006 with partner Grupo Serrana S.A. de C.V. to gain a 70 percent stake by contributing funds for exploration and mine development.

But that agreement has been terminated following the closure of the deal on Wednesday to buy the whole project. As part of the original joint venture, Hochschild had already spent $8.8 million on the project and used existing cash for the $51.5 million payment.

The project has silver, zinc, lead and copper.

The price paid seems reasonable and the acquisition comes with very strong exploration upside, analyst Michael Rawlinson at Liberium Capital said in a research note.

The properties at San Felipe, located in Mexico's Sonora state, cover 62,900 hectares consisting of 24 underground mining concessions and one mining concession application. (Reporting by Eric Onstad; Editing by David Cowell)

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