Ben Kramer-Miller
Gold & precious metals, macro, research analyst, deep value

The 'New' Primero Mining Is Less Appealing And Overvalued

In January I wrote an article in which I suggested that investors should view Primero Mining's (NYSE:PPP) acquisition of Brigus Gold with some skepticism. While the deal would be accretive to Primero shareholders on a gold-produced-per-share basis there were issues with the deal.

    The Black Fox mine is a relatively high cost producer when compared with Primero's San Dimas mine and its soon to be producing Cerro del Gallo project. Furthermore it only had about 7 years of high certainty production. Even if we extended this mine life to management's expectations (14 years) the DCF valuation of Black Fox didn't justify an acquisition at the (then) current gold price of $1,240/ounce. One of the appeals of Primero Mining ...
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