Your SlideShare is downloading. ×
Primero Corporate Presentation January 2011
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Saving this for later?

Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime - even offline.

Text the download link to your phone

Standard text messaging rates apply

Primero Corporate Presentation January 2011

498
views

Published on

Published in: Investor Relations

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
498
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. The ‘New’ Americas Gold Play TSX:PJanuary 2011
  • 2. Cautionary Statement TSX:PThis 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 preliminary prospectus and will be detailed from time to time in the Company’s interim and annual financial statements andmanagement’s discussion and analysis of those statements, 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 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$. 2
  • 3. Investment Highlights TSX:P San Dimas Gold-Silver Mine DURANGO MEXICO 3
  • 4. Corporate Strategy Disciplined Growth TSX:PGROWTH TARGETED GROWTH OBJECTIVE Gold Eq. ounces (000) LEADING MID-TIER 2011-2012: Optimization & Expansion 400 GOLD PRODUCER 2011-2012: Potential Latin American acquisitions Leading mid-tier gold producer by 2013 LATIN AMERICAN ACQUISITIONS 300LOW CASH COST Below industry average cash costs SAN DIMAS OPTIMIZATION ACQUISITIONS 200LOW RISK EXPLORATION Maintain balance sheet strength OPTIMIZATION Un-hedged gold 100 SAN DIMAS Americas pro-mining jurisdictions only (GOLD EQUIVALENT OUNCES) Commitment to leading CSR programs 0 2010 2011E 2012E 2013E 4
  • 5. San DimasSolid Platform with expansion & exploration potential TSX:P QUICK FACTS VentanasSAN DIMAS Durango, Mexico Exploration Property DURANGO MEXICOOWNERSHIP 100%METALS Gold & Silver San DimasMINING Underground, cut and fill Gold-Silver Mine DURANGO MEXICO RESERVES & RESOUCES (as at December 31, 2009) Mazatlan DurangoProven & Probable ReservesTonnes (millions) Grade (g/t) Silver (g/t) Gold (Moz) Silver (Moz)5.6 4.8 339 0.9 60.9Inferred Resources (exclusive of reserves)Tonnes (millions) Grade (g/t) Silver (g/t) Gold (Moz) Silver (Moz)15.2 3.3 317 1.6 154.6 2010 PRODUCTION 2011E PRODUCTIONGOLD EQ 100,500 gold equivalent ounces 110,000-120,000 gold equivalent ouncesGOLD 85,400 ounces 90,000-100,000 ouncesSILVER 4.5 million ounces 4.5-5.0 million ouncesCASH COST $581 per gold equivalent ounce $550-$570 per gold equivalent ounce 5
  • 6. Operating Results Ownership Transition Complete TSX:P Q4 2010 Q4 2009 2010 2009 2011E Gold equivalent production 24,700 35,500 100,500 133,900 110,000-120,000 (gold equivalent ounces) Gold production 21,200 30,800 85,400 113,000 90,000-100,000 (ounces) Silver production 1.21 1.27 4.53 5.09 4.5-5.0 (million ounces) Gold grade 4.01 5.89 4.46 5.36 4.8 (grams per tonne) Silver grade 236 251 244 249 250 (grams per tonne) 1 Cash cost – gold equivalent $643 $411 $581 $407 $550-$570 ($ per gold equivalent ounce) 1 Cash cost – by-product $524 $307 $471 $301 $350-$370 ($ per gold ounce)1. Cash cost is a non-GAAP measure.2. Cash costs (by-product) per gold ounce reported for San Dimas by Goldcorp Inc. for year and three months ending Dec 31, 2009 were $287 and $272 respectively and are not comparable to 6Primero cash cost numbers due to certain inter-company transactions that are reversed for Goldcorp Inc.’s consolidated reporting.
  • 7. Strong Financial Position Solid Platform for Growth TSX:P (US$ million) September 30, 2010 Cash $55 million Promissory note (5yr, 6%, $5M annual payment plus balloon in year 5) $50 million Convertible note (1yr rolling, 3%, convertible at $6) $60 million Long term debt $110 million Common shares outstanding 88 million Common shares, fully diluted 117 million Volume (M) Share Performance Relative Change10 30% Volume Primero TSX Gold Index 9 20% 8 7 10% 6 5 0% 4 -10% 3 2 -20% 1- -30% August September October November December January 7
  • 8. Improved Silver Agreement Increased Revenue, Reduced Costs Term Production 25 yearsOld Agreement 100% of silver production at $4 (19 remaining)Revised Agreement Life of Mine First 4 years: First 3.5 million ounces plus 50% of excess sold at $4 plus Goldcorp supplements Silver Wheaton with additional 1.5 million ounces 50% of production above 3.5 million sold by Primero at spot Year 5 and beyond: First 6.0 million ounces plus 50% of excess sold at $4 50% of production above 6.0 million ounces sold by Primero at spot Increases Revenue1 Decreases Cash Costs11. BMO Capital Markets Research. Gold Prices 2010: $1,188, 2011: $1,300, 2012:$1,250, 2013:$1,150, Silver Prices: 2010: $18.50, 2011:$ 21.00, 2012:$20.00, 2013:$17.00 8
  • 9. Improved Silver Agreement Quarterly Volatility, Tax Impact Remain VOLATILE QUARTERLY SILVER PRICE RECEIVED1 QUARTERLY VOLATILITY Agreement structure causes quarterly earnings volatility Silver threshold based on anniversary of August 6, not calendar year TAX IMPACT SILVER:GOLD RATIO Primero pays tax on silver at spot price: High correlation between gold & silver 10% increase in Gold price increases operating 96% over 10 years, 60% over 30 years cash flow by ~8%; 30 year historical silver:gold ratio 55:1 10% increase in Silver price decreases operating Consensus: 60:1 in 2011E, 55:1 in 2014E cash flow by ~3-4%; Conclusion: Remote prospect of 10% increase in Gold and Silver price increases operating cash flow by ~6%; silver:gold ratio dramatically impacting fundamental valuation1. BMO Capital Markets Research. Gold Prices 2010: $1,188, 2011: $1,300, 2012:$1,250, 2013:$1,150, Silver Prices: 2010: $18.50, 2011:$ 21.00, 2012:$20.00, 2013:$17.00 9
  • 10. Improved Silver AgreementOpportunities for Further Improvement Increase San Dimas production Investigate all appropriate tax planning alternatives Acquisition of additional operations:  Reduce tax impact  Smooth quarterly earnings 10
  • 11. Operations TSX:P
  • 12. Historical Production1 Impact of High Grade TSX:P Gold Equivalent Production Gold Equivalent Production Gold Grade (000 gold equivalent ounces) (g/t)250 9.0 Sinaloa Graben Discovery Subsequent Acquisition of San Dimas by Primero 8.0200 7.0 Central Block Discovery 6.0 Acquisition of San Dimas by Wheaton River150 5.0 4.0100 3.0 2.0 50 1.0 0 0.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1. Gold equivalent ounces calculated on silver price received ie spot price from 1998-2004 and silver stream agreement price of ~$4/oz from 2005-2010 12
  • 13. History of Reserve Growth1 TSX:P Proven & Probable Reserves1,400 (thousands of ounces) Gold Equivalent Gold Silver Wheaton Silver Purchase Agreement1,2001,000 800 600 400 200 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1. Gold equivalent ounces calculated on silver price received ie spot price from 1998-2004 and silver stream agreement price of ~$4/oz from 2005-2010 13
  • 14. Established Infrastructure TSX:PRECENT INVESTMENTS: MILL EXPANDED 2002: 1,400 tpd to 2,100 tpd NEW DRY TAILINGS SYSTEM 2,700 tpd going to 3,000 tpd HYDRO PLANT 7MW reduced cost from $0.11 per kWh to $0.015 Potentially expanding to 14MW 14
  • 15. Optimization & Expansion TSX:PINCREASE MINE DEVELOPMENTKey to production growthOPERATE MILL AT DESIGN CAPACITYCurrent:1,600-1,800 tpd, Design: 2,100 tpdEXPAND MILL TO 2,500 TPD BY 2013Mill: 2,100 tpd, Leach: 2,500 tpdPOTENTIAL EXPANSION BEYOND 2,500 tpd2011 review 15
  • 16. Growth TSX:P
  • 17. Significant Exploration Upside TSX:POver 100 known veins in district225 km2 land packageNew high-grade zone called Sinaloa Graben discovered in 2009Aggressive 2011 exploration budget:  $12 million  54,000 metres diamond drilling – 30% more than 2010 levels  3,800 metres exploration drifting – 11 times 2010 levels 17
  • 18. Sinaloa Graben Key to Growth TSX:P Sinaloa Graben million ounce resource potential  Only 27,000 ounces included in Reserves at Dec. 31, 2009 Higher Grade:  Average reserve grades of 4.8 g/t Au, 339 g/t Ag  Sinaloa Graben results show ~6.0 – 10.0 g/t Wider:  Current average mining width ~1.5m  Sinaloa Graben results show ~3.0 – 8.0m 2011 Target:  Drift through Roberta, Robertita (main production veins in adjacent Central Block)  Significantly increase Sinaloa Graben reserves and resources 18
  • 19. San Dimas Higher Grade Sinaloa Graben DDH Ag g/t Au g/t mRO-16-02 132RO-20-05 514 3.27 4.23 1.43 1.27 SAN FRANCISO N CULEBRA Arana CANDELARIA 7 Hanging Wall Tayoltita Mine DDH Ag g/t Au g/t m A-25-217(1) 778 7.9 0.80DDH Ag g/t Au g/t m HW-4G-01B 302 8.7 0.60MAR-9-17 514 8.86 2.45 6 BLENDITA DDH Ag g/t Au g/t m CORONADO PATRICIASOL-9-02 549 10.67 1.81 5 Santa Rita 3 4 mine 5 HERMANOS LEGEND DDH Ag g/t Au g/t m EL SOLPIL 7-01 508 16.0 2.90 Ag-Au High S. ANTONIO 2 Mill West MINE Grade Trend Block 1 TAYOLTITA Proposed Tunnel San Antonio TOWN mine Tunnel Budget 2011 Tunnel done VeinDDH Ag g/t Au g/t m FaultTGS-S-22 958 6.81 8.56 TownTGS-S-15 403 8.08 7.52 Mill Dev Ag g/t Au g/t m VERDOSA 0 1 2 kmRAMP7-129W 1,115 10.30 2.75 Piaxtla River (Source: San Dimas Geological Office) 19
  • 20. The Value Proposition
  • 21. Unlocking Value TSX:P Market Capitalization BMO 2011E Production & Cash Cost 2010 to 2012 CFPS Growth ($B) (000 AuEqoz & $/AuEqoz)1 (Consensus %)2 $4.0 500 $800 1000% 450 900% $3.5 $700 400 800% #REF! $3.0 $600 Market Capitalization ($B) 350 700% $2.5 $500 300 600% $422 $2.0 250 $400 500% 200 400% $1.5 $300 144 150 300% $1.0 $200 100 200% $0.5 $0.4 $100 50 100% $0.0 0 $- 0% Primero Alamos New Gold Minefinders* Gammon Jaguar* Alamos Gammon Primero New Gold Minefinders* Jaguar* Alamos Gammon Primero Jaguar Minefinders New Gold1. Estimates based on BMO Capital Markets research (except for names noted with “*” which are based on company reports and street estimates); BMO prices: Gold Price: 2011: $1,350, 2012: $1,300, 2013: $1,150, 2014: $1,000, LT: $1,000; Silver Price: 2011: $23.00, 2012: $21.00, 2013: $17.75, 2014: $15.50, LT: $15.00. Cash cost based on total cash cost per gold equivalent ounce2. Consensus data source Thomson One. 21Note: As of Jan 10, 2011
  • 22. 2011 Objectives TSX:P12345678 22
  • 23. APPENDICES
  • 24. Transaction Overview TSX:P1. $510 million structured as: $216 million in cash $184 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 share 24
  • 25. Strong Management & Board TSX:PWade Nesmith | Executive Chairman Robert A. Quartermain Founder of Mala Noche Former President, Silver Standard Director of Vista Gold Corp. and Canplats Resources Founding and current director of Silver Wheaton, Chairman of Geovic Mining and Grant Edey Selwyn Resources Director of Breakwater Resources and former director of Queenstake Resources, Santa Cruz Gold Former CFO, IAMGOLDJoseph F. Conway | President & C.E.O. Former CEO, President and Director of Timo Jauristo IAMGOLD from 2003 to 2010 EVP, Corporate Development, Goldcorp Rohan HazeltonEduardo Luna | President, Mexico VP, Finance, Goldcorp Former Chairman and CEO of Silver Wheaton, David Demers Executive VP of Goldcorp and Luismin S.A. de Founder, CEO and Director Westport Innovations C.V. (San Dimas) and President of Mexican Director of Cummins Westport and Juniper Engines Mining Chamber and the Silver Institute Michael Riley Chartered accountant with more than 26 years of accounting experience Audit committee chair B.C. Lottery Corporation and Seacliff Construction 25
  • 26. District Wide Upside – Long Section TSX:P 2011 PrioritySW NE San Antonio Sinaloa Graben Central Block Tayoltita Block Arana West Block Castellana and3,000 m. Block Robertas Hanging Wall 3,000 m.2,000 m. 2,000 m.1,000 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 26
  • 27. Sinaloa GrabenHigher Grade and Wider Widths Sinaloa Graben Tunnel: Julieta - Sinaloa Norte vein (San Salvador system) Sinaloa Mine Sinaloa Graben San Salvador ( Central Block ) (San Antonio Area) 7-660 L NE SW Ag g/t Au g/t m 189 3.13 1.24 1,000 m 1,000 m 500 m 500 m San Luis Tunnel Elev San Luis Tunnel Santa Anita Tunnel 0m 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 2010 Proven Ore Drifting Plan M E T E R S Probable Ore Drifting Plan 2010 Probable Ore by Drilling Drifting Done 27
  • 28. PRIMERO MINING CORP.Richmond Adelaide Centre120 Adelaide Street West, Suite 1202Toronto, ON M5H 1T1T 416 814 3160 F 416 814 3170TF 877 619 3160Email: info@primeromining.comINVESTOR RELATIONSTamara BrownVice President, Investor RelationsT 416 814 3168tbrown@primeromining.com The ‘New’ Americas Gold Play