Welcome!

Microsoft Cloud Authors: David Bermingham, Jayaram Krishnaswamy, Dana Gardner, Yung Chou, Pat Romanski

News Feed Item

Primero to Acquire Cerro Del Gallo

TORONTO, ONTARIO -- (Marketwire) -- 12/13/12 --

(Please note that all dollar amounts in this news release are expressed in Canadian dollars unless otherwise indicated.)

Primero Mining Corp. ("Primero" or the "Company") (TSX:P)(NYSE:PPP) today announced that it has entered into a definitive agreement (the "Agreement") with Cerro Resources NL ("Cerro") (ASX:CJO)(TSX VENTURE:CJO) whereby Primero will acquire all of the issued and outstanding common shares of Cerro by way of a scheme of arrangement (the "Arrangement") under the Australian Corporations Act 2001. Cerro is an exploration and development company whose principal asset is 69%(1) of the feasibility stage Cerro Del Gallo project, a gold-silver deposit with approximately 1.0 million ounces of gold equivalent proven and probable reserves and 2.3 million ounces of gold equivalent measured and indicated resources (inclusive of reserves)(2), located in the province of Guanajuato, Mexico.

Under the terms of the Arrangement, each Cerro shareholder will receive 0.023 of a Primero common share (the "Exchange Ratio") for each Cerro common share held (the "Share Consideration"). Additionally Cerro shareholders will receive 80.01% of the common shares of a newly incorporated company ("Spinco"). Spinco will assume Cerro's interests in the Namiquipa, Espiritu Santo, Mt Philp and Kalman projects, shares in Syndicated Metals Limited and approximately $4 million in cash. Primero will purchase a 19.99% interest in Spinco with anti-dilution rights for two years. Primero will also be entitled to appoint a director to the Spinco board of directors.

Excluding the value of the Spinco exploration assets, the offer represents an implied 62% premium to Cerro's 20-day volume weighted average price ("VWAP") and a 77% premium to the spot closing price at December 12, 2012. Upon completion of the Arrangement, existing Primero shareholders and Cerro shareholders will own approximately 85% and 15%, respectively, of the issued common shares of Primero. The total transaction value is approximately $119 million.

"For the past two years, Primero has been focused on organic growth at San Dimas at the same time as reviewing external diversification and acquisition opportunities. We believe that Cerro Resources' Cerro Del Gallo project offers our existing and new shareholders immediate improved leverage to gold with a significantly larger reserve and resource base, production and cash flow profile. Although, upon completion, it will represent 15% of Primero's market capitalization, it could ultimately deliver more than 55% of our total gold equivalent production," commented Joseph Conway, President and Chief Executive Officer. "This transaction solidifies Primero's operating advantage in Mexico, a region that we feel has further consolidation opportunities. In our view, Cerro Del Gallo is a very promising, undeveloped, large resource base opportunity in Mexico. Primero has the operational and financial strength to advance the project on a timely basis which will be beneficial for all stakeholders involved. This also represents a significant opportunity for Cerro shareholders in terms of continuing participation in Primero shares and their potential upside."

"Cerro management has recognized the investment market's prevailing preference to see new precious metals operations funded out of existing cash flows. By undertaking this transaction, Cerro shareholders will benefit from Primero's balance sheet and cash flow, enabling the Cerro Del Gallo project to be constructed without external financing. Importantly, this should enable returns from an operationalised Cerro Del Gallo to be maximized benefitting all shareholders. They will also benefit from improved market liquidity for shareholders and the combination with Primero's proven management team who have a demonstrated track record of successfully growing precious metals mining companies," stated Tony McDonald, Managing Director and Chief Executive Officer of Cerro.

Highlights of the Transaction:


--  Creates a diversified, high growth, competitive cost producer in Mexico
    with further consolidation opportunities. 
    
--  Peer leading growth profile with expected annualized production growth
    of 24% over the next four years, reaching at least 260,000 ounces of
    gold production by 2016. 
    
--  Combined attributable proven and probable reserves of approximately 1.7
    million gold equivalent ounces and measured and indicated resources of
    over 3.1 million gold equivalent ounces (inclusive of reserves). 
    
--  Strongly enhances and diversifies Primero's production profile and
    diversifies Cerro's development project with a high quality mine and
    existing cash flow. 
    
--  Ability to fund further opportunities with a strong balance sheet and
    significant cash flows from existing production. 
    
--  Leverages on Primero's position in Mexico. 
    
--  Additional significant exploration upside. 
    
--  Exceptional re-valuation opportunity for all shareholders, driven by
    compelling valuation, growth potential, transaction rationale and
    management track record. 

Benefits to Primero Shareholders:


--  Attractive long-life, precious metals project. 
    
--  Diversifies near-term production with an additional 95,000 gold
    equivalent ounces per year, a 58% increase in currently estimated near-
    term production. 
    
--  Doubles reserves and triples measured and indicated resources(3 ). 
    
--  Leverages on Primero's regional expertise and solidifies Primero's
    presence in Mexico, one of the world's most supportive mining districts,
    with further consolidation opportunities. 
    
--  Accretive to Primero on key metrics and an attractive total acquisition
    cost. 
    
--  Asset diversification reduces risk and volatility in cash flow and
    earnings. 
    
--  Allows participation in upside potential of non-Cerro Del Gallo assets
    through 19.99% ownership of Spinco. 
    
--  Enhanced capital markets profile and re-rating potential as a junior
    gold producer with a proven operating team, a superior growth profile
    and significant exploration upside. 
    
--  Delivers on Primero's strategy of creating value for shareholders
    through low risk exposure to precious metals in the Americas. 

Benefits to Cerro Shareholders:


--  Offer represents an implied premium of 62% to the 20 trading day VWAP as
    at December 12, 2012. The implied premium represents a share price
    exceeding Cerro's 52 week high. 
    
--  Immediate exposure to strong balance sheet and cash flow sufficient to
    fund the development of Cerro Del Gallo, as well as finance further
    growth opportunities including a potential further expansion of San
    Dimas. 
    
--  Primero has an existing management team with proven mine construction
    and operational expertise. 
    
--  Provides opportunity to participate in valuation re-rating as the
    combination has a greater market capitalization, liquidity and immediate
    cash flows. 
    
--  Increases analytical following and exposure of the Cerro Del Gallo
    opportunity. 
    
--  Allows continuing shareholder participation in non-Cerro Del Gallo
    assets through 80.01% ownership of Spinco. 

Transaction Summary

Under the terms of the Arrangement, each Cerro shareholder will receive 0.023 of a Primero common share for each Cerro common share held (the "Share Consideration"). Cerro shareholders will also receive 80.01% of the common shares of a newly incorporated company ("Spinco"). Spinco will acquire Cerro's interests in the Namiquipa, Espiritu Santo, Mt Philp and Kalman projects, shares in Syndicated Metals Limited and approximately $4 million in cash. Primero will purchase a 19.99% interest in Spinco with anti-dilution rights for two years. Primero will also be entitled to appoint a director to the Spinco board of directors.

Cerro's outstanding options and its option plan will be substantially assumed by Primero, subject to adjustment to reflect the Exchange Ratio and a corresponding upward adjustment in the exercise price.

The transaction will be carried out by way of a court-approved scheme of arrangement and will require approval by at least 75% of the votes cast by at least 50% of the shareholders of Cerro at a special meeting of Cerro shareholders. Approval of Cerro's option holders will also be required. The transaction is also subject to applicable regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature. It is anticipated that the Cerro shareholder meeting will be held in April 2013. Primero does not require a shareholder vote to complete the transaction.

The Arrangement includes customary provisions, including no solicitation of alternative transactions by Cerro, a right in favour of Primero to match any potential superior proposals and a reimbursement fee payable to Primero by Cerro in certain events.

Both companies' Boards of Directors have determined that the proposed transaction is fair and reasonable to their respective shareholders based on a number of factors. Each company's Board of Directors approved the terms of the proposed Arrangement and Cerro's Board of Directors will recommend that their shareholders vote in favour of the proposed transaction. TD Securities Inc. has provided an opinion to the Board of Directors of Primero that, as of the date of such opinion and based upon and subject to the scope of review, assumptions, limitations, qualifications and other matters described in such opinion, the consideration to be paid by Primero in connection with the proposed transaction is fair, from a financial point of view, to Primero. Cerro will engage an independent expert to provide a report to shareholders as to the fairness and reasonableness of the transaction and to assist them in determining their vote at a meeting to approve the transaction. Each of the directors of Cerro and its Chief Executive Officer and Chief Financial Officer have agreed to enter into a support agreement and have agreed to vote in favour of the transaction.

The transaction is expected to close in May 2013.

Advisors and Counsel

Primero's financial advisor in relation to the transaction is TD Securities Inc. Its Canadian legal advisor is Stikeman Elliott LLP and its Australian legal advisor is ClarkeKann Lawyers LLP.

Cerro's Canadian financial advisor in relation to the Canadian aspects of the transaction is National Bank Financial Inc. Its Canadian legal advisor is Wildeboer Dellelce LLP and its Australian legal advisor is GRT Lawyers.

Conference Call and Webcast

A conference call is scheduled for Thursday, December 13, 2012 at 10:00 a.m. (EST), to discuss the proposed transaction. Participants may join the call by dialing North America toll free 1-866-200-6965 or 1-646-216-7221 for calls outside Canada and the U.S. and entering the participant passcode 29461929#.

A recorded playback of the call will be available until January 10, 2013 by dialing North America toll free 1-866-206-0173 or 646-216-7204 for calls outside Canada and the U.S. and entering the call back passcode 278669#.

A live and archived webcast of the conference call will also be available at www.primeromining.com.

For more details about the transaction please refer to the investor presentation on Primero's website at www.primeromining.com.


(1) Cerro Del Gallo is owned 69.2% by Cerro Resources NL and 30.8% by       
    Goldcorp Inc. as of September 30, 2012.                                 
                                                                            
(2) Gold equivalent reserves and resources are calculated based on 100%     
    ownership of Cerro Del Gallo and on long term consensus prices of       
    US$1,350 per ounce of gold, US$23.25 per ounce of silver and US$7,447   
    per tonne of copper. Measured and indicated resources include reserves. 
                                                                            
(3) Assuming Goldcorp Inc. converts their position to a Net Profit Interest.

About Primero

Primero Mining Corp. is a Canadian-based precious metals producer that owns 100% of the San Dimas gold-silver mine in Mexico. Primero is focused on delivering superior, sustainable value for all stakeholders with low-risk exposure to precious metals. The Company has intentions to become an intermediate producer by building a portfolio of high quality, low cost precious metals assets in the Americas.

Primero's website is www.primeromining.com.

About Cerro Resources

Cerro Resources is a precious and base metals exploration and development company. The Company is currently focused on Mexico where it is developing the Cerro Del Gallo gold/silver project in the central state of Guanajuato, Mexico, actively exploring the Namiquipa silver project in northern Mexico, and commencing exploration on the Espiritu Santo gold/silver project in Jalisco. It also maintains an active focus on the Mt Isa, Queensland, region where it holds 100% of the Mt Philp haematite project as well as a continued interest in the Kalman molybdenum, rhenium, and copper project.

Additional information about the Company and its projects is available on the Cerro's website at www.cerroresources.com and on SEDAR.

CAUTIONARY NOTE ON FORWARD-LOOKING INFORMATION

This Primero news release contains "forward-looking information", as such term is defined in applicable Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, concerning Primero's future financial or operating performance and other statements that express management's expectations or estimates of future developments, circumstances or results. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "expects", "believes", "anticipates", "budget", "scheduled", "estimates", "forecasts", "intends", "plans" and variations of such words and phrases, or by statements that certain actions, events or results "may", "will", "could", "would" or "might", "be taken", "occur" or "be achieved". Such forward-looking information may include, without limitation, statements regarding the completion and expected benefits of the proposed transaction and other statements that are not historical facts. Forward-looking information is based on a number of assumptions and estimates that, while considered reasonable by management based on the business and markets in which Primero operates, are inherently subject to significant operational, economic and competitive uncertainties and contingencies. Assumptions upon which forward looking statements relating to the arrangement have been made include that Primero will be able to satisfy the conditions in the Agreement, that due diligence investigations of each party will not identify any materially adverse facts or circumstances, that the required approvals will be obtained from the shareholders of Cerro, that all required third party, regulatory and government approvals will be obtained and that Primero will be able to achieve its currently announced guidance targets.

Primero cautions that forward-looking information involves known and unknown risks, uncertainties and other factors that may cause Primero's actual results, performance or achievements to be materially different from those expressed or implied by such information, including, but not limited to: gold, silver and copper price volatility; fluctuations in foreign exchange rates and interest rates; the impact of any hedging activities; discrepancies between actual and estimated production, between actual and estimated reserves and resources or between actual and estimated metallurgical recoveries; costs of production; capital expenditure requirements; the costs and timing of construction and development of new deposits and expansion of existing operations; the success of exploration and permitting activities; parts, equipment, labor or power shortages or other increases in costs; mining accidents, labour disputes or other adverse events; and changes in applicable laws or regulations. In addition, the factors described or referred to in the section entitled "Risk Factors" in Primero's Annual Information Form for the year ended December 31, 2011 or under the heading "Risks and Uncertainties" in Primero's 2011 Annual Report, both of which are available on the SEDAR website at www.sedar.com, should be reviewed in conjunction with the information found in this news release. Although Primero has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in forward-looking information, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. As a result of these risks and uncertainties, the proposed transaction could be modified, restricted or not completed, and the results or events predicted in these forward looking statements may differ materially from actual results or events. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information in this news release is made as of the date of this news release, and Primero disclaims any intention or obligation to update or revise such information, except as required by applicable law.

This news release does not constitute an offer to buy any securities or a solicitation of any vote or approval or a solicitation of an offer to sell any securities.

Cautionary Note to US Investors Regarding Mineral Reporting Standards:

Primero prepares its disclosure in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of US securities laws. Terms relating to mineral resources and mineral reserves in this news release are defined in accordance with National Instrument 43-101-Standards of Disclosure for Mineral Projects under the guidelines set out in the Canadian Institute of Mining, Metallurgy, and Petroleum Standards on Mineral Resources and Mineral Reserves. The Securities and Exchange Commission (the "SEC") permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. Primero use certain terms, such as, "measured mineral resources", "indicated mineral resources", "inferred mineral resources" and "probable mineral reserves", that the SEC does not recognize (these terms may be used in this news release and are included in the public filings of Primero which have been filed with securities commissions or similar authorities in Canada).

Estimates of equivalent production are calculated using analyst consensus metal price estimates. Primero's gold equivalent production estimate is adjusted for the silver purchase agreement and only silver ounces attributable to Primero are included.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

@ThingsExpo Stories
SYS-CON Events announced today that Avere Systems, a leading provider of enterprise storage for the hybrid cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Avere delivers a more modern architectural approach to storage that doesn’t require the overprovisioning of storage capacity to achieve performance, overspending on expensive storage media for inactive data or the overbuilding of data centers ...
SYS-CON Events announced today that Alert Logic, Inc., the leading provider of Security-as-a-Service solutions for the cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Alert Logic, Inc., provides Security-as-a-Service for on-premises, cloud, and hybrid infrastructures, delivering deep security insight and continuous protection for customers at a lower cost than traditional security solutions. Ful...
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 ad...
Companies can harness IoT and predictive analytics to sustain business continuity; predict and manage site performance during emergencies; minimize expensive reactive maintenance; and forecast equipment and maintenance budgets and expenditures. Providing cost-effective, uninterrupted service is challenging, particularly for organizations with geographically dispersed operations.
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management...
SYS-CON Events announced today that VAI, a leading ERP software provider, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. VAI (Vormittag Associates, Inc.) is a leading independent mid-market ERP software developer renowned for its flexible solutions and ability to automate critical business functions for the distribution, manufacturing, specialty retail and service sectors. An IBM Premier Business Part...
With an estimated 50 billion devices connected to the Internet by 2020, several industries will begin to expand their capabilities for retaining end point data at the edge to better utilize the range of data types and sheer volume of M2M data generated by the Internet of Things. In his session at @ThingsExpo, Don DeLoach, CEO and President of Infobright, will discuss the infrastructures businesses will need to implement to handle this explosion of data by providing specific use cases for filte...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Fortunately, meaningful and tangible business cases for IoT are plentiful in a broad array of industries and vertical markets. These range from simple warranty cost reduction for capital intensive assets, to minimizing downtime for vital business tools, to creating feedback loops improving product design, to improving and enhancing enterprise customer experiences. All of these business cases, which will be briefly explored in this session, hinge on cost effectively extracting relevant data from ...
SYS-CON Events announced today that Pythian, a global IT services company specializing in helping companies adopt disruptive technologies to optimize revenue-generating systems, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Founded in 1997, Pythian is a global IT services company that helps companies compete by adopting disruptive technologies such as cloud, Big Data, advanced analytics, and DevO...
As enterprises work to take advantage of Big Data technologies, they frequently become distracted by product-level decisions. In most new Big Data builds this approach is completely counter-productive: it presupposes tools that may not be a fit for development teams, forces IT to take on the burden of evaluating and maintaining unfamiliar technology, and represents a major up-front expense. In his session at @BigDataExpo at @ThingsExpo, Andrew Warfield, CTO and Co-Founder of Coho Data, will dis...
With the Apple Watch making its way onto wrists all over the world, it’s only a matter of time before it becomes a staple in the workplace. In fact, Forrester reported that 68 percent of technology and business decision-makers characterize wearables as a top priority for 2015. Recognizing their business value early on, FinancialForce.com was the first to bring ERP to wearables, helping streamline communication across front and back office functions. In his session at @ThingsExpo, Kevin Roberts...
SYS-CON Events announced today that iDevices®, the preeminent brand in the connected home industry, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. iDevices, the preeminent brand in the connected home industry, has a growing line of HomeKit-enabled products available at the largest retailers worldwide. Through the “Designed with iDevices” co-development program and its custom-built IoT Cloud Infrastruc...
Eighty percent of a data scientist’s time is spent gathering and cleaning up data, and 80% of all data is unstructured and almost never analyzed. Cognitive computing, in combination with Big Data, is changing the equation by creating data reservoirs and using natural language processing to enable analysis of unstructured data sources. This is impacting every aspect of the analytics profession from how data is mined (and by whom) to how it is delivered. This is not some futuristic vision: it's ha...
Silver Spring Networks, Inc. (NYSE: SSNI) extended its Internet of Things technology platform with performance enhancements to Gen5 – its fifth generation critical infrastructure networking platform. Already delivering nearly 23 million devices on five continents as one of the leading networking providers in the market, Silver Spring announced it is doubling the maximum speed of its Gen5 network to up to 2.4 Mbps, increasing computational performance by 10x, supporting simultaneous mesh communic...
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, will provide an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data profes...
SYS-CON Events announced today that Men & Mice, the leading global provider of DNS, DHCP and IP address management overlay solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. The Men & Mice Suite overlay solution is already known for its powerful application in heterogeneous operating environments, enabling enterprises to scale without fuss. Building on a solid range of diverse platform support,...
One of the bewildering things about DevOps is integrating the massive toolchain including the dozens of new tools that seem to crop up every year. Part of DevOps is Continuous Delivery and having a complex toolchain can add additional integration and setup to your developer environment. In his session at @DevOpsSummit at 18th Cloud Expo, Miko Matsumura, Chief Marketing Officer of Gradle Inc., will discuss which tools to use in a developer stack, how to provision the toolchain to minimize onboa...
SYS-CON Events announced today that Fusion, a leading provider of cloud services, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Fusion, a leading provider of integrated cloud solutions to small, medium and large businesses, is the industry's single source for the cloud. Fusion's advanced, proprietary cloud service platform enables the integration of leading edge solutions in the cloud, including clou...
Most people haven’t heard the word, “gamification,” even though they probably, and perhaps unwittingly, participate in it every day. Gamification is “the process of adding games or game-like elements to something (as a task) so as to encourage participation.” Further, gamification is about bringing game mechanics – rules, constructs, processes, and methods – into the real world in an effort to engage people. In his session at @ThingsExpo, Robert Endo, owner and engagement manager of Intrepid D...