Primero Reports Third Quarter 2012 Results; and Maintains

Primero Reports Third Quarter 2012 Results; and Maintains Annual
Production Guidance 
TORONTO, ONTARIO -- (Marketwire) -- 11/08/12 --  
(Please note that all dollar amounts in this news release are
expressed in U.S. dollars unless otherwise indicated. Refer to the
third quarter 2012 management discussion and analysis ("MD&A") and
unaudited financial statements for more information.) 
Primero Mining Corp. ("Primero" or the "Company") (TSX:P)(NYSE:PPP)
today reported financial results for the third quarter ended
September 30, 2012. The Company reported net earnings of $11.6
million ($0.12 per share) and operating cash flows(2) of $16.2
million ($0.17 per share).   
"Primero has been transformed since the end of the second quarter
2012," stated Mr. Joseph F. Conway, President and Chief Executive
Officer. "With a successful advance tax ruling, we have eliminated a
significant liability for Primero and dramatically improved our
silver leverage. This, combined with the decision to expand the San
Dimas mine and mill to 2,500 tonnes per day by the end of the first
quarter of 2014 with a very low capital cost, resulted in a
significant share price improvement for our shareholders. We have
remained focused on operating improvements at San Dimas, with year to
date operating cash flow up 14% compared to last year, while the gold
price has risen only 8%. Production in the third quarter was slightly
impacted by delayed development as a result of power interruptions.
We are very encouraged by the initial results of our optimization
program that began in the third quarter with the San Dimas mill
operating at above its nameplate capacity in the month of October and
lower mining dilution rates are being observed. We remain confident
in our production guidance for 2012 and continue to expect to produce
more than 110,000 gold equivalent ounces."  
Third Quarter Highlights: 


 
--  Production: Production of 18,890 ounces of gold and 1.14 million ounces
    of silver at cash costs of $699 per gold equivalent ounce; 
    
--  Silver Sales at Spot Prices: Primero sold 246,230 ounces of silver at
    spot prices in the third quarter, resulting in 716,230 ounces of silver
    being sold at spot prices in 2012; 
    
--  Cash Position Increases: Cash balance increased to $133.1 million at
    September 30, 2012, from $125.7 million at June 30, 2012; 
    
--  Reserves and Resources Increased: Mid-Year Reserve and Resource update
    indicated the Company replaced six month gold depletion by 265%; 
    
--  Convertible Note Repaid: Primero repaid the outstanding $30 million
    convertible note, issuing 8,422,460 common shares to Goldcorp who
    subsequently sold them in a secondary offering on a bought deal basis; 
    
--  Production Guidance Maintained: Primero expects to achieve the mid to
    low end of its annual production guidance range of 110,000 to 120,000
    gold equivalent ounces. 

 
Subsequent to Third Quarter: 


 
--  Positive Advance Tax Ruling: Mexican tax authorities confirmed the
    Company can record revenues and taxes from sales under the silver
    purchase agreement(5) at realized prices; 
    
--  San Dimas Expansion Announced: The Company announced the expansion of
    the San Dimas mine and mill to 2,500 tonnes per day ("TPD") by end of
    the first quarter 2014, with a project IRR of 150%. 

 
Strong Throughput Continues  
Primero produced 25,580 gold equivalent ounces(3) during the third
quarter of 2012 or 18,890 ounces of gold and 1.14 million ounces of
silver, 3% less and 4% more, respectively, than the same period in
2011. The decrease in gold production was due to a 5% decrease in
throughput primarily due to the processing of stockpiled ore in the
third quarter 2011 following a second quarter 2011 mill worker
stoppage and power interruptions in the third quarter 2012 which
impacted development rates. Mill throughput during the third quarter
was 2% higher than the second quarter 2012.   
Grades were slightly higher in the third quarter 2012 than the third
quarter 2011. Gold and silver grades were lower in the third quarter
2012 than the second quarter and first quarter 2012. This was
partially due to mining lower grades than planned as a result of the
lack of access to higher grade ore due to safety concerns. Remote
access equipment has been delivered to site and mining of higher
grade pillars expects to continue in the fourth quarter.  
Total cash costs(4) on a gold equivalent and by-product basis in the
third quarter 2012 were $699 and $363 per ounce respectively,
compared with $641 and $222 per ounce in the third quarter 2011.
Operating costs between the two periods remained relatively
consistent. Average realized silver prices were 19% higher in 2011
than 2012, which decreased gold equivalent ounces of silver and
silver by-product credits by 16% and 17%, respectively, in 2012
compared with 2011.   
Earnings Impacted by Delayed Sales  
Revenue was $38.3 million for the three months ended September 30,
2012 as a result of selling 17,100 ounces of gold at an average
realized price of $1,646 per ounce, and 1.05 million ounces of silver
at an average realized price of $9.66 per ounce. Revenue was $46.1
million for the same period in 2011 from selling 19,659 ounces of
gold at an average realized price of $1,668 per ounce and 1.11
million ounces of silver at an average realized price of $12.00 per
ounce. Sales in the third quarter of 2012 were 9% less than
production due mainly to a broken crucible that delayed a shipment of
dore to the refinery. The Company plans to sell these ounces during
the fourth quarter.  
The Company reached the 3.5 million ounce annual threshold under the
silver purchase agreement(5) at the end of April 2012, and
subsequently sold 246,230 ounces of silver at an average price of
$27.70 in the three months ended September 30, 2012. In the prior
year, the 3.5 million annual threshold was met at the end of May and
the Company subsequently sold 251,159 ounces of silver at an average
price of $39.03 in the third quarter 2011. Between August 6, 2012
(the silver purchase agreement annual threshold renewal date) and
September 30, 2012, the San Dimas mine produced 721,235 ounces of
silver, to be sold to Silver Wheaton Caymans under the silver
purchase agreement.  
The Company earned net income of $11.6 million ($0.12 per share) in
the third quarter of 2012 compared with net income of $16.5 million
($0.19 per share) in 2011. Income taxes in 2012 reflect the benefit
of the positive Advance Pricing Agreement ("APA") filing in October
2011, which was validated by the receipt of a positive ruling in
October 2012. The ruling confirmed the Company's Mexican subsidiary
can record revenue and taxes from sales under the silver purchase
agreement at realized prices rather than spot prices from August 6,
2010. Adjusted net income for 2012 was $2.6 million ($0.03 per share)
compared with $11.6 million ($0.13 per share) for 2011. Both 2012 and
2011 adjusted net income includes the reversal of the impact of
foreign exchange on deferred income tax assets and liabilities(8).
The 2011 adjusted net income includes the benefit of the APA ruling,
as well as the reversal of the tax savings as a result of foreign
exchange losses on an intercompany loan, the transaction break-fee
(net of transaction costs) and unrealized foreign exchange gains and
finance income on the VAT receivable from the Mexican government
relating to the acquisition of the San Dimas mine.  
Operating cash flow before working capital changes in the third
quarter of 2012 were $16.2 million ($0.17 per share), compared to
$40.8 million ($0.46 per share) in 2011.   
Revenue was $139.3 million for the nine months ended September 30,
2012 as a result of selling 64,980 ounces of gold at an average
realized price of $1,643 per ounce, and 3.76 million ounces of silver
at an average realized price of $8.65 per ounce. Revenue was $120.9
million for the same period in 2011 from selling 59,002 ounces of
gold at an average realized price of $1,524 per ounce and 3.52
million ounces of silver at an average realized price of $8.81 per
ounce.   
The Company earned net income of $48.3 million ($0.54 per share) in
the nine months ended September 30, 2012 compared with net income of
$18.4 million ($0.21 per share) in the nine months ended September 30
2011. Adjusted net income for the nine months ended September 30,
2012 was $36.8 million ($0.41 per share), compared to adjusted net
income of $18.8 million ($0.21 per share) for the same period in
2011. The 2011 adjusted net income includes the benefit of the APA
ruling, as well as the reversal of the tax savings as a result of
foreign exchange losses on an intercompany loan, the transaction
break-fee (net of transaction costs) and realized foreign exchange
gains and finance income on the VAT refund collected from the Mexican
government related to VAT paid on the acquisition of the San Dimas
mine. Both 2012 and 2011 adjusted net income also includes the
reversal of the impact of foreign exchange on deferred income tax
assets and liabilities.  
Operating cash flow before working capital changes for the first nine
months of 2012 was $72.4 million ($0.81 per share), up from $63.5
million ($0.72 per share) in the first nine months of 2011.  
Cash Position Continues to Increase  
The Company's cash position increased to $133.1 million at September
30, 2012 from the June 30, 2012 balance of $125.7 million. Capital
expenditures during the third quarter 2012 totaled $7.9 million and
were spent mainly on underground development and exploration.   
Positive Advance Tax Ruling  
On October 4, 2012, the Company received a positive ruling from the
Mexican tax authorities (Servicio de Administracion Tributaria) on
its APA filing made in October 2011. The ruling confirmed that the
Company's Mexican subsidiary appropriately records revenue and taxes
from sales under the silver purchase agreement at realized prices
rather than spot prices effective from August 6, 2010.  
Under Mexican tax law, an APA ruling is generally applicable for up
to a five year period. For Primero this applies to the fiscal years
2010 to 2014. Assuming the Company continues to sell silver under the
silver purchase agreement on the same terms and there are no changes
in the application of Mexican tax laws relative to the APA ruling,
the Company expects to pay taxes on realized prices for the life of
the San Dimas mine.  
Convertible Note Re-Paid in Shares  
On July 24, 2012, the Company's board of directors resolved to repay
the remaining $30 million Note on its maturity date of August 6,
2012, in common shares. The conversion price was Cdn$3.74, being the
greater of the 90% of the volume weighted average trading price of
the Company's common shares for the five trading days ended August 6,
2011 and August 6, 2012. In accordance with the terms of the Note,
the Note was translated into Canadian dollars at Cdn$1.05 to US
$1.00. Accordingly the number of shares to be issued to Goldcorp was
8,422,460; these shares were issued on August 7, 2012.   
Goldcorp Secondary Offering  
On September 24, 2012, Primero entered into an underwriting agreement
together with Goldcorp and a syndicate of underwriters led by Scotia
Capital Inc. ("the Underwriters"). Pursuant to the underwriting
agreement, the Underwriters purchased 8,422,460 common shares of
Primero held by Goldcorp on a bought deal basis at an offering price
of C$5.25 per share. Immediately prior to the sale of shares,
Goldcorp owned 39,573,660 common shares of Primero representing in
the aggregate 40.9% of the issued and outstanding common shares of
the Company. After giving effect to the offering, Goldcorp owns
31,151,200 common shares of Primero, representing approximately 32.2%
of the outstanding common shares of the Company. Primero did not
receive any proceeds from this offering, and all of the expenses of
the offering were paid by Goldcorp. The remaining 31,151,200 common
shares of Primero held by Goldcorp upon completion of the offering
will continue to be held by Goldcorp subject to the original three
year lock-up period that commenced on August 6, 2010.  
Optimization Program Delivers Promising Results  
The Company initiated an optimization program in the third quarter of
2012. The Company's aim is to expand throughput to the current
milling capacity of 2,150 TPD (or 2,300 TPD based on 94%
availability) exclusively through productivity improvements by the
end of first quarter of 2013.   
The optimization program has a 30-week implementation period and a
strategic focus on reducing process variation and increasing
throughput. Since its initiation the optimization program has
successfully increased average throughput rates from 1,915 TPD in the
second quarter 2012 to 1,950 TPD in the third quarter.  
The optimization program has also been successful at improving mining
dilution rates, with October dilution estimated at approximately 30%,
down from the average 55% estimated in 2011 by an external consulting
firm.  
Dilution control represents a significant opportunity for the Company
to improve mined grades. San Dimas is a cut and fill operation
previously utilizing only jack-leg and jumbo drilling equipment. The
average dilution factor used in the Company's Reserve and Resource
estimates is 58%, mainly as a result of mining narrow width veins
with jumbo drills that require a minimum mining width.   
As part of the optimization program the Company began testing
long-hole mining at San Dimas in the third quarter of 2012. Long-hole
mining methods have evolved significantly over the last decade, with
stopes of less than one metre width being successfully mined with
minimal dilution. Based on the positive results of the long-hole
testing at San Dimas to date, the Company has brought a second
long-hole drilling machine to site. The Company anticipates that it
may be incorporating long-hole mining into its 2013 mine plan, with
improvements in mining dilution anticipated.  
Outlook for 2012  
Primero expects to achieve the mid to low end of its production
guidance range summarized in the following table.  


 
----------------------------------------------------------------------------
                                                        Revised Outlook 2012
----------------------------------------------------------------------------
Attributable gold equivalent production(3)                   110,000-120,000
(gold equivalent ounces)                                                    
----------------------------------------------------------------------------
Gold production                                                85,000-95,000
(ounces)                                                                    
----------------------------------------------------------------------------
Silver production(5)                                 
    5,000,000-5,500,000
(ounces)                                                                    
----------------------------------------------------------------------------
Silver sales at spot market prices(5)                       716,230 (actual)
(ounces)                                                                    
----------------------------------------------------------------------------
Total cash costs(4)                                              $610 - $640
(per gold equivalent ounce)                                                 
----------------------------------------------------------------------------
Total cash costs(4) - by-product                                 $340 - $370
(per gold ounce)                                                            
----------------------------------------------------------------------------
Capital expenditures                                             $35 million
(US$ millions)                                                              
----------------------------------------------------------------------------

 
Material assumptions used to forecast total cash costs for 2012
include: an average gold price of $1,600 per ounce; an average silver
price of $9.41 per ounce (calculated using the silver agreement
contract price of $4.08 per ounce and assuming excess silver beyond
contract requirements is sold at an average silver price of $30 per
ounce); and foreign exchange rates of 1.05 Canadian dollars and 12.8
Mexican pesos to the US dollar. 
Reserves and Resources Increased at Mid-Year  
On September 4, 2012, the Company provided an update of its Mineral
Reserves and Mineral Resources at San Dimas as at June 30, 2012(6),
successfully replacing its six month gold depletion by 265%. The
Company reported contained gold in Probable Mineral Reserves
increased by 16%; Indicated Mineral Resources (which include Probable
Mineral Reserves) increased by 17%; and Inferred Mineral Resources
increased by 23%.  
Expansion of San Dimas to 2,500 TPD  
On October 15, 2012, the Company announced its plans to expand the
San Dimas mine and mill to 2,500 TPD by the end of the first quarter
of 2014(7). The estimated capital cost is $14.4 million resulting in
attractive economics of a 150% after-tax IRR and a payback period of
less than 24 months. The expansion is expected to increase production
at the mine to approximately 160,000 gold equivalent ounces per year
of average annual production over the next five years and reduce cash
costs from current levels by roughly $110 per ounce to approximately
$510 per gold equivalent ounce, or $200 per gold ounce on a
by-product basis, average over the next five years. The Company will
continue to assess of a further potential expansion to 3,000 TPD.  
Restatement of previously issued financial statements  
The Company announced today(8) that it has re-filed its consolidated
financial statements and MD&A for the year ended December 31, 2011.
In addition, the Company has amended its financial statements for the
first and second quarters of 2012 but rather than re-filing those
statements, has disclosed the amendments in the notes to its
financial statements for the third quarter of 2012, released today.
In connection with the preparation of the financial statements for
the third quarter of 2012 it was identified that during the
transition to International Financial Reporting Standards ("IFRS"),
the Company had not taken into account a methodology difference
between Canadian Generally Accepted Accounting Principles ("GAAP")
and IFRS with respect to translation of deferred tax assets and
liabilities denominated in a currency other than the Company's
functional currency (the US dollar). The re-filed financial
statements have been restated to give effect to the IFRS
requirements. The restatements do not impact the Company's cash flows
or adjusted net income.  
The re-filed financial statements are available on the Company's
website at www.primeromining.com and filed on SEDAR at www.sedar.com. 
Reminder of Conference Call and Webcast Details  
The Company's senior management will host a conference call today,
Thursday, November 8, 2012 at 11:00 a.m. (EST), to discuss these
results. Participants may join the call by dialing North America toll
free 1-866-200-6965 or 1-646-216-7221 for calls outside Canada and
the U.S. and entering the participant passcode 39078496#.  
A live and archived webcast of the conference call will also be
available at www.primeromining.com under the News and Events section
or by clicking here: http://event.onlineseminarsolutions.com/r.htm?e=
527524&s=1&k=AC45E3936EDA3B6135AA0414D65B5899. 
A recorded playback of the call will be available until, Monday,
February 4, 2013 by dialing North America toll free 1-866-206-0173 or
646-216-7204 for calls outside Canada and the U.S. and entering the
call back passcode 277028#. 
This release should be read in conjunction with Primero's third
quarter 2012 financial statements and MD&A report on the Company's
website, www.primeromining.com, in the "Financial Reports" section
under "Investors", or on the SEDAR website at www.sedar.com, or on
the Edgar website www.sec.gov.  
(1) Adjusted net earnings/income and adjusted net earnings/income per
share are non-GAAP measures. Neither of these non-GAAP performance
measures has any standardized meaning and is therefore unlikely to be
comparable to other measures presented by other issuers. The Company
believes that, in addition to conventional measures prepared in
accordance with GAAP, the Company and certain investors use this
information to evaluate the Company's performance. Accordingly, it is
intended to provide additional information and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. Refer to the third
quarter 2012 MD&A for a reconciliation of adjusted net
earnings/income to reported net income.  
(2) "Operating cash flow" is operating cash flow before working
capital changes. This and operating cash flows before working capital
changes per share are non-GAAP measures which the Company believes
provides a better indicator of the Company's ability to generate cash
flow from its mining operations. See the third quarter 2012 MD&A for
a reconciliation of operating cash flows to GAAP.  
(3) "Gold equivalent ounces" include silver ounces produced, and
converted to a gold equivalent based on a ratio of the average
commodity prices realized for each period. The ratio for the third
quarter 2012 was based on realized prices of $1,646 per ounce of gold
and $9.66 per ounce of silver. The ratio used for the 2012 guidance
projection was based on estimated average prices of $1,600 per ounce
of gold and $9.41 per ounce of silver.  
(4) Total cash costs per gold equivalent ounce and total cash costs
on a by-product basis are non-GAAP measures. Total cash costs per
gold equivalent ounce is defined as cost of production (including
refining costs) divided by the total number of gold equivalent ounces
produced. Total cash costs on a by-product basis are calculated by
deducting the by-product silver credits from operating costs. The
Company reports total cash costs on a production basis. In the gold
mining industry, these are common performance measures but do not
have any standardized meaning, and are non-GAAP measures. The Company
follows the recommendations of the Gold Institute standard. The
Company believes that, in addition to conventional measures, prepared
in accordance with GAAP, certain investors use this information to
evaluate the Company's performance and ability to generate cash flow.
Accordingly, it is intended to provide additional information and
should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with GAAP. See the third
quarter 2012 MD&A for a reconciliation of total cash costs to
reported operating expenses (the nearest GAAP measure).  
(5) According to the silver purchase agre
ement between the Company
and Silver Wheaton Corp., until August 6, 2014 Primero will deliver
to Silver Wheaton a per annum (from August 6 to following August 5)
amount equal to the first 3.5 million ounces of silver produced at
San Dimas and 50% of any excess at $4.08 per ounce (increasing by 1%
per year). Thereafter Primero will deliver to Silver Wheaton a per
annum amount equal to the first 6.0 million ounces of silver produced
at San Dimas and 50% of any excess at $4.20 per ounce (increasing by
1% per year). The Company will receive silver spot prices only after
the annual threshold amount has been delivered.  
(6) Please refer to the Company's News Release titled "Primero
Announces Mid-Year Reserve and Resource Update; Replacing its 6 month
Gold Depletion by 265%", dated September 4, 2012, located on the
Company's website at www.primeromining.com and SEDAR at
www.sedar.com.   
(7) Please refer to the Company's News Release titled "Primero
Announces Expansion of its San Dimas Mine", dated October 15, 2012,
located on the Company's website at www.primeromining.com and SEDAR
at www.sedar.com.   
(8) Please refer to the Company's News Release titled "Primero Amends
Financial Statements for Deferred Tax IFRS Transition Adjustment",
dated November 8, 2012, located on the Company's website at
www.primeromining.com and SEDAR at www.sedar.com.  
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
is focused on delivering superior, sustainable value for all
stakeholders with low-risk exposure to precious metals. The Company
has intentions to become an intermediate producer by building a
portfolio of high quality, low cost precious metals assets in the
Americas.  
Primero's website is www.primeromining.com.  
CAUTIONARY NOTE 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. 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", "potential", "expects",
"is expected", "promising", "budget", "scheduled", "targeted", "is
targeting", "estimates", "forecasts", "intends", "anticipates",
"believes", "if realized", or variations of such words and phrases or
statements that certain actions, events or results "may", "could",
"would", "might" or "will continue", "occur" or "be achieved" or the
negative connotation thereof.  
Forward-looking statements in this news release include, but are not
limited to, statements regarding management's expectation that
capital expenditures for 2012 will be approximately $35 million; the
number of gold equivalent, gold and silver ounces expected to be
produced in 2012; the anticipated cash costs per gold equivalent
ounce and anticipated by-product cash costs per gold ounce; the
process improvement program to be implemented with expected
productivity improvements in 2012; the expansion of overall mill
capacity; the San Dimas production level based on continued positive
exploration results combined with productivity enhancements; the
inclusion of long-hole mining method in the 2013 mine plan; the
ability of long-hole mining methods to improve mining dilution; and
the Company's intentions to become an intermediate gold producer.   
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 assumptions set forth
herein and in the management's discussion and analysis and the
Company's annual report on Form 40-F for the year ended December 31,
2011, as amended, 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 as well as
the expectations and beliefs of management and that there are no
significant disruptions affecting operations; that development and
expansion at San Dimas proceeds on a basis consistent with current
expectations and 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 and is consistent
with estimations; that increases in capacity and improvements in
productivity improvements meet expectations; that the Company
identifies higher grade veins in sufficient quantities of minable ore
in the Central Block and in Sinaloa Graben; that the geology and vein
structures in Sinaloa Graben are as expected; that the ratio of gold
to silver price is maintained in accordance with the Company's
expectations; that there are no material variations in the current
tax and regulatory environment or the tax positions taken by the
Company; that the Company can access financing, appropriate equipment
and sufficient labour; that long-hole mining will be included in the
2013 mine plan; that long-hole mining methods will improve mining
dilution and that the political environment within Mexico 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 the risks that the Company may not be able to
achieve planned production levels; dilution may be higher or recovery
rates may be lower than anticipated; the Company may not be able to
expand production at San Dimas; the Company may need to incur higher
costs and capital expenditures for exploration and development
activities; the Company may not be able to fund exploration and
development expenditures; the Company may be required to change its
development and exploration plans with a negative impact on
production; the Company may not discover mineralization in minable
quantities; 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; that long-hole mining is
not included in the 2013 mine plan; that long-hole mining does not
improve mining dilution; and the Company may not be able to become an
intermediate gold producer by building a portfolio of high quality,
low cost precious metals assets in the Americas. Certain of these
factors are discussed in greater detail in Primero's annual report on
Form 40-F for the year ended December 31, 2011, as amended, on file
with the U.S. Securities and Exchange Commission, and its most recent
Annual Information Form and management's discussion and analysis, as
amended, which are 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 re
liance 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. 
SUMMARIZED FINANCIAL AND OPERATING RESULTS AND FINANCIAL STATEMENTS
FOLLOW 


 
SUMMARIZED FINANCIAL & OPERATING RESULTS                                    
                                                                            
(in thousands of United States dollars, except per share and per ounce      
 amounts - unaudited)                                                       
                                                                            
SUMMARIZED FINANCIAL DATA                                                   
                                  Three months ended       Nine months ended
                                        September 30            September 30
                                    2012        2011        2012        2011
----------------------------------------------------------------------------
  Operating Data                                                            
Tonnes of ore milled             177,926     186,997     531,191     485,977
Produced                                                                    
  Gold equivalent (ounces)        25,582      27,450      84,829      79,110
  Gold (ounces)                   18,892      19,500      64,757      59,373
  Silver (million ounces)           1.14        1.10        3.82        3.40
Sold                                                                        
  Gold equivalent (ounces)        23,251      27,633      84,785      78,946
  Gold (ounces)                   17,100      19,659      64,980      59,002
  Silver (million ounces)           1.05        1.11        3.76        3.52
Average realized prices                                                     
  Gold ($/ounce)                  $1,646      $1,668      $1,643      $1,524
  Silver ($/ounce)(1)              $9.66      $12.00       $8.65       $8.81
Total cash costs (per gold                                                  
 ounce)                                                                     
  Gold equivalent basis             $699        $641        $624        $617
  By-product basis                  $363        $222        $307        $317
                                                                            
----------------------------------------------------------------------------
  Financial Data                          (Restated)              (Restated)
(in thousands of US dollars                                                 
 except per share amounts)                                                  
Revenues                          38,277      46,079     139,342     120,897
Income from mine operations       13,087      22,170      61,918      51,805
Net income/(loss)                 11,586      16,491      48,308      18,427
Basic income/(loss) per                                                     
 share                              0.12        0.19        0.54        0.21
Diluted income/(loss) per                                                   
 share                              0.12        0.19        0.54        0.21
Operating cash flows before                                                 
 working capital changes          16,172      40,770      72,377      63,529
Assets                                                                      
  Mining interests               488,435     485,610     488,435     485,610
  Total assets                   662,069     614,029     662,069     614,029
Liabilities                                                                 
  Long-term liabilities           60,676     122,699      60,676     122,699
  Total liabilities               94,386     158,268      94,386     158,268
Equity                           567,683     455,761     567,683     455,761
Weighted average shares                                                     
 outstanding (basic)(000's)       93,203      88,250      89,709      87,980
Weighted average shares                                                     
 outstanding                                                                
 (diluted)(000's)                 93,365      88,333      89,765      88,212
                                                                            
SUMMARIZED OPERATING DATA                                                   
                                                                            
                                          Three months ended                
                          30-Sep-12 30-Jun-12 31-Mar-12 31-Dec-11 30-Sep-11 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating Data                                                              
Tonnes of ore milled        177,926   174,742   178,523   176,633   186,997 
Average mill head grade                                                     
 (grams/tonne)                                                              
  Gold                         3.40      4.25      4.05      3.70      3.35 
  Silver                        210       256       242       223       195 
Average recovery rate (%)                                                   
  Gold                           97%       97%       97%       98%       97%
  Silver                         95%       95%       95%       95%       94%
Produced                                                                    
  Gold equivalent (ounces)   25,582    33,598    25,793    23,115    27,450 
  Gold (ounces)              18,892    23,277    22,588    20,191    19,500 
  Silver (million ounces)      1.14      1.36      1.32      1.20      1.10 
Sold                                                                        
  Gold equivalent (ounces)   23,251    35,442    26,229    21,192    27,633 
  Gold (ounces)              17,100    24,876    23,004    18,487    19,659 
  Silver at fixed price                                                     
   (million ounces)            0.80      0.92      1.33      1.11      0.86 
  Silver at spot (million                                                   
   ounces)                     0.25      0.47         -         -      0.25 
Average realized price                                                      
 (per ounce)                                                                
  Gold                     $  1,646  $  1,610  $  1,678  $  1,679  $  1,668 
  Silver                   $   9.66  $  12.24  $   4.08  $   4.08  $  12.00 
Total cash operating costs                                                  
 ($000s)                   $ 17,872  $ 17,645  $ 17,381  $ 16,622  $ 17,584 
Total cash costs (per gold                                                  
 ounce) (1)                                                                 
  Gold equivalent basis    $    699  $    525  $    674  $    719  $    641 
  By-product basis         $    363  $     44  $    532  $    580  $    222 
                                                                            
(1) Total cash costs per gold ounce on a gold equivalent and by-product     
basis are non-GAAP financial measures. Refer to "Non-GAAP measure - Total   
cash costs per gold ounce calculation" in the Company's third quarter 2012  
MD&A for a reconciliation to operating expenses.                            
                                                                            
PRIMERO MINING CORP.                                                  
      
                                                                            
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE   
INCOME                                                                      
                                                                            
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 and 2011                     
(In thousands of United States dollars, except for share and per share      
amounts)                                                                    
(Unaudited)                                                                 
                                Three months ended        Nine months ended 
                                     September 30,            September 30, 
                                 2012         2011        2012         2011 
                                        (Restated)               (Restated) 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                    $            $           $            $ 
                                                                            
                                                                            
Revenue                        38,277       46,079     139,342      120,897 
----------------------------------------------------------------------------
                                                                            
Operating expenses            (19,021)     (16,987)    (56,167)     (49,020)
Depreciation and depletion     (6,169)      (6,922)    (21,257)     (20,072)
----------------------------------------------------------------------------
Total cost of sales           (25,190)     (23,909)    (77,424)     (69,092)
----------------------------------------------------------------------------
                                                                            
Income from mine operations    13,087       22,170      61,918       51,805 
General and administrative                                                  
 expenses                      (9,407)      (4,454)    (18,939)     (13,806)
----------------------------------------------------------------------------
                                                                            
Income from operations          3,680       17,716      42,979       37,999 
Other income (expense)           (282)      18,721        (713)      18,535 
Foreign exchange gain              98        1,247         302        4,634 
Finance income                    188          856       1,020        4,002 
Finance expense                  (279)      (2,125)     (2,118)      (8,976)
Gain (loss) on derivative                                                   
 contracts                        721       (2,283)        524         (385)
----------------------------------------------------------------------------
                                                                            
Income before income taxes      4,126       34,132      41,994       55,809 
                                                                            
Income taxes (expense)                                                      
 recovery                       7,460      (17,641)      6,314      (37,382)
----------------------------------------------------------------------------
                                                                            
Net income for the period      11,586       16,491      48,308       18,427 
----------------------------------------------------------------------------
                                                                            
Other comprehensive income                                                  
  Exchange differences on                                                   
   translation of foreign                                                   
   operations                      91         (771)        189       (1,482)
----------------------------------------------------------------------------
Total comprehensive income                                                  
 for the period                11,677       15,720      48,497       16,945 
----------------------------------------------------------------------------
                                                                            
  Basic income per share         0.12         0.19        0.54         0.21 
  Diluted income per share       0.12         0.19        0.54         0.21 
----------------------------------------------------------------------------
                                                                            
Weighted average number of                                                  
 common shares outstanding                                                  
  Basic                    93,203,449   88,249,831  89,709,072   87,980,377 
  Diluted                  93,365,106   88,333,119  89,764,808   88,212,457 
----------------------------------------------------------------------------
                                                                            
PRIMERO MINING CORP.                                                        
                                                                            
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS                               
(In thousands of United States dollars)                                     
(Unaudited)                                                                 
                                           September 30,       December 31, 
                                                    2012               2011 
                                                                 (Restated) 
----------------------------------------------------------------------------
                                                       $                  $ 
                                                                            
Assets                                                                      
Current assets                                                              
  Cash                                           133,130             80,761 
  Trade and other receivables                      2,985              5,526 
  Taxes receivable                                 8,354             20,969 
  Prepaid expenses                                 6,622              5,570 
  Inventories                                      9,238              9,463 
  Derivative asset                                 1,022                203 
----------------------------------------------------------------------------
Total current assets                             161,351            122,492 
                                                                            
Non-current assets                                                          
  Mining interests                               488,435            486,424 
  Deferred tax asset                              12,283                343 
----------------------------------------------------------------------------
Total assets                                     662,069            609,259 
----------------------------------------------------------------------------
                                                                            
Liabilities                                                                 
Current liabilities                                                         
  Trade and other payables                        21,157             24,907 
  Taxes payable                                    7,553              4,213 
  Current portion of long-term debt                5,000             40,000 
----------------------------------------------------------------------------
Total current liabilities                         33,710             69,120 
                                                                        
    
Non-current liabilities                                                     
  Decommissioning liability                        9,917              9,373 
  Long-term debt                                  40,000             40,000 
  Other long-term liabilities                     10,759              2,926 
----------------------------------------------------------------------------
Total liabilities                                 94,386            121,419 
----------------------------------------------------------------------------
                                                                            
Equity                                                                      
Share capital                                    453,250            423,250 
Warrant reserve                                   34,237             34,237 
Share-based payment reserve                       15,991             14,645 
Foreign currency translation reserve              (1,261)            (1,450)
Retained earnings                                 65,466             17,158 
----------------------------------------------------------------------------
Total equity                                     567,683            487,840 
----------------------------------------------------------------------------
Total liabilities and equity                     662,069            609,259 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
PRIMERO MINING CORP.                                                        
                                                                            
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS THREE AND NINE      
MONTHS ENDED SEPTEMBER 30, 2012 AND 2011                                    
(In thousands Of United States dollars)                                     
(Unaudited)                                                                 
----------------------------------------------------------------------------
                                   Three months ended     Nine months ended 
                                        September 30,         September 30, 
                                      2012       2011       2012       2011 
----------------------------------------------------------------------------
                                         $          $          $          $ 
Operating activities                                                        
  Income before taxes                4,126     34,132     41,994     55,809 
  Adjustments for:                                                          
    Depreciation and depletion       6,169      6,922     21,257     20,072 
    Changes to decomissioning                                               
     liability                           -         (2)         -        768 
    Share-based payments             7,008      1,518      9,722      6,158 
    Cash paid for derivative                                                
     contracts (net of                                                      
    sales proceeds)                   (295)    (2,759)      (295)    (3,725)
    Unrealized (gain) loss on                                               
     derivative asset               (2,138)     1,543     (3,807)      (328)
    Realized loss on derivative                                             
     asset                           1,417        737      3,282        348 
    Assets written off                  87          -        414          - 
    Unrealized foreign exchange                                             
     gain                             (556)       (53)      (892)      (310)
    Taxes paid                        (461)    (3,266)    (1,532)   (21,583)
Other adjustments                                                           
Finance income (disclosed in                                                
 investing activities)                (188)      (856)    (1,020)    (4,002)
Finance expense including                                                   
 capitalized borrowing costs                                                
 (disclosed in financing                                                    
 activities)                         1,003      2,854      3,254     10,322 
----------------------------------------------------------------------------
                                    16,172     40,770     72,377     63,529 
                                                                            
  Changes in non-cash working                                               
   capital                             497     78,063     14,300     74,648 
----------------------------------------------------------------------------
Cash provided by operating                                                  
 activities                         16,669    118,833     86,677    138,177 
----------------------------------------------------------------------------
                                                                            
Investing activities                                                        
  Expenditures on exploration                                               
   and                                                                      
  evaluation assets                 (6,951)    (2,790)   (20,742)    (6,910)
  Expenditures on mining                                                    
   interests                          (981)    (4,025)    (3,047)   (14,020)
  Interest received                    188      2,487      1,020      2,686 
----------------------------------------------------------------------------
Cash used in investing                                                      
 activities                         (7,744)    (4,328)   (22,769)   (18,244)
----------------------------------------------------------------------------
                                                                            
Financing activities                                                        
  Repayment of debt                      -    (70,000)    (5,000)   (70,000)
  Proceeds on exercise of                                                   
   warrants and options                  -          -          -      1,021 
  Interest paid                     (1,908)      (121)    (6,314)    (1,052)
----------------------------------------------------------------------------
Cash used in financing                                                      
 activities                         (1,908)   (70,121)   (11,314)   (70,031)
----------------------------------------------------------------------------
                                                                            
Effect of foreign exchange rate                                             
 changes on cash                       380       (786)      (225)      (973)
----------------------------------------------------------------------------
                                                                            
Increase in cash                     7,397     43,598     52,369     48,929 
Cash, beginning of period          125,733     63,629     80,761     58,298 
----------------------------------------------------------------------------
Cash, end of period                133,130    107,227    133,130    107,227 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
Contacts:
Primero Mining Corp.
Tamara Brown
VP, Investor Relations
(416) 814 3168
tbrown@primeromining.com
www.primeromining.com
 
 
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