Primero Mining Poised for Premier Mid-Tier Status

Gold and silver miner hits important milestone in its growth trajectory

Mar 16, 2014 at 8:45PM

There's no holding back silver miner Primero Mining (NYSE:PPP), which is transforming itself into a storehouse of wealth that will enrich investors over the long haul.

Slidehome

Source: Primero Mining.

The miner said last week it had crossed the annual threshold of producing 3.5 million ounces of silver at its San Dimas project in Mexico that it is required to deliver to Silver Wheaton (NYSE:SLW), and did so six weeks ahead of schedule. That's significant because, between now and August the rest of the output from the mine is available for Primero to begin selling at spot prices for its own account. Silver was last priced at around $21.24 per ounce, and the miner estimates it will sell between 1.25 million and 1.5 million ounces by Aug. 5, when the annual threshold jumps to 6 million ounces and remains there for the life of the mine.

Investors need to go back to 2010, when Primero bought San Dimas from Goldcorp (NYSE:GG) for $500 million. At the time, silver streamer Silver Wheaton had in place a purchase agreement with the gold miner that had higher annual thresholds but which expired in 2029. When Primero took over, the agreement was renegotiated, lowering the thresholds for the first four years (but bumping them up thereafter) and extending the time frame to cover the life of the mine.

The arrangement was a win-win-win deal for all parties involved, despite the seemingly low price Primero paid for the project, because in return Goldcorp had received a 30% equity stake in the junior miner. Earlier this month Goldcorp entered into an offering to sell all 31.15 million shares it owned at a price of $224 million Canadian, the same day Primero announced it had completed the acquisition of another junior miner, Brigus Gold.

The cash flows from San Dimas are what's transforming this junior miner into a mid-tier precious metals powerhouse. Recently it purchased from Goldcorp the remaining 30.8% interest in its Cerro del Gallo development project that it acquired last year, and it followed that with the Brigus acquisition. With the proceeds from the sale of half of the San Dimas production filling its coffers and the promise held by Cerro del Gallo, Primero is ready to build on its successes.

Its shares surged 11% yesterday on the news it reached the milestone early and are up 50% over the past three months. But with significantly larger bases of reserves and resources, greater production potential, and a higher cash-flow profile, Primero Mining looks like it's golden.

Silence is golden
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

Rich Duprey and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers