Primero meets production threshold 6 wks early, starts selling at spot prices
TORONTO (miningweekly.com) – Silver miner Primero Mining on Thursday announced it had produced the yearly threshold of 3.5-million ounces of silver and will begin selling 50% of the silver produced at San Dimas, in Mexico, at spot prices for its own account until August 5.
The TSX-listed company said that it expected to sell between 1.25-million and 1.5-million ounces of silver at spot realised prices by August.
Spot silver fetched $21.12/oz in New York on Thursday.
The company assumed the silver purchase agreement with streaming firm Silver Wheaton when it bought the San Dimas mine from Goldcorp in 2010, and the agreement was renegotiated in order for Primero to participate in the silver produced above the yearly threshold amount. The silver purchase agreement’s yearly threshold increases to six-million ounces on August 5, and would remain in place for the remainder of the mine life.
The metals-streaming agreement, which initially involved the sale of all of the payable silver produced for the mine’s first 25 years, was amended when Primero acquired the mine, to an obligation to sell Silver Wheaton the first 3.5-million ounces of payable silver produced a year, including half of any excess production at $4.04/oz, which is provided with a 1% yearly increase to cover inflation, until August 5.
Thereafter, Silver Wheaton would benefit from the sale of the first six-million ounces of payable silver produced a year, including half of any excess at the higher price of $4.20, plus the 1% to cover inflation.
The silver purchase agreement stipulated that at least 215-million cumulative silver ounces had to be delivered to Silver Wheaton by the end of 2031.
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