VANCOUVER (miningweekly.com) – Precious metals producer Primero Mining has completed the sale of its development asset, the Cerro del Gallo mine, in Guanajuato state, Mexico, to fellow Canadian miner Argonaut Gold.
Under the terms of the transaction, Toronto-headquartered Primero pocketed $15-million in cash, which will be put towards permanently reducing the outstanding balance on the company's revolving credit facility (RCF), which stood at $77-million at quarter-end in September.
Primero has reached agreement with its lenders to provide an extension past the RCF maturing date of November 23, posting a guarantee underwritten by metals streamer Wheaton Precious Metals.
The RCF maturity date was extended to December 1, providing the company with the ability to continue negotiations surrounding its strategic review process and the possible divestiture of its flagship San Dimas mine, in Mexico.
Primero reported total debt, which includes its 5.75% convertible debentures totalling $47.25-million, of $1.24-billion, as at the end of September.
Primero said in its latest Management Discussion and Analysis, filed with securities regulators, that the question marks regarding its ability to repay current debt might trigger cross-default provisions under the convertible debentures and the Wheaton Precious Metals silver purchase agreement on San Dimas, raising material unease over its ability to continue as a going concern.
The company became distressed following a prolonged strike at the San Dimas mine earlier this year, and a subsequent unexpected phased ramp-up, which has forced it to cut guidance and sell noncore assets in an attempt to prop up the balance sheet.