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 August 2014
Commission File No. 001-35278
PRIMERO MINING CORP.
 (Translation of registrant's name into English)
Suite 1640, One Bentall Centre
505 Burrard Street, Box 24
Vancouver, British Columbia
 V7X 1M6 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	Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Six Months Ended June 30, 2014	
 99.2	Condensed Consolidated Interim Financial Statements – June 30, 2014	
 99.3	Form 52-109F2 Certification of Interim Filings – CEO	
 99.4	Form 52-109F2 Certification of Interim Filings – CFO	
 99.5	News Release dated August 7, 2014	

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: August 7, 2014
PRIMERO MINING CORP.
“David Blaiklock”         
 David Blaiklock
Chief Financial Officer

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
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 interim financial statements of the Company as at and for the six months ended June 30, 2014. Additional information on the Company, including its Annual Information Form for the year ended December 31, 2013, is available on the Company’s website at www.primeromining.com or on SEDAR 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 US 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 August 6, 2014.
SECOND QUARTER HIGHLIGHTS
     Key corporate events
·	Closed a three year $75 million revolving credit facility (the "Line of Credit") with a syndicate of lenders.
·	Repaid the remaining $27.2 million promissory note held by Goldcorp Inc. originally due December 31, 2015.
     Key consolidated financial information 5
·	The Company generated net income of $0.6 million ($0.00 per share) in Q2 2014 compared to net income of $4.2 million ($0.04 per share) in Q2 2013. Results in Q2 2014, compared with Q2 2013, were impacted by significantly higher general and administrative costs due to share-based payment expenses and higher depreciation and amortization expense.
·	Adjusted net income4 was $1.1 million ($0.01 per share) in Q2 2014, compared to $17.0 million ($0.16 per share) in Q2 2013.
·	Operating cash flows before working capital changes were $26.4 million ($0.17 per share) in Q2 2014, compared to $16.9 million ($0.16 per share) in Q2 2013.
     Key consolidated performance measures 5
1

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
·	The Company produced 63,414 gold equivalent ounces¹ in Q2 2014, compared to 39,089 in Q2 2013. Gold and silver production increased to 50,061 ounces and 1.49 million ounces, respectively, in Q2 2014 from 26,904 ounces and 1.46 million ounces, respectively, in Q2 2013.
·	The Company incurred total cash costs per gold equivalent ounce² of $672 for Q2 2014, compared to $551 for Q2 2013. On a by-product basis, total cash costs per gold ounce were $508 for Q2 2014, compared to $167 for Q2 2013.
·	All-in sustaining costs per ounce³ were $1,228 for Q2 2014, compared to $659 in Q2 2013.

 	1	“Gold equivalent ounces” includes silver ounces produced, and converted to a gold equivalent based on a ratio of the average commodity prices received for each period. The ratio for Q2 2014 was based on realized prices of $1,286 per ounce of gold and $11.56 per ounce of silver.	
 	 	 	
 	2	Total cash costs per gold equivalent ounce and total cash costs per gold ounce on a by-product basis are non-GAAP measures. Total cash costs per gold equivalent ounce are defined as costs of production (including refining costs) divided by the total number of gold equivalent ounces produced. Total cash costs per gold ounce on a by-product basis are calculated by deducting the by-product silver credits from operating costs and dividing by the total number of gold ounces produced. 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. As such, they are unlikely to be comparable to similar measures presented by other issuers. In reporting total cash costs per gold equivalent and total cash costs per gold ounce on a by-product basis, 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. Refer to “ Non-GAAP measure – Total cash costs per gold ounce ” below for a reconciliation of cash costs per gold ounce on both a by-product and gold equivalent basis to reported operating expenses (the most directly comparable GAAP measure).	
 	 	 	
 	3	All-in sustaining cost per ounce is a 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. Refer to “ Non-GAAP measure – All-in sustaining costs per gold ounce ” below for a reconciliation of all-in sustaining costs per gold ounce.	
 	 	 	
 	4	Adjusted net income and adjusted net income per share are non-GAAP measures. Adjusted net income is net income adjusted for unusual items. These non-GAAP measures have no standardized meaning and they 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. 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 “ Non-GAAP measure – Adjusted net income” below for a reconciliation of adjusted net income to reported net income.	
 	 	 	
 	5	Includes the results of the Black Fox mine from March 5, 2014 (the acquisition date) to June 30, 2014. Since the Black Fox mine was not owned in Q2 2013, the periods are not directly comparable.	
2

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
OVERVIEW
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 Township of Black River-Matheson, Ontario, Canada. The Company owns two 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 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 common share purchase warrants which trade on the TSX under the symbol “P.WT”, “P.WT.A” and “P.WT.B” (former Brigus warrants), as well as convertible debentures “P.DB.U” (former Brigus debentures).
Primero is a diversified, Americas-based mid-tier gold producer with a pipeline of growth projects. With its two producing mines, Primero has a critical production scale of approximately 225,000- 245,000 gold equivalent ounces in 2014 at below industry average costs. It also has a peer leading growth profile as production is expected to potentially increase to approximately 400,000 gold equivalent ounces by the end of 2016 with the completion of the 2,500 tonnes per day (“TPD”) expansion project at San Dimas in Q1 2014, the optimization of the Black Fox mine and the addition of production from Cerro del Gallo, should the Company make a positive construction decision in early-2015.
During the second quarter of 2014 the gold price increased 2%, ranging from lows of approximately $1,240 per ounce to highs in the region of $1,330 per ounce. Influences during the quarter included the crisis in Ukraine, geopolitical tensions in Iraq, comments by officials at the European Central Bank that further stimulus might be required to boost economies in Europe and the changing economic news out of the USA.
The second quarter saw strong results at the Company’s flagship San Dimas mine, which produced 46,248 gold equivalent ounces, 18% higher than Q2 2013 on higher grades and increased throughput. In addition, higher silver production since August 2013 enabled the Company to meet the 3.5 million ounce threshold under the Silver Purchase Agreement six weeks earlier than in 2013, resulting in 760,603 ounces of silver spot sales in Q2 2014, compared with 603,476 ounces in 2013.
The second quarter was the first full quarter that the Company owned the Black Fox Complex. During the second quarter, the Black Fox mine produced 17,166 ounces of gold, which was in-line with the Company’s expectations. As reported in the Company’s first quarter 2014 MD&A, a lack of investment in exploration and development since mid-2013 at the Black Fox mine has resulted in insufficient geological data for the mine plan and temporary shortage of available stopes. Management has established the capital expenditures plan for Black Fox in order to invest sufficiently in underground development and exploration, while still focusing on cost control, mine productivity and exploring the mine’s potential, both laterally and at depth. With the increased investment planned by Primero, management is confident the mine can increase production levels by the end of 2014, as was accomplished at San Dimas.
3

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
With respect to the Grey Fox and Pike River properties, management has commenced an exploration program for 2014, funded with the Cdn$9 million proceeds from a flow-through share offering that closed on March 25, 2014. As at June 30, 2014, Cdn$2.7 million of the flow-through funds had been spent.
The Company’s main objectives for the Cerro del Gallo project in 2014 are to complete the acquisition of the remaining surface land parcels, the pre-construction permitting process, the basic design of the plant and infrastructure, update of the capital cost estimate, further metallurgical optimization and exploration drilling in order to improve management’s confidence in the Cerro del Gallo metallurgical and regional exploration upside, all in order to advance the project to a potential construction decision in early-2015. The Company had expected to make a construction decision in mid-2014, however it has been delayed in order to allow the 2014 drilling and metallurgical testing programs to be completed.
RECENT CORPORATE DEVELOPMENTS
Line of credit and promissory note repayment
On May 23, 2014, the Company closed a $75 million revolving credit facility with two Canadian chartered banks. The line of credit has a three year term, a floating interest rate that the Company expects to be approximately 4% per annum for the first six months and is secured by a charge over substantially all of the Company's assets. In order to provide the banks with the required security, coincident with closing the line of credit, the Company repaid an outstanding $27.2 million promissory note held by Goldcorp Inc. bearing interest of 6% and originally due December 31, 2015.
Primero added to S&P/TSX Composite Index
S&P Dow Jones Indices (S&P) has added Primero to the S&P/TSX Composite Index as a result of the Quarterly S&P/TSX Composite Index Review, effective after the close of trading on June 20, 2014. The S&P/TSX Composite Index is the headline index in Canada and the premier indicator of performance for Canadian equity markets. It includes the largest companies on the Toronto Stock Exchange as measured by market capitalization and liquidity. The Company’s inclusion in the S&P/TSX Composite Index reflects its strong growth and progress, which management believes will further improve Primero's trading liquidity and increase its exposure to a broader range of investors.
4

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
OUTLOOK FOR 2014
The completion of the mill expansion project to 2,500 TPD at San Dimas and the acquisition of the Black Fox Complex result in Primero's total expected attributable production in 2014 of between 225,000 and 245,000 gold equivalent ounces at cash costs in the range of $650 to $700 per gold equivalent ounce.
Total cash costs per ounce and all-in sustaining costs per ounce for the 2014 outlook and for Q1 & Q2 2014 are impacted by lower than expected gold production as a result of the lack of investment in mine development and exploration at the Black Fox mine in 2013. The Company expects total cash costs per ounce and all-in sustaining costs per ounce to decrease as the Company’s investment in mine development and exploration at the Black Fox mine results in increased gold production.
Material assumptions used to forecast total cash costs for 2014 include: an average gold price of $1,200 per ounce; an average silver price of $7.96 per ounce (calculated using the silver purchase agreement contract price of $4.16 per ounce and assuming excess silver beyond contract requirements is sold at an average silver price of $21 per ounce); and foreign exchange rates of 1.07 Canadian dollars and 13 Mexican pesos to the US dollar.
5

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
SELECTED CONSOLIDATED QUARTERLY AND YEAR - TO - DATE INFORMATION

 	 	Three months ended	 	 	Six months ended	 	
 	 	June 30,	 	 	June 30,	 	
 	 	2014 ¹	 	 	2013	 	 	2014 ¹	 	 	2013	 	
     Key Performance Data	 	 	 	 	 	 	 	 	 	 	 	 	
Tonnes of ore milled	 	428,778	 	 	201,680	 	 	667,344	 	 	385,491	 	
Produced	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold equivalent (ounces)	 	63,414	 	 	39,089	 	 	103,172	 	 	66,745	 	
   Gold (ounces)	 	50,061	 	 	26,904	 	 	82,339	 	 	51,095	 	
  Silver (million ounces)	 	1.49	 	 	1.46	 	 	3.00	 	 	2.83	 	
Sold	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold equivalent (ounces)	 	62,791	 	 	37,555	 	 	100,040	 	 	66,029	 	
   Gold (ounces)  	 	48,596	 	 	25,692	 	 	79,179	 	 	50,428	 	
   Silver (million ounces)	 	1.58	 	 	1.42	 	 	2.93	 	 	2.90	 	
Average realized prices	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold ($/ounce)²	$	1,264	 	$	1,398	 	$	1,276	 	$	1,510	 	
   Silver ($/ounce)²	$	11.56	 	$	11.66	 	$	9.20	 	$	7.82	 	
Average gold London PM fix	$	1,288	 	$	1,415	 	$	1,291	 	$	1,523	 	
Total cash costs (per gold ounce)	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold equivalent basis	$	672	 	$	551	 	$	677	 	$	620	 	
   By-product basis	$	508	 	$	167	 	$	522	 	$	377	 	
All-in sustaining costs (per gold ounce)	$	1,228	 	$	659	 	$	1,288	 	$	943	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
     Financial Data	 	 	 	 	 	 	 	 	 	 	 	 	
(in thousands of US dollars except per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	79,669	 	 	52,475	 	 	127,938	 	 	98,796	 	
Earnings from mine operations	 	19,676	 	 	23,593	 	 	27,941	 	 	39,299	 	
Net income (loss)	 	572	 	 	4,241	 	 	(8,513	)	 	21,565	 	
Adjusted net income (loss)	 	1,052	 	 	17,039	 	 	(1,828	)	 	26,140	 	
Basic income (loss) per share	 	0.00	 	 	0.04	 	 	(0.06	)	 	0.21	 	
Diluted income (loss) per share	 	0.00	 	 	0.04	 	 	(0.06	)	 	0.21	 	
Adjusted net income (loss) per share	 	0.01	 	 	0.16	 	 	(0.01	)	 	0.26	 	
Operating cash flows before working capital changes	 	26,431	 	 	16,932	 	 	32,344	 	 	36,443	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	
   Mining interests	 	955,587	 	 	600,525	 	 	955,587	 	 	600,525	 	
   Total assets	 	1,207,602	 	 	780,316	 	 	1,207,602	 	 	780,316	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	
   Long-term liabilities	 	189,743	 	 	49,678	 	 	189,743	 	 	49,678	 	
   Total liabilities	 	249,388	 	 	95,567	 	 	249,388	 	 	95,567	 	
Equity	 	958,214	 	 	684,749	 	 	958,214	 	 	684,749	 	
Weighted average shares outstanding (basic)(000's)	 	159,617	 	 	105,345	 	 	144,108	 	 	101,321	 	
Weighted average shares outstanding (diluted)(000's)	 	161,321	 	 	105,696	 	 	145,582	 	 	101,817	 	
6

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	

 	1	Includes the results for the period for which the Black Fox Complex assets, acquired on March 5, 2014, were owned by Primero (March 5, 2014 to June 30, 2014).	
 	 	 	
 	2	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 “REVIEW OF CONSOLIDATED FINANCIAL INFORMATION –Gold purchase agreement and Silver purchase agreement” below ).	
REVIEW OF CONSOLIDATED FINANCIAL INFORMATION
Three months ended June 30, 2014 compared to three months ended June 30, 2013
The information in this section relates to the Company’s consolidated financial results. More detailed operating and financial information on the Company’s mines is included in “REVIEW OF OPERATIONS ” below.
·	Revenues increased to $79.7 million in Q2 2014 from $52.5 million in Q2 2013, with the acquisition of Black Fox mine on March 5, 2014 accounting for $20.9 million of the increase. Revenues at San Dimas were $6.3 million higher in Q2 2014 than Q2 2013 due to a 23% increase in gold sales volumes and a 27% increase in silver spot sales, partially offset by an 8% decrease in average realized gold prices.
·	Silver purchase agreement - During Q2 2014, the Company sold 760,603 ounces of silver at spot for an average price of $19.52 per ounce, compared to 603,476 ounces at an average price of $21.88 per ounce in Q2 2013. 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 Ltd. (“Silver Wheaton Caymans”) in return for an upfront payment comprising cash and shares of Silver Wheaton Corp. 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 (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 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.
·	Gold purchase agreement – During Q2 2014, the Company sold 1,334 ounces of gold at an average price of $509 per ounce. On November 9, 2010, Brigus entered into an gold purchase agreement with Sandstorm to sell a portion of future gold production from the Black Fox mine and the adjoining Pike River property (the “Black Fox Extension”) 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 Black Fox Extension. The Company was required to assume the gold purchase agreement when it acquired Brigus in March 2014.
7

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
·	Operating expenses were $40.4 million in Q2 2014, $19.6 million more than Q2 2013, $13.9 million of which was due to the acquisition of Black Fox. Operating expenses at San Dimas increased by $5.7 million, mainly due to higher production and sales volumes.
·	Depreciation and depletion was $19.6 million in Q2 2014, $11.5 million higher than Q2 2013, with Black Fox accounting for $7.2 million of the increase. Depreciation and depletion, which is recorded on a units of production basis, was $12.4 million at San Dimas in Q2 2014, $4.3 million higher than Q2 2013 due mainly to the increase in production.
·	General and administrative expenses were $10.5 million in Q2 2014, compared with $1.9 million in Q2 2013 due mainly to significantly higher share-based payment expense, as shown below.

 	 	Three months ended June 30,	 	
(In thousands of U.S. dollars)	 	2014	 	 	2013	 	
 	 	 	 	 	 	 	
Share-based payment	 	3,345	 	 	(2,369	)	
Salaries and wages	 	3,257	 	 	1,770	 	
Rent and office costs	 	572	 	 	421	 	
Legal, accounting, consulting, and other professional fees	 	1,968	 	 	977	 	
Other general and administrative expenses	 	1,382	 	 	1,108	 	
Total	 	10,524	 	 	1,907	 	
	The value of units in the Company’s cash-settled phantom share unit (“PSU”) plans, are marked to market each period based on the Company’s share price, which increased 7% in Q2 2014 and decreased 31% in Q2 2013. The Brigus acquisition in March 2014 increased general and administrative expenses by $0.6 million in Q2 2014, including $0.5 million in salaries and wages and $0.1 million in consulting fees. The remaining $1.0 million increase in salaries and wages was due mainly to new positions hired since Q2 2013 as the Company has grown its business. The $1.1 million increase in legal, accounting, consulting and professional expenses was due mainly to $0.7 million for an ongoing operational assessment and business improvement initiative at San Dimas and Black Fox. Transaction costs and other expenses were $0.5 million in Q2 2014, down from $5.8 million in Q2 2013, which included $5.5 million in respect of a back charge for historical social security premiums in Mexico (see Note 17 to the June 30, 2014 condensed consolidated interim financial statements).

·	Finance expense was $1.8 million in Q2 2014, $1.4 million higher than Q2 2013, primarily due to $1.2 million of accrued interest and accretion on the convertible debentures assumed upon the acquisition of Brigus.
·	The Company recorded a foreign exchange loss of $2.3 million in Q2 2014 compared with a foreign exchange gain of $0.7 million in Q2 2013. The loss in Q2 2014 was mainly due to an unrealized foreign exchange loss on translation of the net liabilities of Primero Gold Canada from the Canadian dollar, which appreciated during the period, to the U.S. dollar (its functional currency). The gain in Q2 2013 was due mainly to unrealized foreign exchange gains on accounts payable and accrued withholding taxes (denominated in pesos), as a result of the depreciation of the Mexican peso relative to the US dollar during the three month period.
8

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
·	The Company recorded an income tax expense of $4.3 million in Q2 2014, compared with $12.0 million in Q2 2013. The impact of foreign exchange on deferred income tax assets and liabilities was a $0.1 million recovery of deferred taxes in Q2 2014 and an $8.4 million deferred tax expense in Q2 2013. The volatility of the exchange rate between the Mexican peso and the US dollar can result in significant adjustments to deferred tax balances but not cash taxes (see Note 7 to the June 30, 2014 condensed consolidated interim financial statements for a reconciliation of income taxes at the statutory rate to the income tax recovery or expense in the statement of operations).
Six months ended June 30, 2014 (“YTD 2014”) compared to six months ended June 30, 2013 (“YTD 2013”)
The information in this section relates to the Company’s consolidated financial results. More detailed operating and financial information on the Company’s mines is included in “REVIEW OF OPERATIONS ” below.
·	Revenue was $127.9 million in YTD 2014, $29.1 million more than YTD 2013, with the Black Fox mine, acquired on March 5, 2014, accounting for $27.7 million of the increase. Revenue at San Dimas increased by $1.5 in YTD 2014, compared with YTD 2013, as a 13% increase in gold sales volumes was offset by a 14% decrease in realized gold prices and a 58% increase in silver spot sales was partially offset by a 10% decrease in realized spot silver prices (see “REVIEW OF CONSOLIDATED FINANCIAL INFORMATION - Three months ended June 30, 2014 compared to three months ended June 30, 2013 – Silver purchase agreement and Gold purchase agreement”).
·	Operating expenses increased by $24.8 million to $68.1 million in YTD 2014, of which $21.0 million was due to the acquisition of the Black Fox mine. Operating expenses at San Dimas increased by $3.8 million in YTD 2014 from YTD 2013 mainly due to increased production and sales volumes.
·	Depreciation and depletion was $31.9 million in YTD 2014, an increase of $15.7 million from YTD 2013, with Black Fox accounting for $10.7 million of the increase. Depreciation and depletion expense, which is recorded on a units of production basis, was $21.2 million at San Dimas in YTD 2014, 31% higher than YTD 2013 due mainly to the increase in gold production.
·	General and administrative expenses were $23.9 million in YTD 2014, compared with $9.7 million in YTD 2013, primarily due to an $8.7 million increase in share-based payment expense. The value of units in the Company’s cash-settled PSU plans are marked to market each period based on the Company’s share price, which increased 83% in YTD 2014 and decreased 25% in YTD 2013. The breakdown of general and administrative expenses is as follows.
9

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	

YTD Q2 2014	 	Six months ended June 30,	 	
(In thousands of U.S. dollars)	 	2014	 	 	2013	 	
 	 	 	 	 	 	 	
Share-based payment	 	10,971	 	 	2,307	 	
Salaries and wages	 	6,690	 	 	2,990	 	
Rent and office costs	 	1,052	 	 	902	 	
Legal, accounting, consulting, and other professional fees	 	2,578	 	 	1,521	 	
Other general and administrative expenses	 	2,586	 	 	1,983	 	
Total	 	23,877	 	 	9,703	 	
	The Brigus acquisition added $0.7 million of general and administrative expenses in YTD 2014, comprising $0.6 million in salaries and wages and $0.1 million in consulting fees. The remaining $3.1 million increase in salaries and wages was due mainly to new positions hired since YTD 2013 as the Company has grown its business. The $1.1 million increase in legal, accounting, consulting and professional expenses was due mainly to $0.7 million for an ongoing operational assessment and business improvement initiative at San Dimas and Black Fox.

·	Transaction costs and other expenses were $7.8 million in YTD 2014, including $7.3 million of transaction costs related to the acquisition of Brigus, compared with $6.1 million in YTD 2013, including $5.5 million for historical social security premiums in Mexico (see Note 17 to the June 30, 2014 condensed consolidated interim financial statements).
·	Finance expense increased by $1.4 million in YTD 2014 as compared to YTD 2013, primarily due to accrued interest and accretion on the convertible debentures assumed upon the acquisition of Brigus.
·	The Company recorded a foreign exchange loss of $2.6 million in YTD 2014 compared with a loss of $0.7 million in YTD 2013. The loss in YTD 2014 was mainly due to an unrealized foreign exchange loss on translation of the net liabilities of Primero Gold Canada from the Canadian dollar, which appreciated during the period, to the U.S. dollar (its functional currency). The Mexican peso depreciated against the US dollar in YTD 2013, producing unrealized foreign exchange losses on the conversion of peso denominated asset and liability balances.
·	The Company recorded an income tax recovery of $0.3 million in YTD 2014, compared with an income tax expense of $0.5 million in YTD 2013. The recovery in YTD 2014 was primarily due to the pretax loss incurred by the Company (see Note 7 to the June 30, 2014 condensed consolidated interim financial statements for a reconciliation of income taxes at the statutory rate to the income tax recovery or expense in the statement of operations).
10

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
REVIEW OF OPERATIONS
T HREE MONTHS ENDED J UNE 30, 2014

 	 	 	 	 	San Dimas	 	 	BlackFox¹	 	
 	 	 	 	 	Three months ended June 30	 	 	Three months ended June 30	 	
 	 	 	 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue		$000s	 	 	58,803	 	 	52,475	 	 	20,866	 	 	-	 	
Gold produced	 	(ounces)	 	 	32,895	 	 	26,904	 	 	17,166	 	 	-	 	
Gold sold at spot price	 	(ounces)	 	 	31,542	 	 	25,692	 	 	15,720	 	 	-	 	
Gold sold at fixed price	 	(ounces)	 	 	-	 	 	-	 	 	1,334	 	 	-	 	
Average realized gold price	 	(per ounce)	 	 	1,286	 	 	1,398	 	 	1,224	 	 	-	 	
Silver produced	 	(ounces)	 	 	1,485,502	 	 	1,460,926	 	 	-	 	 	-	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Silver sold at spot price	 	(ounces)	 	 	760,603	 	 	603,476	 	 	-	 	 	-	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Silver sold at fixed price	 	(ounces)	 	 	818,573	 	 	818,831	 	 	-	 	 	-	 	
Total cash costs	 	(per ounce)	 	 	551	 	 	551	 	 	998	 	 	-	 	
All-in sustaining costs	 	(per ounce)	 	 	626	 	 	588	 	 	1,771	 	 	-	 	
S IX MONTHS ENDED J UNE 30, 2014

 	 	 	 	 	San Dimas	 	 	BlackFox¹	 	
 	 	 	 	 	Six months ended June 30	 	 	Six months ended June 30	 	
 	 	 	 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue		$000s	 	 	100,302	 	 	98,796	 	 	27,636	 	 	-	 	
Gold produced	 	(ounces)	 	 	61,077	 	 	51,095	 	 	21,262	 	 	-	 	
Gold sold at spot price	 	(ounces)	 	 	56,803	 	 	50,428	 	 	20,728	 	 	-	 	
Gold sold at fixed price	 	(ounces)	 	 	-	 	 	-	 	 	1,649	 	 	-	 	
Average realized gold price	 	(per ounce)	 	 	1,292	 	 	1,510	 	 	1,235	 	 	-	 	
Silver produced	 	(ounces)	 	 	2,996,351	 	 	2,828,600	 	 	-	 	 	-	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Silver sold at spot price	 	(ounces)	 	 	953,103	 	 	603,476	 	 	-	 	 	-	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Silver sold at fixed price	 	(ounces)	 	 	1,972,611	 	 	2,293,976	 	 	-	 	 	-	 	
Total cash costs	 	(per ounce)	 	 	586	 	 	620	 	 	1,028	 	 	-	 	
All-in sustaining costs	 	(per ounce)	 	 	749	 	 	753	 	 	1,715	 	 	-	 	

 	1	Includes the results for the period for which the Black Fox mine was owned by Primero (March 5, 2014 to June 30, 2014).	
11

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
San Dimas mine
The following table discloses operating data for the San Dimas mine for Q2 2014 and the four preceding quarters.

 	 	 	 	 	 	Three months ended	 	 	 	 	
 	 	30-Jun-14	 	 	 	31-M ar-14	 	 	31-Dec-13	 	 	30-Sep-13	 	 	30-Jun-13	 	
Key Performance Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tonnes of ore mined	 	196,025	 	 	 	218,032	 	 	205,345	 	 	198,222	 	 	207,263	 	
Tonnes of ore milled	 	218,830	 	 	 	198,570	 	 	181,626	 	 	199,812	 	 	201,680	 	
Average mill head grade (grams/tonne)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold	 	4.97	 	 	 	4.76	 	 	5.17	 	 	5.08	 	 	4.25	 	
   Silver	 	230	 	 	 	260	 	 	292	 	 	265	 	 	236	 	
Average recovery rate (% )	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold	 	94%	 	 	 	93%	 	 	96%	 	 	97%	 	 	98%	 	
   Silver	 	92%	 	 	 	91%	 	 	94%	 	 	95%	 	 	96%	 	
Produced	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold equivalent (ounces)	 	46,248	 	 	 	35,662	 	 	34,371	 	 	41,998	 	 	39,089	 	
   Gold (ounces)	 	32,895	 	 	 	28,182	 	 	29,097	 	 	31,791	 	 	26,904	 	
   Silver (million ounces)	 	1.49	 	 	 	1.51	 	 	1.60	 	 	1.62	 	 	1.46	 	
Sold	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold equivalent (ounces)	 	45,737	 	 	 	31,926	 	 	37,733	 	 	40,210	 	 	37,555	 	
   Gold (ounces)	 	31,542	 	 	 	25,260	 	 	32,157	 	 	30,261	 	 	25,692	 	
   Silver at fixed price (million ounces)	 	0.82	 	 	 	1.15	 	 	1.69	 	 	1.18	 	 	0.82	 	
   Silver at spot (million ounces)	 	0.76	 	 	 	0.19	 	 	-	 	 	0.40	 	 	0.60	 	
Average realized price (per ounce)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold	$	1,286	 	 	$	1,300	 	$	1,265	 	$	1,338	 	$	1,398	 	
   Silver	$	11.56	 	 	$	6.44	 	$	4.16	 	$	8.42	 	$	11.66	 	
Total cash operating costs ($000s)	$	25,474	 	 	$	22,540	 	$	22,676	 	$	21,660	 	$	21,530	 	
Total cash costs (per gold ounce)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold equivalent basis	$	551	 	 	$	632	 	$	660	 	$	516	 	$	551	 	
   By-product basis	$	252	 	 	$	455	 	$	550	 	$	252	 	$	167	 	
All-in sustaining costs (per ounce)¹	$	626	 	 	$	893	 	$	1,151	 	$	751	 	$	588	 	

 	1	For the purposes of calculating all-in sustaining costs at individual mine sites, the Company does not include corporate general and administrative expenses. Prior period mine site results have been re-stated to reflect this.	
The San Dimas mine produced 32,895 ounces of gold and 1.5 million ounces of silver in Q2 2014, 22% more and 2% more, respectively, than Q2 2013. The increase in gold production was due mainly to 9% higher throughput from 201,680 tonnes in Q2 2013 to 218,830 tonnes in Q2 2014, and a 17% increase in gold mill head grade. The project to expand the grinding capacity of the mill to 2,500 TPD was completed by March 31, 2014, resulting in average daily throughput Q2 2014 of 2,405 TPD. Throughput for April and May 2014 averaged 2,566 TPD but in June the Company’s Truchas hydro facility, which is undergoing an expansion, was shut down for eight days in order to tie-in to the penstock and the mine was reliant on unstable grid power and diesel generation, which caused several plant shutdowns that reduced average daily throughput for the month to 2,077 TPD. The reduction in recovery rates in Q1 and Q2 2014 compared with earlier quarters was due to the commissioning of new tanks to allow for more leaching time at 2500 TPD, which was completed by the end of Q2 2014. This is not expected to continue for the remainder of the year.
12

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Total cash costs on a gold equivalent and by-product basis in Q2 2014 were $551 and $252 per ounce, respectively, compared with $551 and $167 per ounce, respectively, in Q2 2013. The consistent cash costs per ounce was due to a 18% increase in gold equivalent ounces produced, offset by a $3.9 million (18%) increase in cash operating costs when comparing Q2 2014 to Q2 2013. Most of the increases in input costs related to labour and contractors. Labour costs increased by $2.0 million between Q2 2013 and Q2 2014 due to a $1.2 million increase in pay rates and headcount, $0.6 million increase in social security payments and $0.2 million increase in bonuses due to the achievement of higher production targets. Contractor costs increased by $1.5 million, due mainly to expanding the contracted security force in mid-2013 and higher contract mining and haulage fees.
The Company incurred all-in sustaining costs for the San Dimas mine of $626 per gold ounce in Q2 2014, compared with $588 per gold ounce in Q2 2013. All-in sustaining costs increased to $20.6 million in Q2 2014 from $15.8 million in Q2 2013 due mainly to $3.8 million higher cash costs net of silver by-product credits (increased labour and contractor costs as described above) and $1.0 million higher sustaining capital expenditures (increased equipment purchases). The 30% increase in gross all-in sustaining costs was partially offset by a 22% increase in gold ounces produced, resulting in the 6% increase in all-in sustaining costs per ounce in Q2 2014, compared with Q2 2013.
13

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Black Fox mine
The following table discloses operating data for the Black Fox mine for second quarter 2014 and the four preceding quarters. The Company owned the mine for the entirety of the second quarter 2014 and for just 26 days during Q1 2014.

 	 	Three months ended	 	 	 	For the period	 	 	Three months ended	 	
 	 	 	 	 	 	March 5, 2014 -	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	30-Jun-14	 	 	 	March 31, 2014	 	 	31-M ar-14	 	 	31-Dec-13	 	 	30-Sep-13	 	 	30-Jun-13	 	
Key Performance Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Open pit mining	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tonnes of ore mined	 	247,029	 	 	 	55,422	 	 	166,753	 	 	161,895	 	 	152,709	 	 	149,825	 	
Average grade (grams/tonne)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold	 	1.85	 	 	 	2.17	 	 	1.89	 	 	2.20	 	 	2.88	 	 	2.70	 	
Underground mining	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tonnes of ore mined	 	41,739	 	 	 	8,096	 	 	36,211	 	 	68,294	 	 	74,628	 	 	82,616	 	
Average grade (grams/tonne)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold	 	4.33	 	 	 	5.65	 	 	5.00	 	 	6.07	 	 	5.69	 	 	5.93	 	
Open pit and underground	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tonnes of ore milled	 	209,948	 	 	 	39,996	 	 	149,803	 	 	206,914	 	 	207,559	 	 	154,667	 	
Average mill head grade (grams/tonne)	 	2.69	 	 	 	3.36	 	 	2.96	 	 	3.53	 	 	4.34	 	 	4.97	 	
Average recovery rate (%)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold	 	95%	 	 	 	95%	 	 	93%	 	 	93%	 	 	94%	 	 	94%	 	
Produced	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold equivalent (ounces)	 	17,166	 	 	 	4,096	 	 	13,298	 	 	21,916	 	 	27,174	 	 	23,304	 	
   Gold (ounces)	 	17,166	 	 	 	4,096	 	 	13,298	 	 	21,916	 	 	27,174	 	 	23,304	 	
Sold	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold equivalent (ounces)	 	17,054	 	 	 	5,323	 	 	15,620	 	 	20,582	 	 	28,344	 	 	22,490	 	
   Gold at spot price (ounces)	 	15,720	 	 	 	5,008	 	 	14,176	 	 	18,992	 	 	25,963	 	 	20,745	 	
   Gold at fixed price (ounces)	 	1,334	 	 	 	315	 	 	1,444	 	 	1,590	 	 	2,381	 	 	1,745	 	
Average realized price (pe rounce)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold	$	1,224	 	 	$	1,272	 	$	1,242	 	$	1,249	 	$	1,301	 	$	1,352	 	
Total cash operating costs ($000s)¹	$	17,127	 	 	$	4,726	 	$	18,732	 	$	20,376	 	$	16,714	 	$	19,107	 	
Total cash costs (per gold ounce)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Gold equivalent basis	$	998	 	 	$	1,154	 	$	1,409	 	$	930	 	$	615	 	$	820	 	
All-in sustaining costs (per ounce)²	$	1,771	 	 	$	1,480	 	$	1,825	 	$	1,336	 	$	905	 	$	1,154	 	

 	1	The Company reports total cash costs on a production basis, whereas the prior owner of Black Fox reported total cash costs on a sales basis, consequently the reported total cash costs, cash costs per gold ounce, and all-in sustaining costs per ounce for Black Fox for historical periods will differ from those reported by the prior owner.	
 	 	 	
 	2	For the purposes of calculating all-in sustaining costs at individual mine sites, the Company does not include corporate general and administrative expenses. Prior period mine site results have been re-stated to reflect this.	
Q2 2014 was the first full quarter that the Company owned the Black Fox mine. During Q2 2014, the Black Fox mine produced 17,166 ounces of gold, of which 1,373 were committed under a gold streaming agreement to Sandstorm (see “REVIEW OF CONSOLIDATED FINANCIAL INFORMATION – Gold purchase agreement” above). Total gold production from the Black Fox mine in Q2 2014 was 26% lower than Q2 2013 mainly due to reduced tonnage and lower grades in the underground. An average of 458 TPD were mined from the underground in Q2 2014, down from 908 TPD in Q2 2013. The lower tonnage and grade from the underground was mainly due to insufficient investment in underground development and exploration in 2013, which resulted in a lack of visibility into the location of higher grade ore and a shortage of available stopes for mining. The Company is spending significant amounts of capital on exploration and development, with the objective of increasing mining from the underground to levels achieved in 2013. Tonnage from the open pit was 65% higher in Q2 2014 than Q2 2013, however the grade was 31% lower. Total tonnes milled were 36% higher in Q2 2014, at 2,307 TPD, than Q2 2013, partly because operation at the mill was suspended for 19 days in Q2 2013 as a precautionary measure due to higher than recommended water levels in the holding and water management facilities at the Black Fox mill resulting from abnormally high levels of precipitation. The average mill head grade decreased to 2.69 gpt in Q2 2014 from 4.97 gpt in Q2 2013 due mainly to less feed from the higher grade underground.
14

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Total cash costs per gold ounce increased 22% from $820 in Q2 2013 to $998 in Q2 2014, due mainly to the lower production. The Black Fox mine incurred all-in sustaining costs per gold ounce of $1,771 in Q2 2014, compared to $1,154 in Q2 2013 mainly due to $6.4 million more sustaining capital expenditures in Q2 2014 than Q2 2013, primarily for exploration and development.
G REY FOX AND P IKE R IVER
The Grey Fox property is located four kilometers south-east of the Black Fox mine and the Pike River property lies between the Black Fox mine and the Grey Fox gold deposit. Apart from the Black Fox mine deposit mineralization, the majority of known gold mineralization defined to date at the Black Fox Complex occurs within the two zones (the Contact Zone and Zone 147) on the Grey Fox-Pike River properties. The Company's 2014 exploration program includes 76,600 metres of exploration and delineation drilling at Grey Fox, of which approximately 22,780 metres have been drilled to date in 2014. Drill results at the Contact Zone show continuation of the identified hanging wall zone as drilling is extended to the north and east. Drilling in the second half of 2014 will continue to infill the Contact Zone. The Company also obtained encouraging drill results in the Grey Fox South zone as they indicate the zone is wider than previously anticipated with more consistent grade than in earlier drilling results. Primero raised Cdn$9 million in March 2014 in a flow-through financing, in order to carry out its exploration program at the Grey Fox, Pike River and the Stock Mill property of which Cdn$2.7 was spent by June 30, 2014.
Mineral Resources
On July 9, 2014, the Company filed an updated NI 43-101 technical report on mineral reserves and mineral resources as at December 31, 2013 at the Black Fox Complex. On the acquisition of the Black Fox Complex, management reviewed the block model and reserve and resource estimation parameters. While the block model estimation methodology was considered appropriate, management elected to be more conservative on several estimation parameters, including increasing the cut-off grade, reducing the area of influence around drill holes, and using more detailed domaining and more conservative capping. Management believes this more conservative approach is appropriate as the Company optimizes the Black Fox operation. While the new estimation resulted in a reduction in reserves and resources, the advancement in underground development and significant increases in definition and delineation drilling during 2014 are expected to position the Company to materially increase resources and convert resources into reserves by the end of 2014. Based on the new estimation, the Black Fox mine contained proven and probable reserves of 537,700 gold ounces and inferred resources of 167,786 gold ounces, while the Grey Fox property contained indicated resources of 557,655 gold ounces and inferred resources of 218,820 gold ounces as at December 31, 2013.
15

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
REVIEW OF DEVELOPMENT AND EXPLORATION PROJECTS
C ERRO DEL G ALLO
The Cerro del Gallo project is located on the San Antón property in the state of Guanajuato in central Mexico, approximately 270 kilometers northwest of Mexico City. The San Antón property fully incorporates the San Antón de las Minas mining district, centered 23 kilometers east northeast of Guanajuato city and the historic Guanajuato Mining District where production from 1700 to 2004 is reported to be 1.14 billion ounces of silver and 6.5 million ounces of gold. The project was acquired by Primero in May 2013. The Company’s investment in Cerro del Gallo was approximately $118 million on June 30, 2014.
Mineral Resources
Cerro del Gallo is an attractive long-life project with approximately 1.0 million ounces of gold equivalent proven and probable reserves and 1.6 million ounces of gold equivalent measured and indicated resources (exclusive of reserves). Assuming a positive construction decision, the project is expected to contribute 95,000 gold equivalent (silver and copper as by-products) ounces per year to the Company’s overall production.
Exploration and development program
The exploration activities at the San Antón property have consisted of drilling and several sampling programs and the majority of the exploration work has focused on the Cerro del Gallo deposit. Drilling activity by previous owners of the property ceased in 2008. Primero resumed the exploration program in 2013, when approximately $2 million was spent on geophysical compilation and diamond drilling. In 2013, 15,179 meters were drilled, including infill, condemnation and regional exploration drilling, as well as geotechnical drilling for metallurgical and geochemical tests. The infill drilling program was designed to convert inferred resources into indicated resources in the central part of the Cerro del Gallo mineralized zone. The condemnation drilling program was designed to sterilize areas for future infrastructure, including the waste dumps and leach pads.
The exploration program covering the Cerro del Gallo deposit and regional epithermal mineralized veins is continuing in 2014. Approximately $2.5 million is budgeted for exploration drilling and surface mapping and sampling. Further work on optimization of Cerro del Gallo also continues in 2014 with completion of land acquisition, process water drilling, pre-construction permitting, basic design of the plant and infrastructure, update of the capital cost estimate, and further metallurgical testing to improve management’s confidence in the Cerro del Gallo metallurgical and regional exploration upside, all in order to advance the project to a potential construction decision in the first quarter of 2015.. The Company’s 2014 development budget for Cerro del Gallo is $10.4 million, $2.9 million of which was spent by June 30 2014.
V ENTANAS
Primero has one exploration property in Mexico – Ventanas, located in Durango State, approximately 32 kilometers from the San Dimas mine. The Company re-initiated exploration of the Ventanas property in 2013 (after last having explored it in 2008) with systematic channel sampling and mapping. The 2014 budget for regional diamond drilling on the Ventanas property is $0.9 million for a total of approximately 4,100 meters.
16

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA
The following table provides summary unaudited financial and operating data for the last eight quarters:

(In thousands of US$ except for per	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
share amounts and operating data)	 	2014	 	 	2013	 	 	2012	 	
 	 	Q 2	 	 	Q1	 	 	Q4	 	 	Q3	 	 	Q2	 	 	Q1	 	 	Q4	 	 	Q3	 	
  Financial Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue	 	79,669	 	 	48,269	 	 	47,737	 	 	53,793	 	 	52,475	 	 	46,321	 	 	43,597	 	 	38,277	 	
Net income (loss)	 	572	 	 	(9,087	)	 	(35,895	)	 	10,080	 	 	4,241	 	 	17,325	 	 	1,245	 	 	11,586	 	
Basic income (loss) per share	 	0.00	 	 	(0.07	)	 	(0.31	)	 	0.09	 	 	0.04	 	 	0.18	 	 	0.01	 	 	0.12	 	
Diluted income (loss) per share	 	0.00	 	 	(0.07	)	 	(0.31	)	 	0.09	 	 	0.04	 	 	0.18	 	 	0.01	 	 	0.12	 	
Adjusted net income (loss)	 	1,052	 	 	(2,882	)	 	1,570	 	 	10,959	 	 	17,039	 	 	9,415	 	 	4,528	 	 	2,634	 	
Adjusted net income (loss) per share	 	0.01	 	 	(0.02	)	 	0.01	 	 	0.09	 	 	0.16	 	 	0.10	 	 	0.05	 	 	0.03	 	
Operating cash flow before working capital changes	 	26,431	 	 	6,509	 	 	14,038	 	 	20,926	 	 	16,932	 	 	19,309	 	 	17,775	 	 	16,172	 	
Cash	 	44,168	 	 	86,372	 	 	110,711	 	 	125,709	 	 	130,390	 	 	141,246	 	 	139,244	 	 	133,130	 	
Total assets	 	1,207,602	 	 	1,257,431	 	 	800,822	 	 	783,883	 	 	780,316	 	 	692,015	 	 	670,506	 	 	662,069	 	
Long-term liabilities	 	189,743	 	 	133,904	 	 	94,039	 	 	49,392	 	 	49,678	 	 	48,745	 	 	47,253	 	 	60,676	 	
Equity	 	958,214	 	 	954,274	 	 	661,090	 	 	696,159	 	 	684,749	 	 	590,340	 	 	571,738	 	 	567,683	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
    Key Performance Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold produced (ounces)	 	50,061	 	 	32,278	 	 	29,097	 	 	31,791	 	 	26,904	 	 	24,190	 	 	23,143	 	 	18,892	 	
Gold equivalent ounces produced	 	63,414	 	 	39,758	 	 	34,371	 	 	41,998	 	 	39,089	 	 	27,656	 	 	26,310	 	 	25,582	 	
Gold sold at spot (ounces)	 	47,262	 	 	30,268	 	 	32,157	 	 	30,261	 	 	25,692	 	 	24,736	 	 	22,404	 	 	17,100	 	
Gold sold at fixed prices (ounces)	 	1,334	 	 	315	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	
Average price realized per gold ounce	$	1,264	 	$	1,295	 	$	1,265	 	$	1,338	 	$	1,398	 	$	1,626	 	$	1,715	 	$	1,646	 	
Cash cost per gold equivalent ounce	$	672	 	$	686	 	$	660	 	$	516	 	$	551	 	$	719	 	$	677	 	$	699	 	
Cash cost per gold ounce, net of silver by-products	$	508	 	$	543	 	$	550	 	$	252	 	$	167	 	$	589	 	$	535	 	$	363	 	
All-in sustaining costs (per gold ounce)	 		 	 		 	 		 	 		 	 		 	 		 	 		 	 		 	
   Consolidated	$	1,228	 	$	1,381	 	$	1,415	 	$	974	 	$	659	 	$	1,236	 	$	1,644	 	$	1,240	 	
   San Dimas	$	626	 	$	893	 	$	1,151	 	$	751	 	$	588	 	$	914	 	$	1,166	 	$	742	 	
   Black Fox	$	1,771	 	$	1,480	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	
   Other¹	$	210	 	$	413	 	$	264	 	$	223	 	$	71	 	$	322	 	$	478	 	$	498	 	
Silver produced (million ounces)	 	1.49	 	 	1.51	 	 	1.60	 	 	1.62	 	 	1.46	 	 	1.37	 	 	1.32	 	 	1.14	 	
Silver sold at fixed price (million ounces)	 	0.82	 	 	1.15	 	 	1.69	 	 	1.18	 	 	0.82	 	 	1.48	 	 	1.25	 	 	0.80	 	
Silver sold at spot (million ounces)	 	0.76	 	 	0.19	 	 	-	 	 	0.40	 	 	0.60	 	 	-	 	 	-	 	 	0.25	 	

 	1	For the purposes of calculating all-in sustaining costs at individual mine sites, the Company does not include corporate general and administrative expenses. Prior period mine site results have been re-stated to reflect this. Corporate general and administrative expenses per consolidated gold ounce produced are reflected in the ‘other’ category.	
The Company owned the Black Fox mine for 26 days in Q1 2014, and for all of Q2 2014, contributing to higher production and sales in Q1 and Q2 2014 as compared to any other quarter presented above. Gold production, and accordingly sales, were higher in Q1 and Q2 2014 and each of the quarters in 2013 than the quarters in 2012 due to the Company’s optimization project at the San Dimas mine, which was started in Q3 2012 and finished in Q1 2013, and resulted in increases in tonnes milled. In addition, the Company successfully completed the project to increase the San Dimas mill capacity to 2,500 TPD in Q1 2014 resulting in an increase in production in Q2 2014.
17

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Revenue was significantly higher in Q2 2014 than any other quarter due in part to owning the Black Fox Mine for a full quarter. In addition, gold production and sales at San Dimas were the highest in Q2 2014 than any other period presented. Revenue was higher in each quarter of 2013 over the corresponding quarter in 2012. The growth in production and sales in 2013 over 2012 was partly offset by significant decreases in gold and silver prices in 2013, compared with 2012. Revenue in Q2 2014, Q1 2014, Q3 2013, Q2 2013 and Q3 2012 included $14.8 million, $3.9 million, $8.4 million, $13.2 million and $6.8 million, respectively, of silver sales at spot prices, after the Company reached the annual threshold for deliveries under the silver purchase agreement. These silver spot sales also reduced cash costs per ounce and particularly by-product cash costs per ounce, as well as all-in sustaining costs per ounce in each of the periods.
The net loss in Q1 2014 was primarily as a result of a loss from operations at the newly acquired Black Fox mine, $6.7 million of transaction costs related to the Brigus acquisition and the recognition of $7.5 million of share-based payment expense due to the 71% increase in the Company’s share price. As previously discussed, due to the lack of investment in exploration and development in the second half of 2013, the Black Fox mine had a limited number of stopes available for mining during Q1 and Q2 2014 and production from the underground mine was below management’s expectations.
The net loss in Q4 2013 was 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 (see “REVIEW OF CONSOLIDATED FINANCIAL INFORMATION” above). Quarterly net income fluctuates in part as a result of items which are adjusted out in the calculation of adjusted net income. The decrease in adjusted net income in Q1 2014 is mainly due to the loss from operations at the Black Fox mine as well as the significant share-based payment expense in the period. The decrease in adjusted net income in Q4 2013 compared with the other quarters in 2013 was due mainly to the realization of silver spot sales in Q2 and Q3 and significantly higher realized gold prices in Q1.
Cash balances decreased in Q1 2014 and each quarter of 2013 due mainly to the decline in metals prices, coupled with higher investments both in capital expenditures at San Dimas as well as the acquisition of Cerro del Gallo and expenditures to develop the project. In addition, $12.7 million of cash was used in Q1 2014 for Brigus transaction costs and severance payments as well as Cdn$10 million to capitalize Fortune Bay. In Q2 2014, the Company drew down a net amount of $28.2 million on the newly issued line of credit, and repaid the $20.9 million of senior secured notes million and $1.9 million of the convertible debentures assumed upon the acquisition of Brigus, as well as the remaining balance of $27.2 million of the promissory note with Goldcorp. In Q4 2013, Q1 2013 and Q4 2012 principal and interest cash payments were made against the promissory note of $7.1 million, $7.8 million and $7.8 million, respectively. Cash in Q1 2014 includes principal and interest payments of $2.0 million on the senior secured notes assumed with the acquisition of Brigus, as well as interest payments of $1.6 million on the convertible debentures assumed. Further, in Q2 and Q1 2014 there were inflows of $1.7 million and $7.7 million, respectively, from the exercise of stock options and in Q1 2014 the Company received $8.0 million from the issuance of flow-through shares.
The significant increases in total assets and equity in Q1 2014 were due mainly to the closing of the acquisition of Brigus for a purchase price of $301.6 million, funded primarily through the issuance of 41.3 million common shares.
18

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
FINANCIAL CONDITION REVIEW

 	 	As at June 30, 	 	 	As at December 31, 	 	
($000's except ratios and share amounts)	 	2014	 	 	2013	 	
Total cash and equivalents	 	44,168	 	 	110,711	 	
Current assets	 	100,307	 	 	145,629	 	
Non-current assets	 	1,107,295	 	 	655,193	 	
Total assets	 	1,207,602	 	 	800,822	 	
 	 	 	 	 	 	 	
Current liabilities (excluding short-term debt)	 	53,205	 	 	40,693	 	
Non-current liabilities (excluding long-term debt)	 	107,351	 	 	71,825	 	
Debt	 	88,832	 	 	27,214	 	
Total liabilities	 	249,388	 	 	139,732	 	
 	 	 	 	 	 	 	
Total shareholders' equity	 	958,214	 	 	661,090	 	
Total equity	 	958,214	 	 	661,090	 	
 	 	 	 	 	 	 	
Total common shares outstanding (1)	 	159,884,712	 	 	115,726,035	 	
Total options outstanding (2)(3)	 	9,566,683	 	 	7,963,990	 	
Total warrants outstanding (4)	 	20,800,000	 	 	20,800,000	 	
 	 	 	 	 	 	 	
Key financial ratios	 	 	 	 	 	 	
Current ratio	 	1.89	 	 	3.19	 	
Total liabilities-to-equity	 	0.26	 	 	0.21	 	
Debt-to-total capitalization	 	0.09	 	 	0.04	 	

 	1	As at the date of this MD&A, the Company had 159,961,376 common shares outstanding.	
 	 	 	
 	2	Total options exercisable as at June 30, 2014 were 8,592.535.	
 	 	 	
 	3	As at the date of this MD&A, the Company had 9,490,019 options outstanding, of which 8,515,871 were exercisable	
 	 	 	
 	4	As at the date of this MD&A, the Company had 20,800,000 common share purchase warrants outstanding. In addition, upon completion of the acquisition of Brigus, 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. 15,886,317 Brigus warrants were outstanding as at the date of this MD&A to purchase 2,780,106 million common shares of the Company. All warrants are exercisable.	
S TATEMENT OF FINANCIAL POSITION REVIEW
The Company’s total assets as at June 30, 2014 were $1,207.6 million, compared to $800.8 million as at December 31, 2013. The significant increase was due mainly to the acquisition of Brigus in Q1 2014, which upon closing increased assets by $441.6 million. Of note, at June 30, 2014, the Company has preliminarily recognized $99.0 million of goodwill compared to $nil at December 31, 2013. This goodwill arose during Q2 2014 as the Company continued to assess the fair values of the assets and liabilities purchased upon the acquisition of Brigus on March 5, 2014. As part of this process, management has determined a preliminary value for the mining interests acquired of approximately $300 million; this has resulted in a preliminary value of $99.0 million being assigned to goodwill. This goodwill is calculated as the difference between the fair value of the consideration issued for the acquisition of Brigus and the fair value of all other assets and liabilities acquired. The value of the goodwill represents value acquired upon the acquisition of Brigus including the skilled workforce at the Black Fox mine, the diversification of Primero, benefits resulting from transforming to a mid-tier mining company and other synergies that benefit Primero as a whole. As at the date of this MD&A, management has not completed its assessment of the components of goodwill and the allocation of goodwill to cash generating units for the purposes of impairment testing. Under IFRS, the Company has up to 12 months to determine the fair value of assets acquired and liabilities assumed in a business combination, consequently the amount recognized for goodwill could change.
19

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
The Company’s total liabilities as at June 30, 2014 were $249.4 million, compared to $139.7 million as at December 31, 2013. The Company assumed $87.1 million of debt, a $15.7 million decommissioning liability relating to the Black Fox Complex and accounts payable of $30.4 million upon the acquisition of Brigus. The Company was required to make change of control offers for Brigus’ Cdn$24 million senior secured notes and $50 million unsecured convertible debentures at 105% and 100%, respectively, of outstanding principal plus accrued interest. The note holders accepted the Company’s offer and on April 3, 2014 the Company paid Cdn$23.1 million to them (a scheduled principal and interest payment of Cdn$2.2 million was made on March 31, 2014). Of the $50 million unsecured convertible debentures, $1.9 million accepted the Company’s offer and $48.1 million remain outstanding.
Included within liabilities at June 30, 2014 is an amount of $9.3 million, of which $7.3 million is classified as current, in relation to the cash-settled phantom share units of the Company. An increase in the Company’s share price from Cdn$4.68 to Cdn$8.55 between December 31, 2013 and June 30, 2014 resulted in a charge to general and administrative expenses of $9.8 million, and a charge to operating expenses of $1.4 million in the period. The Company paid out $9.1 million for phantom share units that vested during the six months ending June 30, 2014, resulting in a net increase of $1.2 million in the liability.
SHAREHOLDERS ’ EQUITY
An increase in shareholders’ equity from $661.1 million as at December 31, 2013 to $958.2 million as at June 30, 2014 was largely a result of issuing 41,340,347 common shares upon the acquisition of Brigus in Q1 2014, with a book value of $279.0 million.
In addition, in Q1 2014 and Q2 2014, the Company issued 1,496,542 and 321,788 common shares, respectively, upon the exercise of stock options and during Q1 2014, 1,000,000 common shares were issued further to a Cdn$9 million flow-through financing .
A net loss for the period reduced retained earnings from $62.5 million as at December 31, 2013 to $53.9 million as at June 30, 2014.
FINANCIAL POSITION AND LIQUIDITY
Total cash and cash equivalents at June 30 2014 were $44.2 million. The Company’s primary source of liquidity is operating cash flow which is significantly affected by prevailing metal prices. Management’s goal is to maintain a strong balance sheet and have sufficient liquidity to fund the Company’s ongoing operations and growth plans, regardless of the level of precious metals prices. The Company expects to generate average annual after-tax operating cash flows over the next five years in excess of $120 million, based on a gold price of $1,200 per ounce and assuming the San Dimas and Black Fox mines operate at 2,500 TPD and 2,300 TPD, respectively. Management has prioritized its planned capital expenditures and developed contingency plans in the event that the gold price drops significantly below current levels.
20

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Debt
Upon the acquisition of Brigus, Primero assumed $50 million of unsecured convertible debentures Cdn$24 million of senior secured notes and $15.5 million of finance leases. The Company was required to make change of control offers to purchase the notes and the debentures at 105% and 100%, respectively, of their principal balance. The note holders accepted the Company’s offer and the notes were repaid on April 3, 2014. Investors holding $1.9 million of the debentures accepted the Company’s offer, and these debentures were repaid on May 16, 2014. The remaining $48.1 million debentures bear interest at a rate of 6.5% per annum, payable semi-annually on March 31 and September 30, are convertible by the holders into common shares of the Company at any time at a conversion price of Cdn$14.00 per common share and mature on March 31, 2016. 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.
On May 23, 2014, the Company closed a 3-year $75 million revolving line of credit. In order to provide the required security to the lenders, coincident with the closing, the Company paid out the $27.2 million promissory note outstanding to a subsidiary of Goldcorp Inc., by drawing down $30 million of the line of credit.
At June 30, 2014, the balance outstanding on finance leases was $15.0 million.
21

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
2014 Capital/Exploration expenditures
The Company’s 2014 expected capital expenditures are $80 million, of which $44.6 million has been spent at June 30, 2014, broken down as follows:

 	 	Anticipated
2014
expenditures			Total
expenditures
YTD as of
June 30, 2014	 	
in millions of USD		$  	 		$  	 	
San Dimas Underground Development	 	14.7	 	 	8.4	 	
San Dimas Sustaining Capital	 	11.8	 	 	8.4	 	
San Dimas Projects	 	11.8	 	 	9.1	 	
San Dimas Sub Total	 	38.3	 	 	25.9	 	
Black Fox Underground Development	 	7.6	 	 	7.6	 	
Black Fox Open Pit Capital Stripping	 	3.3	 	 	1.5	 	
Black Fox Sustaining	 	10.7	 	 	3.7	 	
Black Fox Projects	 	8.3	 	 	2.9	 	
Grey Fox Development Studies	 	1.3	 	 	0.1	 	
Black Fox Complex Sub Total	 	31.2	 	 	15.8	 	
 	 	 	 	 	 	 	
Cerro del Gallo Development	 	10.5	 	 	2.9	 	
Total	 	80.0	 	 	44.6	 	
The Company’s 2014 expected exploration expenditures total $35 million, of which $11.1 million was spent at June 30, 2014, broken down as follows:

 	 	Anticipated
2014
exploration	 	 	Anticipated
2014
expenditures	 	 	Total
exploration
YTD as of
June 30, 2014	 	 	Total
expenditures
YTD as of
June 30, 2014	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
in millions of USD	 	Meters	 		$  	 	 	Meters	 		$  	 	
San Dimas Diamond Drilling	 	60,000	 	 	5.4	 	 	37,496	 	 	3.2	 	
San Dimas Drifting	 	2,500	 	 	5.9	 	 	564	 	 	1.6	 	
San Dimas Regional Diamond Drilling	 	20,000	 	 	3.5	 	 	7,465	 	 	1.2	 	
San Dimas Sub Total	 	82,500	 	 	14.8	 	 	45,525	 	 	6.0	 	
Black Fox Diamond Drilling	 	55,700	 	 	7.7	 	 	9,303	 	 	1.3	 	
Grey Fox & Regional Exploration	 	76,400	 	 	9.1	 	 	25,293	 	 	3.0	 	
Black Fox Complex Sub Total	 	132,100	 	 	16.8	 	 	34,596	 	 	4.3	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Cerro del Gallo Diamond Drilling	 	10,000	 	 	2.5	 	 	-	 	 	-	 	
Ventanas Regional Exploration	 	4100	 	 	0.9	 	 	4,561	 	 	0.8	 	
Total	 	228,700	 	 	35.0	 	 	84,682	 	 	11.1	 	
22

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Commitments and contingencies
The following table summarizes the contractual maturities of the Company’s financial liabilities (excluding taxes) and operating and capital commitments as at June 30, 2014:

 	 	 	 	 	December 31	 	
 	 	June 30, 2014	 	 	2013	 	
 	 	Within	 	 	 	 	 	Over	 	 	 	 	 	 	 	
 	 	1 year	 	 	2-5years	 	 	5 years	 	 	Total	 	 	Total	 	
 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	
Trade and other payables and accrued liabilities	 	36,402	 	 	-	 	 	-	 	 	36,402	 	 	33,958	 	
Share based payments	 	7,345	 	 	1,992	 	 	-	 	 	9,337	 	 	8,144	 	
Promissory note and interest	 	-	 	 	 	 	 	-	 	 	-	 	 	30,262	 	
Convertible debentures and interest	 	3,128	 	 	51,252	 	 	-	 	 	54,380	 	 	-	 	
Line of credit and interest	 	1,575	 	 	33,016	 	 	-	 	 	34,591	 	 	-	 	
Finance lease payments	 	6,440	 	 	8,542	 	 	-	 	 	14,982	 	 	-	 	
Minimum rental and operating lease payments	 	3,323	 	 	6,299	 	 	-	 	 	9,622	 	 	4,799	 	
Reclamation and closure cost obligations	 	-	 	 	12,624	 	 	46,321	 	 	58,945	 	 	31,347	 	
Commitment to purchase plant and equipment	 	12,982	 	 	-	 	 	-	 	 	12,982	 	 	6,062	 	
 	 	71,195	 	 	113,725	 	 	46,321	 	 	231,241	 	 	114,572	 	
The Company expects to discharge its commitments as they come due from its existing cash balances, cash flow from operations, collection of receivables, and credit facilities.
Other liquidity considerations
Cerro del Gallo
The Company has potential future financial commitments related to its acquisition 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 (the “First Contingent Payment”) after achieving commercial production on the Phase I heap leach operation; $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 the CIL mill for Phase II (“the Third Contingent Payment”), and $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”). If all the contingencies are satisfied, the Company would be required to pay $32 million.
The Company expects to make a decision whether to construct the phase 1 heap leach project for Cerro del Gallo in early 2015. The estimated capital cost of this project is $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. Should the Company decide to construct the project additional financing will be required.
23

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Recent Mexican tax reforms
On December 11, 2013, the Mexican President approved an extensive tax reform bill that has far reaching implications to the mining sector and taxpayers generally. The tax reforms were effective starting on January 1, 2014. The reforms include a tax-deductible mining royalty of 7.5% on taxable earnings before the deduction of interest, taxes, depreciation and amortization, with precious metals mining companies paying an additional 0.5% on revenue from gold, silver and platinum. In addition, the long term corporate tax rate remains at 30% rather than reducing to 28% as originally planned and deductions for accelerated depreciation of exploration costs and certain other capital expenditures are no longer allowed. Mining companies may be able to undertake community development projects that would be allowed as credits against the royalty, however this will require extensive consultation with federal, state and municipal governments and native communities.
The impact of the tax reforms on the Company is significant and is estimated to be approximately $14 million in 2014 (with cash payments initially due in March 2015) assuming a $1,200 per ounce gold price. Everything else being equal, the impact reduces somewhat in later years due to higher deductions for depreciation and exploration costs resulting from the elimination of accelerated deductions for these items.
APA ruling
APA rulings generally have a five year term and the APA ruling that the Company received from the Mexican tax authorities that confirmed that the appropriate price for silver sales under the silver purchase agreement was the fixed price realized, expires on December 31, 2014. The Company and its advisers are reviewing what, if anything, is required to ensure that the ruling remains in effect. The Company has taken the position that if the Mexican tax laws relative to the APA ruling do not change and the Company does not change the structure of the silver purchase agreement, the ability of the Company to continue to pay taxes in Mexico based on realized prices of silver will continue for the life of the San Dimas mine. Should the Mexican tax authorities disagree with this position and assess taxes based on amounts higher than realized prices, the Company’s cash flow could be significantly impacted.
Dividend Report and Policy
The Company has not paid any dividends since incorporation and currently has no plans to pay dividends.
Overall, the Company expects to be able to meet all of its commitments and fulfill its exploration and capital expenditure plans for 2014 from its cash balances, operating cash flows and credit facilities. The Company may from time-to-time opportunistically raise additional financing in order to build up cash reserves for general corporate purposes and for its future growth.
24

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	

ANALYSIS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 2014 AND 2013

 	 	Three months ended	 	
(In thousands of US dollars)	 	June 30,	 	
 	 	2014	 	 	2013	 	
Cash Flow:		$  	 		$ 	 	
Provided by operating activities	 	13,068	 	 	10,382	 	
Used in investing activities	 	(31,094	)	 	(20,567	)	
(Used in) provided by financing activities	 	(24,523	)	 	34	 	
Effect of exchange rate changes on cash	 	345	 	 	(705	)	
(Decrease) increase in cash	 	(42,204	)	 	(10,856	)	
Cash, beginning of period	 	86,372	 	 	141,246	 	
Cash, end of period	 	44,168	 	 	130,390	 	
Primero generated $13.1 million of cash flows from operating activities in Q2 2014, compared with $10.4 million Q2 2013. Operating cash flow before working capital changes was $26.4 million in Q2 2014, up from $16.9 million in Q2 2013, due mainly to $7.6 million higher cash earnings from mine operations. Changes in non-cash working capital were a cash outflow of $13.4 million in Q2 2014 compared with an outflow of $6.6 million in Q2 2013 due mainly to a $9.8 million decrease for payables in Q2 2014 versus a $0.6 million decrease for payables in Q2 2013 offset by a $2.4 million increase in prepayments in Q2 2014 compared to a $1.1 million decrease in Q2 2013.
Cash used in investing activities in Q2 2014 amounted to $31.1 million as compared to $20.6 million in Q2 2013. Capital expenditures in Q2 2014 totaled $31.2 million, up from $16.0 million spent in Q2 2013, with the addition of the Black Fox mine accounting for $11.2 million. The Company also spent $3.5 million cash on the acquisition of Cerro and $1.1 million cash investment in Santana Minerals in Q2 2013.
The Company used $24.3 million of cash in financing activities in Q2 2014, compared with a $0.1 million inflow of cash in Q2 2013. The Company repaid $53.3 million of debt in Q2 2014, including Cdn$23.1 million of senior secured notes and $1.9 million of convertible debentures both assumed on the acquisition of Brigus, as well as the $27.2 million promissory note with Goldcorp. The Company drew down $28.2 million (net of transaction costs) on the newly completed line of credit to partially fund the debt repayments. The Company also paid $1.1 million in cash interest and received $1.7 million from the exercise of stock options in Q2 2014.
25

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
ANALYSIS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013

 	 	Six months ended	 	
(In thousands of US dollars)	 	June 30,	 	
 	 	2014	 	 	2013	 	
Cash Flow:		$  	 		$ 	 	
Provided by operating activities	 	4,428	 	 	28,275	 	
Used in investing activities	 	(58,748	)	 	(29,191	)	
(Used in) provided by financing activities	 	(12,347	)	 	(6,876	)	
Effect of exchange rate changes on cash	 	124	 	 	(1,062	)	
(Decrease) increase in cash	 	(66,543	)	 	(8,854	)	
Cash, beginning of period	 	110,711	 	 	139,244	 	
Cash, end of period	 	44,168	 	 	130,390	 	
Primero generated $4.4 million of cash flows from operating activities in YTD 2014, compared with $28.3 million in YTD 2013. Operating cash flow before working capital changes was $32.3 million in YTD 2014, down from $36.4 million in YTD 2013. Cash flows from mine operations were $4.3 million higher in YTD 2014 than YTD 2013, however, these were offset by $7.3 million of transaction costs related to the Brigus acquisition and $3.4 million higher PSU payouts. Changes in non-cash working capital were a cash outflow of $27.9 million in YTD 2014, compared with an outflow of $8.2 million in YTD 2013 due mainly to a $15.1 million decrease for payables in YTD 2014 versus a $4.4 million increase for payables in YTD 2013 and an increase in taxes receivable of $10.3 million in YTD 2014 compared to $4.9 million in YTD 2013.
The Company used $58.7 million cash in investing activities in YTD 2014, compared with $29.2 million in YTD 2013. Capital expenditures were $51.2 million in YTD 2014, up from $24.8 million in YTD 2013, with the Black Fox Complex accounting for $15.5 million. Capital expenditures increased by $7.4 million at San Dimas in YTD 2014 from YTD 2013 due mainly to the timing project completions, such as the mill expansion, and infrastructure development. The Company also used $7.8 million of cash for the Brigus acquisition in YTD 2014 and $4.6 million of cash for the acquisition of Cerro and investment in Santana Minerals in YTD 2013.
The Company used $12.3 million of cash for financing activities in YTD 2014, compared with $6.9 million in YTD 2013. The Company repaid $56.4 million of debt in YTD 2014, including Cdn$25.1 million of senior secured notes and $1.9 million of convertible debentures both assumed on the acquisition of Brigus, as well as the $27.2 million promissory note with Goldcorp. The Company drew down $28.2 million (net of transaction costs) on the recently completed line of credit to partially fund the debt repayments. The Company repaid $7.8 million of debt in YTD 2013 related to the promissory note with Goldcorp. The Company received Cdn$9.0 million from the proceeds of a flow-through financing to fund exploration costs at the Grey Fox and Pike River properties on March 25, 2014, as well as $9.4 million from the exercise of stock options in YTD 2014.
26

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
N ON - 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 also 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.
Non – GAAP measure – 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 recommendations of 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 byproduct basis to operating expenses (the nearest GAAP measure) per the consolidated financial statements.

 	 	Three months ended June 30,	 	 	Six months ended June 30,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
Operating expenses per the consolidated	 	 	 	 	 	 	 	 	 	 	 	 	
financial statements ($000's)	 	40,387	 	 	20,813	 	 	68,070	 	 	43,276	 	
Share-based payment included in operating expenses ($000's)	 	37	 	 	355	 	 	(708	)	 	71	 	
Inventory movements and adjustments ($000's)	 	2,177	 	 	362	 	 	1,816	 	 	(1,944	)	
Total cash operating costs ($000's)	 	42,601	 	 	21,530	 	 	69,867	 	 	41,403	 	
Ounces of gold produced	 	50,061	 	 	26,904	 	 	82,339	 	 	51,095	 	
Gold equivalent ounces of silver produced	 	13,353	 	 	12,185	 	 	20,833	 	 	15,650	 	
Gold equivalent ounces produced	 	63,414	 	 	39,089	 	 	103,172	 	 	66,745	 	
Total cash costs per gold equivalent ounce	$	672	 	$	551	 	$	677	 	$	620	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total cash operating costs ($000's)	 	42,601	 	 	21,530	 	 	69,867	 	 	41,403	 	
By-product silver credits ($000's)	 	(17,172	)	 	(17,034	)	 	(26,902	)	 	(22,120	)	
Cash costs, net of by-product credits ($000's)	 	25,429	 	 	4,496	 	 	42,965	 	 	19,283	 	
Ounces of gold produced	 	50,061	 	 	26,904	 	 	82,339	 	 	51,095	 	
Total by-product cash costs per gold ounce produced	$	508	 	$	167	 	$	522	 	$	377	 	
Gold equivalent ounces of silver produced for the San Dimas mine are computed as silver ounces produced multiplied by the ratio of the average realized silver price to the average realized gold price during each quarter. The computations are shown below.
27

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	

 	 	Three months ended	 	 	Six months ended	 	
 	 	June 30,	 	 	June 30,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
Silver ounces produced (millions) (A)	 	1.49	 	 	1.46	 	 	3.00	 	 	2.83	 	
Average realized silver price (B)	$	11.56	 	$	11.66	 	$	9.20	 	$	7.82	 	
Average realized gold price (C)	$	1,286	 	$	1,398	 	$	1,292	 	$	1,510	 	
Gold equivalent ounces of silver (A) x (B) / (C)	 	13,353	 	 	12,185	 	 	20,833	 	 	15,650	 	
The Company produces one by-product metal, being silver at San Dimas. By-product silver credits are computed as silver ounces produced multiplied by the average realized silver price during a quarter. Cash costs without adjusting for by-product credits would be computed on a co-product basis, whereby total cash operating costs would be allocated separately to production of gold and silver. The basis for the allocation of costs is typically relative realized sales prices, which results in co-product cash costs being exactly the same as cash costs on a gold equivalent ounce basis. Hence cash costs without adjusting for by-product credits are equal to cash costs per gold equivalent ounce.
The Company sells the majority of its silver production at a fixed price of approximately $4 per ounce pursuant to a silver purchase agreement that the Company assumed when it acquired the San Dimas mine in 2010. The fixed price approximated the cost of producing an ounce of silver at the time the silver purchase agreement was entered into by the previous mine owner. The fixed price is reflected in the calculation of by-product silver credits.
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.
28

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Non – GAAP measure – 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 “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 and has no standardized meaning throughout the industry. 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.
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.
29

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
The following table provides a reconciliation of all-in sustaining costs per gold ounce to condensed consolidated interim financial statements for the three and six months ended June 30, 2014 and 2013:

 	 	Three months ended	 	 	Six months ended	 	
 	 	June 30,	 	 	 	 	 	June 30,	 	 	 	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash costs, net o fby-product credits ($000's)	 	25,429	 	 	4,496	 	 	42,965	 	 	19,283	 	
Corporate general and administrative expenses	 	 	 	 	 	 	 	 	 	 	 	 	
   Share-based payments ($000's)	 	3,345	 	 	(2,369	)	 	10,971	 	 	2,308	 	
   Other general and administrative expenses ($000's)	 	7,179	 	 	4,276	 	 	12,906	 	 	7,395	 	
Reclamation cost accretion ($000's)	 	279	 	 	160	 	 	615	 	 	321	 	
Sustaining capital expenditures ($000's)	 	25,281	 	 	11,170	 	 	38,641	 	 	18,885	 	
All-in sustaining costs ($000's)	 	61,513	 	 	17,733	 	 	106,098	 	 	48,192	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Ounces of gold produced	 	50,061	 	 	26,904	 	 	82,339	 	 	51,095	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
All-in sustaining costs per gold ounce	$	1,228	 	$	659	 	$	1,288	 	$	943	 	
30

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Adjustments
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. The following table reconciles sustaining capital expenditures to the Company’s total capital expenditures, which are disclosed in the consolidated statements of cash flows:

 	 	Three months ended	 	 	Six months ended	 	
 	 	June 30,	 	 	 	 	 	June 30,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
Capital expenditures per consolidated statements of cash flows	 	31,159	 	 	16,037	 	 	51,159	 	 	24,772	 	
Less: San Dimas non-sustaining capital expenditures	 	(3,421	)	 	(3,707	)	 	(6,279	)	 	(4,645	)	
Less: capital expenditures attributable to Cerro del Gallo	 	(3,093	)	 	(107	)	 	(4,237	)	 	(107	)	
Less: capital expenditures attributable to Grey Fox	 	(2,172	)	 	-	 	 	(2,922	)	 	-	 	
Add: Black Fox capital expenditures financed through leasing	 	4,140	 	 	-	 	 	4,140	 	 	-	 	
Less: capital expenditures attributable to other projects and corporate, including San Dimas regional exploration and Pike River	 	(1,332	)	 	(1,053	)	 	(3,220	)	 	(1,135	)	

Sustaining capital expenditures attributable to San Dimas	 	12,128	 	 	11,170	 	 	24,325	 	 	18,885	 	
Sustaining capital expenditures attributable to Black Fox	 	13,153	 	 	-	 	 	14,316	 	 	-	 	
Total sustaining capital expenditures	 	25,281	 	 	11,170	 	 	38,641	 	 	18,885	 	
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.
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. The Company has prepared discounted cash flow models of the estimated costs to remediate its operating mine sites at the end of the estimated mine life. Reclamation cost accretion for San Dimas was calculated based on a discount rate of 7.75% and estimated remediation costs of $31.3 million, which are generally expected to be incurred in 2035 and 2036. Reclamation cost accretion for Black Fox was calculated based on a discount rate of 2% and estimated remediation costs of $30.0 million, which are generally expected to be incurred in 2018 and 2023. Reclamation cost accretion is included in finance expense in the Company’s consolidated statements of operations and comprehensive income.
31

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Non – GAAP measure – Adjusted net income
The Company has included the non-GAAP performance measures of adjusted net income and adjusted net income per share, throughout this document. Items are adjusted where considered to be unusual or non-recurring based on the historical and expected future performance of the Company. 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, 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 consolidated financial statements.

 	 	Three months ended	 	 	Six months  ended	 	
(In thousands of US dollars except per share amounts)	 	June 30,	 	 	June 30,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income	 	572	 	 	4,241	 	 	(8,513	)	 	21,565	 	
Impact of foreign exchange on deferred income tax assets and liabilities	 	(54	)	 	8,402	 	 	(571	)	 	178	 	
Liability for social security payments, net of tax	 	-	 	 	3,823	 	 	-	 	 	3,823	 	
Transaction costs	 	534	 	 	573	 	 	7,256	 	 	574	 	
Adjusted net income	 	1,052	 	 	17,039	 	 	(1,828	)	 	26,140	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted net income per share	 	0.01	 	 	0.16	 	 	(0.01	)	 	0.26	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of common shares outstanding (basic)	 	159,616,775	 	 	105,344,778	 	 	144,107,966	 	 	101,320,723	 	
32

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Non – GAAP measure - Operating cash flows before working capital changes
The Company has included the non-GAAP performance measure operating cash flows before working capital changes in this MD&A. Non-GAAP performance measures do not have 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 operating cash flows before working capital changes to cash (used in) provided by operating activities (the nearest GAAP measure) per the condensed consolidated interim financial statements.

 	 	Three months ended	 	 	Six months ended	 	
(In thousands of US dollars except per share amounts)	 	June 31,	 	 	June 31,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
Cash provided by operating activities	 	13,068	 	 	10,382	 	 	4,428	 	 	17,708	 	
Change in non-cash operating working capital	 	13,363	 	 	6,550	 	 	27,916	 	 	1,601	 	
Operating cash flows before working capital changes	 	26,431	 	 	16,932	 	 	32,344	 	 	19,309	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating cash flows per share before working capital changes	 	0.17	 	 	0.16	 	 	0.22	 	 	0.19	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of common shares outstanding (basic)	 	159,616,775	 	 	105,344,778	 	 	144,107,966	 	 	101,320,723	 	
33

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
ADOPTION OF NEW ACCOUNTING POLICIES
The accounting policies applied in the preparation of the unaudited condensed consolidated interim financial statements of the Company for the three and six months ended June 30, 2014 are consistent with those applied and disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2013, except for the application of the following new interpretation and amendment to existing IFRSs, which was effective January 1, 2014:
IFRIC 21 – Levies (“IFRIC 21”), an interpretation of IAS 37 – Provisions, Contingent Liabilities and Contingent Assets ("IAS 37"), clarifies that the obligating event, as defined by IAS 37, that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. The Company has applied IFRIC 21 on a retrospective basis in compliance with the transitional requirements of IFRIC 21. The application of IFRIC 21 did not result in an adjustment to the Company's unaudited condensed consolidated interim financial statements.
The following accounting policy was adopted upon the acquisition of Brigus which resulted in the Company owning open pit operations for the first time.
Stripping costs
In open pit mining operations, it is necessary to incur costs to remove overburden and other mine waste materials in order to access the ore body. Pre-production stripping costs are capitalized as incurred. Stripping costs incurred during the production stage of an open pit mine are accounted for as costs of the inventory produced during the period that the stripping costs were incurred, unless these costs provide a future economic benefit. Production phase stripping costs are considered to generate a future economic benefit when the related stripping activity: (i) provides access to ore to be mined in the future; (ii) increases the fair value of the mine as access to future mineral reserves becomes less costly; (iii) increases the productive capacity; or (iv) extends the productive life of the mine. Production phase stripping costs that generate a future economic benefit are capitalized as mine development costs. Stripping costs incurred and capitalized during the production phase are depleted using the units-of-production method over the reserves and resources (where relevant as part of the depletion policy) that directly benefit from the specific stripping activity.
The following accounting policy was adopted upon the issuance of flow-through shares during the three months ended March 31, 2014.
Flow-through Shares
The Company may, from time to time, issue flow-through shares to finance a portion of its Canadian exploration program. Pursuant to the terms of the flow-through share agreements, the Company agrees to incur qualifying expenditures and renounce the tax deductions associated with these qualifying expenditures to the subscribers by an agreed upon date. The excess of cash consideration received over the market price of the Company’s shares at the date of the announcement of the flow-through share financing is recorded as a liability. This liability is extinguished and recognized in the statement of operations and comprehensive income (loss) when the renunciation of the tax benefit by the Company, is recorded.
A deferred tax liability is recognized for the taxable temporary difference that arises from the difference between the carrying amount of eligible expenditures that are capitalized to exploration and evaluation assets and their tax basis. If the Company has sufficient tax assets to offset the deferred tax liability, the liability will be offset by the recognition of a corresponding deferred tax asset.
The following policy was adopted upon the recognition of goodwill during the three months ended June 30, 2014.
Goodwill
34

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Goodwill may arise on the Company’s acquisitions due to: (i) the ability of the Company to capture certain synergies through management of the acquired operation within the Company; (ii) the potential to increase reserves and resources through exploration activities; and (iii) the requirement to record a deferred tax liability for the difference between the assigned fair values and the tax bases of assets acquired and liabilities assumed.
Goodwill is not amortized. The Company performs an annual impairment test for goodwill and when events or changes in circumstances indicate that the related carrying amount may not be recoverable. If the carrying amount of a mine site to which goodwill has been allocated exceeds the recoverable amount, an impairment loss is recognized for the amount in excess. The impairment loss is allocated first to reduce the carrying amount of goodwill allocated to the mine site to nil and then to the other assets of the mine site based on the relative carrying amounts of those assets. Impairment losses recognized for goodwill are not reversed in subsequent periods should the value of goodwill recover.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash generating units or groups of CGUs that are expected to benefit from the synergies of the business combination. If the composition of one or more cash generating units to which goodwill has been allocated changes due to a re-organization, the goodwill is re-allocated to the units affected.
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:
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, 2017, with early adoption permitted. The Company is currently evaluating the impact the standard is expected to have on its consolidated financial statements.
Primero will be required to adopt IFRS 9, “Financial Instruments” on January 1, 2018. IFRS 9 is the result of the first phase of the IASB’s project to replace IAS 39, “Financial Instruments: Recognition and Measurement”. The new standard replaces the current multiple classification and measurement models for financial assets and liabilities with a single model that has only two classification categories: amortized cost and fair value. The Company is currently assessing the impact that IFRS 9 will have on its financial statements.
C RITICAL ACCOUNTING POLICY – D EPLETION OF MINING PROPERTIES
Mining properties are depleted using a units-of-production basis over the mine’s estimated and economically proven and probable reserves and an estimate of the portion of resources expected to be classified as reserves. Depletion is calculated on a mine-by-mine basis. During the six months ended June 30, 2014, the Company had two operating mines, San Dimas and the recently-acquired Black Fox mine. Where applicable, the Company segregates each of its mines’ mineralization into reserves (including proven and probable), resources (including measured, indicated and inferred) and exploration potential.
The definitions applied by the Company in respect of the various categories of mineralization are as follows:
35

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	

 	a)	Mineral Reserve - the economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined.	
 	 	 	
 	b)	Measured mineral resource - that part of a mineral resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.	
 	 	 	
 	c)	Indicated mineral resource - that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.	
 	 	 	
 	d)	Inferred mineral resource - that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.	
 	 	 	
 	e)	Exploration potential – mineralization quantified by the Company’s geologists with a sufficient degree of confidence to include in the Company’s acquisition fair value determination, but without the necessary level of measurement precision to enable it to be classified as a mineral reserve or resource as defined by NI 43-101.	
The Company’s depletion estimation methodology divides the total of a capitalized mining property into a depletable component and a non-depletable component. The value assigned to the depletable component is equal to the value assigned to reserves and inferred resources and the value assigned to the non-depletable component is the value assigned to the exploration potential. The allocation of values to the reserves, inferred resources and exploration potential is based on the discounted cash flow analysis of the Company’s life-of-mine plans. The depletable component of the capitalized total mining property is depleted over 100% of reserves and a portion of resources included in the Company’s life-of-mine plan. The non-depletable component is not depleted but, in combination with the depletable component, is evaluated for impairment when events and changes in circumstances indicate that the carrying amount may not be recoverable.
Each year, coincident with the updated reserve and resource statement and preparation of the updated life-of-mine plan, the Company expects that (where applicable) a portion of resources will be transferred to reserves and a portion of exploration potential will be transferred to resources. As a result, the category of non-depletable mineralization is expected to reduce and, in the absence of further additions to exploration potential, eventually be fully classified within the depletable component.
36

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
When considering the percentage of inferred resources to include in the depletion base of the depletable component, management considered what portion of the Company’s inferred resources are expected to be classified as measured and indicated resources, and if economically recoverable, are expected to be included in proved and probable reserves. In completing its assessment as to which resources to include so as to best reflect the useful life of the mine, management considered resources that have been included in the life-of-mine plan. To be included in the life-of-mine plan, resources needed to be above the cut-off grade set by management, which means that the resource can be economically mined and is therefore commercially viable. This consistent systematic method for inclusion in the life-of-mine plan takes into account management’s view of the gold price and exchange rates.
In addition, in order to determine which proportion of resources should be included in the depletion base, management considered the existence, commercial viability and potential economic recovery of such resources based on historical experience and available geological and drilling information of the area under consideration and other operations/parts of the mine, that are contiguous to the area under consideration. In instances where management is able to demonstrate the economic recovery of such resources with a high level of confidence, such additional resources, which may also include certain of the inferred resources, are included in the calculation of depletion.
Total depletion expense for the Company in respect of the three and six months ended June 30, 2014 was $15.0 million and $25.0 million respectively (2013 - $5.8 million and $10.9 million). Had the depletion expense been calculated without inclusion of inferred resources and, where applicable, exploration potential, and related future development costs, the depletion expense would have been $20.0 million and $34.2 million respectively (2013 - $18.9 million and $34.6 million).
Due to the fact that the economic assumptions used to estimate the proved and probable reserves and resources change from year to year, and because additional geological data is generated during the course of operations, estimates of the resources and proved and probable reserves may change from year to year. Changes in the proved and probable reserves and inferred resources used in the life-of -mine plan may affect the depletion calculation and such changes are recognized prospectively.
San Dimas
The value assigned to the depletable and non-depletable pools of San Dimas were $419.7 million and $57.8 million respectively for the first half of 2014. The depletable component is depleted over 100% of reserves and 75% of resources for the three and six months ended June 30, 2014. The non-depletable component is not depleted.
Inferred resources are established based on more limited information than measured or indicated resources and reserves. The Company has risk-weighted the inferred resources included in the San Dimas depletion calculation considering the following factors:

 	i.	Both historic and recent rates of conversion of inferred resources to reserves at the San Dimas mine;	
 	 	 	
 	ii.	The nature of the ore deposit and the physical characteristics of the mine site. Exploration from the surface at San Dimas is challenging due to topographical challenges and accordingly the definition drilling required to establish resources is delayed due to the time required to develop access to underground drilling stations. This delay has historically limited the quantity of reserves that can be identified for future mining at San Dimas at any point in time. Accordingly, the San Dimas mine has historically had a short reserve life, however, management is confident that inferred resources and exploration potential will convert to reserves as development progresses;	
37

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	

 	iii.	Management is required under IFRS to assess the useful life of the San Dimas mine and management believes that inclusion of a portion of inferred resources provides a more accurate estimate as the useful life of the San Dimas mine for calculation of depletion expense. Estimating the useful life of the San Dimas mine without inclusion of a portion of inferred resources would, in management’s opinion, result in an inappropriately short estimate of the life of the San Dimas mine;	
 	 	 	
 	iv.	The change in reserve and resource estimation methodology as at December 31, 2011 from a polygonal approach to a geostatistical approach, which resulted in a transfer of estimated mineral reserves to inferred resources and the reclassification of a substantial portion of inferred resources to exploration potential. Given the high proportion of inferred resources previously classified as proven and probable reserves under the polygonal method, management has a high level of confidence that these inferred resources will be converted into production.	
The Company has determined to include 100% of probable reserves and 75% of inferred resources in the depletion calculation for the three months ended March 31, 2014. The Company believes that inclusion of both probable reserves and 75% of inferred resources and, where applicable, exploration potential, in the depletion calculation is supported by the long mining history at the San Dimas mine with an average historical conversion rate of approximately 90% of inferred resources into reserves.
Future capital expenditures necessary to access these inferred resources have been taken into account when determining the pattern of depletion charge for the San Dimas operations. These costs are included in the life-of-mine plan and are determined by the Company’s geologists and engineers based on an in-depth knowledge of the mine and planned development work. For the three months ended June 30, 2014, $77.0 million of future development costs were included in the calculation of depletion expense for San Dimas.
For the six months ended June 30, 2014, the depletable pool was depleted on a units-of-production basis based on inclusion of 100% of reserves and 75% of inferred resources, which represented 0.8 million ounces of reserves and 0.7 million ounces of inferred resources.
Black Fox
The entire Black Fox mining property is currently in the depletable pool, which is depleted over 100% of reserves and 0% of inferred resources for the three and six months ended June 30, 2014.
When considering the percentage of inferred resources to include in the depletion base of the depletable component, management considered the existence, commercial viability and potential economic recovery of the Black Fox resources based on historical experience and available geological and drilling information of the area under consideration and other operations/parts of the mine, that are contiguous to the area under consideration. Given the relative lack of history of the mine and inability to demonstrate the economic recovery of such resources with a high level of confidence, it was determined that none of the resources should be included in the calculation of depletion for the Black Fox mine. As at December 31, 2013, the Black Fox mine had 167,786 ounces of gold inferred resources, compared with 537,700 ounces of gold reserves, so the impact of excluding a portion of inferred resources in the depletion base is not significant.
38

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in conformity with IFRS requires management to make estimates, judgements and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Management has identified the following critical accounting policies and estimates.
Economic recoverability and probability of future economic benefits of exploration, evaluation and development costs
The Company has determined that exploration drilling, evaluation, development and related costs incurred which have been capitalized are economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefits including geological and metallurgical information, history of conversion of mineral deposits to proven and probable reserves, scoping and feasibility studies, accessible facilities, and existing permits for the life of mine plan. The estimates contained within these criteria could change over time which could affect the economic recoverability of capitalized costs.
Determination of useful lives of property, plant and equipment
Assets other than mining interests are depreciated using the straight-line method. Should the actual useful life of the property, plant or equipment vary future depreciation charges may change.
Deferred stripping
The Company defers stripping costs incurred during the production stage of its open pit operations when these costs are considered to generate a future benefit. The determination of these amounts requires the use of judgements and estimates such as estimates of tonnes of waste to be removed over the life of the mining area and economically recoverable reserves extracted as a result. Changes in a mine’s life and design may result in changes to the expected stripping ratio. Any changes in these estimates are accounted for prospectively.
Inventories
Finished goods, work-in-process and stockpiled ore are valued at the lower of average production cost and net realizable value.
The Company records the costs of work-in-process inventories at the lower of cost and estimated net realizable value. These costs are charged to income and included in operating expenses on the basis of ounces of gold recovered. The estimates and assumptions include surveyed quantities of stockpiled ore, in-circuit process volumes, gold and silver contents of both, costs to recover saleable ounces, recoverable ounces once processed and the price per ounce of gold or silver when ounces of gold and silver are expected to be recovered and sold. If these estimates or assumptions prove to be inaccurate, the Company could be required to write down the carrying amounts of its work-in-process inventories, which would reduce the Company’s income and working capital.
39

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Mining interests and impairment testing
The Company records mining interests at cost. Exploration costs are capitalized where they meet the Company’s criteria for capitalization.
Mining properties are depleted using a units-of-production basis over a mine’s estimated and economically proven and probable reserves and an estimate of the portion of resources expected to be classified as reserves. If a mine has significant parts with differing useful lives, depletion is calculated based on the useful life of each part. For certain mines, including the San Dimas and Black Fox mines, the Company may segregate the recognized value of the mine between its “depletable” and “non-depletable” parts. The value assigned to the depletable component is that which is recognized in respect of the mine’s reserves and resources, while the value assigned to the non-depletable component is that which relates to exploration potential. If estimates of the value of the “depletable” and “non-depletable” parts of a mining property prove to be inaccurate, this could increase the amount of future depletion expense which would reduce the Company’s net income and net assets.
The Company depletes its operating mines based on estimates of the production to be derived over the life of the mine that are attributable to proven and probable reserves and inferred resources. The Company has estimated that 100% of proven and probable reserves and 75% of inferred resources will be recovered from the San Dimas mine and that 100% of proven and probable reserves and 0% of inferred resources will be recovered from the Black Fox mine. If these estimates of reserves and resources expected to be recovered prove to be inaccurate, or if the Company revises its mining plan for a location, due to reductions in the metal price forecasts or otherwise, to reduce the amount of reserves and resources expected to be recovered, the Company could be required to write down the carrying amounts of its mining properties, or to increase the amount of future depletion expense, both of which would reduce the Company’s income and net assets.
The Company reviews and evaluates its goodwill and mining interests for impairment when events and changes in circumstances indicate that the related carrying amounts may not be recoverable, and in the case of goodwill, annually. Goodwill is allocated to cash-generating units (“CGUs”) for the purposes of impairment testing. The allocation is made to those CGUs that are expected to benefit from the business combination in which the goodwill arose. The carrying amounts of the CGUs are compared to their recoverable amount. The recoverable amount is the higher of value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU for which the estimates of future cash flows have not been adjusted.
The Company bases its impairment calculation on detailed budgets and forecasts which are prepared separately for each of the Company’s Cash Generating Units (“CGU”) to which the individual assets are allocated. The Company currently has three CGUs, the San Dimas mine, the Black Fox Complex and, the Cerro del Gallo project. These budgets and forecasts generally cover the life of the mine. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, an impairment is recognized immediately as an expense and the carrying amount is reduced to its recoverable amount. Impairment is assessed at the CGU level.
Plant and equipment are depreciated over their estimated useful lives. If estimates of useful lives including the economic lives of mines prove to be inaccurate, the Company could be required to write down the carrying amounts of its plant and equipment, or increase the amount of future depreciation expense, both of which would reduce the Company’s income and net assets.
40

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Fair value of assets purchased in a business combination
The Company’s business combinations are accounted for using the acquisition method of accounting whereby assets acquired and liabilities assumed are recorded at their fair values as of the date of acquisition and any excess of the purchase price over such fair values is recorded as goodwill. No goodwill has been recorded to date.
Assumptions underlying fair value estimates are subject to significant risks and uncertainties, which if incorrect could lead to an overstatement of the mineral properties of the Company which would then be subject to an impairment test as described above.
Reclamation and closure cost obligations
The Company has an obligation to reclaim its mining properties after the minerals have been mined from the site, and has estimated the costs necessary to comply with existing reclamation standards. IFRS requires the Company to recognize the fair value of a decommissioning liability, such as site closure and reclamation costs, in the period in which it is incurred if a reasonable estimate of fair value can be made. The Company records the estimated present value of future cash flows associated with site closure and reclamation as liabilities when the liabilities are incurred and increases the carrying values of the related assets by the same amount. At the end of each reporting period, the liabilities are increased to reflect the passage of time (accretion expense). Adjustments to the liabilities are also made for changes in the estimated future cash outflows underlying the initial fair value measurements, and changes to the discount rate used to present value the cash flows, both of which may result in a corresponding change to the carrying values of the related assets. Should the estimation of the reclamation and closure cost obligations be incorrect, additional amounts may need to be provided for in future which could lead to an increase in both the liability and associated asset. Should the reported asset and liability increase, the amortization expense in the statement of operations of the capitalized asset retirement cost would increase.
Taxation
The Company recognizes the future tax benefit related to deferred tax assets to the extent that it is probable that future taxable profits will be available against which they can be utilized. Assessing the recoverability of deferred tax assets requires management to make significant estimates related to expectations of future taxable income, applicable tax strategies and the expected timing of the reversals of existing temporary differences. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. Forecasted cash flows from operations are based on life of mine projections internally developed and reviewed by management.
The Company recognizes current income tax benefits when it is more likely than not, based on technical merits, that the relevant tax position will be sustained upon examination by applicable tax authorities. The more likely than not criteria is a matter of judgment based on the individual facts and circumstances of the relevant tax position evaluated in light of all available evidence.
The recoverability of deferred tax assets and the recognition and measurement of uncertain tax positions are subject to various assumptions and management judgment. Actual results may differ from these estimates. In circumstances where the applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates could occur that materially affect the amounts of current and deferred income taxes recognized by the Company, as well as deferred tax assets and liabilities recorded at June 30, 2014.
41

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Share-based payments
For equity-settled awards, the fair value of the award is charged to the statement of operations and credited to the share-based payment reserve rateably over the vesting period, after adjusting for the number of awards that are expected to vest. The significant estimations and assumptions included in the calculation of the fair value of the award are expected volatility, expected life, expected dividend rate and expected risk-free rate of return. Changes in these assumptions may result in a material change to the expense recorded for the issuance of share-based compensation.
The critical judgements that the Company’s management has made in the process of applying the Company’s accounting policies that have the most significant effect on the amounts recognized in the Company’s condensed consolidated interim financial statements are as follows:
Tax ruling in Mexico
The Company has taken the position that if the Mexican tax laws relative to the APA ruling do not change and the Company does not change the structure of the silver purchase agreement, the ability of the Company to continue to pay taxes in Mexico based on realized prices of silver will continue for the life of the San Dimas mine. Should this judgment change, there would be a material change in both the income and deferred tax position recognized by the Company.
Liability to sell silver to Silver Wheaton Caymans and gold to Sandstorm Gold Ltd
The Company has accounted for and presented the liability to sell silver to Silver Wheaton Caymans and gold to Sandstorm Gold Ltd net within the mining interests rather than as a separate liability in the Company’s statement of financial position.
Componentization of property, plant and equipment
Assets are componentized for the purposes of depreciation. Should the componentization of assets change, depreciation charges may vary materially in the future.
Asset acquisitions
The Company has determined that the acquisition of Cerro was an asset acquisition rather than a business combination. This is considered a significant judgment that could have a material impact on the assets and liabilities recognized as well as any future depletion expense.
Functional currency
The determination of a subsidiary’s functional currency often requires significant judgment where the primary economic environment in which the subsidiary operates may not be clear. This can have a significant impact on the consolidated results of the Company.
42

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
Capital management
There have been no significant changes in the Company’s objectives, policies and processes for managing its capital, including items the Company regards as capital, during the six months ended June 30, 2014. At June 30, 2014, the Company expects its capital resources (including its access to new sources of capital) and projected cash flows from continuing operations to support its normal operating requirements on an ongoing basis, planned development and exploration of its mineral properties, and other expansionary plans. At June 30, 2014, there were no externally imposed capital requirements to which the Company is subject and with which the Company had not complied.
RISKS AND UNCERTAINTIES
The Company’s business contains significant risk due to the nature of mining, exploration, and development activities. In 2014, there have been no changes to the Company’s exposure to risks and uncertainties, including risks relating to the Company’s foreign operations, government regulation, and environmental regulation, as described in the 2013 year-end MD&A, or the Company’s Annual Information Form for the year ended December 31, 2013, both of which are available on the Company’s website at www.primeromining.com or on SEDAR at www.sedar.com .
Disclosure controls and procedures
Disclosure controls and procedures form a framework designed to provide reasonable assurance that information disclosed publicly fairly presents in all material respects the financial condition, results of operations, and cash flows of the Company for the periods presented in this MD&A. The Company’s disclosure controls and procedures framework includes processes designed to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to management by others within those entities to allow timely decisions regarding required disclosure.
The Company’s management, with the participation of its CEO and CFO, has evaluated the design, operation and effectiveness of the Company’s disclosure controls and procedures. Based on the results of that evaluation, the Company’s CEO and CFO have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company 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 the securities legislation, and is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Internal controls 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:
43

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
·	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.
There has been no material change in internal controls of the Company during the three months ended June 30, 2014 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.
Cautionary Statement on Forward-Looking Statement 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 expand production at the San Dimas and Black Fox mines,
·	the ability of the Company to identify appropriate future acquisition opportunities, or if an opportunity is identified, to conclude a transaction on satisfactory terms,
·	the actual results of exploration activities, including the ability of the Company to continue the historical conversion of resources to reserves at the San Dimas mine, and the anticipated results of the exploration programs at Cerro del Gallo and the Black Fox Complex,
·	actual results of reclamation activities at the San Dimas and Black Fox mines,
·	the estimation or realization of Mineral Reserves and Resources,
·	the timing and amount of estimated future production, capital expenditures and costs, including forecasted cash costs,
·	the timing of the development of new mineral deposits,
·	the Company’s requirements for additional capital and ability to complete future financings,
·	future prices of precious and base metals,
·	expected ore grades, recovery rates, and throughput,
44

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
·	that plant, equipment or processes will operate as anticipated,
·	the occurrence of accidents, labour disputes, road blocks and other risks of the mining industry,
·	the ability of the Company to obtain governmental approvals or permits in connection with the continued operation and development of the San Dimas mine, the Black Fox Complex and the Cerro del Gallo project,
·	the continuation of Mexican tax laws relative to the APA ruling,
·	the ability of the Company to continue to pay taxes in Mexico based on realized prices of silver,
·	the ability of the Company to comply with environmental, safety and other regulatory requirements,
·	expectations for the Cerro del Gallo project including the timing of activities to lead to a construction decision,
·	the completion of development or construction activities, including the construction of the Cerro del Gallo mine,
·	expectations regarding currency fluctuations,
·	title disputes relating to the Company’s properties,
·	the timing and possible outcome of pending litigation, and
·	the ability of the Company to maintain effective control over financial reporting.
Such forward-looking information is necessarily based upon a number of factors and assumptions that, while considered reasonable by the Company as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The assumptions made by the Company in preparing the forward looking information contained in this MD&A, 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 MD&A; assumptions relating to the existence of companies that may wish to dispose of producing or near-term producing precious metals assets; 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 there are no disruptions in the supply of power from the Las Truchas power generation facility, whether as a result of damage to the facility or unusually limited amounts of precipitation; that development and expansion at San Dimas and Black Fox proceeds on a basis consistent with current expectations and the Company does not change its development and exploration plans; that the Cerro del Gallo and Grey Fox projects will be developed in accordance with the Company’s plans; that the exchange rate between the Canadian dollar, Mexican peso and the United States dollar remains consistent with current levels; 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; that the Company’s current estimates of mineral reserves, mineral resources, exploration potential, mineral grades and mineral recovery are accurate; that the Company identifies higher grade veins in sufficient quantities of minable ore in the Central Block and Sinaloa Graben; that the geology and vein structures in the Sinaloa Graben are as expected; that the Company completes the proposed tunnels and access routes; that the ratio of gold to silver price is maintained in accordance with the Company’s expectations; that there are no material variations in the current tax and regulatory environment; that Mexican tax laws relative to the APA ruling remain unchanged; that the Company will continue to pay taxes in Mexico based on realized prices of silver; that the Company will receive required permits and access to surface rights; that the Company can access financing, appropriate equipment and sufficient labour and that the political environment within Mexico will continue to support the development of environmentally safe mining projects.
45

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
No assurance can be given as to whether 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 and other metals; uncertainty of mineral reserves, mineral resources, exploration potential, mineral grades and mineral recovery estimates; uncertainty of future production, delays in completion of the mill expansion at San Dimas, exploration and development plans; insufficient capital to complete development and exploration plans; risks associated with developing the Cerro del Gallo and Grey Fox projects; currency fluctuations; financing of additional capital requirements; cost of exploration and development programs; inability to complete proposed tunnels and access routes or other development; mining risks, including unexpected formations and cave-ins, which delay operations or prevent extraction of material; risks associated with foreign operations; governmental and environmental regulation; tax law changes; the ability of the Company to continue to pay taxes based on the realized price of silver; the volatility of the Company's stock price; landowner dissatisfaction and disputes; delays in permitting; damage to equipment; labour disruptions; interruptions. 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 “ Risk and uncertainties ”, and in the Company’s Annual Information Form for the year ended December 31, 2013 as filed on SEDAR, 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.
Cautionary Note for United States Investors
As a British Columbia corporation and a “reporting issuer” under Canadian securities laws, the Company is subject to certain rules and regulations issued by Canadian Securities Administrators. The Company is required to provide detailed information regarding its properties including mineralization, drilling, sampling and analysis, on security of samples and mineral reserve estimates under Canadian National Instrument 43-101 (“NI 43-101”). The United States Securities and Exchange Commission applies different standards than the standards under NI 43-101 in order to classify mineralization as a reserve. Accordingly, mineral reserve estimates contained in this MD&A may not qualify as “reserves” under SEC standards. Further, the Company describes any mineral resources associated with its properties utilizing terminology such as “measured resources”, “indicated resources” or “inferred resources” which are terms recognized by Canadian regulators under NI 43-101 but not recognized by the United States’ Securities and Exchange Commission. United States investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into mineral reserves. These terms have a greater amount of uncertainty as to their existence and feasibility than reserves recognized by the United States Securities and Exchange Commission. Further, “inferred resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Therefore, United States investors are also cautioned not to assume that all or any part of the “inferred resources” exist. United States investors are also cautioned that disclosure of 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.
46

PRIMERO MINING CORP.	
MANAGEMENT’S DISCUSSION AND ANALYSIS	
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
On behalf of the Board

Joseph F. Conway	 	
President, CEO and Director	 	
47

PRIMERO MINING CORP.	
June 30, 2014	
 	
Table of contents	

Condensed consolidated interim statements of operations and comprehensive (loss) income	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	5-37	

PRIMERO MINING CORP.	
 	
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND	
COMPREHENSIVE (LOSS) INCOME	
 	
THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
 	
(In thousands of United States dollars, except for share and per share amounts)	
(Unaudited)	

 	 	 	 	Three months ended June 30,	 	 	Six months ended June 30,	 	
 	 	 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	Notes	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 		$  	 		$ 	 		$  	 		$ 	 	

Revenue	 	6	 	79,669	 	 	52,475	 	 	127,938	 	 	98,796	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses	 	 	 	(40,387	)	 	(20,813	)	 	(68,070	)	 	(43,276	)	
Depreciation and depletion	 	9	 	(19,606	)	 	(8,069	)	 	(31,927	)	 	(16,221	)	
Total cost of sales	 	 	 	(59,993	)	 	(28,882	)	 	(99,997	)	 	(59,497	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings from mine operations	 	 	 	19,676	 	 	23,593	 	 	27,941	 	 	39,299	 	
General and administrative expenses	 	 	 	(10,524	)	 	(1,907	)	 	(23,877	)	 	(9,703	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings (loss) from operations	 	 	 	9,152	 	 	21,686	 	 	4,064	 	 	29,596	 	
Transaction costs and other expenses	 	 	 	(498	)	 	(5,755	)	 	(7,765	)	 	(6,082	)	
Foreign exchange (loss) gain	 	 	 	(2,250	)	 	651	 	 	(2,608	)	 	(710	)	
Finance income	 	 	 	65	 	 	40	 	 	184	 	 	151	 	
Finance expense	 	 	 	(1,785	)	 	(415	)	 	(2,308	)	 	(924	)	
Share of equity-accounted investment results	 	2 (ii)	 	(77	)	 	-	 	 	(679	)	 	-	 	
Gain on derivative liability	 	 	 	286	 	 	-	 	 	286	 	 	-	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings (loss) before income taxes	 	 	 	4,893	 	 	16,207	 	 	(8,826	)	 	22,031	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income tax (expense) recovery	 	7	 	(4,321	)	 	(11,966	)	 	313	 	 	(466	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) for the period	 	 	 	572	 	 	4,241	 	 	(8,513	)	 	21,565	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Items not subsequently reclassified to profit or loss:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
      Exchange differences on translation of foreign operations	 	 	 	1,035	 	 	(4,136	)	 	1,239	 	 	(3,790	)	
Total comprehensive income (loss) for the period	 	 	 	1,607	 	 	105	 	 	(7,274	)	 	17,775	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic (loss) income per share	 	 	 	0.00	 	 	0.04	 	 	(0.06	)	 	0.21	 	
Diluted (loss) income per share	 	 	 	0.00	 	 	0.04	 	 	(0.06	)	 	0.21	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of common shares outstanding	 	 	 		 	 		 	 		 	 		 	
   Basic	 	12	 	159,616,775	 	 	105,344,778	 	 	144,107,966	 	 	101,320,723	 	
   Diluted	 	12	 	161,320,681	 	 	105,696,266	 	 	145,582,448	 	 	101,817,431	 	

See accompanying notes to the consolidated financial statements.	1	

PRIMERO MINING CORP.	
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION	
(In thousands of United States dollars)	
(Unaudited)	

 	 	 	 	June 30,	 	 	December 31,	 	
 	 	Notes	 	2014	 	 	2013	 	
 	 	 		$  	 		$ 	 	
 	 	 	 	 	 	 	 	 	
Assets	 	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	 	
   Cash and cash equivalents	 	 	 	44,168	 	 	110,711	 	
   Trade and other receivables	 	 	 	6,363	 	 	4,794	 	
   Taxes receivable	 	7	 	20,480	 	 	10,224	 	
   Prepaid expenses	 	 	 	8,513	 	 	7,729	 	
   Inventories	 	10	 	20,783	 	 	12,171	 	
Total current assets	 	 	 	100,307	 	 	145,629	 	
 	 	 	 	 	 	 	 	 	
Non-current assets	 	 	 	 	 	 	 	 	
   Restricted cash	 	8	 	19,185	 	 	-	 	
   Mining interests	 	9	 	955,587	 	 	636,253	 	
   Goodwill	 	2 (i)	 	98,961	 	 	-	 	
   Deferred tax asset	 	7 (b)	 	21,716	 	 	17,898	 	
   Inventories	 	10	 	10,677	 	 	-	 	
   Equity investment	 	2 (ii)	 	391	 	 	1,042	 	
   Available for sale investment	 	2 (i)	 	778	 	 	-	 	
Total assets	 	 	 	1,207,602	 	 	800,822	 	
 	 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	 	
   Trade and other payables	 	12 ( e)	 	45,220	 	 	33,958	 	
   Taxes payable	 	7	 	7,985	 	 	6,735	 	
   Current portion of long-term debt	 	11	 	6,440	 	 	5,000	 	
Total current liabilities	 	 	 	59,645	 	 	45,693	 	
 	 	 	 	 	 	 	 	 	
Non-current liabilities	 	 	 	 	 	 	 	 	
   Taxes payable	 	7	 	10,750	 	 	8,456	 	
   Deferred tax liability	 	7 (b)	 	53,722	 	 	47,660	 	
   Decommissioning liability	 	 	 	33,070	 	 	8,730	 	
   Long-term debt	 	11	 	82,392	 	 	22,214	 	
   Other long-term liabilities	 	12 ( e)	 	6,399	 	 	6,979	 	
   Derivative liability	 	15	 	3,410	 	 	-	 	
Total liabilities	 	 	 	249,388	 	 	139,732	 	
 	 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	 	
Share capital	 	12 (a)(b)	 	853,065	 	 	553,518	 	
Warrant reserve	 	12 (d)	 	34,782	 	 	34,237	 	
Share-based payment reserve	 	12 (c )( e) (iii)	 	19,824	 	 	15,518	 	
Foreign currency translation reserve	 	 	 	(3,405	)	 	(4,644	)	
Retained earnings	 	 	 	53,948	 	 	62,461	 	
Total equity	 	 	 	958,214	 	 	661,090	 	
Total liabilities and equity	 	 	 	1,207,602	 	 	800,822	 	
Commitments and contingencies (Note 19)

See accompanying notes to the consolidated financial statements.	2	

PRIMERO MINING CORP.	
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY	
(In thousands of United States dollars, except for number of common shares)	
(Unaudited)	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Foreign	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	Share-based	 	 	currency	 	 	Retained	 	 	 	 	
 	 	 	 	Share capital	 	 	Warrants	 	 	payment	 	 	translation	 	 	earnings/	 	 	 	 	
 	 	Notes	 	Shares	 	 	Amount	 	 	reserve	 	 	reserve	 	 	reserve	 	 	(deficit)	 	 	Total equity	 	
 	 	 	 	 	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	 	$	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, January 1, 2013	 	 	 	97,205,622	 	 	456,734	 	 	34,237	 	 	15,120	 	 	(1,064	)	 	66,711	 	 	571,738	 	
Shares issued for	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Acquisition of Cerro Resources NL	 	2 (ii)	 	17,983,956	 	 	93,337	 	 	-	 	 	759	 	 	-	 	 	-	 	 	94,096	 	
   Exercise of stock options	 	12 ( c)	 	245,000	 	 	1,728	 	 	-	 	 	(819	)	 	-	 	 	-	 	 	909	 	
Foreign currency translation	 	 	 	-	 	 	-	 	 	-	 	 	-	 	 	(3,790	)	 	-	 	 	(3,790	)	
Share-based payment	 	12 ( c)( e)(iii)	 	-	 	 	-	 	 	-	 	 	231	 	 	-	 	 	-	 	 	231	 	
Net income	 	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	21,565	 	 	21,565	 	
Balance, June 30, 2013	 	 	 	115,434,578	 	 	551,799	 	 	34,237	 	 	15,291	 	 	(4,854	)	 	88,276	 	 	684,749	 	
Shares issued for	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Exercise of stock options	 	12 ( c)	 	250,000	 	 	1,504	 	 	-	 	 	(497	)	 	-	 	 	-	 	 	1,007	 	
   Exercise of PSUs	 	12 ( e) (ii)	 	41,457	 	 	215	 	 	-	 	 	-	 	 	-	 	 	-	 	 	215	 	
Foreign currency translation	 	 	 	-	 	 	-	 	 	-	 	 	-	 	 	210	 	 	-	 	 	210	 	
Share-based payment	 	12 ( c)( e)(iii)	 	-	 	 	-	 	 	-	 	 	724	 	 	-	 	 	-	 	 	724	 	
Net loss	 	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	(25,815	)	 	(25,815	)	
Balance, December 31, 2013	 	 	 	115,726,035	 	 	553,518	 	 	34,237	 	 	15,518	 	 	(4,644	)	 	62,461	 	 	661,090	 	
Shares issued for	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Acquisition of Brigus Gold Corp.	 	2 (i)	 	41,340,347	 	 	279,049	 	 	545	 	 	6,983	 	 	-	 	 	-	 	 	286,577	 	
   Exercise of stock options	 	12 ( c)	 	1,818,330	 	 	13,393	 	 	-	 	 	(4,029	)	 	-	 	 	-	 	 	9,364	 	
   Flow-through agreement	 	19 (a)	 	1,000,000	 	 	7,105	 	 	-	 	 	-	 	 	-	 	 	-	 	 	7,105	 	
Foreign currency translation	 	 	 	-	 	 	-	 	 	-	 	 	-	 	 	1,239	 	 	 	 	 	1,239	 	
Share-based payment	 	12 ( c)( e)(iii)	 	-	 	 	-	 	 	-	 	 	1,352	 	 	-	 	 	-	 	 	1,352	 	
Net loss	 	 	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	(8,513	)	 	(8,513	)	
Balance, June 30, 2014	 	 	 	159,884,712	 	 	853,065	 	 	34,782	 	 	19,824	 	 	(3,405	)	 	53,948	 	 	958,214	 	
Total comprehensive income (loss) was $1,607 and $(7,274) for the three and six months ended June 30, 2014 respectively (June 30, 2013 - income of $105 and $17,775 respectively )

See accompanying notes to the condensed consolidated interim financial statements.	3	

PRIMERO MINING CORP.	
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS	
THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
(In thousands of United States dollars)	
(Unaudited)	

 	 	 	 	Three months ended June 30,	 	 	Six months ended June 30,	 	
 	 	 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
	 	Notes	 	 	 	 	 	 	 	 	 	 	 	 	
Operating activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Earnings (loss) before income taxes	 	 	 	4,893	 	 	16,207	 	 	(8,826	)	 	22,031	 	
   Adjustments for:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
       Depreciation and depletion	 	9	 	19,606	 	 	8,069	 	 	31,927	 	 	16,221	 	
       Payments relating to decomissioning liability	 	 	 	-	 	 	-	 	 	-	 	 	(53	)	
       Share-based payments - Stock Option plan	 	12 (c)	 	328	 	 	53	 	 	482	 	 	108	 	
       Share-based payments - Phantom Share Unit plan	 	12 (e)	 	3,160	 	 	(2,792	)	 	11,197	 	 	2,128	 	
       Payments made under the Phantom Share Unit Plan	 	12 (e)	 	(6,443	)	 	(5,048	)	 	(9,131	)	 	(5,727	)	
       Unrealized loss on equity accounted investment	 	 	 	77	 	 	-	 	 	679	 	 	-	 	
       Unrealized (gain)/loss on available for sale investment	 	 	 	(3	)	 	-	 	 	349	 	 	-	 	
       Unrealised gain on derivative liability	 	15	 	(286	)	 	-	 	 	(286	)	 	-	 	
       Loss on disposal of assets	 	 	 	1,195	 	 	101	 	 	1,215	 	 	165	 	
       Loss on write-down of inventory	 	 	 	-	 	 	-	 	 	1,225	 	 	-	 	
       Unrealized foreign exchange loss	 	 	 	2,690	 	 	177	 	 	2,328	 	 	1,310	 	
       Taxes paid	 	 	 	(506	)	 	(210	)	 	(939	)	 	(523	)	
Other adjustments	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Finance income (disclosed in investing activities)	 	 	 	(65	)	 	(40	)	 	(184	)	 	(151	)	
Finance expense	 	 	 	1,785	 	 	415	 	 	2,308	 	 	924	 	
Operating cash flow before working capital changes	 	 	 	26,431	 	 	16,932	 	 	32,344	 	 	36,433	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Changes in non-cash working capital	 	13	 	(13,363	)	 	(6,550	)	 	(27,916	)	 	(8,158	)	
Cash (used in) provided by operating activities	 	 	 	13,068	 	 	10,382	 	 	4,428	 	 	28,275	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investing activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Expenditures on mining interests	 	9	 	(31,159	)	 	(16,037	)	 	(51,159	)	 	(24,772	)	
   Acquisition of Brigus Gold Corp (net)	 	2 (i)	 	-	 	 	-	 	 	(7,773	)	 	-	 	
   Acquisition of Cerro Resources NL	 	2 (ii)	 	-	 	 	(3,508	)	 	-	 	 	(3,508	)	
   Equity investment in Santana Minerals Limited	 	2 (ii)	 	-	 	 	(1,062	)	 	-	 	 	(1,062	)	
   Interest received	 	 	 	65	 	 	40	 	 	184	 	 	151	 	
Cash used in investing activities	 	 	 	(31,094	)	 	(20,567	)	 	(58,748	)	 	(29,191	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Financing activities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Repayment of debt	 	11	 	(53,258	)	 	-	 	 	(56,361	)	 	(7,786	)	
   Proceeds on exercise of options	 	12 (c)	 	1,678	 	 	34	 	 	9,363	 	 	910	 	
   Proceeds on issuance of flow-through shares	 	19 (a)	 	-	 	 	 	 	 	8,037	 	 	 	 	
   Interest paid	 	 	 	(1,135	)	 	-	 	 	(1,578	)	 	-	 	
   Drawdown of line of credit, net of transaction costs	 	 	 	28,192	 	 	-	 	 	28,192	 	 	 	 	
Cash provided by (used in) financing activites	 	 	 	(24,523	)	 	34	 	 	(12,347	)	 	(6,876	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Effect of foreign exchange rate changes on cash	 	 	 	345	 	 	(705	)	 	124	 	 	(1,062	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(Decrease) increase in cash	 	 	 	(42,204	)	 	(10,856	)	 	(66,543	)	 	(8,854	)	
Cash and cash equivalents, beginning of period	 	 	 	86,372	 	 	141,246	 	 	110,711	 	 	139,244	 	
Cash, end of period	 	 	 	44,168	 	 	130,390	 	 	44,168	 	 	130,390	 	
Supplemental cash flow information (Note 13)

See accompanying notes to the consolidated financial statements.	4	

PRIMERO MINING CORP.	
 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

1.	Nature of operations	
Primero Mining Corp. (“Primero” or the “Company”) was incorporated in Canada on November 26, 2007 under the Business Corporations Act (British Columbia). The Company’s registered office is Suite 1500, 1055 West Georgia Street, Vancouver, British Columbia. Primero is a publicly traded company, listed on both the Toronto and New York Stock Exchanges; Primero has no parent company.
Primero is a Canadian-based precious metals producer with mining operations in 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 the Black Fox gold mine located near Timmins, Ontario. The Company also has one project in the development stage, Cerro del Gallo, located in the state of Guanajuato in central Mexico, and one exploration property, Ventanas, located in Durango state, Mexico.

2.	Acquisitions of mining interests
(i)        Brigus Gold Corp	
On March 5, 2014, the Company acquired all of the issued and outstanding common shares of Brigus Gold Corp (“Brigus”) pursuant to a plan of arrangement (the "Arrangement"), thereby taking control of Brigus. Brigus is a gold producing company, whose principal assets are 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 (the “Black Fox Complex”). The purchase was part of the Company’s strategy of building a portfolio of precious metal assets. On March 28, 2014, Brigus changed its name to Primero Gold Canada Inc.
Pursuant to the Arrangement, 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, the remaining 9.9% interest. All outstanding options to purchase Brigus common shares were exchanged for options to purchase Primero common shares based upon the Exchange Ratio. Further, upon completion of the Arrangement, 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 accounts for its equity investment in Fortune Bay as an available for sale financial instrument which is measured at fair value. Any unrealized gains and losses relating to the equity investment in Fortune Bay are recorded in other comprehensive income (“OCI”).
5

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	
On March 14, 2014 the Company made a change of control offer for Brigus’ outstanding Cdn$24 million senior secured term notes in accordance with the facility agreement dated October 29, 2012 governing the notes. The offer stated that a change of control had occurred and offered to purchase the notes at 105% of the principal amount plus accrued and unpaid interest on the date that is 20 days following delivery of the note Change of Control Notice. The notes were repaid in full on April 3, 2014.
On April 4, 2014, the Company also made a change of control offer for Brigus’ outstanding $50 million 6.5% convertible senior unsecured debentures in accordance with their trust indenture dated March 23, 2011. The offer stated that a change of control had occurred and offered to purchase the debentures at 100% of the principal amount plus accrued and unpaid interest on May 16, 2014. Investors holding $1.9 million of the debentures accepted the Company’s offer and these debentures were repaid on May 16, 2014.
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.
Since its acquisition on March 5, 2014, Primero Gold Canada Inc. has generated revenue of $27.6 million and a net loss of $13.2 million which are included in the Company’s condensed consolidated interim statement of operations and comprehensive (loss) income for the six months ended June 30, 2014. Should the acquisition of Primero Gold Canada Inc. have taken place on January 1, 2014, the total consolidated revenue and loss for the Company would have been $140.6 million and $19.3 million, respectively.
The following table summarizes the fair value of the consideration transferred to Brigus shareholders and the fair values of identified assets acquired and liabilities assumed. The fair values of the identified assets and liabilities purchased have been amended from those reported as at March 31, 2014 as follows:

 		The preliminary fair value for the mining interest has decreased by $124.4 million from the initial estimate at March 31, 2014. The Company is still in the process of finalizing the valuation of the mining interest and this value may change. The decrease in the fair value of the mining interest resulted in a decrease of $26.2 million in the deferred tax liability.	
 	 	 	
 		Based on the reduction in the mining interest the Company has identified goodwill, on a preliminary basis, that arose on the acquisition of $99.0 million. This goodwill is calculated as the difference between the fair value of the consideration issued for the acquisition of Brigus and the fair value of all other assets and liabilities acquired; goodwill representsvalue acquired upon the acquisition of Brigus including the skilled workforce at the Black Fox mine, the diversification of Primero, benefits resulting from transforming to a mid-tier mining company and other synergies that benefit Primero as a whole. As at June 30, 2014, management has not completed its assessment of the components of goodwill, nor determined the allocation of goodwill to cash generating units (“CGU”s) for the purposes of testing for impairment.	
 	 	 	
 		With the acceptance rate on the Company’s change of control offer to repay the convertible debentures known during the second quarter, it was determined that the convertible debenture liability assumed contained an embedded derivative, which was measured at fair value and separated from the fair value of the debt component of the debentures.	
6

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

 		$1.9 million of the convertible debentures have been reclassified to current liabilities in the table below given they were repaid within the second quarter.	
Due to the recent timing of the acquisition, the fair value assigned to the identified assets and liabilities is preliminary and may be revised by the Company as additional information becomes available. In particular, the Company continues to assess the value of the mining interests purchased with the acquisition of Brigus, notably the value assigned to the Grey Fox and Pike River properties, in order to support the value assigned to these assets upon acquisition which may also impact the value assigned to goodwill. The Company will finalize the determination of the fair values of the assets and liabilities acquired within 12 months of the acquisition date, which could result in material differences from the preliminary values presented in these condensed consolidated interim financial statements. Transaction costs of $7.3 million relating to the acquisition have been expensed in accordance with IFRS 3, Business combinations; these transaction costs are recognized within “ Transaction costs and other expenses” in the condensed consolidated statement of operations and comprehensive (loss) income.

 	 		$000s	 	
 	Purchase price	 	 	 	
 	Com mon shares	 	279,049	 	
 	Cash	 	15,030	 	
 	Share-based consideration	 	6,983	 	
 	Warrants	 	545	 	
 	 	 	301,607	 	

 	N et assets acquired	 	 	 	
 	Assets	 	 	 	
 	Cash	 	7,257	 	
 	Restricted Cash	 	18,524	 	
 	Accounts receivable	 	848	 	
 	Inventories	 	15,567	 	
 	Investment in Fortune Bay	 	1,127	 	
 	Prepaid expenses	 	482	 	
 	Mining interests and property, plant and equipment	 	298,800	 	
 	Goodwill	 	98,961	 	
 	 	 	 	 	
 	Liabilities	 	 	 	
 	Accounts payable	 	(30,370	)	
 	Finance leases	 	(15,511	)	
 	Decommissioning liability	 	(15,746	)	
 	Convertible debentures	 	(45,168	)	
 	Derivative liability	 	(3,696	)	
 	Senior secured notes	 	(22,713	)	
 	Deferred tax liability	 	(6,755	)	
 	 	 	301,607	 	
The contractual amounts of accounts receivable purchased was $nil.
7

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

 	(ii)	Cerro Resources NL	
On May 22, 2013, the Company acquired all of the issued and outstanding common shares of Cerro Resources NL (“Cerro”) by way of a scheme of arrangement (the "Scheme") under the Australian Corporations Act 2001. Cerro was an exploration and development company whose principal asset was 69.2% ownership of the feasibility stage Cerro del Gallo project, a gold-silver-copper deposit located in the state of Guanajuato, Mexico.
Under the terms of the Scheme, each Cerro shareholder received 0.023 of a Primero common share for each Cerro common share held, and each Cerro option holder received 0.023 of a Primero option for each Cerro option held. Additionally, Cerro shareholders received 80.01% of the common shares of a newly incorporated company, Santana Minerals Limited ("Santana"). Santana assumed Cerro's interests in the Namiquipa, Espiritu Santo, Mt Philp and Kalman projects, shares in Syndicated Metals Limited and approximately $4 million in cash. The Company subscribed for a 19.99% interest in Santana, which is held as an equity accounted investment since it has been determined significant influence exists due to Primero’s 25% representation on the Santana board of directors. As such, the Company records its share of Santana’s quarterly profit or loss, and adjusts the carrying value of the investment accordingly. There are currently no transactions between the Company and Santana. The initial value assigned to the Company’s interest in Santana was based on 19.99% of Santana’s total market capitalization.
After the spinout of Santana, Cerro’s only asset was its interest in the Cerro del Gallo project. The Company determined that the Cerro del Gallo project was not a business in accordance with the definition in IFRS 3 Business combinations , and therefore it accounted for the acquisition as an asset acquisition rather than a business combination.
On December 19, 2013, the Company acquired the remaining 30.8% interest in the Cerro del Gallo project from a subsidiary of Goldcorp Inc. The consideration comprised an upfront cash payment of $8 million, plus contingent payments based on meeting certain milestones or market conditions. The contingent payments include $8 million (the “First Contingent Payment”) after achieving commercial production on the phase I heap leach operation; $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; $14 million (“the Second Contingent Payment”) on announcement of a decision by Primero to construct a carbon-in-leach mill for Phase II (“the Third Contingent Payment”), and $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 First, Second, Third and Fourth Contingent Payments are considered to be contingent liabilities. These contingent liabilities were not included in the purchase consideration and shall only be recognized if and when the contingency in question is satisfied. The purchase price of the 30.8% interest in the Cerro del Gallo project is considered to be $8 million prior to any of the contingencies being satisfied. The Company determined that the Cerro del Gallo project was not a business in accordance with the definition in IFRS 3 Business combinations at the date of purchasing the remaining 30.8% and therefore it also accounted for the acquisition as an asset acquisition rather than a business combination.
8

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	
The following table summarizes the fair value of the consideration transferred to Cerro shareholders and Goldcorp Inc. for the respective purchase of 69.2% and 30.8% of the Cerro del Gallo project, including transaction costs and the amounts of identified assets acquired and liabilities assumed:

 	 	Purchase of 69.2% 	 	 	Purchase of 30.8%  	 	 	Total	 	
 	 	 	 	 	 	 	 	 	 	
Purchase price	 	$	 	 	$	 	 	$	 	
Common shares	 	93,337	 	 	-	 	 	93,337	 	
Share-based compensation	 	759	 	 	-	 	 	759	 	
Cash	 	2,782	 	 	8,000	 	 	10,782	 	
Transaction costs	 	890	 	 	-	 	 	890	 	
 	 	97,768	 	 	8,000	 	 	105,768	 	
 	 	 	 	 	 	 	 	 	 	
Net assets acquired:	 	$	 	 	$	 	 	 	 	
Cash	 	300	 	 	77	 	 	377	 	
Working capital & other	 	(2,794	)	 	547	 	 	(2,247	)	
Property, plant & equipment	 	410	 	 	239	 	 	649	 	
Mining interests	 	99,852	 	 	7,137	 	 	106,989	 	
 	 	97,768	 	 	8,000	 	 	105,768	 	

3.	Significant accounting policies, judgements and estimates	
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”, as issued by the International Accounting Standards Board (“IASB”) and using the accounting policies the Company expects to adopt in its consolidated financial statements for the year ending December 31, 2014 based on current standards. The accounting policies followed in these condensed consolidated interim financial statements are the same as those applied in the Company’s consolidated financial statements for the year ended December 31, 2013, except for new accounting policies described in Note 4.
These condensed consolidated interim financial statements do not include all the necessary annual disclosures in accordance with IFRS. These condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated annual financial statements for the year ended December 31, 2013.
These condensed consolidated interim financial statements have been prepared on a historical cost basis with the exception of the available for sale investment, the derivative liability and those balances recognized at fair value upon initial recognition as part of the Arrangement. These condensed consolidated interim financial statements were approved by the Company’s Board of Directors on August 6, 2014.
The preparation of the condensed consolidated interim financial statements requires management to make estimates, judgements and assumptions that affect the reported amounts of revenues, expenses, assets, and liabilities at the date of the condensed consolidated interim financial statements. If in future such estimates, judgments and assumptions, which are based on management’s best judgment at the date of the condensed consolidated interim financial statements, deviate from actual circumstances, the original estimates, judgments and assumptions will be modified as appropriate in the period in which the circumstances change.
9

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	
In the opinion of management, all adjustments necessary to present fairly the financial position of the Company as at June 30, 2014 and the results of its operations and cash flows for the three months then ended have been made. The interim results are not necessarily indicative of results for a full year.

 	(a)	Basis of consolidation	
 	 	 	
 		These consolidated financial statements include the accounts of the Company and its subsidiaries from their respective dates of acquisition. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the group have been eliminated in full. The Company’s significant subsidiaries, which are all wholly owned, are: Primero Empresa Minera, S.A. de C.V., which owns the San Dimas mine, Primero Gold Canada Inc., which owns the Black Fox Complex, San Anton de las Minas, S.A. de C.V., which owns the Cerro del Gallo project, Silver Trading (Barbados) Limited (“Silver Trading”) and Primero Mining Luxembourg S.a.r.l.	
 	 	 	
 	(b)	Functional and presentation currency	
 	 	 	
 		The functional currency of Primero Empresa Minera, S.A. de C.V, Primero Canada Gold Inc., San Anton de las Minas S.A. de C.V. and Silver Trading is the U.S. dollar. The functional currency of certain subsidiaries of Cerro is the Australian dollar. The functional currency of Primero Mining Luxembourg S.a.r.l is the Mexican peso. The functional currency of the parent company, incorporated in Canada, is the Canadian dollar.	
 	 	 	
 		The presentation currency of the Company is the U.S. dollar. The accounts of the entities with non-U.S. dollar functional currencies are translated into the U.S. dollar presentation currency as follows: all assets and liabilities are translated at the exchange rate prevailing at the statement of financial position date; equity balances are translated at the rates of exchange at the transaction dates, and all items included in the statement of operations are translated using the period average exchange rates unless there are significant fluctuations in the exchange rate, in which case the rate at the date of transaction is used. All differences arising upon the translation to the presentation currency are recorded in the foreign currency translation reserve within OCI; there is no tax impact of this translation.	
 	 	 	
 	(c)	Measurement uncertainties	
 	 	 	
 		The significant assumptions about the future and other major sources of estimation uncertainty as at the end of the reporting period that have a significant risk of resulting in a material adjustment to the carrying amounts of the Company’s assets and liabilities are as follows:	
10

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

 	(i)	Economic recoverability and probability of future economic benefits of exploration, evaluation and development costs	
 	 	 	
 		The Company has determined that exploration drilling, evaluation, development and related costs incurred which have been capitalized are economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefits including geological and metallurgical information, history of conversion of mineral deposits to proven and probable reserves, scoping and feasibility studies, accessible facilities, and existing permits for the life of mine plan. The estimates contained within these criteria could change over time which could affect the economic recoverability of capitalized costs.	
 	 	 	
 	(ii)	Estimated recoverable ounces	
 	 	 	
 		The carrying amounts of the Company’s operating mines are divided into a depletable and non-depletable pool; the depletable pool is depleted based on recoverable ounces contained in proven and probable reserves and a portion of resources. The Company includes a portion of resources in its depletion base where it is considered probable that those resources will be economically extracted. Changes to estimates of recoverable ounces and depletable costs, including changes resulting from revisions to the Company’s mine plans, can result in a change to future depletion rates.	
 	 	 	
 	(iii)	Deferred stripping	
 	 	 	
 		The Company defers stripping costs related to open pit mining operations when these costs are considered to generate a future benefit. The determination of these amounts requires the use of judgements and estimates such as estimates of tonnes of waste to be removed over the life of the mining area and economically recoverable reserves extracted as a result. Changes in a mine’s life and design may result in changes to the expected stripping ratio. Any changes in these estimates are accounted for prospectively.	
 	 	 	
 	(iv)	Determination of useful lives of property, plant and equipment	
 	 	 	
 		Property, plant and equipment are depreciated to their estimated residual value over the estimated useful life of the asset. Should the actual useful life of the property, plant or equipment vary future depreciation charges may change.	
 	 	 	
 	(v)	Impairment charges	
 	 	 	
 		Goodwill and non-current assets are tested for impairment if there is an indicator of impairment, and in the case of goodwill, annually. The impairment analysis requires the use of estimates and assumptions, including amongst others, long- term commodity prices, discount rates, length of mine life, future production levels, future operating costs, future capital expenditures and tax estimates. The estimates and assumptions are subject to risk and uncertainty; hence, there is the possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the assets. In such circumstances the carrying value of the assets may be impaired or a prior period’s impairment charge reversed (with the exception of goodwill for which impairment charges are not reversed) with the impact recorded in the condensed consolidated interim statements of operations and comprehensive (loss) income.	
11

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

 	(vi)	Decommissioning liability	
 	 	 	
 		The Company’s accounting policy for the recognition of accrued site closure costs requires significant estimates and assumptions such as the requirements of the relevant legal and regulatory framework, the magnitude of possible disturbance and the timing, extent and costs of required closure, rehabilitation activity and applicable discount rates. Changes to these estimates and assumptions may result in actual expenditures in the future differing from the amounts currently provided for. The decommissioning liability is periodically reviewed and updated based on the available facts and circumstances.	
 	 	 	
 	(vii)	Income taxes	
 	 	 	
 		The Company is periodically required to estimate the tax basis of assets and liabilities. Where applicable tax laws and regulations are either unclear or subject to varying interpretations, it is possible that changes in these estimates could occur that materially affect the amounts of deferred income tax assets and liabilities recorded in the financial statements. Changes in deferred tax assets and liabilities generally have a direct impact on earnings in the period of changes. Each period, the Company evaluates the likelihood of whether some portion or all of each deferred tax asset will not be realized. This evaluation is based on historic and future expected levels of taxable income, the pattern and timing of reversals of taxable temporary timing differences that give rise to deferred tax liabilities, and tax planning initiatives. Levels of future taxable income are affected by, among other things, the market price for gold and silver, production costs, quantities of proven and probable reserves, interest rates and foreign currency exchange rates.	
 	 	 	
 	(viii)	Valuation of inventory	
 	 	 	
 		All inventory is valued at the lower of average cost or net realizable value. Management is required to make various estimates and assumptions to determine the value of stockpiled ore, in-circuit inventories and doré inventories. The estimates and assumptions include surveyed quantities of stockpiled ore, in- circuit process volumes, gold and silver contents of both, costs to recover saleable ounces, recoverable ounces once processed and the price per ounce of gold or silver when ounces of gold and silver are expected to be recovered and sold.	
 	 	 	
 	(ix)	The fair values of assets and liabilities acquired in business combinations	
 	 	 	
 		In a business combination, it generally takes time to obtain the information necessary to measure the fair values of assets acquired and liabilities assumed and the resulting goodwill, if any. Changes to the provisional measurements of assets and liabilities acquired, including the associated deferred income taxes and resulting goodwill, may be retrospectively adjusted when new information is obtained until the final measurements are determined (within one year of acquisition date). The determination of fair value as of the acquisition date requires management to make certain estimates about future events, including, but not restricted to, estimates of mineral reserves and resources acquired, exploration potential, future operating costs and capital expenditures, future metal prices, long-term foreign exchange rates, and discount rates.	
12

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

 	(x)	Share-based compensation	
 	 	 	
 		The Company makes certain estimates and assumptions when calculating the fair values of share-based compensation granted. The significant estimations and assumptions include expected volatility, expected life, expected dividend rate and expected risk-free rate of return. Changes in these assumptions may result in a material change to the expense recorded for the issuance or vesting of share- based compensation.	
The critical judgements that the Company’s management has made in the process of applying the Company’s accounting policies that have the most significant effect on the amounts recognized in the Company’s condensed consolidated financial statements are as follows:

 	(i)	Tax ruling in Mexico	
 	 	 	
 		The Company has taken the position that if the Mexican tax laws relative to the Advance Pricing Agreement (“APA”) ruling do not change and the Company does not change the structure of the silver purchase agreement, the ability of the Company to continue to pay taxes in Mexico based on realized prices of silver will continue for the life of the San Dimas mine (see Notes 5(i) and 7). Should this judgment change, there would be a material change in both the income and cash flow of the Company.	
 	 	 	
 	(ii)	Gold and silver purchase arrangements	
 	 	 	
 		The Company has accounted for and presented the liability to deliver silver to Silver Wheaton Caymans and gold to Sandstorm Gold Ltd (“Sandstorm”) (Note 5(ii)) net within the mining interests rather than as a separate liability in the Company’s statement of financial position. If the mining interests and liabilities were separately recorded, there could be a material change in depreciation and depletion expense and deliveries against the liabilities would be recorded as credit in the statement of operations.	
 	 	 	
 	(iii)	Componentization of property, plant and equipment	
 	 	 	
 		Assets are componentized for the purposes of depreciation. Should the componentization of assets change, depreciation charges may vary materially in the future.	
13

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

 	(iv)	Asset acquisitions	
 	 	 	
 		The Company has determined that the acquisition of Cerro (Note 2(ii)) was an asset acquisition rather than a business combination. This is considered a significant judgment that could have a material impact on the assets and liabilities recognized as well as any future depletion expense.	
 	 	 	
 	(v)	Functional currency	
 	 	 	
 		The determination of a subsidiary’s functional currency often requires significant judgment where the primary economic environment in which an entity operates may not be clear. This can have a significant impact on the consolidated results of the Company.	

4.	Changes in accounting policies and recent pronouncements issued	
New policies
The accounting policies applied in the preparation of these unaudited condensed interim consolidated financial statements are consistent with those applied and disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2013, except for the application of the following new interpretation and amendment to existing IFRSs, which was effective January 1, 2014:
IFRIC 21 – Levies (“IFRIC 21”), an interpretation of IAS 37 – Provisions, Contingent Liabilities and Contingent Assets ("IAS 37"), clarifies that the obligating event, as defined by IAS 37, that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. The Company has applied IFRIC 21 on a retrospective basis in compliance with the transitional requirements of IFRIC 21. The application of IFRIC 21 did not result in an adjustment to the Company's unaudited condensed interim consolidated financial statements.
The following accounting policy was adopted upon the acquisition of Brigus (Note 2(i)) which resulted in the Company owning open pit operations for the first time.
Stripping costs
In open pit mining operations, it is necessary to incur costs to remove overburden and other mine waste materials in order to access the ore body. Pre-production stripping costs are capitalized as incurred. Stripping costs incurred during the production stage of an open pit mine are accounted for as costs of the inventory produced during the period that the stripping costs were incurred, unless these costs provide a future economic benefit. Production phase stripping costs are considered to generate a future economic benefit when the related stripping activity: (i) provides access to ore to be mined in the future; (ii) increases the fair value of the mine as access to future mineral reserves becomes less costly; (iii) increases the productive capacity; or (iv) extends the productive life of the mine. Production phase stripping costs that generate a future economic benefit are capitalized as mine development costs. Stripping costs incurred and capitalized during the production phase are depleted using the units-of-production method over the reserves and resources (where relevant as part of the depletion policy) that directly benefit from the specific stripping activity.
14

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	
The following accounting policy was adopted upon the issuance of flow-through shares during the six months ended June 30, 2014.
Flow-through Shares
The Company may, from time to time, issue flow-through shares to finance a portion of its Canadian exploration program. Pursuant to the terms of the flow-through share agreements, the Company agrees to incur qualifying expenditures and renounce the tax deductions associated with these qualifying expenditures to the subscribers by an agreed upon date. The excess of cash consideration received over the market price of the Company’s shares at the date of the announcement of the flow-through share financing is recorded as a liability. This liability is extinguished and recognized in the statement of operations and comprehensive income (loss) when the renunciation of the tax benefit by the Company, is recorded.
A deferred tax liability is recognized for the taxable temporary difference that arises from the difference between the carrying amount of eligible expenditures that are capitalized to exploration and evaluation assets and their tax basis. If the Company has sufficient tax assets to offset the deferred tax liability, the liability will be offset by use of the deferred tax asset.
The following policy was adopted upon the preliminary recognition of goodwill during the three months ended June 30, 2014.
Goodwill
Goodwill may arise on the Company’s acquisitions due to: (i) the ability of the Company to capture certain synergies through management of the acquired operation within the Company; (ii) the potential to increase reserves and resources through exploration activities; and (iii) the requirement to record a deferred tax liability for the difference between the assigned fair values and the tax bases of assets acquired and liabilities assumed.
Goodwill is not amortized. The Company performs an annual impairment test for goodwill and when events or changes in circumstances indicate that the related carrying amount may not be recoverable. If the carrying amount of a mine site to which goodwill has been allocated exceeds the recoverable amount, an impairment loss is recognized for the amount in excess. The impairment loss is allocated first to reduce the carrying amount of goodwill allocated to the mine site to nil and then to the other assets of the mine site based on the relative carrying amounts of those assets. Impairment losses recognized for goodwill are not reversed in subsequent periods should the value of goodwill recover.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash generating units or groups of CGUs that are expected to benefit from the synergies of the business combination. If the composition of one or more cash generating units to which goodwill has been allocated changes due to a re-organization, the goodwill is re-allocated to the units affected.
15

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	
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:
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 cashflows arising from a contract with a customer. The standard is effective for annual periods beginning on or after January 1, 2017, with early adoption permitted. The Company is currently evaluating the impact the standard is expected to have on its consolidated financial statements.
Primero will be required to adopt IFRS 9, “Financial Instruments” on January 1, 2018. IFRS 9 is the result of the first phase of the IASB’s project to replace IAS 39, “Financial Instruments: Recognition and Measurement”. The new standard replaces the current multiple classification and measurement models for financial assets and liabilities with a single model that has only two classification categories: amortized cost and fair value. The Company is currently assessing the impact that IFRS 9 will have on its financial statements.

5.	Gold and silver purchase agreements	
 	 	 	
	(i)	Silver purchase agreement – San Dimas mine	
 	 	 	
		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. 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 the 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., up to 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. After four years (i.e., from August 6, 2014), for the life of the mine, the first 6 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.	
 	 	 	
		The expected cash flows associated with the sale of the silver to Silver Wheaton Caymans at a price lower than market price have been reflected in the fair value of the mining interest recorded upon acquisition of the San Dimas mine. The Company has presented the value of any expected future cash flows from the sale of any future silver production to Silver Wheaton Caymans as part of the mining interest, as the Company did not receive any of the upfront payment which was made by Silver Wheaton to acquire its interest in the silver production of the San Dimas mine. Further, the Company does not believe that the agreement to sell to Silver Wheaton Caymans meets the definition of an onerous contract or other liability as the obligation to sell silver to Silver Wheaton Caymans only arises upon production of the silver (Note 3 (c)).	
16

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

 	(ii)	Gold purchase agreement – Black Fox Complex	
 	 	 	
 		On November 9, 2010, the then owner of the Black Fox Complex entered into an gold purchase agreement (the “Gold Purchase Agreement”) with Sandstorm to sell a portion of future gold production from the Black Fox mine and a portion of the adjoining Pike River property (the “Black Fox Extension”) 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 the London fix price quoted by the London Bullion Market Association (the “Fixed Price”) for each ounce delivered (“the Goldstream”). The Company was required to assume the Gold Purchase Agreement when it acquired Brigus in 2014. Sales under the Gold Purchase Agreement commenced on January 1, 2011. Under the terms of the Gold Purchase Agreement, the upfront payment is reduced by the difference between the market price of gold on the business day prior to the date of gold delivery and the Fixed Price of the gold multiplied by the total ounces of gold delivered (the “Uncredited Balance”). If, after the term of the Agreement (November 9, 2090), the Uncredited Balance has not been reduced to $nil, then the Company will be required to repay the amount of the Uncredited Balance.	
 	 	 	
 		On November 5, 2012, Brigus elected to repurchase 4% and 3.7% of the future gold production at the Black Fox mine and Black Fox Extension, respectively, for $24.4 million, thereby reducing the original Uncredited Balance to $31.9 million. The Uncredited Balance upon acquisition on March 5, 2014 was $7.1 million. Sandstorm is now entitled to 8% of the future production at the Black Fox mine and 6.3% at the Black Fox Extension. The Company has no additional option to repurchase any remaining portion of the Goldstream.	

6.	Revenue	
Revenue is comprised of the following sales:

 	 	Three months ended June 30,	 	 	Six months ended June 30,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 		$  	 		$ 	 		$  	 		$ 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold	 	61,414	 	 	35,896	 	 	101,018	 	 	76,139	 	
Silver	 	18,255	 	 	16,579	 	 	26,920	 	 	22,657	 	
 	 	79,669	 	 	52,475	 	 	127,938	 	 	98,796	 	
17

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	
As described in Note 5 (i), for the first four years post-acquisition of the San Dimas Mine, the Company is entitled to sell 50% of silver production above a 3.5 million ounce annual threshold at market prices. The contract year for the purposes of the threshold runs from August 6 of a year to August 5 of the next year. The threshold for 2014 was met in early March, while the threshold for 2013 was met in mid-April. During the three and six months ended June 30, 2014, the Company sold 760,603 and 953,103 ounces of silver, respectively, at market prices for revenues of $14.8 million and $26.9 million (2013 - $13.2 million and $13.2 million).
From the acquisition date of Brigus to June 30, 2014, the Company recorded revenue of $0.8 million related to gold sales under the Gold Purchase Agreement (2013 - $nil) (Note 5 (ii)).
18

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

7.	Income taxes	
 	 	 	
	(a)	The following table reconciles income taxes calculated at the statutory rate with the income tax recovery presented in these condensed consolidated interim financial statements:	

 	 	 	Three months ended June 30,	 	 	Six months ended June 30,	 	
 	 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 		$  	 		$ 	 		$  	 		$ 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Income (loss) before income taxes	 	4,893	 	 	16,207	 	 	(8,826	)	 	22,031	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Canadian federal and provincial income tax rate	 	26.00%	 	 	25.75%	 	 	26.00%	 	 	25.75%	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Expected income tax (expense) recovery	 	(1,272	)	 	(4,173	)	 	2,295	 	 	(5,673	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	(Increase) decrease attributable to:	 	 	 	 	 	 	 	 	 	 	 	 	
 	   Effect of different foreign statutory rates
        on earnings of subsidiaries	 	(490	)	 	(502	)	 	(711	)	 	(572	)	
 	   Share-based payments	 	38	 	 	168	 	 	246	 	 	154	 	
 	   Amounts allowable for tax purposes	 	2,854	 	 	3,538	 	 	4,217	 	 	6,484	 	
 	   Impact of Mexican inflation on tax values	 	(433	)	 	666	 	 	3,558	 	 	4,143	 	
 	   Impact of foreign exchange	 	1,080	 	 	(1,461	)	 	830	 	 	(242	)	
 	   Impact of foreign exchange on deferred
        income tax assets and liabilities	 	54	 	 	(8,402	)	 	571	 	 	(178	)	
 	   Withholding taxes on intercompany interest	 	(1,137	)	 	(1,266	)	 	(2,242	)	 	(2,396	)	
 	   Royalty taxes in Mexico	 	(1,170	)	 	-	 	 	(1,184	)	 	-	 	
 	   Flow through share renunciation	 	(306	)	 	-	 	 	(306	)	 	-	 	
 	   Ontario mining taxes	 	283	 	 	-	 	 	239	 	 	-	 	
 	   Benefit of tax losses not recognized	 	(3,822	)	 	(534	)	 	(7,200	)	 	(2,186	)	
 	Income tax (expense) recovery	 	(4,321	)	 	(11,966	)	 	313	 	 	(466	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Income tax (expense) recovery is represented by:	 		 	 		 	 		 	 		 	
 	Current income tax (expense) recovery	 	(475	)	 	608	 	 	(2,228	)	 	(173	)	
 	Deferred income tax (expense) recovery	 	(3,846	)	 	(12,574	)	 	2,541	 	 	(293	)	
 	Net income tax (expense) recovery	 	(4,321	)	 	(11,966	)	 	313	 	 	(466	)	
On December 11, 2013, the Mexican government enacted a tax reform to introduce a mining royalty effective January 1, 2014. This royalty is deductible for tax purposes and is calculated as 7.5% of a royalty base which is computed as follows:
19

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	
Taxable revenues for income tax purposes (except interest and inflationary adjustment), less allowable deductions for income tax purposes (except interest, inflationary adjustment, depreciation and mining fees), less prospecting and exploration expenses of the year.
The Company has taken the position that the royalty is an income tax as it is based on a measure of revenue less certain specified costs. On substantial enactment, a taxable temporary difference arose, as mining assets and financial assets/liabilities had a book basis but no tax basis for purposes of the royalty. The Company has recognized a net deferred tax liability of $35.5 million as at June 30, 2014 (December 31, 2013 - $35.9 million) in respect of this royalty. This deferred tax liability will be drawn down to $nil as a reduction to tax expense over the life of mine as the mine and its related assets are depleted/depreciated.
There is currently no taxation related to the OCI balances recorded by the Company.
(b) The significant components of the Company’s deferred tax liabilities and assets are as follows:

 	 	June 30,	 	 	December31,	 	
 	 	2014	 	 	2013	 	
 	 	 	 	 	 	 	
 		$  	 		$ 	 	

Mineral property, plant and equipment	 	(5,053	)	 	(13,554	)	
Non-capital losses and other future deductions	 	8,297	 	 	12,913	 	
Decommissioning liability to be recovered	 	1,177	 	 	1,081	 	
Deduction for Mexican royalty taxes	 	11,660	 	 	11,796	 	
Other	 	5,635	 	 	5,662	 	
Deferred tax asset	 	21,716	 	 	17,898	 	
 	 	 	 	 	 	 	
Mineral property, plant and equipment	 	(53,089	)	 	(48,114	)	
Non-capital losses and other future deductions	 	-	 	 	-	 	
Decommissioning liability to be recovered	 	1,286	 	 	270	 	
Other	 	(1,919	)	 	184	 	
Deferred tax liability	 	(53,722	)	 	(47,660	)	
 	 	 	 	 	 	 	
Net deferred tax liability	 	(32,006	)	 	(29,762	)	
The company has $132.0million in Canadian resource tax pools which do not expire and can be utilized to shelter future income earned from the Black Fox Complex.
On October 17, 2011 the Company’s Mexican subsidiary filed an APA with the Mexican tax authorities on the appropriate price for the intercompany sale of silver under the silver purchase agreement. On October 4, 2012, the Mexican tax authorities ruled on the APA. The ruling confirmed that the Company's Mexican subsidiary appropriately recorded revenue and taxes from sales under the silver purchase agreement at realized prices rather than spot prices effective from August 6, 2010.
20

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

	Under Mexican tax law, an APA ruling is generally applicable for up to a five year period. For Primero this applies to the fiscal years 2010 to 2014. Assuming the Company continues to sell silver from its San Dimas mine on the same terms and there are no changes in the application of Mexican tax laws relative to the APA ruling, the Company expects to pay taxes on realized prices for the life of the San Dimas mine.	
 	 	
8.	Restricted cash	
 	 	
	Restricted cash of $19.2 million represents funds held as security for letters of credit issued by the Company in favour of the Ontario Ministry of Northern Development, Mines and Forestry to meet the Company’s bonding requirements for the site closure obligations of the Black Fox Complex.	
21

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

9.	Mining interests	
 	 	
	Mining interests include mining and exploration properties and related plant and equipment:	

 	 	 	Mining	 	 	 	 	 	Plant,	 	 	Construction	 	 	 	 	 	 	 	
 	 	 	properties	 	 	Land and	 	 	equipment	 	 	in	 	 	Computer	 	 	 	 	
 	 	 	and leases	 	 	buildings	 	 	and vehicles	 	 	progress	 	 	equipment	 	 	Total	 	
 	 		$ 	 		$ 	 		$ 	 		$ 	 		$ 	 		$ 	 	
 	Cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	At January 1, 2013	 	443,034	 	 	51,206	 	 	58,403	 	 	8,299	 	 	1,909	 	 	562,851	 	
 	At December 31, 2013	 	580,683	 	 	55,414	 	 	70,914	 	 	29,966	 	 	2,596	 	 	739,573	 	
 	At June 30, 2014	 	824,641	 	 	65,316	 	 	150,350	 	 	50,703	 	 	2,764	 	 	1,093,774	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Depreciation and depletion	 		 	 		 	 		 	 		 	 		 	 		 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	At January 1, 2013	 	45,229	 	 	5,144	 	 	15,520	 	 	-	 	 	826	 	 	66,719	 	
 	At December 31, 2013	 	70,804	 	 	7,442	 	 	23,611	 	 	-	 	 	1,463	 	 	103,320	 	
 	At June 30, 2014	 	95,748	 	 	8,876	 	 	32,008	 	 	-	 	 	1,555	 	 	138,187	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Carrying value	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	At January 1, 2013	 	397,805	 	 	46,062	 	 	42,883	 	 	8,299	 	 	1,083	 	 	496,132	 	
 	At December 31, 2013	 	509,879	 	 	47,972	 	 	47,303	 	 	29,966	 	 	1,133	 	 	636,253	 	
 	At June 30, 2014	 	728,893	 	 	56,440	 	 	118,342	 	 	50,703	 	 	1,209	 	 	955,587	 	
A summary of mining interest by property is as follows:

 	 	 	Mining	 	 	 	 	 	Plant,	 	 	Construction	 	 	 	 	 	 	 	 	 	 	
 	 	 	properties	 	 	Land and	 	 	equipment	 	 	in	 	 	Computer	 	 	June 30,	 	 	December 31,	 	
 	 	 	and leases	 	 	buildings	 	 	and vehicles	 	 	progress	 	 	equipment	 	 	2014	 	 	2013	 	
 	 		$	 		$	 		$	 		$	 		$	 		$	 		$	 	
 	San Dimas	 	391,999	 	 	45,393	 	 	49,759	 	 	48,637	 	 	733	 	 	536,521	 	 	526,873	 	
 	Black Fox Complex	 	225,306	 	 	8,794	 	 	68,439	 	 	2,066	 	 	161	 	 	304,766	 	 	-	 	
 	Cerro del Gallo	 	111,588	 	 	2,253	 	 	144	 	 	-	 	 	46	 	 	114,031	 	 	109,054	 	
 	Corporate	 	-	 	 	-	 	 	-	 	 	-	 	 	269	 	 	269	 	 	326	 	
 	Total	 	728,893	 	 	56,440	 	 	118,342	 	 	50,703	 	 	1,209	 	 	955,587	 	 	636,253	 	
22

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	
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 5). Substantially all of the Company’s assets are pledged as security under the line of credit (Note 11).
The carrying value of property, plant, and equipment under finance leases at June 30, 2014 was $25.0 million (December 31, 2013 - $nil). The lessors hold first security rights over the leased assets.
Depreciation and depletion expense for the three and six months ended June 30, 2014 was $21.3 million and $34.9 million, respectively (2013 - $8.5 million and $16.3 million), of which $1.7 million and $3.0 million, respectively, represents the change in the inventories balance in the three and six months ended June 30, 2014 (2013 – $0.4 million and $0.1 million). Borrowing costs of $0.5 million and $1.1 million, respectively, were capitalized to mining interests during the three and six months ended June 30, 2014 (2013 - $0.3 million and $0.5 million) at a weighted average borrowing rate of 6% (2013 – 6%).

10.	Inventories	

 	 	June 30,	 	 	December 31,	 	
 	 	2014	 	 	2013	 	
 		$  	 		$ 	 	
Current portion of inventory	 	 	 	 	 	 	
   Gold and silverdore	 	7,255	 	 	1,297	 	
   Stockpiled ore	 	1,599	 	 	3,748	 	
   Work-in-progress	 	5,642	 	 	2,145	 	
   Supplies	 	6,287	 	 	4,981	 	
 	 	20,783	 	 	12,171	 	
 	 	 	 	 	 	 	
Long-term stock piled ore	 	10,677	 	 	-	 	
Total inventory	 	31,460	 	 	12,171	 	
23

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

11.	Current and long-term debt	

 	 	June 30,	 	 	December 31,	 	
 	 	2014	 	 	2013	 	
 		$  	 		$ 	 	
 	 	 	 	 	 	 	
Promissory note (i)	 	-	 	 	27,214	 	
Senior unsecured convertible debentures (ii)	 	45,608	 	 	-	 	
Line of credit (iii)	 	28,242	 	 	-	 	
Finance lease liabilities	 	14,982	 	 	-	 	
 	 	88,832	 	 	27,214	 	
Less: Current portion of debt	 	(6,440	)	 	(5,000	)	
Long-term debt	 	82,392	 	 	22,214	 	

 	(i)	On August 6, 2010, in connection with the acquisition of the San Dimas Mine, the Company issued a promissory note for $50 million to Desarrolos Mineros San Luis, S.A. de C.V. (“DMSL”), a subsidiary of Goldcorp Inc. (“Goldcorp”). The Company repaid the promissory note in full on May 29, 2014.	
 	 	 	
 	(ii)	As part of the acquisition of Brigus, the Company assumed $50 million of senior unsecured debentures. As disclosed in Note 2 (i), 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 June 30, 2014.	
 	 	 	
 		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 six months ended June 30, 2014 was $343 and $440 (2013 - $nil and $nil), respectively.	
 	 	 	
 	(iii)	The Company closed a $75 million revolving line of credit, 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 which was 4% per annum during the three and six months ended June 30, 2014. The line of credit is secured by substantially all of the Company’s assets.	
24

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

12.	Share capital	
 	 	 	
	(a)	Authorized share capital consists of unlimited common shares without par value and unlimited preferred shares, issuable in series with special rights and restrictions attached.	

 	 	 	2014	 	 	2013	 	
 	Common shares issued and fully paid	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	
 	At January 1	 	115,726,035	 	 	97,205,622	 	
 	Issued during three month period (Note12 (b))	 	43,836,889	 	 	230,000	 	
 	At March 31	 	159,562,924	 	 	97,435,622	 	
 	Issued during three month period (Note12 (b))	 	321,788	 	 	17,998,956	 	
 	At June 30	 	159,884,712	 	 	115,434,578	 	
The following is a reconciliation of the basic and diluted weighted average number of common shares:

 	 	 	Three months ended	 	 	Six months ended	 	
 	 	 	June 30,	 	 	June 30,	 	
 	 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Weighted average number of common shares - basic	 	159,616,775	 	 	105,344,778	 	 	144,107,966	 	 	101,320,723	 	
 	Potentially dilutive options (i)	 	1,703,906	 	 	351,488	 	 	1,474,482	 	 	496,708	 	
 	Weighted average number of common shares - diluted	 	161,320,681	 	 	105,696,266	 	 	145,582,448	 	 	101,817,431	 	
(i) Calculated using the treasury buy-back method
The following table lists the options and warrants that were anti-dilutive as their exercise prices exceeded the Company’s average market price in the period:

 	 	 	Three months ended June 30,	 	 	Six months ended June 30,	 	
 	 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Stock options	 	2,088,966	 	 	5,897,265	 	 	2,132,322	 	 	5,897,265	 	
 	Warrants	 	20,800,000	 	 	20,800,000	 	 	20,800,000	 	 	20,800,000	 	

 	(b)	Common shares issuance	
 	 	 	 	
 		(i)	During the six months ended June 30 2014, the Company issued 41,340,347 common shares as consideration for the acquisition of Brigus (Note 2(i)); 1,818,330 common shares upon the exercise of stock options; and 1,000,000 common shares pursuant to a flow-through agreement.	
25

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

 	(ii)	During the six months ended June 30 2013, the Company issued 17,983,956 common shares as consideration for the acquisition of Cerro (Note 2(ii)) and 245,000 common shares upon the exercise of stock options.	

 	(c)	Stock options	
 	 	 	
 		Under the Company’s stock option plan (“the Rolling 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). The majority of options issued typically vest over two or three years in equal thirds, however, this is at the discretion of the Board of Directors upon grant. All options are equity-settled and have a maximum term of ten years when granted. Vested options granted under the Rolling Plan will generally expire 90 days after the date that the optionee ceases to be employed by, provide services to, or be a director or officer of, the Company, and any unvested options will terminate immediately. Each employee share option converts into one ordinary share of the Company upon exercise. No amounts are paid or payable by the recipient upon receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.	
 	 	 	
 		As at June 30, 2014, the following stock options were outstanding and exercisable:	

 	 	Awards Outstanding	 	 	Awards Exercisable	 	
GrantPrice	 	 	 	 	Remaining	 	 	 	 	 	Remaining	 	
(Cdn$)	 	Quantity	 	 	Contractual	 	 	Quantity	 	 	Contractual	 	
 	 	 	 	 	Life	 	 	 	 	 	Life	 	
$2.60-$2.69	 	75,000	 	 	2.8	 	 	50,000	 	 	2.8	 	
$2.70-$3.46	 	170,000	 	 	4.7	 	 	170,000	 	 	4.7	 	
$3.47-$5.21	 	360,079	 	 	2.6	 	 	260,079	 	 	2.7	 	
$5.22-$5.25	 	11,500	 	 	0.2	 	 	11,500	 	 	0.2	 	
$5.26-$5.99	 	1,358,874	 	 	2.0	 	 	1,358,874	 	 	2.0	 	
$6.00-$6.42	 	4,533,490	 	 	1.1	 	 	4,533,490	 	 	1.1	 	
$6.43-$7.38	 	968,774	 	 	2.1	 	 	928,774	 	 	2.0	 	
$7.39-$7.52	 	871,082	 	 	4.1	 	 	120,750	 	 	0.5	 	
$7.53-$8.69	 	737,440	 	 	1.6	 	 	678,624	 	 	1.3	 	
$8.70-$21.72	 	480,444	 	 	2.0	 	 	480,444	 	 	2.0	 	
 	 	9,566,683	 	 	1.8	 	 	8,592,535	 	 	1.5	 	
26

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	
The following is a continuity schedule of options outstanding for the period:

 	 	 	 	 	 	Weighted	 	
 	 	 	 	 	 	average	 	
 	 	 	Number of	 	 	exercise	 	
 	 	 	options	 	 	price	 	
 	 	 	 	 	 	Cdn$	 	
 	Outstanding at January 1, 2013	 	7,804,490	 	 	5.57	 	
 	Exercised	 	(495,000	)	 	4.38	 	
 	Granted	 	866,525	 	 	7.92	 	
 	Cancelled	 	(70,000	)	 	6.43	 	
 	Expired	 	(142,025	)	 	7.99	 	
 	Outstanding at December 31, 2013	 	7,963,990	 	 	5.85	 	
 	Granted	 	3,517,636	 	 	6.85	 	
 	Exercised	 	(1,818,330	)	 	5.52	 	
 	Expired	 	(96,613	)	 	7.94	 	
 	Outstanding at June 30, 2014	 	9,566,683	 	 	6.26	 	
Of the 3,517,636 options granted in 2014, 2,708,488 were issued to the former option holders of Brigus, pursuant to the Arrangement (Note 2(i)). The 866,525 options granted in 2013 were issued to the former option holders of Cerro, pursuant to the terms of the Scheme (Note 2(ii)). The fair value of newly issued options was calculated using the Black-Scholes option pricing model. For all grants, the assumed dividend yield and forfeiture rate were nil and 5%, respectively. Other conditions and assumptions for options issued in the three and six moths ended June 30, 2014 were as follows:

 	 	 	 	 	Average	 	 	 	 	 	 	 	 	 	 	 	Weighted	 	
 	 	 	 	 	expected	 	 	 	 	 	 	 	 	 	 	 	average	 	
 	 	Number of	 	 	life of options	 	 	Exercise	 	 	Risk free	 	 	Volatility	 	 	Black-Scholes	 	
Issue date	 	options	 	 	(years)	 	 	price	 	 	interest rate	 	 	(i)	 	 	value assigned	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
February 18, 2014	 	750,332	 	 	3.5	 	 	7.40	 	 	1.29	 	 	53	 	 	2.89	 	
March 28, 2014	 	58,816	 	 	3.5	 	 	7.95	 	 	1.36	 	 	53	 	 	3.14	 	
 	 	809,148	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

 	(i)	Volatility was determined based upon the historic volatility of the Company’s share price over the same period of time as the expected life of the option.	

 	(d)	Warrants	
 	 	 	
 		As at June 30, 2014 and December 31, 2013, 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.	
 	 	 	
 		In addition, upon completion of the Arrangement, 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. An aggregate of 15.9 million Brigus warrants were outstanding as at June 30, 2014 to purchase 2.8 million common shares of the Company at a price of Cdn$12.51 - $12.53 until November 19, 2014.	
27

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

 		Where warrants were issued as part of a unit or subscription receipt comprised of common shares and warrants, the value assigned to the warrants was based on their relative fair value (as compared to the shares issued), determined using the Black-Scholes pricing model. This value is assigned to the warrant reserve within equity in the consolidated statement of financial position.	
 	 	 	
 	(e)	Phantom share unit plans	
 	 	 	
 		The Company has three phantom share unit plans	

 	(i)	On May 29, 2010, the Board of Directors approved the establishment of the Company’s Phantom Share Unit Plan (“PSUP”); this is a cash-settled plan and the exercise price of all units is $nil. The amount to be paid out in respect of units which vest under the plan is the number of PSUs that vest multiplied by 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.	
 	 	 	
 	(ii)	On May 28, 2012 the Company’s shareholders approved the establishment of the Directors PSU Plan (“Directors PSUP”). A person holding Director PSUs is entitled to elect to receive, at vesting either (1) 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 (2) the number of common shares equal to the number of Directors’ PSUs (subject to the total number of common shares issuable at any time under the Directors’ PSU Plan, combined with all other common shares issuable under any other equity compensation arrangements then in place, not exceeding 10% of the total number of issued and outstanding common shares of the Company). If no election is made, the Company will pay out such Directors’ PSUs in cash.	
 	 	 	
 	(iii)	On May 8, 2013 the Company’s shareholders approved the establishment of the 2013 PSU Plan (“2013 PSUP”). A person holding PSUs issued under this plan is entitled to receive, at vesting either (1) 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, (2) the number of common shares equal to the number of PSUs (subject to the total number of common shares issuable at any time under the PSU Plan, combined with all other common shares issuable under any other equity compensation arrangements then in place, not exceeding 10% of the total number of issued and outstanding common shares of the Company), or (3) a combination of cash and shares. The choice of settlement is solely at the Company`s discretion.	
 	 	 	
 		Units issued under the PSUP and Directors PSUP are accounted as cash-settled awards, while units issued under the 2013 PSUP are treated as equity-settled awards.	
 	 	 	
 		The following units were issued and outstanding as at June 30, 2014 under the PSUP and Directors PSUP plans:	
28

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

 	 	Number of	 	 	 	 	 	 	 	
 	 	units	 	 	 	 	 	 	 	
Dateofissue	 	outstanding	 	 	Vesting date	 	 	Expiry date	 	
November 8, 2011	 	33,333	 	 	November 8, 2014	 	 	December 31, 2014	 	
March 31, 2012	 	769,001	 	 	March 31, 2015	 	 	December 31, 2015	 	
March 31, 2012	 	38,460	 	 	December 1, 2014	 	 	December 31, 2014	 	
May 25, 2012	 	7,051	 	 	May 25, 2015	 	 	December 31, 2015	 	
August 3, 2012	 	3,008	 	 	August 3, 2014	 	 	December 31, 2014	 	
August 3, 2012	 	3,009	 	 	August 3, 2015	 	 	December 31, 2015	 	
November 12, 2012	 	28,902	 	 	November 12, 2014	 	 	December 31, 2014	 	
November 12, 2012	 	28,902	 	 	November 12, 2015	 	 	December 31, 2015	 	
February 25, 2013	 	261,166	 	 	February 25, 2015	 	 	December 31, 2015	 	
February 25, 2013	 	261,167	 	 	February 25, 2016	 	 	December 31, 2016	 	
March 28, 2013	 	56,223	 	 	December 1, 2014	 	 	December 31, 2014	 	
March 28, 2013	 	56,224	 	 	December 1, 2015	 	 	December 31, 2015	 	
June 26, 2013	 	5,605	 	 	December 1, 2014	 	 	December 31, 2014	 	
June 26, 2013	 	5,606	 	 	December 1, 2015	 	 	December 31, 2015	 	
February 18, 2014	 	57,432	 	 	December 1, 2014	 	 	December 31, 2014	 	
February 18, 2014	 	57,432	 	 	December 1, 2015	 	 	December 31, 2015	 	
February 18, 2014	 	57,432	 	 	December 1, 2016	 	 	December 31, 2016	 	
March 28, 2014	 	4,090	 	 	March 28, 2015	 	 	December 31, 2015	 	
March 28, 2014	 	4,091	 	 	March 28, 2016	 	 	December 31, 2016	 	
March 28, 2014	 	4,091	 	 	March 28, 2017	 	 	December 31, 2017	 	
May 12, 2014	 	4,681	 	 	December 1, 2014	 	 	December 31, 2014	 	
May 12, 2014	 	4,682	 	 	December 1, 2015	 	 	December 31, 2015	 	
May 12, 2014	 	4,682	 	 	December 1, 2016	 	 	December 31, 2016	 	
June 16, 2014	 	56,814	 	 	June 16, 2015	 	 	December 31, 2015	 	
June 16, 2014	 	56,814	 	 	June 16, 2016	 	 	December 31, 2016	 	
June 16, 2014	 	56,815	 	 	June 16, 2017	 	 	December 31, 2017	 	
Total	 	1,926,713	 	 	 	 	 	 	 	
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 of expense recognized in the condensed consolidated interim statement of operations and comprehensive (loss) income during the three and six months ended June 30, 2014 in relation to the PSUP and Directors PSUP was $2.2 million and $9.7 million, respectively (2013 - $(2.9) million and $2.0 million). The total liability recognized at June 30, 2014 in respect of the PSUP and Directors PSUP was $9.3 million (December 31, 2013 - $8.1 million), of which $7.3 million (December 31, 2013 - $5.1 million) is classified as a current liability, reported within trade and other payables, with the remaining $2.0 million (December 31, 2013 - $3.0 million) classified as a long-term liability, reported within other long-term liabilities. None of these cash-settled units was vested at June 30, 2014, but all remain outstanding.
During the six months ended June 30, 2014, the Company issued 182,715 units under the PSUP (2013 – 814,851 units), and 186,341 units under the Directors PSUP (2013 – 185,483 units).
29

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	
The fair value of the units as at June 30, 2014 was calculated using the Black-Scholes option pricing model with an assumed dividend yield and forfeiture rate of nil and 0% respectively. Other conditions and assumptions were as follows:

 	 	Number of	 	 	Remaining	 	 	Exercise	 	 	Risk free	 	 	Volatility	 	 	Black-Scholes 	 	
         Issue date	 	units	 	 	Term (years)	 	 	price	 	 	interest rate	 	 	(i)	 	 	value assigned	 	
 	 	 	 	 	 	 	 	Cdn$	 	 	%	 	 	%	 	 	Cdn$	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
November 8, 2011	 	33,333	 	 	0.4	 	 	0.00	 	 	1.07	 	 	40	 	 	8.55	 	
March 31, 2012	 	769,001	 	 	0.8	 	 	0.00	 	 	1.07	 	 	46	 	 	8.55	 	
March 31, 2012	 	38,460	 	 	0.4	 	 	0.00	 	 	1.07	 	 	46	 	 	8.55	 	
May 25th, 2012	 	7,051	 	 	0.9	 	 	0.00	 	 	1.07	 	 	46	 	 	8.55	 	
August 3, 2012	 	6,017	 	 	0.1	 	 	0.00	 	 	1.07	 	 	30	 	 	8.55	 	
November 12, 2012	 	57,804	 	 	0.4	 	 	0.00	 	 	1.07	 	 	43	 	 	8.55	 	
February 25, 2013	 	522,333	 	 	0.7	 	 	0.00	 	 	1.07	 	 	46	 	 	8.55	 	
March 28, 2013	 	112,447	 	 	0.4	 	 	0.00	 	 	1.07	 	 	46	 	 	8.55	 	
June 26, 2013	 	11,211	 	 	0.4	 	 	0.00	 	 	1.07	 	 	46	 	 	8.55	 	
February 18, 2014	 	172,296	 	 	1.6	 	 	0.00	 	 	1.07	 	 	48	 	 	8.55	 	
March 28, 2014	 	12,272	 	 	1.7	 	 	0.00	 	 	1.07	 	 	47	 	 	8.55	 	
May 12, 2014	 	170,443	 	 	1.4	 	 	0.00	 	 	1.07	 	 	46	 	 	8.55	 	
June 16, 2014	 	14,045	 	 	2.0	 	 	0.00	 	 	1.07	 	 	52	 	 	8.55	 	
Total	 	1,926,713	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

 	(i)	Volatility was determined based upon the historic volatility of the Company’s share price over the same period of time as the expected life of the unit.	
30

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	
The following units were issued and outstanding as at June 30, 2014 under the 2013 PSUP:

 	 	Number of	 	 	 	 	 	 	 	
 	 	units	 	 	 	 	 	 	 	
Date of issue	 	outstanding	 	 	Vesting date	 	 	Expiry date	 	
May 10, 2013	 	49,318	 	 	May 10, 2014	 	 	December 31, 2014	 	
May 10, 2013	 	49,319	 	 	May 10, 2015	 	 	December 31, 2015	 	
May 10, 2013	 	49,319	 	 	May 10, 2016	 	 	December 31, 2016	 	
June 26, 2013	 	13,046	 	 	June 26, 2014	 	 	December 31, 2014	 	
June 26, 2013	 	13,047	 	 	June 26, 2015	 	 	December 31, 2015	 	
June 26, 2013	 	13,047	 	 	June 26, 2016	 	 	December 31, 2016	 	
August 12, 2013	 	29,948	 	 	August 12, 2014	 	 	December 31, 2014	 	
August 12, 2013	 	29,948	 	 	August 12, 2015	 	 	December 31, 2015	 	
August 12, 2013	 	29,949	 	 	August 12, 2016	 	 	December 31, 2016	 	
November 8, 2013	 	5,853	 	 	November 8, 2014	 	 	December 31, 2014	 	
November 8, 2013	 	5,853	 	 	November 8, 2015	 	 	December 31, 2015	 	
November 8, 2013	 	5,853	 	 	November 8, 2016	 	 	December 31, 2016	 	
February 18, 2014	 	142,387	 	 	February 18, 2015	 	 	December 31, 2015	 	
February 18, 2014	 	142,387	 	 	February 18, 2016	 	 	December 31, 2016	 	
February 18, 2014	 	142,387	 	 	February 18, 2017	 	 	December 31, 2017	 	
March 28, 2014	 	70,589	 	 	March 28, 2015	 	 	December 31, 2015	 	
March 28, 2014	 	70,589	 	 	March 28, 2016	 	 	December 31, 2016	 	
March 28, 2014	 	70,590	 	 	March 28, 2017	 	 	December 31, 2017	 	
May 12, 2014	 	21,951	 	 	May 12, 2015	 	 	December 31, 2015	 	
May 12, 2014	 	21,951	 	 	May 12, 2016	 	 	December 31, 2016	 	
May 12, 2014	 	21,951	 	 	May 12, 2017	 	 	December 31, 2017	 	
June 16, 2014	 	15,380	 	 	June 16, 2015	 	 	December 31, 2015	 	
June 16, 2014	 	15,380	 	 	June 16, 2016	 	 	December 31, 2016	 	
June 16, 2014	 	15,380	 	 	June 16, 2017	 	 	December 31, 2017	 	
Total	 	1,045,422	 	 	 	 	 	 	 	
During the six months ended June 30, 2014, the Company issued 757,679 2013 PSUP units (2013 – 311,172).
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 condensed consolidated interim statement of operations and comprehensive (loss) income for the three and six months ended June 30, 2014 in relation to the 2013 PSUP was $0.9 million and $1.5 million respectively (2013 - $0.1 million and $0.1 million).
31

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

13.	Supplementary cash flow information	
 	 	
	Changes in non-cash working capital comprise the following:	

 	 	 	Three months ended June 30,	 	 	Six months ended June 30,	 	
 	 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 		$  	 		$ 	 		$  	 		$ 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Trade and other receivables	 	(1,277	)	 	(932	)	 	(622	)	 	(3,412	)	
 	Taxes receivable	 	(6,259	)	 	(4,376	)	 	(10,338	)	 	(4,861	)	
 	Prepaid expenses	 	2,350	 	 	(1,143	)	 	(294	)	 	(4,765	)	
 	Inventories	 	78	 	 	(880	)	 	(1,518	)	 	350	 	
 	Trade and other payables	 	(9,823	)	 	(617	)	 	(15,112	)	 	4,380	 	
 	Taxes payable	 	1,568	 	 	1,398	 	 	(32	)	 	150	 	
 	 	 	(13,363	)	 	(6,550	)	 	(27,916	)	 	(8,158	)	
Working capital balances assumed upon the acquisition of Brigus and Cerro are excluded from the table above and instead are netted within “Acquisition of Brigus Gold Corp (net)” and “Acquisition of Cerro Resources NL”, respectively, under cash flow from investing activities in the condensed consolidated interim statement of cash flows.

14.	Capital management	
There have been no significant changes in the Company’s objectives, policies and processes for managing its capital, including items the Company regards as capital, during the three and six months ended June 30, 2014. The Company manages its common shares, stock options, warrants and debt as capital. The Company’s objectives in managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. To meet this objective, the Company will ensure it has sufficient cash resources to fund future production at its operating mines and pursue the exploration and development of its mining properties and potential acquisitions.
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, acquire or dispose of assets or adjust the amount of cash held. The Company does not currently pay out dividends.
The Company’s investment policy is to invest its cash in highly liquid short-term interest-bearing investments with maturities of 90 days or less from the original date of acquisition, selected with regards to the expected timing of expenditures from continuing operations.
32

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

15.	Financial instruments	
The Company’s financial instruments at June 30, 2014 consist of cash and cash equivalents, trade and other receivables, restricted cash, an equity investment in Fortune Bay, trade and other payables, the convertible debentures and the line of credit.
At June 30, 2014, 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 OCI. During the period from March 5 to June 30, 2014, the Company recorded an unrealized loss of $0.3 million in OCI relating to its investment in Fortune Bay. Fortune Bay is a publicly-listed company and the fair value is based on the trading price its shares as at the date of the condensed consolidated interim statement of financial position.
The fair value of the convertible debtentures 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.
The fair value of the line of credit upon initial recognition was considered to be its face value and is subsequently being carried at amortized cost.

 	 	Fair value	 	 	Carrying value	 	
 	 	June 30, 2014	 	 	June 30, 2014	 	
 	 	 	 	 	 	 	
Convertible debentures (i)	 	48,980	 	 	45,608	 	
Line of credit (i)	 	30,098	 	 	28,242	 	
       (i) Calculated using a discounted cash flow analysis
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 June 30, 2014 or December 31, 2013, other than those discussed below.
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 six months ended June 30, 2014 unrealized derivative gains of $0.3 million and $0.3 million, respectively, were recognized in relation to this derivative liability.
33

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	
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.
At June 30, 2014, 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:

 	 	 	June 30, 2014	 	 	December 31, 2013	 	
 	 	 	Level 1	 	 	Level 2	 	 	Level 1	 	 	Level 2	 	
 	 		$  	 		$  	 		$  	 		$  	 	
 	Equity investment in Fortune Bay (1)	 	778	 	 	-	 	 	-	 	 	-	 	
 	Derivative liability (2)	 	-	 	 	3,410	 	 	-	 	 	-	 	

 	(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)	Calculated using an option pricing model with the following inputs: share price $8.04, conversion price $14.00, expected life 1.75 years, volatility 49.39% and a discount rate of 8%.	
As at June 30, 2014, there were no financial assets and liabilities measured and recognized at fair value on a non-recurring basis.
The Company’s policy for determining when a transfer occurs between levels in the fair value hierarchy is to assess the impact at the date of the event or the change in circumstances that could result in a transfer. There were no transfers between levels in the fair value hierarchy during the three and six months ended June 30, 2014.
At June 30, 2014, there were no financial assets or liabilities measured and recognized on the condensed consolidated interim statements of financial position at fair value that would be categorized as Level 3 in the fair value hierarchy (December 31, 2013 – $nil).
34

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

16.	Related party transactions	
 	 	
	As at December 31, 2013, 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 as at June 30, 2014, Goldcorp no longer held an equity interest in Primero and was no longer a related party.	
 	 	
	During the three and six months ended June 30, 2014 $nil and $nil (2013 - $nil and $0.3 million) was paid to DMSL for the purchase of equipment, equipment leasing fees and services received under a transition services agreement between the Company and DMSL.	
 	 	
17.	Liability for social security payments	
 	 	
	When Primero acquired the San Dimas Mine in August 2010, a potential liability was known to exist related to the registration of employees at San Dimas under the Mexican social security system (“IMSS”). Mexico has a legal requirement that employees are registered for IMSS and that their employers pay premiums under the IMSS. The employees were not registered because government provided social security benefits were not available in the vicinity of the mine due to the remoteness of the location. Instead benefits were provided by the employer, DMSL. After the acquisition of the mine, Primero continued to provide social security benefits to its Mexican employees.	
 	 	
	The Company was in discussions with the IMSS authority for about two years and the matter was concluded in 2013. The outcome was that effective June 1, 2013 all of the Mexican employees were registered for IMSS and the Company started paying social security premiums on their behalf. In addition, on July 23, 2013, the IMSS authority notified the Company that it would be assessed $6.9 million in respect of past amounts due (including penalties and interest), dating back to August 2010. Consequently the Company accrued $6.9 million in its financial statements as at June 30, 2013. The amount that related to 2013 ($1.4 million) was charged to operating expenses while the amount that related to 2012 and earlier years ($5.5 million) was charged to other expenses in the statement of operations. The liability was fully settled in August 2013.	
35

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

18.	Segmented information	
 	 	
	As a result of the Brigus acquisition, the Company now 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:	
 	 	 	 	 	
 	 	 	As at	 	
 	in thousands of US dollars	 	June 30, 2014	 	
 	 	 	 	 	 	 	 	 	BlackFox	 	 	 	 	 	 	 	
 	 	 	San Dimas	 	 	Cerro del Gallo	 	 	Com plex	 	 	Corporate	 	 	Total	 	
 	Total assets	 	619,297	 	 	115,739	 	 	452,970	 	 	19,596	 	 	1,207,602	 	
 	Total liabilities	 	69,103	 	 	9,242	 	 	63,331	 	 	107,712	 	 	249,388	 	
 	 	 	December 31, 2013	 	
 	 	 	 	 	 	 	 	 	Black Fox	 	 	 	 	 	 	 	
 	 	 	San Dimas	 	 	Cerro del Gallo	 	 	Complex	 	 	Corporate	 	 	Total	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Total assets	 	652,948	 	 	109,618	 	 	-	 	 	38,256	 	 	800,822	 	
 	Total liabilities	 	123,484	 	 	596	 	 	-	 	 	15,652	 	 	139,732	 	
 	 	 	 	 	
 	 	 	Six months ended	 	
 	in thousands of US dollars	 	June 30, 2014	 	
 	 	 	 	 	 	 	 	 	Black Fox	 	 	 	 	 	 	 	
 	 	 	San Dimas	 	 	Cerro del Gallo	 	 	Complex	 	 	Corporate	 	 	Total	 	
 	Revenue	 	100,302	 	 	-	 	 	27,636	 	 	-	 	 	127,938	 	
 	Net income (loss)	 	27,193	 	 	(441	)	 	(6,327	)	 	(28,938	)	 	(8,513	)	
 	 	 	June 30, 2013	 	
 	 	 	 	 	 	 	 	 	Black Fox	 	 	 	 	 	 	 	
 	 	 	San Dimas	 	 	Cerro del Gallo	 	 	Complex	 	 	Corporate	 	 	Total	 	
 	Revenue	 	98,796	 	 	-	 	 	-	 	 	-	 	 	98,796	 	
 	Net income (loss)	 	31,820	 	 	-	 	 	-	 	 	(10,255	)	 	21,565	 	
 	 	 	 	 	
 	 	 	Three months ended	 	
 	in thousands of US dollars	 	June 30, 2014	 	
 	 	 	 	 	 	 	 	 	Black Fox	 	 	 	 	 	 	 	
 	 	 	San Dimas	 	 	Cerro del Gallo	 	 	Complex	 	 	Corporate	 	 	Total	 	
 	Revenue	 	58,804	 	 	-	 	 	20,865	 	 	-	 	 	79,669	 	
 	Net income (loss)	 	12,851	 	 	(242	)	 	(2,881	)	 	(9,156	)	 	572	 	
 	 	 	June 30, 2013	 	
 	 	 	 	 	 	 	 	 	Black Fox	 	 	 	 	 	 	 	
 	 	 	San Dimas	 	 	Cerro del Gallo	 	 	Complex	 	 	Corporate	 	 	Total	 	
 	Revenue	 	52,475	 	 	-	 	 	-	 	 	-	 	 	52,475	 	
 	Net income (loss)	 	12,411	 	 	-	 	 	-	 	 	(8,170	)	 	4,241	 	
36

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
JUNE 30 2014	
(Amounts in tables in thousands of United States dollars unless otherwise stated)	
(Unaudited)	

19 .	Commitments and contingencies	

 	(a)	The Company entered into flow-through share subscription agreements during the six months ended June 30, 2014, whereby it agreed to renounce to investors a total of Cdn$9.0 million of qualifying Canadian Exploration Expenses as described in the Income Tax Act of Canada, with an effective date of no later than December 31, 2014. Should the Company fail to renounce resource expenditures of Cdn$9.0 million in total by December 31, 2014, the Company will indemnify the subscribers of the flow-through shares for all additional taxes payable as a result of the full renouncement not having been made.	
 	 	 	
 	(b)	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. None of the proceedings name Primero as a party and Primero therefore has no standing to participate in them. In all cases, the defendants are 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.	
 	 	 	
 		While Primero cannot intervene in these proceedings, in the event that a final decision is rendered in favour of the Ejido, Primero may seek to annul the decision or commence an action as an affected third party on the basis that it is the legitimate owner and is in possession of the property. 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. There has been no material change in this contingency during the three and six months ended June 30, 2104.	
 	 	 	
 	(c)	As at June 30, 2014, the Company had entered into commitments to purchase plant and equipment totaling $13.0 million (December 31, 2013 - $6.1 million).	
 	 	 	
 	(d)	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. In the opinion of management, any potential charges not yet accrued will not have a material effect on the consolidated financial statements of the Company.	
37

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 June 30, 2014 .
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 (1992) published by the Committee of Sponsoring Organizations of the Treadway Commission.
5.2 N/A

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 April 1, 2014 and ended on June 30, 2014 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date: August 6 th , 2014
“Joseph Conway”
_______________________
Joseph Conway
Chief Executive Officer

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
 FULL CERTIFICATE
I, David Blaiklock , Chief Financial 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 June 30, 2014 .
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 ( 1992 ) published by the Committee of Sponsoring Organizations of the Treadway Commission.
5.2 N/A

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 April 1, 2014 and ended on June 30, 2014 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date: August 6 th , 2014
“David Blaiklock”
_______________________
David Blaiklock
Chief Financial Officer

 
 
PRIMERO REPORTS SECOND QUARTER 2014;
SAN DIMAS DELIVERS RECORD PRODUCTION
(Please note that all dollar amounts in this news release are expressed in U.S. dollars. Refer to the second quarter 2014 management’s discussion and analysis (MD&A) and unaudited financial statements for more information.)
 
Toronto, Ontario, August 7, 2014 – Primero Mining Corp. (“Primero” or the “Company”) (TSX:P) (NYSE:PPP) today reported operational and financial results for the second quarter ended June 30, 2014. During the second quarter the Company reported record production of 63,414 gold equivalent ounces 1 , compared to 39,089 gold equivalent ounces in the same period of 2013 and adjusted net income 2 of $1.1 million ($0.01 per share).
“The second quarter highlighted the value and success of the first phase of the expansion of the San Dimas mine,” stated Mr. Joseph F. Conway, Chief Executive Officer. “The San Dimas mill successfully operated at close to its new capacity of 2,500 tonnes per day for the entire second quarter delivering record production for the Company. We are also very pleased to have announced earlier today the approval of the second phase of the expansion at San Dimas to 3,000 tonnes per day, elevating annual production from that mine to approximately 215,000 gold equivalent ounces from the end of the second quarter of 2016. During the second quarter we were also focused on improving the operating results from our recently acquired Black Fox mine. We have begun the process of investing in and optimizing the operation and are encouraged by the 29% increase in gold production this quarter over last quarter, although the grades mined were below expectation and the current low level of long-hole mining needs to be addressed. We understand what needs to be achieved and look forward to continuing to deliver improving results from Black Fox throughout the year.”
Second Quarter Highlights:
·	Record Quarterly Production : Production increased by 62% to 63,414 gold equivalent ounces (including a record 32,895 ounces of gold and 1.5 million ounces of silver from San Dimas and 17,166 ounces of gold from Black Fox), compared to 39,089 gold equivalent ounces in the same period of 2013;
1

·	Record Revenue : Record revenues of $79.7 million, with adjusted net income 2 of $1.1 million ($0.01 per share) and operating cash flow before working capital changes 3 of $26.4 million ($0.17 per share);
·	Line of Credit Established : Cash position of $44.2 million plus available credit of $45 million at June 30, 2014;
·	Highest Spot Silver Sales : Highest ever silver sales at spot prices of 0.8 million ounces, compared to 0.6 million ounces in the same period in 2013;
·	Construction Decision on San Dimas Expansion to 3,000 TPD : The Company announced earlier today a further expansion of the San Dimas mine and mill to 3,000 tonnes per day (“TPD”).
San Dimas Delivers Record Production; Black Fox Shows Positive Progress
The Company produced a total of 63,414 gold equivalent ounces¹ in Q2 2014, a 62% increase compared to 39,089 gold equivalent ounces in Q2 2013. Gold and silver production increased to 50,061 ounces and 1.49 million ounces, respectively, in Q2 2014 from 26,904 ounces and 1.46 million ounces in Q2 2013.
The Company incurred combined total cash costs per gold equivalent ounce 4 of $672 for Q2 2014, compared to $551 for Q2 2013. On a by-product basis, total cash costs per gold ounce were $508 for Q2 2014, compared to $167 for Q2 2013. All-in sustaining costs per ounce 5 were $1,228 for Q2 2014, compared to $659 in Q2 2013. San Dimas produced 46,248 gold equivalent ounces (32,895 ounces of gold and 1.5 million ounces of silver) during the second quarter of 2014, 18% more than the same period in 2013. The increase in production was mainly due to 9% higher throughput and a 17% higher gold grade when comparing the same periods. The throughput increase was due to the mill expansion to 2,500 TPD being completed during the first quarter, with throughput in the second quarter averaging 2,405 TPD. Throughput was impacted by a planned nine day shutdown at the Company’s hydro-power facility in order to expand its capacity.
San Dimas total cash costs on a gold equivalent and by-product basis in the second quarter 2014 were $551 and $252 per ounce, respectively, consistent with $551 and $167 per ounce, respectively, in the second quarter 2013. Higher operating costs were offset by an 18% increase in gold equivalent ounces produced. All-in sustaining costs 5 at San Dimas were $626 per ounce in the second quarter 2014, compared with $588 per ounce in the same period of 2013. Increased sustaining capital expenditures were offset by a 22% increase in gold ounces produced in the second quarter of 2014 compared with the second quarter of 2013.
Black Fox produced 17,166 ounces of gold during the second quarter of 2014, the first full quarter for which the Company owned the Black Fox Mine. This represented a 29% increase in production compared to the previous quarter and 26% decline compared to the prior year period. The lower year over year production was mainly the result of lower underground and open pit grades and lower underground throughput as a result of insufficient investment in underground development and exploration. This led to a lack of available underground stopes for mining in the first half of 2014. Since acquiring the Black Fox mine, the Company has significantly increased investment in underground development and exploration, which management believes will allow the mine to return to higher production levels by the end of 2014.
Black Fox total cash costs per gold ounce increased 22% from $820 in Q2 2013 to $998 in Q2 2014, due mainly to the lower production. The Black Fox mine incurred all-in sustaining costs per gold ounce of $1,771 in Q2 2014, compared to $1,154 in Q2 2013 mainly due to lower production and higher sustaining capital expenditures in Q2 2014 than Q2 2013, primarily due to increased exploration and development and capitalization of waste. The overall strip ratio during the second quarter was 9:1, resulting in $271 per ounce of capitalized waste being included in the all-in sustaining costs. This is expected to decline significantly in the second half of 2014 as the strip ratio declines to the life of mine average of 5:1.
2

Revenue Increases with Expanded Production
Revenues increased to $79.7 million in the second quarter of 2014 as a result of selling 48,596 ounces of gold at an average realized price of $1,264 per ounce, and 1.58 million ounces of silver at an average realized price of $11.56 per ounce, up from $52.5 million in the second quarter of 2013, with the acquisition of Black Fox mine on March 5, 2014 accounting for $20.9 million of the increase. Revenues at San Dimas were $6.3 million higher in Q2 2014 than Q2 2013 due to a 23% increase in gold sales volumes and a 27% increase in silver spot sales, partially offset by an 8% decrease in average realized gold prices.
Gold produced at Black Fox is subject to a gold purchase agreement 7 and as a result 1,334 ounces were sold to Sandstorm Gold Ltd. (“Sandstorm”) at a fixed price of $509 per ounce. Silver produced at San Dimas is subject to a silver purchase agreement 6 and as a result 818,573 ounces of silver were sold to Silver Wheaton Corp. (“Silver Wheaton”) at a fixed price of $4.16 per ounce and 760,603 ounces of silver were sold at an average spot price of $19.52, compared to 603,476 ounces at an average price of $21.88 in Q2 2013.
Operating cash flow before working capital changes in the second quarter of 2014 was $26.4 million ($0.17 per share), compared to $16.9 million ($0.16 per share) in the second quarter of 2013. The increase was mainly due to $7.6 million higher cash earnings from mine operations.
The Company generated net income of $0.6 million ($0.00 per share) in Q2 2014 compared to net income of $4.2 million ($0.04 per share) in Q2 2013. Adjusted net income, which primarily excludes transaction costs and the impact of foreign exchange rate changes on deferred tax balances, was $1.1 million ($0.01 per share) for the second quarter 2014, compared with adjusted net income of $17.0 million ($0.16 per share) for the same period in 2013. The second quarter 2014 adjusted net income includes $6.2 million more share-based payment expense and $11.5 million more depreciation and depletion expense than the second quarter of 2013. The second quarter adjusted net income includes a share-based payment expense of $3.5 million ($0.02 per share).
Line of Credit Provides Financial Flexibility
The Company’s cash position was $44.2 million at June 30, 2014 down from the March 31, 2014 balance of $86.4 million. The cash balance decreased in Q2 2014 as a result of repaying $20.9 million in senior secured notes and $1.9 million of the convertible debentures both assumed upon the acquisition of Brigus, as well as the remaining balance of $27.2 million of the Goldcorp promissory note, partially offset by the Company drawing down a net amount of $28.2 million on the new line of credit.
Capital expenditures during the second quarter 2014 totaled $31.2 million, up from $16.0 million spent in Q2 2013. The increase was partly as a result of spending on the Black Fox Complex, which was not owned in the same period of 2013, and partly due to increased expenditure at the San Dimas mine due to increased equipment purchases. In 2014, capital expenditures are expected to total approximately $80.0 million excluding capitalized exploration expenses of $35.0 million.
On May 23, 2014, the Company closed a 3-year $75 million revolving line of credit. In order to provide the lenders with the required security, coincident with the closing the Company repaid the $27.2 million promissory note outstanding to a subsidiary of Goldcorp Inc. by drawing down $30 million of the line of credit.
3

At June 30, 2014, the balances outstanding on the convertible debentures and finance leases were $48.1 million and $15.0 million, respectively.
Outlook Maintained for 2014
Primero maintains its 2014 production guidance of between 225,000 and 245,000 gold equivalent ounces, an increase of up to 70% over 2013. Cash costs for 2014 are expected to be in the range of $650 to $700 per gold equivalent ounce.
San Dimas Expansion to 3,000 TPD Construction Decision
Earlier today, the Company announced that it has approved the second phase of the San Dimas expansion to 3,000 TPD 8 . The preliminary scoping study completed by the Company shows an attractive 78% after-tax IRR and a payback period of less than 12 months after project completion.
Annual production after project completion is expected to increase by more than 25% over 2014 levels to approximately 215,000 gold equivalent ounces. Cash costs are expected to drop by approximately $50 per ounce from current levels to approximately $530 per gold equivalent ounce, or $300 per gold ounce on a by-product basis.
The Company currently estimates that expanding the San Dimas mill to 3,000 TPD will require approximately $26.4 million of capital investment. The Company has retained an engineering firm with extensive plant design experience in the mining sector to assist with an optimization project that could significantly reduce this estimated capital cost and at the same time create operating cost savings through process improvement. An important feature of the expansion to 3,000 TPD is that it increases the Company’s exposure to spot silver sales as it coincides with the increase in the annual silver threshold of the San Dimas silver purchase agreement.
Black Fox Making Progress
After acquiring the Black Fox Complex in March 2014 the Company immediately began to invest in underground development, definition and delineation drilling. During the second quarter the Company successfully increased underground development by 54%, completing 1,881 metres of underground development compared to 1,329 meters in the first quarter of 2014. The Company also initiated its exploration program during the second quarter of 2014 and completed 15,500 meters of exploration and delineation drilling and 12,760 meters of definition drilling.
The Company increased underground throughput during the second quarter by 15% to approximately 460 TPD, as a result of increasing the available cut and fill stopes. It still only mined from a single underground long-hole stope, impacting underground productivity. The Company targeted 60% long-hole mining at Black Fox and only achieved 40% during the second quarter. During the remainder of 2014 the Company will be focused on opening new underground long-hole mining stopes and increasing the underground production rate.
On July 9, 2014 9 the Company released an updated Mineral Reserve and Mineral Resource estimation for the Black Fox Complex (including both the Black Fox mine and the adjacent Grey Fox exploration property). The Company elected to use more conservative estimation parameters, in part, in order to improve the accuracy of its mine planning. Drilling results released at the same time confirmed the extension of the Black Fox deposit at depth.
The grades mined at Black Fox during the second quarter were below the Company’s mine plan created using the recent Mineral Reserve and Mineral Resource estimation. As a result, the Company has initiated a review of the Black Fox underground grades and short-term underground mine plan that it expects to complete by the end of August 2014. The open pit grades are expected to improve throughout the remainder of 2014 and the strip ratio is expected to decline to the average life of mine ratio of 5:1.
4

Cerro del Gallo Project Construction Decision Delayed
On July 30, 2014 10 the Company provided an update on its Cerro del Gallo development project located in Guanajuato, Mexico. Primero has advanced the development of the project but has delayed a construction decision until early 2015 so it can complete the planned 2014 metallurgical testwork and drilling programs. Primero has spent $3.9 million of its 2014 $12.9 million budget and completed basic engineering and water rights acquisition and advanced land acquisition and permitting. The Company aims to complete the necessary metallurgical tests, 10,000 metres of drilling, all required land purchases and submit the permit application by the end of 2014. The Company remains focused on achieving its desired rate of return and once the 2014 program is completed can assess the economics of the project in order to make a potential construction decision in early 2015.
Conference Call and Webcast Details
The Company's senior management will host a conference call today, Thursday, August 7, 2014 at 10:00 a.m. ET to discuss the second quarter operating and financial results.
This release should be read in conjunction with Primero’s second quarter 2014 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.
Participants may join the call by dialing North America toll free 1 (866)-229-4144 or 1 (416) 216-4169 for calls outside Canada and the U.S. and entering the participant passcode 7403645#.
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://event.onlineseminarsolutions.com/r.htm?e=815965&s=1&k=B6B354DBE428690A5191316C02C52E9F
A recorded playback of the call will be available until, Friday, November 6, 2014 by dialing North America toll free 1 (888) 843-7419 or 1 (630) 652-3042 for calls outside Canada and the U.S. and entering the call back passcode 7403645#
 
(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 second quarter 2014 for San Dimas was based on realized prices of $1,286 per ounce of gold and $11.56 per ounce of silver. The ratio used for the 2014 guidance projection is 151:1 based on estimated average prices of $1,200 per ounce of gold and $7.96 per ounce of silver.
(2) 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 second quarter 2014 MD&A for a reconciliation of adjusted net income (loss) to reported net income (loss).
(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 second quarter 2014 MD&A for a reconciliation of operating cash flows to GAAP.
(4) 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 is 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 second quarter 2014 MD&A for a reconciliation of total cash costs to reported operating expenses (the nearest GAAP measure).
5

(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 second quarter 2014 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 will deliver 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 Black Fox Extension.
(8) Refer to today’s news releases “Primero Announces Expansion of its San Dimas Mine To 3,000 TPD” as filed on SEDAR at www.sedar.com .
(9) Refer to the July 9, 2014 news releases “Primero Announces High-Grade Black Fox Complex Drilling Results and Reports Updated Reserves And Resources” as filed on SEDAR at www.sedar.com .
(10) Refer to the July 30, 2014 news releases “Primero Provides Cerro Del Gallo Project Update” 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:
Tamara Brown
VP, Investor Relations
Tel: (416) 814 3168
tbrown@primeromining.com
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” 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”.
6

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 realization of silver sales at spot prices; the amount of gold equivalent ounces produced in 2014, the cash costs and all-in sustaining costs for 2014; the capital expenditures in 2014; 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 2014; the amount of ore from the Company’s operations in 2014; three-year plan forecasts; the plans for Cero del Gallo and the intentions to make a construction decision in respect of the project; 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 2014; that the Company identifies higher grade veins in sufficient quantities of minable ore in the Central Block and in Sinaloa Graben; that the Company will be in a position to make a decision respecting the construction of Cerro del Gallo when anticipated and that such decision will be positive; 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
7

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

 	 	Three months ended	 	 	Six months ended June	 	
 	 	June 30,	 	 	30,	 	
 	 	2014 ¹	 	 	2013	 	 	2014 ¹	 	 	2013	 	
    Key Performance Data	 	 	 	 	 	 	 	 	 	 	 	 	
Tonnes of ore milled	 	428,778	 	 	201,680	 	 	667,344	 	 	385,491	 	
Produced	 	 	 	 	 	 	 	 	 	 	 	 	
Gold equivalent (ounces)	 	63,414	 	 	39,089	 	 	103,172	 	 	66,745	 	
Gold (ounces)	 	50,061	 	 	26,904	 	 	82,339	 	 	51,095	 	
Silver (million ounces)	 	1.49	 	 	1.46	 	 	3.00	 	 	2.83	 	
Sold	 	 	 	 	 	 	 	 	 	 	 	 	
Gold equivalent (ounces)	 	62,791	 	 	37,555	 	 	100,040	 	 	66,029	 	
Gold (ounces)	 	48,596	 	 	25,692	 	 	79,179	 	 	50,428	 	
Silver (million ounces)	 	1.58	 	 	1.42	 	 	2.93	 	 	2.90	 	
Average realized prices	 	 	 	 	 	 	 	 	 	 	 	 	
Gold ($/ounce)²	$	1,264	 	$	1,398	 	$	1,276	 	$	1,510	 	
Silver ($/ounce)²	$	11.56	 	$	11.66	 	$	9.20	 	$	7.82	 	
Average gold London PM fix	$	1,288	 	$	1,415	 	$	1,291	 	$	1,523	 	
Total cash costs (per gold ounce)	 	 	 	 	 	 	 	 	 	 	 	 	
Gold equivalent basis	$	672	 	$	551	 	$	677	 	$	620	 	
 By-product basis	$	508	 	$	167	 	$	522	 	$	377	 	
All-in sustaining costs (per gold ounce)	$	1,228	 	$	659	 	$	1,288	 	$	943	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
    Financial Data	 	 	 	 	 	 	 	 	 	 	 	 	
(in thousands of US dollars except per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	79,669	 	 	52,475	 	 	127,938	 	 	98,796	 	
Earnings from mine operations	 	19,676	 	 	23,593	 	 	27,941	 	 	39,299	 	
Net income (loss)	 	572	 	 	4,241	 	 	(8,513	)	 	21,565	 	
Adjusted net income (loss)	 	1,052	 	 	17,039	 	 	(1,828	)	 	26,140	 	
Basic income (loss) per share	 	0.00	 	 	0.04	 	 	(0.06	)	 	0.21	 	
Diluted income (loss) per share	 	0.00	 	 	0.04	 	 	(0.06	)	 	0.21	 	
Adjusted net income (loss) per share	 	0.01	 	 	0.16	 	 	(0.01	)	 	0.26	 	
Operating cash flows before working capital changes	 	26,431	 	 	16,932	 	 	32,344	 	 	36,443	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	 	
Mining interests	 	955,587	 	 	600,525	 	 	955,587	 	 	600,525	 	
Total assets	 	1,207,602	 	 	780,316	 	 	1,207,602	 	 	780,316	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	
Long-term liabilities	 	189,743	 	 	49,678	 	 	189,743	 	 	49,678	 	
Total liabilities	 	249,388	 	 	95,567	 	 	249,388	 	 	95,567	 	
Equity	 	958,214	 	 	684,749	 	 	958,214	 	 	684,749	 	
Weighted average shares outstanding (basic)(000's)	 	159,617	 	 	105,345	 	 	144,108	 	 	101,321	 	
Weighted average shares outstanding (diluted)(000's)	 	161,321	 	 	105,696	 	 	145,582	 	 	101,817	 	

(1)	Includes the results for the period for which the Black Fox Complex, acquired on March 5, 2014, was owned by Primero (March 5, 2014 to March 31, 2014).	
 	 	
(2)	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 at the San Dimas mine.	
8

SUMMARIZED OPERATING DATA
San Dimas

 	 	 	 	 	Three months ended	 	
 	 	30-Jun-14	 	 	31-M ar-14	 	 	31-Dec-13	 	 	30-Sep-13	 	 	30-Jun-13	 	
Key Performance Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tonnes of ore mined	 	196,025	 	 	218,032	 	 	205,345	 	 	198,222	 	 	207,263	 	
Tonnes of ore milled	 	218,830	 	 	198,570	 	 	181,626	 	 	199,812	 	 	201,680	 	
Average millhead grade (gram s/tonne)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold	 	4.97	 	 	4.76	 	 	5.17	 	 	5.08	 	 	4.25	 	
Silver	 	230	 	 	260	 	 	292	 	 	265	 	 	236	 	
Average recovery rate (% )	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold	 	94%	 	 	93%	 	 	96%	 	 	97%	 	 	98%	 	
Silver	 	92%	 	 	91%	 	 	94%	 	 	95%	 	 	96%	 	
Produced	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold equivalent (ounces)	 	46,248	 	 	35,662	 	 	34,371	 	 	41,998	 	 	39,089	 	
Gold (ounces)	 	32,895	 	 	28,182	 	 	29,097	 	 	31,791	 	 	26,904	 	
Silver (million ounces)	 	1.49	 	 	1.51	 	 	1.60	 	 	1.62	 	 	1.46	 	
Sold	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold equivalent (ounces)	 	45,737	 	 	31,926	 	 	37,733	 	 	40,210	 	 	37,555	 	
Gold (ounces)	 	31,542	 	 	25,260	 	 	32,157	 	 	30,261	 	 	25,692	 	
Silver at fixed price (million ounces)	 	0.82	 	 	1.15	 	 	1.69	 	 	1.18	 	 	0.82	 	
Silver at spot (million ounces)	 	0.76	 	 	0.19	 	 	-	 	 	0.40	 	 	0.60	 	
Average realized price (per ounce)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold	$	1,286	 	$	1,300	 	$	1,265	 	$	1,338	 	$	1,398	 	
Silver	$	11.56	 	$	6.44	 	$	4.16	 	$	8.42	 	$	11.66	 	
Total cash operating costs ($000s)	$	25,474	 	$	22,540	 	$	22,676	 	$	21,660	 	$	21,530	 	
Total cash costs (per gold ounce)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold equivalent basis	$	551	 	$	632	 	$	660	 	$	516	 	$	551	 	
By-product basis	$	252	 	$	455	 	$	550	 	$	252	 	$	167	 	
All-in sustaining costs (per ounce)¹	$	626	 	$	893	 	$	1,151	 	$	751	 	$	588	 	

(1)	Total cash costs per gold ounce on a gold equivalent and by-product basis and all-in sustaining costs are non-GAAP financial measures. Refer to the Company’s second quarter 2014 MD&A for a reconciliation to operating expenses.	
9

Black Fox

 	 	Three months ended	 	 	For the period	 	 	Three months ended	 	
 	 	 	 	 	March 5, 2014 -	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	30-Jun-14	 	 	March 31, 2014	 	 	31-Mar-14	 	 	31-Dec-13	 	 	30-Sep-13	 	 	30-Jun-13	 	
Key Performance Data	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Open pit mining	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tonnes of ore mined	 	247,029	 	 	55,422	 	 	166,753	 	 	161,895	 	 	152,709	 	 	149,825	 	
Average grade(gram s/tonne)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold	 	1.85	 	 	2.17	 	 	1.89	 	 	2.20	 	 	2.88	 	 	2.70	 	
Underground mining	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tonnes of ore mined	 	41,739	 	 	8,096	 	 	36,211	 	 	68,294	 	 	74,628	 	 	82,616	 	
Average grade (gram s/tonne)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold	 	4.33	 	 	5.65	 	 	5.00	 	 	6.07	 	 	5.69	 	 	5.93	 	
Open pit and underground	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tonnes of ore milled	 	209,948	 	 	39,996	 	 	149,803	 	 	206,914	 	 	207,559	 	 	154,667	 	
Average millhead grade(gram s/tonne)	 	2.69	 	 	3.36	 	 	2.96	 	 	3.53	 	 	4.34	 	 	4.97	 	
Average recovery rate(% )	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold	 	95%	 	 	95%	 	 	93%	 	 	93%	 	 	94%	 	 	94%	 	
Produced	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold equivalent (ounces)	 	17,166	 	 	4,096	 	 	13,298	 	 	21,916	 	 	27,174	 	 	23,304	 	
Gold (ounces)	 	17,166	 	 	4,096	 	 	13,298	 	 	21,916	 	 	27,174	 	 	23,304	 	
Sold	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold equivalent (ounces)	 	17,054	 	 	5,323	 	 	15,620	 	 	20,582	 	 	28,344	 	 	22,490	 	
Gold at spot price (ounces)	 	15,720	 	 	5,008	 	 	14,176	 	 	18,992	 	 	25,963	 	 	20,745	 	
Gold at fixed price (ounces)	 	1,334	 	 	315	 	 	1,444	 	 	1,590	 	 	2,381	 	 	1,745	 	
Average realized price (per ounce)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold	$	1,224	 	$	1,272	 	$	1,242	 	$	1,249	 	$	1,301	 	$	1,352	 	
Total cash operating costs ($000s)¹	$	17,127	 	$	4,726	 	$	18,732	 	$	20,376	 	$	16,714	 	$	19,107	 	
Total cash costs (per gold ounce)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gold equivalent basis	$	998	 	$	1,154	 	$	1,409	 	$	930	 	$	615	 	$	820	 	
All-in sustaining costs (per ounce)²	$	1,771	 	$	1,480	 	$	1,825	 	$	1,336	 	$	905	 	$	1,154	 	

(1)	The Company reports total cash costs on a production basis, where the prior owner of Black Fox reported total cash costs on a sales basis, consequently the reported total cash costs, cash costs per gold ounce, and all-in sustaining costs per ounce for Black Fox for historical periods will differ from those reported by the prior owner.	
 	 	
(2)	Total cash costs per gold ounce on a gold equivalent and by-product basis and all-in sustaining costs are non-GAAP financial measures. Refer to the Company’s second quarter 2014 MD&A for a reconciliation to operating expenses.	
10

PRIMERO MINING CORP.	
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND	
COMPREHENSIVE (LOSS) INCOM E	
THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013	
(In thousands of United States dollars, except for share and per share amounts)	
(Unaudited)	

 	 	Three months ended June 30,	 	 	Six months ended June 30,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	  $	 	 	  $	 	 	  $	 	 	  $	 	

Revenue	 	79,669	 	 	52,475	 	 	127,938	 	 	98,796	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses	 	(40,387	)	 	(20,813	)	 	(68,070	)	 	(43,276	)	
Depreciation and depletion	 	(19,606	)	 	(8,069	)	 	(31,927	)	 	(16,221	)	
Total cost of sales	 	(59,993	)	 	(28,882	)	 	(99,997	)	 	(59,497	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings from mine operations	 	19,676	 	 	23,593	 	 	27,941	 	 	39,299	 	
General and administrative expenses	 	(10,524	)	 	(1,907	)	 	(23,877	)	 	(9,703	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings (loss) from operations	 	9,152	 	 	21,686	 	 	4,064	 	 	29,596	 	
Transaction costs and other expenses	 	(498	)	 	(5,755	)	 	(7,765	)	 	(6,082	)	
Foreign exchange (loss) gain	 	(2,250	)	 	651	 	 	(2,608	)	 	(710	)	
Finance income	 	65	 	 	40	 	 	184	 	 	151	 	
Finance expense	 	(1,785	)	 	(415	)	 	(2,308	)	 	(924	)	
Share of equity-accounted investment results	 	(77	)	 	-	 	 	(679	)	 	-	 	
Gain on derivative liability	 	286	 	 	-	 	 	286	 	 	-	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings (loss) before income taxes	 	4,893	 	 	16,207	 	 	(8,826	)	 	22,031	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Income tax (expense) recovery	 	(4,321	)	 	(11,966	)	 	313	 	 	(466	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) for the period	 	572	 	 	4,241	 	 	(8,513	)	 	21,565	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	
Items not subsequently reclassified to profit or loss:	 	 	 	 	 	 	 	 	 	 	 	 	
Exchange differences on translation of foreign operations	 	1,035	 	 	(4,136	)	 	1,239	 	 	(3,790	)	
Total comprehensive income (loss) for the period	 	1,607	 	 	105	 	 	(7,274	)	 	17,775	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic (loss) income per share	 	0.00	 	 	0.04	 	 	(0.06	)	 	0.21	 	
Diluted (loss) income per share	 	0.00	 	 	0.04	 	 	(0.06	)	 	0.21	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of common shares outstanding	 		 	 		 	 		 	 		 	
 Basic	 	159,616,775	 	 	105,344,778	 	 	144,107,966	 	 	101,320,723	 	
 Diluted	 	161,320,681	 	 	105,696,266	 	 	145,582,448	 	 	101,817,431	 	
11

PRIMERO MINING CORP.	
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION	
(In thousands of United States dollars)	
(Unaudited)	

 	 	June 30,	 	 	December 31,	 	
 	 	2014	 	 	2013	 	
 	 	$	 	 	$	 	
 	 	 	 	 	 	 	
Assets	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	
 Cash and cash equivalents	 	44,168	 	 	110,711	 	
 Trade and other receivables	 	6,363	 	 	4,794	 	
 Taxes receivable	 	20,480	 	 	10,224	 	
 Prepaid expenses	 	8,513	 	 	7,729	 	
 Inventories	 	20,783	 	 	12,171	 	
Total current assets	 	100,307	 	 	145,629	 	
 	 	 	 	 	 	 	
Non-current assets	 	 	 	 	 	 	
 Restricted cash	 	19,185	 	 	-	 	
 Mining interests	 	955,587	 	 	636,253	 	
 Goodwill	 	98,961	 	 	-	 	
 Deferred tax asset	 	21,716	 	 	17,898	 	
 Inventories	 	10,677	 	 	-	 	
 Equity investment	 	391	 	 	1,042	 	
 Available for sale investment	 	778	 	 	-	 	
Total assets	 	1,207,602	 	 	800,822	 	
 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	
 Trade and other payables	 	45,220	 	 	33,958	 	
   Taxes payable	 	7,985	 	 	6,735	 	
 Current portion of long-term debt	 	6,440	 	 	5,000	 	
Total current liabilities	 	59,645	 	 	45,693	 	
 	 	 	 	 	 	 	
Non-current liabilities	 	 	 	 	 	 	
 Taxes payable	 	10,750	 	 	8,456	 	
 Deferred tax liability	 	53,722	 	 	47,660	 	
 Decommissioning liability	 	33,070	 	 	8,730	 	
 Long-term debt	 	82,392	 	 	22,214	 	
 Other long-term liabilities	 	6,399	 	 	6,979	 	
 Derivative liability	 	3,410	 	 	-	 	
Total liabilities	 	249,388	 	 	139,732	 	
 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	
Share capital	 	853,065	 	 	553,518	 	
Warrant reserve	 	34,782	 	 	34,237	 	
Share-based payment reserve	 	19,824	 	 	15,518	 	
Foreign currency translation reserve	 	(3,405	)	 	(4,644	)	
Retained earnings	 	53,948	 	 	62,461	 	
Total equity	 	958,214	 	 	661,090	 	
Total liabilities and equity	 	1,207,602	 	 	800,822	 	
12

PRIMERO MINING CORP.	
CONDENSED CONSOLIDATED INTERIM STATEM ENTS OF CASH FLOWS	
TH REE AN D SIX MONTHS ENDED JUNE  30, 2014 AND 2013	
(In thousands of United States dollars)	
(Unaudited)	

 	 	Three months ended June 30	 	 	Six months ended June 30,	 	
 	 	2014	 	 	2013	 	 	2014	 	 	2013	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating activities	 	 	 	 	 	 	 	 	 	 	 	 	
 Earnings(loss) before income taxes	 	4,893	 	 	16,207	 	 	(8,826	)	 	22,031	 	
 Adjustments for:	 	 	 	 	 	 	 	 	 	 	 	 	
     Depreciation and depletion	 	19,606	 	 	8,069	 	 	31,927	 	 	16,221	 	
     Payments relating to decomissioning liability	 	-	 	 	-	 	 	-	 	 	(53	)	
     Share-based payments - Stock Option plan	 	328	 	 	53	 	 	482	 	 	108	 	
     Share-based payments - Phantom Share Unit plan	 	3,160	 	 	(2,792	)	 	11,197	 	 	2,128	 	
     Payments made under the Phantom Share Unit Plan	 	(6,443	)	 	(5,048	)	 	(9,131	)	 	(5,727	)	
     Unrealized loss on equity accounted investment	 	77	 	 	-	 	 	679	 	 	-	 	
     Unrealized (gain)/loss on available for sale investment	 	(3	)	 	-	 	 	349	 	 	-	 	
     Unrealised gain on derivative liability	 	(286	)	 	-	 	 	(286	)	 	-	 	
     Loss on disposal of assets	 	1,195	 	 	101	 	 	1,215	 	 	165	 	
     Loss on write-down of inventory	 	-	 	 	-	 	 	1,225	 	 	-	 	
     Unrealized foreign exchange loss	 	2,690	 	 	177	 	 	2,328	 	 	1,310	 	
     Taxes paid	 	(506	)	 	(210	)	 	(939	)	 	(523	)	
Other adjustments	 	 	 	 	 	 	 	 	 	 	 	 	
Finance income (disclosed in investing activities)	 	(65	)	 	(40	)	 	(184	)	 	(151	)	
Finance expense	 	1,785	 	 	415	 	 	2,308	 	 	924	 	
Operating cash flow before working capital changes	 	26,431	 	 	16,932	 	 	32,344	 	 	36,433	 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Changes in non-cash working capital	 	(13,363	)	 	(6,550	)	 	(27,916	)	 	(8,158	)	
Cash (used in) provided by operating activities	 	13,068	 	 	10,382	 	 	4,428	 	 	28,275	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Investing activities	 	 	 	 	 	 	 	 	 	 	 	 	
 Expenditures on mining interests	 	(31,159	)	 	(16,037	)	 	(51,159	)	 	(24,772	)	
 Acquisition of Brigus Gold Corp (net)	 	-	 	 	-	 	 	(7,773	)	 	-	 	
 Acquisition of Cerro Resources NL	 	-	 	 	(3,508	)	 	-	 	 	(3,508	)	
 Equity investment in Santana Minerals Limited	 	-	 	 	(1,062	)	 	-	 	 	(1,062	)	
 Interest received	 	65	 	 	40	 	 	184	 	 	151	 	
Cash used in investing activities	 	(31,094	)	 	(20,567	)	 	(58,748	)	 	(29,191	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Financing activities	 	 	 	 	 	 	 	 	 	 	 	 	
 Repayment of debt	 	(53,258	)	 	-	 	 	(56,361	)	 	(7,786	)	
 Proceeds on exercise of options	 	1,678	 	 	34	 	 	9,363	 	 	910	 	
 Proceeds on issuance of flow-through shares	 	-	 	 	 	 	 	8,037	 	 	 	 	
 Interest paid	 	(1,135	)	 	-	 	 	(1,578	)	 	-	 	
 Drawdown of line of credit, net of transaction costs	 	28,192	 	 	-	 	 	28,192	 	 	 	 	
Cash provided by (used in) financing activites	 	(24,523	)	 	34	 	 	(12,347	)	 	(6,876	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Effect of foreign exchange rate changes on cash	 	345	 	 	(705	)	 	124	 	 	(1,062	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
(Decrease) increase in cash	 	(42,204	)	 	(10,856	)	 	(66,543	)	 	(8,854	)	
Cash and cash equivalents, beginning of period	 	86,372	 	 	141,246	 	 	110,711	 	 	139,244	 	
Cash, end of  period	 	44,168	 	 	130,390	 	 	44,168	 	 	130,390	 	
13