Download - Q3 2013 presentation final
Third Quarter 2013 Results November 6, 2013
This presentation may contain “forward-looking” statements within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or the anticipated performance of the Company and reflect management’s expectations or beliefs regarding such future events and anticipated performance. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, ”estimates”, ”forecasts”, ”intends”, ”anticipates” or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, ”could”, “would”, ”might”, or “will be taken”, “occur” or “be achieved”, or the negative of these words or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual performance of the Company to be materially different from any anticipated performance expressed or implied by the forward-looking statements. Such factors include various risks related to the Company’s operations, including, without limitation, fluctuations in spot and forward markets for gold, silver and other metals, fluctuations in currency markets, changes in national and local governments in Mexico and the speculative nature of mineral exploration and development, risks associated with obtaining necessary exploitation and environmental licenses and permits, and the presence of laws that may impose restrictions on mining. A complete list of risk factors are described in the Company’s annual information form and will be detailed from time to time in the Company’s continuous disclosure, all of which are, or will be available, for review on SEDAR at www.sedar.com.
This presentation uses the terms “measured resources”, “indicated resources” and “inferred resources”. The Company advises readers that although these terms are recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), the United States Securities and Exchange Commission does not recognize them. Readers are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted in to reserves. In addition, “inferred resources” have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, or economic studies, except for a Preliminary Assessment as defined under NI43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.
Although the Company has attempted to identify important factors that could cause actual performance to differ materially from that described in forward-looking statements, there may be other factors that cause its performance not to be as anticipated. The Company neither intends nor assumes any obligation to update these forward-looking statements or information to reflect changes in assumptions or circumstances other than required by applicable law. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those currently anticipated. Accordingly, readers should not place undue reliance on forward-looking statements.
Unless otherwise indicated, all dollar values herein are in US$.
Cautionary Statement
2
Joseph F. Conway President & Chief Executive Officer
Renaud Adams Chief Operating Officer
David Blaiklock Chief Financial Officer
Management Participants
3
A Record Producing Quarter
o Record Gold and Silver Production
o Low Cash Costs and All-in Sustaining Costs
o Production Guidance Increased
o Highest Silver Sales at Spot Prices
o Robust Earnings and Cash Flow
o Balance Sheet Remains Strong
o Exploration Success Continues
o Capital Programs On Track
Subsequent to Quarter
o Cerro del Gallo Ownership Consolidated
4
Operating Results – Record Production
1,500
6,500
11,500
16,500
21,500
26,500
31,500
36,500
41,500
Q3 2012 Q3 2013
Production (AuEq ounces)
+64%
5 See final slide for footnotes.
Q3 2013 Q3 2012
Mill Throughput1
(tonnes per day) 2,172 1,934
Gold equivalent production2
(gold equivalent ounces) 41,998 25,582
Gold production (ounces) 31,791 18,892
Silver production (million ounces) 1.62 1.14
Gold grade (grams per tonne) 5.08 3.40
Silver grade (grams per tonne) 265 210
All-in Sustaining Cash Costs3
($ per gold ounce) 974 1,279
Cash cost3
($ per AuEq ounce) 516 699
Cash cost3– by-product
($ per gold ounce) 252 363
Financial Results
6
Adjusted EPS4 ($ per share)
(US$ thousands, except per share amounts)
Q3 2013 Q3 2012
Revenues 53,793 38,277 Earnings from Mine Operations 22,960 13,087
Net income 10,080 11,586 EPS ($ per share) 0.09 0.12
Adjusted net income4
10,959 2,634 Adjusted EPS
4
($ per share) 0.09 0.03
Operating cash flows before changes in working capital 20,926 15,448 CFPS ($ per share) 0.18 0.17
See final slide for footnotes.
$-
$0.02
$0.04
$0.06
$0.08
$0.10
Q3 2012 Q3 2013
+200%
Outlook for 2013 Revised Upward
7
Previous Outlook 2013 Revised Outlook 2013
Gold equivalent production2
(gold equivalent ounces) 125,000-135,000 135,000-140,000
Gold production (ounces)
95,000-105,000 105,000-110,000
Silver production5
(million ounces) 5.6-6.0 5.6-6.0
Silver sales at spot5
(thousand ounces) 850-950 999,046
All-in Sustaining Cash Costs3
($ per gold ounce) $1,050-1,150 $1,050-1,150
Cash cost3
($ per gold equivalent ounce) $620-640 $620-640
Cash cost3– by-product
($ per gold ounce) $410-430 $410-430
See final slide for footnotes.
2012 2013E 2014E 2015E 2016E
Future Acquisitions
Cerro del Gallo
San Dimas Expansion
San Dimas
111
TARGETED GROWTH PROFILE6,7
(Thousand Gold Equivalent O
unces)
Our Focus
1. Strong balance sheet
2. Measured growth
3. Disciplined cost management
4. Low-risk jurisdictions
5. Responsible mining
How we are building value in Primero 8
400-500
250-300
135-140
150-170
160-200
See final slide for footnotes.
$126M
STRONG Cash Balance
$90M8
SIGNIFICANT Operating Cash Flow
Strong Financial Position
See final slide for footnotes.
Funds planned growth with no shareholder dilution
Provides funding for:
o Expansion of San Dimas
o Reserve replacement
o Development of Cerro Del Gallo
9
$32M9
CONSERVATIVE Debt Level
Asset Overview
Cerro Del Gallo Project Gold-Silver-Copper Project Guanajuato, Mexico
Ventanas Property Exploration Property Durango, Mexico
San Dimas Mine Gold-Silver Mine Durango, Mexico
0 400 km
o Based in historical mining districts with histories spanning hundreds of years
o With established infrastructure, skilled workforce and local suppliers
o Supported by local communities
Located in proven and low-risk jurisdictions 10
Steady Growth Ahead
PRODUCTION
San Dimas Platform
PHASE 1 EXPANSION
San Dimas 2,500 TPD
DEVELOPMENT
Cerro Del Gallo
PHASE 2 POTENTIAL EXPANSION
San Dimas 3,000 TPD
Targeting to double production by 2016 YE1 11
Flagship Asset – San Dimas
Location Durango-Sinaloa State Border
Ownership 100%
Metals Gold & Silver
Mining Underground cut & fill/longhole
Acquired 2010 from Goldcorp
Long History of Reserve Replacement
Mineral Resources and Mineral Reserves (DECEMBER 31, 2012, MINERAL RESOURCES INCLUDE MINERAL RESERVES)
District Produced 11M oz Gold, 600M oz Silver 12
CLASSIFICATION TONNAGE (M TONNES)
GOLD GRADE (G/T)
SILVER GRADE (G/ T)
CONT. GOLD
(K OUNCES)
CONT. SILVER
(M OUNCES)
Mineral Reserves
Probable 4.6 4.5 267 660 39.4
Mineral Resources
Indicated 3.7 6.5 389 780 46.9
Inferred 6.1 3.9 327 762 64.6
See final slide for footnotes.
Low Cost Structure
Low All-In Sustaining Costs ($/ounce)
$968
$1,134
-
200
400
600
800
1,000
1,200
2011 2012 2013 E
Estimated Industry Average10
Results of strategic initiatives begun in 2012:
Optimization program improves throughput
Long-hole mining decreases dilution
Training improves productivity and quality control
Below industry average costs 13
$99 $98 $108
0
20
40
60
80
100
2011 2012 YTD 2013
Controlling Unit Costs ($/tonne)
$1,050-$1,150
San Dimas Expansion11
o On-track for 2,500 TPD in Q1 2014
o Total capital expenditure of ~$16.5M
o Continuing to assess future expansion to 3,000 TPD - decision by mid 2014
ATTRACTIVE IRR AND PAYBACK PERIOD
See final slide for footnotes.
Increasing capacity to 2,500 TPD 14
Four new high-grade veins in Sinaloa Graben 15
Central Block Mined 2002-Current
Sinaloa Graben 2013 EXPLORATION
DELINEATION
Sinaloa Graben Tunnel
Tunnels 2013 Planned Tunnels Future Planned Tunnels
o Tunnels joining Sinaloa Graben and Central Block being completed
o Lower level tunnel commenced, expected to be completed by end of 2015
o 19,000 metres of development in 2013
SAN DIMAS
Strategic Underground Development
o $15.4 million exploration program
o 22,500 hectare package
o 89,000 metres of drilling: 48,000 metres delineation
drilling 41,000 metres exploration
drilling, plus 2,000 metres of exploration drifting
o Completed 75,000 metres to date at 30% lower costs than 2012
o Increased drilling by 15,000 metres for same budget
Adding to 0.7M oz gold reserves 16
0 1 2 km
SAN DIMAS
Focused Exploration
o Alexa and Victoria discovered in early 2012, included in 2012 year-end Reserves
o Alexa and Victoria already contributed 8% of the tonnes mined in 2013
o 2013 drilling has expanded the known mineralization in both veins
New veins discovered in 2012 and mined in 2013 17
Alexa Vein
SAN DIMAS
New Mineralization Close to Infrastructure
CERRO DEL GALLO INCREASES PRIMERO’SPRODUCTION BY 60%12 Location: Guanajuato State
Ownership: 100% - Subject to agreement to acquire remaining 30.8% from Goldcorp closing
Metals: Gold, silver & copper
Mining: Open pit, heap leach, and/or conventional mill
Excellent Infrastructure: Active mining district, skilled local workforce, grid power, water, sealed roads, equipment suppliers and established transport routes
Supportive Community: District has produced 1.14 billion ounces of silver and 6.5 million ounces of gold over its 450 year mining history
18 Diversifies near-term production & doubles reserves to 1.4 million Au Oz2,12 See final slide for footnotes.
CERRO DEL GALLO
New Mine Development
See final slide for footnotes.
Construction decision expected in Q4 2013 19
CERRO DEL GALLO
Solid Economics TECHNICAL DETAILS
7
(At $1,341 per ounce of gold, $25.58 per ounce of silver, $7,582 per tonne of copper)
Production Start12
(Phase I Heap Leach)
End 2015
Proven and Probable Reserves12
(Phase I Heap Leach)
32.2 Mt @ 1.14 g/t AuEq or 1.2Moz
Measured and Indicated Resources12
(Phase I Heap Leach In-Pit Excluding Proven and Probable Reserves)
47.9 Mt @ 1.06 g/t AuEq or 1.6Moz
Production12
(Phase I Average Annual)
94,600 AuEq. Oz
Cash cost13, 14
(Co-Product, Excluding Royalties) $650-700 per ounce
Heap Leach Grades15 0.7g/t Au, 14.8g/t Ag, 0.08% Cu
Strip Ratio15
0.9:1
Phase I Mine Life 15 7.2 years
Capital Cost Estimate13
$165 million
2013E Capital Expenditures13
$15 million
CERRO DEL GALLO
Anticipated Production Profile
See final slide for footnotes.
59
99 99
87 87
95 99
55
-
20
40
60
80
100
120
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
Gold
Equ
ival
ent O
unce
s (00
0s)
Cerro Del Gallo Phase I Heap Leach Near Term Production Profile7,13
(Gold equivalent calculated at $1,341 per ounce of gold, $25.58 per ounce of silver, $7,582 per tonne of copper)
Increases Production by 60%2 20
o M&I Resources of 3.2Moz of Gold or 5.6Moz of Gold Equivalent 12,13
See final slide for footnotes.
CERRO DEL GALLO
Large Gold Domain
21
CERRO DEL GALLO
Exploration and Development Upside
22 First Exploration Activity Since 2008
o 2013 $4 million exploration budget
o First exploration activity since 2008
o 12,000 metre drill program for infill and condemnation drilling
o Known mineralization outside the existing development plan
o Current Focus on condemnation drilling, permitting, land acquisition and engineering update
Corporate Activity Focused on Low-Risk Jurisdictions
o Further diversify asset base
o Create a portfolio of early and advanced stage projects
o Focused on mining friendly regions of the Americas with established infrastructure: Grid Power, Water Access, Sealed Roads Skilled local workforce Local equipment suppliers
o Targets of similar scale to San Dimas
o Remain opportunistic by utilizing strong balance sheet and cash flow
Selective acquisition criteria
CANADA
USA
BRAZIL
23
Region of focus
Primero Opportunity
o Emerging mid-tier gold producer with portfolio of long-life and high-grade assets
o Track record of steady, dependable growth
o Low cost structure
o Strong cash flow and cash position funding expansion, exploration and new mine development
Producing, profitable and growing 24
100%
Planned Growth 250,000 AuEq.oz1 by 2016 YE
Appendices
Primero sells 50% of annual silver production above 3.5 million ounces at spot
o Remainder sold at ~$4 per ounce under silver purchase agreement
o Threshold commences August 6 to following August 5
o Threshold increases to 6.0 million ounces on August 6, 2014
o Expansion anticipated to generate meaningful silver spot sales post August 6, 2014
Recent Tax Ruling Created Positive Leverage to Silver
25%
75%
SILVER AS PERCENTAGE OF 2013E REVENUE
Silver Gold
SAN DIMAS
Positive Leverage to Silver
26
Favorable Horizon
Mineralization – Ore Bodies Extension of the Favorable Horizon
Potential
0 1 2
K I L O M E T E R S
SW NE 3,000 m.
2,000 m.
1,000 m.
3,000 m.
2,000 m.
1,000 m.
Source: San Dimas Geology Office
Intrusive
Faults
West Block 2013 EXPLORATION
San Antonio Mined 1987-2002
Central Block Mined 2002-Current
Tayoltita Block Mined 1975-Current
Arana Hanging Wall
Sinaloa Graben Mined 2012-Current
2013 EXPLORATION PROGRAM DRILLING FOR EXTENSIONS OF KNOWN VEINS
SAN DIMAS
District Wide Exploration Potential
LONGITUDINAL CROSS SECTION
27
2013 2014 2015 2016 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Basic Engineering
Permitting/Land Acquisition
Site Survey
Leach Pad Design & Earth Works
Infill Drilling and MET Tests
Acid Generation Tests
SART Optimization
Procurement & Detailed
Engineering
Plant & Leach Pad Construction
Commissioning
Production
Phase II Feasibility Study
CERRO DEL GALLO
Cerro Del Gallo Development Plan
28
SAN DIMAS
Mineral Resources and Mineral Reserves (DECEMBER 31, 2012, MINERAL RESOURCES INCLUDE MINERAL RESERVES)
CLASSIFICATION TONNAGE (MILLION TONNES) GOLD GRADE (G/T) SILVER GRADE
(G/ T) CONTAINED GOLD
(000 OUNCES) CONTAINED SILVER
(000 OUNCES)
Mineral Reserves
Probable 4.579 4.5 267 660 39,377
Mineral Resources
Indicated 3.748 6.5 389 780 46,877
Inferred 6.144 3.9 327 762 64,637 Notes to Mineral Reserve Statement: 1. Cutoff grade of 2.4 grams per tonne (”g/t”) gold equivalent (“AuEq”) based on total operating cost of US$104.73/t. Metal prices assumed are gold
US$1,400 per troy ounce and silver US$25 per troy ounce. Silver supply contract obligations have been referenced in determining overall vein reserve estimate viability.
2. Processing recovery factors for gold and silver of 97% and 94% assumed. 3. Exchange rate assumed is 13 pesos/US$1.00. 4. The Mineral Reserve estimates were prepared by Mr. Herbert A. Smith P.Eng. of AMC Mining Consultants (Canada) Ltd. and a QP for the purposes of
National Instrument 43-101 (“NI 43-101”).
Notes to Mineral Resource Statement: 1. Mineral Resources are total and include those resources converted to Mineral Reserves. 2. A 2.0g/t Au Eq cutoff grade is applied and the AuEq is calculated at a gold price of US$1,625 per troy ounce and a silver price of US$25 per troy ounce. 3. A constant bulk density of 2.7 tonnes/m3 has been used. 4. The Mineral Resource estimates were prepared by Mr. Rodney Webster MAusIMM, MAIG and Mr. J. Morton Shannon P.Geo., both of AMC Mining
Consultants (Canada) Ltd. and a QP for the purposes of NI 43-101. Additional exploration potential estimated at 6-10 million tonnes at grade ranges of 3-5 grams per tonne of gold and 200-400 grams per tonne of silver. It should be noted that these targets are conceptual in nature. There has been insufficient exploration to define an associated Mineral Resource and it is uncertain if further exploration will result in the target being delineated as a Mineral Resource.
29
Category M Tonnes Au Au Ag Ag Cu Cu Au Eq AuEq
(g/t) (M ozs) (g/t) (M ozs) (%) (M lbs) (g/t) (M oz) Proven 28.2 0.71 0.64 15.1 13.7 0.08 50.2 1.15 1.05 Probable 4.0 0.54 0.07 13.2 1.7 0.07 6.2 0.93 0.12 Proven & Probable 32.2 0.69 0.71 14.8 15.3 0.08 56.4 1.14 1.18
Category M Tonnes Au Au Ag Ag Cu Cu Au Eq AuEq
(g/t) (M ozs) (g/t) (M ozs) (%) (M lbs) (g/t) (M oz) Measured 39.9 0.61 0.78 13.8 17.71 0.10 88.8 1.07 1.37 Indicated 8.0 0.55 0.14 11.0 2.83 0.08 14.6 0.92 0.24 Measured & Indicated 47.9 0.60 0.92 13.3 20.55 0.1 103.4 1.06 1.64
Total Resources Within the Gold Domain2
Phase I Heap Leach In-Pit Proven and Probable Reserves3
In-Pit Resources (excluding Proven and Probable Reserves)4,5
Category M Tonnes Au Au Ag Ag Cu Cu Au Eq AuEq
(g/t) (M ozs) (g/t) (M ozs) (%) (M lbs) (g/t) (M oz) Measured 129 0.54 2.24 12.0 49.8 0.09 256.0 0.94 3.91 Indicated 80 0.38 0.98 8.0 20.6 0.08 141.1 0.69 1.77 Measured & Indicated 209 0.48 3.22 11.0 70.3 0.08 396.9 0.83 5.58 Inferred 20 0.3 0.19 7.0 4.5 0.09 39.7 0.59 0.38
CERRO DEL GALLO
Reserves and In-Pit Resources1
30
1. “Technical Report First Stage Heap Leach Feasibility Study, Cerro del Gallo Gold Silver Project, Guanajuato, Mexico” June 2012 (“Feasibility Study”). Gold equivalent ounces calculated by Cerro Resources using gold, silver and copper prices of US$1,341/oz, US$25.58/oz and US$7,582/t respectively. 2. These resources are reported using internal cut-off grade of 0.2 g/tAu as per Feasibility Study, 2012 and Golder Associates Technical Report, 2008.
3. These reserves are reported using internal cut-off grades of 0.24 and 0.29 gAuEq/t for weathered and partially oxidized, respectively.
4. These resources are reported using internal cut-off grades of 0.24, 0.29, and 0.34 gAuEq/t for weathered, partially oxidized, and fresh material resp. 5. See note 7 in January 23, 2013 News Release “Primero achieves 2012 Guidance and Provides 2013 Outlook”.
Joseph F. Conway | President & C.E.O. 1
o Former CEO, President and Director of IAMGOLD from 2003 to 2010
o Former President, CEO and Director of Repadre Capital from 1995 to 2003
Renaud Adams | C.O.O.
o Former SVP, American Operations for IAMGOLD o Former General Manager of Rosebel Gold Mine
2007 to 2010 o Former General Manager El Toqui Mine in Chile
and then the El Mochito Mine in Honduras
David Blaiklock | C.F.O.
o Former controller IntraWest o Previously controller for a number of public and
private companies in real estate development
David Sandison | VP, Corporate Development
o Former VP, Corporate Development of Clarity Capital ; Director, Corporate Development Xstrata Zinc Canada ; Director Business Development, Noranda/Falconbridge; Former EVP, Noranda Chile
Gabriel Voicu | VP, Geology and Exploration
o 25 Years of mining experience, formerly held senior technical and exploration positions with Cambior and IAMGOLD
Tamara Brown | VP, Investor Relations
o Former Director Investor Relations for IAMGOLD; Partner of a Toronto based, boutique investment bank; Professional engineer in mining industry
H. Maura Lendon | VP, Chief General Counsel and Corporate Secretary
o Former Senior Vice President, Chief Legal Officer and Corporate Secretary of HudBay Minerals Inc.; Chief Counsel Canada, Chief Privacy Officer - Canada of AT&T
Executive Management
31
Louis Toner | VP, Project Development & Construction
o Over 30 Years of Engineering and Construction experience, formerly held Senior Project Management roles with BBA Inc. and Lafarge Canada Inc.
32 32
Board Committees: 1.Health, Safety and Environment 2. Human Resources and Compensation 3. Governance and Nominating 4. Lead Director 5. Audit
Wade Nesmith | Chairman
o Founder of Primero o Founding and current director
of Silver Wheaton
Joseph Conway | Director1 see Executive Management
David Demers | Director2,3,4,5
o Founder, CEO and Director Westport Innovations
o Director of Cummins Westport and Juniper Engines
Grant Edey | Director 3,5
o President & CEO, Khan Resources Inc.
o Former Director of Breakwater Resources, former director of Queenstake Resources, Santa Cruz Gold
o Former CFO, IAMGOLD
Rohan Hazelton | Director 1,5
o VP, Strategy, Goldcorp o Formerly with Wheaton River
and Deloitte & Touche LLP
Timo Jauristo | Director 2
o EVP, Corporate Development, Goldcorp
o Former CEO of Zincore Metals Inc. and Southwestern Resources Corp.
Eduardo Luna | Director 1
o Former EVP & President, Mexico. Former Chairman and CEO of Silver Wheaton, Executive VP of Goldcorp and Luismin S.A. de C.V. (San Dimas) and President of Mexican Mining Chamber and the Silver Institute
Board of Directors
Robert Quartermain | Director 2,3
o Founder and President & CEO, Pretivm Resources
o Former President, Silver Standard o Director of Vista Gold Corp.
and Canplats Resources
Michael Riley | Director 5
o Chartered accountant with more than 26 years of accounting experience
o Chair of Primero Audit Committee, Chair of Audit Committee of B.C. Lottery Corporation and member of the Audit Committee of Canalaska Uranium Ltd.
Brad Marchant| Director 2,3
o Co-founder of Triton Mining Corporation
o Founder of BioteQ Environmental Technologies Inc.
Notes to Investors Regarding the Use of Resources This presentation has been prepared in accordance with the requirements of Canadian provincial securities laws which differ from the requirements of U.S. securities laws. Unless otherwise indicated, all mineral reserve and resource estimates included in this presentation have been prepared in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum classification systems. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. These standards differ significantly from the requirements of the United States Securities and Exchange Commission (the “SEC”), and reserve and resource estimates disclosed in this presentation may not be comparable to similar information disclosed by U.S. companies. The mineral reserve estimates in this presentation have been calculated in accordance with NI 43-101, as required by Canadian securities regulatory authorities. For United States reporting purposes, SEC Industry Guide 7 under the United States Securities Exchange Act of 1934, as amended, as interpreted by Staff of the SEC, applies different standards in order to classify mineralization as a reserve. As a result, the definition of “probable reserves” used in NI 43-101 differs from the definition in the SEC Industry Guide 7. Under SEC standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC standards. Accordingly, mineral reserve estimates contained in this presentation may not qualify as “reserves” under SEC standards. In addition, this presentation uses the terms “indicated resources” and “inferred resources” to comply with the reporting standards in Canada. The Company advises United States investors that while those terms are recognized and required by Canadian regulations, the SEC does not recognize them. United States investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into mineral reserves. Further, “inferred resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Therefore, United States investors are also cautioned not to assume that all or any part of the “inferred resources” exist. In accordance with Canadian securities laws, estimates of “inferred resources” cannot form the basis of feasibility or other economic studies. It cannot be assumed that all or any part of “indicated resources” or “inferred resources” will ever be upgraded to a higher category or are economically or legally mineable. In addition, disclosure of “contained ounces” is permitted disclosure under Canadian securities laws; however, the SEC only permits issuers to report mineralization as in place tonnage and grade without reference to unit measures. NI 43-101 also permits the inclusion of disclosure regarding the potential quantity and grade, expressed as ranges, of a target for further exploration provided that the disclosure (i) states with equal prominence that the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a mineral resource and that it is uncertain if further exploration will result in the target being delineated as a mineral resources, and (ii) states the basis on which the disclosed potential quantity and grade has been determined. Disclosure regarding exploration potential has been included in this presentation. United States investors are cautioned that disclosure of such exploration potential is conceptual in nature by definition and there is no assurance that exploration will result in any category of NI 43-101 mineral resources being identified.
33
Footnotes 1. Based on 365 days per year. 2. “Gold equivalent ounces” include revenue from silver converted to a gold equivalent based on estimated average realized commodity
prices ($1,410 per ounce; an average silver price of $6.77 per ounce (calculated using the silver agreement contract price of $4.14 per ounce and assuming excess silver beyond contract requirements is sold at an average silver price of $21.16 per ounce)).
3. Cash cost is a non-GAAP measure. Refer to the third quarter 2013 MD&A for a reconciliation of cash costs. 4. Refer to third quarter 2013 MD&A for adjustments. 5. Silver production is subject to a silver purchase agreement. Refer to the third quarter 2013 MD&A for details. 6. “Gold equivalent ounces” include silver and copper production converted to a gold equivalent based on consensus estimated
commodity prices; accounts for the San Dimas silver purchase agreement; and uses Cerro Resources publically disclosed production estimates delayed by 18 months.
7. Assumes 100% ownership of Cerro Del Gallo and that it begins production at the end of 2015, with full year production estimated at 95,000AuEq. oz in 2016, anticipated production increase is over 2015 estimated production increase from San Dimas.
8. Estimated five-year annual average after-tax operating cash flow assuming San Dimas expansion to 2,500 tpd starting in Q1 2014 estimated at metals prices in dollars per ounce for gold and silver of 2013: 1,400/25.00, 2014:1,300/21.43, 2015 and beyond: 1,200/21.43, including recent tax reforms in Mexico.
9. Goldcorp: 5 year, 6% note with annual principal payments of $5M plus 50% of Excess Free Cash Flow, with balloon payment of balance at end of 2015.
10. Industry average based on all-in sustaining cost comparison published by TD Securities July 18, 2013. 11. See October 15, 2012 News Release “Primero Announces Expansion of its San Dimas Mine” for details. 12. As estimated by Cerro Resources using gold, silver and copper price of US$1,341/oz, US$25.58/oz and US$7,582/t (or $3.44/lb)
respectively. See Cerro Resources Phase I Definitive Feasibility Study as of May 2012 filed on SEDAR by Primero on April 1, 2013. 13. Based on Cerro Resources Phase I Definitive Feasibility Study as of May 2012 and filed on SEDAR by Primero on April 1, 2013. and
preliminary capital expenditure estimates calculated internally by Primero as of May 2013. 14. The Cerro del Gallo mine is subject to a 4% Net Smelter Return (NSR) royalty. 15. Cerro Resources Phase I Definitive Feasibility Study as of May 2012 as filed on SEDAR by Primero on April 1, 2013.
34
Tamara Brown Vice President, Investor Relations T 416 814 3168 [email protected]
Trading Symbols Common Shares TSX:P, NYSE:PPP, ASX:PPM Warrants TSX:P.WT
PRIMERO MINING CORP. 20 Queen Street West, Suite 2301 Toronto, ON M5H 3R3 T 416 814 3160 F 416 814 3170 TF 877 619 3160 www.primeromining.com
