"For the past two years, Primero has been focused on organic...

"For the past two years, Primero has been focused on organic growth at San Dimas at the same time as reviewing external diversification and acquisition opportunities. We believe that Cerro Resources' Cerro Del Gallo project offers our existing and new shareholders immediate improved leverage to gold with a significantly larger reserve and resource base, production and cash flow profile. Although, upon completion, it will represent 15% of Primero's market capitalization, it could ultimately deliver more than 55% of our total gold equivalent production," commented Joseph Conway , President and Chief Executive Officer. "This transaction solidifies Primero's operating advantage in Mexico, a region that we feel has further consolidation opportunities. In our view, Cerro Del Gallo is a very promising, undeveloped, large resource base opportunity in Mexico. Primero has the operational and financial strength to advance the project on a timely basis which will be beneficial for all stakeholders involved. This also represents a significant opportunity for Cerro shareholders in terms of continuing participation in Primero shares and their potential upside."
"Cerro management has recognized the investment market's prevailing preference to see new precious metals operations funded out of existing cash flows. By undertaking this transaction, Cerro shareholders will benefit from Primero's balance sheet and cash flow, enabling the Cerro Del Gallo project to be constructed without external financing. Importantly, this should enable returns from an operationalised Cerro Del Gallo to be maximized benefitting all shareholders. They will also benefit from improved market liquidity for shareholders and the combination with Primero's proven management team who have a demonstrated track record of successfully growing precious metals mining companies," stated Tony McDonald , Managing Director and Chief Executive Officer of Cerro.
Highlights of the Transaction:
? Creates a diversified, high growth, competitive cost producer in Mexico with further consolidation opportunities.



? Peer leading growth profile with expected annualized production growth of 24% over the next four years, reaching at least 260,000 ounces of gold production by 2016.



? Combined attributable proven and probable reserves of approximately 1.7 million gold equivalent ounces and measured and indicated resources of over 3.1 million gold equivalent ounces (inclusive of reserves).



? Strongly enhances and diversifies Primero's production profile and diversifies Cerro's development project with a high quality mine and existing cash flow.



? Ability to fund further opportunities with a strong balance sheet and significant cash flows from existing production.



? Leverages on Primero's position in Mexico.



? Additional significant exploration upside.



? Exceptional re-valuation opportunity for all shareholders, driven by compelling valuation, growth potential, transaction rationale and management track record.



Benefits to Primero Shareholders:
? Attractive long-life, precious metals project.



? Diversifies near-term production with an additional 95,000 gold equivalent ounces per year, a 58% increase in currently estimated near-term production.



? Doubles reserves and triples measured and indicated resources3.



? Leverages on Primero's regional expertise and solidifies Primero's presence in Mexico, one of the world's most supportive mining districts, with further consolidation opportunities.



? Accretive to Primero on key metrics and an attractive total acquisition cost.



? Asset diversification reduces risk and volatility in cash flow and earnings.



? Allows participation in upside potential of non-Cerro Del Gallo assets through 19.99% ownership of Spinco.



? Enhanced capital markets profile and re-rating potential as a junior gold producer with a proven operating team, a superior growth profile and significant exploration upside.



? Delivers on Primero's strategy of creating value for shareholders through low risk exposure to precious metals in the Americas.



Benefits to Cerro Shareholders:
? Offer represents an implied premium of 62% to the 20 trading day VWAP as at December 12, 2012. The implied premium represents a share price exceeding Cerro's 52 week high.



? Immediate exposure to strong balance sheet and cash flow sufficient to fund the development of Cerro Del Gallo, as well as finance further growth opportunities including a potential further expansion of San Dimas.



? Primero has an existing management team with proven mine construction and operational expertise.



? Provides opportunity to participate in valuation re-rating as the combination has a greater market capitalization, liquidity and immediate cash flows.



? Increases analytical following and exposure of the Cerro Del Gallo opportunity.



? Allows continuing shareholder participation in non-Cerro Del Gallo assets through 80.01% ownership of Spinco.