Resource World Magazine

MINI NG Primero Mining to become an intermediate gold producer by Jennifer S. Getsinger, PhD, PGeo Primero Mining Corp. [P-TSX; PPP-NYSE], with offices in Toronto and Vancouver, mines gold and silver in Mexico at its San Dimas Mine in the Sierra Madre Occidental 150 km west of Durango and 125 km northeast of Mazatlan. Recently the company announced its intent to acquire the Cerro del Gallo goldsilver/copper project in Guanajuato, Mexico, in order to diversify its assets and significantly increase its potential production of precious metals. In 2010, Mala Noche Resources of Vancouver, BC, acquired the operating San Dimas Mine from Goldcorp Inc. for $500 million, and changed its name to Primero Mining Corp. The previous year (2009), production from San Dimas Mine's three underground vein systems was 113,000 troy ounces of gold and 5.1 million troy ounces of silver. An amended, ongoing "silver streaming" agreement with Silver Wheaton Corp. indicates that Primero will deliver to Silver Wheaton yearly 3.5 million ounces of silver (plus half of what it produces above that) at a price of approximately $4/oz for the life of the mine. That threshold increases to 6 million ounces in August 2014. Goldcorp still holds a significant proportion of shares. In 2011, Primero listed on the New York stock exchange. Central Mexico has been mined for several hundred years, and many Canadian companies in that area are producing gold and silver. Spanish mining began in the San Dimas area in 1757, and continued intermittently over the centuries, interrupted by wars and the vicissitudes of the mining industry. Named for the Mala Noche Mine, which operated until 1973, and formed in 2008, by an experienced group associated with Goldcorp and Silver Wheaton, Mala Noche Resources regenerated efforts that led to the current arrangement. The San Dimas Mine consists of nearly 35 km2 of mining concessions covering ground with many old workings. The mineralization was described in news releases as formed in mid-stage polymetallic low to intermediate sulphidation epithermal vein systems. Historical production is estimated at 11 million oz Au (gold) and 582 million oz Ag (silver). Primero met its guidance target for 2012 and is pushing forward to increase future productivity, expecting a projected mine life of 12 years. Production in 2010 and 2011 consisted of 100,266 and 102,224 gold-equivalent ounces, respectively, and in 2012 production went up 9% to 111,130 gold-equivalent ounces. (Information from the Primero website explains that "goldequivalent ounces are calculated by including silver ounces produced and converted to gold equivalent based on a ratio of the average commodity prices realized for each period", which in 2012 were $1,662/oz Au and $7.52/oz Ag.) 30 www.resourceworld.com The San Dimas Mine in the Sierra Madre Occidental 150 km west of Durango, Mexico. Photo courtesy Primero Mining Corp. Reported on March 26, 2013, San Dimas Mine estimates, as of December 31, 2012, were: 4.579 million tonnes of probable reserves at grades of 4.5 g/t Au and 267 g/t Ag, containing 660,000 oz Au and 39,377,000 oz Ag; 3.748 million tonnes of indicated resources at grades of 6.5 g/t Au and 389 g/t Ag containing 780,000 oz Au and 46,877,000 oz Ag; and 6.144 million tonnes of inferred resources at grades of 3.9 g/t Au and 327 g/t Ag, containing 762,000 oz Au and 64,637,000 oz Ag, with cut-off grades near 2.0 g/t Au. During the 2012 operating year, these figures showed increases due to exploration discoveries of additional high-grade vein systems in the Sinaloa Graben. With further discoveries and improvements, Joseph F. Conway, President and CEO of Primero, is enthusiastic about upping mine production to 2,500 or potentially 3,000 tonnes per day in a few years, and has approved San Dimas expansion expenditures of more than $16 million. Plans to become an intermediate gold producer are coming along not only by stepping up the pace and output at San Dimas, but by adding to Primero's portfolio of operating mines and/or near-production exploration properties, beginning with the acquisition of the Cerro del Gallo feasibility stage gold/silver/copper project in Guanajuato, for which a NI 43-101 technical report was filed on Sedar as of April 1, 2013. Combined proven and probable reserves are 1.0 million oz Au, and 2.3 million gold-equivalent ounces of measured and indicated resources. Primero's vigorous 2013 exploration season at San Dimas includes both underground and regional geological delineation of hundreds of veins, partly by drilling and tunnelling in underexplored areas (74,000 m diamond drilling and 3,800 m exploration drifting). n M AY 2 0 1 3

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