q3 2013 presentation final

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  • 1.Third Quarter 2013 Results November 6, 2013

2. Cautionary StatementThis 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 managements 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 Companys 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 Companys annual information form and will be detailed from time to time in the Companys 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$.2 3. Management ParticipantsJoseph F. ConwayPresident & Chief Executive OfficerRenaud AdamsChief Operating OfficerDavid BlaiklockChief Financial Officer3 4. A Record Producing Quarter oRecord Gold and Silver ProductionoLow Cash Costs and All-in Sustaining CostsoProduction Guidance IncreasedoHighest Silver Sales at Spot PricesoRobust Earnings and Cash FlowoBalance Sheet Remains StrongoExploration Success ContinuesoCapital Programs On TrackSubsequent to Quarter oCerro del Gallo Ownership Consolidated 4 5. Operating Results Record Production Q3 2013 Q3 2012 Mill Throughput12,172(tonnes per day)Gold equivalent production41,99841,50031,791Gold grade (grams per tonne)Silver grade (grams per tonne)26,5003.4021,500265(million ounces)1.145.08Silver production18,8921.62(ounces)21016,5009741,27911,5003($ per gold ounce)Cash cost25,582+64% 36,500Gold productionAll-in Sustaining Cash Costs(AuEq ounces)1,9342(gold equivalent ounces)Production3($ per AuEq ounce)5166993Cash cost by-product ($ per gold ounce) See final slide for footnotes.31,5006,500 1,500252363Q3 2012Q3 20135 6. Financial Results (US$ thousands, except per share amounts)Q3 2013 Q3 2012Revenues53,79338,277Earnings from Mine Operations22,96013,087Net income10,08011,5860.09Adjusted EPS 4 ($ per share) $0.100.12EPS ($ per share) 4Adjusted net income+200%$0.08$0.06$0.0410,9592,6340.090.0320,92615,4480.180.174Adjusted EPS ($ per share)Operating cash flowsbefore changes in working capitalCFPS ($ per share)See final slide for footnotes.$0.02$Q3 2012Q3 20136 7. Outlook for 2013 Revised Upward Previous Outlook 2013 Revised Outlook 2013 Gold equivalent production2125,000-135,000Silver production5(million ounces)Silver sales at spot5(thousand ounces)All-in Sustaining Cash Costs3($ per gold ounce)Cash cost3($ per gold equivalent ounce) 3Cash cost by-product ($ per gold ounce)See final slide for footnotes.5.6-6.0850-950(ounces)105,000-110,0005.6-6.0Gold production135,000-140,00095,000-105,000(gold equivalent ounces)999,046$1,050-1,150$1,050-1,150$620-640$620-640$410-430$410-4307 8. Our Focus 1.Strong balance sheet Measured growth3.Disciplined cost management4.Low-risk jurisdictions5.400-500Future Acquisitions Cerro del Gallo San Dimas Expansion 250-300Responsible miningSan Dimas160-200 150-170 135-140(Thousand Gold Equivalent Ounces)2.TARGETED GROWTH PROFILE6,711120122013E2014E2015E2016ESee final slide for footnotes.How we are building value in Primero8 9. Strong Financial Position$126M STRONG Cash Balance$90Mo8SIGNIFICANT Operating Cash Flow$32MProvides funding for: Expansion of San DimasoReserve replacementoDevelopment of Cerro Del Gallo9CONSERVATIVE Debt Level See final slide for footnotes.Funds planned growth with no shareholder dilution9 10. Asset Overview oooBased in historical mining districts with histories spanning hundreds of years With established infrastructure, skilled workforce and local suppliers Supported by local communitiesSan Dimas Mine Gold-Silver Mine Durango, Mexico0400 kmVentanas Property Cerro Del Gallo Project Exploration Property Durango, MexicoGold-Silver-Copper Project Guanajuato, MexicoLocated in proven and low-risk jurisdictions10 11. Steady Growth Ahead DEVELOPMENT PHASE 2 POTENTIAL EXPANSION PHASE 1 EXPANSION PRODUCTIONSan Dimas PlatformSan Dimas 2,500 TPDSan Dimas 3,000 TPDCerro Del GalloTargeting to double production by 2016 YE111 12. Flagship Asset San Dimas LocationDurango-Sinaloa State BorderOwnership 100% MetalsGold & SilverMiningUnderground cut & fill/longholeAcquiredLong History of Reserve Replacement2010 from GoldcorpMineral Resources and Mineral Reserves (DECEMBER 31, 2012, MINERAL RESOURCES INCLUDE MINERAL RESERVES)CLASSIFICATIONTONNAGE (M TONNES)GOLD GRADE (G/T)SILVER GRADE (G/ T)CONT. GOLD (K OUNCES)CONT. SILVER (M OUNCES)4.526766039.4Mineral Reserves Probable4.6Mineral Resources Indicated3.76.538978046.9Inferred6.13.932776264.6District Produced 11M oz Gold, 600M oz Silver12 13. Low Cost StructureControlling Unit Costs ($/tonne) 100$99$982011201280Results of strategic initiatives begun in 2012:$10860 40Optimization program improves throughput Long-hole mining decreases dilution20 0Low All-In Sustaining Costs ($/ounce)Training improves productivity and quality controlYTD 2013Estimated Industry Average101,200$1,1341,000 800$1,050$1,15020122013 E$968600 400 200See final slide for footnotes.-2011Below industry average costs13 14. San Dimas Expansion11 ATTRACTIVE IRR AND PAYBACK PERIOD oooOn-track for 2,500 TPD in Q1 2014 Total capital expenditure of ~$16.5M Continuing to assess future expansion to 3,000 TPD decision by mid 2014See final slide for footnotes.Increasing capacity to 2,500 TPD14 15. SAN DIMASStrategic Underground Development oTunnels joining Sinaloa Graben and Central Block being completedoLower level tunnel commenced, expected to be completed by end of 2015o19,000 metres of development in 2013 Sinaloa GrabenCentral Block2013 EXPLORATIONMined 2002-CurrentSinaloa Graben TunnelDELINEATION Tunnels2013 Planned TunnelsFuture Planned TunnelsFour new high-grade veins in Sinaloa Graben15 16. SAN DIMASFocused Exploration oo ooo$15.4 million exploration program 22,500 hectare package 89,000 metres of drilling: 48,000 metres delineation drilling 41,000 metres exploration drilling, plus 2,000 metres of exploration drifting Completed 75,000 metres to date at 30% lower costs than 2012 Increased drilling by 15,000 metres for same budget01Adding to 0.7M oz gold reserves2 km16 17. SAN DIMASNew Mineralization Close to Infrastructure oAlexa and Victoria discovered in early 2012, included in 2012 year-end ReservesoAlexa and Victoria already contributed 8% of the tonnes mined in 2013o2013 drilling has expanded the known mineralization in both veinsAlexa VeinNew veins discovered in 2012 and mined in 201317 18. CERRO DEL GALLONew Mine Development CERRO Guanajuato State Location: DEL GALLO INCREASES PRIMEROSPRODUCTION BY 60%12 Ownership: 100% - Subject to agreement to acquire remaining 30.8% from Goldcorp closing Metals:Gold, silver & copperMining:Open pit, heap leach, and/or conventional millExcellent Infrastructure: Active mining district, skilled local workforce, grid power, water, sealed roads, equipment sup