Primero Mining Corp. says a fix of its troublesome Black Fox gold mine in Canada is within reach, restoring the miner’s credibility for investors while clearing the way for future expansion through acquisitions.
The Toronto-based company, which has fallen 45 percent in the past year, expects to show signs of improved performance at the northern Ontario mine this year, Chief Executive Officer Joe Conway said. In July, the company cut its gold-reserve estimate at Black Fox, which it acquired in a takeover last year to add to output from its flagship San Dimas gold and silver mine in Mexico.
“The reality is we’re very much focused on demonstrating to the investment community that we’ve turned Black Fox to account,” Conway, 57, said in a phone interview.
Analysts, at least, are giving the former CEO of Iamgold Corp. the benefit of the doubt. With 15 buy, one sell and two hold ratings on Primero, they project the share price will rise at least 50 percent in the next 12 months, based on target prices compiled by Bloomberg. They also estimate the company’s per-share cash flow will expand faster than most of its Canadian peers, according to data compiled by Bloomberg.
“Black Fox really drives the bus” in terms of expectations for the share price, Joe Fazzini, a Toronto-based analyst at Dundee Capital Markets, said by phone. “It looks like the worst has passed.”
Fivefold Expansion
Primero fell 2 percent to C$4.41 at 4 p.m. in Toronto, giving it a market value of C$713.8 million ($568 million).
Conway became CEO of Toronto-based gold miner Iamgold in 2003, when the company bought Repadre Capital Corp., which Conway had led. During his seven-year tenure at Iamgold, the company’s market value expanded more than fivefold to about C$6 billion, as it grew from an investor in mines to an operator with almost 1 million ounces a year of production.
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