On October 15, 2004, the previous owner of the San Dimas mine, entered into a silver purchase agreement to sell 100% of the payable silver produced for a period of 25 years to a subsidiary of Silver Wheaton Corp.
On August 6, 2010, upon Primero’s acquisition of the San Dimas mine, the silver purchase agreement was amended. Primero assumed the obligation to sell Silver Wheaton the first 3.5 million ounces of payable silver produced per year plus 50% of any excess at $4.04 per ounce (plus 1% inflation) until August 5, 2014. From August 6, 2014 until the end of the mine life, Primero will sell Silver Wheaton the first 6 million ounces of payable silver produced per year plus 50% of any excess at $4.20 (plus 1% inflation) per ounce. Primero sells the remainder of the silver produced at spot market prices, considerably increasing revenues. The silver purchase agreement provides that a minimum of 215 million cumulative silver ounces must be delivered to Silver Wheaton by the end of 2031and any shortfall is the obligation of Goldcorp Inc., which will be required to make a payment of $0.50 per ounce below 215 million ounces.