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Gold: 1,283.45 -0.09 -0.01% Volume: Pricing Delayed 20 Minutes April 23, 2014

Operations

Underground gold and silver mining operations are carried out at the different ore zones in the district. The operations employ underground cut-and-fill techniques, with LHD equipment feeding either truck or rail haul to the mills. Primary access takes advantage of the topographic relief, with adits driven at river level to intersect the veins at depth.

The ore is transported from the mining areas to the processing plant in Tayoltita. The current operations employ approximately 1,100 people.

Tayoltita Area

The Tayoltita area includes the oldest operating mine in the San Dimas area. The main access is a 4.4 kilometre tunnel from a portal approximately 400 metres northeast of the Tayoltita mill.

The mining method employs mechanized cut-and-fill mining on vein mineralization using waste rock as backfill. The veins vary from 1 to 3 metres in width and generally dip at 75-80 degrees. Production drilling is largely completed with jackleg drills depending on the vein thickness. Ore is hauled from the stoping areas using LHD equipment, then by rail haulage to surface through the main access tunnel. Tayoltita has the lowest overall operating costs and cut-off grade in the area mainly due to the efficient ore transport system.

The development of the San Luis tunnel to connect the San Antonio area to the Tayoltita area enabled the development of several additional veins of variable width dipping at 75 degrees. This area is currently being developed as an important new source of ore for Tayoltita.

Arana Hanging Wall Area

Main access to the Santa Rita mine is by an adit located three kilometres to the northeast of the Tayoltita mill site. The vein dip varies from sub vertical to as low as 35 degrees which allows for a room and pillar mining operation in some of the flatter lying areas. Ore is hauled by LHD equipment to either an internal shaft or directly to rail haulage on the main access tunnel. The shaft employs a double drum hoist with 2.2 tonne skips. San Dimas plans to connect the rail haulage to the Tayoltita tunnel, which will considerably reduce ore transport costs. Currently, ore is loaded at the portal for surface haulage to the Tayoltita mill.

Central Block Area

The Central Block area, currently the main mining area at San Dimas, is located 2 kilometres northwest of Tayoltita. It is linked to it by the San Luis Tunnel, which provides easy access to the area, as well as integration of support services.

Mining operations at Central Block vary according to the width of the veins, since they range from one to six metres. All are exploited by conventional cut and fill. Ore haulage is by a combination of LHD equipment and trucking.

Ore is to be transported through the San Francisco Tunnel, which was completed in the second half of 2009.

Sinaloa Graben Area

The Sinaloa Graben area, a recently discovered high-grade exploration area, is located 2 kilometres west of the Central Block. The tunnels that serve as the main haulage levels for the Sinaloa Graben and Center Block areas were completed during the first quarter of 2010.

Exploration results to date indicate that the Sinaloa Graben could contain higher grade mineralization than the adjacent Central Block and with larger widths. Primero is focused on increasing the known mineralization in the Sinaloa Graben, which represents the future of the San Dimas mine.

Processing

Milling operations are carried out at Tayoltita. The Tayoltita mill processes ore from throughout the district and has a current throughput capacity of 2,100 tonnes per day. The mill facility is a conventional operation that employs cyanidation and zinc precipitation for recovery of gold and silver.

The Tayoltita mill has undergone a series of plant expansions over its operating life. In December 2005, crushing capacity was increased to 2,100 tonnes per day, as well as improvements to the chemical treatment / leaching area.

The Tayoltita mill employs fine crushing and single stage ball milling to achieve a fine grind before passing into the leach circuit. Leaching is completed in a series of tanks providing 72 hours of leach residence time. The pregnant solution is recovered in a CCD circuit with the gold and silver recovered from solution in a zinc precipitation circuit.

Tailing is pumped by a newly installed single stage pumping station to the tailings impoundment area in a box canyon east of the mill site. The gold and silver precipitate is refined using an induction furnace to produce 1,000 ounce gold and silver dore bars.

DESIGNED BLENDER