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TORONTO (miningweekly.com) – The import and export licences of a Mexican subsidiary of precious metals producer Primero Mining were suspended in May by the Mexican customs authorities, resulting in about 880 000 oz of silver not being sold in the three months ended June.
Customs authorities had suspended the licences owing to a discrepancy over Primero Empresa Minera’s (PEM’s) address related to its corporate office relocation from Mexico City to Durango.
PEM had since clarified the discrepancy and had been meeting with customs officials, but had regrettably not been reinstated on the customs registry.
Primero’s subsidiary was able to source necessary supplies locally so that the San Dimas mine and mill continued to operate uninterrupted.
PEM was currently refining its gold/silver doré in Mexico and selling its gold in the normal course. However, the company was unable to deliver silver under its silver purchase agreement with metals streaming firm Silver Wheaton, which required delivery outside of Mexico. As a result, about 630 000 oz of silver were not delivered under the silver purchase agreement in the second quarter and PEM did not get the benefit of spot sales on about 250 000 oz.
This represented about $6.5-million in delayed revenue.
Meanwhile, senior customs officials had confirmed that Pimero's registry status was being reviewed, but the company had not been given a definitive date for reinstatement of the licences.
Primero delivered a threshold of 3.5-million ounces of silver a year to Silver Wheaton, after which it could sell half of the silver produced at San Dimas at spot prices for its own account until August 5, when the threshold reset.
The danger was that should Primero’s export licence not be reinstated before August 5, it might not realise any spot silver sales in the third quarter. Should this happen, the company could then reach the annual threshold earlier in 2016, providing greater spot price flexibility.
Primero had forecast full-year output of between 250 000 oz and 270 000 oz of gold equivalent, at a cost of between $650/oz and $700/oz of gold equivalent, or $1 000/oz and $1 100/oz on an all-in sustaining costs basis.