Primero background.
even back in sept. 2010, Mining Weekly was writing up Primero as a midlevel producer by 2013.
Primero targets mid-tier status by 2013
By: Liezel Hill
14th September 2010
(miningweekly.com) – Primero Mining, which bought Goldcorp's San Dimas mine and changed its name from Mala Noche Resources last month, aims to produce around 350,000 to 400,000 gold-equivalent ounces a year (including silver) by 2013, CEO Joe Conway said on Tuesday.
Conway, who was chief executive at Iamgold until January this year, said in an interview he expects about 180,000 oz of that could come from San Dimas, located in Mexico, and Primero will look to make up the balance through merger and acquisition activity in Latin America.
The company announced on Tuesday it expects to produce between 43 000 and 49 000 gold-equivalent ounces at San Dimas between August 6 – when the acquisition closed – and the end of 2010.
This breaks down to 37,000 oz to 42,000 oz of gold and between 1,76-million and 1,96-million ounces of silver.
Full year output is forecast at between 106,000 and 112,000 gold-equivalent ounces, or 90,000 to 95,000 oz of gold and between 4,5-million and 4,7-million ounces of silver.
While production levels are more or less flat compared with Goldcorp's reported output in the first half, Primero expects costs will be lower, at between $450/oz and $480/oz on a gold-equivalent basis.
The company expects further improvements in costs and cashflow from the second quarter of 2011, when it should start seeing the benefits of changes to a silver-purchase agreement with Vancouver-based Silver Wheaton.
The original deal stipulated that all silver output from San Dimas would be sold to Silver Wheaton at around $4/oz.
At the same time as buying the mine, Primero negotiated a change so that the first 3,5-million ounces of silver produced each year for the first four years, plus 50% of the balance, will be sold to Silver Wheaton under the previous terms, but the other 50% will be sold at spot prices. From year five, the 50-50 arrangement will kick in after the first six-million ounces each year.
EXPANSION PLANS
Primero will conduct a scoping study this year into potential optimisations and throughput expansions at San Dimas, Conway said last week at a conference hosted by Bank of America Merrill Lynch.
The company is looking at running the mill at the full 2,100 t/d capacity, compared with the current rate of 1,900 t/d and will also study an expansion to match the mill capacity with the 2,500 t/d leaching capacity, he said.
Primero is also optimistic on the exploration potential at San Dimas, and expects to continue adding to both resources and reserves at the operation.
As far as acquisitions go, the firm is especially interested in assets in Mexico, Peru, Colombia and Brazil, Conway told Mining Weekly Online on Tuesday.
Shares in Primero Mining were flat on Tuesday morning, at C$5,20 apiece by 11:21 in Toronto.
Edited by: Liezel Hill |
