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Primero: 1Q Result Impacted By San Dimas Strike

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Primero Mining Corp. (TSX: P; NYSE: PPP) reports that adjusted earnings were roughly flat per share in a first quarter in which output was reduced due to a strike that since has been resolved. The company recognized net income of $13.5 million, compared to a net loss of $13.2 million in the first quarter of 2016, due to a $19.5 million deferred income tax recovery in the January-March period mainly resulting from the effect of the revaluation of the Mexican peso to the U.S. dollar. Adjusted net income was basically zero per share, compared to an adjusted net loss of $8.5 million, or 5 cents, in the year-ago period, Primero says. Despite lower gold and silver production, higher earnings occurred in the first quarter due to lower operating expenses, depreciation and depletion as a result of the strike, Primero says. A strike by San Dimas unionized employees negatively affected output, resulting in only 45 operating days in the quarter, the company says. The strike ended on April 13 with a new two-year labor agreement. First-quarter production was 26,733 gold-equivalent ounces, 26% lower than the 36,158 in the year-ago period. Primero says it expects to produce between 140,000 and 170,000 gold-equivalent ounces in 2017, lower than in the previous year due to operating time lost during the San Dimas strike, and the phased restart. All-in sustaining costs are seen between $1,200 and $1,400 per gold ounce, with this including a $25 million incremental reset investment in San Dimas. “The first quarter of 2017 marked a turning point for Primero,” says Joseph F. Conway, interim president and chief executive officer. “We continue to pursue our strategy of reducing the complexity, and the associated costs, of our operations. We remained steadfast in achieving these goals throughout the union negotiations during the quarter, and we were able to achieve our objectives, which we believe will allow for significant cost reductions at the San Dimas mine. We were also successful in extending our revolving credit facility, allowing more time to term-out our debt to better match our asset’s cash profiles.”

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