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This presentation may contain “forward-looking” statements within the meaning of Canadian securities legislation and the U...
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PRIMERO GROWTH OBJECTIVE1        Gold Eq. ounces (000)                                   LEADING MID-TIER1                ...
$65                 Increased                                                  Exchange                                   ...
(US$ thousands, except per share amounts)   Q1 2011    Q1 2010    Q4 2010Revenues                                     33,9...
1                    Increasing Throughput                                                                       Q1 2011  ...
3                                                                                                                         ...
200        180                                                                                                            ...
•     First 3.5 million oz annual Ag production plus 50% of excess sold to SLW at ~$4    2010-2014                     •  ...
12345    13
DoloresMulatosPinos Altos   Ocampo     El Sauzal              La Cienega   Penasquito                            Durango  ...
West Block          Sinaloa Graben                        Central Block                   Tayoltita Block       Arana     ...
Sinaloa           Central Block       Tayoltita Block   Arana Hanging WallSan Antonio West Block   Graben                 ...
Sinaloa Graben High-Grade Elia Vein                                      1
    19
Q3Q4Q1     20
1. $489 million structured as:• $220 million in cash• $159 million in shares of Primero (~36% ownership)• $50 million 5-ye...
   Founder of Mala Noche   Founding and current director of Silver Wheaton, Chairman of Geovic    Mining and Selwyn Reso...
1      2      3      4      5      6      7      81. Primero raised $285 million on July 20, 2010, currency exchange fluct...
(US$ thousands, except per share amounts)                                                                   Q4 2010       ...
Sinaloa Graben Tunnel: Julieta - Sinaloa Norte vein (San Salvador system)     Sinaloa Mine                  Sinaloa Graben...
Sinaloa Graben                              Robertita Vn               Nancy Vein System               Robertita Vn W     ...
Primero corporate presentation june final
Primero corporate presentation june final
Primero corporate presentation june final
Primero corporate presentation june final
Primero corporate presentation june final
Primero corporate presentation june final
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Transcript of "Primero corporate presentation june final"

  1. 1. This presentation may contain “forward-looking” statements within the meaning of Canadian securities legislation and the United StatesPrivate Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or the anticipated performance of theCompany 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 orcomparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and otherfactors which may cause the actual performance of the Company to be materially different from any anticipated performance expressed orimplied by the forward-looking statements. Such factors include various risks related to the Company’s operations, including, withoutlimitation, fluctuations in spot and forward markets for gold, silver and other metals, fluctuations in currency markets, changes in nationaland local governments in Mexico and the speculative nature of mineral exploration and development, risks associated with obtainingnecessary exploitation and environmental licenses and permits, and the presence of laws that may impose restrictions on mining. Acomplete list of risk factors are described in the Company’s annual information form and will be detailed from time to time in theCompany’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 readersthat although these terms are recognized and required by Canadian regulations (under National Instrument 43-101 Standards ofDisclosure for Mineral Projects (“NI43-101”)), the United States Securities and Exchange Commission does not recognize them. Readers arecautioned 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 thatall or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferredmineral resources may not form the basis of feasibility or pre-feasibility studies, or economic studies, except for a Preliminary Assessmentas defined under NI43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically orlegally mineable.Although the Company has attempted to identify important factors that could cause actual performance to differ materially from thatdescribed in forward-looking statements, there may be other factors that cause its performance not to be as anticipated. The Companyneither intends nor assumes any obligation to update these forward-looking statements or information to reflect changes in assumptionsor circumstances other than required by applicable law. There can be no assurance that forward-looking statements will prove to beaccurate, as actual results and future events could differ materially from those currently anticipated. Accordingly, readers should not placeundue reliance on forward-looking statements.Unless otherwise indicated, all dollar values herein are in US$. 2
  2. 2. 12345 4
  3. 3. PRIMERO GROWTH OBJECTIVE1 Gold Eq. ounces (000) LEADING MID-TIER1 GOLD PRODUCER 400   LATIN AMERICAN ACQUISITIONS 3002  SAN DIMAS OPTIMIZATION ACQUISITIONS  200 EXPLORATION3 OPTIMIZATION  100 SAN DIMAS  (GOLD EQUIVALENT OUNCES)  0 2010 2011E 2012E 2013E 1. See Primero Press Release of January 17, 2011. 5
  4. 4. $65 Increased Exchange TSX:P million Cash Balance BALANCE SHEET at Mar 31, 2011 Cash $65 million Promissory note1 $50 million Convertible note2 $60 million $90 Strong OWNERSHIP million3 Operating Cash Flow Goldcorp 36% Management & insiders ~3% Institutional & float ~61% $5 Prudent CAPITAL STRUCTURE million Level Of Debt Shares outstandingrepayment per 88 million Fully Diluted 117 million year Market Cap. At May 26, 2011 $400 million 1. Goldcorp: 5 year, 6% note repaid $5M/yr with balloon payment at end of year 5 2. Goldcorp: 1 year, rolling, 3% note convertible at CDN$6 3. Estimated 5 year average after-tax cash flow based on Primero’s five-year plan. 6
  5. 5. (US$ thousands, except per share amounts) Q1 2011 Q1 2010 Q4 2010Revenues 33,988 - 41,425Earnings from Mine 10,912 - 13,250OperationsEarnings (loss) (7,895) (318) 6,893Earnings (loss) per share (0.09) (0.11) 0.08Cash provided by (used in) 11,779 (129) 11,517operating activities 7
  6. 6. 1 Increasing Throughput Q1 2011 Q4 2010 Q3 2010 (tonnes per day) Throughput 1,870 1,840 1,580 2,000 30tpd (tonnes per day) Gold equivalent production 24,100 24,800 21,800 1,500 (gold equivalent ounces) Gold production 20,500 21,200 18,400 1,000 (ounces) Q3 2010 Q4 2010 Q1 2011 Silver production 1.23 1.21 1.01 (million ounces) Reducing Costs $ per AuEq ounce Gold grade 4.03 4.01 4.03 (grams per tonne) $21 Silver grade 250 236 227 $600 (grams per tonne) 2 Cash cost $624 $645 $653 ($ per gold equivalent ounce) 2 $500 Cash cost – by-product $491 $524 $552 Q3 2010 Q4 2010 Q1 2011 ($ per gold ounce)1. The San Dimas mine was acquired by Primero on August 6, 2010. Operating data for Q3 2010 comprises results during Goldcorp’s ownership (July 1 – Aug 5).2 .Cash cost is a non-GAAP measure. Refer to the first quarter 2011 MD&A for a reconciliation of cash costs to operating expenses. 8
  7. 7. 3 2011E  Production up 15% Gold equivalent production (gold equivalent ounces) 110,000 - 120,000  Silver sold at spot partial Q2/Q3 Gold production 90,000 - 100,000 (ounces)  Development up 50%: Silver at spot 500,000 – 750,000 (ounces) $11.4 million or 8,900 metres Total silver production 4.5 – 5.0 (million ounces)  Exploration doubled to $12 million: 1 Cash cost – gold equivalent $550 - $570 54,000 metres diamond drilling – 30% ($ per gold equivalent ounce) more than 2010 levels 1,2 Cash cost – by-product $350 - $370 3,800 metres exploration drifting – ($ per gold ounce) Ten-fold increase over 2010 levels Capital Expenditures $31 (millions)1. Cash cost is a non-GAAP measure.2. Cash costs (by-product) per gold ounce reported for San Dimas by Goldcorp Inc. are not comparable to Primero cash cost numbers due to certain inter-company transactions that are reversed for Goldcorp Inc.’s consolidated reporting.3. 2011 forecasts assume an average gold price of $1,400 per ounce; an average silver price of $6.63 per ounce, as according to the silver purchase agreement the first 3.5 million ounces and 50% of the excess of silver are sold at $4.04 10 per ounce and the balance is sold at spot, which is assumed to be $24 per ounce.
  8. 8. 200 180 Sinaloa Graben 160 140 120 Central 100 Block 80 60 40 Sta. Lucia 20 Sta. Rita Tayoltita 0 2010 2011E 2012E 2013E1. Forecast production figures were calculated using the following metal prices: 2011: gold $1,400 per ounce; silver $24 per ounce; silver price received from Silver Wheaton $4.04 per ounce. 2012: gold $1,450 per ounce; silver $25 perounce; silver price received from Silver Wheaton $4.08 per ounce. 2013: gold $1,270 per ounce; silver $21 per ounce; silver price received from Silver Wheaton $4.12 per ounce. 11
  9. 9. • First 3.5 million oz annual Ag production plus 50% of excess sold to SLW at ~$4 2010-2014 • 50% of annual Ag production above 3.5 million oz sold at spot • First 6 million oz annual Ag production plus 50% of excess sold to SLW at ~$4 2015-LOM • 50% of annual Ag production above 6 million oz sold at spot Disproportionate Tax: Estimated Quarterly Variation In Revenues1 Primero currently pays tax on silver at spot Quarterly Volatility: Anniversary August 6, not calendar year 1. UBS Research, “Higher sales leads to a strong Q4 result”, February 2011. Assumes flat gold ($1,400/oz) and silver ($30/oz) 12
  10. 10. 12345 13
  11. 11. DoloresMulatosPinos Altos Ocampo El Sauzal La Cienega Penasquito Durango Mazatlan 15
  12. 12. West Block Sinaloa Graben Central Block Tayoltita Block Arana San Antonio Mined 2002-Current Mined 1975-2002 2011 EXPLORATION Hanging Wall Mined 1987-2002 PRIORITYSW NE3,000 m. 6.8 4.7 3,000 m. g/t average grade g/t average grade2,000 m. 3 – 81 1.5 2,000 m. m average width m average width1,000 m. 1,000 m. Source: San Dimas Geology Office Mineralization – Ore Bodies Extension of the Favorable Horizon 0 1 2 Favorable Horizon Potential K I L O M E T E R S 1. Indicative of exploration results to date 16
  13. 13. Sinaloa Central Block Tayoltita Block Arana Hanging WallSan Antonio West Block Graben Dev Ag g/t Au g/t m Block 1. RAMP7-129W 1,115 10.30 2.75 RAMP8-129E 2,054 22.8 3.20 7 RAMP8-129E 1,449 14.0 4.20 DDH Ag g/t Au g/t m SAN VICENTE 2. TGS-S-22 958 6.81 8.56 TGS-S-15 403 8.08 7.52 Santa Rita 3. PIL 7-01 508 16.0 2.90 6 4. SOL-9-02 549 10.67 1.81 mine 5. MAR-9-17 514 8.86 2.45 6. RO-20-05 514 4.23 1.27 5 7. A-25-217(1) 778 7.9 0.80 3 4 HW-4G-01B 302 8.7 0.60 TAYOLTITA LEGEND 2 TOWN & MILL 1 Ag-Au High Grade Trend San Antonio Proposed Tunnel mine Tunnel 2011 Tunnel done Vein N Fault Town 0 1 2 km Piaxtla River (Source: San Dimas Geological Office) 17
  14. 14. Sinaloa Graben High-Grade Elia Vein 1
  15. 15.  19
  16. 16. Q3Q4Q1 20
  17. 17. 1. $489 million structured as:• $220 million in cash• $159 million in shares of Primero (~36% ownership)• $50 million 5-year 6% note ($5 million annually plus final balloon payment at the end of year 5)• $60 million 1-year 3% note convertible at C$6.00 per shareNote: Transaction structure reflects the working capital adjustment completed during Q4 2010. 22
  18. 18.  Founder of Mala Noche Founding and current director of Silver Wheaton, Chairman of Geovic Mining and Selwyn Resources Former CEO, President and Director of IAMGOLD from 2003 to 2010 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 Robert A. Quartermain, Grant Edey, Timo Jauristo, Rohan Hazelton, David Demers, Michael Riley 23
  19. 19. 1 2 3 4 5 6 7 81. Primero raised $285 million on July 20, 2010, currency exchange fluctuation resulted in $292 million in proceeds being delivered on August 6, 2010 24
  20. 20. (US$ thousands, except per share amounts) Q4 2010 Q4 2009 2010 2009 Revenues 41,425 - 60,278 - Earnings from Operations 13,250 - 14,145 - Net earnings 1,827 (333) (34,487) (783) Earnings (loss) per share 0.02 (0.11) (0.93) (0.36) 1 Adjusted net earnings (loss) 3,069 (333) (7,357) (783) 1 Adjusted earnings (loss) per (0.11) (0.20) (0.36) 0.03 share Operating cash flow before 1 14,044 (318) 11,697 (660) working capital changes1. Adjusted net earnings, adjusted net earnings per share and operating cash flow before working capital changes are non-GAAP measures. Refer to the 2010 fourth quarterMD&A for a reconciliation to GAAP. 25
  21. 21. Sinaloa Graben Tunnel: Julieta - Sinaloa Norte vein (San Salvador system) Sinaloa Mine Sinaloa Graben San Salvador ( Central Block ) (San Antonio Area) 7-660 L NESW Ag g/t Au g/t m 189 3.13 1.241,000 m 1,000 m500 m 500 m San Luis Tunnel Elev Santa Anita Tunnel0m 0m DDH TGS-S-22 DDH TGS S-15 DDH TGS 7-17 Sinaloa Norte Intercept Sinaloa Norte intercept Julieta intercept Ag g/t Au g/t m Ag g/t Au g/t m Ag g/t Au g/t m 958 6.81 8.56m 403 8.08 7.52 481 3.73 2.22 0 500 1000 Explanation Drilling Plan 2011 Proven Ore Drifting Plan M E T E R S Probable Ore Drifting Plan 2011 Probable Ore by Drilling Drifting Done 26
  22. 22. Sinaloa Graben Robertita Vn Nancy Vein System Robertita Vn W DDH Ag gr/t Au gr/t m E ROB 12-03 160 5.81 3.50 ROB 7-34 344 6.80 3.64 ROB 7-36 472 8.04 2.09 Sinaloa Graben ROB 16-03 519 8.67 1.81 Cross Cut ROB 16-07 649 13.25 1.60 Krc L15-826W San Fernando Favorable Tunnel Zone Krc Pilar Mine Kpa Kpa 600 m 600 m San Luis Tunnel Elev San Luis 400 m 400 m Tunnel ROB 7-34 & 36 Santa Anita Kpr Krs 200 m 200 m Guamuchil Tunnel DDDH TGS-S-07 (Project) PiaxtlaRobertita Vein Cut Granodiorite Kpr Piaxtla Ag Au m Granodiorite191 4.17 2.24 Explanation Drilling Plan Proven Ore Drilling Plan 2011 DDH ROB 16-08 L21-843E Probable Ore Drifting Plan Robertita Vein Cut Drifting Plan 2011 Ag Au m 0 500 1000 m Probable Ore by Drilling Level Done 607 4.18 0.96 Stope 27
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