Primero Mining Can Boom in 2012

With 2012 just beginning, now's a great time to gauge how the stocks you're interested in are likely to do this year and beyond. By knowing what stock analysts and fellow investors expect from a stock, you'll be smarter about whether you should buy it for your portfolio -- or sell it if you already own it.

Today, let's take a look at Primero Mining (NYS: PPP) . As I discussed in more detail last month, Primero had a pretty bad 2011, as the stock lost about a third of its value as it failed to execute on a planned merger with Northgate Minerals. But can 2012 prove to be a turnaround year for the miner? Below, I'll take a closer look at what people expect from Primero Mining and its rivals.

Forecasts on Primero Mining

Median Target Stock Price


2012 EPS Estimate


2013 EPS Estimate


Expected Revenue Growth, 2012


CAPS Rating


Source: Yahoo! Finance.

How will Primero Mining do this year?
Primero has a lot of stakeholders excited for its future prospects. The target stock price analysts have put on the company is roughly double its current level, and 2012 earnings estimates far exceed what 2011 brought for the miner. That isn't as enthusiastic as investors feel about Paramount Gold & Silver (ASE: PZG) , which carries a target price that's five times its current price. But both Paramount and Primero have jumped sharply to begin 2012.

Much of the challenge for Primero has stemmed from an ongoing dispute with Mexican tax authorities. Although Primero has an agreement with Silver Wheaton (NYS: SLW) whereby the silver streamer buys silver from Primero at a low contract price, Mexico taxes Primero on the full market value of that silver. Resolving that dispute could add millions to Primero's coffers.

Primero's setback in losing Northgate Minerals to AuRico Gold (NYS: AUQ) also put a stumbling block in its strategic plans. But the company still plans to complete an expansion plan at its San Dimas mine by the end of 2013.

Earlier this week, Primero gave guidance for 2012. With a forecast of 100,000 to 110,000 ounces of gold production, Primero acknowledged the lower ore grades it has discovered. With costs expected to drop, especially on a by-product basis, Primero hopes to improve margins considerably this year.

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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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