Referenced Stocks

Primero Mining Up 30% at Midday, at 2-Yr High; Announces Positive Advance Tax Ruling in Mexico

By Midnight Trader,  October 05, 2012, 12:11:06 PM EDT

Primero Mining Corp. (P.TO) announced today that the Company's Mexican subsidiary has received a positive ruling from the Mexican tax authorities on its Advance Pricing Agreement ( APA ) filing made in October 2011.

The ruling confirms that the Company's Mexican subsidiary appropriately records revenue and taxes from sales under the silver purchase agreement at realized prices rather than spot prices effective from August 6, 2010.

Under Mexican tax law, an APA ruling is generally applicable for up to a five year period. For Primero this applies to the fiscal years 2010 to 2014. Assuming the Company continues to sell its silver from its San Dimas mine on the same terms and there are no changes in the application of Mexican tax laws relative to the APA ruling, the Company expects to pay taxes on realized prices for the life of the San Dimas mine.

According to the silver purchase agreement between the Company and Silver Wheaton Corp., , until August 6, 2014 Primero will deliver to Silver Wheaton aN annual amount equal to the first 3.5 million ounces of silver produced at San Dimas and 50% of any excess at US$4.08 per ounce (increasing by 1% per year).Thereafter Primero will deliver to Silver Wheaton an annual amount equal to the first 6.0 million ounces of silver produced at San Dimas and 50% of any excess at US$4.20 per ounce (increasing by 1% per year).The Company will receive silver spot prices only after the annual threshold amount has been delivered.

Primero is now trading at $6.92, well above a previous yr high of $5.59. Day range is between $6.90 and $7.72.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Commodities

Referenced Stocks: APA



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