Primero Mining (NYSE:PPP)

CAPS Rating: 4 out of 5


Player Avatar silverminer (30.45) Submitted: 9/30/2011 1:46:36 PM : Outperform Start Price: $2.65 PPP Score: -12.25

Quite simply ... the greatest gold stock in the world:

"I recently selected Primero Mining as my top stock recommendation for gold because of my deep conviction that the market has failed to comprehend the true nature of the San Dimas asset. The site first began yielding gold and silver more than 250 years ago, and for more than a century now the mine has continuously churned out high-grade gold and silver from its uncommonly expansive network of epithermal veins. Beginning in 2005, the operation contributed to Goldcorp's (NYSE: GG ) celebrated growth trajectory. Primero expects to produce at least 100,000 gold-equivalent ounces from San Dimas during 2011, and promptly double that output organically to 200,000 gold-equivalent ounces by 2013."

"Even when Goldcorp moved to monetize the asset last year to permit Primero's founding transaction -- valuing San Dimas at $500 million when gold traded for $1,220 -- Goldcorp's esteem for the project's remaining productive potential was crystal clear. Typically, a seller will have incentive to understate the significance of a disposed asset to win favor with shareholders; however, Goldcorp went out of its way to explain that existing reserves at San Dimas offered a wholly inadequate understanding of the asset's true value. As Goldcorp explained, "The long history of continuous mining at San Dimas and the known occurrence of the mineral veins have overridden the need to prove up reserves for many years ahead. Consequently, the true potential of the deposits are neither fully realized nor reflected in the stated reserves and resources.""

"But actions speak louder than words, so I find even greater significance in Goldcorp's retained 36% equity stake in Primero Mining. I was astounded, furthermore, by the savvy deal maker's commitment to guarantee total output of at least 215 million ounces of cumulative silver from San Dimas through 2031 (I estimate approximately 168 million ounces will remain outstanding after 2011). As I pointed out when the Primero deal was struck, Goldcorp's backstop within the modified silver stream agreement with Silver Wheaton (NYSE: SLW ) conveys a confident expectation of remaining silver production that far exceeds currently stated reserves of 60.9 million ounces!"

Member Avatar ClarenceWorley (28.51) Submitted: 11/25/2011 6:12:20 PM
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Have you visited San Dimas, and if so, what did you find?

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