TD UpdatePrimero Mining Corp. (P-T) C$4.54 Record Quarter at San Dimas to Kick off the Year Event Primero reported Q1/15 financial and operating results. Impact: SLIGHTLY POSITIVE Adj. EPS of $0.01 was above our estimate for a loss of $0.05 and the consensus loss of $0.02, reflecting lower depreciation. Cash flow of $0.12/share was effectively in line with our estimate of $0.11/share and consensus of $0.13/share. Production of 61,073 oz Aueq was slightly above our estimate of 59,001 oz. Costs of $699/oz Aueq were below our $734/oz, reflecting lower costs from San Dimas.
2015 guidance remains unchanged. Record quarter at San Dimas: Q1’s solid operating performance was the result of record production at San Dimas, owing to strong grades and recoveries and increased throughput with the mill expansion to 3,000tpd nearly complete. Grades averaged 5.01g/t, ahead of budget, but still below reserve grade of 5.7g/t. Commensurate with the strong production, cash costs of $582/oz Aueq remained low.
Management indicated that ~35% of production was from long-hole stoping in Q1, but they expect to increase that to 40% by year-end which should bode well for maintaining low costs. We expect to see continued solid results from the mine across the rest of the year.
Black Fox had another weak quarter. This was largely expected as the company had previously guided to a weaker H1. We have incorporated Q1 results and made minor revisions to our model; our NAV increases slightly to C$5.94/share from C$5.79/share.
TD Investment Conclusion Continued strong performance from San Dimas has been overshadowed in recent quarters by disappointing results from Black Fox; however, with expected improvement in u/g throughput combined with a weak Canadian dollar, we expect improvement at Black Fox in 2015 combined with continued strong cash flow from San Dimas, and for the stock to narrow its valuation discount.
We are maintaining our BUY recommendation and C$7.50 target price.