Form 6-K PRIMERO MINING CORP For: Nov 03

FREE Breaking News Alerts from StreetInsider.com!

StreetInsider.com Top Tickers, 4/23/2024

1. GM
2. TSLA
3. SPY
4. ADBE
5. CPRI

6. TPR
7. NVDA
8. CLF
9. AMP
10. VERX

Top News Most Read Special Reports

November 3, 2015 7:08 AM EST

E-mail

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2015

Commission File No. 001-35278

PRIMERO MINING CORP.
(Translation of registrant's name into English)

Suite 2100, 79 Wellington Street West,
TD South Tower, P.O Box 139
Toronto, Ontario
M5K 1H1 Canada
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F

Form 20-F [ ] Form 40-F [X]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) [ ]

Indicate by check mark whether the registrant, by furnishing the information contained in this Form, is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes [ ] No [X]

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________________________

SUBMITTED HEREWITH

Exhibits
99.1	Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2015 and 2014
99.2	Management's Discussion and Analysis for the three and nine months ended September 30, 2015 and 2014
99.3	CEO Certification
99.4	CFO Certification
99.5	News Release dated November 3, 2015

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 3, 2015

PRIMERO MINING CORP.

“Wendy Kaufman”
______________________________________________
Wendy Kaufman
Chief Financial Officer

PRIMERO MINING CORP.

SEPTEMBER 30, 2015

TABLE OF CONTENTS

Condensed consolidated interim statements of operations and comprehensive income (loss)	1

Condensed consolidated interim statements of financial position	2

Condensed consolidated interim statements of changes in equity	3

Condensed consolidated interim statements of cash flows	4

Notes to the condensed consolidated interim financial statements	5 - 24

PRIMERO MINING CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

(IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)

(UNAUDITED)

			Three months ended						Nine months ended
			September 30						September 30
						2014						2014
						(As restated,						(As restated,
	Notes		2015			Note 1	)		2015			Note 1	)

Revenue	4	$	79,219		$	75,503		$	219,900		$	203,441
Operating expenses			(41,859	)		(44,502	)		(121,038	)		(112,572	)
Depreciation and depletion	7		(19,535	)		(17,798	)		(58,489	)		(43,540	)
Total cost of sales			(61,394	)		(62,300	)		(179,527	)		(156,112	)
Earnings from mine operations			17,825			13,203			40,373			47,329
Goodwill impairment charge			-			(98,961	)		-			(98,961	)
Exploration expenses			(231	)		(1,205	)		(1,091	)		(1,239	)
General and administrative expenses			(6,247	)		(5,854	)		(21,411	)		(29,698	)
Earnings (loss) from operations			11,347			(92,817	)		17,871			(82,569	)
Transaction costs and other expenses			-			(1,120	)		(3,685	)		(8,884	)
Finance expense	11		(3,057	)		(2,309	)		(7,860	)		(4,617	)
Mark-to-market gain on convertible debentures	9(c)		9,000			-			13,500			-
Other income (loss)	13		(5,347	)		4,686			(2,475	)		1,867
Earnings (loss) before income taxes			11,943			(91,560	)		17,351			(94,203	)
Income tax expense	14		(17,346	)		(7,922	)		(25,909	)		(8,414	)
Net loss for the period			($5,403	)		($99,482	)		($8,558	)		($102,617	)
Other comprehensive income (loss), net of tax
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations, net of tax of $nil			(131	)		(1,870	)		(865	)		(282	)
Unrealized gain (loss) on investment in Fortune Bay, net of tax of $nil			-			(95	)		60			(444	)
Reclassification of unrealized loss on investment in Fortune Bay to impairment, net of tax of $nil			-			-			456			-
Total comprehensive loss for the period			($5,534	)		($101,447	)		($8,907	)		($103,343	)
Basic loss per share			($0.03	)		($0.62	)		($0.05	)		($0.69	)
Diluted loss per share			($0.03	)		($0.62	)		($0.05	)		($0.69	)
Weighted average number of common shares outstanding
Basic			162,472,841			159,960,683			162,202,155			149,719,306
Diluted			162,472,841			159,960,683			162,202,155			149,719,306

See accompanying notes to the condensed consolidated interim financial statements.

PRIMERO MINING CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(IN THOUSANDS OF UNITED STATES DOLLARS)

(UNAUDITED)

			September 30			December 31
	Notes		2015			2014
Assets
Current assets
Cash and cash equivalents		$	43,104		$	27,389
Trade and other receivables			36			59
Taxes receivable			26,719			33,272
Prepaid expenses			10,744			6,633
Inventories	8		33,166			20,366
Total current assets			113,769			87,719
Non-current assets
Restricted cash	6		6,140			17,646
Mining interests	7		881,742			881,480
Deferred tax asset			-			611
Long-term stockpile	8		8,195			14,309
Other non-current assets			1,237			1,055
Total assets		$	1,011,083		$	1,002,820

Liabilities
Current liabilities
Trade and other payables		$	31,499		$	50,743
Income tax payable			10,264			5,575
Other taxes payable			1,769			2,688
Current portion of long-term debt	9		52,076			5,616
Total current liabilities			95,608			64,622
Non-current liabilities
Other taxes payable			12,095			11,295
Deferred tax liability			59,267			50,374
Decommissioning liability			30,392			32,566
Long-term debt	9		63,500			89,771
Derivative liability	9(a)		-			1,405
Other long-term liabilities			4,826			4,802
Total liabilities		$	265,688		$	254,835

Shareholders' equity
Share capital	10(a)	$	863,076		$	858,761
Warrant reserve	10(b)		-			34,782
Contributed surplus	10(c)		58,310			21,526
Accumulated other comprehensive loss			(5,510	)		(5,161	)
Deficit			(170,481	)		(161,923	)
Total shareholders' equity		$	745,395		$	747,985
Total liabilities and shareholders' equity		$	1,011,083		$	1,002,820

Commitments and contingencies (Note 18)

See accompanying notes to the condensed consolidated interim financial statements.

PRIMERO MINING CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

(IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT FOR NUMBER OF COMMON SHARES)

(UNAUDITED)

													Accumulated
													other			Deficit
		Share capital					Warrants			Contributed			comprehensive			Note 1	)
	Notes		Shares		Amount		reserve			surplus			loss			(As restated,			Total equity
Balance, January 1, 2014			115,726,035	$	553,518	$	34,237		$	15,518			($4,644	)	$	62,461		$	661,090
Shares issued for
Acquisition of Brigus Gold Corp.	2		41,340,347		279,049		545			6,983			-			-			286,577
Exercise of stock options	10(d)		1,911,744		14,105		-			(4,232	)		-			-			9,873
PSUs settled in shares			-		-		-			-			-			-			-
Exercise of warrants			-		-		-			-			-			-			-
Flow-through agreement	10(a)		1,000,000		7,105		-			-			-			-			7,105
Foreign currency translation			-		-		-			-			(726	)		-			(726	)
Unrealized loss on Fortune Bay investment			-		-		-			-			-			-			-
Share-based payment	10(c)		-		-		-			2,329			-			-			2,329
Loss for the period			-		-		-			-			-			(102,617	)		(102,617	)
Balance, September 30, 2014			159,978,126	$	853,777	$	34,782		$	20,598			($5,370	)		($40,156	)	$	863,631
Shares issued for
Exercise of stock options	10(d)		10,000	$	39	$	-			($15	)	$	-		$	-		$	24
PSUs settled in shares	10(e)		81,477		350		-			-			-			-			350
Exercise of warrants			4,790		47		-			-			-			-			47
Flow-through agreement	10(a)		1,481,482		4,548		-			-			-			-			4,548
Foreign currency translation			-		-		-			-			665			-			665
Unrealized loss on Fortune Bay investment			-		-		-			-			(456	)		-			(456	)
Share-based payment	10(c)		-		-		-			943			-			-			943
Loss for the period			-		-		-			-			-			(121,767	)		(121,767	)
Balance, December 31, 2014			161,555,875	$	858,761	$	34,782		$	21,526			($5,161	)		($161,923	)	$	747,985
Shares issued for
Exercise of stock options	10(d)		300,000	$	1,120	$	-			($294	)	$	-		$	-		$	826
PSUs settled in shares	10(e)		637,883		3,195		-			(3,398	)		-			-			(203	)
Expiry of warrants	10(b)		-		-		(34,782	)		34,782			-			-			-
Reclassification of unrealized loss on investment in Fortune Bay			-		-		-			-			456			-			456
Foreign currency translation			-		-		-			-			(865	)		-			(865	)
Unrealized gain on Fortune Bay investment			-		-		-			-			60			-			60
Share-based payment	10(c)		-		-		-			5,694			-			-			5,694
Net income (loss) for the period			-		-		-			-			-			(8,558	)		(8,558	)
Balance, September 30, 2015			162,493,758	$	863,076	$	-		$	58,310			($5,510	)		($170,481	)	$	745,395

Total comprehensive loss was $8.9 million for the nine months ended September 30, 2015 (September 30, 2014 – $103.3 million, as restated) .
See accompanying notes to the condensed consolidated interim financial statements.

PRIMERO MINING CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

(IN THOUSANDS OF UNITED STATES DOLLARS)

(UNAUDITED)

			Three months ended						Nine months ended
			September 30						September 30
						2014						2014
						(As restated,						(As restated,
	Notes		2015			Note 1	)		2015			Note 1	)
Operating activities
Earnings (loss) before income taxes		$	11,943			($91,560	)	$	17,351			($94,203	)
Adjustments for:
Depreciation and depletion	7		19,535			17,798			58,489			43,540
Goodwill impairment charge			-			98,961			-			98,961
Share-based compensation expense			1,285			(993	)		6,360			10,713
Payments made under the Phantom Share Unit Plan			(196	)		(336	)		(3,813	)		(9,490	)
Mark-to-market gain on convertible debentures			(9,000	)		-			(13,500	)		-
Write-off of assets			-			102			-			1,317
Write-down of inventory			745			525			1,791			1,750
Unrealized foreign exchange loss (gain)			(1,712	)		(2,385	)		(3,232	)		97
Taxes paid			(5,574	)		(610	)		(11,421	)		(1,549	)
Other			39			(2,029	)		(955	)		(1,636	)
Other adjustments
Transaction costs (disclosed in financing activities)			-			-			3,651			-
Finance income (disclosed in investing activities)			(16	)		(78	)		(94	)		(262	)
Finance expense			3,057			2,309			7,860			4,617
Operating cash flow before working capital changes			20,106			21,704			62,487			53,855
Changes in non-cash working capital	12		7,998			(9,682	)		(18,970	)		(36,889	)
Cash provided by (used in) operating activities		$	28,104		$	12,022		$	43,517		$	16,966
Investing activities
Expenditures on mining interests			($20,687	)		($30,087	)		($60,448	)		($80,880	)
Equity investment in Santana Minerals			-			(355	)		-			(355	)
Acquisition of Brigus Gold Corp (net)			-			-			-			(7,773	)
Interest received			16			78			94			262
Cash used in investing activities			($20,671	)		($30,364	)		($60,354	)		($88,746	)
Financing activities
Repayment of debt	9 (d)	$	-			($1,183	)		($40,000	)		($57,545	)
Proceeds on exercise of options			-			510			826			9,873
Issuance of $75 million convertible debt			-			-			75,000			-
Transaction costs on issuance of convertible debt			-			-			(3,651	)		-
Payments on capital leases			(1,533	)		-			(4,832	)		-
Funds released from reclamation bond	6		-			-			9,846			-
Proceeds on issuance of flow-through shares			-			-			-			8,037
Drawdown on line of credit, net of transaction costs			-			(561	)		-			27,632
Interest paid			(3,191	)		(2,239	)		(6,267	)		(3,817	)
Cash provided by (used in) financing activities			($4,724	)		($3,473	)	$	30,922			($15,820	)
Effect of foreign exchange rate changes on cash		$	565			($297	)	$	1,630			($1,055	)
Increase (decrease) in cash		$	3,274			($22,112	)	$	15,715			($88,655	)
Cash, beginning of period			39,830			44,168			27,389			110,711
Cash, end of period		$	43,104		$	22,056		$	43,104		$	22,056

Supplemental cash flow information (Note 12)

See accompanying notes to the condensed consolidated interim financial statements.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

1.	Corporate Information and basis of preparation

Primero Mining Corp. (Primero or the Company) is a publicly traded company, listed on both the Toronto and New York Stock Exchanges. Its registered office is Suite 1500, 1055 West Georgia Street, Vancouver, British Columbia. The Corporate address is Suite 2100, 79 Wellington Street West, Toronto, Ontario. The Company owns two producing properties, the San Dimas gold-silver mine in the San Dimas district of Mexico and the Black Fox gold mine in Timmins, Ontario, Canada. The Company owns two properties adjacent to the Black Fox gold mine – Grey Fox and Pike River, which together with the Black Fox mine and the Black Fox mill, comprise the Black Fox Complex. The Company also has one project in the development stage, Cerro del Gallo, and one exploration property, Ventanas, both located in Mexico.

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (IAS 34) as issued by the International Accounting Standards Board (IASB). It does not include all the necessary annual disclosures in accordance with International Financial Reporting Standards (IFRS) and should be read in conjunction with the Company’s most recently issued annual consolidated financial statements which include information necessary or useful to understanding the Company’s business and financial statement presentation.

The Company’s significant accounting policies, judgements and estimates were presented in Note 2 of the audited annual consolidated financial statements for the year ended December 31, 2014 and have been consistently applied in the preparation of these condensed consolidated interim financial statements except for the accounting policy changes disclosed in Note 3.

The Company’s profitability and cash flow is highly dependent on the price of gold. A prolonged decline in gold prices could trigger the Company to re-evaluate the long-term metal price assumptions used in the valuation of its assets. A significant decrease in long-term metal price assumptions could have an adverse effect on the Company’s asset values.

These condensed consolidated interim financial statements were approved by the Company’s Board of Directors on November 2, 2015.

(a) Restatement of comparative information

As a result of the finalization of the purchase price allocation in the fourth quarter of 2014 relating to the acquisition of Brigus Gold Corp. (Brigus) (note 2), depletion expense was adjusted from the date of acquisition and a $13.2 million decrease was recorded in the Company’s fourth quarter 2014 statement of operations and comprehensive loss relating to the period from March 5 to September 30, 2014. Accordingly, in presenting the comparative operating results for the three and nine month period ended September 30, 2014, the Company reduced depletion by $7.0 million and $13.2 million, respectively, and recognized a corresponding reduction in income tax recovery of $0.6 million and $1.4 million, respectively.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

The following table summarizes the corrections on each of the affected financial statement line items for the period presented.

		As previously		Restatement			As
		reported		adjustment			Restated
Three months ended September 30, 2014
Depreciation and depletion	$	24,817		($7,019	)	$	17,798
Income tax expense		7,325		597			7,922
Net income (loss) for the period		(105,904	)	6,422			(99,482	)

Nine months ended September 30, 2014
Depreciation and depletion	$	56,744		($13,204	)	$	43,540
Income tax expense		7,013		1,401			8,414
Net income (loss) for the period		(114,420	)	11,803			(102,617	)

(b) Reclassification of comparative information

Certain amounts in the 2014 consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on loss for the period as previously reported.

2.	Acquisition of Brigus Gold Corp.

On March 5, 2014, the Company acquired all of the issued and outstanding common shares of Brigus. Brigus was a gold producing company, whose principal assets were the Black Fox mine and adjacent properties, Grey Fox and Pike River, located in the Township of Black River–Matheson, Ontario, Canada, and the Black Fox mill (together the “Black Fox Complex”).

As part of the transaction, Primero acquired each outstanding Brigus common share for 0.175 of a Primero common share (the “Exchange Ratio”). In addition, Brigus shareholders received 0.1 of a common share in a newly incorporated company, Fortune Bay Corp. (“Fortune Bay”) for each Brigus common share as part of the Arrangement. Fortune Bay holds Brigus’ non-Ontario assets and was capitalized on March 5, 2014 with Cdn$10 million in cash by Primero. Upon completion of the Arrangement, Brigus shareholders held, in aggregate, a 90.1% interest in Fortune Bay and Primero held the remaining 9.9% interest. In addition, each outstanding warrant to purchase a Brigus common share became exercisable to purchase 0.175 of a Primero common share and 0.1 of a Fortune Bay common share.

The Company determined that the acquisition of Brigus was a business combination in accordance with the definition in IFRS 3 Business combinations and as such has accounted for it in accordance with this standard using the acquisition method with Primero as the acquirer. On March 28, 2014, Brigus changed its name to Primero Gold Canada Inc.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

The fair value assigned to the identified assets and liabilities was finalized during the fourth quarter of 2014 and is presented below. Transaction costs of $7.5 million relating to the acquisition were expensed in accordance with IFRS 3, Business combinations; these transaction costs are recognized within “transaction costs and other expenses” in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2014.

Purchase price
Common shares	$	279,049
Cash		15,030
Share-based compensation		6,983
Warrants		545
	$	301,607
Net assets acquired
Assets
Cash	$	7,257
Restricted cash		18,524
Accounts receivable		848
Inventories		15,567
Investment in Fortune Bay ⁽¹⁾		1,127
Prepaid expenses		482
Mining interests ⁽²⁾		302,551
Goodwill ⁽³⁾		98,961
Liabilities & Equity
Accounts payable		(30,370	)
Finance leases		(15,511	)
Decommissioning liability		(15,746	)
Convertible debentures		(45,168	)
Derivative liabiliy		(3,696	)
Senior secured notes		(22,713	)
Deferred tax liability		(10,506	)
	$	301,607

1.	During the quarter ended March 31, 2015, the Company performed an assessment of its investment in Fortune Bay and recognized an impairment loss of $534.0 in the condensed consolidated interim statement of operations and comprehensive income (loss) with a corresponding reduction in accumulated other comprehensive income (loss).

2.	In the fourth quarter of 2014 the Company recorded an impairment charge of $75.0 million resulting from its growing understanding of the mine parameters, including a decline in mineable ounces and depletion of the open pit in 2015.

3.	In the third quarter of 2014, the Company determined that it could not support the value assigned to goodwill and recorded an impairment charge of the full $99.0 million.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

3.	Functional currency change and recent pronouncements issued

(a) Functional and presentation currency

On January 1, 2015, Primero Gold Canada Inc. (PGCI) and Primero Mining Corp. (PMC) amalgamated as one company under the name Primero Mining Corp. (amalgamated PMC). PGCI, which held the Black Fox Complex assets, used the U.S. dollar as its functional currency, while the functional currency of the former parent company, PMC, was the Canadian dollar.

On March 12, 2015 Canada Revenue Agency approved the election of U.S. dollar as the functional currency of amalgamated PMC. As a result of the change in underlying conditions relevant to amalgamated PMC, effective March 31, 2015 the functional currency was changed from the Canadian dollar to the U.S. dollar.

(b) Recent pronouncements issued

The Company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective and determined that the following may have an impact in the future on the Company. The Company is currently evaluating the impact of adopting these standards on its consolidated financial statements.

In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers which supersedes existing standards and interpretations including IAS 18, Revenue. IFRS 15 establishes a single five-step model framework for determining the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. The standard is currently effective for annual periods beginning on or after January 1, 2018, with early adoption permitted.

In July 2014, the IASB issued the final version of IFRS 9, Financial Instruments (IFRS 9). This standard is effective for annual periods beginning on or after January 1, 2018, and permits early adoption. IFRS 9 provides a revised model for recognition, measurement and impairment of financial instruments and includes a substantially reformed approach to hedge accounting. The Company is in the process of determining the impact of IFRS 9 on its consolidated financial statements.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

4.	Revenue

Revenue is comprised of the following sales:

		Three months ended September 30				Nine months ended September 30
		2015		2014		2015		2014

Gold	$	57,988	$	64,662	$	185,324	$	165,680
Silver		21,231		10,841		34,576		37,761
	$	79,219	$	75,503	$	219,900	$	203,441

Silver Purchase Agreement

The silver purchase agreement provides that for the first four years after the Company’s acquisition of the San Dimas mine up to August 5, 2014, the first 3.5 million ounces of silver produced per annum by the San Dimas mine, plus 50% of the excess silver produced above this amount, were to be sold to Silver Wheaton Caymans (SWC) at the lesser of $4.04 per ounce (adjusted by 1% per year) and market prices. From August 6, 2014, for the life of the mine, the first 6 million ounces of silver produced per annum by the San Dimas mine, plus 50% of the excess silver produced above this amount, must be sold to SWC at the lesser of $4.20 per ounce (adjusted by 1% per year) and market prices. All silver not sold to SWC is available to be sold by the Company at market prices.

The contract year for purposes of the threshold runs from August 6 of a year to August 5 of the following year. The 6 million ounces production threshold for the year ended August 5, 2015 was met in July 2015 and the 3.5 million ounces production threshold for the year ended August 5, 2014 was met in early March 2014. During the three and nine months ended September 30, 2015, the Company sold 0.8 million ounces of silver at market prices for revenue of $12.7 million (2014 – $5.9 million and $24.6 million, respectively).

Gold Purchase Agreement

As part of the acquisition of Brigus, the Company assumed a gold purchase agreement related to the Black Fox Mine. Under the agreement, the Company is obligated to sell 8% of the future gold production at the Black Fox mine and 6.3% at the adjoining Pike River property (Black Fox Extension). During the three and nine months ended September 30, 2015, the Company recorded revenue of $0.7 million and $2.6 million, respectively (2014 - $0.8 million and $1.6 million, respectively) under the contract terms.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

5.	Advanced Pricing Agreement (APA)

On October 4, 2012, the Company received a ruling (the “APA Ruling”) from the Mexican tax authorities which confirmed the appropriate price for sales of silver under the Amended and Restated Silver Purchase Agreement. Under Mexican tax law, an APA Ruling is generally applicable for up to a five year period (which in the Company’s case, covered the year in which the ruling application was filed, the immediately preceding year and the three subsequent years) and the Company’s APA Ruling covered the five years ending December 31, 2014. In 2015, the Company intends to continue to record its revenue from sales of silver under the Amended and Restated Silver Purchase Agreement in a manner consistent with prior years, the APA Ruling and applicable Mexican laws. The Company has until the end of 2016 to file an application for a renewed APA Ruling in respect of 2015 and the subsequent four taxation years. There can be no assurance that Mexican tax laws applicable to the APA Ruling will not change or that the applicable authorities will issue a renewal or similar ruling or that the authorities will continue to assess the Company’s taxes on the basis of its realized prices for silver.

The Company continues to evaluate alternatives to achieve long-term tax certainty including through engaging in a dialogue with the Mexican tax authorities in this regard. To the extent the Mexican tax authorities determine that the appropriate price of silver sales under the Amended and Restated Silver Purchase Agreement is different than the realized price, it could have a material adverse effect on the Company’s results of operations, financial condition and cash flows.

6.	Restricted cash

In 2015, the Company changed its form of financial assurance on its closure obligations at the Black Fox Complex. At September 30, 2015, restricted cash of $6.1 million (C$8.2 million) represented collateralized cash held for a letter of credit securing C$20.5 million of closure bonds held with the Ontario Ministry of Northern Development (OMND). At December 31, 2014, the restricted cash balance of $17.6 million represented fully cash collateralized letters of credit of C$19.0 million and cash on deposit of C$1.5 million with the OMND securing the same closure obligations for the Black Fox Complex.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

7.	Mining interests

A summary of mining interest by property is as follows:


		Mining properties		Land and		Plant, equipment		Construction		September 30,		December 31,
		and leases		buildings		and vehicles		in progress		2015		2014
San Dimas	$	385,587	$	43,980	$	50,359	$	54,151	$	534,077	$	543,621
Black Fox Complex		192,230		8,359		57,575		4,073		262,237		255,136
Cerro Del Gallo		80,142		4,587		262		-		84,991		82,437
Corporate		-		-		437		-		437		286
Total	$	657,959	$	56,926	$	108,633	$	58,224	$	881,742	$	881,480

All property of the San Dimas mine is pledged as security for the Company’s obligations under the silver purchase agreement and certain assets of the Black Fox Complex are pledged as security for the gold purchase agreement (Note 4).

The carrying value of property, plant and equipment under finance leases at September 30, 2015 was $9.7 million (December 31, 2014 - $22.4 million). The lessors hold first security rights over the leased assets.

Depreciation and depletion expense for the three and nine months ended September 30, 2015 was $19.5 million and $58.5 million, respectively (2014 - $17.8 million and $43.5 million, respectively).

8.	Inventories

		September 30,		December 31,
		2015		2014
Current portion of inventory
Gold and silver	$	9,360	$	6,950
Stockpiled ore		11,466		585
Work-in-progress		5,749		6,140
Supplies		6,591		6,691
		33,166		20,366
Long-term stockpile		8,195		14,309
	$	41,361	$	34,675

Long-term stockpile represents the remaining ore from the Black Fox open pit mine that is expected to be used beyond September 30, 2016. For the three and nine months ended September 30, 2015, the Company recorded inventory write downs of $0.7 million and $1.8 million, respectively (2014 - $0.5 million and $1.8 million, respectively) to reflect a net realizable value based on a price of $1,150 per ounce of gold.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

Debt

		September 30,		December 31,
		2015		2014
Current debt
Senior unsecured convertible debentures ^(a)	$	47,388	$	-
Finance lease liabilities ^(b)		4,688		5,616
	$	52,076	$	5,616
Long-term debt
Senior unsecured convertible debentures ^(a)	$	-	$	46,315
5.75% convertible unsecured debentures ^(c)		61,500		-
Finance lease liabilities ^(b)		2,000		5,629
Line of credit ^(d)		-		37,827
	$	63,500	$	89,771
	$	115,576	$	95,387

(a) As part of the acquisition of Brigus, the Company assumed $50 million of senior unsecured debentures. The debentures, which will mature on March 31, 2016, bear interest at 6.5% per annum payable semi-annually in arrears on March 31 and September 30 of each year, commencing September 30, 2011. The Company made a change of control offer for Brigus’ senior unsecured convertible debentures on April 4, 2014. Investors holding $1.9 million of the debentures accepted the Company’s offer and these debentures were repaid on May 16, 2014, leaving $48.1 million of principal outstanding as at September 30, 2015.

The remaining $48.1 million of debentures are convertible by the holders into Common Shares at any time at a conversion price of $14.00 per Common Share. The debentures allow for forced conversion by the Company if the market price of the Company’s shares is at least 125% of the conversion price. Subject to certain restrictions, the Company may, at its option, elect to satisfy its obligation to repay the principal amount of all or any portion of the principal amount of the debentures outstanding, by issuing common shares of the Company on maturity.

In accordance with IAS 39, Financial Instruments: Recognition and Measurement, the debentures are considered to contain an embedded derivative relating to the conversion option. The conversion option was valued upon initial recognition at fair value using an option pricing model and was separated from the debt component of the debentures. The debt component of the debentures was measured upon initial recognition, based on the present value of the cash flows associated with the debentures. Subsequent to initial recognition, the embedded derivative component is re-measured at fair value at each reporting date while the debt component is accreted to the face value of the debentures using the effective interest rate through periodic charges to finance expense over the term of the debentures. Accretion relating to the debentures for the three and nine month periods ended September 30, 2015 was $0.4 million and $1.1 million, respectively (2014 - $0.4 million and $0.8 million, respectively).

(b) The Company is obligated under various finance leases for equipment as well as a milling facility on the Black Fox Complex. All finance lease agreements provide that the Company can purchase the leased equipment at the end of the lease term for a nominal amount. Interest payable on the various leases range from a fixed rate of 4.75% to 6.60% . The are no restrictions placed on the Company as a result of these leases, however, the lessors hold first security rights over the leased assets.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

(c) On February 9, 2015, the Company closed its offering (the Offering) of $75 million aggregate principal amount of 5.75% convertible unsecured subordinated debentures (the 5.75% Debentures) maturing on February 28, 2020. The Debentures bear interest at a rate of 5.75% per annum, payable in U.S. dollars semi-annually on August 28 and February 28 each year, commencing on August 28, 2015. The 5.75% Debentures are convertible into the Company’s common shares at a conversion price of approximately $6.55 per share, representing a conversion rate of 152.6718 common shares per $1,000 principal amount of Debentures. Upon conversion, holders will be entitled to receive accrued and unpaid interest up to, but excluding, the date of conversion.

The 5.75% Debentures are not redeemable prior to February 28, 2018. On and after February 28, 2018 and prior to February 28, 2020, the 5.75% Debentures may be redeemed by the Company, in whole or in part from time to time, on not more than 60 days and not less than 30 days prior notice, at a redemption price equal to their principal amount plus accrued and unpaid interest, if any, up to but excluding the date set for redemption, provided the simple average of the daily volume-weighted average trading price of the common shares on the New York Stock Exchange for the 20 consecutive trading days ending five trading days prior to the date on which notice of redemption is provided is at least 125% of the conversion price.

In accordance with IAS 39, Financial Instruments: Recognition and Measurement, the 5.75% Debentures are considered to contain embedded derivatives relating to the conversion and redemption options. The Company has elected to classify the convertible debenture as a financial instrument measured at fair value for reporting purposes given that the debentures contain multiple embedded derivatives. Fair value changes are recorded through the statement of income and comprehensive income (loss). Transaction costs associated with the debentures of $3.7 million were expensed during the nine months ended September 30, 2015.

(d) The Company closed a $75 million revolving credit facility, provided by two Canadian banks, on May 23, 2014. The line of credit has a three-year term and bears interest at a floating interest rate equal to LIBOR or the prime rate of Canada or the bankers’ acceptance rate (depending on the choice of credit availment by the Company) plus an applicable margin. The line of credit is secured by substantially all of the Company’s assets and contains customary covenants and default clauses typical to this type of facility. As at December 31, 2014, the Company had drawn $40 million under the line of credit. Net transaction costs of $2.2 million have been netted against the drawn amount resulting in a carrying balance of $37.8 million at December 31, 2014.

On March 13, 2015, the Company made a payment on the outstanding balance of the line of credit utilizing the proceeds from the Offering (Note 9(c)). Following the payment of the line of credit, the remaining unamortized transaction costs amounting to $1.9 million have been reclassified as prepayment for pre-arranged services and are amortized over the remaining term of the facility as a finance expense.

10.

Shareholders’ equity

(a) Share capital

The authorized share capital consists of unlimited common shares without par value and unlimited preferred shares, issuable in series with special rights and restrictions attached.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

The Company received $11.7 million (net of transaction costs) from the proceeds of two flow-through financings in 2014 to fund exploration costs at the Grey Fox and Pike River properties. Primero raised C$9.0 million in March 2014 by issuing 1,000,000 flow through shares and C$8.0 million in December 2014 by issuing 1,481,482 flow-through shares. All of the March 2014 financing was spent by December 31, 2014 and all of the December 2014 financing is expected to be spent by December 31, 2015.

(b) Warrants

As at December 31, 2014, the Company had 20.8 million warrants outstanding which were exercisable to purchase 20.8 million common shares at a price of C$8.00 until July 20, 2015. On July 21, 2015, these warrants expired unexercised. Accordingly, the carrying value of $34.8 million was reclassified to contributed surplus.

(c) Contributed Surplus

During the nine month period ended September 30, 2015, the Company credited contributed surplus for amounts relating to share-based compensation as follows:

		September 30,		September 30,
		2015		2014
Stock options	$	1,322	$	830
2013 PSU Plan		4,137		1,499
Deferred share units		235		-
	$	5,694	$	2,329

Contributed surplus relating to exercised stock options of $0.3 million (2014 - $4.2 million) and settlement of 2013 PSUs of $3.4 million were credited to share capital net of cash payments of $0.2 million during the nine months ended September 30, 2015.

In addition to the above share-based compensation expense recognized through contributed surplus, charges relating to the Company’s Phantom Share Unit Plan and Directors PSU Plan were recognized in the condensed consolidated interim statement of operations and comprehensive income (loss) as discussed in Note 10(e)(i).

(d) Stock options

Under the Company’s stock option plan (the Plan), the number of common shares that may be issued on the exercise of options granted under the Plan is equal to 10% of the issued and outstanding shares of the Company at the time an option is granted (less any common shares reserved for issuance under other share compensation arrangements).

A summary of the Company’s stock option activities for the nine month period ended September 30, 2015 and the year ended December 31, 2014 is presented below.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

	Options		Weighted average
	outstanding		exercise price
Outstanding at January 1, 2014	7,963,990		C$5.85
Granted	3,682,393		6.75
Exercised	(1,921,744	)	5.50
Cancelled	(172,500	)	6.90
Expired	(297,915	)	7.70
Outstanding at December 31, 2014	9,254,224		C$6.17
Granted	1,617,870		4.23
Exercised	(300,000	)	3.47
Cancelled/Forfeited	(71,875	)	5.68
Expired	(5,526,815	)	5.91
Outstanding at September 30, 2015	4,973,404		C$5.99

The following table summarizes the weighted average assumptions used in the Black-Scholes valuation model for the determination of the cost of stock options issued during the nine month period ended September 30, 2015 and 2014.

	2015	2014
Risk free interest rate	0.95%	1.33%
Expected life in years	3.50	3.50
Volatility	59.27%	53.00%
Expected dividends	0.00%	0.00%
Forfeiture rate	5.00%	5.00%
Weighted average fair value of options issued	C$1.73	C$2.91

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

As at September 30, 2015, the following stock options were outstanding and exercisable:

	Awards Outstanding				Awards Exercisable
		Remaining		Weighted		Remaining		Weighted
		contractual		average		contractual		average
Range of exercise		life		exercise		life		exercise
price per share	Quantity	(in years)		price	Quantity	(in years)		price
$2.60 - $4.00	235,000	3.05	C$	2.67	235,000	3.05	C$	2.67
$4.01 - $8.00	3,889,920	3.11		5.55	1,694,526	1.72		6.50
$8.01 - $12.00	824,306	0.50		8.70	824,306	0.50		8.70
$12.01 - $16.00	6,242	3.67		13.63	6,242	3.67		13.63
$16.01 - $20.11	17,936	1.20		17.24	17,936	1.20		17.24
	4,973,404	2.67	C$	5.99	2,778,010	1.47	C$	6.91

(e) Phantom share unit plans

The Company has the following phantom share unit plans:

(i) Phantom Share Unit Plan (PSUP) and Directors PSU Plan (Directors PSUP)

PSUP is a cash-settled plan. The amount to be paid for vested units is based on the volume weighted average price per share of the Company traded on the Toronto Stock Exchange over the last twenty trading days preceding the vesting date.

A person holding Director PSUs is entitled to elect to receive at vesting, either a cash amount equal to the number of Directors’ PSUs that vest multiplied by the volume weighted average trading price per common share over the five preceding trading days, or the number of common shares equal to the number of Directors’ PSUs. If no election is made, the Company will pay out such Directors’ PSUs in cash.

A summary of the unit activity for the nine month period ended September 30, 2015 and the year ended December 31, 2014 under the PSUP and the Directors PSUP is presented below.

	September 30,		December 31,
	2015		2014
Opening balance	1,515,143		2,825,968
Redeemed	(1,020,660	)	(1,490,119	)
Granted	223,883		358,432
Cancelled	(5,312	)	(179,138	)
	713,054		1,515,143

Units issued under the PSUP and Directors PSUP are accounted for as cash-settled awards. All of the units issued under the PSUP and Directors PSUP have been measured at the reporting date using their fair values. The total amount recognized in the statement of operations and comprehensive income (loss) during the three and nine months ended September 30, 2015 in relation to the PSUP and Directors PSUP was $0.3 million and $0.7 million, respectively (2014 – ($2.3) million and $7.5 million, respectively) recognized under general and administrative expenses. The total liability recognized at September 30, 2015 in respect of the PSUP and Directors PSUP was $1.1 million (December 31, 2014 - $4.4 million) which is classified as a current liability, reported within trade and other payables.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

During the nine months ended September 30, 2015, the Company issued nil units under the PSUP (2014 – 172,091 units), and issued 223,883 units under the Directors PSUP (2014 – 186,341 units).

(ii) 2013 PSU Plan (2013 PSUP)

A person holding PSUs issued under this plan is entitled to receive, at vesting either a cash amount equal to the number of 2013 PSUs that vest multiplied by the volume weighted average trading price per common share over the five preceding trading days, or the number of common shares equal to the number of PSUs, or a combination of cash and equity. The choice of settlement is solely at the Company`s discretion.

A summary of the unit activity for the nine month period ended September 30, 2015 and the year ended December 31, 2014 under the 2013 PSUP is presented below.

	September 30,		December 31,
	2015		2014
Opening balance	1,152,464		412,094
Redeemed	(706,105	)	(140,103	)
Granted	1,960,463		969,878
Cancelled	(58,957	)	(89,405	)
	2,347,865		1,152,464

The 2013 PSUP is accounted for as an equity-settled plan. All of the outstanding units have been measured at the reporting date using their grant date fair value, calculated as the grant date closing price of Primero shares on the TSX. The total amount of expense recognized in the statement of operations and comprehensive income (loss) for the three and nine months ended September 30, 2015 in relation to the 2013 PSUP was $1.0 million and $4.1 million, respectively (2014 - $1.0 million and $2.4 million, respectively).

(f) Deferred Share Units

The Company’s shareholders approved a deferred share unit plan (DSUP) on May 6, 2015. A person holding deferred share units (DSUs) under this plan is entitled to receive at vesting, either a cash payment equal to the redemption value of the DSUs, shares issued from treasury equal to the number of DSUs, shares purchased on the stock exchange, or any combination of these, such that the cash payment plus number of shares delivered have a value equal to the redemption value of the DSUs. The choice of settlement is solely at the Company’s discretion.

The redemption value is calculated by the number of DSUs redeemed multiplied by the weighted average price per share traded on the TSX over the last five trading days preceding the redemption date.

As at September 30, 2015, a total of 315,790 DSUs were issued and outstanding. The DSUP is accounted for as an equity-settled plan. All of the outstanding units have been measured at the reporting date using their grant date fair value, calculated as the grant date closing price of Primero shares on the TSX. The total amount of expense recognized in the statement of operations and comprehensive income (loss) for the three and nine months ended September 30, 2015 in relation to the DSUP was $0.1 million and $0.2 million, respectively.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

(g) Dilutive securities

For the three and nine months ended September 30, 2015, 2,535,976 and 2,214,883 common shares, respectively, which are issuable from outstanding stock options, 2013 PSUs and DSUs (2014 - 1,743,819 and 1,568,835 common shares, respectively) were excluded from the calculation of diluted securities as they would be considered to be anti-dilutive.

11.

Finance expenses

Finance expense comprise the following:

		Three months ended					Nine months ended
		September 30					September 30
		2015		2014			2015		2014
Interest on 6.5% convertible debentures	$	798	$	788		$	2,349	$	1,793
Interest on 5.75% convertible debentures		1,051		-			1,642		-
Interest on line of credit		235		988			783		1,589
Interest on Goldcorp promissory note		-		-			-		673
Accretion on 6.5% convertible debentures		379		355			1,073		795
Accretion on asset retirement obligation		270		279			819		763
Amortization of line of credit transaction costs		179		-			660		-
Others		145		(101	)		534		(996	)
	$	3,057	$	2,309		$	7,860	$	4,617

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

12.

Supplementary cash flow information

Changes in non-cash working capital comprise the following:

		Three months ended						Nine months ended
		September 30						September 30
		2015			2014			2015			2014
Trade and other receivables	$	2,136		$	1,568		$	1,119		$	864
Taxes receivable		7,092			(4,940	)		5,612			(15,278	)
Prepaid expenses		(4,334	)		(3,103	)		(4,746	)		(3,397	)
Inventories		4,594			(2,332	)		(7,100	)		(4,051	)
Trade and other payables		(1,490	)		2,560			(13,855	)		(12,500	)
Taxes payable		-			(3,435	)		-			(2,527	)
	$	7,998			($9,682	)		($18,970	)		($36,889	)

13.

Other income (loss)

	Three months ended					Nine months ended
	September 30					September 30
	2015			2014		2015			2014
Foreign exchange gain (loss)	($5,568	)	$	2,579		($3,229	)		($30	)
Gain on derivative liability	208			2,179		1,483			2,464
Finance income	16			78		214			262
Other	(3	)		(150	)	(943	)		(829	)
	($5,347	)	$	4,686		($2,475	)	$	1,867

14.

Income Taxes

		Three months ended				Nine months ended
	September 30					September 30
		2015		2014		2015		2014
Current income tax expense	$	7,575	$	1,476	$	15,331	$	4,508
Deferred income tax expense		9,771		6,446		10,578		3,906
Income tax expense	$	17,346	$	7,922	$	25,909	$	8,414

Income tax expense differs from the amount that would result from applying the Canadian federal and provincial income tax rates to earnings from continuing operations before taxes. These differences result from the following items:

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

		Three months ended						Nine months ended
		September 30						September 30
		2015			2014			2015			2014
Earnings (loss) before income taxes	$	11,943			($91,560	)	$	17,351			($94,203	)
Canadian federal and provincial income tax rate		26%			26%			26%			26%
Expected income tax expense (recovery)		3,105			(23,806	)		4,511			(24,493	)
(Increase) decrease attributable to:
Effect of different foreign statutory rates on earnings of subsidiaries		295			1,221			932			1,932
Share-based payments		3			64			309			(182	)
Amounts allowable for tax purposes		(2,439	)		(4,525	)		(10,938	)		(10,350	)
Impact of Mexican deflation on tax values		791			1,242			(2,656	)		(2,316	)
Impact of foreign exchange		1,561			1,608			2,728			778
Impact of foreign exchange on deferred income tax assets and liabilities		13,206			4,607			23,669			4,036
Withholding taxes on intercompany interest		862			1,132			3,034			3,374
Royalty taxes in Mexico		1,027			150			1,924			1,334
Flow through share renunciation		7			440			151			746
Impairment of goodwill		-			24,740			-			24,740
Ontario mining taxes		(114	)		361			(1,241	)		927
Benefit of tax losses not recognized		(958	)		688			3,486			7,888
Income tax expense	$	17,346		$	7,922		$	25,909		$	8,414

15.

Financial instruments

The Company’s financial instruments at September 30, 2015 consist of cash, restricted cash, trade and other receivables, an equity investment in Fortune Bay, trade and other payables, and debt. At September 30, 2015, the carrying amounts of cash, restricted cash, trade and other receivables, and trade and other payables are considered to be a reasonable approximation of their fair values due to their short-term nature.

The Company’s equity investment in Fortune Bay is designated as available for sale and is held at fair value. Any unrealized gains on available for sale assets are recognized in OCI. Cumulative losses recorded under Accumulated other comprehensive income are reclassified from equity to the statement of operations when there is objective evidence that the asset is impaired. Once an impairment is recognized, all subsequent losses are recognized in the statement of operations until the asset is derecognized. During the nine months ended September 30, 2015, the Company recorded an impairment loss of $0.6 million in the statement of operations and comprehensive income (loss) relating to its investment in Fortune Bay. Fortune Bay is a publicly-listed company and the fair value is based on the trading price of its shares as at the date of the statement of financial position.

The fair value of the 6.5% convertible debentures upon initial recognition was based on the present value of the future cash flows to be paid under the terms of the debentures. Subsequently, the convertible debentures are being carried at amortized cost.

Derivative instruments - Embedded derivatives

Financial instruments and non-financial contracts may contain embedded derivatives, which are required to be accounted for separately at fair value as derivatives when the risks and characteristics of the embedded derivatives are not closely related to those of their host contract and the host contract is not carried at fair value. The Company regularly assesses its financial instruments and non-financial contracts to ensure that any embedded derivatives are accounted for in accordance with its policy. There were no material embedded derivatives requiring separate accounting at September 30, 2015 or December 31, 2014, other than those discussed below.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

The convertible debentures assumed with the acquisition of Brigus (Note 2 (i)) are considered to contain an embedded derivative liability which was initially recognized at fair value using an option pricing model, and is subsequently measured at fair value each period during the term of the debentures. During the three and nine month periods ended September 30, 2015, an unrealized derivative gain of $0.2 million and $1.5 million, respectively (2014 – unrealized gains of $2.2 million and $2.5 million, respectively) were recognized in relation to this derivative liability.

The 5.75% convertible unsecured debentures issued by the Company on February 9, 2015 (Note 9 (c)) are considered to contain multiple embedded derivatives. These debentures and all related derivatives were accounted for as one instrument which was initially recognized at fair value and will subsequently be measured at fair value for each period during the term of the debentures. During the three and nine month periods ended September 30, 2015, a mark to market gain of $9.0 million and $13.5 million, respectively (2014 - $nil and $nil) were recognized in relation to this derivative liability.

Fair value measurements of financial assets and liabilities recognized on the Condensed Consolidated Interim Statements of Financial Position

The categories of the fair value hierarchy that reflect the significance of inputs used in making fair value measurements are as follows:

Level 1 – quoted prices in active markets for identical assets or liabilities;
Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
Level 3 – inputs for the asset or liability that are not based on observable market data.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

At September 30, 2015, the levels in the fair value hierarchy that the Company’s financial assets and liabilities are measured and recognized on a recurring basis are as follows:

		September 30, 2015				December 31, 2014
		Level 1		Level 2		Level 1		Level 2
Investment in Fortune Bay ⁽¹⁾	$	601	$	-	$	671	$	-
5.75% convertible unsecured debentures ⁽²⁾		61,500		-		-		-
Derivative liability on 6.5% convertible debentures ⁽³⁾		-		-		-		1,405

1.	Fortune Bay is a publicly-listed company and the fair value is based on the trading price of its shares as at the date of the statement of financial position.

2.	The fair value of the 5.75% convertible debentures is calculated using the market price on the TSX Exchange as at the date of the statement of financial position.

3.	Calculated using an option pricing model with the following inputs: share price $3.36, conversion price $14.00, expected life 1.00 years, volatility 69.77% and a discount rate of 8%.

At September 30, 2015, there were no financial assets or liabilities measured and recognized on the condensed interim consolidated statements of financial position at fair value that would be categorized as Level 3 in the fair value hierarchy (December 31, 2014 – $nil).

16.

Related party transactions

On January 1, 2014, Goldcorp owned 31,151,200 of the Company’s common shares, approximately 27% of the Company’s total shares. On March 26, 2014 Goldcorp sold all these shares and as such subsequent to that date, Goldcorp no longer held an equity interest in Primero and was no longer a related party.

During the year ended December 31, 2014 the Company paid an additional $0.4 million to maintain its 19.99% ownership percentage in Santana Minerals as the result of a rights issue.

Other than payments to key management, there were no further related party transactions for the three and nine months ended September 30, 2015.

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

17.

Segmented information

The Company operates in two geographic areas, Mexico (the San Dimas mine and the Cerro del Gallo project) and Canada (the Black Fox Complex). The Company’s operating segments reflect its different mining interests and are reported in a manner consistent with the internal reporting used to assess each segment’s performance. Significant information relating to reportable operating segments is summarized below:

					Cerro del			Black Fox
		San Dimas			Gallo			Complex			Corporate			Total
At September 30, 2015
Mining interests	$	534,077		$	84,991		$	262,237		$	437		$	881,742
Total assets		612,356			87,058			300,537			11,132			1,011,083
Total liabilities		105,958			5,728			55,315			98,687			265,688
As at December 31, 2014
Mining interests	$	543,621		$	82,437		$	255,136		$	286		$	881,480
Total assets		611,791			84,969			305,587			473			1,002,820
Total liabilities		98,072			396			55,993			100,374			254,835
Nine months ended September 30, 2015
Revenue	$	160,279		$	-		$	59,621		$	-		$	219,900
Income tax expense (recovery)		28,621			-			(2,902	)		190			25,909
Net income (loss)		5,587			393			1,985			(16,523	)		(8,558	)
Nine months ended September 30, 2014
(As restated, Note 1)
Revenue	$	151,575		$	-		$	51,866		$	-		$	203,441
Income tax expense (recovery)		8,304			-			110			-			8,414
Net income (loss)		31,034			(147	)		(97,306	)		(36,198	)		(102,617	)
Three months ended September 30, 2015
Revenue	$	59,660		$	-		$	19,559		$	-		$	79,219
Income tax expense (recovery)		17,785			-			(402	)		(37	)		17,346
Net income (loss)		(6,922	)		627			1,815			(923	)		(5,403	)
Three months ended September 30, 2014
(As restated, Note 1)
Revenue	$	51,273		$	-		$	24,230		$	-		$	75,503
Income tax expense (recovery)		8,010			-			(187	)		99			7,922
Net income (loss)		4,806			294			(96,359	)		(8,223	)		(99,482	)

PRIMERO MINING CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)

(UNAUDITED)

18.

Commitments and contingencies

(a) An Ejido is a communal ownership of land recognized by the federal laws in Mexico. While mineral rights are administered by the federal government through federally issued mining concessions, access to surface rights is also required for mining operations. An Ejido controls surface rights over its communal property through an assembly where each of the Ejido members has a voting right. An Ejido may sell or lease lands directly to a private entity and it may also allow individual members of the Ejido to obtain title to specific parcels of land and thus the right to sell or lease the land.

The San Dimas mine uses Ejidos’ lands pursuant to written agreements with Ejidos. Some of these agreements may be subject to renegotiation and changes to the existing agreements may increase operating costs or have an impact on operations. In cases where access to land is required for operations and an agreement cannot be reached with the land owner, Primero may seek access under Mexican law which provides for priority rights for mining activities.

Three of the properties included in the San Dimas mine and for which Primero holds legal title are subject to legal proceedings commenced by Ejidos seeking title to the property. These proceedings were initiated by Ejidos against defendants who were previous owners of the properties, either deceased individuals who, according to certain public deeds, owned the properties more than 80 years ago, corporate entities that are no longer in existence, or Goldcorp companies. Some of the proceedings also name the Tayoltita Property Public Registry as co-defendant. None of the initial proceedings named Primero as a party and Primero therefore had no standing to participate in them.

Two of these proceedings were recently decided in favor of the Ejidos. Upon becoming aware of the decisions Primero obtained injunctions to suspend any legal effect of the decisions while the Company proceeds with a legal process to nullify the Ejidos’ claim by submitting evidence of Primero’s legal title.

The third legal proceeding commenced by the Ejidos has not been decided and Primero remains without standing to participate therein because it was not named as a party. In the event a final decision is rendered in favour of the Ejido in that proceeding, Primero will seek to annul such decision by defending its position as the legitimate owner.

If Primero is not successful in its challenge, the San Dimas mine could face higher costs associated with agreed or mandated payments that would be payable to the Ejidos for use of the properties.

(b) As at September 30, 2015, the Company had entered into commitments to purchase plant and equipment totaling $1.4 million (December 31, 2014 - $0.9 million).

(c) Due to the size, complexity and nature of the Company’s operations, various legal and tax matters arise in the ordinary course of business. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

This management’s discussion and analysis (“MD&A”) of the financial condition and results of operations of Primero Mining Corp. (“Primero” or the “Company”) should be read in conjunction with the condensed consolidated financial statements of the Company as at and for the three and nine months ended September 30, 2015. Additional information on the Company, including its Annual Information Form for the year ended December 31, 2014, can be found under Primero’s profile at www.sedar.com.

Management is responsible for the preparation of the financial statements and MD&A. The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. All dollar figures in this MD&A are expressed in U.S. dollars, unless stated otherwise.

This MD&A contains forward-looking statements and should be read in conjunction with the risk factors described in the “Risks and uncertainties” and “Cautionary statement on forward-looking information” sections at the end of this MD&A.

This MD&A has been prepared as of November 2, 2015.

OVERVIEW OF THE BUSINESS

Primero is a Canadian-based precious metals producer with operations in both Mexico and Canada. The Company is focused on building a portfolio of high quality, low cost precious metals assets in the Americas through acquiring, exploring, developing and operating mineral resource properties. The Company owns two producing properties, the San Dimas gold-silver mine, located in Mexico’s San Dimas district, on the border of Durango and Sinaloa states, and as of March 5, 2014, with the acquisition of Brigus Gold Corp. (“Brigus”), the Black Fox mine located in the Township of Black River]Matheson, Ontario, Canada. The Company owns properties adjacent to the Black Fox mine - Grey Fox and Pike River, which together with the Black Fox mine and the Black Fox mill, located on the Stock Mill property, comprise the Black Fox Complex.

In addition, the Company owns one development-stage project; the Cerro del Gallo gold-silver-copper project, located in the state of Guanajuato in central Mexico. Further, the Company has one exploration property, Ventanas, located in Durango State, Mexico.

The profitability and operating cash flow of the Company are affected by numerous factors, including the amount of gold and silver produced and sold, market prices of gold and silver, operating costs, regulatory and environmental compliance, as well as currency exchange rates, political risks, and varying levels of taxation. The Company seeks to manage these risks, but many of the factors affecting these risks are beyond the Company’s control.

Commodity prices continue to be volatile as economies around the world continue to experience economic challenges. Volatility in the price of gold and silver impacts the Company's revenue, while volatility in the foreign exchange rates and certain input costs have an impact on the Company's operating costs and capital expenditures.

The Company’s shares are listed on the Toronto Stock Exchange (“TSX”) under the symbol “P” and on the New York Stock Exchange (“NYSE”) under the symbol “PPP”. In addition, Primero has convertible debentures trading on the TSX under the symbols “P.DB.U” and “P.DB.V”.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

		Three months ended						Nine months ended
		September 30,						September 30,
		2015			2014			2015			2014¹
Key Performance Data
Tonnes of ore milled		461,902			442,739			1,388,900			1,110,083
Produced
Gold equivalent (ounces)²		68,620			59,673			192,183			162,845
Gold (ounces)		52,677			51,464			161,904			133,803
Silver (million ounces)		1.90			1.41			5.99			4.40
Sold
Gold equivalent (ounces)²		71,417			60,209			189,889			160,250
Gold (ounces)		52,413			51,701			160,425			130,880
Silver (million ounces)		2.86			1.46			6.03			4.38
Average realized prices
Gold ($/ounce)³	$	1,106		$	1,251		$	1,155		$	1,266
Silver($/ounce)³	$	7.42		$	7.43		$	5.73		$	8.61
Total cash costs (per gold ounce)²
Gold equivalent basis	$	577		$	689		$	642		$	682
By-product basis	$	415		$	596		$	546		$	546
All-in sustaining costs (per gold ounce)²	$	775		$	1,154		$	962		$	1,232

Financial Data (in thousands of US dollars except per share amounts)
Revenues	$	79,219		$	75,503		$	219,900		$	203,441
Earnings from mine operations⁴		17,825			13,203			40,373			47,329
Net income (loss)⁴		(5,403	)		(99,482	)		(8,558	)		(102,617	)
Basic income (loss) per share		(0.03	)		(0.62	)		(0.05	)		(0.69	)
Adjusted Net Income (loss)^2,4		153			6,681			6,594			10,231
Adjusted net income (loss) per share		0.00			0.04			0.04			0.07
Operating cash flows before working capital changes²	$	20,106		$	21,704		$	62,487		$	53,855

Operating cash flows before working capital changes per share²	$	0.12		$	0.14		$	0.39		$	0.36
Weighted average shares outstanding (basic)(000’s)		162,473			159,961			162,202			149,719
Weighted average shares outstanding(diluted) (000’s)		162,473			159,961			162,202			149,719

					September 30,						December 31,
					2015						2014¹
Assets
Mining interests				$	881,742					$	881,480
Total assets				$	1,011,083					$	1,002,820
Liabilities
Long-term liabilities				$	170,080					$	190,213
Total liabilities				$	265,688					$	254,835
Equity				$	745,395					$	747,985

1.	Includes the results for the period for which the Black Fox Complex assets, acquired March 5, 2014, were owned by Primero (March 5, 2014 to September 30, 2014).
2.	See “NON-GAAP measurements “
3.	Average realized gold and silver prices reflect the impact of the gold purchase agreement with Sandstorm at the Black Fox mine and the silver purchase agreement with Silver Wheaton Caymans at the San Dimas mine (see “Other liquidity considerations”).
4.	Adjustment to 2014 figures – as a result of the finalization of the Black Fox purchase price allocation the depletion at Black Fox was adjusted relating to the period March 5, 2014 to September 30, 2014. Earnings from mine operations increased by $13.2 million ($7.0 million for Q3 2014), and net income and adjusted income increased by $11.8 million ($6.4 million for Q3 2014) (see Note 1(a) to the condensed consolidated interim financial statements).

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

Q3 2015 HIGHLIGHTS

•	Total production of 68,620 gold equivalent ounces in Q3 2015 compared to 59,673 gold equivalent ounces in the same period of 2014. Gold production was 52,677 ounces in Q3 2015 compared to 51,464 ounces in Q3 2014, and silver production was 1.9 million ounces from San Dimas in Q3 2015 compared to 1.41 million ounces in Q3 2014. Improved metals production was due to higher throughput, grades and metals recovery at San Dimas.

•	Earnings from mine operations for Q3 2015 were $17.8 million compared to $13.2 million in Q3 2014. Lower gold prices realized in 2015 were more than offset by higher quantities of silver sold at both fixed and spot prices and lower operating costs at San Dimas. In Q3 2015 the Company realized the benefit of selling 850,000 ounces of silver at spot compared to 290,000 in Q3 2014.

•	Import and export licenses of Primero Empresa Minera, S.A. de C.V. (PEM), the subsidiary of Primero that holds the San Dimas mine, were reinstated August 6, 2015 after a three month suspension following a discrepancy related to its corporate office relocation from Mexico City to Durango, Mexico. During the suspension of its export license, the Company could not export silver for delivery under its silver purchase agreement with Silver Wheaton Caymans Ltd. (“Silver Wheaton Caymans”), which requires delivery outside of Mexico. With the reinstatement of the permit, approximately 880,000 ounces that were held in inventory at June 30, 2015 were sold in the third quarter.

•	The Company incurred total cash costs per gold equivalent ounce of $577 for Q3 2015 compared to $689 for Q3 2014.

•	Primero maintains its Company production guidance of between 250,000 and 270,000 gold equivalent ounces, approximately 16% higher than 2014. The Company has also updated its cost guidance to reflect year to date actual foreign exchange rates and silver by-product credits. As a result it has lowered its total Company cash cost guidance to $640 to $680 per gold equivalent ounce and all-in sustaining costs to $1,030 to $1,060 per ounce.

•	During Q3 2015, the Mexican peso devalued approximately 10% relative to the U.S. dollar. As a result, the tax basis for the Company’s assets in Mexico devalued relative to its U.S. dollar functional reporting currency. The lower tax base from a U.S. dollar perspective results in lower deductions for tax purposes in future years if the peso remains devalued. As a result, included in the $17.3 million of income tax expense in Q3 2015 is a $13.2 million non-cash deferred tax expense related to foreign exchange.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

REVIEW OF CONSOLIDATED FINANCIAL INFORMATION

Three and nine months ended September 30, 2015 and 2014

Earnings from mine operations comprises:

		Three months ended						Nine months ended
		September 30,						September 30,
(in thousands of U.S. dollars)		2015			2014¹			2015			2014¹
Gold revenue	$	57,988		$	64,662		$	185,324		$	165,680
Silver revenue		21,231			10,841			34,576			37,761
Operating expenses		(41,859	)		(44,502	)		(121,038	)		(112,572	)
Depreciation and depletion		(19,535	)		(17,798	)		(58,489	)		(43,540	)
Earnings from mine operations	$	17,825		$	13,203		$	40,373		$	47,329

1. Adjustment to 2014 figures – as a result of the finalization of the Black Fox purchase price allocation the depletion at Black Fox was adjusted relating to the period March 5, 2014 to September 30, 2014. Depreciation and depletion decreased by $13.2 million for the year to September 2014 and $7.0 million for Q3 2014 (see Note 1(a) to the condensed consolidated interim financial statements).

The table below sets out variances in the key drivers of earnings from mine operations for the three and nine months ended September 30, 2015 compared with the three and nine months ended September 30, 2014:

		Three months ended			Nine months ended
(in thousands of U.S. dollars)		September 30,			September 30,
Earnings from mine operations in 2014	$	13,203		$	47,329
Differences:
Revenue
Lower realized gold price		(7,565	)		(17,757	)
Higher ounces of gold sold		890			37,401
Lower realized silver price		(5	)		(17,410	)
Higher ounces of silver sold		10,395			14,224
Lower (higher) operating expenses		2,644			(8,466	)
Higher depreciation and depletion		(1,737	)		(14,948	)
Earnings from mine operations as reported in 2015	$	17,825		$	40,373

•	Gold revenue decreased in Q3 2015 compared to Q3 2014 because of the lower realized sales price; gold sales quantities increased modestly over the same period. For the year to September 30 (“YTD”), although the gold price was lower, higher volumes sold due to a full nine months of production at Black Fox and higher throughput at San Dimas resulted in an improvement in gold revenues compared to 2014.

•	For Q3 2015 San Dimas sold twice as much silver as Q3 2014 and almost 40% more year-over-year because of higher silver grades, higher production and sales of silver produced from Q2, 2015. The reinstatement of the Company’s export permit early in August allowed silver in inventory and silver produced in the quarter to be delivered to Silver Wheaton Caymans under its silver purchase agreement allowing San Dimas to sell its 50% share of production over the annual threshold requirement at spot. For the year to September 30, 2015, fewer quantities were sold at spot price due to a higher threshold requirement and were sold at lower spot price of silver. For 2015 and subsequent years, the Company is required to deliver 6.0 million ounces of silver under the silver purchase agreement (for the period from August 6, 2014 to August 5, 2015) before it is entitled to sell 50 percent of its silver production for its own account on the spot market. In 2014 and prior years, the threshold was 3.5 million ounces of silver (for the period from August 6, 2013 to August 5, 2014) before it was entitled to sell 50 percent of its excess silver production on the spot market.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

•	Operating expenses were $41.9 million in Q3 2015, $2.6 million lower than Q3 2014 mostly because Black Fox operating expenses decreased as a result of a weaker Canadian dollar.

	Operating expenses increased YTD by $8.5 million, of which $8.2 million related to operating costs at the Black Fox mine for the additional two months of Primero operation in 2015 compared to 2014. Operating expenses at San Dimas increased modestly in YTD 2015 from YTD 2014.

•	Depreciation and depletion was $19.5 million in Q3 2015, compared to $17.8 million in Q3 2014 due mainly to increased production at both mine sites.

	Depreciation and depletion was $58.5 million in YTD 2015, an increase of $14.9 million from YTD 2014, with Black Fox accounting for $7.5 million of the increase for the period reflecting a full nine month period of operations for Black Fox. In addition, higher production at San Dimas also resulted in higher depreciation and depletion.

A summary income statement follows:

		Three months ended						Nine months ended
		September 30,						September 30,
(in thousands of U.S. dollars)		2015			2014			2015			2014
Earnings from mine operations	$	17,825		$	13,203		$	40,373		$	47,329
Goodwill impairment charge		-			(98,961	)		-			(98,961	)
Exploration expenses		(231	)		(1,205	)		(1,091	)		(1,239	)
General and administrative expenses		(6,247	)		(5,854	)		(21,411	)		(29,698	)
Transaction costs and other expenses		-			(1,120	)		(3,685	)		(8,884	)
Finance expenses		(3,057	)		(2,309	)		(7,860	)		(4,617	)
Mark to market gain (loss) on convertible debentures		9,000			-			13,500			-
Other income (loss)		(5,347	)		4,686			(2,475	)		1,867
Income tax (expense)		(17,346	)		(7,922	)		(25,909	)		(8,414	)
Net income (loss)		($5,403	)		($99,482	)		($8,558	)		($102,617	)

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

•	On the acquisition of Brigus Gold Corp. (“Brigus”), goodwill of $99.0 million arose on the transaction, most of which is attributed to the additional consideration as a result of the increase in the Company’s share price between announcement and closing of the acquisition. All of this goodwill was assigned to the Black Fox Complex cash generating unit as it was the only business unit acquired pursuant to the acquisition. At September 30, 2014, the Company determined that the current valuation could not support the carrying value of the goodwill and accordingly a goodwill impairment charge was recorded for the full carrying value of $99.0 million in Q3 2014.

•	General and administrative expenses were $6.2 million in Q3 2015, compared with $5.9 million in Q3 2014 due mainly to higher share-based payment expense, and salaries and wages. General and administrative expenses were $21.4 million in YTD 2015, compared with $29.7 million in YTD 2014, primarily due to a $4.5 million decrease in share-based payment expense. The breakdown of general and administrative expenses is as follows.

		Three months ended					Nine months ended
		September 30,					September 30,
(in thousands of U.S. dollars)		2015		2014			2015		2014
Share-based payment	$	1,096		($1,154	)	$	5,099	$	9,635
Salaries and wages		1,897		1,702			8,031		8,573
Legal, accounting and consulting services		1,628		694			4,632		2,925
Other general expenses		1,626		4,612			3,649		8,565
Total	$	6,247	$	5,854		$	21,411	$	29,698

Share based payments include amortization on equity settled plans and marked-to-market adjustments on the value of units in the Company’s cash-settled plans. The share price declined in Q3 2015 and Q3 2014 resulting in lower share-based payments, but because there are fewer cash settled PSUs outstanding in 2015 compared to 2014 an overall expense was recorded reflecting the accretion on the equity settled plans. The YTD 2015 share based payment is impacted by a depreciating share price compared to the appreciating share price in 2014.

Other general expenses for the three and nine months ended 2014 include $2.0 million accrued for the closure of the Company’s Vancouver office.

•	Transaction costs of $3.7 million YTD 2015 were mainly incurred on the issuance of the $75.0 million of 5.75% convertible debentures. YTD 2014, $7.3 million in transaction costs were expensed in relation to the acquisition of Brigus.

•	Finance expense increased by $3.2 million in YTD 2015 as compared to YTD 2014, primarily due to accrued interest and accretion on the 5.75% convertible debentures issued during the first quarter of 2015 and a full nine months of interest and accretion on the Brigus 6.5% convertible debentures.

	In addition, the amortization of the line of credit transactions costs and higher accretion on the Company’s decommissioning liabilities contributed to the increase in finance expenses during the period.

•	The 5.75% convertible debentures issued in the first quarter of 2015 are accounted for at fair value and are marked-to-market each period based on the trading price of the debentures. For Q3 2015, a gain of $9.0 million was recorded. There is YTD gain related to this instrument of $13.5 million.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

•	The Company recorded a foreign exchange loss of $5.6 million in Q3 2015 compared to a gain of $2.6 million in Q3 2014 and a foreign exchange loss of $3.2 million in YTD 2015 compared with nil in YTD 2014 (recorded in other income (loss)). The foreign exchange losses in 2015 were mainly due to unrealized foreign exchange losses on translation of the net liabilities of Primero denominated in Canadian dollars, as the Canadian dollar depreciated during the period, relative to the U.S. dollar (its functional currency).

•	The Company’s income tax expense is detailed as follows:

		Three months ended						Nine months ended
		September 30,						September 30,
(in thousands of U.S. dollars)		2015			2014			2015			2014
Tax expense (recovery)
San Dimas	$	17,785		$	8,010		$	28,621		$	8,304
Black Fox and other		(439	)		(88	)		(2,712	)		110
Total	$	17,346		$	7,922		$	25,909		$	8,414

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

		Three months ended						Nine months ended
		September 30						September 30
		2015			2014			2015			2014
Earnings (loss) before income taxes	$	11,943			($91,560	)	$	17,351			($94,203	)
Canadian federal and provincial income tax rate		26%			26%			26%			26%
Expected income tax expense (recovery)		3,105			(23,806	)		4,511			(24,493	)
(Increase) decrease attributable to:
Effect of different foreign statutory rates on earnings of subsidiaries		295			1,221			932			1,932
Share-based payments		3			64			309			(182	)
Amounts allowable for tax purposes		(2,439	)		(4,525	)		(10,938	)		(10,350	)
Impact of Mexican deflation on tax values		791			1,242			(2,656	)		(2,316	)
Impact of foreign exchange		1,561			1,608			2,728			778
Impact of foreign exchange on deferred income tax assets and liabilities		13,206			4,607			23,669			4,036
Withholding taxes on intercompany interest		862			1,132			3,034			3,374
Royalty taxes in Mexico		1,027			150			1,924			1,334
Flow through share renunciation		7			440			151			746
Impairment of goodwill		-			24,740			-			24,740
Ontario mining taxes		(114	)		361			(1,241	)		927
Benefit of tax losses not recognized		(958	)		688			3,486			7,888
Income tax expense	$	17,346		$	7,922		$	25,909		$	8,414

The impact of the foreign exchange on deferred income tax assets and liabilities results from the devaluation of the Mexican peso relative to the U.S. dollar. The Company reports its Mexican peso based deferred income taxes in its U.S. dollar functional currency. When the Mexican peso devalues, the tax basis for the Company’s assets in Mexico devalue relative to its U.S. dollar functional reporting currency. The lower tax base from a U.S. dollar perspective results in lower deductions for tax purposes in future years if the peso remains devalued. As a result, non-cash deferred tax expense related to foreign exchange is reflected in income tax expense in all periods. The devaluation is most significant in 2015.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

REVIEW OF OPERATIONS

San Dimas Mine

		Three months				Nine months
		ended				ended
		September 30,				September 30,
		2015		2014		2015		2014
Key Performance Data
Tonnes of ore mined		232,014		229,589		755,229		643,646
Tonnes of ore milled		228,392		219,656		742,296		637,056
Tonnes of ore milled per day		2,483		2,388		2,719		2,334
Average mill head grade (grams/tonne)
Gold		4.75		4.34		4.79		4.69
Silver		272		216		266		235
Average gold recovery rate (%)
Gold		96%		95%		96%		94%
Silver		95%		92%		94%		92%
Produced
Gold equivalent (ounces)		49,566		37,385		140,263		119,295
Gold (ounces)		33,623		29,176		109,984		90,253
Silver (million ounces)		1.90		1.41		5.99		4.40
Sold
Gold equivalent (ounces)		53,475		40,221		136,850		117,885
Gold (ounces)		34,471		31,713		107,386		88,515
Silver at fixed price (million ounces)		2.01		1.17		5.18		3.14
Silver at spot (million ounces)		0.85		0.29		0.85		1.24
Average realized price (per ounce)
Gold	$	1,115	$	1,275	$	1,172	$	1,286
Silver¹	$	7.42	$	7.43	$	5.73	$	8.61
Total cash costs (per gold ounce)²
Gold equivalent basis	$	507	$	690	$	564	$	619
By product basis	$	219	$	526	$	401	$	398
All in sustaining costs (per ounce)³	$	454	$	919	$	660	$	798
Revenue ($000's)	$	59,660	$	51,273	$	160,279	$	151,575
Earnings from mine operations ($000's)	$	18,179	$	10,737	$	42,309	$	42,855

1.	Average realized silver prices reflect the impact of the silver purchase agreement with Silver Wheaton Caymans (see “Other liquidity considerations”).
2.	For the purposes of calculating all-in sustaining costs at individual mine sites, the Company does not include corporate general and administrative expenses. See “NON- GAAP measurements “.
3.	See “NON- GAAP measurements “

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

The San Dimas mine produced 33,623 ounces of gold and 1.9 million ounces of silver in the third quarter of 2015, 15% and 35% higher for gold and silver respectively, in comparison to the third quarter of 2014. For the nine months to September 2015, gold production increased 22% and silver production by 36% compared to the same period in 2014. The increase in production was due to a number of factors:

•	higher mill throughput with the completion in Q1 2014 of the mill expansion to 2,500 tonnes per day (“TPD”). For the nine months 2015, average throughput was 2,719 TPD; 17% better than 2014. However, heavy rains during Q3 2015 resulted in higher moisture content in the mined ore which reduced the efficiency of the crushing and screening process slowing the throughput of the mill, as a result throughput in Q3 2015 only increased by 4% over Q3 2014, averaging 2,483 TPD;

•	increased recoveries for gold and silver following the commissioning of two leach tanks and a thickener during the second half of 2014, and implementation of a tailings wash system in the filtration plant in Q1 2015;

•	higher gold and silver grades obtained, a result of the areas being mined;

•	an increase in long-hole mining allowing the mine to operate more efficiently during 2015;

•	other operational improvements in crushing and the mill.

For Q3 2015, silver sold was considerably more than production in the same period. The reinstatement of the Company’s export permit early in August allowed silver in inventory and silver produced in the quarter to be delivered to Silver Wheaton Caymans under the silver purchase agreement. As a result the annual threshold delivery to Silver Wheaton Caymans was met and the Company sold 850,000 ounces of silver for its own account at spot prices. In comparison, the Company sold 290,000 ounces at spot in Q3 2014 and sold 1.24 million ounces at spot for the year to September 30, 2014. The threshold limit under the silver purchase agreement for the 2015 contract year (August 6 of a year to August 5 of the following year) increased to 6.0 million ounces of silver from 3.5 million ounces in the 2014 contract year.

Total cash costs on a gold equivalent and by-product basis in Q3 2015 were $507 and $219 per ounce, respectively, compared with $690 and $526 per ounce, respectively, in Q3 2014. For the nine months to September, total cash costs on a gold equivalent and by-product basis in 2015 were $564 and $401 per ounce, respectively, compared with $619 and $398 per ounce, respectively, in 2014. Unit costs were mostly lower in 2015 due to higher gold production and in Q3 2015 due to higher silver credits. For the year to September 2014, San Dimas by-product costs included higher silver credits from higher silver ounces sold at spot prices compared to the same period in 2015.

Despite lower unit costs, overall costs were generally higher in 2015 because of higher throughput, higher costs related to security and higher labour rates subsequent to the finalization of the union agreement. 2015 also showed some benefits with reduced power and diesel costs as the mine was able to access more power from its wholly owned hydroelectric generation facility (Las Truchas). The start-up of the Las Truchas second turbine in Q3 2014 and high rainfalls increased capacity from the dam. Certain input costs, such as cyanide, were also lower in 2015.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

All-in sustaining costs per gold ounce of $454 in Q3 2015, compared with $919 per ounce in Q3 2014 correspond to the decreased by-product cash costs as described above. Also, in Q3 2014, San Dimas purchased approximately $3 million in underground equipment. For the year to September 30, 2015, all-in sustaining costs per gold ounce were $660 compared with $798 in 2014; the decrease was largely due to the mine spending $8 million less on equipment replacements in 2015.

At the San Dimas mill, the Company has completed the construction of foundations for the new secondary crusher and Primero personnel completed an inspection of the crusher fabrication at the manufacturer’s factory. Demolition of the old foundry is well advanced, which will clear space for the delivery of the new de-aeration system expected this quarter. The installation of the additional tailings pump is now complete and control has been handed over to the operations team. The new tailings filter and thickener are also in the process of fabrication and remain on-schedule for delivery to site in Q1 2016.

For the 2015 year outlook, San Dimas is expected to produce just above its original guidance range, between 180,000 and 190,000 gold equivalent ounces. In addition, the Company has also updated its cost guidance to actual costs year to September and updated foreign exchange rates for Q4 2015. As a result San Dimas cash cost guidance has been lowered to $570 to $600 per gold equivalent ounce and its all-in sustaining costs to $740 to $770 per ounce.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

Black Fox Mine

		Three months ended						Nine months ended
		September 30,						September 30,
		2015			2014			2015			2014¹
Key Performance Data
Open pit mining
Tonnes of ore mined		201,484			232,985			849,668			535,436
Strip ratio		4.40			6.78			4.71			8.00
Average gold grade (grams/tonne)		2.01			2.61			2.09			2.21
Underground mining
Tonnes of ore mined		36,005			20,880			83,795			70,715
Average gold grade (grams/tonne)		3.99			5.78			4.11			4.91
Open pit and underground
Tonnes of ore milled		233,510			223,083			646,604			473,027
Tonnes of ore milled per day		2,538			2,425			2,369			2,210
Average mill head grade (grams/tonne)		2.66			3.24			2.61			3.01
Average gold recovery rate (%)		96%			96%			96%			95%
Produced
Gold (ounces)		19,054			22,288			51,920			43,550
Sold
Gold at spot price (ounces)		16,302			18,432			48,163			39,160
Gold at fixed price (ounces)		1,640			1,556			4,876			3,205
Average realized gold price (per ounce)²	$	1,089		$	1,212		$	1,123		$	1,224
Total cash costs (per gold ounce)³	$	780		$	688		$	856		$	854
All-in sustaining costs (per ounce)⁴	$	1,000		$	1,202		$	1,183		$	1,453
Revenue ($000's)	$	19,559		$	24,230		$	59,621		$	51,866
Earnings (loss) from mine operations (000's)⁵		($354	)		($6,678	)		($1,936	)		($4,671	)

1.	Includes the results for the period for which the Black Fox Complex assets, acquired March 5, 2014, were owned by Primero (March 5, 2014 to September 30, 2014).
2.	Average realized gold prices reflect the impact of the gold purchase agreement with Sandstorm (see “Other liquidity considerations”).
3.	For the purposes of calculating all-in sustaining costs at individual mine sites, the Company does not include corporate general and administrative expenses. See “NON- GAAP measurements “.
4.	Adjustment to 2014 figures – as a result of the finalization of the Black Fox purchase price allocation, the depletion at Black Fox was adjusted. Earnings from mine operations increased by $7.0 million in Q3 2014 and $13.2 million for the nine months ended September 30, 2014. (see Note 1(a) to the condensed consolidated interim financial statements).
5.	See “NON- GAAP measurements “

The Company acquired the Black Fox Complex in 2014. During the second half of 2014 and continuing through 2015, an optimization plan was outlined for Black Fox that included increasing investment in exploration, development and underground mining equipment. The objective was to increase throughput from the higher grade underground mine to ultimately replace tonnage from the lower grade open-pit.

The Black Fox mine produced 19,054 ounces of gold in the third quarter of 2015 compared to 22,288 ounces in the quarter of 2014. Most of the production came from the open pit in 2015 and 2014. In the third quarter of 2015, production was 15% lower than 2014 mostly due to the lower grades remaining in the pit. Underground production was slightly higher in 2015, with a small higher grade stockpile created for processing early in Q4 2015.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

For the year to September 30, 2015 gold production was 19% higher than 2014 due to higher production coming from the open pit and because the Company owned the mine for the full nine months of 2015 compared to seven months in 2014. The open pit was fully depleted by the end of September 2015.

During the first half of 2015 the Company increased its inventory of stopes for production scheduled in the second half of 2015. In the third quarter, Black Fox mined the underground at a rate of 400 TPD. This was lower than anticipated because of approximately 3 weeks of rehabilitation required for a ramp wall slough, and rehabilitation in other areas of the mine. In the same period, the Company implemented management changes and commenced equipment utilization and project availability studies using six sigma techniques to identify mining improvement opportunities. The Company expects underground mine production in the fourth quarter to be about 600 to 700 TPD. However the mine’s best productivity will come from the Central Zone that is expected to be mined during Q2 2016.

The Company has moderately adjusted its production outlook for Black Fox because of the lower underground production and anticipates producing between 70,000 and 80,000 ounces of gold for 2015. Cash costs are expected to be within the original guidance of between $820 to $870 per ounce. The Company’s recently approved capital expenditure of $6.1 million to develop a ramp to the 640 metre level in order to commence mining from the higher grade, wider Central Zone between the 600 and 800 metre levels in 2016 is progressing on schedule. The Central Zone has wider intercepts as opposed to the remnant areas above the 500 metre level that were in place at the time of acquisition.

Total cash cost per gold ounce were higher in Q3 2015 at $780 compared to $688 per ounce in Q3 2014 due to lower gold production partially offset by lower costs. The weaker Canadian dollar relative to the U.S. dollar impacted costs positively at Black Fox during the quarter as well as lower costs in the mine with improvements in the underground mining method.

All-in sustaining costs are lower period over period due to substantially less development capital spent and less equipment replacements in 2015 compared to 2014.

For the nine months ended September 30, 2015, 246,000 tonnes mined from the open pit but not milled were added to the low grade stockpile that will begin to be processed in Q4 2015.

In Q3 2015 Black Fox sold 1,640 ounces of gold under a gold purchase agreement to Sandstorm Gold Inc. (“Sandstorm”) at an average price of $518 per ounce, and 16,302 ounces of gold were sold at an average market price of $1,116 per ounce, resulting in an overall average price for all gold sales from the Black Fox mine of $1,089 per ounce.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

OUTLOOK FOR 2015 OPERATING RESULTS

Primero maintains its Company production guidance of between 250,000 and 270,000 gold equivalent ounces, approximately 16% higher than 2014. It now expects San Dimas to produce just above its original guidance range, between 180,000 and 190,000 gold equivalent ounces and Black Fox to produce just below its original guidance range, between 70,000 and 80,000 gold equivalent ounces.

The Company has also updated its cost guidance to reflect year to September actual results. As a result it has lowered its San Dimas cash cost guidance to $570 to $600 per gold equivalent ounce and its all-in sustaining costs to $740 to $770 per ounce. This has resulted in slightly lower total Company cash cost guidance of $640 to $680 per gold equivalent ounce and all-in sustaining costs to $1,030 to $1,060 per ounce.

The Company's 2015 production outlook is summarized in the following table, with a comparison to 2014 actual results:

		Black Fox		San Dimas		Estimated 2015		Actual 2014

Attributable gold equivalent production¹ (gold equivalent ounces)		70,000-80,000		180,000-190,000		250,000-270,000		225,054
Gold production¹ (ounces)		70,000-80,000		150,00-160,00		220,000-240,000		189,943
Silver production¹ (million ounces)		N/A		7.5-8.0		7.5-8.0		6.15
Total cash costs² (per gold equivalent ounce)	$	820-$870	$	570-$600	$	640-$680	$	687
All-in sustaining costs² (per gold ounce)	$	1,150-$1,200	$	740-$770	$	1,030-$1,060	$	1,222
Capital expenditures (millions of U.S. dollars)	$	38	$	54	$	103	$	113

1.	Black Fox previously disclosed a gold production outlook of 75,000 to 85,000 ounces. San Dimas previous production outlook was 175,000 to 185,000 gold equivalent ounces, 145,000 to 155,000 gold ounces and 6.5 to 7.5 million silver ounces. Company outlook production for gold equivalent and gold remains unchanged.
2.	San Dimas previous outlook for cash cost per equivalent ounce of $590 to $640 and all-in sustaining cost per ounce of $890 to $940. The Company previous outlook for cash cost per equivalent ounce of $650 to $700 and all-in sustaining cost per ounce of $1,050 to $1,150.

Material assumptions used to forecast total cash costs for 2015 were based on the Company's actual results to September 30 2015 and include an estimated average silver price of $4.24 per ounce (as per the silver purchase agreement) and foreign exchange rates of 1.30 Canadian dollars and 16 Mexican pesos to the U.S. dollar for Q4 2015.

The Company’s 2015 outlook for revenues and operating expenses are directly correlated to its production outlook and cash cost outlook with the assumption that production will match sales quantities. Depreciation and depletion should increase relative to 2014 because of the expected increase in production.

Income tax expenses are mainly attributable to income from the San Dimas mine. Income taxes are based on 30% of San Dimas’ net income before tax but foreign exchange can have significant impacts on the amounts. In addition, San Dimas pays a mining royalty tax and accrues for withholding tax on intercompany interest.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

ANALYSIS OF CASH FLOWS FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 2015 AND 2014

Sources and uses of cash

		Three months ended						Nine months ended
		September 30,						September 30,
(in thousands of U.S. dollars)		2015			2014			2015			2014
Cash flow:
Provided by operating activities before working capital changes	$	20,106		$	21,704		$	62,487		$	53,855
Changes in non-cash working capital		7,998			(9,682	)		(18,970	)		(36,889	)
Provided by operating activities		28,104			12,022			43,517			16,966
Used in investing activities		(20,671	)		(30,364	)		(60,354	)		(88,746	)
Provided by (used in) financing activities and other		(4,159	)		(3,770	)		32,552			(16,875	)
Increase (decrease) in cash	$	3,274			($22,112	)	$	15,715			($88,655	)

Operating activities

Q3 2015 compared to Q3 2014
Primero generated consistent cash flows from operating activities before working capital changes in 2015 compared to 2014 as higher revenues and lower costs were offset by higher tax payments made at San Dimas. Changes in non-cash working capital were a cash inflow of $8.0 million in Q3 2015 compared with an outflow of $9.7 million in Q3 2014. In Q3 2015 silver inventories decreased by approximately $2.3 million at San Dimas due to the reinstatement of its export license allowing delivery of silver outside Mexico and VAT receivables have been used to offset corporate income taxes payable at San Dimas.

YTD 2015 compared to YTD 2014
Operating cash flows before working capital changes were higher in 2015 due to higher sales and lower stock based compensation payments. The lower spot silver sales at San Dimas were offset by a full nine months of operating cash flow from Black Fox. In addition, because tax losses at PEM were fully utilized in 2014, PEM started paying tax instalments in 2015.

Investing activities

Cash used in investing activities are mostly capital expenditures as shown in the table below. In addition, in YTD 2014, the Company used $7.8 million for the Brigus acquisition.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

		Three months ended					Nine months ended				Estimated
		September 30,					September 30,
(in millions of U.S. dollars)		2015		2014			2015		2014		2015
Capital Expenditures
San Dimas Underground Development	$	6.5	$	5.3		$	13.2	$	13.7	$	15.2
San Dimas Sustaining Capital		1.7		3.3			7.6		11.7		10.8
San Dimas Projects		1.5		2.0			3.6		11.1		15.4
San Dimas Sub Total	$	9.7	$	10.6		$	24.4	$	36.5	$	41.4
Black Fox Underground Development		3.0		(1.6	)		11.2		6.0		19.5
Black Fox Open Pit Capitalized Development & Stripping		-		4.4			-		5.9		-
Black Fox Sustaining Capital		0.1		9.0			0.9		12.7		4.5
Black Fox Projects		0.7		5.1			2.8		8.0		3.4
Grey Fox Development Studies		0.0		-			0.0		0.1		1.3
Black Fox Complex Sub Total	$	3.8	$	16.9		$	14.9	$	32.7	$	28.7
Cerro del Gallo Development		0.3		2.9			0.8		5.8		2.7
Total Capital Expenditures	$	13.8	$	30.4		$	40.1	$	75.0	$	72.8

Capitalized Exploration Expenditures
San Dimas Diamond Drilling	$	0.9	$	1.4		$	3.3	$	4.6	$	6.9
San Dimas Drifting		1.3		0.8			1.7		2.4		4.5
San Dimas Regional Diamond Drilling		0.4		0.7			2.2		1.9		1.5
San Dimas Sub Total	$	2.6	$	2.9		$	7.2	$	8.9	$	12.9
Black Fox Diamond Drilling		1.0		1.4			4.0		2.7		9.7
Grey Fox & Regional Exploration		1.5		2.8			6.9		5.8		7.3
Black Fox Complex SubTotal	$	2.5	$	4.2		$	10.9	$	8.5	$	17.0
Cerro del Gallo Geology Mapping		1.6		0.4			2.0		1.2		0.7
Total Capitalized Exploration Expenditures	$	6.7	$	7.5		$	20.1	$	18.6	$	30.6

TOTAL CAPITAL	$	20.5	$	37.9		$	60.2	$	93.6	$	103.4

Financing activities

YTD 2015 compared to YTD 2014
During 2015, the Company received $75.0 million in gross proceeds from the issuance of the 5.75% convertible debentures, $9.8 million from the release of restricted cash and $0.8 million proceeds from stock options exercised. A total of $3.6 million in transaction costs were paid associated with the closing of the debentures. The Company also repaid $40 million of debt, associated with the outstanding balance of its revolving line of credit leaving the full $75 million undrawn and available for corporate purposes in the future. In 2014, the Company drew down $28 million from its line of credit and together with cash on hand repaid the promissory note owing to Goldcorp Inc., its senior secured notes and $1.9 million of the convertible debentures assumed on the acquisition of Brigus. In addition, $9.9 million was received from the exercise of stock options and $8.0 million received from a flow-through financing.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

FINANCIAL CONDITION REVIEW

A key financial objective is to make sure the Company has access to funds to achieve its medium term (three year) objectives. The Company’s strategy is to ensure liquidity is available to finance exploration and development requirements at its mining operations and growth projects as well as to repay financial obligations. The Company manages its liquidity by ensuring that, even in a low gold price environment, its operations can manage spending and provide adequate cash flow.

Key financial ratios the Company uses to assess new growth opportunities and to determine how much debt the Company can take on are shown in the net asset table below.

		As at		As at
(in thousands of U.S. dollars except ratios and per share amounts)		September 30, 2015		December 31, 2014
Cash and cash equivalents	$	43,104	$	27,389
Other current assets		70,665		60,330
Non-current assets		897,314		915,101
Total assets	$	1,011,083	$	1,002,820
Current liabilities (excluding short-term debt)	$	43,532	$	59,006
Non-current liabilities (excluding long-term debt)		106,580		100,442
Short-term debt		52,076		5,616
Long-term debt		63,500		89,771
Total liabilities	$	265,688	$	254,835
Total shareholders' equity	$	745,395	$	747,985
Total equity	$	745,395	$	747,985
Total common shares outstanding¹		162,493,758		161,555,875
Total options outstanding²		4,973,404		9,254,224
Total warrants outstanding³		-		20,800,000
Key financial ratios
Current ratio		1.19		1.36
Total liabilities-to-equity		0.36		0.34
Debt-to-total capitalization		0.13		0.11

1.	As at the date of this MD&A, the Company had 162,493,758 common shares outstanding.
2.	As at the date of this MD&A, the total number of options outstanding was 4,955,904 of which 2,902,340 are exercisable.
3.	The Company had 20.8 million warrants outstanding which were exercisable to purchase 20.8 million common shares at a price of Cdn$8.00 until July 20, 2015. These warrants expired unexercised as of July 21, 2015.

The Company’s net assets (equity) as at September 30, 2015 were $745 million compared to $748 million as at December 31, 2014. The current ratio has decreased from December 31, 2014 as a result of the reclassification of the liability of the 6.5% Convertible Debenture from long-term to short-term as it is due on March 31, 2016.

The Company’s objective is to manage financial risk by maintaining a conservative balance sheet. Liquidity at September 30, 2015 included cash and cash equivalents of $43.1 million and an undrawn amount on its revolving line of credit of $75.0 million. In addition, the Company expects to be able to meet all of its commitments including repayment of its 6.5% Convertible Debentures, and fulfill its exploration and capital program for 2015 and later years from its operating cash flows, cash balances and the revolving line of credit, even at gold prices of $1,000 per ounce. A $100 per ounce reduction in the price of gold for the remainder of the year could reduce cash flows by approximately $5 million.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

To support these objectives the Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and risk characteristics of its underlying assets. To maintain or adjust its capital structure, the Company may attempt to issue shares, issue debt, reduce capital spending, acquire or dispose of assets or adjust the amount of cash held.

Capital structure

Debt

		As at		As at
(in thousands of U.S. dollars)		September 30, 2015		December 31, 2014
Current debt
Senior unsecured convertible debentures	$	47,388	$	-
Finance lease liabilities		4,688		5,616
Total Current debt	$	52,076	$	5,616
Long-term debt
6.5% convertible debentures	$	-	$	46,315
5.75% convertible debentures		61,500		-
Finance lease liabilities		2,000		5,629
Line of credit		-		37,827
Total Long-term debt	$	63,500	$	89,771

Total debt	$	115,576	$	95,387

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements, other than the availability of the undrawn revolving $75 million line of credit. The line of credit is secured by substantially all of the Company’s assets and contains customary covenants and default clauses typical to this type of facility.

Pursuant to the terms of the line of credit, the Company is required to maintain the following financial covenants:

•	Tangible net worth (being equity less goodwill and other intangible assets) of at least $685 million plus 50% of positive net income earned after September 30, 2015.
•	Net debt leverage ratio (being total liabilities, less trade payables incurred in the ordinary course of business less unrestricted cash divided by rolling 4 quarter EBITDA) of less than 3.50:1.
•	Senior net debt leverage ratio (being that portion of net debt that ranks pari passu with or in priority to the line of credit divided by rolling 4 quarter EBITDA) less than 2.00:1.
•	Interest coverage ratio (being earnings before interest, depreciation and amortization divided by interest expense) greater than 4.50:1.

As at September 30, 2015, the Company was compliant with these covenants.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

Cash requirements

The following table summarizes the contractual maturities of the Company’s financial liabilities and operating and capital commitments:

				As at						As at
				September 30, 2015						Dec. 31, 2014
		Within 1		2-5		Over 5
(in thousands of U.S. dollars)		year		years		years		Total		Total
Trade and other payables and accrued liabilities	$	30,404	$	-	$	-	$	30,404	$	44,178
Share based payments		1,095		-		-		1,095		4,414
6.5% Convertible debentures and interest		49,684		-		-		49,684		52,812
5.75% Convertible debentures and interest		4,324		89,722		-		94,046		-
Line of credit and interest		-		-		-		-		42,689
Finance lease payments		4,688		2,000		-		6,688		11,245
Minimum rental and operating lease payments		1,217		2,833		-		4,050		7,939
Reclamation and closure cost obligations		-		13,747		47,625		61,372		57,194
Commitment to purchase plant and equipment		1,450		-		-		1,450		886
Total	$	92,862	$	108,302	$	47,625	$	248,789	$	221,357

The Company expects to discharge its commitments as they come due from its existing cash balances, cash flow from operations, collection of receivables, and its revolving line of credit.

Other liquidity considerations

San Dimas

In 2004, the then owner of the San Dimas mine entered into an agreement to sell all the silver produced at the San Dimas mine for a term of 25 years to Silver Wheaton Caymans in return for an upfront payment comprising cash and shares of Silver Wheaton Corp. (“Silver Wheaton”) and a per ounce payment of the lesser of $3.90 (adjusted for annual inflation), or the market price. The Company was required to assume this agreement, with amendments, when it acquired the San Dimas mine in 2010. The amendments provided that for each of the first four years after the acquisition date (i.e., until August 5, 2014), the first 3.5 million ounces per annum of silver produced by the San Dimas mine, plus 50% of the excess silver above this amount, must be sold to Silver Wheaton Caymans at the lesser of $4.04 per ounce (adjusted by 1% per year) and market prices. From August 6, 2014 and for the life of the mine, the first 6.0 million ounces per annum of silver produced by the San Dimas mine, plus 50% of the excess silver above this amount, must be sold to Silver Wheaton Caymans at the lesser of $4.20 per ounce (adjusted by 1% per year) and market prices. All silver not sold to Silver Wheaton Caymans is available to be sold by the Company at market prices.

Black Fox Complex

On November 9, 2010, Brigus entered into a gold purchase agreement with Sandstorm to sell a portion of future gold production from the Black Fox mine and the adjoining Pike River property for an upfront cash payment of $56.3 million and ongoing per ounce payments of the lesser of $500 per ounce of gold (subject to an inflationary adjustment beginning in 2013, not to exceed 2% per year) and market prices. On November 5, 2012, Brigus elected to repurchase a portion of the stream by paying $24.4 million to Sandstorm, which resulted in Sandstorm being entitled to 8% of the future production at the Black Fox mine and 6.3% at the Pike River property. The Company was required to assume the gold purchase agreement when it acquired Brigus in March 2014.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

Cerro del Gallo

The Company has potential future financial commitments related to its acquisition in December 2013 of Goldcorp’s 30.8% interest in the Cerro del Gallo project. These commitments are contingent payments based on meeting certain milestones or market conditions. The contingent payments include:

•	$8 million after achieving commercial production on the phase I heap leach operation (the “First Contingent Payment”);
•	$5 million if the date of the First Contingent Payment occurs before December 19, 2018 and the gold price averages $1,500 or more per ounce for a consecutive 30 day period within one year following the date of the First Contingent Payment, and not later than December 19, 2018 (“the Second Contingent Payment”);
•	$14 million on announcement of a decision by Primero to construct a carbon-in-leach mill for Phase II (“the Third Contingent Payment”);
•	$5 million if the date of the Second Contingent Payment occurs before December 19, 2018 and the gold price averages $1,500 or more per ounce for a consecutive 30 day period within one year following the date of the Second Contingent Payment, and not later than December 19, 2018 (“the Fourth Contingent Payment”).

The Company has decided not to construct the phase 1 heap leach project for Cerro del Gallo in 2015. The timing of construction will depend on market conditions and project returns. The estimated capital cost for phase 1 of this project is over $165 million and construction would take approximately 18 months. Once completed, Cerro del Gallo is expected to produce approximately 95,000 gold equivalent ounces on an annual basis.

APA Ruling

The Company continues to evaluate alternatives to achieve long term tax certainty including through engaging in a dialogue with the Mexican tax authorities in this regard. To the extent the Mexican tax authorities determine that the appropriate price of silver sales under the Amended and Restated Silver Purchase Agreement is different than the realized price, it could have a material adverse effect on the Company’s results of operations, financial condition and cash flows.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

Dividend Report and Policy

The Company has not paid any dividends since incorporation and currently has no plans to pay dividends.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA

The following table provides summary of unaudited financial data for the last eight quarters:

					2015									2014									2013
(in thousands of U.S.
dollars except for		Q3			Q2			Q1			Q4			Q3			Q2			Q1			Q4
per share amounts)
Financial Data
Revenue	$	79,219		$	67,371		$	73,310		$	71,171		$	75,503		$	79,669		$	48,269		$	47,737
Total cost of sales		(61,394	)		(56,293	)		(61,840	)		(65,837	)		(62,300	)		(55,025	)		(38,788	)		(33,992	)
Earnings from mine operations	$	17,825		$	11,078		$	11,470		$	5,334		$	13,203		$	24,644		$	9,481		$	13,745
Impairment charges	$	-		$	-		$	-			($110,000	)		($98,961	)	$	-		$	-		$	-
Exploration expenses		(231	)		(739	)		(121	)		(577	)		(1,205	)		-			(17	)		(428	)
General and administrative expenses		(6,247	)		(7,151	)		(8,013	)		(7,107	)		(5,854	)		(10,524	)		(13,335	)		(7,682	)
Earnings (loss) from operations	$	11,347		$	3,188		$	3,336			($112,350	)		($92,817	)	$	14,120			($3,871	)	$	5,635
Other income (expenses)	$	596			($5,851	)	$	4,730			($102	)	$	1,257			($4,259	)		($8,633	)		($1,556	)
Income tax (expense) recovery		(17,346	)		(4,081	)		(4,482	)		(9,314	)		(7,922	)		(4,743	)		4,251			(39,974	)
Net income (loss)		($5,403	)		($6,744	)	$	3,584			($121,766	)		($99,482	)	$	5,118			($8,253	)		($35,895	)
Basic income (loss) per share		($0.03	)		($0.04	)	$	0.02			($0.76	)		($0.62	)	$	0.03			($0.06	)		($0.31	)
Diluted income (loss) per share		($0.03	)		($0.04	)	$	0.02			($0.76	)		($0.62	)	$	0.03			($0.06	)		($0.31	)

Adjustment to 2014 figures – as a result of the finalization of the Black Fox purchase price allocation, the depletion at Black Fox was adjusted. Earnings from mine operations and earnings from operations increased by $1.2 million in Q1 2014, $5.0 million in Q2 2014, $7.0 million in Q3 2014, and decreased by $13.2 million in Q4 2014. Income tax (expense) recovery decreased by $0.4 million in Q1 2014, $0.4 million in Q2 2014 and $0.6 million in Q3 2014 and increased by $1.4 million in Q4 2014 . Net (loss) income and adjusted net income (loss) decreased by $0.8 million in Q1 2014, $4.5 million in Q2 2014, $6.4 million in Q3 2014 and decreased by $11.8 million in Q4 2014. See Note 1(a) to the condensed consolidated interim financial statements.

•	Financial data by quarter are significantly impacted by the acquisition of Brigus in 2014. Results from the Black Fox mine have been consolidated as of March 5, 2014.

•	When the Company reaches its annual threshold for deliveries under the silver purchase agreement, the Company realizes silver sales at spot prices, increasing both revenue and net income. Revenue in Q3 2015, Q3 2014, Q2 2014 and Q1 2014 included $12.8 million, $5.9 million, $14.8 million and $3.9 million, respectively, of silver sales at spot prices.

•	In Q2 2015, silver sales were lower because of the loss of PEM’s export license and higher in Q3 2015 because of the subsequent reinstatement (see Review of Consolidated Information).

•	In Q3 2014, an impairment of $99.0 million for goodwill was recorded related to the value on the acquisition of Brigus.

•	In Q4 2014, an impairment of $110.0 million was recorded against mining interests at Black Fox and Cerro del Gallo.

•	General and administrative expenses include share-based compensation which fluctuates based on the share price of the Company. In Q1 and Q2 2014 the share price appreciated resulting in higher share- based compensation.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

•	In Q2 2014 the Company incurred $6.7 million of transaction costs related to the acquisition of Brigus. In Q1 2015 the Company incurred $3.9 million of transaction costs on the issuance of the 5.75% Convertible Debentures. The 5.75% Convertible Debentures are marked-to-market each quarter. In Q1 2015, a $8.2 million gain was recorded, in Q2 2015 a $3.7 million loss was recorded and in Q3 2015 a $9 million gain recorded. All these items are included in other income (expenses) in the table above.

•	The income tax expense in Q4 2013 was higher mainly due to the introduction of a mining royalty in Mexico that resulted in the Company recording a $35.9 million deferred tax liability and expense.

•	Income tax expense is impacted by the effects of foreign exchange fluctuations on its Mexico peso denominated non-cash deferred income taxes, which were significant in certain periods, such as Q4 2014 and Q3 2015.

NON-GAAP MEASURES

The Company has included certain non-GAAP performance measures throughout this document. These performance measures are employed by management to assess the Company’s operating and financial performance and to assist in business decision-making. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors and other stakeholders use this information to evaluate the Company’s operating and financial performance; however, these non-GAAP performance measures do not have any standardized meaning. Accordingly, these performance measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Total cash costs per gold ounce

The Company has included the non-GAAP performance measures of total cash costs per gold ounce on a gold equivalent ounce and by-product basis, throughout this document. The Company reports total cash costs on a production basis. In the gold mining industry, this is a common performance measure but does not have any standardized meaning. In presenting cash costs on a production basis, the Company follows the original recommendations made by the Gold Institute Production Cost Standard. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Company’s performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The following table provides a reconciliation of total cash costs per gold equivalent ounce and total cash costs per gold ounce on a by-product basis to operating expenses (the nearest GAAP measure) per the condensed consolidated interim financial statements.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

		Three months ended						Nine months ended
		September 30,						September 30,
(in thousands of U.S. dollars except for per ounce amounts)		2015			2014			2015			2014

Operating expenses per the consolidated financial statements	$	41,859		$	44,502		$	121,038		$	112,572
Share-based payment included in operating expenses		(333	)		(186	)		(1,050	)		(1,078	)
Inventory movements and adjustments		(1,916	)		(3,173	)		3,392			(484	)
Total cash operating costs	$	39,610		$	41,143		$	123,380		$	111,010

Ounces of gold produced		52,677			51,464			161,904			133,803
Gold equivalent ounces of silver produced		15,943			8,209			30,279			29,042
Gold equivalent ounces produced		68,620			59,673			192,183			162,845
Total cash costs per gold equivalent ounce	$	577		$	689		$	642		$	682

Total cash operating costs	$	39,610		$	41,143		$	123,380		$	111,010
By-product silver credits		(17,774	)		(10,465	)		(34,927	)		(37,926	)
Cash costs, net of by-product credits	$	21,836		$	30,678		$	88,453		$	73,084

Ounces of gold produced		52,677			51,464			161,904			133,803
Total by-product cash costs per gold ounce produced	$	415		$	596		$	546		$	546

Gold equivalent ounces of silver produced for the San Dimas mine are calculated as silver ounces produced multiplied by the ratio of the average realized silver price to the average realized gold price during each quarter. These calculations are shown below.

		Three months ended				Nine months ended
		September 30,				September 30,
		2015		2014		2015		2014
Silver ounces produced (millions) (A)		1.90		1.41		5.99		4.40
Average realized silver price (B)	$	9.34	$	7.43	$	5.80	$	8.61
Average realized gold price (C )	$	1,115	$	1,275	$	1,171	$	1,286
Gold equivalent ounces of silver (A) x (B)/(C )		15,943		8,209		30,279		29,042

By-product silver credits are calculated as silver ounces produced multiplied by the average realized silver price ( (A) X (B) ) in the table above.

Management uses total cash costs per gold equivalent ounce and by-product cash costs per gold ounce to monitor the operating performance of its mines and to assess the attractiveness of potential acquisition targets. Management also believes these measures provide investors and analysts with useful information about the Company’s underlying cash costs of operations and the impact of by-product credits on the Company’s cost structure is a relevant metric used to understand the Company’s operating profitability and ability to generate cash flow. When deriving the production costs associated with an ounce of gold, the Company includes by-product credits as the Company considers that the cost to produce the gold is reduced as a result of the by-product sales supplementary to the gold production process, thereby allowing management and the Company’s other stakeholders to assess the net costs of gold production.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

All-in sustaining costs per gold ounce

In June 2013, the World Gold Council (“WGC”) published a guidance note on non-GAAP metrics available to companies in the gold industry to use to report their costs in an effort to encourage improved understanding of the total costs associated with mining an ounce of gold. The WGC is a market development organization for the gold industry and is an association whose membership comprises leading gold mining companies, including Primero. The WGC is not a regulatory industry organization. The WGC worked with its member companies to develop the definition of “all-in sustaining costs per gold ounce”, which it believes to be helpful to investors, governments, local communities and other stakeholders in understanding the economics of gold mining.

The Company has adopted the reporting of “all-in sustaining costs per gold ounce”. This metric is a non-GAAP performance measure. The Company reports this measure on a gold ounces produced basis.

The Company presents all-in sustaining costs because it believes that it more fully defines the total current cost associated with producing gold. The Company also believes that this measure allows investors and other stakeholders of the Company to better understand its costs of producing gold and better assess the Company’s ability to generate cash flow from current operations. Management also uses all-in sustaining costs in evaluating the efficiency of its operations because it believes that IFRS measures, such as operating expenses, do not capture all of the costs incurred to discover, develop, and sustain gold production. As the measure seeks to reflect the full cost of gold production from current operations, it does not include capital expenditures attributable to development projects or mine expansions, exploration and evaluation costs attributable to growth projects, income tax payments and financing costs. In addition, the calculation of all-in sustaining costs does not include depreciation and depletion expense as it does not reflect the impact of expenditures incurred in prior periods. Even though this measure is not representative of all of the Company’s cash expenditures, management believes that it is a useful measure in allowing it to analyze the efficiency of its current gold mining operations.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

The following table provides a reconciliation of all-in sustaining costs per gold ounce to the condensed consolidated interim financial statements for the three and nine months ended September 30, 2015 and 2014:

		Three months ended				Nine months ended
		September 30,				September 30,
(in thousands of U.S. dollars except for per ounce amounts)		2015		2014		2015		2014
Cash costs, net of by-product credits	$	21,836	$	30,678	$	88,453	$	73,084
Corporate general and administrative expenses		6,247		5,854		21,411		29,698
Reclamation cost accretion		270		281		819		896
Sustaining capital expenditures		12,482		22,650		45,013		61,291
All-in sustaining costs	$	40,835	$	59,463	$	155,696	$	164,969

Ounces of gold produced		52,677		51,464		161,904		133,803
All-in sustaining costs per gold ounce	$	775	$	1,154	$	962	$	1,232

All-in sustaining costs adjust “cash costs, net of by-product credits”, for corporate general and administrative expenses, reclamation cost accretion and sustaining capital expenditures. Corporate general and administrative expenses are included as a line item on the Company’s statement of operations. Sustaining capital expenditures and reclamation cost accretion are not line items on the Company’s financial statements.

Sustaining capital expenditures are defined as those capital expenditures which do not increase annual gold ounce production at a mine site and exclude all expenditures at the Company’s projects and certain expenditures at the Company’s operating sites which are deemed expansionary in nature.

Reclamation cost accretion represents the growth in the Company’s decommissioning liability due to the passage of time. This amount does not reflect cash outflows but it is considered to be representative of the periodic costs of reclamation and remediation. Reclamation cost accretion is included in finance expense in the Company’s condensed consolidated interim statements of operations and comprehensive income (loss).

The Company’s exploration program comprises delineation drilling, exploration drilling, exploration drifting and regional exploration. The costs related to delineation drilling, exploration drilling and exploration drifting are included in all-in sustaining costs. The regional exploration program is designed to identify new mineral targets on the Company’s extensive land holdings in order to grow production rather than sustain production.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

Adjusted net income (loss)

The Company has included the non-GAAP performance measures of adjusted net income (loss) and adjusted net income (loss) per share, throughout this document. Items are adjusted where considered to be unusual and impacting comparability based on the historical and expected future performance of the Company. Neither of these non-GAAP performance measures has any standardized meaning and are therefore unlikely to be comparable to other measures presented by other issuers. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Company’s performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The following table provides a reconciliation of adjusted net income to net income (the nearest GAAP measure) per the condensed consolidated interim financial statements. All adjustments are shown net of tax.

		Three months ended						Nine months ended
		September 30,						September 30,
(in thousands of U.S. dollars except for per share amounts)		2015			2014			2015			2014
Net income (loss)		($5,403	)		($99,482	)		($8,558	)		($102,617	)
Impairment charges		-			98,961			563			98,961
Impact of foreign exchange on deferred taxes		13,205			4,607			23,669			4,036
(Gain) loss on derivative liability		(208	)		-			(1,483	)		-
Mark-to-market (gain) loss on convertible debenture		(9,000	)		-			(13,500	)		-
Office closure costs and severance payments		1,559			2,040			2,264			2,040
Transaction costs		-			555			3,639			7,811
Adjusted net income (loss)	$	153		$	6,681		$	6,594		$	10,231
Weighted average shares outstanding (000's)		162,473			159,961			162,202			149,719
Adjusted net income (loss) per share	$	0.00		$	0.04		$	0.04		$	0.07

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

Operating cash flows before working capital changes and operating cash flows before working capital changes per share

The Company has included the non-GAAP performance measure operating cash flows before working capital changes and operating cash flows before working capital changes per share in this MD&A. The Company believes that, in addition to conventional measures, prepared in accordance with GAAP, certain investors use this information to evaluate the Company’s performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The following table provides a reconciliation of operating cash flows before working capital changes to cash provided by operating activities (the nearest GAAP measure) per the condensed consolidated interim financial statements and the calculation of per share amounts.

		Three months ended				Nine months ended
		September 30,				September 30,
(in thousands of U.S. dollars except for per share amounts)		2015		2014		2015		2014

Operating cash flow before working capital changes	$	20,106	$	21,704	$	62,487	$	53,855
Weighted average shares outstanding (000's)		162,473		159,961		162,202		149,719
Operating cash flow before working capital changes per share	$	0.12	$	0.14	$	0.39	$	0.36

RELATED PARTY TRANSACTIONS

As at September 30, 2015, the Company’s related parties include its subsidiaries, associates over which it exercises significant influence, and key management personnel. During its normal course of operations, the Company enters into transactions with its related parties for goods and services.

Other than payments to key management, there were no further related party transactions for the three and nine months ended September 30, 2015 that have not been disclosed in the Company’s condensed consolidated interim financial statements.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

ADOPTION OF NEW ACCOUNTING POLICIES

Functional and presentation currency

On March 12, 2015 Canada Revenue Agency approved the election of the U.S. dollar as the functional currency of amalgamated PMC. As a result of the change in underlying conditions relevant to amalgamated PMC, effective March 31, 2015 the functional currency was changed from the Canadian dollar to the U.S. dollar.

Recent pronouncements issued

In May 2014, the IASB issued IFRS 15 - Revenue from Contracts with Customers (“IFRS 15”) which supersedes existing standards and interpretations including IAS 18, Revenue. IFRS 15 establishes a single five-step model framework for determining the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. The standard is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted.

CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGEMENTS

The Company’s management makes judgements in its process of applying the Company’s accounting policies in the preparation of its unaudited condensed interim consolidated financial statements. In addition, the preparation of the financial data requires that the Company’s management make assumptions and estimates of the impacts from uncertain future events on the carrying amounts of the Company’s assets and liabilities at the end of the reporting period, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates as the estimation process is inherently uncertain. Estimates are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates and the resulting impacts on the carrying amounts of the Company’s assets and liabilities are accounted for prospectively. The critical accounting policies, estimates and judgements applied in the preparation of the Company’s unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2015 are consistent with those applied and disclosed in note 2 to the Company’s audited consolidated financial statements for the year ended December 31 2014.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

FINANCIAL INSTRUMENTS

The Company’s financial instruments at September 30, 2015 consist of cash and cash equivalents, trade and other receivables, restricted cash, an equity investment in Fortune Bay Corp. (“Fortune Bay”), trade and other payables, the convertible debentures and the line of credit.

At September 30, 2015, the carrying amounts of cash and cash equivalents, trade and other receivables, restricted cash and trade and other payables are considered to be a reasonable approximation of their fair values due to their short-term nature.

The Company’s equity investment in Fortune Bay is designated as available for sale and is held at fair value. Any unrealized gains or losses on available for sale assets are recognized in other comprehensive income (“OCI”). During the first quarter of 2015, the Company recorded an impairment loss of $0.5 million in the statement of operations relating to its investment in Fortune Bay. Fortune Bay is a publicly-listed company and the fair value is based on the trading price of its shares as at the date of the condensed consolidated interim statement of financial position.

The initial fair value of the 6.5% Convertible Debentures assumed with the Brigus acquisition was based on the present value of the future cash flows to be paid under the terms of the debentures. Subsequently, the convertible debentures are being carried at amortized cost. The fair value of the 5.75% Convertible Debentures which closed on February 9, 2015 is based on the market price of the debenture on the TSX Exchange. Gains and losses from fluctuations in the market price are recognized in the statement of operations and comprehensive income (loss) as mark-to-market gain or loss on convertible debentures.

As at September 30, 2015		Fair value		Carrying value
(in thousands of U.S. dollars except for per share amounts)
5.75% convertible debentures ¹	$	61,500	$	61,500
6.5% convertible debentures ²	$	42,592	$	47,388

1.	Fair value is calculated based on the market price of the convertible debenture on the TSX Exchange
2.	Fair value is calculated using a discounted cash flow model

The 6.5% Convertible Debentures assumed with the acquisition of Brigus are considered to contain an embedded derivative liability which was initially recognized at fair value using an option pricing model, and is subsequently measured at fair value each period during the term of the debentures. During the nine months ended September 30, 2015 an unrealized derivative gain of $1.5 million was recognized in relation to this derivative liability.

RISKS AND UNCERTAINTIES

The Company’s business contains significant risk due to the nature of mining, exploration, and development activities. For additional discussion of these and other risk factors, please refer to the Company’s Annual Information Form for the year ended December 31, 2014, which is found under the Company’s profile at www.sedar.com.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

INTERNAL CONTROL OVER FINANCIAL REPORTING

The Company’s management, with the participation of its CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company’s internal control over financial reporting includes policies and procedures that:

•	pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, the transactions and dispositions of assets of the Company;
•	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that the Company’s receipts and expenditures are made only in accordance with authorizations of management and the Company’s Directors; and
•	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s condensed consolidated interim financial statements.

Remediation Plan for Material Weakness in Internal Control over Financial Reporting - In connection with the audit of Primero’s financial statements for the year ended December 31, 2014, the Company’s management and auditors identified a material weakness solely relating to the valuation of business combinations with respect to the acquisition of Brigus. The Company is in the process of developing a remediation plan to address the deficiency previously noted in the areas of personnel, systems and controls.

Because of the inherent complexities in valuing business combinations relating to mergers and acquisitions, the Company will enhance its internal control system by consulting with a professional valuation company with experience and knowledge in valuing assets in accordance with applicable accounting standards for its next material business combination.

There has been no material change in internal controls of the Company during the nine months ended September 30, 2015 that has materially affected, or is likely to materially affect, the Company’s internal control over financial reporting.

Readers are cautioned that any controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Due to the inherent limitations in all controls systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any control system also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

Certain statements made and information contained in this MD&A constitute “forward-looking information” within the meaning of Canadian securities laws, for example, references to the possibility of acquiring producing or near-term producing precious metals assets and future gold and silver production. Forward –looking information and statements in this MD&A include those that relate to:

•	the ability of the Company to operate and expand production at its existing mines;
•	the effect of mining techniques and methods such as long-hole mining or changing labour shifts;
•	the ability of the Company to grow through acquisition;
•	the payment of taxes based upon the contracted price for silver under the Amended and Restated Silver Purchase Agreement;
•	the ability of the Company to meet the threshold in the silver purchase agreement above which it may sell silver at spot market prices and expectation to sell such silver;
•	the ability to identify new Mineral Resources and convert Mineral Resources into Mineral Reserves;
•	the impact of estimation methodologies on mine and production planning;
•	the ability to generate cash flows that exceed requirements;
•	intentions to become an intermediate gold producer;
•	the timing and amount of capital expenditures and costs;
•	the development of new mineral deposits;
•	the Company’s ability to complete future financings to raise additional capital as needed;
•	expected ore grades, recovery rates and through-put;
•	the ability of the Company to comply with environmental, safety and other regulatory requirements as well as the Company’s policies in respect thereof;
•	expected or proposed development or construction activities, and the expected costs thereof;
•	expectations regarding currency fluctuations;
•	the timing and results of union contract negotiations;
•	the timing and possible outcome of pending litigation;
•	future prices of precious and base metals;
•	the ability of the Company to obtain government approvals or permits including import and export permits in connection with the continued operation and development of its operations, development project and exploration properties and the export and sale of its minerals;
•	the impact of the acquisitions on the business and operations of the Company; and
•	the ability of the Company to maintain effective internal control over financial reporting.

Such forward-looking information is based upon factors and assumptions that, while considered reasonable by the Company as of the date of such statements, are inherently subject to uncertainties and contingencies, and, if incorrect, could cause actual future results to be materially different than expressed in the forward-looking statements. The assumptions and factors which may prove to be incorrect, include, but are not limited to: the specific assumptions set forth in this MD&A; the expectations and beliefs of management; assumptions relating to the availability of suitable mining assets for acquisition on reasonable terms; that there are no significant disruptions affecting operations, whether due to labour disruptions, supply disruptions, damage to or loss of equipment, whether as a result of natural occurrences including flooding, political changes, title issues, intervention by local landowners, loss of permits, or environmental concerns or otherwise; that development and expansion at its operations and project proceeds on a basis consistent with current expectations and the Company does not change its expansion, development and exploration plans; that the exchange rate between the Canadian dollar, the Mexican peso and the United States dollar remain consistent with current levels or as set out in this MD&A; that prices for gold and silver remain consistent with the Company’s expectations; that prices for key mining supplies, including labour costs and consumables, remain consistent with the Company’s current expectations; that production meets expectations and is consistent with estimates; that plant, equipment and processes will operate as anticipated; that there are no material variations in the current tax and regulatory environment or the tax positions taken by the Company; that the Company will maintain access to surface rights; that the Company will be able to obtain and maintain government approvals or permits in connection with the continued operation and development of its existing operations, development and exploration activities; and that the Company can access adequate financing, appropriate equipment and sufficient labour, all at acceptable rates.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

No assurance can be given that these assumptions will prove to be correct. These assumptions should be considered carefully by investors. Investors are cautioned not to place undue reliance on the forward-looking information and statements or the assumptions on which the Company’s forward-looking information and statements are based.

Forward-looking information is subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements. Such risks include, but are not limited to: the volatility of prices of gold, silver and other metals; uncertainty of Mineral Reserves, Mineral Resources, Inferred Mineral Resources, inability to realize exploration potential, mineral grades and mineral recovery estimates; uncertainty of future production, delays in completion of expansion, exploration and development plans for any reason including insufficient capital, delays in permitting, and labour issues; inability to maintain or acquire attractive mining properties on terms it considers acceptable or at all; other risks inherent with acquisitions including integration inefficiencies and potential unknown liabilities associated therewith; the ability of the Company to comply with its obligations under material agreements including financing agreements; changes to Mexican tax laws or a reversal by Mexican tax authorities of their favourable ruling supporting the Company’s advance pricing agreement or other changes in tax law or administration that increases the taxes payable by the Company; the ability of the Company to achieve projected gold and silver production, and gold and silver grades; projected cash costs of production, development and exploration, and capital expenditures may be greater than anticipated; currency fluctuations beyond those that are typical or anticipated; limitations on insurance coverage; commercial viability of mineral deposits; inability to complete any development projects for any reason; risks associated with the adequacy of infrastructure, including interruptions in power supply; mining risks, including unexpected formations, cave-ins and voids, which delay operations or prevent extraction of material; risks associated with competition in the mining industry; risks associated with the ability to retain key executives and key operating personnel; risks associated with conflicting legal obligations of directors and officers of the Company who are directors and/or officers of other companies; risks associated with foreign operations; adverse changes in labour laws or in the Company’s labour relations, or labour disputes, accidents or other adverse safety incidents; title disputes or claims; changes in other regulations that result in increased costs; cost of environmental expenditures and potential environmental liabilities; dissatisfaction or disputes with local communities or first nations; failure of plant, equipment or processes to operate as anticipated. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements.

Investors are advised to carefully review and consider the risk factors identified in this MD&A under the heading “Risks and uncertainties”, and in the Company’s Annual Information Form for the year ended December 31, 2014, for a discussion of the factors that could cause the Company’s actual results, performance and achievements to be materially different from any anticipated future results, performance or achievements expressed or implied by the forward-looking statements. Investors are further cautioned that the foregoing list of assumptions and risk factors is not exhaustive and it is recommended that prospective investors consult the more complete discussion of the Company’s business, financial condition and prospects that is included in this MD&A. The forward-looking information and statements contained in this MD&A are made as of the date hereof and, accordingly, are subject to change after such date. The Company does not undertake to update any forward-looking information, except as, and to the extent, required by applicable securities laws. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

Cautionary Note for United States Investors

The disclosure in this MD&A uses terms that comply with reporting standards in Canada and certain estimates are made in accordance with National Instrument 43-101 “Standards of Disclosure for Mineral Projects” (“NI 43-101”). NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Unless otherwise indicated, all reserve and resource estimates contained in or incorporated by reference in this AIF have been prepared in accordance with NI 43-101. These standards differ significantly from the requirements of the United States Securities and Exchange Commission (the “SEC”), SEC Industry Guide 7, as amended (“Guide 7”) and reserve and resource information contained herein and incorporated by reference herein may not be comparable to similar information disclosed by U.S. companies.

This MD&A uses the terms “Mineral Reserve”, “Proven Mineral Reserve” and “Probable Mineral Reserve” which are terms defined in the Canadian Institute of Mining, Metallurgy and Petroleum which were adopted by the Canadian Securities Administrators’ NI 43-101. Under SEC standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC standards. Accordingly, Mineral Reserve estimates contained in this MD&A may not qualify as “reserves” under SEC standards. In addition, disclosure of “contained ounces” is permitted disclosure under Canadian regulations; however, the SEC only permits issuers to report mineralization as in place tonnage and grade without reference to unit measures.

This MD&A also uses the terms “Measured Mineral Resources”, “Indicated Mineral Resources” and “Inferred Mineral Resources”. We advise investors that while such terms are recognized and required by Canadian securities regulations, the SEC does not recognize them. Inferred Mineral Resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian regulations, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies, except in limited circumstances. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Investors are cautioned not to assume that all or any part of Measured Mineral Resources or Indicated Mineral Resources will ever be converted into Mineral Reserves. Investors are also cautioned not to assume that any part or all of an Inferred Mineral Resource exists, or is economically or legally mineable.

NI 43-101 also permits the inclusion of disclosure regarding the potential quantity and grade, expressed as ranges, of a target for further exploration provided that the disclosure (i) states with equal prominence that the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the target being delineated as a Mineral Resource, and (ii) states the basis on which the disclosed potential quantity and grade has been determined. Disclosure regarding exploration potential has been included in this MD&A. United States investors are cautioned that disclosure of such exploration potential is conceptual in nature by definition and there is no assurance that exploration of the mineral potential identified will result in any category of NI 43-101 Mineral Resources being identified.

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

For the above reasons, information contained in this MD&A may not be comparable to similar information disclosed by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.

On behalf of the Board

“Joseph F. Conway”

_____________________
Joseph F. Conway
CEO and Director

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, Joseph Conway, Chief Executive Officer, Primero Mining Corp., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Primero Mining Corp. (the “issuer”) for the interim period ended September 30, 2015.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

A.	designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

	I.	material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

	II.	information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

B.	designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

	(a)	a description of the material weakness;

	(b)	the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

	(c)	the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 N/A

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2015 and ended on September 30, 2015 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: November 3, 2015

“Joseph Conway”

_______________________
Joseph Conway
Chief Executive Officer

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, Wendy Kaufman, Chief Financial Officer, Primero Mining Corp., certify the following:

	A.	designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

		I.	material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

		II.	information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

B.	designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

	(a)	a description of the material weakness;

	(b)	the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

	(c)	the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 N/A

Date: November 3, 2015

“Wendy Kaufman”

_______________________
Wendy Kaufman
Chief Financial Officer

PRIMERO REPORTS THIRD QUARTER 2015 RESULTS;

ON-TRACK TO MEET 2015 PRODUCTION GUIDANCE AT LOWER COSTS

(Please note that all dollar amounts in this news release are expressed in U.S. dollars. Refer to the third quarter 2015 management’s discussion and analysis (“MD&A”) and unaudited financial statements for more information.)

Toronto, Ontario, November 3, 2015 – Primero Mining Corp. (“Primero” or the “Company”) (TSX:P) (NYSE: PPP) today reported operational and financial results for the third quarter ended September 30, 2015.

Third Quarter Highlights:

	•	On-track to Meet 2015 Production Guidance: Production increased by 15% to 68,620 gold equivalent ounces¹, compared to 59,673 gold equivalent ounces in the third quarter of 2014. The Company is on- track to meet its 2015 consolidated production guidance of 250,000 to 270,000 gold equivalent ounces with production to September 30, 2015 totaling 192,183 gold equivalent ounces.

	•	Cash Costs and All-In Sustaining Cost Guidance Lowered: Cash costs²of $577 per gold equivalent ounce and all-in sustaining costs³of $775 per ounce are both below reduced annual guidance of $640 to $680 per gold equivalent ounce and $1,030 to $1,060 per ounce, respectively.

	•	San Dimas Continues to Excel: San Dimas produced 49,566 gold equivalent ounces (33,623 ounces of gold and 1.90 million ounces of silver) at extremely low all-in sustaining costs of $454 per ounce. The Company has increased the San Dimas 2015 production guidance to 180,000 to 190,000 gold equivalent ounces at significantly reduced all-in sustaining costs expected in the range of $740 to $770 per ounce.

	•	Black Fox Maintains Cost Control: Black Fox mill throughput averaged above 2,500 tonnes per day (“TPD”), generating gold production of 19,054 ounces at all-in sustaining costs of $1,000 per ounce. The Company has updated the Black Fox 2015 production guidance to 70,000 to 80,000 ounces at unchanged all-in sustaining costs of $1,150 to $1,200 per ounce.

•

Operating Cash Flow Remains Strong: Third quarter operating cash flow before changes in working capital⁴was $20.1 million ($0.12 per share). Adjusted net income⁵ was $0.2 million ($0.00 per share), compared with adjusted net income of $6.7 million ($0.04 per share) for Q3 2014.

“Strong third quarter operating results reflect our focus on production expansion, optimization and cost control at both of our mines,” stated Joseph F. Conway, Chief Executive Officer. “The San Dimas mine continued to deliver strong operational results, and the mill expansion to 3,000 tonnes per day remains ahead of the original schedule and on track to be completed at a cost 33% less than originally estimated. We also continued to focus on the optimization of the Black Fox mine during the quarter and were able to extend the life of the Black Fox open-pit until the end of the third quarter. Importantly we are trialling the Black Fox mill at a peak rate of up to 3,200 tonnes per day following verbal confirmation of permit modifications, allowing us to increase throughput to an average of 2,500 tonnes per day. We enter the fourth quarter well positioned to deliver on our 2015 consolidated production guidance of 250,000 to 270,000 gold equivalent ounces, an increase of approximately 16% over 2014 levels.”

San Dimas Continues to Deliver; Black Fox Maintains Cost Control During Transition to Underground Mining

Primero produced a total of 68,620 gold equivalent ounces in Q3 2015, a 15% increase compared to 59,673 gold equivalent ounces in Q3 2014. Gold and silver production was 52,677 ounces and 1.90 million ounces, respectively, in Q3 2015 compared to 51,464 ounces and 1.41 million ounces in Q3 2014. This resulted in total production to September 30, 2015 of 192,183 gold equivalent ounces.

Reinstatement of the Company’s import and export licenses on August 6, 2015 resulted in the Company selling approximately 880,000 ounces of inventoried silver that was produced in the second quarter during the third quarter. This positively affected cash costs and associated all-in sustaining costs per ounce at San Dimas for the quarter.

The Company incurred consolidated total cash costs per gold equivalent ounce of $577 for Q3 2015, compared to $689 for Q3 2014. All-in sustaining costs per ounce were $775 for Q3 2015, compared to $1,154 in Q3 2014. Year to date total cash costs per gold equivalent ounce and total all-in sustaining costs per ounce are $642 and $962, respectively.

San Dimas produced 49,566 gold equivalent ounces (33,623 ounces of gold and 1.90 million ounces of silver) during the third quarter of 2015, a 33% increase from the same period in 2014. The increase in production was mainly due to higher throughput, grades and recoveries when comparing the periods.

San Dimas total cash costs on a gold equivalent basis in the third quarter of 2015 were $507 per ounce, compared to $690 per ounce, in Q3 2014. The lower cash costs per ounce were mainly due to higher metals production and higher silver credits in the third quarter of 2015. All-in sustaining costs at San Dimas were $454 per ounce in the third quarter 2015, compared with $919 per ounce in the same period of 2014, again mainly lower as a result of higher silver credits realized during the quarter.

The Black Fox mine produced 19,054 ounces of gold in the third quarter of 2015 compared to 22,288 ounces in the third quarter of 2014. Most of the production ounces came from the open-pit mine in 2015 and 2014. In the third quarter of 2015, production was 15% lower than 2014 largely due to the lower grades remaining in the open-pit. Underground production was slightly higher in 2015.

The Company successfully extended mining of the open-pit into late in the third quarter, compared to the original expectation of late August, and built a small higher-grade open-pit stock-pile that was processed early in the fourth quarter. The Company also received verbal confirmation of a permit modification during the third quarter to trial operations of the Black Fox mill at a peak rate of up to 3,200 tonnes per day, allowing the mill to increase throughput to an average of 2,500 tonnes per day.

Black Fox total cash costs per gold ounce were higher in Q3 2015 at $780 compared to $688 per ounce in Q3 2014 due to lower gold production and partially offset by lower costs. The weaker Canadian dollar relative to the U.S. dollar had a positive impact on costs at Black Fox during the quarter as well as lower costs in the mine with improvements to the underground mining method. The Black Fox mine incurred all-in sustaining costs per gold ounce of $1,000 in Q3 2015, compared to $1,202 in Q3 2014 as a result of substantially less development capital spent and equipment replacements in 2015 compared to 2014.

Cash Flows Remain Strong

Revenue in the third quarter of 2015 was $79.2 million, 5% higher than the same period in 2014, as a result of selling 52,413 ounces of gold at an average realized price of $1,106 per ounce, and 2.86 million ounces of silver at an average realized price of $7.42 per ounce⁶. Revenue was $75.5 million in the third quarter of 2014 from selling 51,701 ounces of gold at an average realized price of $1,251 per ounce, and 1.46 million ounces of silver at an average realized price of $7.43 per ounce.

Gold produced at Black Fox is subject to a gold purchase agreement⁷ and as a result 1,640 ounces were sold to Sandstorm Gold Ltd. (“Sandstorm”) at a fixed price of $518 per ounce in Q3 2015. Silver produced at San Dimas is subject to a silver purchase agreement and as a result 2.01 million ounces of silver were sold to Silver Wheaton Caymans (“Silver Wheaton”) at a fixed price of $4.22 per ounce. In addition 847,000 ounces of silver were sold at an average spot price of $15.08 per ounce, which includes the silver ounces not sold during the second quarter of 2015, compared to 289,957 ounces of silver were sold at an average spot price of $20.44 in Q3 2014. The annual silver threshold of 6.0 million ounces under the silver purchase agreement was reset on August 6, 2015.

Operating cash flow before working capital changes in the third quarter of 2015 was $20.1 million ($0.12 per share), compared to $21.7 million ($0.14 per share) in the third quarter of 2014. Higher revenues and lower costs were offset by higher tax payments made at San Dimas in 2015 compared to 2014.

The Company generated a net loss of $5.4 million ($0.03 per share) in Q3 2015, compared to a net loss of $99.5 million ($0.62 per share) in Q3 2014, which included a goodwill impairment charge of $99.0 million relating to the Brigus acquisition.

Adjusted net income for Q3 2015 was $0.2 million ($0.00 per share), which excludes the impact of foreign exchange rate changes on deferred tax balances and removes the mark-to-market gain on the convertible debenture, compared with adjusted net income of $6.7 million ($0.04 per share) for Q3 2014, which excluded the impact of the $99.0 million impairment related to the Brigus acquisition, foreign exchange rate changes on deferred tax balances, office closure costs and transaction costs. The third quarter of 2015 adjusted net income includes a share-based payment expense of $0.3 million.

Revenue for the nine months ended September 30, 2015 was $219.9 million as a result of selling 160,425 ounces of gold at an average realized price of $1,155 per ounce, and 6.03 million ounces of silver at an average realized price of $5.73 per ounce. Revenue was $203.4 million in the same period of 2014 as a result of selling 130,880 ounces of gold at an average realized price of $1,266 per ounce, and 4.38 million ounces of silver at an average realized price of $8.61 per ounce.

Operating cash flow before working capital changes for the nine months ended September 30, 2015 was $62.5 million ($0.39 per share), compared to $53.9 million ($0.36 per share) in the same period of 2014, primarily as a result of higher sales volumes being offset by lower commodity prices and higher operating expenses.

The Company generated a net loss of $8.6 million ($0.05 per share) for the nine months ended September 30, 2015 compared with a net loss of $102.6 million ($0.69 per share) for the nine months ended September 30, 2014⁸, which included a goodwill impairment charge of $99.0 million relating to the Brigus acquisition. Higher sales volumes were offset by lower realized commodity prices and higher operating expenses and depreciation and depletion

Adjusted net income was $6.6 million ($0.04 per share) for the nine months ended September 30, 2015, which primarily excludes the impact of foreign exchange changes on deferred tax balances and removes the mark-to-market gain on the convertible debenture, compared with adjusted net income of $10.2 million ($0.07 per share) for the same period in 2014 which primarily excluded goodwill impairment charges, transaction costs associated with the Brigus transaction, the impact of foreign exchange changes on deferred tax balances and office closure costs.

On-track to Meet 2015 Production Guidance at Lower Costs

Primero maintains its consolidated production guidance of between 250,000 and 270,000 gold equivalent ounces, approximately 16% higher than 2014. It now expects San Dimas to produce just above its original guidance range, to between 180,000 and 190,000 gold equivalent ounces and Black Fox to produce just below its original guidance range, to between 70,000 and 80,000 gold equivalent ounces.

The Company has lowered its cost guidance to reflect actual results to September 30, 2015 and includes updated foreign exchange rate estimates. As a result it has lowered its San Dimas cash cost guidance to $570 to $600 per gold equivalent ounce and its all-in sustaining costs to $740 to $770 per ounce. This has resulted in lower consolidated cash cost guidance of $640 to $680 per gold equivalent ounce and all-in sustaining costs of between $1,030 to 1,060 per ounce. Despite reduced expected production levels, Black Fox remains on track to meet its original cash cost guidance of $820 to $870 per ounce with the same all-in sustaining costs of between $1,150 to $1,200 per ounce.

		Original Guidance						Revised Guidance
		Black Fox		San Dimas		Consolidated		Black Fox		San Dimas		Consolidated
Attributable gold equivalent production¹ (gold equivalent ounces)		75,000- 85,000		175,000- 185,000		250,000- 270,000		70,000- 80,000		180,000- 190,000		250,000- 270,000
Gold Production (ounces)		75,000- 85,000		145,000- 155,000		220,000- 240,000		70,000- 80,000		150,000- 160,000		220,000- 240,000
Silver Production (million ounces)				6.5-7.5		6.5-7.5				7.5-8.0		7.5-8.0
Total cash costs² (per gold equivalent ounce)	$	820-$870	$	590-$640	$	650-$700	$	820-$870	$	570-$600	$	640-$680
All-in Sustaining Costs³ (per gold ounce)	$	1,150- 1,200	$	890-$940	$	1,050-$1,150	$	1,150- 1,200	$	740-$770	$	1,030- 1,060
Capital Expenditures (US$ millions)	$	38	$	54	$	103	$	38	$	54	$	103

Liquidity Position

The Company’s liquidity position is $118.1 million, comprising cash of $43.1 million at September 30, 2015 and $75.0 million in undrawn credit facility. The Company’s cash position has increased from the June 30, 2015 balance of $39.8 million.

The Company expects to be able to meet all of its short term liability commitments, including the repayment of its 6.5% convertible debentures due in March 2016, and fulfill its exploration and capital expenditure plans for 2015 and 2016 from its cash balances, operating cash flows and available credit facility. Management’s goal is to maintain a strong balance sheet and have sufficient liquidity to fund the Company’s ongoing operations and growth plans.

San Dimas Meets Key Milestones Towards 3,000 TPD Expansion

During the third quarter the Company achieved key milestones at both the San Dimas mine and the mill, tracking towards the completion of its expansion from 2,500 TPD to 3,000 TPD⁹ by the accelerated Q2 2016 completion date¹⁰.

The Company successfully connected the tunnel between the Sinaloa-Graben and Central mining blocks, enabling one-way traffic flow within the mine and reducing average total haulage distances by approximately 3 kilometres. The connection of the tunnels provides a critical de-bottlenecking in the flow of machinery through the San Dimas mine.

As previously disclosed, the Company has reduced the estimated capital investment to complete the 3,000 TPD expansion from $26.4 million to $17.7 million, which significantly improves the rate of return of the expansion project. The $8.7 million cost reduction is from 2016 planned spending. Annual production after project completion is expected to increase beyond 2015 levels with an associated reduction of cash costs.

Black Fox Turnaround Continues

Since the acquisition of the Black Fox Complex in March 2014, the Company has been focused on investing in underground development and drilling in order to transition the mine from a predominantly open-pit operation to a higher grade underground operation. Black Fox completed mining of the open-pit in September, but continued to process high-grade stockpiled ore from the open-pit in October. In Q4 2015 and onwards the Black Fox mill will be maintained at its 2,500 TPD capacity through a combination of high-grade production from the Black Fox underground mine supplemented by lower-grade stockpiled ore.

“While underground operations at Black Fox have achieved daily rates above the 1,000 tonnes per day target, we have been unable to sustain production at this level.” commented Ernest Mast, President and Chief Operating Officer. “Mining rates during the quarter were impacted by ground conditions in the east ramp at the 390 level. The current mine plan does not enable us sufficient flexibility to consistently exceed the 1,000 TPD to make up for days of lower productivity, which is why we have accelerated plans to begin mining from the Deep Central Zone. The development ramp to this zone is well advanced and expected to reach the 620 metre level by the end of 2015, with first production ore expected in Q2 2016. With mining of the higher-grade, wider mineralization in the Deep Central Zone we are confident we will have the flexibility to sustain the 1,000 TPD targeted rate.”

The Company’s 2015 mine plan includes mining down to the 560 metre level, with an average grade of between 5.0 and 6.0 grams per tonne (“g/t”) gold. On July 20, 2015 the Company announced recent drilling results from the Black Fox Deep Central Zone, which is currently estimated to contain approximately 160,000 ounces of gold resources with an average grade of 8.5 g/t. The Black Fox stockpile currently contains an estimated 1.2 million tonnes of ore grading 1.1 g/t. Mining at a rate of 1,000 TPD from the Black Fox underground, the Company anticipates the stockpile is capable of sustaining the mill until late 2017. Looking beyond, Primero continues to advance the environmental permitting and scoping study associated with the proposed Grey Fox open-pits. Results of the scoping study are expected to be released in early 2016.

On October 26, 2015¹¹ the Company announced recent drilling results from the Froome zone, located close the Black Fox open-pit and from the adjacent Grey Fox development project that continue to give management confidence that there remains significant exploration upside outside of the identified deposits at the Black Fox Complex. Drilling from the Froome zone, located 1 kilometre west of the Black Fox open-pit, include long mineralized intercepts of 5.1 g/t gold over 56.7 metres (15PR-G015), 4.8 g/t gold over 52.4 metres (15PR-G007) and 5.1 g/t gold over 30.9 metres (15PR-G013), demonstrating considerable continuity over long mineralized intervals. Recent drilling from the Gibson South deposit, located 300 metres to the southwest of the Grey Fox Contact zone, include 5.2 g/t gold over 34.0 metres (GF15-1043), and 6.4 g/t gold over 7.0 metres (GF15-1045).

Conference Call and Webcast Details

The Company's senior management will host a conference call today, Tuesday, November 3, 2015 at 10:00 am ET to discuss third quarter operating and financial results.

Participants may join the call by dialing North America toll free 1-888-789-9572 or 416-695-7806 for calls outside Canada and the U.S., and entering the participant passcode 7982094.

A live and archived webcast of the conference call will also be available at www.primeromining.com under the News and Events section or by clicking here: http://www.gowebcasting.com/6948.

A recorded playback of the third quarter 2015 results call will be available until January 31, 2016 by dialing 1-800-408-3053 or 905-694-9451 and entering the call back passcode 4880609.

This release should be read in conjunction with Primero’s third quarter 2015 financial statements and MD&A report on the Company's website, www.primeromining.com, in the “Financial Reports” section under “Investors”, or on the SEDAR website at www.sedar.com, or on the Edgar website www.sec.gov.

(1) “Gold equivalent ounces” include silver ounces produced, and converted to a gold equivalent based on a ratio of the average commodity prices realized for each period. The ratio for the third quarter 2015 for San Dimas was based on realized prices of $1,115 per ounce of gold and $7.42 per ounce of silver. The ratio used for the 2015 fourth quarter guidance projection is 271:1 based on estimated average prices of $1,150 per ounce of gold and $4.24 per ounce of silver.

(2) Total cash costs per gold equivalent ounce and total cash costs on a by-product basis are non-GAAP measures. Total cash costs per gold equivalent ounce are defined as cost of production (including refining costs) divided by the total number of gold equivalent ounces produced. Total cash costs on a byproduct basis are calculated by deducting the by-product silver credits from operating costs. The Company reports total cash costs on a production basis. In the gold mining industry, these are common performance measures but do not have any standardized meaning, and are non-GAAP measures. The Company follows the recommendations of the Gold Institute standard. The Company believes that, in addition to conventional measures, prepared in accordance with GAAP, certain investors use this information to evaluate the Company’s performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. See the third quarter 2015 MD&A for a reconciliation of total cash costs to reported operating expenses (the nearest GAAP measure).

(3) “Operating cash flow” is operating cash flow before working capital changes. This and operating cash flows before working capital changes per share are non-GAAP measures which the Company believes provides a better indicator of the Company’s ability to generate cash flow from its mining operations. See the third quarter 2015 MD&A for a reconciliation of operating cash flows to GAAP.

(4) Adjusted net income (loss) and adjusted net income (loss) per share are non-GAAP measures. Neither of these non-GAAP performance measures has any standardized meaning and is therefore unlikely to be comparable to other measures presented by other issuers. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Company’s performance. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Refer to the third quarter 2015 MD&A for a reconciliation of adjusted net income (loss) to reported net income (loss).

(5) The Company, in conjunction with an initiative undertaken within the gold mining industry, has adopted an all-in sustaining cost non-GAAP performance measure that the Company believes more fully defines the total cost associated with producing gold; however, this performance measure has no standardized meaning. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company reports this measure on a gold ounces produced basis. For the purposes of calculating all-in sustaining costs at individual mine sites, the Company does not include corporate general and administrative expenses. Corporate general and administrative expenses are included in the computation of all-in sustaining costs per consolidated gold ounce. Refer to the Company’s third quarter 2015 financial statements and MD&A for a reconciliation of all-in sustaining costs per gold ounce.

(6) According to the silver purchase agreement between the Company and Silver Wheaton Corp., until August 6, 2014 Primero delivered to Silver Wheaton a per annum amount equal to the first 3.5 million ounces of silver produced at San Dimas and 50% of any excess at $4.12 per ounce (increasing by 1% per year). Thereafter Primero will deliver to Silver Wheaton a per annum amount equal to the first 6.0 million ounces of silver produced at San Dimas and 50% of any excess at $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.

(7) Black Fox was subject to a gold purchase agreement which continues and was assumed by the Company upon its acquisition of the mine. According to the gold purchase agreement, Sandstorm is entitled to 8% of production at the Black Fox mine and 6.3% at the Pike River property.

(8) Adjustment to 2014 figures – as a result of the finalization of the Black Fox purchase price allocation the depletion at Black Fox was adjusted relating to the period March 5, 2014 to September 30, 2014. Earnings from mine operations increased by $13.2 million ($7.0 million for Q3 2014), and net income and adjusted income increased by $11.8 million ($6.4 million for Q3 2014). Refer to Note 1(a) of the third quarter 2015 financial statements.

(9) Refer to the August 7, 2014 news release titled “Primero Announces Expansion of its San Dimas Mine To 3,000 TPD” as filed on SEDAR at www.sedar.com.

(10) Refer to the August 5, 2015 news release titled “Primero Reports Second Quarter 2015 Results; Strong Operating Results at Both Black Fox and San Dimas” as filed on SEDAR at www.sedar.com.

(11) Refer to the October 26, 2015 news release titled “Primero Continues to Grow Black Fox at Depth and Announces Wide Extension of the Froome Zone” as filed on SEDAR at www.sedar.com.

About Primero

Primero Mining Corp. is a Canadian-based precious metals producer that owns 100% of the San Dimas gold-silver mine and the Cerro del Gallo gold-silver-copper development project in Mexico and 100% of the Black Fox mine and adjoining properties in the Township of Black River–Matheson near Timmins, Ontario, Canada. Primero offers immediate exposure to un-hedged, below average cash cost gold production with a substantial resource base in politically stable jurisdictions. The Company is focused on becoming a leading intermediate gold producer by building a portfolio of high quality, low cost precious metals assets in the Americas.

Primero’s website is www.primeromining.com.

For further information, please contact:

Evan Young
Manager, Investor Relations
Tel: (416) 814 2694
[email protected]

CAUTIONARY NOTE ON FORWARD-LOOKING INFORMATION

This news release contains “forward-looking statements”, within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, concerning the business and operations of Primero Mining Corp. and its consolidated subsidiaries (collectively, “Primero” or the “Company”). All statements, other than statements of historical fact, are forward-looking statements. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects”, “is expected”, “if approved”, “forecasts”, “intends”, “anticipates”, “believes”, “in order to” or variations of such words and phrases or statements that certain actions, events or results “are anticipated”, “may”, “could”, “would”, “might” or “will require”, “will allow”, “will enhance” or “will include” or similar statements or the negative connotation thereof. Forward-looking information is also identifiable in statements of currently occurring matters which will continue in future, such as “is updating”, “is working” or “is also assessing” or other statements that may be stated in the present tense and are not historical facts or words with future implication such as “opportunity”, “promising”.

Forward-looking statements in this news release include, but are not limited to, statements regarding the level and timing of gold equivalent production at San Dimas and Black Fox; the Company’s annual production guidance; the realization of silver sales at spot prices; the amount of gold equivalent ounces produced in 2015, the cash costs and all-in sustaining costs for 2015; the capital expenditures in 2015; the Company’s intentions and expectations respecting the expansion of San Dimas production to 3,000 TPD; the Black Fox underground development and ability to open new mining areas in 2015; the amount of ore from the Company’s operations in 2015; three-year plan forecasts; the probability of encountering high grade mineralization in, and the exploration potential of, the Company’s exploration targets and plans; the ability to generate significant free cash flow while repaying debt and also internally funding future growth; optimization and expansion initiatives; and the Company’s intentions to become an intermediate gold producer.

The assumptions made by the Company in preparing the forward-looking information contained in this news release, which may prove to be incorrect, include, but are not limited to: the expectations and beliefs of management; the specific assumptions set forth above in this news release; that there are no significant disruptions affecting operations; that development and expansion at San Dimas proceeds on a basis consistent with current expectations and the Company does not change its development and exploration plans; that the exchange rate between the Canadian dollar, Mexican peso and the United States dollar remain consistent with current levels or as set out in this news release; that prices for gold and silver remain consistent with the Company's expectations; that production meets expectations; the amount of silver that the Company will sell at spot prices in 2015; that the Company identifies higher grade veins in sufficient quantities of minable ore in the Central Block and in Sinaloa Graben; that there are no material variations in the current tax and regulatory environment; that the Company will receive required permits and access to surface rights; that the Company can access financing, appropriate equipment and sufficient labour; that the political environment within Mexico and Canada will continue to support the development of environmentally safe mining projects.

Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results, performance or achievements of Primero to be materially different from those expressed or implied by such forward-looking statements, including: the Company may not be able to achieve planned production levels; the Company may not be able to expand production at San Dimas as anticipated or generate significant free cash flow; the Company may not be able to develop the Cerro del Gallo asset or realize anticipated production levels; the Company may not be successful in returning the Black Fox mine to higher production levels; the Company may be required to change its development and exploration plans with a negative impact on production; the Company may not discover mineralization in minable quantities; the exchange rate between the Canadian dollar, the Mexican peso and the United States dollar may change with an adverse impact on the Company’s financial results; the optimization and expansion initiatives may not provide the benefits anticipated; the Company may not be able to become an intermediate gold producer by building a portfolio of high quality, low cost precious metals assets in the Americas. Certain of these factors are discussed in greater detail in Primero’s registration statement on Form 40-F on file with the U.S. Securities and Exchange Commission, and its most recent Annual Information Form on file with the Canadian provincial securities regulatory authorities and available at www.sedar.com.

Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. In addition, although Primero has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Forward-looking statements are made as of the date hereof and accordingly are subject to change after such date. Forward-looking statements are provided for the purpose of providing information about management’s current expectations and plans and allowing investors and others to get a better understanding of our operating environment. Primero does not undertake to update any forward-looking statements that are included in this document, except in accordance with applicable securities laws.

SUMMARIZED FINANCIAL AND OPERATING RESULTS AND FINANCIAL STATEMENTS FOLLOW

SUMMARIZED FINANCIAL AND OPERATING RESULTS
(in thousands of United States dollars, except per share and per ounce amounts - unaudited)

SUMMARIZED FINANCIAL DATA

		Three months ended						Nine months ended
		September 30,						September 30,
		2015			2014			2015			2014¹
Key Performance Data
Tonnes of ore milled		461,902			442,739			1,388,900			1,110,083
Produced
Gold equivalent (ounces)²		68,620			59,673			192,183			162,845
Gold (ounces)		52,677			51,464			161,904			133,803
Silver (million ounces)		1.90			1.41			5.99			4.40
Sold
Gold equivalent (ounces)²		71,417			60,209			189,889			160,250
Gold (ounces)		52,413			51,701			160,425			130,880
Silver (million ounces)		2.86			1.46			6.03			4.38
Average realized prices
Gold ($/ounce)³	$	1,106		$	1,251		$	1,155		$	1,266
Silver($/ounce)³	$	7.42		$	7.43		$	5.73		$	8.61
Total cash costs (per gold ounce)²
Gold equivalent basis	$	577		$	689		$	642		$	682
By-product basis	$	415		$	596		$	546		$	546
All-in sustaining costs (per gold ounce)²	$	775		$	1,154		$	962		$	1,232

Financial Data (in thousands of US dollars except per share amounts)
Revenues	$	79,219		$	75,503		$	219,900		$	203,441
Earnings from mine operations⁴		17,825			13,203			40,373			47,329
Net income (loss)⁴		(5,403	)		(99,482	)		(8,558	)		(102,617	)
Basic income (loss) per share		(0.03	)		(0.62	)		(0.05	)		(0.69	)
Adjusted Net Income (loss)^2,4		153			6,681			6,594			10,231
Adjusted net income (loss) per share		0.00			0.04			0.04			0.07
Operating cash flows before working capital changes²	$	20,106		$	21,704		$	62,487		$	53,855
Operating cash flows before working capital changes per share²	$	0.12		$	0.14		$	0.39		$	0.36
Weighted average shares outstanding (basic)(000’s)		162,473			159,961			162,202			149,719
Weighted average shares outstanding(diluted) (000’s)		162,473			159,961			162,202			149,719

		September 30,		December 31,
		2015		2014¹
Assets
Mining interests	$	881,742	$	881,480
Total assets	$	1,011,083	$	1,002,820
Liabilities
Long-term liabilities	$	170,080	$	190,213
Total liabilities	$	265,688	$	254,835
Equity	$	745,395	$	747,985

1.	Includes the results for the period for which the Black Fox Complex assets, acquired March 5, 2014, were owned by Primero (March 5, 2014 to September 30, 2014).
2.	See “NON-GAAP measurements“ in the Company’s third quarter 2015 MD&A.
3.	Average realized gold and silver prices reflect the impact of the gold purchase agreement with Sandstorm at the Black Fox mine and the silver purchase agreement with Silver Wheaton Caymans at the San Dimas mine (see “Other liquidity considerations” in the Company’s third quarter 2015 MD&A.).
4.	Adjustment to 2014 figures – as a result of the finalization of the Black Fox purchase price allocation the depletion at Black Fox was adjusted relating to the period March 5, 2014 to September 30, 2014. Earnings from mine operations increased by $13.2 million ($7.0 million for Q3 2014), and net income and adjusted income increased by $11.8 million ($6.4 million for Q3 2014). Refer to Note 1(a) of the third quarter 2015 financial statements.

SUMMARIZED OPERATING DATA
San Dimas

		Three months ended				Nine months ended
		September 30,				September 30,
		2015		2014		2015		2014
Key Performance Data
Tonnes of ore mined		232,014		229,589		755,229		643,646
Tonnes of ore milled		228,392		219,656		742,296		637,056
Tonnes of ore milled per day		2,483		2,388		2,719		2,334
Average mill head grade (grams/tonne)
Gold		4.75		4.34		4.79		4.69
Silver		272		216		266		235
Average gold recovery rate (%)
Gold		96%		95%		96%		94%
Silver		95%		92%		94%		92%
Produced
Gold equivalent (ounces)		49,566		37,385		140,263		119,295
Gold (ounces)		33,623		29,176		109,984		90,253
Silver (million ounces)		1.90		1.41		5.99		4.40
Sold
Gold equivalent (ounces)		53,475		40,221		136,850		117,885
Gold (ounces)		34,471		31,713		107,386		88,515
Silver at fixed price (million ounces)		2.01		1.17		5.18		3.14
Silver at spot (million ounces)		0.85		0.29		0.85		1.24
Average realized price (per ounce)
Gold	$	1,115	$	1,275	$	1,172	$	1,286
Silver¹	$	7.42	$	7.43	$	5.73	$	8.61
Total cash costs (per gold ounce)²
Gold equivalent basis	$	507	$	690	$	564	$	619
By product basis	$	219	$	526	$	401	$	398
All in sustaining costs (per ounce)³	$	454	$	919	$	660	$	798
Revenue ($000's)	$	59,660	$	51,273	$	160,279	$	151,575
Earnings from mine operations ($000's)	$	18,179	$	10,737	$	42,309	$	42,855

1.	Average realized silver prices reflect the impact of the silver purchase agreement with Silver Wheaton Caymans (see “Other liquidity considerations” in the Company’s third quarter 2015 MD&A).
2.	For the purposes of calculating all-in sustaining costs at individual mine sites, the Company does not include corporate general and administrative expenses. See “NON- GAAP measurements“ in the Company’s third quarter 2015 MD&A.
3.	See “NON-GAAP measurements“ in the Company’s third quarter 2015 MD&A.

Black Fox

		Three months ended						Nine months ended
		September 30,						September 30,
		2015			2014			2015			2014¹
Key Performance Data
Open pit mining
Tonnes of ore mined		201,484			232,985			849,668			535,436
Strip ratio		4.40			6.78			4.71			8.00
Average gold grade (grams/tonne)		2.01			2.61			2.09			2.21
Underground mining
Tonnes of ore mined		36,005			20,880			83,795			70,715
Average gold grade (grams/tonne)		3.99			5.78			4.11			4.91
Open pit and underground
Tonnes of ore milled		233,510			223,083			646,604			473,027
Tonnes of ore milled per day		2,538			2,425			2,369			2,210
Average mill head grade (grams/tonne)		2.66			3.24			2.61			3.01
Average gold recovery rate (%)		96%			96%			96%			95%
Produced
Gold (ounces)		19,054			22,288			51,920			43,550
Sold
Gold at spot price (ounces)		16,302			18,432			48,163			39,160
Gold at fixed price (ounces)		1,640			1,556			4,876			3,205
Average realized gold price (per ounce)²	$	1,089		$	1,212		$	1,123		$	1,224
Total cash costs (per gold ounce)³	$	780		$	688		$	856		$	854
All-in sustaining costs (per ounce)⁴	$	1,000		$	1,202		$	1,183		$	1,453
Revenue ($000's)	$	19,559		$	24,230		$	59,621		$	51,866
Earnings (loss) from mine operations (000's)⁵		($354	)		($6,678	)		($1,936	)		($4,671	)

1.	Includes the results for the period for which the Black Fox Complex assets, acquired March 5, 2014, were owned by Primero (March 5, 2014 to September 30, 2014).
2.	Average realized gold prices reflect the impact of the gold purchase agreement with Sandstorm (see “Other liquidity considerations” in the Company’s third quarter 2015 MD&A).
3.	For the purposes of calculating all-in sustaining costs at individual mine sites, the Company does not include corporate general and administrative expenses. See “NON- GAAP measurements“ in the Company’s third quarter 2015 MD&A.
4.	Adjustment to 2014 figures – as a result of the finalization of the Black Fox purchase price allocation the depletion at Black Fox was adjusted relating to the period March 5, 2014 to September 30, 2014. Earnings from mine operations increased by $13.2 million ($7.0 million for Q3 2014), and net income and adjusted income increased by $11.8 million ($6.4 million for Q3 2014). Refer to Note 1(a) of the third quarter 2015 financial statements.
5.	See “NON- GAAP measurements“ in the Company’s third quarter 2015 MD&A.

PRIMERO MINING CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)

			Three months ended						Nine months ended
			September 30						September 30
						2014						2014
						(As restated,						(As restated,
	Notes		2015			Note 1)			2015			Note 1)

Revenue	4	$	79,219		$	75,503		$	219,900		$	203,441

Operating expenses			(41,859	)		(44,502	)		(121,038	)		(112,572	)
Depreciation and depletion	7		(19,535	)		(17,798	)		(58,489	)		(43,540	)
Total cost of sales			(61,394	)		(62,300	)		(179,527	)		(156,112	)

Earnings from mine operations			17,825			13,203			40,373			47,329
Goodwill impairment charge			-			(98,961	)		-			(98,961	)
Exploration expenses			(231	)		(1,205	)		(1,091	)		(1,239	)
General and administrative expenses			(6,247	)		(5,854	)		(21,411	)		(29,698	)

Earnings (loss) from operations			11,347			(92,817	)		17,871			(82,569	)
Transaction costs and other expenses			-			(1,120	)		(3,685	)		(8,884	)
Finance expense	11		(3,057	)		(2,309	)		(7,860	)		(4,617	)
Mark-to-market gain on convertible debentures	9(c)		9,000			-			13,500			-
Other income (loss)	13		(5,347	)		4,686			(2,475	)		1,867

Earnings (loss) before income taxes			11,943			(91,560	)		17,351			(94,203	)

Income tax expense	14		(17,346	)		(7,922	)		(25,909	)		(8,414	)

Net loss for the period			($5,403	)		($99,482	)		($8,558	)		($102,617	)

Other comprehensive income (loss), net of tax
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations, net of tax of $nil			(131	)		(1,870	)		(865	)		(282	)
Unrealized gain (loss) on investment in Fortune Bay, net of tax of $nil			-			(95	)		60			(444	)
Reclassification of unrealized loss on investment in Fortune Bay to impairment, net of tax of $nil			-			-			456			-

Total comprehensive loss for the period			($5,534	)		($101,447	)		($8,907	)		($103,343	)

Basic loss per share			($0.03	)		($0.62	)		($0.05	)		($0.69	)
Diluted loss per share			($0.03	)		($0.62	)		($0.05	)		($0.69	)

Weighted average number of common shares outstanding
Basic			162,472,841			159,960,683			162,202,155			149,719,306
Diluted			162,472,841			159,960,683			162,202,155			149,719,306

See accompanying notes to the third quarter 2015 condensed consolidated interim financial statements.

PRIMERO MINING CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(IN THOUSANDS OF UNITED STATES DOLLARS)
(UNAUDITED)

			September 30			December 31
	Notes		2015			2014

Assets
Current assets
Cash and cash equivalents		$	43,104		$	27,389
Trade and other receivables			36			59
Taxes receivable			26,719			33,272
Prepaid expenses			10,744			6,633
Inventories	8		33,166			20,366
Total current assets			113,769			87,719

Non-current assets
Restricted cash	6		6,140			17,646
Mining interests	7		881,742			881,480
Deferred tax asset			-			611
Long-term stockpile	8		8,195			14,309
Other non-current assets			1,237			1,055
Total assets		$	1,011,083		$	1,002,820

Liabilities
Current liabilities
Trade and other payables		$	31,499		$	50,743
Income tax payable			10,264			5,575
Other taxes payable			1,769			2,688
Current portion of long-term debt	9		52,076			5,616
Total current liabilities			95,608			64,622

Non-current liabilities
Other taxes payable			12,095			11,295
Deferred tax liability			59,267			50,374
Decommissioning liability			30,392			32,566
Long-term debt	9		63,500			89,771
Derivative liability	9(a)		-			1,405
Other long-term liabilities			4,826			4,802
Total liabilities		$	265,688		$	254,835

Shareholders' equity
Share capital	10(a)	$	863,076		$	858,761
Warrant reserve	10(b)		-			34,782
Contributed surplus	10(c)		58,310			21,526
Accumulated other comprehensive loss			(5,510	)		(5,161	)
Deficit			(170,481	)		(161,923	)
Total shareholders' equity		$	745,395		$	747,985
Total liabilities and shareholders' equity		$	1,011,083		$	1,002,820

See accompanying notes to the third quarter 2015 condensed consolidated interim financial statements.

PRIMERO MINING CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(IN THOUSANDS OF UNITED STATES DOLLARS)
(UNAUDITED)

			Three months ended						Nine months ended
			September 30						September 30
						2014						2014
						(As restated,						(As restated,
	Notes		2015			Note 1	)		2015			Note 1	)
Operating activities
Earnings (loss) before income taxes		$	11,943			($91,560	)	$	17,351			($94,203	)
Adjustments for:
Depreciation and depletion	7		19,535			17,798			58,489			43,540
Goodwill impairment charge			-			98,961			-			98,961
Share-based compensation expense			1,285			(993	)		6,360			10,713
Payments made under the Phantom Share Unit Plan			(196	)		(336	)		(3,813	)		(9,490	)
Mark-to-market gain on convertible debentures			(9,000	)		-			(13,500	)		-
Write-off of assets			-			102			-			1,317
Write-down of inventory			745			525			1,791			1,750
Unrealized foreign exchange loss (gain)			(1,712	)		(2,385	)		(3,232	)		97
Taxes paid			(5,574	)		(610	)		(11,421	)		(1,549	)
Other			39			(2,029	)		(955	)		(1,636	)
Other adjustments
Transaction costs (disclosed in financing activities)			-			-			3,651			-
Finance income (disclosed in investing activities)			(16	)		(78	)		(94	)		(262	)
Finance expense			3,057			2,309			7,860			4,617
Operating cash flow before working capital changes			20,106			21,704			62,487			53,855
Changes in non-cash working capital	12		7,998			(9,682	)		(18,970	)		(36,889	)
Cash provided by (used in) operating activities		$	28,104		$	12,022		$	43,517		$	16,966

Investing activities
Expenditures on mining interests			($20,687	)		($30,087	)		($60,448	)		($80,880	)
Equity investment in Santana Minerals			-			(355	)		-			(355	)
Acquisition of Brigus Gold Corp (net)			-			-			-			(7,773	)
Interest received			16			78			94			262
Cash used in investing activities			($20,671	)		($30,364	)		($60,354	)		($88,746	)

Financing activities
Repayment of debt	9 (d)	$	-			($1,183	)		($40,000	)		($57,545	)
Proceeds on exercise of options			-			510			826			9,873
Issuance of $75 million convertible debt			-			-			75,000			-
Transaction costs on issuance of convertible debt			-			-			(3,651	)		-
Payments on capital leases			(1,533	)		-			(4,832	)		-
Funds released from reclamation bond	6		-			-			9,846			-
Proceeds on issuance of flow-through shares			-			-			-			8,037
Drawdown on line of credit, net of transaction costs			-			(561	)		-			27,632
Interest paid			(3,191	)		(2,239	)		(6,267	)		(3,817	)
Cash provided by financing activites			($4,724	)		($3,473	)	$	30,922			($15,820	)

Effect of foreign exchange rate changes on cash		$	565			($297	)	$	1,630			($1,055	)

Increase (decrease) in cash		$	3,274			($22,112	)	$	15,715			($88,655	)
Cash, beginning of period			39,830			44,168			27,389			110,711
Cash, end of period		$	43,104		$	22,056		$	43,104		$	22,056

See accompanying notes to the third quarter 2015 condensed consolidated interim financial statements.

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

Create E-mail Alert Related Categories

SEC Filings

Sign up for StreetInsider Free!

Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!

Form 6-K PRIMERO MINING CORP For: Nov 03

You May Also Be Interested In

Create E-mail Alert Related Categories

Sign up for StreetInsider Free!

Free News Feed