Analyst opinion 01:55 PM EDT, 05/09/2017 (MT Newswires) -- RBC Capital expects 2017 to be a critical year for Primero as the company looks to complete its ongoing strategic review, execute a turnaround at San Dimas, and decide on the future of Black Fox. "While we recognize the challenges facing Primero, we believe the long-term potential of San Dimas can be realized by Primero or another operator assuming the silver stream is restructured and proposed changes at the operation are successfully implemented."
Primero noted its recently announced strategic review process is ongoing with the company's Board of Directors evaluating potential strategic investments, joint ventures, asset sales and/or restructuring of the current silver stream. RBC believes restructuring the silver stream would materially improve the outlook for San Dimas and allow the company to more consistently reinvest in the operation. "With Silver Wheaton showing a willingness to work with its partners and guaranteeing Primero's $75M line of credit (extended to Nov/17), we believe a restructuring with Primero, or an acquirer, could be in the works."
Outlook for Black Fox uncertain post depletion of stockpiles -- RBC believes Black Fox could be placed on care and maintenance over the next 6-12 months. "Suspending operations would provide Primero with time to flush out the regional exploration potential before deciding to restart, close or divest the mine."
Maintain Sector Perform/Speculative, US$0.70 TP.