A Lousy 2011 for Primero Mining

As 2011 comes to a close, it's a great time to look back at what happened to the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at Primero Mining (NYS: PPP) . If you just look at gold prices, you'd think that 2011 was another decent year, albeit with gold closing well below its summer highs. But many gold miners, including Primero, took huge hits this year. Below, I'll take a closer look at the events that moved shares of Primero Mining this year.

Stats on Primero Mining

Year-to-Date Stock Return


Market Cap

$272 million

Total Revenue, Trailing 12 Months

$162 million

1-Year Revenue Growth


Net Income, Trailing 12 Months

$34.9 million

CAPS Rating


Source: S&P Capital IQ. NM = not meaningful due to negative earnings.

Why'd Primero Mining lose its shine in 2011?
Primero came into the year with big potential. Spun off from Goldcorp (NYS: GG) in 2010, Primero mines both gold and silver, and with its San Dimas mine in Mexico, Primero already has strong production. Although the company has a commitment to sell some of its silver production to streaming company Silver Wheaton (NYS: SLW) , Primero typically produces more than the required amount of silver each year and gets to enjoy market prices on the remainder.

Primero was on the cusp of a huge strategic move when it put together a merger with Northgate Minerals. But AuRico Gold (NYS: AUQ) scuttled the deal by making its own move for Northgate. Although Primero earned a break-up fee, the stock performed badly in the wake of the news, and you can expect the company to keep searching for strategic partners going forward.

One big problem for Primero comes from taxation. Mexico taxes Primero's silver production based on spot prices, even though it receives only a small fraction of that amount from Silver Wheaton under their streaming contract.

Like companies such as Thompson Creek Metals (NYS: TC) and Great Panther Silver (ASE: GPL) , Primero represents a turnaround play in the making. But with Goldcorp remaining a 36% shareholder and with a strong CEO at the helm, Primero has plenty of potential for investors to get back in the black in 2012.

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At the time thisarticle was published Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. The Motley Fool owns shares of Primero Mining. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.

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