* Sees integration of mining with smelting businesses
* Analysts see mining as offering higher margins
* Shares up more than 7 percent
(Adds detail, share price, analyst comment)
By Antonia van de Velde
BRUSSELS, June 24 (Reuters) - Belgium's Nyrstar SA, the world's biggest producer of zinc, plans to expand into mining to complement its smelting operations, it said on Wednesday, sending its shares more than 7 percent higher.
In a strategy update, the group said it would focus on resources that would support its existing assets and in which it already had expertise. Analysts noted mining offered higher margins than the group's existing core businesses.
"The further upstream you go, the higher the margins become. This potentially increases (Nyrstar's) margins," an analyst who declined to be identified said.
At 0820 GMT, Nyrstar shares were up 7.8 percent at 6.52 euros, against a 3.5 percent rise in the DJ Stoxx European basic resources index. The stock remains not far from a 10-month high of 7.46 euros hit earlier this month.
Nyrstar is mainly active in zinc smelting, but also focuses on lead, copper, silver and gold. Its recent acquisition of a mine complex in Tennessee was an example of its strategic direction, the group said.
"Our aim is that both smelting and mining should provide a very good contribution to future earnings," Chief Executive Roland Junck told a news conference, noting valuations in the mining sector appeared "quite conservative" for the time being.
"This means that not only does it make strategic sense to enter into the upstream, but also it is the moment to do it," Junck said.
He added Nyrstar would evaluate consolidation opportunities when they arose but declined to name specific targets.
The group's strong financial position, with 176 million euros ($244 million) in cash at the end of March and undrawn credit facilities of 350 million euros, would enable it to fund the transformation.
Nyrstar named Junck as its new chief executive in February after a slew of grim news at the company.
The group said at the end of April it was planning to transform its cost structure, which would result in over 50 million euros in cost savings per year from 2010.
Junck said at the time the group would realise half of that target in cost savings in 2009, and said on Wednesday it was on track to reach that objective. (Editing by David Holmes)