Empty Header San Dimas Black Fox* Consolidated 2017*
Gold equivalent production1
(gold equivalent ounces)
75,000 – 85,000 50,000 – 60,000 125,000 – 135,000
Gold production
(ounces)
60,000 – 70,000 50,000 – 60,000 110,000 – 120,000
Silver production4
(million ounces)
4.5 – 5.0 N/A 4.5 – 5.0
Total cash costs2,4
(per gold equivalent ounce)
$800  $900 $850  $950 $800  $900
All-in sustaining costs3,4
(per gold ounce)
$1,050  $1,150 $1,150  $1,250 $1,200  $1,300

*Revised consolidated 2017 guidance includes approximately 50,000 ounces of gold production and $13.4 million of capital expenditures at Black Fox attributable to Primero prior to the completion of sale to McEwen Mining Inc. which closed on October 6, 2017.

(1) “Gold equivalent ounces” include silver ounces produced, and converted to a gold equivalent based on a ratio of the average commodity prices realized for each period.  The ratio for the revised 2017 production guidance for San Dimas is based on forecast realized prices of $1,250 per ounce of gold and $4.32 per ounce of silver.

(2) Total cash costs per gold equivalent ounce and total cash costs on a by-product basis are non-GAAP measures.  Total cash costs per gold equivalent ounce are defined as cost of production (including refining costs) divided by the total number of gold equivalent ounces produced.  Total cash costs on a by-product basis are calculated by deducting the by-product silver credits from operating costs.  The Company reports total cash costs on a production basis. In the gold mining industry, these are common performance measures but do not have any standardized meaning, and are non-GAAP measures. The Company follows the recommendations of the Gold Institute standard. The Company believes that, in addition to conventional measures, prepared in accordance with GAAP, certain investors use this information to evaluate the Company’s performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.  See the second quarter 2017 MD&A for a reconciliation of total cash costs to reported operating expenses (the nearest GAAP measure).

(3) The Company, in conjunction with an initiative undertaken within the gold mining industry, has adopted an all-in sustaining cost non-GAAP performance measure that the Company believes more fully defines the total cost associated with producing gold; however, this performance measure has no standardized meaning. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company reports this measure on a gold ounces produced basis. For the purposes of calculating all-in sustaining costs at individual mine sites, the Company does not include corporate general and administrative expenses.  Corporate general and administrative expenses are included in the computation of all-in sustaining costs per consolidated gold ounce. Refer to the Company’s second quarter 2017 MD&A for a reconciliation of all-in sustaining costs per gold ounce.

(4) According to the silver purchase agreement between the Company and Silver Wheaton Corp., until August 6, 2015 Primero delivered to Silver Wheaton a per annum amount equal to the first 3.5 million ounces of silver produced at San Dimas and 50% of any excess at $4.12 per ounce (increasing by 1% per year). Thereafter Primero will deliver to Silver Wheaton a per annum amount equal to the first 6.0 million ounces of silver produced at San Dimas and 50% of any excess at $4.20 per ounce (increasing by 1% per year). The Company will receive silver spot prices only after the annual threshold amount has been delivered.

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