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Primero corporate presentation may final

  1. 1. Focused on Production Focused on Growth Corporate Update May 2012 NYSE:PPP TSX:P | NYSE:PPP TSX:P
  2. 2. Cautionary StatementThis presentation may contain “forward-looking” statements within the meaning of Canadian securities legislation and the United States Private SecuritiesLitigation Reform Act of 1995. Forward-looking statements relate to future events or the anticipated performance of the Company and reflectmanagement’s expectations or beliefs regarding such future events and anticipated performance. In certain cases, forward-looking statements can beidentified 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 betaken”, “occur” or “be achieved”, or the negative of these words or comparable terminology. By their very nature forward-looking statements involveknown and unknown risks, uncertainties and other factors which may cause the actual performance of the Company to be materially different from anyanticipated 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 innational and local governments in Mexico and the speculative nature of mineral exploration and development, risks associated with obtaining necessaryexploitation and environmental licenses and permits, and the presence of laws that may impose restrictions on mining. A complete list of risk factors aredescribed 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 willbe available, for review on SEDAR at presentation uses the terms “measured resources”, “indicated resources” and “inferred resources”. The Company advises readers that although theseterms are recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI43-101”)),the United States Securities and Exchange Commission does not recognize them. Readers are cautioned not to assume that any part or all of the mineraldeposits 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 fora Preliminary Assessment as defined under NI43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economicallyor 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 anyobligation to update these forward-looking statements or information to reflect changes in assumptions or circumstances other than required by applicablelaw. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially fromthose currently anticipated. Accordingly, readers should not place undue reliance on forward-looking statements.Unless otherwise indicated, all dollar values herein are in US$. TSX:P | NYSE:PPP 2
  3. 3. Who is Primero? Long-life, high-grade gold-silver producer generating significant cash flow Asset displays exploration upside & expansion potential Vancouver Office Toronto Strong management & board Office Balanced capital structure San Dimas Modest C$260 million market capitalization Gold-Silver Mine DURANGO MEXICOCorporate August 2010 January 2012 Acquired San Dimas • Strengthened Balance Sheet • Increased throughputHistory from Goldcorp • Listed on TSX:P, NYSE:PPP • Exploration success TSX:P | NYSE:PPP 3
  4. 4. San DimasLong Life, High-Grade Mining District: Record of Exploration Success and Reserve ReplacementSAN DIMAS RESERVES & RESOURCES1 MEXICO Sierra Madre Trend(At December 31, 2011, Indicated Resources include Reserves)GOLD RESERVES SILVER RESERVES505k 4.5oz Gold Probable Reserves grams per tonne grade 31.8M 280 oz Silver Probable Reserves grams per tonne gradeGOLD RESOURCES SILVER RESOURCES577k 6.2oz Gold Indicated Resources grams per tonne grade 36.5M 390 oz Silver Indicated Resources grams per tonne grade San Dimas704k 3.8oz Gold Inferred Resources grams per tonne grade 60.8M 320 Gold-Silver Mine Ventanas oz Silver Exploration Property grams per tonne grade Inferred Resources1 . See slide 23 for notes & details. See slide 8 for details of silver purchase agreement. TSX:P | NYSE:PPP 4
  5. 5. Focused on Production Increasing ThroughputMaximize Throughput (tonnes per day) 8% Ensure daily throughput at capacity (2,100 tpd) 2,000 8% Focus on mill expansionControl Costs Reduce costs per tonne 1,500 Improve productivity per man shift 2010 2011 2012EOptimize Grade Reducing Costs ($ per ounce by-product) Implementing 3D Planning $500 $87 $44- Control mining dilution $450 $74 $400Accelerate Mine Development $350 $300 Increase number of mining faces $250 Complete lateral haulage connections between $200 2010 2011 2012E current mining and exploration areas TSX:P | NYSE:PPP 5
  6. 6. Focused on GrowthObjective is to Become an Intermediate Gold Producer (~ 400,000 AuEq oz) San Dimas Expansion (to ~200,000 AuEq oz) Growth Strategy  Focused on significant high-grade discovery LEADING MID-TIER GOLD PRODUCER  Focused on accelerating mine development AMERICAS ACQUISITIONS  Targeting mill expansion to 2,500+ tpd ACQUISITIONS ACQUISITIONS Expansion through Acquisitions SAN DIMAS ACQUISITIONS  Build the Americas presence OPTIMIZATION OPTIMIZATION  Diversify asset base EXPLORATION  Create a portfolio of early and advanced stage projects SAN DIMAS PLATFORM TSX:P | NYSE:PPP 6
  7. 7. Strengthened Balance Sheet TSX:P Exchanges NYSE:PPP$86M After $9.4M Debt Repayment2 Balance Sheet at March 31, 2012 Cash Promissory note2 $86 million $45 millionSolid Cash Balance Convertible note3 $30 million Ownership Goldcorp 36%$90M 1 Management & insiders Institutional & float ~3% ~61%Strong Operating Cash Flow Capital Structure Shares outstanding 88 million Fully Diluted 118 million$5M Repayment per year2 Market Cap. At May 4, 2012 1. C$260 million Estimated five-year average after-tax operating cash flow based on a 2012 goldConservative Level of Debt 2. price of $1,600/oz and spot silver $30/oz, see Jan 17, 2012 Press Release. Goldcorp: 5 year, 6% note repaid $5M/yr with balloon payment at end of 2015. 3. Goldcorp: 1 year, 3% note maturing August 6, 2012, convertible at any time at C$6 or on maturity at the greater of C$3.74 or 90% of the 5 day VWAP before the maturity date. TSX:P | NYSE:PPP 7
  8. 8. Strong Financial Results Increasing Earnings Adjusted EPS ($ per share) (US$ thousands, except per share amounts) Q1 2012 Q1 2011 950% $0.20 Revenues 44,044 33,988 Earnings from Mine Operations 18,662 10,912 $0.10 Net income (loss) 18,578 (7,895) $- Q1 2011 Q1 2012 EPS ($ per share) 0.21 (0.09) Increasing Cash Flow Op CF before changes in working capital ($ per share) 1 Adjusted net income 18,780 1,621 $0.30 +$0.25 $0.25 Adjusted EPS ($ per share) 0.21 0.02 $0.20 $0.15 Operating cash flows before changes in $0.10 21,257 (1,182) working capital $0.05 $- CFPS ($ per share) 0.24 (0.01) $(0.05) Q1 2011 Q1 20121 . Please refer to first quarter 2012 MD&A for adjustments. TSX:P | NYSE:PPP 8
  9. 9. Operating Results & Guidance Increasing Throughput 2012E Q1 2012 Q1 2011 (tonnes per day) 8% Mill Throughput 2,050 2,076 1,870 (tonnes per day) 2,000 8% Gold equivalent 100,000- 1 production 25,790 24,080 110,000 (gold equivalent ounces) Gold production 80,000- 22,590 20,500 (ounces) 90,000 1,500 Silver production 4.5-5.0 1.32 1.23 2010 2011 2012E (million ounces) Gold grade 3.7 4.05 4.03 (grams per tonne) Increasing Grade (grams of gold per tonne) Silver grade 225 242 250 (grams per tonne) 5.0 Cash cost 2 9% 4.0 10% ($ per gold equivalent $630-660 $674 $624 ounce) 3.0 2 Cash cost – by-product $310-340 $532 $491 2.0 ($ per gold ounce) 1.0 Capital Expenditures $30 $7.9 $5.2 ($ million) -1 . “Gold equivalent ounces” include revenue from silver converted to a gold equivalent based on 2012 estimated Q3 2011 Q4 2011 Q1 2012 average realized commodity prices ($1,600 per ounce of gold and $9.41 per ounce of silver in full year 2012).2. Cash cost is a non-GAAP measure refer to the first quarter 2012 MD&A for a reconciliation of cash costs. TSX:P | NYSE:PPP 9
  10. 10. Strong Growth Profile Production Profile1 (000 AuEq ounces) 200 3,000 tpd 3,000 tpd 2,500 tpd Ramping to: 2,500 tpd 100 GOLD EQUIVALENT GOLD 0 2012E 2013E 2014E 2015E1 . “Gold equivalent ounces” include silver revenue converted to a gold equivalent based on flat estimated average realized commodity prices of $1,600 per ounce of gold and $9.41 per ounce of silver ($30 per ounce for ounces sold at spot and ~$4 per ounce for contract ounces). TSX:P | NYSE:PPP 10
  11. 11. Silver Purchase AgreementEarly Silver Sales at Spot PricesPrimero sells 50% of annual production above 3.5 million ounces at spot Remainder sold at ~$4 per ounce under silver purchase agreement Threshold increases to 6.0 million ounces in August 2014Primero to immediately commence selling 50% of production at spot pricesReducing tax impact Advance tax ruling (“APA”) filed in Mexico, seeking taxes be based on realized revenue • APA ruling expected by end of 2012 • Financial Statements reflect benefit of paying tax on realized revenue retroactive to acquisition Silver call options used as insurance to limit tax impact, designed to cover 30% of expected sales under purchase agreement (to cover tax liability in event of negative APA ruling) Increase San Dimas production and diversify asset base TSX:P | NYSE:PPP 11
  12. 12. Potential Impact of Positive Tax RulingPositive tax ruling could save Primero ~$40M/year in cash BMO Research Primero Cash/(Debt) Outlook, using Spot April 2, 2012 BMO Research Primero Valuation April 2, 2012 TSX:P | NYSE:PPP 12
  13. 13. Focused onSan Dimas Growth TSX:P | NYSE:PPP
  14. 14. Long-Life Mining District Produced 11M oz To DateOver 120 known veins; 22,500 hectare land package ARANA HANGING TAYOLTITA WALL BLOCK CENTRAL BLOCK TAYOLTITA MINE SINALOA Mined 1975 - 2002 2012 GRABEN Target BLOCK WEST BLOCK CENTRAL MINE 2012 Mined 2002 - Present Target SAN ANTONIO MINE Mined 1987 - 2002 TSX:P | NYSE:PPP 14
  15. 15. District Wide Exploration Potential West Block 2012 EXPLORATION Sinaloa Graben Central Block Tayoltita Block Arana San Antonio Mined 1987-2002 2012 EXPLORATION Mined 2002-Current Mined 1975-2002 Hanging WallSW NE3,000 m. 3,000 m.2,000 m. 2012 EXPLORATION PROGRAM 2,000 m. DRILLING BETWEEN EXISTING MINES1,000 m. 1,000 m. Source: San Dimas Geology Office 0 1 2 Mineralization – Ore Bodies Extension of the Favorable Horizon Faults Favorable Horizon Potential Intrusive K I L O M E T E R S TSX:P | NYSE:PPP 15
  16. 16. 2012 Exploration Program $12 million 2012 Program Targets Vein Extensions from Existing Mines Development drifting key to expansion Increased delineation drilling  22,000 metres drifting and raise boring  35,000 metres delineation drilling  Tunnels approaching Sinaloa Graben from the Exploration drilling remains aggressive east and from the south  30,000 metres diamond drillingROBERTITA CROSS SECTION Sinaloa Graben Central Block 2012 EXPLORATION Mined 2002-Current Sinaloa Graben Tunnel DELINEATION TSX:P | NYSE:PPP 16
  17. 17. New Sinaloa Graben Discovery Victoria Vein Discovery Validates Exploration Potential Located in Prolific Central Corridor Strategic Underground Drill Locations  Delineation to commence in April  Drilling from El Pilar, Sinaloa Graben tunnel and  Mining access by end of 2012 drift from RobertitaVICTORIA VEIN - ROBERTITA CROSS SECTION TSX:P | NYSE:PPP 17
  18. 18. 2012: Targeting Additional Discoveries Historical Significant Intercepts - Exploration Opportunities in 2012 Length Width Silver Gold CENTRAL TAYOLTITA SINALOA BLOCKDrift (m) (g/t) BLOCK GRABEN1. Aranza 7-129W 79 2.2 543 5.2 BLOCK Elia 8-285W 221 2.8 1,491 15.9 7 Elia 8-359W 69 2.2 668 8.1 72. Rob 21-822E 167 3.0 686 13.8 2 WESTDrill Hole Width Silver Gold BLOCK 43. TGS-S-22 8.6 958 6.8 6 TGS-S-15 7.5 403 8.1 54. PIL 7-01 2.9 508 16.0 35. SOL-9-02 1.8 549 10.7 16. MAR-9-17 2.4 514 8.97. RO-16-03 1.4 205 9.58. HW-4G-01B 0.6 302 8.7 LEGEND LEGEND TSX:P | NYSE:PPP 18
  19. 19. Re-Evaluating Geological Model Testing for Second Mineralized HorizonHistorical Geological Model Recognized One Mineralized Horizon 300-600 metres of vertical extentGeologic Concept of Second Mineralized Horizon Running parallel and 150-200 metres below first horizon If proven, would significantly increase exploration potential TSX:P | NYSE:PPP 19
  20. 20. Mill Expansion OpportunityMill Expansion Depends on Mine DevelopmentCurrent operating capacity of 2,100 tpdCurrent capacity is mainly limited by crushingExamining two expansion scenarios: 2,500 tpdand 3,000 tpd Both basic engineerings completed Launching detailed engineering Targeting expansion decision by Q3 2012Third Ball Mill On-Site expands crushing to 3,000 tpdMill Leaching Capacity of 2,500 tpd Assessing Mill Expansion:Tailings Filter Expansion Completed 2,500 tpd or 3,000 tpd CAPACITY Capacity 3,300 tpd TSX:P | NYSE:PPP 20
  21. 21. 2012 DeliverablesOperational Performance  Produce or exceed 100,000-110,000 AuEq oz  Improve productivity per man shift  Develop access across Sinaloa Graben  Complete 65,000 metres of drilling  Replace reserves with 150% of production  Mill expansion construction commencedStrategic Initiatives  Evaluate strategic growth alternatives  Remain focused on Americas  Maintain strong balance sheetSustainability Performance  Maintain industry leading corporate responsibility standards  Publish first GRI compliant Sustainability Report TSX:P | NYSE:PPP 21
  22. 22. Upcoming Catalysts 2012 CATALYST Q1 Q2 Q3 Q4ExplorationResultsReserve andResource UpdateMill ExpansionDecisionExplorationResultsAdvance TaxRuling TSX:P | NYSE:PPP 22
  23. 23. The Primero OpportunityCompelling Investment Argument MEXICO Sierra Madre TrendLong-Life, High-Grade AssetProven Management & BoardStrong Capital Structure to Fund GrowthSignificant Exploration PotentialAttractive Valuation San Dimas Gold-Silver Mine Ventanas Exploration Property TSX:P | NYSE:PPP 23
  24. 24. Appendices TSX:P | NYSE:PPP 24
  25. 25. Executive Management Joseph F. Conway | President & C.E.O. 1 Tamara Brown | VP Investor Relations  Former CEO, President and Director of IAMGOLD  Fomer Director Investor Relations for IAMGOLD; from 2003 to 2010 Partner of a Toronto based, boutique investment bank; Professional engineer in mining industry  Former President, CEO and Director of Repadre Capital from 1995 to 2003 H. Maura Lendon | VP, Chief General Counsel and Corporate Secretary  Former Senior Vice President, Chief Legal Officer Renaud Adams | C.O.O. and Corporate Secretary of HudBay Minerals Inc.; Chief Counsel Canada, Chief Privacy Officer -  Former SVP, American Operations for IAMGOLD Canada of AT&T  Former General Manager of Rosebel Gold Mine 2007 to 2010  Former General Manager El Toqui Mine in Chile Joaquin Merino | VP Exploration and then the El Mochito Mine in Honduras  Former VP, Exploration of Apogee Minerals; Exploration Manager for Placer Dome at Porgera Mine David Blaiklock | C.F.O.  Former controller IntraWest David Sandison | VP Corporate Development  Previously controller for a number of public and private companies in real estate development  Former VP, Corporate Development of Clarity Capital ; Director, Corporate Development Xstrata Zinc Canada ; Director Business Development, Noranda/Falconbridge;;Former EVP, Noranda Chile Board Committees: 1.Health, Safety and Environment TSX:P | NYSE:PPP 25
  26. 26. Board of Directors Wade Nesmith | Chairman Rohan Hazelton | Director 1,5 Robert Quartermain | Director 2,3  Founder of Primero  VP, Finance, Goldcorp  Founder and President & CEO,  Founding and current director  Formerly with Wheaton River Pretivm Resources of Silver Wheaton, Chairman of and Deloitte & Touche LLP  Former President, Silver Standard Selwyn Resources  Director of Vista Gold Corp. and Canplats Resources David Demers | Director2,3,4 Timo Jauristo | Director 2 Michael Riley | Director 5  Founder, CEO and Director  EVP, Corporate Development,  Chartered accountant with more Westport Innovations Goldcorp than 26 years of accounting  Director of Cummins Westport  Former CEO of Zincore Metals experience and Juniper Engines Inc. and Southwestern  Chair of Primero Audit Committee, Resources Corp. Chair of Audit Committee of B.C. Lottery Corporation and member of the Audit Committee of Canalaska Uranium Ltd. Grant Edey | Director 3,5 Eduardo Luna | Director 1 Joseph Conway | Director1 see Executive Management  Former Director of Breakwater  Former EVP & President, Resources, former director of Mexico. Former Chairman and Queenstake Resources, Santa CEO of Silver Wheaton, Board Committees: Cruz Gold Executive VP of Goldcorp and 1.Health, Safety and Environment  Former CFO, IAMGOLD Luismin S.A. de C.V. (San Dimas) 2. Human Resources and Compensation and President of Mexican 3. Governance and Nominating Mining Chamber and the Silver 4. Lead Director 5. Audit Institute TSX:P | NYSE:PPP 26
  27. 27. 2011 Mineral Resources and Mineral Reserves Classification Tonnage Gold Grade (g/t) Silver Grade Contained Gold Contained Silver (million tonnes) (g/ t) (000 ounces) (000 ounces)Mineral Resources Indicated 2.877 6.2 390 577 36,470 Inferred 5.833 3.8 320 704 60,770Mineral Reserves Probable 3.514 4.5 280 505 31,800Notes to Resource Statement:1. Indicated Mineral Resources include Mineral Reserves.2. Cutoff grade of 2 g/t AuEq is applied and the AuEq is calculated at a gold price of US$1,400 per troy ounce and 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 Qualified Persons (“QP’s”) for the purposes of National Instrument 43-101 (“NI 43-101”).Notes to Reserve Statement:1. Cutoff grade of 2.52g/t AuEq based on total operating cost of US$98.51/t. Metal prices assumed are a gold price of US$1,250 per troy ounce and silver price of US$20 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 13.00 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 Qualified Person (“QP”) for the purposes of NI 43-101.Additional exploration potential estimated at 6-10 million tonnes at grade rangesof 3-5 grams per tonne of gold and 200-400 grams per tonne of silver.11. It should be noted that these targets are conceptual in nature. There has been insufficient exploration to define an associated Mineral Resource and it isuncertain if further exploration will result in the target being delineated as a Mineral Resource. TSX:P | NYSE:PPP 27
  28. 28. Notes to Investors Regarding the Use of ResourcesThis 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 accordancewith Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy andPetroleum classification systems. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosurean issuer makes of scientific and technical information concerning mineral projects. These standards differ significantly from the requirements of the UnitedStates Securities and Exchange Commission (the “SEC”), and reserve and resource estimates disclosed in this presentation may not be comparable to similarinformation 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 regulatoryauthorities. For United States reporting purposes, SEC Industry Guide 7 under the United States Securities Exchange Act of 1934, as amended, asinterpreted 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” unlessthe determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination ismade. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reservesunder 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. TheCompany 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 mineralreserves. Further, “inferred resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally oreconomically. Therefore, United States investors are also cautioned not to assume that all or any part of the “inferred resources” exist. In accordance withCanadian securities laws, estimates of “inferred resources” cannot form the basis of feasibility or other economic studies. It cannot be assumed that all orany 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 asin 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 explorationprovided that the disclosure (i) states with equal prominence that the potential quantity and grade is conceptual in nature, that there has been insufficientexploration 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 includedin this presentation. United States investors are cautioned that disclosure of such exploration potential is conceptual in nature by definition and there is noassurance that exploration will result in any category of NI 43-101 mineral resources being identified. TSX:P | NYSE:PPP 28
  29. 29. PRIMERO MINING CORP. Joseph ConwayRichmond Adelaide Centre President & C.E.O.120 Adelaide Street West, Suite 1202Toronto, ON M5H 1T1 Investor RelationsT 416 814 3160 F 416 814 3170 T 416 814 3168TF 877 619 3160 Trading Symbols Common Shares TSX:P NYSE:PPP Warrants TSX:P.WT NYSE:PPP TSX:P | NYSE:PPP TSX:P