Primero’s profit down on reduced sales

By Henry Lazenby

Joseph Conway

TORONTO — Mexico-focused gold and silver producer Primero Mining had reported a 30% year-on-year drop in third-quarter net profit to $11.58-million or 12c a share, as a result of a 9% drop in sales owing to a broken crucible that delayed a shipment of ore to the refinery and lower prices.

However, Primero CEO Joseph Conway on Thursday told an analyst conference call the company had been effectively transformed since the end of the second quarter, as a result of Mexican tax authorities in October ruling the company could pay tax on the realised prices of metals sold under its advance pricing agreement with streaming firm Silver Wheaton, instead of being taxed on spot prices, giving the company more leverage on its silver production.

Under the silver purchase agreement between Primero and Silver Wheaton, Primero would deliver a yearly amount equal to the first 3.5-million ounces of silver produced at its San Dimas mine, and half of any excess at $4.08/oz, bearing a 1%/y interest rate.

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