TORONTO, ONTARIO, Aug 07, 2014 (Marketwired via COMTEX) — Primero Mining Corp. ("Primero" or the "Company") CA:P -3.52% PPP -3.59% today reported operational and financial results for the second quarter ended June 30, 2014. During the second quarter the Company reported record production of 63,414 gold equivalent ounces(1), compared to 39,089 gold equivalent ounces in the same period of 2013 and adjusted net income(2) of $1.1 million ($0.01 per share).
"The second quarter highlighted the value and success of the first phase of the expansion of the San Dimas mine," stated Mr. Joseph F. Conway, Chief Executive Officer. "The San Dimas mill successfully operated at close to its new capacity of 2,500 tonnes per day for the entire second quarter delivering record production for the Company. We are also very pleased to have announced earlier today the approval of the second phase of the expansion at San Dimas to 3,000 tonnes per day, elevating annual production from that mine to approximately 215,000 gold equivalent ounces from the end of the second quarter of 2016. During the second quarter we were also focused on improving the operating results from our recently acquired Black Fox mine. We have begun the process of investing in and optimizing the operation and are encouraged by the 29% increase in gold production this quarter over last quarter, although the grades mined were below expectation and the current low level of long-hole mining needs to be addressed. We understand what needs to be achieved and look forward to continuing to deliver improving results from Black Fox throughout the year."
Second Quarter Highlights:
-- Record Quarterly Production: Production increased by 62% to 63,414 gold
equivalent ounces (including a record 32,895 ounces of gold and 1.5
million ounces of silver from San Dimas and 17,166 ounces of gold from
Black Fox), compared to 39,089 gold equivalent ounces in the same period
of 2013;
-- Record Revenue: Record revenues of $79.7 million, with adjusted net
income(2) of $1.1 million ($0.01 per share) and operating cash flow
before working capital changes(3) of $26.4 million ($0.17 per share);
-- Line of Credit Established: Cash position of $44.2 million plus
available credit of $45 million at June 30, 2014;
-- Highest Spot Silver Sales: Highest ever silver sales at spot prices of
0.8 million ounces, compared to 0.6 million ounces in the same period in
2013;
-- Construction Decision on San Dimas Expansion to 3,000 TPD: The Company
announced earlier today a further expansion of the San Dimas mine and
mill to 3,000 tonnes per day ("TPD").
San Dimas Delivers Record Production; Black Fox Shows Positive Progress
The Company produced a total of 63,414 gold equivalent ounces(1) in Q2 2014, a 62% increase compared to 39,089 gold equivalent ounces in Q2 2013. Gold and silver production increased to 50,061 ounces and 1.49 million ounces, respectively, in Q2 2014 from 26,904 ounces and 1.46 million ounces in Q2 2013.
The Company incurred combined total cash costs per gold equivalent ounce(4) of $672 for Q2 2014, compared to $551 for Q2 2013. On a by-product basis, total cash costs per gold ounce were $508 for Q2 2014, compared to $167 for Q2 2013. All-in sustaining costs per ounce(5) were $1,228 for Q2 2014, compared to $659 in Q2 2013.
San Dimas produced 46,248 gold equivalent ounces (32,895 ounces of gold and 1.5 million ounces of silver) during the second quarter of 2014, 18% more than the same period in 2013. The increase in production was mainly due to 9% higher throughput and a 17% higher gold grade when comparing the same periods. The throughput increase was due to the mill expansion to 2,500 TPD being completed during the first quarter, with throughput in the second quarter averaging 2,405 TPD. Throughput was impacted by a planned nine day shutdown at the Company's hydro-power facility in order to expand its capacity.
San Dimas total cash costs on a gold equivalent and by-product basis in the second quarter 2014 were $551 and $252 per ounce, respectively, consistent with $551 and $167 per ounce, respectively, in the second quarter 2013. Higher operating costs were offset by an 18% increase in gold equivalent ounces produced. All-in sustaining costs(5) at San Dimas were $626 per ounce in the second quarter 2014, compared with $588 per ounce in the same period of 2013. Increased sustaining capital expenditures were offset by a 22% increase in gold ounces produced in the second quarter of 2014 compared with the second quarter of 2013.
Black Fox produced 17,166 ounces of gold during the second quarter of 2014, the first full quarter for which the Company owned the Black Fox Mine. This represented a 29% increase in production compared to the previous quarter and 26% decline compared to the prior year period. The lower year over year production was mainly the result of lower underground and open pit grades and lower underground throughput as a result of insufficient investment in underground development and exploration. This led to a lack of available underground stopes for mining in the first half of 2014. Since acquiring the Black Fox mine, the Company has significantly increased investment in underground development and exploration, which management believes will allow the mine to return to higher production levels by the end of 2014.
Black Fox total cash costs per gold ounce increased 22% from $820 in Q2 2013 to $998 in Q2 2014, due mainly to the lower production. The Black Fox mine incurred all-in sustaining costs per gold ounce of $1,771 in Q2 2014, compared to $1,154 in Q2 2013 mainly due to lower production and higher sustaining capital expenditures in Q2 2014 than Q2 2013, primarily due to increased exploration and development and capitalization of waste. The overall strip ratio during the second quarter was 9:1, resulting in $271 per ounce of capitalized waste being included in the all-in sustaining costs. This is expected to decline significantly in the second half of 2014 as the strip ratio declines to the life of mine average of 5:1.
Revenue Increases with Expanded Production
Revenues increased to $79.7 million in the second quarter of 2014 as a result of selling 48,596 ounces of gold at an average realized price of $1,264 per ounce, and 1.58 million ounces of silver at an average realized price of $11.56 per ounce, up from $52.5 million in the second quarter of 2013, with the acquisition of Black Fox mine on March 5, 2014 accounting for $20.9 million of the increase. Revenues at San Dimas were $6.3 million higher in Q2 2014 than Q2 2013 due to a 23% increase in gold sales volumes and a 27% increase in silver spot sales, partially offset by an 8% decrease in average realized gold prices.
Gold produced at Black Fox is subject to a gold purchase agreement(7) and as a result 1,334 ounces were sold to Sandstorm Gold Ltd. ("Sandstorm") at a fixed price of $509 per ounce. Silver produced at San Dimas is subject to a silver purchase agreement(6) and as a result 818,573 ounces of silver were sold to Silver Wheaton Corp. ("Silver Wheaton") at a fixed price of $4.16 per ounce and 760,603 ounces of silver were sold at an average spot price of $19.52, compared to 603,476 ounces at an average price of $21.88 in Q2 2013.
Operating cash flow before working capital changes in the second quarter of 2014 was $26.4 million ($0.17 per share), compared to $16.9 million ($0.16 per share) in the second quarter of 2013. The increase was mainly due to $7.6 million higher cash earnings from mine operations.
The Company generated net income of $0.6 million ($0.00 per share) in Q2 2014 compared to net income of $4.2 million ($0.04 per share) in Q2 2013. Adjusted net income, which primarily excludes transaction costs and the impact of foreign exchange rate changes on deferred tax balances, was $1.1 million ($0.01 per share) for the second quarter 2014, compared with adjusted net income of $17.0 million ($0.16 per share) for the same period in 2013. The second quarter 2014 adjusted net income includes $6.2 million more share-based payment expense and $11.5 million more depreciation and depletion expense than the second quarter of 2013. The second quarter adjusted net income includes a share-based payment expense of $3.5 million ($0.02 per share).
Line of Credit Provides Financial Flexibility
The Company's cash position was $44.2 million at June 30, 2014 down from the March 31, 2014 balance of $86.4 million. The cash balance decreased in Q2 2014 as a result of repaying $20.9 million in senior secured notes and $1.9 million of the convertible debentures both assumed upon the acquisition of Brigus, as well as the remaining balance of $27.2 million of the Goldcorp promissory note, partially offset by the Company drawing down a net amount of $28.2 million on the new line of credit.
Capital expenditures during the second quarter 2014 totaled $31.2 million, up from $16.0 million spent in Q2 2013. The increase was partly as a result of spending on the Black Fox Complex, which was not owned in the same period of 2013, and partly due to increased expenditure at the San Dimas mine due to increased equipment purchases. In 2014, capital expenditures are expected to total approximately $80.0 million excluding capitalized exploration expenses of $35.0 million.
On May 23, 2014, the Company closed a 3-year $75 million revolving line of credit. In order to provide the lenders with the required security, coincident with the closing the Company repaid the $27.2 million promissory note outstanding to a subsidiary of Goldcorp Inc. by drawing down $30 million of the line of credit.
At June 30, 2014, the balances outstanding on the convertible debentures and finance leases were $48.1 million and $15.0 million, respectively.
Outlook Maintained for 2014
Primero maintains its 2014 production guidance of between 225,000 and 245,000 gold equivalent ounces, an increase of up to 70% over 2013. Cash costs for 2014 are expected to be in the range of $650 to $700 per gold equivalent ounce.
San Dimas Expansion to 3,000 TPD Construction Decision
Earlier today, the Company announced that it has approved the second phase of the San Dimas expansion to 3,000 TPD(8). The preliminary scoping study completed by the Company shows an attractive 78% after-tax IRR and a payback period of less than 12 months after project completion.
Annual production after project completion is expected to increase by more than 25% over 2014 levels to approximately 215,000 gold equivalent ounces. Cash costs are expected to drop by approximately $50 per ounce from current levels to approximately $530 per gold equivalent ounce, or $300 per gold ounce on a by-product basis.
The Company currently estimates that expanding the San Dimas mill to 3,000 TPD will require approximately $26.4 million of capital investment. The Company has retained an engineering firm with extensive plant design experience in the mining sector to assist with an optimization project that could significantly reduce this estimated capital cost and at the same time create operating cost savings through process improvement. An important feature of the expansion to 3,000 TPD is that it increases the Company's exposure to spot silver sales as it coincides with the increase in the annual silver threshold of the San Dimas silver purchase agreement.
Black Fox Making Progress
After acquiring the Black Fox Complex in March 2014 the Company immediately began to invest in underground development, definition and delineation drilling. During the second quarter the Company successfully increased underground development by 54%, completing 1,881 metres of underground development compared to 1,329 meters in the first quarter of 2014. The Company also initiated its exploration program during the second quarter of 2014 and completed 15,500 meters of exploration and delineation drilling and 12,760 meters of definition drilling.
The Company increased underground throughput during the second quarter by 15% to approximately 460 TPD, as a result of increasing the available cut and fill stopes. It still only mined from a single underground long-hole stope, impacting underground productivity. The Company targeted 60% long- hole mining at Black Fox and only achieved 40% during the second quarter. During the remainder of 2014 the Company will be focused on opening new underground long-hole mining stopes and increasing the underground production rate.
On July 9, 2014(9) the Company released an updated Mineral Reserve and Mineral Resource estimation for the Black Fox Complex (including both the Black Fox mine and the adjacent Grey Fox exploration property). The Company elected to use more conservative estimation parameters, in part, in order to improve the accuracy of its mine planning. Drilling results released at the same time confirmed the extension of the Black Fox deposit at depth.
The grades mined at Black Fox during the second quarter were below the Company's mine plan created using the recent Mineral Reserve and Mineral Resource estimation. As a result, the Company has initiated a review of the Black Fox underground grades and short-term underground mine plan that it expects to complete by the end of August 2014. The open pit grades are expected to improve throughout the remainder of 2014 and the strip ratio is expected to decline to the average life of mine ratio of 5:1.
Cerro del Gallo Project Construction Decision Delayed
On July 30, 2014(10) the Company provided an update on its Cerro del Gallo development project located in Guanajuato, Mexico. Primero has advanced the development of the project but has delayed a construction decision until early 2015 so it can complete the planned 2014 metallurgical testwork and drilling programs.
Primero has spent $3.9 million of its 2014 $12.9 million budget and completed basic engineering and water rights acquisition and advanced land acquisition and permitting. The Company aims to complete the necessary metallurgical tests, 10,000 metres of drilling, all required land purchases and submit the permit application by the end of 2014. The Company remains focused on achieving its desired rate of return and once the 2014 program is completed can assess the economics of the project in order to make a potential construction decision in early 2015.
Conference Call and Webcast Details
The Company's senior management will host a conference call today, Thursday, August 7, 2014 at 10:00 a.m. ET to discuss the second quarter operating and financial results.
This release should be read in conjunction with Primero's second quarter 2014 financial statements and MD&A report on the Company's website, www.primeromining.com , in the "Financial Reports" section under "Investors", or on the SEDAR website atwww.sedar.com , or on the Edgar website www.sec.gov .
Participants may join the call by dialing North America toll free 1 (866)-229-4144 or 1 (416) 216-4169 for calls outside Canada and the U.S. and entering the participant passcode 7403645#.
A live and archived webcast of the conference call will also be available atwww.primeromining.com under the News and Events section or by clicking here:http://event.onlineseminarsolutions.com/r.htm?e=815965&s=1&k=B6B354DBE428690A5191316C02C52E9F
A recorded playback of the call will be available until, Friday, November 6, 2014 by dialing North America toll free 1 (888) 843-7419 or 1 (630) 652-3042 for calls outside Canada and the U.S. and entering the call back passcode 7403645#
(1) "Gold equivalent ounces" include silver ounces produced, and converted to a gold equivalent based on a ratio of the average commodity prices realized for each period. The ratio for the second quarter 2014 for San Dimas was based on realized prices of $1,286 per ounce of gold and $11.56 per ounce of silver. The ratio used for the 2014 guidance projection is 151:1 based on estimated average prices of $1,200 per ounce of gold and $7.96 per ounce of silver.
(2) Adjusted net income (loss) and adjusted net income (loss) per share are non-GAAP measures. Neither of these non-GAAP performance measures has any standardized meaning and is therefore unlikely to be comparable to other measures presented by other issuers. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Company's performance. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Refer to the second quarter 2014 MD&A for a reconciliation of adjusted net income (loss) to reported net income (loss).
(3) "Operating cash flow" is operating cash flow before working capital changes. This and operating cash flows before working capital changes per share are non-GAAP measures which the Company believes provides a better indicator of the Company's ability to generate cash flow from its mining operations. See the second quarter 2014 MD&A for a reconciliation of operating cash flows to GAAP.
(4) Total cash costs per gold equivalent ounce and total cash costs on a by-product basis are non-GAAP measures. Total cash costs per gold equivalent ounce is defined as cost of production (including refining costs) divided by the total number of gold equivalent ounces produced. Total cash costs on a by-product basis are calculated by deducting the by-product silver credits from operating costs. The Company reports total cash costs on a production basis. In the gold mining industry, these are common performance measures but do not have any standardized meaning, and are non-GAAP measures. The Company follows the recommendations of the Gold Institute standard. The Company believes that, in addition to conventional measures, prepared in accordance with GAAP, certain investors use this information to evaluate the Company's performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. See the second quarter 2014 MD&A for a reconciliation of total cash costs to reported operating expenses (the nearest GAAP measure).
(5) The Company, in conjunction with an initiative undertaken within the gold mining industry, has adopted an all-in sustaining cost non-GAAP performance measure that the Company believes more fully defines the total cost associated with producing gold; however, this performance measure has no standardized meaning. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company reports this measure on a gold ounces produced basis. For the purposes of calculating all-in sustaining costs at individual mine sites, the Company does not include corporate general and administrative expenses. Corporate general and administrative expenses are included in the computation of all-in sustaining costs per consolidated gold ounce. Refer to the Company's second quarter 2014 financial statements and MD&A for a reconciliation of all-in sustaining costs per gold ounce.
(6) According to the silver purchase agreement between the Company and Silver Wheaton Corp., until August 6, 2014 Primero will deliver to Silver Wheaton a per annum amount equal to the first 3.5 million ounces of silver produced at San Dimas and 50% of any excess at $4.12 per ounce (increasing by 1% per year). Thereafter Primero will deliver to Silver Wheaton a per annum amount equal to the first 6.0 million ounces of silver produced at San Dimas and 50% of any excess at $4.20 per ounce (increasing by 1% per year). The Company will receive silver spot prices only after the annual threshold amount has been delivered.
(7) Black Fox was subject to a gold purchase agreement which continues and was assumed by the Company upon its acquisition of the mine. According to the gold purchase agreement, Sandstorm is entitled to 8% of production at the Black Fox mine and 6.3% at the Black Fox Extension.
(8) Refer to today's news releases "Primero Announces Expansion of its San Dimas Mine To 3,000 TPD" as filed on SEDAR at www.sedar.com .
(9) Refer to the July 9, 2014 news releases "Primero Announces High-Grade Black Fox Complex Drilling Results and Reports Updated Reserves And Resources" as filed on SEDAR at www.sedar.com .
(10) Refer to the July 30, 2014 news releases "Primero Provides Cerro Del Gallo Project Update" as filed on SEDAR at www.sedar.com .
About Primero
Primero Mining Corp. is a Canadian-based precious metals producer that owns 100% of the San Dimas gold-silver mine and the Cerro del Gallo gold-silver- copper development project in Mexico and 100% of the Black Fox mine and adjoining properties in the Township of Black River-Matheson near Timmins, Ontario, Canada. Primero offers immediate exposure to un-hedged, below average cash cost gold production with a substantial resource base in politically stable jurisdictions. The Company is focused on becoming a leading intermediate gold producer by building a portfolio of high quality, low cost precious metals assets in the Americas.
Primero's website is www.primeromining.com .
CAUTIONARY NOTE ON FORWARD-LOOKING INFORMATION
This news release contains "forward-looking statements", within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, concerning the business and operations of Primero Mining Corp. and its consolidated subsidiaries (collectively, "Primero" or the "Company"). All statements, other than statements of historical fact, are forward-looking statements. Generally, forward- looking statements can be identified by the use of forward-looking terminology such as "plans", "expects", "is expected", "if approved", "forecasts", "intends", "anticipates", "believes", "in order to" or variations of such words and phrases or statements that certain actions, events or results "are anticipated", "may", "could", "would", "might" or "will require", "will allow", "will enhance" or "will include" or similar statements or the negative connotation thereof. Forward-looking information is also identifiable in statements of currently occurring matters which will continue in future, such as "is updating" or "is also assessing" or other statements that may be stated in the present tense and are not historical facts or words with future implication such as "opportunity", "promising".
Forward-looking statements in this news release include, but are not limited to, statements regarding the level and timing of gold equivalent production at San Dimas and Black Fox; the realization of silver sales at spot prices; the amount of gold equivalent ounces produced in 2014, the cash costs and all-in sustaining costs for 2014; the capital expenditures in 2014; the Company's intentions and expectations respecting the expansion of San Dimas production to 3,000 TPD; the Black Fox underground development and ability to open new mining areas in 2014; the amount of ore from the Company's operations in 2014; three-year plan forecasts; the plans for Cero del Gallo and the intentions to make a construction decision in respect of the project; the probability of encountering high grade mineralization in, and the exploration potential of, the Company's exploration targets and plans; the ability to generate significant free cash flow while repaying debt and also internally funding future growth; optimization and expansion initiatives; and the Company's intentions to become an intermediate gold producer.
The assumptions made by the Company in preparing the forward-looking information contained in this news release, which may prove to be incorrect, include, but are not limited to: the expectations and beliefs of management; the specific assumptions set forth above in this news release; that there are no significant disruptions affecting operations; that development and expansion at San Dimas proceeds on a basis consistent with current expectations and the Company does not change its development and exploration plans; that the exchange rate between the Canadian dollar, Mexican peso and the United States dollar remain consistent with current levels or as set out in this news release; that prices for gold and silver remain consistent with the Company's expectations; that production meets expectations; the amount of silver that the Company will sell at spot prices in 2014; that the Company identifies higher grade veins in sufficient quantities of minable ore in the Central Block and in Sinaloa Graben; that the Company will be in a position to make a decision respecting the construction of Cerro del Gallo when anticipated and that such decision will be positive; that there are no material variations in the current tax and regulatory environment; that the Company will receive required permits and access to surface rights; that the Company can access financing, appropriate equipment and sufficient labour; that the political environment within Mexico and Canada will continue to support the development of environmentally safe mining projects.
Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results, performance or achievements of Primero to be materially different from those expressed or implied by such forward-looking statements, including: the Company may not be able to achieve planned production levels; the Company may not be able to expand production at San Dimas as anticipated or generate significant free cash flow; the Company may not be able to develop the Cerro del Gallo asset or realize anticipated production levels; the Company may not be successful in returning the Black Fox mine to higher production levels; the Company may be required to change its development and exploration plans with a negative impact on production; the Company may not discover mineralization in minable quantities; the exchange rate between the Canadian dollar, the Mexican peso and the United States dollar may change with an adverse impact on the Company's financial results; the optimization and expansion initiatives may not provide the benefits anticipated; the Company may not be able to become an intermediate gold producer by building a portfolio of high quality, low cost precious metals assets in the Americas. Certain of these factors are discussed in greater detail in Primero's registration statement on Form 40-F on file with the U.S. Securities and Exchange Commission, and its most recent Annual Information Form on file with the Canadian provincial securities regulatory authorities and available at www.sedar.com .
Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. In addition, although Primero has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Forward-looking statements are made as of the date hereof and accordingly are subject to change after such date. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of our operating environment. Primero does not undertake to update any forward-looking statements that are included in this document, except in accordance with applicable securities laws.
SUMMARIZED FINANCIAL AND OPERATING RESULTS AND FINANCIAL STATEMENTS FOLLOW
SUMMARIZED FINANCIAL & OPERATING RESULTS
(in thousands of United States dollars, except per share and per ounce
amounts - unaudited)
SUMMARIZED FINANCIAL DATA
Three months ended Six months ended
June 30, June 30,
2014(1) 2013 2014(1) 2013
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Key Perform ance Data
Tonnes of ore milled 428,778 201,680 667,344 385,491
Produced
Gold equivalent (ounces) 63,414 39,089 103,172 66,745
Gold (ounces) 50,061 26,904 82,339 51,095
Silver (million ounces) 1.49 1.46 3.00 2.83
Sold
Gold equivalent (ounces) 62,791 37,555 100,040 66,029
Gold (ounces) 48,596 25,692 79,179 50,428
Silver (million ounces) 1.58 1.42 2.93 2.90
Average realized prices
Gold ($/ounce)(2) $1,264 $1,398 $1,276 $1,510
Silver ($/ounce)(2) $11.56 $11.66 $9.20 $7.82
Average gold London PM fix $1,288 $1,415 $1,291 $1,523
Total cash costs (per gold ounce)
Gold equivalent basis $672 $551 $677 $620
By-product basis $508 $167 $522 $377
All-in sustaining costs (per gold
ounce) $1,228 $659 $1,288 $943
Financial Data
(in thousands of US dollars except
per share amounts)
Revenues 79,669 52,475 127,938 98,796
Earnings from mine operations 19,676 23,593 27,941 39,299
Net income (loss) 572 4,241 (8,513) 21,565
Adjusted net income (loss) 1,052 17,039 (1,828) 26,140
Basic income (loss) per share 0.00 0.04 (0.06) 0.21
Diluted income (loss) per share 0.00 0.04 (0.06) 0.21
Adjusted net income (loss) per share 0.01 0.16 (0.01) 0.26
Operating cash flows before working
capital changes 26,431 16,932 32,344 36,443
Assets
Mining interests 955,587 600,525 955,587 600,525
Total assets 1,207,602 780,316 1,207,602 780,316
Liabilities
Long-term liabilities 189,743 49,678 189,743 49,678
Total liabilities 249,388 95,567 249,388 95,567
Equity 958,214 684,749 958,214 684,749
Weighted average shares outstanding
(basic)(000's) 159,617 105,345 144,108 101,321
Weighted average shares outstanding
(diluted)(000's) 161,321 105,696 145,582 101,817
(1) Includes the results for the period for which the Black Fox Complex,
acquired on March 5, 2014, was owned by Primero (March 5, 2014 to March
31, 2014).
(2) Average realized gold and silver prices reflect the impact of the gold
purchase agreement with Sandstorm at the Black Fox mine and the silver
purchase agreement with Silver Wheaton at the San Dimas mine.
SUMMARIZED OPERATING DATA
San Dimas
Three months ended
30-Jun-14 31-Mar-14 31-Dec-13 30-Sep-13 30-Jun-13
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Key Performance Data
Tonnes of ore mined 196,025 218,032 205,345 198,222 207,263
Tonnes of ore milled 218,830 198,570 181,626 199,812 201,680
Average mill head grade
(grams/tonne)
Gold 4.97 4.76 5.17 5.08 4.25
Silver 230 260 292 265 236
Average recovery rate (%)
Gold 94% 93% 96% 97% 98%
Silver 92% 91% 94% 95% 96%
Produced
Gold equivalent (ounces) 46,248 35,662 34,371 41,998 39,089
Gold (ounces) 32,895 28,182 29,097 31,791 26,904
Silver (million ounces) 1.49 1.51 1.60 1.62 1.46
Sold
Gold equivalent (ounces) 45,737 31,926 37,733 40,210 37,555
Gold (ounces) 31,542 25,260 32,157 30,261 25,692
Silver at fixed price
(million ounces) 0.82 1.15 1.69 1.18 0.82
Silver at spot (million
ounces) 0.76 0.19 - 0.40 0.60
Average realized price
(per ounce)
Gold $1,286 $1,300 $1,265 $1,338 $1,398
Silver $11.56 $6.44 $4.16 $8.42 $11.66
Total cash operating costs
($000s) $25,474 $22,540 $22,676 $21,660 $21,530
Total cash costs (per gold
ounce)
Gold equivalent basis $551 $632 $660 $516 $551
By-product basis $252 $455 $550 $252 $167
All-in sustaining costs
(per ounce) (1) $626 $893 $1,151 $751 $588
(1) Total cash costs per gold ounce on a gold equivalent and by-product
basis and all-in sustaining costs are non-GAAP financial measures. Refer
to the Company's second quarter 2014 MD&A for a reconciliation to
operating expenses.
Black Fox
Three
months For the
ended period Three months ended
March 5,
2014 -
March 31, 31-Mar- 31-Dec- 30-Sep- 30-Jun-
30-Jun-14 2014 14 13 13 13
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Key Performance Data
Open pit mining
Tonnes of ore mined 247,029 55,422 166,753 161,895 152,709 149,825
Average grade
(grams/tonne)
Gold 1.85 2.17 1.89 2.20 2.88 2.70
Underground mining
Tonnes of ore mined 41,739 8,096 36,211 68,294 74,628 82,616
Average grade
(grams/tonne)
Gold 4.33 5.65 5.00 6.07 5.69 5.93
Open pit and underground
Tonnes of ore milled 209,948 39,996 149,803 206,914 207,559 154,667
Average mill head grade
(grams/tonne) 2.69 3.36 2.96 3.53 4.34 4.97
Average recovery rate
(%)
Gold 95% 95% 93% 93% 94% 94%
Produced
Gold equivalent
(ounces) 17,166 4,096 13,298 21,916 27,174 23,304
Gold (ounces) 17,166 4,096 13,298 21,916 27,174 23,304
Sold
Gold equivalent
(ounces) 17,054 5,323 15,620 20,582 28,344 22,490
Gold at spot price
(ounces) 15,720 5,008 14,176 18,992 25,963 20,745
Gold at fixed price
(ounces) 1,334 315 1,444 1,590 2,381 1,745
Average realized price
(per ounce)
Gold $1,224 $1,272 $1,242 $1,249 $1,301 $1,352
Total cash operating
costs ($000s)(1) $17,127 $4,726 $18,732 $20,376 $16,714 $19,107
Total cash costs (per
gold ounce)
Gold equivalent basis $998 $1,154 $1,409 $930 $615 $820
All-in sustaining costs
(per ounce) (2) $1,771 $1,480 $1,825 $1,336 $905 $1,154
(1) The Company reports total cash costs on a production basis, where the
prior owner of Black Fox reported total cash costs on a sales basis,
consequently the reported total cash costs, cash costs per gold ounce,
and all-in sustaining costs per ounce for Black Fox for historical
periods will differ from those reported by the prior owner.
(2) Total cash costs per gold ounce on a gold equivalent and by-product
basis and all-in sustaining costs are non-GAAP financial measures. Refer
to the Company's second quarter 2014 MD&A for a reconciliation to
operating expenses.
PRIMERO MINING CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND
COMPREHENSIVE (LOSS) INCOME
THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(In thousands of United States dollars, except for share and per share
amounts)
(Unaudited)
Three months ended Six months ended
June 30 June 30,
2014 2013 2014 2013
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$ $ $ $
Revenue 79,669 52,475 127,938 98,796
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Operating expenses (40,387) (20,813) (68,070) (43,276)
Depreciation and depletion (19,606) (8,069) (31,927) (16,221)
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Total cost of sales (59,993) (28,882) (99,997) (59,497)
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Earnings from mine
operations 19,676 23,593 27,941 39,299
General and administrative
expenses (10,524) (1,907) (23,877) (9,703)
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Earnings (loss) from
operations 9,152 21,686 4,064 29,596
Transaction costs and other
expenses (498) (5,755) (7,765) (6,082)
Foreign exchange (loss) gain (2,250) 651 (2,608) (710)
Finance income 65 40 184 151
Finance expense (1,785) (415) (2,308) (924)
Share of equity-accounted
investment results (77) - (679) -
Gain on derivative liability 286 - 286 -
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Earnings (loss) before
income taxes 4,893 16,207 (8,826) 22,031
Income tax (expense)
recovery (4,321) (11,966) 313 (466)
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Net income (loss) for the
period 572 4,241 (8,513) 21,565
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Other comprehensive income
Items not subsequently
reclassified to profit or
loss:
Exchange differences on
translation of foreign
operations 1,035 (4,136) 1,239 (3,790)
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Total comprehensive income
(loss) for the period 1,607 105 (7,274) 17,775
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Basic (loss) income per
share 0.00 0.04 (0.06) 0.21
Diluted (loss) income per
share 0.00 0.04 (0.06) 0.21
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Weighted average number of
common shares outstanding
Basic 159,616,775 105,344,778 144,107,966 101,320,723
Diluted 161,320,681 105,696,266 145,582,448 101,817,431
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PRIMERO MINING CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(In thousands of United States dollars)
(Unaudited)
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June 30, December 31,
2014 2013
----------------------------------------------------------------------------
$ $
Assets
Current assets
Cash and cash equivalents 44,168 110,711
Trade and other receivables 6,363 4,794
Taxes receivable 20,480 10,224
Prepaid expenses 8,513 7,729
Inventories 20,783 12,171
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Total current assets 100,307 145,629
Non-current assets
Restricted cash 19,185 -
Mining interests 955,587 636,253
Goodwill 98,961 -
Deferred tax asset 21,716 17,898
Inventories 10,677 -
Equity investment 391 1,042
Available for sale investment 778 -
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Total assets 1,207,602 800,822
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Liabilities
Current liabilities
Trade and other payables 45,220 33,958
Taxes payable 7,985 6,735
Current portion of long-term debt 6,440 5,000
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Total current liabilities 59,645 45,693
Non-current liabilities
Taxes payable 10,750 8,456
Deferred tax liability 53,722 47,660
Decommissioning liability 33,070 8,730
Long-term debt 82,392 22,214
Other long-term liabilities 6,399 6,979
Derivative liability 3,410 -
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Total liabilities 249,388 139,732
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Equity
Share capital 853,065 553,518
Warrant reserve 34,782 34,237
Share-based payment reserve 19,824 15,518
Foreign currency translation reserve (3,405) (4,644)
Retained earnings 53,948 62,461
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Total equity 958,214 661,090
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Total liabilities and equity 1,207,602 800,822
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PRIMERO MINING CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(In thousands of United States dollars)
(Unaudited)
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Three months ended Six months ended
June 30 June 30,
2014 2013 2014 2013
----------------------------------------------------------------------------
Operating activities
Earnings (loss) before income
taxes 4,893 16,207 (8,826) 22,031
Adjustments for:
Depreciation and depletion 19,606 8,069 31,927 16,221
Payments relating to
decomissioning liability - - - (53)
Share-based payments - Stock
Option plan 328 53 482 108
Share-based payments - Phantom
Share Unit plan 3,160 (2,792) 11,197 2,128
Payments made under the Phantom
Share Unit Plan (6,443) (5,048) (9,131) (5,727)
Unrealized loss on equity
accounted investment 77 - 679 -
Unrealized (gain)/loss on
available for sale investment (3) - 349 -
Unrealised gain on derivative
liability (286) - (286) -
Loss on disposal of assets 1,195 101 1,215 165
Loss on write-down of inventory - - 1,225 -
Unrealized foreign exchange loss 2,690 177 2,328 1,310
Taxes paid (506) (210) (939) (523)
Other adjustments
Finance income (disclosed in
investing activities) (65) (40) (184) (151)
Finance expense 1,785 415 2,308 924
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Operating cash flow before working
capital changes 26,431 16,932 32,344 36,433
Changes in non-cash working
capital (13,363) (6,550) (27,916) (8,158)
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Cash (used in) provided by operating
activities 13,068 10,382 4,428 28,275
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Investing activities
Expenditures on mining interests (31,159) (16,037) (51,159) (24,772)
Acquisition of Brigus Gold Corp
(net) - - (7,773) -
Acquisition of Cerro Resources NL - (3,508) - (3,508)
Equity investment in Santana
Minerals Limited - (1,062) - (1,062)
Interest received 65 40 184 151
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Cash used in investing activities (31,094) (20,567) (58,748) (29,191)
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Financing activities
Repayment of debt (53,258) - (56,361) (7,786)
Proceeds on exercise of options 1,678 34 9,363 910
Proceeds on issuance of flow-
through shares - 8,037
Interest paid (1,135) - (1,578) -
Drawdown of line of credit, net of
transaction costs 28,192 - 28,192
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Cash provided by (used in) financing
activites (24,523) 34 (12,347) (6,876)
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Effect of foreign exchange rate
changes on cash 345 (705) 124 (1,062)
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(Decrease) increase in cash (42,204) (10,856) (66,543) (8,854)
Cash and cash equivalents, beginning
of period 86,372 141,246 110,711 139,244
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Cash, end of period 44,168 130,390 44,168 130,390
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Contacts:
Primero Mining Corp.
Tamara Brown
VP, Investor Relations
(416) 814 3168
[email protected]
www.primeromining.com
SOURCE: Primero Mining Corp.
