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Primero bmo presentation final

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Primero bmo presentation final

  1. 1. Focused on Production Focused on Growth BMO Capital Markets 2012 Global Metals & Mining Conference February 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$250 million market capitalization Gold-Silver Mine DURANGO MEXICOCorporate August 2010 January 2012 Acquired San Dimas • Strengthened Balance Sheet • Increased throughputHistory from Goldcorp • Listed on TSX:P, NYSE:PPP • Exploration success TSX:P | NYSE:PPP 3
  4. 4. San Dimas MineSolid Production Platform in Mining Friendly Jurisdiction MEXICO Rich History Sierra Madre Trend Produced over 11 million ounces 100 + years of gold and 590 million ounces of silver. Average gold grade of 5.1 grams per tonne and average silver grade 353 grams per tonne over last 40 years. Significant Potential 90 Over 100 known veins, very few fully % explored. High-grade central corridor open along strike and at depth. History of 90% resource to reserve conversion. Solid Production Platform San Dimas 2 X Solid production platform to build a Gold-Silver Mine diversified intermediate producer. Focused Ventanas on doubling production through Exploration Property optimization and expansion. TSX:P | NYSE:PPP 4
  5. 5. Focused on Production Increasing ThroughputMaximize Throughput (tonnes per day) 8% Ensure daily throughput at capacity (2,100 tpd) 2,000 8% Focus on mill expansionControl Costs Reduce costs per tonne 1,500 Improve productivity per man shift 2010 2011 2012EOptimize Grade Reducing Costs ($ per ounce by-product) Estimation review underway $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. Balanced Capital Structure TSX:P Exchanges NYSE:PPP~ $72M 1 Balance Sheet (estimated) Cash1 Promissory note1,3 ~$72 million $50 millionSolid Cash Balance Convertible note1,4 $30 million Ownership Goldcorp 36%$90M 2 Management & insiders Institutional & float ~3% ~61%Strong Operating Cash Flow Capital Structure Shares outstanding 88 million Fully Diluted 117 million$5M Repayment per year Market Cap. At February 21, 2012 1. C$250 million Cash at September 30, 2011 of $107 million. $30 million of convertible note paid on OctoberConservative Level of Debt 2. 19, 2011, $5 million of promissory note was paid on December 31,2011. Estimated five-year average after-tax operating cash flow based on a 2012 gold price of $1,600/oz and spot silver $30/oz, see Jan 17, 2012 Press Release. 3. Goldcorp: 5 year, 6% note repaid $5M/yr with balloon payment at end of 2015. 4. Goldcorp: 1 year, 3% note maturing August 6, 2012, convertible at any time at C$6 or on maturity at the greater of C$3.74 or 90% of the 5 day VWAP before the maturity date. TSX:P | NYSE:PPP 7
  8. 8. Strong Financial Results Increasing Earnings(US$ thousands, except per share Adjusted EPS ($ per share)amounts) Q3 2011 Q2 2011 Q1 2011 $0.10Revenues 46,079 40,830 33,988 $-Earnings from Mine Operations 22,170 18,723 10,912Net income (loss) 35,066 3,897 (7,895) $(0.10) Q1 2011 Q2 2011 Q3 2011EPS ($ per share) 0.40 0.04 (0.09) Increasing Cash Flow Op CF before changes in working capital ($ per share)Adjusted net income (loss) 5,716 395 (7,652) $0.50Adjusted EPS ($ per share) 0.06 - (0.09) $0.30Operating cash flows before 50,549 21,456 (1,521) $0.10changes in working capital $(0.10)CFPS ($ per share) 0.57 0.24 (0.02) Q1 2011 Q2 2011 Q3 2011 TSX:P | NYSE:PPP 8
  9. 9. Operating Results & Guidance Increasing Throughput (tonnes per day) 2012E 2011 8%Mill Throughput 2,050 1,950 2,000 8%(tonnes per day) 1Gold equivalent production 100,000-110,000 102,200(gold equivalent ounces)Gold production 80,000-90,000 79,600(ounces) 1,500Silver production 2010 2011 2012E 4.50-5.00 4.60(million ounces)Gold grade 3.7 3.85 Reducing Costs(grams per tonne) ($ per ounce by-product)Silver grade 225 229 $500 $87(grams per tonne) $450 $44-74 2 $400Cash cost $630-660 $640($ per gold equivalent ounce) $350 2 $300Cash cost – by-product $310-340 $384($ per gold ounce) $250 $2001 . “Gold equivalent ounces” include silver ounces converted to a gold equivalent based on estimated average realized 2010 2011 2012E commodity prices of $1,600 per ounce of gold and $9.41 per ounce of silver.2. Cash cost is a non-GAAP measure. Refer to the 2011 MD&A for a reconciliation of cash costs to operating expenses. TSX:P | NYSE:PPP 9
  10. 10. Silver Purchase AgreementAdvance tax ruling initiated in order to pay tax only on realized silver revenuePrimero 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 2015Reducing tax impact Advance tax ruling (“APA”) filed in Mexico, seeking taxes be based on realized revenue • APA ruling expected by end of 2012 • Q4 2011 Financial Statements will reflect benefit of paying tax on realized revenue, retroactive to August 6, 2010 • Cash will be retained to satisfy contingent tax liability Silver call options used to limit tax impact, designed as insurance 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 10
  11. 11. Focused onSan Dimas Growth TSX:P | NYSE:PPP
  12. 12. San Dimas: Long-Life Mining DistrictOver 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 Mined 2002 - Present 2012 Target SAN ANTONIO MINE Mined 1987 - 2002 TSX:P | NYSE:PPP 12
  13. 13. High Rate of Resource to Reserve Conversion Increased Exploration Linked to Reserve Increases San Dimas Gold Reserve Replacement (2003-2010) 1,000,000 900,000 800,000 700,000 600,000Ounces 500,000 400,000 300,000 200,000 100,000 0 Initial 2003 2004 2005 2006 2007 2008 2009 2010 End Reserve Additions Production TSX:P | NYSE:PPP 13
  14. 14. Historical Reserve & Resource Estimation 3 San Dimas Reserves & Resources Millions (Gold Ounces) Over a century of reserve replacement Total Resources (Au oz) 2P Reserves (Au oz) 2 Reserves and resources increased markedly with exploration investment 1 Inferred Resource primarily calculated based on 0 probability of mineralization in ‘Favourable Zone’ 2002 2003 2004 2005 2006 2007 2008 2009 2010 San Dimas Grade Reconciliation 80% Recent lack of reconciliation to geological model (Actual mined grade versus predicted grade) 60% 40% 20% 0% -20% Gold Grade -40% Silver Grade 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TSX:P | NYSE:PPP 14
  15. 15. Reserve & Resource UpdateFocused on Improving PredictabilityPrimero Taking New Approach:  Changing to kriging geostatistical method from polygonal method  Reducing vein extrapolation distance  Reducing area of influence around drill-holes  Reviewing the probability of mineralization in ‘Favourable Zone’ approach for Inferred Resource estimation  Introducing the terminology of ‘Mineral Potential’  Reviewing QA/QC protocolExpected results:  Improved grade reconciliation  Reclassification of ounce categories  More effective mine planning  Introduction of Measured and Indicated  More efficient expansion plan Resource categories  Improved exploration success  Reduced resource and reserve estimate TSX:P | NYSE:PPP 15
  16. 16. 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. 6.81 4.7 3,000 m. g/t average grade g/t average grade2,000 m. 3+1 1.5 2,000 m. m average width m average width1,000 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 S1. Average Sinaloa Graben grade reported in 2010 Reserve and Resource Statement2. Indicative of exploration results to date TSX:P | NYSE:PPP 16
  17. 17. 2012 Exploration Program Target Vein Extensions from Existing/Historical MinesDevelopment drifting key to expansion Increased delineation drilling 22,000 metres drifting and raise boring  36,000 metres delineation drilling Tunnels approaching Sinaloa Graben Exploration drilling remains aggressive from the east and from the south  30,000 metres diamond drilling DELINEATION D TSX:P | NYSE:PPP 17
  18. 18. 2012: Targeting Additional Discoveries 2011 Results Highlight Sinaloa Graben Potential CENTRAL BLOCK SINALOA Length Width Silver Gold 2012 GRABEN TargetDrift (m) (g/t) BLOCK1. Aranza 7-129W 79 2.2 543 5.2 2 WEST CENTRAL BLOCK Mined 2002 - Present Elia 8-285W 221 2.8 1,491 15.9 BLOCK Elia 8-359W 69 2.2 668 8.1 6 2012 52. Rob 21-822E 167 3.0 686 13.8 4 TargetDrill Hole SAN ANTONIO3. TGS-S-22 8.6 958 6.8 Mined 1987 - 2002 TGS-S-15 7.5 403 8.1 34. PIL 7-01 2.9 508 16.0 15. SOL-9-02 1.8 549 10.76. MAR-9-17 2.4 514 8.9 LEGEND LEGEND TSX:P | NYSE:PPP 18
  19. 19. Re-Evaluating Geological Model Testing for Second ‘Boiling Zone’Historical Geological Model Recognized One Boiling Zone 300-600 metres of vertical extentGeologic Concept of Second Boiling Zone Running parallel and 150-200 metres below first zone If proven, would significantly increase exploration potential TSX:P | NYSE:PPP 19
  20. 20. Mill Expansion OpportunityMill Expansion Depends of Mine DevelopmentMill Crushing Capacity is 2,100 tpdThird Ball Mill On-Site to expand to up to 3,000 tpd Engineering design commenced Targeting expansion decision by Q3 2012Mill Leaching Capacity is already 2,500 tpdTailings Filter Expansion Completed Capacity 3,300 tpd Third Dry Tailings Filter Completed 3,300 tpd TOTAL CAPACITY TSX:P | NYSE:PPP 20
  21. 21. Mine Expansion Opportunity Expansion Subject to Exploration Results, Delineation Drilling and Detailed EngineeringROBERTITA CROSS SECTION Sinaloa Graben Central Block 2012 EXPLORATION Mined 2002-Current 2012 2012 TARGET TARGET 2012 TARGET Extending north into Sinaloa Extending west into Sinaloa Expansion would justify Graben. Expected to approach Graben. Expected to reach Guamuchil Tunnel extension, Robertita level by end of Q1 Limoncito Fault by end of Q1 creating two haulage levels TSX:P | NYSE:PPP 21
  22. 22. 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 22
  23. 23. Appendices TSX:P | NYSE:PPP 23
  24. 24. Executive Management Joseph F. Conway | President & C.E.O. 1 David Sandison | VP Corporate Development  Former CEO, President and Director of IAMGOLD  Former VP, Corporate Development of from 2003 to 2010 Clarity Capital  Former President, CEO and Director of Repadre  Former Director, Corporate Development Capital from 1995 to 2003 Xstrata Zinc Canada , Director Business Development, Noranda/Falconbridge  Former EVP, Noranda Chile Renaud Adams | C.O.O. Joaquin Merino | VP Exploration  Former SVP, American Operations for IAMGOLD  Former VP, Exploration of Apogee Minerals  Former General Manager of Rosebel Gold Mine  Former exploration manager for Placer Dome 2007 to 2010 at Porgera Mine  Former General Manager El Toqui Mine in Chile and then the El Mochito Mine in Honduras David Blaiklock | C.F.O. Tamara Brown | VP Investor Relations  Former controller IntraWest  Former Director Investor Relations for IAMGOLD  Previously controller for a number of public and  Former partner of a Toronto based, boutique private companies in real estate development investment bank  Former professional engineer in mining industry Board Committees: 1.Health, Safety and Environment TSX:P | NYSE:PPP 24
  25. 25. Board of Directors Wade Nesmith | Chairman Rohan Hazelton | Director 1,5 Robert Quartermain | Director 2,3  Founder of Mala Noche  VP, Finance, Goldcorp  Founder and President & CEO,  Founding and current director  Formerly with Wheaton River Pretium Resources of Silver Wheaton, Chairman of and Deloitte & Touche LLP  Former President, Silver Standard Geovic Mining and Selwyn  Director of Vista Gold Corp. Resources 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  Audit committee chair B.C. Resources Corp. Lottery Corporation and Seacliff Construction 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 25
  26. 26. 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