Development of the Cerro del Gallo project is subject to permitting and a final construction decision based on the project achieving a 15% IRR at $1,100/oz gold.

The Cerro del Gallo deposit is situated within the larger San Antón property, located in the state of Guanajuato in central Mexico, approximately 270 kilometres northwest of Mexico City in an active mining district. The property is accessible by road, rail, and/or air services. Additionally, there is availability of a skilled local workforce, grid power, water, sealed roads, equipment suppliers and established transport routes.

The San Antón Property is located within the Mesozoic Sierra Madre Oriental terrane and 80 kilometres north of the west northwest trending Trans-Mexico Neovolcanic Belt. The Sierra Madre Oriental terrane is a thin skinned fold-thrust belt of Laramide age (Late Cretaceous-Early Tertiary). High level felsic intrusions emplaced into the western two thirds of the terrane provided the mechanism for hydrothermal activity and mineral deposition. The San Antón Property is known to host a variety of styles of mineral deposits, including porphyry copper-gold deposits, intrusion-related gold deposits, epithermal silver-gold deposits, and gold-copper skarn deposits.

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All of these styles of mineralization are known to occur within Primero’s property concessions. Historic mining within the San Antón de las Minas area concentrated on epithermal veins, however, the main area of present interest is the large low grade bulk mineable gold-copper-silver deposit at Cerro del Gallo where a significant mineral resource has been identified.

A Definitive Feasibility Study (DFS) was completed for the Cerro del Gallo project in May 2012. The DFS outlines an initial 7.2 year mine life, which could be extended to 14 years through a Second Stage Carbon-in-Leach (CIL)/Heap Leach mill expansion. The Cerro del Gallo DFS project has been planned as conventional open-pit truck and shovel operation coupled with a 4.5 million tonne per annum processing plant. The flow sheet design is broadly based upon a conventional cyanide heap leach and gold on carbon recovery technologies but will incorporate a SART processing stage to facilitate copper removal prior to gold recovery. The plant design is based on the treatment of both fully and partially oxidised ores, producing an average of 95,000 ounces of gold equivalent annually at estimated cash costs of US$700/oz.

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