TORONTO, ON — (Marketwired) — 11/14/17 — (Please note that all dollar amounts in this news release are expressed in U.S. dollars unless otherwise indicated. Refer to the Q3 2017 management’s discussion and analysis (“MD&A”) and financial statements for more information.)
Primero Mining Corp. (“Primero” or the “Company”) (TSX: P) today reported operating and financial results for the third quarter ended September 30, 2017.
- Financial Results: The Company recognized a net loss of $7.6 million in Q3 2017 compared to a net loss of $11.7 million in Q3 2016. Adjusted net income1 was $1.8 million ($0.01 per share) for Q3 2017, compared to adjusted net loss of $7.9 million ($0.04 per share) for Q3 2016. Primero generated operating cash flow before working capital changes during Q3 2017 of $13.5 million ($0.07 per share).
- Q3 2017 Production: Total production of 36,602 gold equivalent ounces2, comprised of 20,537 gold equivalent ounces ounces from San Dimas, and 16,065 gold ounces from Black Fox, compared to 35,965 gold equivalent ounces in Q2 2017 and 44,684 gold equivalent ounces in Q3 2016. Consolidated Q3 2017 total cash costs3 were $857 per gold equivalent ounce, with consolidated all-in sustaining costs4 (“AISC”) of $1,235 per gold ounce.
- San Dimas Operations: San Dimas produced 17,070 ounces of gold and 1.05 million ounces of produced silver compared to 11,903 ounces of gold and 0.97 million ounces in Q2 2017. San Dimas continued to implement its phased restart throughout the quarter, despite delays early in the quarter related to the 2016 annual workers’ bonus negotiations, underground mining rates increased month-over-month during the quarter.
- Black Fox Sale Complete: Black Fox produced 16,065 ounces of gold in Q3 2017 (all attributable to Primero), compared to 16,230 ounces in Q3 2016. Primero closed the sale of the Black Fox Complex on October 6, 2017. After closing net working capital adjustments and release of cash collateral previously securing environmental closure liabilities, Primero expects to receive total consideration of $32.5 million. The net amount received is being applied to the Company’s revolving credit facility (“RCF”) with all amounts other than the cash collateral amount being a permanent reduction of the RCF.
- VAT Refunds Add to Cash Position: The Company continued a dialogue with the the Servicio de Administración Tributaria (“SAT”) during the quarter to seek to a resolution of its tax matters in Mexico. The Company received VAT refunds from the SAT of $4.6 million during Q3 2017. In October 2017, a further $10.6 million of VAT refunds were received. The Company’s cash position as of September 30, 2017 was $14.9 million, and as of October 31, 2017 was approximately $22 million.
- Strategic Process Ongoing: The Company continues to explore alternatives to maximize stakeholder value related to its San Dimas mine in Mexico. Primero has received proposals from interested parties regarding a potential acquisition of the San Dimas operation. All proposals received require a revision of the silver purchase agreement (“SPA”) with Wheaton Precious Metals Corp. (“WPM”), formerly Silver Wheaton Corp. Discussions are now focused on the distribution of potential proceeds among stakeholders. The Company’s RCF matures on November 23, 2017 and any extension will likely require the consent of WPM as guarantor of the RCF. There can be no certainty that these discussions will result in a resolution acceptable to all stakeholders.