(Please note that all dollar amounts in this news release are
expressed in U.S. dollars unless otherwise indicated.)
Primero Mining Corp. (“Primero” or the “Company”)
(TSX:P) today announced its updated year-end 2017 Mineral Reserves
and Mineral Resources.
Primero commenced a strategic review process in
early 2017 that resulted in the sale of the Black Fox Complex in
October 2017 and the sale of the Cerro del Gallo development
project in November 2017. In January 2018 the Company also
announced that it had entered into the Arrangement Agreement
whereby First Majestic will acquire all of the issued and
outstanding common shares of Primero. The transaction is
expected to close in or around April 2018, subject to applicable
regulatory approvals and the satisfaction of other customary
conditions.
Primero’s Mineral Reserves and Mineral Resources
as at December 31, 2017 include the San Dimas mine and adjacent
Ventanas exploration property in Durango, Mexico.
Total Proven and Probable Mineral Reserves at
December 31, 2017 were 495,000 ounces of contained gold and 39.7
million ounces of contained silver. Total Measured and
Indicated Mineral Resources at year-end 2017 were 823,000 ounces of
contained gold and 62.2 million ounces of contained silver.
Total Inferred Mineral Resources at December 31, 2017 were 799,000
ounces of contained gold and 73.9 million ounces of contained
silver.
The year-end 2017 Mineral Resource and Mineral
Reserve estimates were completed internally with applied metal
prices of $1,200 per ounce of gold and $17.00 per ounce of silver,
and foreign exchange rates of 18.00 Mexican pesos per US
dollar. The San Dimas Mineral Resources are calculated
inclusive of Mineral Reserves.
San Dimas
San Dimas Proven and Probable Mineral Reserves
at December 31, 2017 totalled 4.1 million tonnes grading 3.8 grams
per tonne (“g/t”) gold and 304 g/t silver with 495,000 ounces of
contained gold and 39.7 million ounces of contained silver.
This represents a decrease of 22,000 ounces of gold and 1.5 million
ounces of silver from year-end 2016. The decrease is
primarily attributable to 2017 mining depletion, materially offset
by successful drilling results.
The Company has applied a two-pass cut-off grade
at San Dimas. Firstly, an all-in sustaining cost cut-off
grade was applied to highlight areas for inclusion in the Mineral
Reserve, followed by the application of an operating cost cut-off
grade to highlight additional incremental material for potential
inclusion. The all-in sustaining cost cut-off grade applied
was unchanged from 2016, at 3.22 g/t gold equivalent (“AuEq”) and
considers direct operating costs and sustaining capital
costs. The operating cut-off grade next applied was also
unchanged from 2016, at 2.22 g/t AuEq and considers direct
operating costs only.
San Dimas Measured and Indicated Mineral
Resources at December 31, 2017 totalled 4.9 million tonnes grading
5.1 g/t gold and 385 g/t silver with 811,000 ounces of gold and
60.9 million ounces of silver contained, inclusive of Mineral
Reserves. Inferred Resources totalled 6.9 million tonnes
grading 3.5 g/t gold and 319 g/t silver with 782,000 ounces of gold
and 70.9 million ounces of silver contained.
Table 1: Total Mineral Reserves and Mineral Resources as
at December 31, 2017
Classification |
Property |
Tonnage(Mt) |
Gold Grade(g/t) |
Silver Grade(g/t) |
Contained Gold(koz) |
Contained Silver(koz) |
Mineral Reserves |
|
|
|
|
|
|
Proven
& Probable |
San
Dimas |
4.1 |
3.8 |
304 |
495 |
39,662 |
Total Proven & Probable |
|
|
|
|
495 |
39,662 |
Mineral Resources |
|
|
|
|
|
|
Measured & Indicated |
San
Dimas |
4.9 |
5.1 |
385 |
811 |
60,936 |
Measured & Indicated |
Ventanas |
0.2 |
2.5 |
258 |
12 |
1,286 |
Total Measured & Indicated |
|
|
|
|
823 |
62,222 |
Inferred Resources |
San
Dimas |
6.9 |
3.5 |
319 |
782 |
70,859 |
Inferred Resources |
Ventanas |
0.2 |
2.3 |
412 |
17 |
3,039 |
Total Inferred Resources |
|
|
|
|
799 |
73,898 |
NOTES TO THE MINERAL RESERVE AND MINERAL
RESOURCE STATEMENTS
- Mineral Reserves and Mineral Resources estimated as of December
31, 2017.
- San Dimas and Black Fox Complex Resources are calculated
inclusive of Reserves.
- Figures may not add due to rounding.
Notes to the San Dimas Mineral Reserve
Statement:
- Assumed gold price of US$1,200 per troy ounce and silver price
of US$17 per troy ounce.
- A two-pass cut-off grade was applied at San Dimas; first-pass
of 3.22 g/t gold equivalent based total all-in costs of $118.00/t
($81/t direct costs and $37/t sustaining capital), and second-pass
of 2.22 g/t gold equivalent based on direct operating costs
only. Metal supply contract obligations have been referenced
in determining overall vein reserve estimate viability.
- Assumed processing recovery factors at San Dimas for gold of
95% and silver of 92% have been used in the calculation of the
cut-off grade.
- Exchange rate assumed is MXN$18.00/US$1.00.
- The Mineral Reserve estimates for San Dimas Mine set out in the
table above have been reviewed and approved by Mr. Patrick McCann,
P.Eng., Principal Engineer, Primero and a Qualified Person ("QP")
for the purposes of National Instrument 43-101 (“NI 43-101”).
- Mineral Reserves do not consider the silver purchase agreement
which exists with Wheaton Precious Metals Corp. (“WPM”) such that
the first 6.0 million ounces per annum of silver produced by the
San Dimas mine, plus 50% of the excess silver above this amount,
must be sold to WPM at the lesser of $4.32 per ounce (adjusted by
1% per year) and market prices.
Notes to the San Dimas Mineral Resource
Statement:
- Mineral Resources are total and include those resources
converted to Mineral Reserves
- Assumed gold price of US$1,200 per troy ounce and silver price
of US$17 per troy ounce.
- San Dimas cut-off grade of 2.0 g/t gold equivalent was
applied.
- The Mineral Resource estimates for the San Dimas Mine set out
in the table above have been reviewed and approved by Mr. Dave
Laudrum, P.Geo., Senior Resource Manager, Primero and a QP for the
purposes of NI 43-101.
Notes to the Ventanas Mineral Resource
Statement:
- As reported in the technical report entitled "Technical Report
On The Ventanas Epithermal Silver-Gold Property Durango State
Mexico For Mala Noche Resources Corp." (the "Technical Report")
with an effective date of January 27, 2009. The Qualified Person
for the report was Ian Trinder, Associate Geologist with Howe
(Canada) and qualified person for the purposes of NI 43-101.
Qualified Person
The scientific and technical content of this
news release have been reviewed by Mr. David Laudrum, P.Geo.,
Senior Resource Manager for Primero, who is a "Qualified Person" as
defined by National Instrument 43-101 - Standards of Disclosure for
Mineral Projects ("NI 43-101").
Quality Control
San Dimas drilling and sampling was conducted by
Primero's exploration team. All drill-hole samples at San
Dimas and Lechuguilla are 1/2 core and analyses reported herein
were performed in the ISO certified independent laboratory SGS
Servicios Minerales in Durango Mexico, using fire assay with atomic
absorption finish or gravimetric finish for values over 10 g/t
gold. Intercepts cited represent true widths and drilling is
generally intersecting interpreted mineralized zones at a high
angle. Primero's quality control program includes systematic
insertion of blanks, standard reference material and 5% of rejects
are re-assayed to ensure laboratory accuracy. Generally, in a block
of twenty samples one will be a standard and one will be a
blank.
About Primero
Primero Mining Corp. is a Canadian-based
precious metals producer that owns 100% of the San Dimas
gold-silver mine in Mexico.
Primero’s website is
www.primeromining.com.
For further information, please contact:
Investor RelationsTel: (416)
814-3160info@primeromining.com
CAUTIONARY NOTE TO UNITED STATES INVESTORS
CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES
AND RESERVE ESTIMATES
The mineral reserve estimates in this news
release have been prepared in accordance with NI 43-101 and the
Canadian Institute of Mining, Metallurgy and Petroleum
classification systems, as required by Canadian securities
regulatory authorities. These standards differ significantly from
the requirements of the United States Securities and Exchange
Commission (the “SEC”), and reserve and resource estimates
disclosed in this news release may not be comparable to similar
information disclosed by U.S. companies. For United States
reporting purposes, SEC Industry Guide 7 under the United States
Securities Exchange Act of 1934, as amended, as interpreted by
Staff of the SEC, applies different standards in order to classify
mineralization as a reserve. As a result, the definition of
“proven and 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” unless the
determination has been made that the mineralization could be
economically and legally produced or extracted at the time the
reserve determination is made. Among other things, all
necessary permits would be required to be in hand or issuance
imminent in order to classify mineralized material as reserves
under the SEC standards. Accordingly, mineral reserve estimates
contained in this news release may not qualify as “reserves” under
SEC standards.
In addition, this news release uses the terms
“measured and indicated resources” and “inferred resources” to
comply with the reporting standards in Canada. The Company
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 mineral reserves.
Further, “inferred resources” have a great amount of uncertainty as
to their existence and as to whether they can be mined legally or
economically. Therefore, United States investors are also cautioned
not to assume that all or any part of the “inferred resources”
exist. In accordance with Canadian securities laws, estimates
of “inferred resources” cannot form the basis of feasibility or
other economic studies. It cannot be assumed that all or any
part of “measured and 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 as
in 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 exploration provided that the
disclosure (i) states with equal prominence that the potential
quantity and grade is conceptual in nature, that there has been
insufficient exploration 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 included in this news release. United States investors
are cautioned that disclosure of such exploration potential is
conceptual in nature by definition and there is no assurance that
exploration will result in any category of NI 43-101 mineral
resources being identified.
CAUTIONARY STATEMENT ON FORWARD-LOOKING
INFORMATION
This news release contains "forward-looking
statements", within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and applicable Canadian
securities legislation, concerning the business and operations of
Primero Mining Corp. and its consolidated subsidiaries
(collectively, "Primero" or the "Company"). All statements, other
than statements of historical fact, are forward-looking statements.
Generally, forward-looking statements can be identified by the use
of forward-looking terminology such as "plans", "expects", "is
expected", "forecasts", "intends", "anticipates", "believes", or
variations of such words and phrases or statements that certain
actions, events or results "are anticipated", "may", "could",
"would", "might" or "will", or similar statements or the negative
connotation thereof. Forward-looking information is also
identifiable in statements of currently occurring matters which
will continue in future, or other statements that may be stated in
the present tense and are not historical facts.
Forward-looking statements in this news release
include, but are not limited to, the expected timing to closed the
transaction whereby First Majestic will acquire all of the issued
and outstanding common shares of the Company, statements regarding
the Company's estimation of mineral reserves and resources and the
realization of mineral reserve estimates (including all
assumptions), the ability to identify new resources and convert
resources into reserves and resources, the ability to access or
find ore below the current mining level, the timing, nature and
success of exploration activities.
The assumptions made by the Company in preparing
the forward-looking information contained in this news release,
which may prove to be incorrect, include, but are not limited to:
the expectations and beliefs of management; the specific
assumptions set forth above in this news release; that the
transaction with First Majestic will be approved by the Company’s
shareholders and that all regulatory approvals will be timely
received, that there are no significant disruptions affecting
operations; that the Company does not change its development and
exploration plans; that the exchange rate between the Canadian
dollar, Mexican peso and the United States dollar remain consistent
with current levels or as set out in this news release; that prices
for gold and silver remain consistent with the Company's
expectations; that production meets expectations; that there are no
material variations in the current tax and regulatory environment
or the basis for the calculation of the Company’s income tax
(including as a result of the current challenge to the advance
pricing agreement); that the political environment within Mexico
and Canada will continue to support the development of
environmentally safe mining projects.
Forward-looking statements are subject to known
and unknown risks, uncertainties and other important factors that
may cause the actual results, performance or achievements of
Primero to be materially different from those expressed or implied
by such forward-looking statements, including: regulatory approvals
may be delayed or denied, the Company may not be able to achieve
planned production levels; the Company may not be able to generate
significant free cash flow; the Company may not be able realize
anticipated production levels; the exchange rate between the
Canadian dollar, the Mexican peso and the United States dollar may
change with an adverse impact on the Company's financial results.
Certain of these factors are discussed in greater detail in
Primero's annual report on Form 40-F on file with the U.S.
Securities and Exchange Commission, and its most recent Annual
Information Form on file with the Canadian provincial securities
regulatory authorities and available at www.sedar.com.
Should one or more of these risks and
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described
in forward-looking statements. In addition, although Primero has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that such
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking statements.
Forward-looking statements are made as of the
date hereof and accordingly are subject to change after such date.
Forward-looking statements are provided for the purpose of
providing information about management's current expectations and
plans and allowing investors and others to get a better
understanding of our operating environment. Primero does not
undertake to update any forward-looking statements that are
included in this document, except in accordance with applicable
securities laws.