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
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of MAY, 2018
Commission File Number: 001-35278
PRIMERO MINING CORP.
(Translation of registrant's name into English)
Suite 2100, 79 Wellington Street West,
TD South Tower, P.O Box 139
Toronto, Ontario
M5K 1H1 Canada
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
[X] Form 20-F   [  ] Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [             ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [             ]
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [             ] No [ x ]
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

 
SUBMITTED HEREWITH
Exhibits

 	99.1	Condensed Consolidated Interim Financial Statements for the period ended March 31, 2018	
 		
 	99.2	Management's Discussion and Analysis for the period ended March 31, 2018	
 	 	 	
 	99.3	Form 52-109F2 - Certification of Interim Filings - Full Certificate - Chief Executive Officer	
 	 	 	
 	99.4	Form 52-109F2 - Certification of Interim Filings - Full Certificate - Chief Financial Officer	

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.

 	PRIMERO MINING CORP.	
 	(Registrant)	
 	 	 	
Date: May 9, 2018	By:	/s/ Ryan Snyder	
 	 	Ryan Snyder	
 	Title:	Chief Financial Officer	

PRIMERO MINING CORP.
MARCH 31, 2018
 
TABLE OF CONTENTS

Condensed consolidated interim statements of operations and comprehensive income (loss)	1	
 	 	
Condensed consolidated interim statements of financial position	2	
 	 	
Condensed consolidated interim statements of changes in equity	3	
 	 	
Condensed consolidated interim statements of cash flows	4	
 	 	
Notes to the condensed consolidated interim financial statements	5 - 21	

PRIMERO MINING CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE(LOSS)INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
(IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)

 	Notes	 	2018	 	 	2017	 	
 	 	 	 	 	 	 	 	
Revenue	5	$	36,832	 	$	19,369	 	
Operating expenses	 	 	(22,131	)	 	(13,591	)	
Depreciation and depletion	 	 	(4,079	)	 	(6,399	)	
Total cost of sales	 	 	(26,210	)	 	(19,990	)	
Earnings from mine operations	 	 	10,622	 	 	(621	)	
Exploration expenses	 	 	(156	)	 	(474	)	
Share-based compensation	 	 	(624	)	 	(1,786	)	
General and administrative expenses	9	 	(3,234	)	 	(2,946	)	
Other charges	10	 	(2,607	)	 	(7,811	)	
Profit (loss) from operations	 	 	4,001	 	 	(13,638	)	
Interest and finance expenses	11	 	(2,247	)	 	(2,146	)	
Mark-to-market(loss)gain on debentures & warrants	 	 	(26,249	)	 	6,653	 	
Other (expenses) income	12	 	105	 	 	1,443	 	
Loss before income taxes	 	 	(24,390	)	 	(7,688	)	
Income tax recovery (expense)	13	 	(2,573	)	 	18,831	 	
Net (loss) income from continuing operations	 	 	(26,963	)	 	11,143	 	
Net income from discontinued operations, net of income taxes	3	 	-	 	 	2,360	 	
Net (loss) income for the period	 	 	($26,963	)	$	13,503	 	
Other comprehensive loss, net of tax	 	 	 	 	 	 	 	
Items that may be subsequently reclassified to profit or loss:	 	 	 	 	 	 	 	
 Exchange differences on translation of foreign operations,	 	 	 	 	 	 	 	
net of tax of $nil	 	 	(178	)	 	-	 	
Items that will not be reclassified to profit or loss:	 	 	 	 	 	 	 	
Unrealized (loss) gain on investment in Fortune Bay, net of tax of $nil	 	 	170	 	 	-	 	
Total comprehensive loss for the period	 	 	($26,971	)	$	13,503	 	
Basic and diluted (loss) income per share from continuing operations	 	 	($0.14	)	$	0.06	 	
Basic and diluted (loss) income per share from discontinued operations	 	 	-	 	$	0.01	 	
Basic and diluted (loss) income per share including discontinued operations	 	 	($0.14	)	$	0.07	 	
Weighted average number of	 	 	 	 	 	 	 	
common shares outstanding	 	 	 	 	 	 	 	
Basic	 	 	193,045,822	 	 	189,943,952	 	
Diluted	 	 	193,045,822	 	 	194,854,319	 	
See accompanying notes to the condensed consolidated interim financial statements.
1

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

 	 	 	March 31	 	 	December 31	 	
 	Notes	 	2018	 	 	2017	 	
 	 	 	 	 	 	 	 	
Assets	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	
   Cash and cash equivalents	 	$	16,344	 	$	20,966	 	
   Trade and other receivables	 	 	872	 	 	1,241	 	
   Value added and income taxes receivable	 	 	48,774	 	 	40,789	 	
   Prepaid expenses	 	 	1,640	 	 	2,642	 	
   Inventories	6	 	15,069	 	 	13,668	 	
Total current assets	 	 	82,699	 	 	79,306	 	
Non-current assets	 	 	 	 	 	 	 	
   Mining interests	7	 	128,171	 	 	125,050	 	
   Other non-current assets	 	 	825	 	 	910	 	
Total assets	 	$	211,695	 	$	205,266	 	
 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	
   Trade and other payables	 	$	22,550	 	$	19,593	 	
   Income tax payable	 	 	2,210	 	 	3,298	 	
   Other taxes payable	 	 	2,783	 	 	1,200	 	
   Current portion of long-term debt	8	 	30,253	 	 	30,310	 	
Total current liabilities	 	 	57,796	 	 	54,401	 	
Non-current liabilities	 	 	 	 	 	 	 	
   Other taxes payable	 	 	21,195	 	 	18,805	 	
   Deferred taxliability	 	 	7,461	 	 	7,457	 	
   Decommissioning liability	 	 	11,911	 	 	11,646	 	
   Long-term debt	8	 	73,875	 	 	47,625	 	
   Warrant liability	15 (a)	 	43	 	 	44	 	
   Other long-term liabilities	 	 	6,008	 	 	5,557	 	
Total liabilities	 	$	178,289	 	$	145,535	 	
 	 	 	 	 	 	 	 	
Shareholders' equity	 	 	 	 	 	 	 	
Share capital	15 (a)	$	915,641	 	$	915,641	 	
Shares reserved for future issuance	15 (a)	 	243	 	 	243	 	
Contributed surplus	15 (b)	 	58,276	 	 	57,630	 	
Accumulated other comprehensive loss	 	 	(853	)	 	(845	)	
Deficit	 	 	(939,901	)	 	(912,938	)	
Total shareholders' equity	 	$	33,406	 	$	59,731	 	
Total liabilities and shareholders' equity	 	$	211,695	 	$	205,266	 	
Going concern (Note 1)	 	 	 	 	 	 	 	
Commitments and contingencies (Notes 13 and 18)	 	 	 	 	 	 	 	
Subsequent events (Note 19)	 	 	 	 	 	 	 	
See accompanying notes to the condensed consolidated interim 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 )

 	 	 	 	 	 	 	 	 	 	 	 	 	 	Accumulated	 	 	 	 	 	 	 	
 	 	Share capital	 	 	Shares reserved	 	 	 	 	 	other	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	for future	 	 	Contributed	 	 	comprehensive	 	 	 	 	 	 	 	
 	 	Shares	 	 	Amount	 	 	issuance	 	 	surplus	 	 	loss	 	 	Deficit	 	 	Total equity	 	
Balance ,January 1, 2017	 	189,508,365	 	$	908,923	 	$	297	 	$	58,857	 	 	($3,694	)	 	($503,253	)	$	461,130	 	
Shares issued for	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   PSUs settled in shares	 	1,251,708	 	 	4,251	 	 	-	 	 	(4,251	)	 	-	 	 	-	 	 	-	 	
   Severance and other employee payments	 	782,184	 	 	480	 	 	-	 	 	-	 	 	-	 	 	-	 	 	480	 	
Share-based compensation	 	-	 	 	-	 	 	-	 	 	2,080	 	 	-	 	 	-	 	 	2,080	 	
Income for the period	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	13,503	 	 	13,503	 	
Balance, March 31, 2017	 	191,542,257	 	$	913,654	 	$	297	 	$	56,686	 	 	($3,694	)	 	($489,750	)	$	477,193	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, January 1,2018	 	193,045,822	 	$	915,641	 	$	243	 	$	57,630	 	 	($845	)	 	($912,938	)	$	59,731	 	
Other comprehensive income, net of tax	 	-	 	 	-	 	 	-	 	 	-	 	 	(8	)	 	-	 	 	(8	)	
Share-based compensation	 	-	 	 	-	 	 	-	 	 	646	 	 	-	 	 	-	 	 	646	 	
Loss for the period	 	-	 	 	-	 	 	-	 	 	-	 	 	-	 	 	(26,963	)	 	(26,963	)	
Balance, March 31, 2018	 	193,045,822	 	$	915,641	 	$	243	 	$	58,276	 	 	($853	)	 	($939,901	)	$	33,406	 	
Total comprehensive loss was $27.0 million for the three months ended March 31, 2018 (March 31, 2017 – total comprehensive income of $13.5 million) .
See accompanying notes to the condensed consolidated interim financial statements.
3

PRIMERO MINING CORP.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
(IN THOUSANDS OF UNITED STATES DOLLARS)
(UNAUDITED)

 	Notes	 	2018	 	 	2017	 	
Operating activities	 	 	 	 	 	 	 	
Loss before income taxes	 	 	($24,390	)	 	($7,688	)	
Income before income taxes, from discontinued operations	3	 	-	 	 	1,673	 	
Adjustments for:	 	 	 	 	 	 	 	
     Depreciation and depletion	 	 	4,079	 	 	9,616	 	
     Share-based compensation expense	 	 	646	 	 	2,074	 	
     Mark-to-market gain on convertible debentures	 	 	26,250	 	 	(6,000	)	
     Mark-to-market gain on warrant liability	 	 	(1	)	 	(653	)	
     Write-down of inventory	 	 	-	 	 	1,566	 	
     Unrealized foreign exchange loss(gain)	 	 	(570	)	 	(2,365	)	
     Taxes paid	 	 	(1,343	)	 	(4,116	)	
     Other	 	 	510	 	 	1,613	 	
Other adjustments	 	 	 	 	 	 	 	
Finance income	 	 	(13	)	 	(14	)	
Finance expense	 	 	2,260	 	 	2,221	 	
Operating cash flow before working capital changes	 	 	7,428	 	 	(2,073	)	
Changes in non-cash working capital	14	 	(2,775	)	 	(1,105	)	
Cash provided by operating activities	 	$	4,653	 	 	($3,178	)	
Investing activities	 	 	 	 	 	 	 	
Expenditures on mining interests - San Dimas	 	 	($6,675	)	 	($3,824	)	
Expenditures on mining interests - Black Fox	 	 	-	 	 	(3,609	)	
Cash used in investing activities	 	 	($6,675	)	 	($7,433	)	
Financing activities	 	 	 	 	 	 	 	
Net draw down on revolving credit facility	8 (a)	$	-	 	$	10,000	 	
Repayment of revolving credit facility	 	 	-	 	 	(869	)	
Interest paid	 	 	(2,629	)	 	(2,854	)	
Cash (used in) provided by financing activites	 	 	($2,629	)	$	6,277	 	
Effect of foreign exchange rate changes on cash	 	$	29	 	$	82	 	
Decrease in cash	 	 	($4,622	)	 	($4,252	)	
Cash, beginning of period	 	 	20,966	 	 	19,875	 	
Cash, end of period	 	$	16,344	 	$	15,623	 	
See accompanying notes to the condensed consolidated interim financial statements.
4

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
1.    Basis of preparation, going concern and significant accounting policies
i) Basis of presentation and going concern
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (IAS 34) as issued by the International Accounting Standards Board (IASB). It does not include all the necessary annual disclosures in accordance with International Financial Reporting Standards (IFRS) and should be read in conjunction with Primero Mining Corp.’s (“Primero” or the “Company”) annual consolidated financial statements.
In 2017, the Company’s Board of Directors commenced a strategic review process to explore alternatives to improve shareholder value. This process ultimately resulted in the sale of the Black Fox Complex in October 2017, the sale of the Cerro del Gallo project in November 2017, and a definitive arrangement agreement (the "Arrangement Agreement") to sell Primero to First Majestic Silver Corp. (“First Majestic”), announced on January 12, 2018 (the “Arrangement”). Under the terms of the Arrangement Agreement, all of Primero’s issued and outstanding common shares will be exchanged for First Majestic common shares on the basis of 0.03325 of a First Majestic common share for each Primero common share (the "Exchange Ratio").
On March 13, 2018, the Arrangement was approved by Primero shareholders, and the holders of the 5.75% convertible debentures voted to approve an amendment to the maturity date of the debentures to the day following the closing date of the Arrangement with full principal paid on this date. In May 2018, the antitrust clearance from the Comisión Federal de Competencia Económica (“COFECE”), which is the final government agency approval required before closing the Arrangement with First Majestic was received. Primero anticipates closing of the Arrangement on May 10, 2018.
The Company has sufficient cash on hand to support the business through to the expected close of the Arrangement with First Majestic. If the transaction closes as planned, Management believes First Majestic will have sufficient funding to satisfy all commitments of Primero and its subsidiaries.
If the Arrangement Agreement with First Majestic is terminated for any reason, there is significant uncertainty that Primero will have sufficient funds to repay the full outstanding obligation under the revolving credit facility (“RCF”) upon maturity, which would allow the lenders to exercise their rights under the RCF (see notes 7 and 8). An Event of Default under the RCF, unless waived, would trigger cross default provisions under the 5.75% convertible debentures and the Silver Purchase Agreement.
The above noted factors represent a material uncertainty that casts substantial doubt on the ability of the Company to continue as a going concern. These condensed consolidated interim financial statements do not include the adjustments to the amounts and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern. These adjustments may be material.
These condensed consolidated interim financial statements were approved by the Company’s Board of Directors on May 8, 2018.
5

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
ii) Significant accounting policies
The Company’s significant accounting policies, estimates and judgements were presented in Notes 2 and 3 of the audited annual consolidated financial statements for the year ended December 31, 2017 and have been consistently applied in the preparation of these condensed consolidated interim financial statements except as noted below.
a) IFRS 9, Financial instruments (“IFRS 9”)
The Company adopted IFRS 9 effective January 1, 2018. The Company has applied IFRS 9 on a retrospective basis.
The following summarizes the significant changes in IFRS 9 compared to the previous standard IAS 39, Financial Instruments, Recognition and Measurement (“IAS 39”):

 	•	IFRS 9 uses a single approach to determine whether a financial asset is classified and measured at amortized cost or fair value. The classification and measurement of financial assets is based on the Company's business models for managing its financial assets and whether the contractual cash flows represent solely payments for principal and interest. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward in IFRS 9. Adoption of the classification and measurement guidance of IFRS 9 did not impact the carrying amounts of any of our financial assets on the transition date.	
 	 	 	
 	•	The adoption of the new "expected credit loss" impairment model under IFRS 9, as opposed to an incurred credit loss model under IAS 39, had a negligible impact on the carrying amounts of our financial assets on the transition date.	
On initial recognition of an equity investment that is not held for trading, an irrevocable election is available to measure the investment at Fair Value through Other Comprehensive Income (FVOCI), whereby changes in the investment’s fair value will be recognized permanently in other comprehensive income (loss) with no reclassification to profit or loss. The election is available on an investment-by-investment basis. On transition to IFRS 9, the Company made the election to designate its investment in Fortune Bay as FVOCI. The election did not result in an adjustment to the Company’s financial statements on transition.
b) IFRS 15, Revenue from Contracts with Customers
On January 1, 2018, the Company adopted IFRS 15 – Revenue from Contracts with Customers ("IFRS 15") which supersedes IAS 18 – Revenue ("IAS 18"), IFRIC 13 “Customer Loyalty Programmes”, IFRIC 15 “Agreements for the Construction of Real Estate”, IFRIC 18 “Transfer of Assets from Customers” and SIC 31 “Revenue – Barter Transactions Involving Advertising Services”. IFRS 15 establishes a single five-step model framework for determining the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. The standard is effective for annual periods beginning on or after January 1, 2018. The Company adopted the standard on January 1, 2018 using the full retrospective approach without applying any practical expedients.
6

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
IFRS 15 requires entities to recognize revenue when ‘control’ of goods or services transfers to the customer and when the Company satisfies its performance obligations, whereas the previous standard, required entities to recognize revenue when the ‘risks and rewards’ of the goods or services transfer to the customer. Revenue from contracts with customers is derived from the sale of gold and silver, which are generally physically delivered to customers in the period in which they are produced, with their sales price based on prevailing spot market metal prices. The Company has reviewed its contracts with customers using the five-step analysis required under IFRS 15. Transfer of control generally coincides with the receipt of proceeds from sale of gold and silver, after the goods have been transferred to and accepted by the customer.
The Company concluded there is no change in the timing or amount of revenue recognition on its gold and silver sales under IFRS 15 compared to the previous standard as the point of transfer of risks and rewards of goods and services and transfer of control occur at the same time. As such, no adjustment was required to the Company's financial statements on adoption of IFRS 15.
Additionally, IFRS 15 requires entities to apportion the transaction price attributable to contracts from customers to distinct performance obligations on a relative standalone selling price basis. The impact of this change was insignificant to the Company’s financial statements.
2. Tax ruling in Mexico
On October 4, 2012, the Company’s subsidiary, Primero Empresa Minera, S.A. de C.V. (“PEM”), received a ruling (the “APA Ruling”) from the Mexican tax authority, Servicio de Administración Tributaria (“SAT”), which confirmed the appropriate price for sales of silver under the Amended and Restated Silver Purchase Agreement (see note 13 for further information). Under Mexican tax law, an advance pricing agreement (“APA”) ruling is generally applicable for up to a five year period (which in the Company’s case, covered the year in which the ruling application was filed, the immediately preceding year and the three subsequent years). The Company’s APA Ruling covered the five years ended December 31, 2014.
In February 2016, PEM received a legal claim from the Mexican tax authority seeking to nullify the APA. The legal claim initiated does not identify any different basis for paying taxes, nor have any tax reassessments been received from the SAT. The Company intends to vigorously defend the validity of its APA. The Company has filed procedural and substantive responses to the claim. The procedural response is a challenge against the admission of the SAT’s claim. The substantive response contains the Company’s response to the SAT’s claim. If the SAT is successful in retroactively nullifying the APA, the SAT may seek to audit and reassess PEM in respect of its sales of silver in connection with the Silver Purchase Agreement for 2010 through 2014. If the SAT is successful in retroactively nullifying the APA and issuing reassessments, it would likely have a material adverse effect on the Company’s results of operations, financial condition and cash flows. PEM would have rights of appeal in connection with any reassessments.
In June 2017, as part of the ongoing annual audits of the PEM tax returns, the SAT issued an observations letter for the 2010 tax year. An observations letter is issued to a taxpayer in advance of a reassessment being issued, provides an outline of the SAT’s position on matters under audit, and affords the taxpayer an opportunity to respond to such position in advance of the reassessment being issued. In this observations letter issued to PEM, the SAT made explicit its view that PEM should pay taxes based on the market price of silver which, if successfully applied to its 2010 taxation year, would make PEM liable for an additional $9.1 million of taxes before penalties or interest. As the Company continues to defend the APA in the Mexican legal proceeding, the APA remains valid and the Company will vigorously dispute any reassessment that may be issued in the future on a basis that assesses taxes on its silver revenues that is inconsistent with the APA. The observations letter does not represent a tax reassessment and no liability has been recognized in the financial statements.
7

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
In October 2017, the SAT issued an observations letter for the 2011 tax year, with the same explicit view that PEM should pay taxes on the market price of silver, which if successfully applied to its 2011 taxation year, would make PEM liable for an additional $25.2 million of taxes before penalties or interest. The Company has submitted its formal response to both the 2010 and the 2011 observations letters.
While the Company continues to believe its tax filing position based upon the APA is correct, should the Company ultimately be required to pay tax on its silver revenues based on market prices without any mitigating adjustments, the incremental income tax for the years 2012-2017 would be in the range of $140 - $155 million, before interest or penalties.
While the Company continues to vigorously defend the validity of the APA and its transfer pricing position, it is also engaging in dialogue with the SAT seeking to resolve matters and bring tax certainty through a negotiated solution. Primero has also had constructive dialogue with the SAT in relation to outstanding value-added tax (“VAT”) receivables and has received $15.2 million of VAT refunds since July 2017.
Since January 1, 2015, the Company has continued to record its revenue from the sale of silver for purposes of Mexican tax accounting in a manner consistent with the APA, on the basis that the applicable facts and laws have not changed. The Company’s legal and financial advisors continue to believe that the Company has filed its tax returns compliant with applicable Mexican law. To the extent the SAT determines that the appropriate price of silver sales under the Silver Purchase Agreement is significantly different from the realized price and while PEM would have rights of appeal in connection with any reassessments, it is likely to have a material adverse effect on the Company’s business, financial condition and results of operations.
3. Discontinued operations
On October 6, 2017, the Company sold the Black Fox Complex for total consideration of $32.3 million including cash proceeds of $27.5 million and the release of $4.8 million from restricted cash that was pledged towards environmental closure liabilities. The Black Fox Complex comprises the Black Fox mine and adjacent properties, Grey Fox and Pike River.
On November 27, 2017, the Company sold the Cerro del Gallo project, via the sale of all of the issued and outstanding shares of San Anton Resource Corporation, the indirect owner of the Cerro del Gallo project to Argonaut Gold Inc. for cash proceeds of $15 million.
8

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
Given the dispositions occurred in 2017, there is no impact from discontinued operations in the Statement of Operations and Comprehensive Income (Loss) in 2018. The impact in the comparative period of 2017 is presented below:

 	 	Cerro del Gallo	 	 	Black Fox	 	 	 	 	
 	 	Project	 	 	Com plex	 	 	Total	 	
Three Months Ended M arch 31, 2017	 	 	 	 	 	 	 	 	 	
Revenue	$	-	 	$	18,318	 	$	18,318	 	
Operating expenses	 	229	 	 	12,810	 	 	13,039	 	
Depreciation and depletion	 	14	 	 	3,203	 	 	3,217	 	
Total cost of sales	 	243	 	 	16,013	 	 	16,256	 	
Earnings (loss) from mine operations	 	(243	)	 	2,305	 	 	2,062	 	
Exploration expenses	 	-	 	 	-	 	 	-	 	
Share-based compensation	 	-	 	 	-	 	 	-	 	
General and administrative expenses	 	(26	)	 	(112	)	 	(138	)	
Other charges	 	-	 	 	-	 	 	-	 	
Earnings (loss) from operations	 	(269	)	 	2,193	 	 	1,924	 	
Other income (expense) items	 	147	 	 	(398	)	 	(251	)	
Earnings (loss) before income taxes	 	(122	)	 	1,795	 	 	1,673	 	
Income tax recovery	 	687	 	 	-	 	 	687	 	
Net income (loss)	$	565	 	$	1,795	 	$	2,360	 	
The results of discontinued operations included in the interim consolidated statement of cash flows for the three months ended March 31, 2017 are presented below:

Cash flow from (used in):	 	2017	 	
 	 	 	 	
Operating activities before working capital changes	$	1,939	 	
Changesin non-cash working capital	 	($1,524	)	
Operating activities	$	415	 	
Investing activities	 	($3,609	)	
Financing activities and effect of foreign exchangerates	 	($869	)	
Net cash flow used in discontinued operations	 	($4,063	)	
4. Segmented information
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:
9

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	

 	 	San Dimas	 	 	 	 	 	 	 	
 	 	Mine	 	 	Corporate	 	 	Total	 	
At March 31, 2018	 	 	 	 	 	 	 	 	 	
Current assets	$	78,330	 	$	4,369	 	$	82,699	 	
Mining interests	 	127,985	 	 	186	 	 	128,171	 	
Other non-current assets	 	-	 	 	825	 	 	825	 	
Total assets	$	206,315	 	$	5,380	 	$	211,695	 	
 	 	 	 	 	 	 	 	 	 	
Current liabilities	$	24,081	 	$	33,715	 	$	57,796	 	
Non-current liabilities	 	45,593	 	 	74,900	 	 	120,493	 	
Total liabilities	$	69,674	 	$	108,615	 	$	178,289	 	

 	 	San Dimas	 	 	Corporate	 	 	Total	 	
At December 31, 2017	 	 	 	 	 	 	 	 	 	
Current assets	$	72,026	 	$	7,280	 	$	79,306	 	
Mining interests	 	124,835	 	 	215	 	 	125,050	 	
Othernon-currentassets	 	-	 	 	910	 	 	910	 	
Totalassets	$	196,861	 	$	8,405	 	$	205,266	 	
 	 	 	 	 	 	 	 	 	 	
Current liabilities	$	19,242	 	$	35,159	 	$	54,401	 	
Non-current liabilities	 	42,428	 	 	48,706	 	 	91,134	 	
Total liabilities	$	61,670	 	$	83,865	 	$	145,535	 	

 	 	San Dimas	 	 	 	 	 	 	 	
 	 	Mine	 	 	Corporate	 	 	Total	 	
Three Months Ended March 31, 2018	 	 	 	 	 	 	 	 	 	
Revenue	$	36,832	 	$	-	 	$	36,832	 	
Operating expenses	 	22,131	 	 	-	 	 	22,131	 	
Depreciation and depletion	 	4,049	 	 	30	 	 	4,079	 	
Total cost of sales	 	26,180	 	 	30	 	 	26,210	 	
Earnings (loss) from mine operations	 	10,652	 	 	(30	)	 	10,622	 	
Exploration expenses	 	(156	)	 	-	 	 	(156	)	
Share-based compensation	 	-	 	 	(624	)	 	(624	)	
General and administrative expenses	 	(662	)	 	(2,572	)	 	(3,234	)	
Other charges	 	-	 	 	(2,607	)	 	(2,607	)	
Earnings (loss) from operations	 	9,834	 	 	(5,833	)	 	4,001	 	
Other income (expense) items	 	2,100	 	 	(30,491	)	 	(28,391	)	
Earnings (loss) before income taxes	 	11,934	 	 	(36,324	)	 	(24,390	)	
Income tax expense	 	(2,573	)	 	-	 	 	(2,573	)	
Net income (loss)	$	9,361	 	 	($36,324	)	 	($26,963	)	
10

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	

 	 	San Dimas	 	 	 	 	 	Continuing	 	 	BlacFox	 	 	Cerro de Gallo	 	 	Discontinued	 	 	 	 	
 	 	Mine	 	 	Corporate	 	 	Operations	 	 	Com plex	 	 	Project	 	 	Operations	 	 	Total	 	
Three Months Ended March 31,2017	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue	$	19,369	 	$	-	 	$	19,369	 	$	18,318	 	$	-	 	$	18,318	 	$	37,687	 	
Operating expenses	 	13,591	 	 	-	 	 	13,591	 	 	12,810	 	 	229	 	 	13,039	 	$	26,630	 	
Depreciation and depletion	 	6,369	 	 	30	 	 	6,399	 	 	3,203	 	 	14	 	 	3,217	 	$	9,616	 	
Totalc ost of sales	 	19,960	 	 	30	 	 	19,990	 	 	16,013	 	 	243	 	 	16,256	 	$	36,246	 	
Earnings (loss) from mine operations	 	(591	)	 	(30	)	 	(621	)	 	2,305	 	 	(243	)	 	2,062	 	$	1,441	 	
Exploration expenses	 	(474	)	 	-	 	 	(474	)	 	-	 	 	-	 	 	-	 	 	($474	)	
Share-based compensation	 	-	 	 	(1,786	)	 	(1,786	)	 	-	 	 	-	 	 	-	 	 	($1,786	)	
Generaland administrative expenses	 	(511	)	 	(2,435	)	 	(2,946	)	 	(112	)	 	(26	)	 	(138	)	 	($3,084	)	
Other charges	 	(5,633	)	 	(2,178	)	 	(7,811	)	 	-	 	 	-	 	 	-	 	 	($7,811	)	
Earnings (loss) from operations	 	(7,209	)	 	(6,429	)	 	(13,638	)	 	2,193	 	 	(269	)	 	1,924	 	 	($11,714	)	
Other income (expense) items	 	1,382	 	 	4,567	 	 	5,949	 	 	(398	)	 	147	 	 	(251	)	$	5,698	 	
Earnings (loss) before income taxes	 	(5,827	)	 	(1,862	)	 	(7,689	)	 	1,795	 	 	(122	)	 	1,673	 	 	($6,016	)	
Income tax recovery	 	18,832	 	 	-	 	 	18,832	 	 	-	 	 	687	 	 	687	 	$	19,519	 	
Net income (loss)	$	13,005	 	 	($1,862	)	$	11,143	 	$	1,795	 	$	565	 	$	2,360	 	$	13,503	 	
5. Revenue

 	 	Three months ended March 31	 	
 	 	2018	 	 	2017	 	
 	 	 	 	 	 	 	
Gold	$	30,905	 	$	15,964	 	
Silver	 	5,927	 	$	3,405	 	
 	$	36,832	 	$	19,369	 	
a) Silver Purchase Agreement
The Silver Purchase Agreement provides that for the life of the mine, the first 6.0 million ounces of silver produced per annum by the San Dimas mine, plus 50% of the excess silver produced above this amount, must be sold to Wheaton Precious Metals International (“WPMI”), formerly Silver Wheaton Caymans (“SWC”) at the lesser of $4.32 per ounce (adjusted by 1% per year) and market prices. All silver not sold to WPMI is available to be sold by the Company at market prices.
The contract year for purposes of the threshold runs from August 6 of a year to August 5 of the following year. At March 31, 2018 the threshold for the year ended August 5, 2018 has not been met (3.6 million ounces have been delivered under the contract as at March 31, 2018). During the three months ended March 31, 2018 and 2017 the Company did not sell any silver at market prices.
In connection with the Arrangement Agreement, First Majestic has entered into agreements with WPMI, whereby, following closing of the Arrangement, the Silver Purchase Agreement will be terminated and replaced with a new stream which will provide for a reduction in the amount of payable metal content.
11

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
6. Inventories

 	 	March 31	 	 	December 31	 	
 	 	2018	 	 	2017	 	
Gold and silver	$	6,839	 	$	5,848	 	
Stockpiled ore	 	89	 	 	175	 	
W ork-in-progress	 	2,011	 	 	2,444	 	
Supplies	 	6,130	 	 	5,201	 	
 	$	15,069	 	$	13,668	 	
7. Mining interests
A summary of mining interest is as follows:

 	 	Mining	 	 	 	 	 	Plant,	 	 	 	 	 	 	 	 	 	 	
 	 	properties	 	 	Landand	 	 	equipment	 	 	Construction	 	 	March 31	 	 	December 31	 	
 	 	and leases	 	 	buildings	 	 	andvehicles	 	 	inprogress	 	 	2018	 	 	2017	 	
San Dimas Mine	$	83,552	 	$	16,243	 	$	16,178	 	$	12,013	 	$	127,986	 	$	124,835	 	
Corporate	 	-	 	 	-	 	 	185	 	 	-	 	 	185	 	 	215	 	
Total	$	83,552	 	$	16,243	 	$	16,363	 	$	12,013	 	$	128,171	 	$	125,050	 	
All property of the San Dimas mine is pledged as security for the Company’s obligations under the Silver Purchase Agreement (Note 5a)). Substantially all of the Company’s assets are pledged as security under the revolving credit facility (Note 8 (a)).
8. Debt

 	 	March 31	 	 	December 31	 	
 	 	2018	 	 	2017	 	
Current debt	 	 	 	 	 	 	
   Revolving credit facility (RCF) (a)	$	30,201	 	$	30,201	 	
   Finance lease liabilities (b)	 	52	 	 	109	 	
 	 	30,253	 	 	30,310	 	
Long-term debt	 	 	 	 	 	 	
   5.75% convertible debentures (b)	$	73,875	 	$	47,625	 	
 	 	73,875	 	 	47,625	 	
 	$	104,128	 	$	77,935	 	
(a) The RCF was extended multiple times from November 2017 to April 2018 in connection with the Company’s strategic review process resulting in the current maturity date being the earlier of (i) May 15, 2018, (ii) the closing of the business combination with First Majestic, and (iii) the seventh business day following termination of the proposed business combination. Wheaton Precious Metals Corp. (“WPM”) continues to provide a guarantee to the lenders for the RCF.
12

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
The revolving credit facility is secured by substantially all of the Company’s assets and contains customary covenants and default clauses typical for this type of facility.
(b) Effective February 28, 2018 until February 28, 2020, the 5.75% convertible debentures are redeemable by the Company, in whole or in part from time to time, on not more than 60 days and not less than 30 days prior notice, at a redemption price equal to their principal amount plus accrued and unpaid interest, if any, up to but excluding the date set for redemption, provided the simple average of the daily volume-weighted average trading price of the common shares for the 20 consecutive trading days ending five trading days prior to the date on which notice of redemption is provided is at least 125% of the conversion price.
On March 13, 2018, the debentureholders voted to approve an amendment to the maturity date of the debentures. Upon the closing of the Arrangement, the amendment of the trust indenture will accelerate the maturity date of the Primero Debentures to the next Business Day (as defined in the trust indenture) following the effective date of the Arrangement.
9. General and administrative expenses

 	 	Three months ended March 31	 	
 	 	2018	 	 	2017	 	
Salaries and wages	$	1,446	 	$	1,254	 	
Rent and office costs	 	191	 	 	192	 	
Legal, accounting, consulting and professional fees	 	461	 	 	523	 	
Directors fees and expenses	 	369	 	 	395	 	
Other general and administrative expenses	 	767	 	 	582	 	
 	$	3,234	 	$	2,946	 	
10. Other charges

 	 	Three months ended March 31	 	
 	 	2018	 	 	2017	 	
Legal expenses associated with proceedings in Mexico	$	66	 	$	50	 	
Office closure costs and severance payments	 	-	 	 	2,115	 	
Legal and advisorycostsrelating to financing initiatives	 	-	 	 	527	 	
Idle and  restart costs incurred during strike at San Dimas	 	-	 	 	5,119	 	
Advisory fees associated with strategic review process	 	2,541	 	 	-	 	
 	$	2,607	 	$	7,811	 	
In 2017, idle costs incurred during the strike at San Dimas comprise labor and contractor costs, supplies and incremental consulting and advisory fees.
11. Interest and finance expenses
13

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	

 	 	 	 	 	Three months ended March 31	 	
 	 	Notes	 	 	2018	 	 	2017	 	
 	 	 	 	 	 	 	 	 	 	
Interest expenses	 	 	 	 	 	 	 	 	 	
 Interest on 5.75% convertible debentures	 	8	 	$	1,081	 	$	1,081	 	
 Interest on revolving credit facility	 	8	 	$	480	 	 	516	 	
 	 	 	 	 	1,561	 	 	1,597	 	
Finance expenses	 	 	 	 	 	 	 	 	 	
 Accretion on asset retirement obligation	 	 	 	$	210	 	 	191	 	
 Revolving credit facility guarantee fee	 	8	 	 	473	 	 	-	 	
 Amortization of revolving credit facility transaction costs	 	 	 	 	-	 	 	358	 	
 Others	 	 	 	 	3	 	 	-	 	
 	 	 	 	 	686	 	 	549	 	
 	 	 	 	$	2,247	 	$	2,146	 	
12. Other (expenses) income

 	 	Three months ended March 31	 	
 	 	2018	 	 	2017	 	
Foreign exchange gain	$	596	 	$	1,070	 	
Finance income	 	7	 	 	14	 	
Royalty and other	 	(498	)	 	359	 	
 	$	105	 	$	1,443	 	
13. Income taxes
Challenge to the 2012 APA
Overview
In February 2016 the Mexican tax authority, the SAT, initiated a proceeding seeking to nullify the APA which it issued to the Company in 2012. The APA confirmed the Company’s basis for paying taxes on the price it realized for certain silver sales between 2010 to 2014. If the SAT’s challenge is successful it is likely to have a material adverse effect on the Company’s business, financial condition and results of operations.
Background
In 2004, affiliates of Goldcorp Inc. (“Goldcorp”) entered into a Silver Purchase Agreement with WPM in connection with the San Dimas mine and two other mines in Mexico. Under the Silver Purchase Agreement, Goldcorp received cash and securities in exchange for an obligation to sell the amount of silver extracted from the mines at a price set forth in the Silver Purchase Agreement. In order to satisfy its obligations under the Silver Purchase Agreement, sales were made by Goldcorp through a non-Mexican subsidiary to a WPM subsidiary in the Cayman Islands. Upon Primero’s acquisition of the San Dimas Mine, the Silver Purchase Agreement was amended and restated and Primero assumed all of Goldcorp’s obligations with respect to the San Dimas concession under the Silver Purchase Agreement. Primero did not receive any of the initial consideration that was paid to Goldcorp under the Silver Purchase Agreement.
14

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
As amended and restated, the provisions of the Silver Purchase Agreement require that, on a consolidated basis, the Company sell to WPM 100% of silver produced from the San Dimas concessions during a contract year (August 6th to the following August 5th), up to 6 million ounces and 50% of silver produced thereafter, at the lower of (i) the current market price and (ii) $4.04 per ounce plus an annual increase of 1% (the PEM Realized Price). From August 6, 2016 to August 5, 2017, the contract price was $4.28 per ounce (August 6, 2015 to August 5, 2016 - $4.24) . From August 6, 2017 the contract price is $4.32 per ounce. The price paid by WPM under the Silver Purchase Agreement represents the total value that the Company and its affiliates receive for the sale of silver to WPM. The Silver Purchase Agreement continues indefinitely in respect of any silver produced from the San Dimas concessions.
The specific terms of the Silver Purchase Agreement require that the Company sell the silver through one of its non-Mexican subsidiaries, STB, to WPM’s subsidiary, WPMI. As a result, the Company’s Mexican subsidiary that holds the San Dimas concessions, PEM, sells the required amount of silver produced from the San Dimas concessions to STB to allow it to fulfill its obligations under the Silver Purchase Agreement.
When the Company initially acquired the San Dimas mine, the sales from PEM to STB were made at the spot market price while the sales by STB to WPMI were at the contracted PEM Realized Price, which at that time was $4.04 per ounce. In order to reflect commercial realities and the effects of the Silver Purchase Agreement on the Company on a consolidated basis, PEM amended the terms of sales of silver between itself and STB and commenced to sell the amount of silver due under the Silver Purchase Agreement to STB at the PEM Realized Price. For Mexican income tax purposes PEM then recognized the revenue on these silver sales on the basis of its actual realized revenue, which was the PEM Realized Price.
APA
In order to provide the Company with stability and assurances that the SAT would accept the PEM Realized Price as the proper price to use to calculate Mexican income taxes, the Company applied for and received the APA from the SAT. The APA confirmed the PEM Realized Price would be used as the Company’s basis for calculating taxes owed by the Company on the silver sold under the Silver Purchase Agreement. The Company believed that the function of an APA was to provide tax certainty and as a result made significant investments in Mexico based on that certainty. Under Mexican law, an advanced pricing agreement is valid for five years and therefore the APA represented the SAT’s agreement to accept the PEM Realized Price as the basis for calculating taxes for the tax years 2010 through 2014.
Challenge to APA for 2010 – 2014 tax years
15

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
In February 2016, the SAT initiated a legal proceeding seeking to nullify the APA, however, the SAT has not identified an alternative basis in the legal claim for calculating taxes on the silver sold by PEM for which it receives the PEM Realized Price. The Company is an ‘interested party’ in this proceeding. If the SAT is successful in retroactively nullifying the APA, the SAT may seek to audit and reassess PEM in respect of its sales of silver in connection with the Silver Purchase Agreement for 2010 through 2014.
In June 2017, as part of the ongoing annual audits of the PEM tax returns, the SAT issued an observations letter for the 2010 tax year. An observations letter is issued to a taxpayer in advance of a reassessment being issued, provides an outline of the SAT’s position on matters under audit, and affords the taxpayer an opportunity to respond to such position in advance of the reassessment being issued. In this observations letter issued to PEM, the SAT made explicit its view that PEM should pay taxes based on the market price of silver which, if successfully applied to its 2010 taxation year, would make PEM liable for an additional $9.1 million of taxes before penalties or interest. As the Company continues to defend the APA in the Mexican legal proceeding, the APA remains valid and the Company will vigorously dispute any reassessment that may be issued in the future on a basis that assesses taxes on its silver revenues that is inconsistent with the APA. The observations letter does not represent a tax reassessment and no liability has been recognized in the financial statements.
In October 2017, the SAT issued an observations letter for the 2011 tax year, with the same explicit view that PEM should pay taxes based on the market price of silver, which if successfully applied to its 2011 taxation year, would make PEM liable for an additional $25.2 million of taxes before penalties or interest. The Company has submitted formal responses to both the 2010 and 2011 observation letters.
While the Company continues to believe its tax filing position based upon the APA is correct, should the Company ultimately be required to pay tax on its silver revenues based on market prices without any mitigating adjustments, the incremental income tax for the years 2012-2017 would be in the range of $140 - $155 million, before interest or penalties.
The Company vigorously defends the validity of the APA and has filed procedural and substantive responses to the claim. In addition, the Company intends to explore opportunities to minimize the potential impact on the Company in the event that the SAT is successful in its legal claim to nullify the APA, but there is no assurance that the Company will find or be able to implement a reasonable solution.
While the Company continues to vigorously defend the validity of the APA and its transfer pricing position, it is also engaging in dialogue with the SAT seeking to resolve matters and bring tax certainty through a negotiated solution. Primero has also had constructive dialogue with the SAT in relation to outstanding VAT receivables and has received $15.2 million of VAT refunds since July 2017.
Primero Mining Corp.’s claim against the Mexican Government
16

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
On June 2, 2016, the Company notified the Mexican Government that the measures taken by the SAT against PEM in connection with the judicial proceeding seeking to retroactively nullify the APA, breached several provisions of Chapter 11 of the North American Free Trade Agreement (“NAFTA”) because these measures are arbitrary, discriminatory, unfair and inequitable. As at March 31, 2018, the Company has the option to commence international arbitration proceedings pursuant to Article 1119 of the NAFTA at a time of its choosing. As Primero is continuing its dialogue with the Mexican Government regarding the Mexican tax authority’s legal claim against the APA, it has temporarily suspended its advancement of international arbitration proceedings against the Mexican Government.
Tax treatment for tax years following 2014
Since January 1, 2015, the Company has continued to record its revenue from the sale of silver for purposes of Mexican tax accounting in a manner consistent with the APA on the basis that the applicable facts and laws have not changed. The Company’s legal and financial advisors continue to believe that the Company has filed its tax returns compliant with applicable Mexican law. Given the legal challenge by the SAT against the APA for the 2010-2014 tax years, the Company currently believes it is unlikely the SAT will agree to an Advance Pricing Agreement for the 2015-2019 tax years on terms similar to the challenged APA. To the extent the SAT determines that the appropriate price of silver sales under the Silver Purchase Agreement, for tax purposes, is significantly different from the PEM Realized Price and, while PEM would have rights of appeal in connection with any reassessments, it is likely to have a material adverse effect on the Company’s business, financial condition and results of operations.
Other
In the observations letters for both the 2010 and 2011 tax years the SAT raised some queries with respect to certain intercompany transactions, and the Company has provided the pertinent information requested. The observations letters do not represent a tax reassessment and no liability has been recognized in the financial statements related to these queries.
17

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
14. Supplementary cash flow information
Changes in non-cash working capital comprise the following:

 	 	Three months ended March 31	 	
 	 	2018	 	 	2017	 	
Trade and other receivables	$	403	 	$	1,321	 	
Value added and income taxes receivable	 	(6,103	)	 	(2,291	)	
Prepaid expenses	 	1,005	 	 	462	 	
Inventories	 	(1,926	)	 	282	 	
Trade and other payables	 	3,494	 	 	(1,455	)	
Other taxes payable	 	352	 	 	576	 	
 	 	($2,775	)	 	($1,105	)	
15. Shareholders’ equity
a) Share capital
The authorized share capital consists of unlimited common shares without par value and unlimited preferred shares, issuable in series with special rights and restrictions attached.
During the quarter ended March 31, 2018, the Company issued a total of nil common shares (2017 – 782,184 common shares), valued at $nil million (2017 - $0.5 million).
As at March 31, 2018, the following stock options were outstanding and exercisable:

 	Awards Outstanding	 	Awards Exercisable	
 	 	Remaining	W eighted	 	 	Remaining	W eighted	
 	 	contractual	average	 	 	contractual	average	
Range of exercise	 	life	exercise	 	 	life	exercise	
price per share	           Quantity	(in years)	price	 	     Quantity	(in years)	price	
C$0.75 -C$2.00	2,165,143	3.93	C$0.85	 	721,716	3.93	C$0.85	
C$2.01-C$5.00	3,832,534	2.37	3.49	 	3,545,556	2.33	3.53	
C$5.01-C$8.00	676,648	0.90	7.45	 	676,648	0.90	7.45	
 	6,674,325	2.73	C$3.03	 	4,943,920	2.36	C$3.68	
Under the the Arrangement with First Majestic, an aggregate of approximately 226,476 replacement stock options will be issued (assuming no exercise of existing Primero options) to Primero optionholders who do not exercise their Primero options prior to the effective time of the Arrangement, at exercise prices adjusted by the Exchange Ratio.
18

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
Deferred share units
As at March 31, 2018, a total of 315,790 DSUs were issued and outstanding. The DSUP is accounted for as an equity-settled plan. All of the outstanding units have been measured at the reporting date using their grant date fair value, calculated based on the grant date closing price of Primero shares on the TSX.
The Arrangement with First Majestic will also provide that upon the Arrangement becoming effective all existing deferred share units and phantom share units of Primero will be paid out in cash in an amount equal to C$0.30 per deferred share unit or phantom share unit.
16. Financial instruments
The Company’s financial instruments at March 31, 2018 consist of cash and cash equivalents, trade and other receivables, an equity investment in Fortune Bay, trade and other payables, and debt.
At March 31, 2018, the carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables, and the RCF are considered to be a reasonable approximation of their fair values due to their short-term nature. The fair value of the finance lease liabilities approximate their carrying value as the interest rate implicit in the leases approximate current market rates.
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 through profit or loss (FVTPL) 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 March 31, 2018 or December 31, 2017, other than those discussed below.
The 5.75% convertible debentures issued by the Company on February 9, 2015 (Note 8 (b)) are considered to contain multiple embedded derivatives. These debentures and all related derivatives were accounted for as one instrument which was initially recognized at fair value and is subsequently measured at FVTPL for each period during the term of the debentures. During the three months ended March 31, 2018 a mark to market loss of $26.3 million (2017 – gain of $4.9 million) was recognized in relation to the debentures.
Fair value measurements of financial assets and liabilities recognized on the Consolidated 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:
19

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
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.
The levels in the fair value hierarchy that the Company’s financial assets and liabilities that are measured and recognized at fair value on a recurring basis are as follows:

 	 	March 31	 	 	December 31	 	
Level 1	 	2018	 	 	2017	 	
Investment in Fortune Bay (1)	$	825	 	$	910	 	
5.75% convertible debentures (2,3)	 	73,875	 	 	47,625	 	
Warrant liability (2)	 	43	 	 	44	 	

(1)	Fortune Bay is a publicly-listed company and the fair value is based on the trading price of its shares as at the date of the statement of financial position.	
(2)	The fair value of the 5.75% convertible debentures and the warrant liability are calculated using the respective market prices on the TSX Exchange as at the date of the statement of financial position.	
(3)	On March 13, 2018, the holders of the 5.75% convertible debentures voted to approve an amendment to accelerate the maturity date of the debentures to the day following the closing date of the Arrangement with the full principal of $75 million paid on this date.	
At March 31, 2018, there were no financial assets or liabilities measured and recognized on the consolidated statements of financial position at fair value that would be categorized as Level 3 in the fair value hierarchy (December 31, 2017 – $nil).
17. Related party transactions
Other than payments to key management, there were no further related party transactions for the three months ended March 31, 2018 and 2017.
18. Commitments and contingencies
(a) An Ejido is a communal ownership of land recognized by the federal laws in Mexico. While mineral rights are administered by the federal government through federally issued mining concessions, access to surface rights is also required for mining operations. An Ejido controls surface rights over its communal property through an assembly where each of the Ejido members has a voting right. An Ejido may sell or lease lands directly to a private entity and it may also allow individual members of the Ejido to obtain title to specific parcels of land and thus the right to sell or lease the land.
The San Dimas mine uses Ejidos’ lands pursuant to written agreements with Ejidos. Some of these agreements may be subject to renegotiation and changes to the existing agreements may increase operating costs or have an impact on operations. In cases where access to land is required for operations and an agreement cannot be reached with the land owner, Primero may seek access under Mexican law which provides for priority rights for mining activities.
20

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
Three of the properties included in the San Dimas mine and for which Primero holds legal title are subject to legal proceedings commenced by Ejidos seeking title to the property. These proceedings were initiated by Ejidos against defendants who were previous owners of the properties, either deceased individuals who, according to certain public deeds, owned the properties more than 80 years ago, corporate entities that are no longer in existence, or Goldcorp companies. Some of the proceedings also name the Tayoltita Property Public Registry as co-defendant. None of the initial proceedings named Primero as a party and Primero therefore had no standing to participate in them.
In 2015, two of these proceedings were decided in favor of the Ejidos. Upon becoming aware of the decisions Primero obtained injunctions to suspend any legal effect of the decisions while the Company proceeds with a legal process to nullify the Ejidos’ claim by submitting evidence of Primero’s legal title. In February 2017, one of the two legal processes to nullify the Ejidos’ claim was decided in favour of Primero and the decision is subject to appeal by the Ejido. The second proceeding is ongoing.
The third legal proceeding commenced by the Ejidos has not been decided and Primero remains without standing to participate therein because it was not named as a party. In the event a final decision is rendered in favour of the Ejido in that proceeding, Primero will seek to annul such decision by defending its position as the legitimate owner.
If Primero is not successful in its challenge, the San Dimas mine could face higher costs associated with agreed or mandated payments that would be payable to the Ejidos for use of the properties.
(b) The Company has agreed to indemnify its directors and officers, and the directors and officers of its subsidiaries, to the extent permitted under corporate law, against costs and damages incurred as a result of lawsuits or any other judicial, administrative or investigative proceeding in which said directors or officers are sued as a result of their services. The directors’ and officers are covered by directors’ and officers’ liability insurance.
In July 2016, the Company and certain officers were served with a class action lawsuit that was filed earlier in the year in the State of California seeking to recover damages for investors in the Company’s common shares under the U.S. federal securities laws. The Company filed a motion to dismiss this action which was granted on January 30, 2017. The plaintiff’s claims were dismissed without prejudice and the plaintiffs filed an amended complaint on February 27, 2017. The Company intends to vigorously defend this class action lawsuit.
(c) As at March 31, 2018, the Company had entered into commitments to purchase plant and equipment totaling $0.2 million (December 31, 2017 - $0.5 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.
21

PRIMERO MINING CORP.	
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	
(IN THOUSANDS OF UNITED STATES DOLLARS UNLESS OTHERWISE STATED)	
(UNAUDITED)	
19. Subsequent events
In order to facilitate the closing of the Arrangement with First Majestic, the maturity of the RCF and the related guarantee provided by WPM were extended from April 30, 2018 to May 15, 2018.
In May 2018, the antitrust clearance from the COFECE, which is the final government agency approval required before closing the Arrangement with First Majestic was received. Primero anticipates closing of the Arrangement on May 10, 2018.
22

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
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 three months ended March 31, 2018. Additional information on the Company, including its Annual Information Form for the year ended December 31, 2017, can be found under Primero’s profile at www.sedar.com .
Management is responsible for the preparation of the financial statements and MD&A. The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. All dollar figures in this MD&A are expressed in U.S. dollars, unless stated otherwise.
This MD&A contains forward-looking statements and should be read in conjunction with the risk factors described in the “Risks and uncertainties” and “Cautionary statement on forward-looking information” sections at the end of this MD&A.
This MD&A has been prepared as of May 8, 2018.
OVERVIEW OF THE BUSINESS
Primero is a Canadian-based precious metals producer with operations in Mexico. The Company owns one producing property, the San Dimas gold-silver mine, located in Mexico’s San Dimas district, on the border of Durango and Sinaloa states. In addition, the Company owns one exploration property, Ventanas, located in Durango State, Mexico. On January 12, 2018, the Company announced that it entered into a definitive arrangement agreement (the "Arrangement Agreement") whereby First Majestic Silver Corp. (“First Majestic”) will acquire all of the issued and outstanding common shares of Primero (the “Arrangement”). On March 13, 2018, the Arrangement Agreement was approved by Primero shareholders. In May 2018, the antitrust clearance from the Comisión Federal de Competencia Económica (“COFECE”), which is the final government agency approval required before closing the Arrangement with First Majestic was received. Primero anticipates closing of the Arrangement on May 10, 2018.
The Company previously owned a second producing property, the Black Fox mine, located in the Township of Black River-Matheson, Ontario, Canada, which was sold on October 6, 2017 along with 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, comprised the Black Fox Complex. On November 27, 2017, the Cerro del Gallo gold-silver-copper project was sold, located in the state of Guanajuato in central Mexico.
The long-term profitability and operating cash flow of the Company are affected by numerous factors, including its ability to extend or replace its existing financing or secure future financing, the amount of gold and silver produced and sold, market prices of gold and silver, the price of metal under its existing streaming agreements, operating costs, regulatory and environmental compliance, as well as currency exchange rates, labour relations, political risks, and varying levels of taxation. The Company seeks to manage these risks, but many of the factors affecting these risks are beyond the Company’s control.
The Company’s shares are listed on the Toronto Stock Exchange (“TSX”) under the symbol “P” and were listed on the New York Stock Exchange (“NYSE”) under the symbol “PPP” until August 14, 2017. In addition, Primero has a convertible debenture trading on the TSX under the symbol “P.DB.V” and common share purchase warrants trading on the TSX under the symbol “P.WT.C”.
1

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017

 	 	Three months ended March 31	 	
 	 	2018	 	 	2017	 	
Key Performance Data 1	 	 	 	 	 	 	
Tonnes of ore milled	 	148,325	 	 	288,219	 	
Produced	 	 	 	 	 	 	
   Golde quivalent (ounces)	 	31,318	 	 	26,733	 	
   Gold (ounces)	 	26,099	 	 	24,531	 	
   Silver (million ounces)	 	1.61	 	 	0.62	 	
Sold	 	 	 	 	 	 	
   Gold (ounces)	 	23,244	 	 	28,978	 	
   Silver(million ounces)	 	1.37	 	 	0.80	 	
Average realized prices	 	 	 	 	 	 	
   Gold ($/ounce) 2	$	1,330	 	$	1,182	 	
   Silver ($/ounce) 2	$	4.32	 	$	4.28	 	
 	 	 	 	 	 	 	
Financial Data 3 (in thousands of US dollars except per share amounts)	 	 	 	 	 	 	
Revenues 3	$	36,832	 	$	19,369	 	
Earnings (loss) from mine operations 3	 	10,622	 	 	(621	)	
Net (loss) income	 	(26,963	)	 	13,503	 	
Basic net (loss) income per share from continuing operations 3	 	(0.14	)	 	0.06	 	
Diluted net (loss) income per share from continuing operations 3	 	(0.14	)	 	0.06	 	
Operating cash flows before working capital changes	 	7,428	 	 	(2,073	)	
Weighted average shares outstanding (basic) (000’s)	 	193,046	 	 	189,944	 	
Weighted average shares outstanding (diluted) (000’s)	 	193,046	 	 	194,854	 	

 	 	March 31,	 	 	December 31,	 	
 	 	2018	 	 	2017	 	
Assets	 	 	 	 	 	 	
   Mining interests	$	128,171	 	$	125,050	 	
   Total assets	$	211,695	 	$	205,266	 	
Liabilities	 	 	 	 	 	 	
   Long-term liabilities	$	120,493	 	$	91,134	 	
   Total liabilities	$	178,289	 	$	145,535	 	
Equity	$	33,406	 	$	59,731	 	

1.	Inclusive of the Black Fox Complex classified as discontinued operations for the period prior to its disposition in 2017.	
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 Wheaton Precious Metals International Ltd. (“WPMI”), formerly Silver Wheaton Caymans at the San Dimas mine (see “Other liquidity considerations ” ).	
3.	As reported per IFRS with Black Fox Complex and the Cerro del Gallo project classified as discontinued operations.	
2

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
Q1 2018 DEVELOPMENTS
Operational performance

•	Primero’s consolidated production was 31,318 gold equivalent ounces in Q1 2018 compared to 26,733 gold equivalent ounces in Q1 2017. Gold production was 26,099 ounces in Q1 2018 compared to 24,531 ounces in Q1 2017, and silver production was 1.61 million ounces from San Dimas in Q1 2018 compared to 0.62 million ounces in Q1 2017.	
 	 	
•	The San Dimas mine produced 26,099 ounces of gold and 1.61 million ounces of silver in Q1 2018, 158% and 160% higher for gold and silver, respectively, in comparison to Q1 2017. Production in Q1 2017 was negatively impacted by a strike action by unionized employees. The strike resulted in a complete stoppage of mining and milling activities at San Dimas from February 15, 2017 to April 22, 2017.	
Corporate Developments

•	On January 12, 2018, the Company announced that it entered into the Arrangement Agreement whereby First Majestic will acquire all of the issued and outstanding common shares of Primero. Under the terms of the Arrangement Agreement, all of Primero’s issued and outstanding common shares will be exchanged for First Majestic common shares on the basis of 0.03325 of a First Majestic common share for each Primero common share. This implied consideration of C$0.30 per Primero common share, based on the 20-day volume weighted average price of the First Majestic common shares on the Toronto Stock Exchange.	
 	 	
•	The Arrangement Agreement is the culmination of a strategic review process that was commenced by the Company’s Board of Directors to explore alternatives to improve shareholder value.	
 	 	
•	On March 13, 2018, the shareholders of Primero voted to approve the Arrangement with First Majestic.	
 	 	
•	On March 13, 2018, the holders of the 5.75% Convertible Debentures voted to approve an amendment to the maturity date of the debentures. Upon the closing of the Arrangement, the amendment of the trust indenture will accelerate the maturity date of the debentures to the next Business Day following the effective date of the Arrangement and will be paid at par plus accrued interest.	
 	 	
•	In May 2018, the antitrust clearance from the COFECE, which is the final government agency approval required before closing the Arrangement with First Majestic was received. Primero anticipates closing of the Arrangement on May 10, 2018.	
 	 	
•	Under the Arrangement, outstanding Primero stock options and warrants will be replaced with First Majestic securities on equivalent terms. All outstanding PSUs and DSUs will be settled in cash at C$0.30 per unit.	
 	 	
•	In connection with the strategic review process, the revolving credit facility (“RCF”) was extended multiple times, and most recently on April 30, 2018, the Company has further extended its RCF maturity date to May 15, 2018, to allow for the execution of the Arrangement Agreement. WPM continues to guarantee the RCF through the current maturity date. The Company believes it has adequate liquidity to manage the business through the closing of the Arrangement.	
 	 	
•	As the Company continues to defend its advanced pricing agreement (“APA”) in Mexican legal proceedings, the APA remains valid and the Company will vigorously dispute any reassessment that assesses taxes on its silver revenues that is inconsistent with the APA. The Company has also continued a dialogue with the SAT to seek resolution of its tax matters.	
3

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
Financial performance

•	Earnings from mine operations of $10.6 million were generated during Q1 2018 compared with a loss of $0.6 million in Q1 2017. The increase in earnings from mine operation in Q1 2018 is a result of higher production, lower depreciation and depletion due to the impairments recognized in 2017 as well as the adverse impact of the strike action in Q1 2017.	
 	 	
•	The Company recognized a net loss of $27.0 million in Q1 2018 compared to a net income of $13.5 million in Q1 2017 mainly due to $26.2 million mark-to-market losses recognized from the 5.75% convertible debentures and the common share purchase warrants compared to a $6.7 million gain on these items in the prior year period. In addition, in Q1 2018, an income tax expense of $2.6 million was recognized compared to a recovery of $18.9 million in Q1 2017.	
 	 	
•	The Company generated $7.4 million from operating cash flow before working capital changes during Q1 2018, compared to a negative operating cash flow of $2.1 million ($0.01 per share) in Q1 2017, primarily due higher cash earnings from operations.	
REVIEW OF CONSOLIDATED FINANCIAL INFORMATION
Earnings (loss) from mine operations comprises:

 	 	Three months ended March 31	 	
(in thousands of U.S. dollars)	 	2018	 	 	2017	 	
Gold revenue	$	30,905	 	$	15,964	 	
Silver revenue	 	5,927	 	 	3,405	 	
Operating expenses	 	(22,131	)	 	(13,591	)	
Depreciation and depletion	 	(4,079	)	 	(6,399	)	
Earnings (loss) from mine operations	$	10,622	 	 	($621	)	
The table below sets out variances in the key drivers of earnings from mine operations for the three months ended March 31, 2018 compared with the three months ended March 31, 2017:
4

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017

 	 	Three months ended	 	
(in thousands of U.S .dollars)	 	March 31	 	
Loss from mine operations in 2017	 	($621	)	
Differences:	 	 	 	
Revenue	 	 	 	
   Higher realized gold price	 	1,576	 	
   Higher ouncesofgold sold	 	13,365	 	
   Higher realized silver price	 	32	 	
   Higher ounces of silver sold	 	2,490	 	
Higher operating expenses	 	(8,540	)	
Lower depreciation and depletion	 	2,320	 	
Earnings from mine operations in 2018	$	10,622	 	

•	Gold and silver revenue increased in Q1 2018 compared to Q1 2017 due mainly to increased production at San Dimas.	
 	 	
•	The average price realized for gold was $1,330 per ounce, higher than the $1,210 per ounce realized in the first quarter of 2017. Silver prices realized during Q1 2018 were similar to the prices realized in Q1 2017, as in both periods all silver was sold to Wheaton Precious Metals International (“WPMI”) under the terms of the silver purchase agreement.	
 	 	
•	Operating expenses were $22.1 million in Q1 2018; $8.5 million higher than Q1 2017 mainly due to the work stoppage from the San Dimas strike in 2017. Costs incurred during the strike period are included in other charges.	
 	 	
•	Depreciation and depletion was $4.1 million in Q1 2018, compared to $6.4 million in Q1 2017, a decrease of $2.3 million due mainly to the impairments taken at Q2 2017 and Q4 2017 for San Dimas.	
A summary income statement follows:

 	 	Three months ended March 31	 	
(in thousands of U.S. dollars)	 	2018	 	 	2017	 	
Earnings (loss) from mine operations	$	10,622	 	 	($621	)	
Exploration expenses	 	(156	)	 	(474	)	
Share-based compensation	 	(624	)	 	(1,786	)	
Generaland administrative expenses	 	(3,234	)	 	(2,946	)	
Other charges	 	(2,607	)	 	(7,811	)	
Interest and finance expense	 	(2,247	)	 	(2,146	)	
Mark-to-market (loss) gain on convertible debentures & warrants	 	(26,249	)	 	6,653	 	
Other income (expense)	 	105	 	 	1,443	 	
Income tax recovery	 	(2,573	)	 	18,831	 	
Net (loss) income	 	($26,963	)	$	11,143	 	
5

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017

•	Share-based compensation expense was lower in Q1 2018 due to no additional grants of Performance Share Units during the period	
 	 	
•	General and administrative expenses were $3.2 million in Q1 2018, slightly higher than in Q1 2017. The breakdown of general and administrative expenses is in the table below.	

 	 	Three months ended March 31	 	
(in thousands of U.S. dollars)	 	2018	 	 	2017	 	
Salaries and wages	$	1,446	 	$	1,254	 	
Rent and office costs	 	191	 	 	192	 	
Legal, accounting and consulting services	 	461	 	 	523	 	
Directors fees and expenses	 	369	 	 	395	 	
Other general and administrative expenses	 	767	 	 	582	 	
 	$	3,234	 	$	2,946	 	

•	Other charges in Q1 2018 relate mainly to legal and advisory costs incurred for the strategic review process.	

 	 	Three months ended March 31	 	
(in thousands of U.S. dollars)	 	2018	 	 	2017	 	
Legal expenses associated with proceedings in Mexico	$	66	 	$	50	 	
Employee severanc epayments	 	-	 	 	2,115	 	
Legal & advisory costs relating to financing initiatives	 	-	 	 	527	 	
Idle costs incurred during strike at San Dimas	 	-	 	 	5,119	 	
Advisory fees associated with strategic review process	 	2,541	 	 	-	 	
 	$	2,607	 	$	7,811	 	

•	The Company recognized a loss of $26.2 million from the 5.75% Convertible Debentures and the common share purchase warrants during Q1 2018, compared to a $6.7 million gain in Q1 2017. After the announcement of the Arrangement Agreement with First Majestic Silver Corp., the market value of the convertible debentures increased significantly and are now trading at close to their principal amount.	
 	 	
•	In other income (expense) the Company recorded a foreign exchange gain of $0.6 million in Q1 2018 compared to a gain of $1.1 million in Q1 2017. The gain in Q1 2018 was mainly due to an unrealized foreign exchange gain on the translation of the Mexican peso denominated taxes receivables. The Mexican peso strengthened during this period relative to the U.S. dollar (its functional currency).	
6

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
REVIEW OF OPERATIONS

San Dimas Mine	 	 	 	 	 	 	
 	 	Three months ended March 31	 	
 	 	2018	 	 	2017	 	
  Key Performance Data	 	 	 	 	 	 	
 Tonnes of ore mined	 	143,891	 	 	81,321	 	
 Tonnes of ore milled	 	148,325	 	 	82,587	 	
 Tonnes of ore milled perd ay	 	1,648	 	 	1,835	 	
 Average millhead grade (gram s/tonne)	 	 	 	 	 	 	
     Gold	 	5.78	 	 	3.87	 	
     Silver	 	359	 	 	238	 	
 Average gold recovery rate(% )	 	 	 	 	 	 	
     Gold	 	96%	 	 	98%	 	
     Silver	 	92%	 	 	98%	 	
 Produced	 	 	 	 	 	 	
     Gold equivalent (ounces)	 	31,318	 	 	12,320	 	
     Gold (ounces)	 	26,099	 	 	10,118	 	
     Silver (million ounces)	 	1.61	 	 	0.62	 	
 Sold	 	 	 	 	 	 	
     Gold (ounces)	 	23,244	 	 	13,195	 	
     Silver at fixed price (million ounces)	 	1.37	 	 	0.80	 	
 Average realized price (per ounce)	 	 	 	 	 	 	
     Gold	$	1,330	 	$	1,210	 	
     Silver 1	$	4.32	 	$	4.28	 	
 Revenue ($000's)	$	36,832	 	$	19,369	 	
 Earnings (loss)from m ineoperations($000's)	$	10,652	 	 	($591	)	

1.	Average realized silver prices reflect the impact of the silver purchase agreement with WPMI (see “Other liquidity considerations”).	
San Dimas produced 26,099 ounces of gold and 1.61 million ounces of silver during the first quarter of 2018, 158% and 160% higher for gold and silver respectively, in comparison to the first quarter of 2017. The production increase was driven by the adverse impact of a strike action initiated by unionized employees at San Dimas in Q1 2017 which resulted in the complete stoppage of mining and milling activities at the site from February 15, 2017, with San Dimas only achieving 45 operating days in Q1 2017. San Dimas mill throughput averaged 1,648 TPD in Q1 2018 compared to 1,835 TPD in Q1 2017, impacted by the availability of ore from mining operations.
Realized head grades in the first quarter of 2018 were 5.79 grams per tonne of gold and 359 grams per tonne of silver, approximately 49% and 51% higher for gold and silver, respectively, compared to the first quarter of 2017. The increased grade was driven by mining in higher quality areas in Q1 2018.
During Q1 2018, both gold and silver production exceeded sales levels due to the timing of shipments. All silver sold was delivered to WPMI under the silver purchase agreement. The threshold limit under the silver purchase agreement for the 2017 contract year (August 6 of a year to August 5 of the following year) is 6.0 million ounces of silver. As of March 31, 2018, the Company has delivered 3.6 million ounces of silver towards this annual threshold.
7

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
FINANCIAL CONDITION REVIEW
During 2018, the Company amended the terms of the RCF to extend its maturity in order to facilitate Primero’s ongoing discussions regarding possible strategic transactions. With the signing of the Arrangement Agreement, the maturity has been extended to the earliest of the following dates:

 	i.	The date on which the Arrangement is completed,	
 	ii.	The date that is seven business days after the Arrangement Agreement is terminated, and	
 	iii.	May 15, 2018.	
The RCF has been guaranteed by WPM at a daily guarantee fee of approximately $5 thousand.
In 2017, the Company’s Board of Directors commenced a strategic review process to explore alternatives to improve shareholder value. This process ultimately resulted in the sale of the Black Fox Complex in Q4 2017, the sale of the Cerro del Gallo project in Q4 2017, and the Arrangement Agreement to sell Primero to First Majestic, announced on January 12, 2018.
On March 13, 2018, the Arrangement was approved by Primero shareholders. On March 13, 2018, the holders of the 5.75% convertible debentures voted to approve an amendment to the maturity date of the debentures to the day following the closing date of the Arrangement with full principal and accrued interest paid on this date. The Company is awaiting anti-trust clearance in Mexico. The Arrangement is expected to close in May 2018.
The Company has sufficient cash on hand to support the business through to the expected close of the arrangement with First Majestic. If the transaction closes as planned, management believes First Majestic will have sufficient funding to satisfy all commitments of Primero and its subsidiaries.
If the Arrangement Agreement with First Majestic is terminated for any reason, there is significant uncertainty that Primero will have sufficient funds to repay the full outstanding obligation under the RCF upon maturity, which would allow the lenders to exercise their rights under the RCF. The Company notes that any Event of Default under the RCF, unless waived, would trigger cross default provisions under the convertible debentures and the Silver Purchase Agreement with WPMI. This represents a material uncertainty that casts substantial doubt on the ability of the Company to continue as a going concern.
8

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
Key financial ratios the Company uses to assess financial capacity are shown in the net asset table below.

 	 	As at	 	 	As at	 	
(in thousands of U.S. dollars except ratios and per share amounts)	 	March 31, 2017	 	 	Decem ber 31, 2017	 	
 	 	 	 	 	 	 	
Cash and cash equivalents	$	16,344	 	$	20,966	 	
Other current assets	 	66,355	 	 	58,340	 	
Non-current assets	 	128,996	 	 	125,960	 	
Total assets	$	211,695	 	$	205,266	 	
 	 	 	 	 	 	 	
Current liabilities (excluding current debt)	$	27,543	 	$	24,091	 	
Non-current liabilities (excluding long-term debt)	 	46,618	 	 	43,509	 	
Current debt	 	30,253	 	 	30,310	 	
Long-term debt	 	73,875	 	 	47,625	 	
Total liabilities	$	178,289	 	$	145,535	 	
 	 	 	 	 	 	 	
Total shareholders'e quity	$	33,406	 	$	59,731	 	
Total equity	$	33,406	 	$	59,731	 	
 	 	 	 	 	 	 	
Total common shares outstanding	 	193,045,822	 	 	193,045,822	 	
Total options outstanding	 	6,674,325	 	 	6,811,316	 	
Total common share purchase warrants outstanding 1	 	11,011,250	 	 	11,011,250	 	
 	 	 	 	 	 	 	
Key financial ratios	 	 	 	 	 	 	
Current ratio 2	 	1.43	 	 	1.46	 	
Total liabilities-to-equity 3	 	5.34	 	 	2.44	 	
Debt-to-Total capitalization 4	 	0.76	 	 	0.57	 	

1.	As at the date of this MD&A, the Company had 193,045,822 common shares outstanding, the total number of options outstanding was 6,674,325 of which 4,943,920 are exercisable and common share purchase warrants outstanding were 11,011,250.	
2.	Current ratio is calculated as (cash and cash equivalents + other current assets) ÷ (current liabilities + current debt).	
3.	Total liabilities-to-equity is calculated as total liabilities ÷ total equity.	
4.	Debt-to-total capitalization is calculated as (current debt + long-term debt) ÷ (current debt + long-term debt + total equity).	
The Company’s net assets (equity) as at March 31, 2018 were $33.4 million compared to $59.7 million as at December 31, 2017, a decrease due to the net loss during Q1 2018 which was driven by mark-to-market losses on the convertible debentures. The current ratio is consistent with December 31, 2017.
9

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
ANALYSIS OF CASH FLOWS FOR THE THREE MONTHS
ENDED MARCH 31, 2018 AND 2017
Sources and uses of cash

 	 	Three months ended March 31	 	
(in thousands of U.S. dollars)	 	2018	 	 	2017	 	
Cash flow:	 	 	 	 	 	 	
Provided by (used in) operating activities before working capital changes	$	7,428	 	 	($2,073	)	
Changes in non-cash working capital	 	(2,775	)	 	(1,105	)	
Provided by (used in) operating activities	 	4,653	 	 	(3,178	)	
Used in investing activities	 	(6,675	)	 	(7,433	)	
(Used in) provided by financing activities and other	 	(2,600	)	 	6,359	 	
Decrease in cash	 	($4,622	)	 	($4,252	)	
Operating activities
Primero’s cash flows from operating activities before working capital changes were higher in the first quarter of 2018 when compared to the first quarter of 2017 due to higher gold and silver production and lower taxes paid.
Changes in non-cash working capital were a cash outflow of $2.8 million in the first quarter of 2018 compared with an outflow of $1.1 million in the first quarter of 2017. The cash outflow during the quarter was mainly due to the increase in tax receivables since December 31, 2017.
Investing activities
Cash used in investing activities are mostly capital expenditures as shown in the table below.
10

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017

 	 	Three months ended	 	
 	 	 	 	 	March 31	 	
(in m illions of U.S. dollars)	 	2018	 	 	2017	 	
Capital Expenditures	 	 	 	 	 	 	
San Dimas Underground Development	$	4.8	 	$	2.0	 	
San Dimas Sustaining Capital	 	0.6	 	 	0.4	 	
San Dimas Projects	 	-	 	 	-	 	
San Dimas SubTotal	$	5.4	 	$	2.4	 	
Black Fox Underground Development	 	-	 	 	3.9	 	
Black Fox Sustaining Capital	 	-	 	 	0.5	 	
Black Fox Complex SubTotal	 	-	 	$	4.4	 	
Total Capital Expenditures	$	5.4	 	$	6.8	 	
 	 	 	 	 	 	 	
Capitalized Exploration Expenditures	 	 	 	 	 	 	
San Dimas Diamond Drilling	$	0.9	 	$	0.8	 	
San Dimas Drifting	 	0.1	 	 	0.1	 	
San Dimas SubTotal	$	1.0	 	$	0.9	 	
Black Fox Diamond Drilling	 	-	 	 	1.0	 	
Regional Exploration	 	-	 	 	0.4	 	
Black Fox Complex SubTotal	 	-	 	$	1.4	 	
Total Capitalized Exploration Expenditures	$	1.0	 	$	2.3	 	
TOTAL CAPITAL EXPENDITURES	$	6.4	 	$	9.1	 	
San Dimas capital spending during 2017 focused on underground development. In order to conserve cash, the capital plan for San Dimas prioritizes only the expenditures required to maintain current operating levels. The majority of exploration activity aimed at new reserve generation has been deferred.
Financing activities
During the first quarter of 2018, financing activities included interest payments associated with the 5.75% Convertible Debentures and the revolving credit facility.
Debt

 	 	As at	 	 	As at	 	
(in thousands of U.S. dollars)	 	March 31, 2018	 	 	December 31, 2017	 	
Current debt	 	 	 	 	 	 	
Revolving credit facility (RCF)	$	30,201	 	$	30,201	 	
Finance lease liabilities	 	52	 	 	109	 	
Total current debt	 	30,253	 	 	30,310	 	
Long-term debt	 	 	 	 	 	 	
5.75% convertible debentures	$	73,875	 	$	47,625	 	
Total debt	$	104,128	 	$	77,935	 	
11

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements, other than the potential availability of the undrawn $4.8 million under the RCF. The Company is not anticipating drawing down the remaining balance since it has entered into the Arrangement Agreement with First Majestic.
Cash requirements
The following table summarizes the contractual maturities of the Company’s financial liabilities and operating and capital commitments:

 	 	As at	 	 	As at	 	
 	 	March 31, 2018	 	 	Dec. 31, 2017	 	
 	 	Within 1	 	 	2-5	 	 	Over 5	 	 	Total	 	 	Total	 	
(in thousands of U.S .dollars)	 	year	 	 	years	 	 	years	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Trade and other payables and accrued liabilities	$	22,552	 	$	-	 	$	-	 	$	22,552	 	$	19,593	 	
Share based payments	 	98	 	 	-	 	 	-	 	 	98	 	 	71	 	
5.75% Convertible debentures and interest 1	 	4,313	 	 	77,853	 	 	-	 	 	82,166	 	 	84,323	 	
Revolving line of credit and interest	 	30,712	 	 	-	 	 	-	 	 	30,712	 	 	30,657	 	
Reclamation and closure cost obligations	 	-	 	 	5,004	 	 	25,711	 	 	30,715	 	 	30,715	 	
Commitment to purchase plant and equipment	 	166	 	 	-	 	 	-	 	 	166	 	 	122	 	
Total	$	57,841	 	$	82,857	 	$	25,711	 	$	166,409	 	$	165,481	 	
1. Upon successful closing of the Arrangement, the convertible debentures will be paid at par plus accrued interest.
Other liquidity considerations
APA Ruling
In February 2016 the Mexican tax authority, the SAT, initiated a proceeding seeking to nullify the APA which it issued to the Company in 2012. The APA confirmed the Company’s basis for paying taxes on the price it realized for certain silver sales between 2010 to 2014. If the SAT’s challenge is successful it is likely to have a material adverse effect on the Company’s business, financial condition and results of operations.
In June 2017, as part of the ongoing annual audits of the PEM tax returns, the SAT issued an observations letter for the 2010 tax year. An observations letter is issued to a taxpayer in advance of a reassessment being issued, provides an outline of the SAT’s position on matters under audit, and affords the taxpayer an opportunity to respond to such position in advance of the reassessment being issued. In this observations letter issued to PEM, the SAT made explicit its view that PEM should pay taxes based on the market price of silver which, if successfully applied to its 2010 taxation year, would make PEM liable for an additional $9.1 million of taxes before penalties or interest. As the Company continues to defend the APA in the Mexican legal proceeding, the APA remains valid and the Company will vigorously dispute any reassessment that may be issued in the future on a basis that assesses taxes on its silver revenues that is inconsistent with the APA. The observations letter does not represent a tax reassessment and no liability has been recognized in the financial statements.
In October 2017, the SAT issued an observations letter for the 2011 tax year, with the same explicit view that PEM should pay taxes based on the market price of silver, which if successfully applied to its 2011 taxation year, would make PEM liable for an additional $25.2 million of taxes before penalties or interest. The Company has submitted formal responses to both the 2010 and 2011 observation letters.
12

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
While the Company continues to believe its tax filing position based upon the APA is correct, should the Company ultimately be required to pay tax on its silver revenues based on market prices without any mitigating adjustments, the incremental income tax for the years 2012-2017 would be in the range of $140 - $155 million, before interest or penalties.
The Company vigorously defends the validity of the APA and has filed procedural and substantive responses to the claim. In addition, the Company intends to explore opportunities to minimize the potential impact on the Company in the event that the SAT is successful in its legal claim to nullify the APA, but there is no assurance that the Company will find or be able to implement a reasonable solution.
While the Company continues to vigorously defend the validity of the APA and its transfer pricing position, it is also engaging in dialogue with the SAT seeking to resolve matters and bring tax certainty through a negotiated solution. Primero has also had constructive dialogue with SAT in relation to outstanding VAT receivables and has received $15.2 million of VAT refunds since July 2017.
Other
In 2016, the Company and certain officers were served with a class action lawsuit that was filed earlier in the year in federal court in the State of California seeking to recover damages for investors in the Company’s common shares under the U.S. federal securities laws. On July 14, 2017, the Company’s motion to dismiss the amended complaint was granted and the plaintiffs’ claims were dismissed without prejudice. The plaintiff filed a notice of appeal of the dismissal order on September 8, 2017. The parties have filed their briefs in this appeal and a ruling on the appeal is expected sometime in 2018. The Company intends to vigorously defend this class action lawsuit.
In the observations letters for both the 2010 and 2011 tax years the SAT raised queries with respect to certain intercompany transactions and the Company has provided the pertinent information for 2010 and 2011. The observations letters do not represent a tax reassessment and no liability has been recognized in the financial statements.
Dividend Report and Policy
The Company has not paid any dividends since incorporation and currently has no plans to pay dividends.
13

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA
The following table provides a summary of unaudited financial data for the last eight quarters:

 	2018	 	2017	 	 	2016	 	
(in thousands of U.S.	 	 	 	 	 	 	 	 	
dollars except for	Q 1	Q 4	Q 3	Q 2	Q 1	Q 4	Q 3	Q 2	
per share amounts)	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Financial Data 1	 	 	 	 	 	 	 	 	
Revenue	$36,832	$32,532	$23,636	$16,232	$19,369	$34,089	$36,581	$42,578	
Total cost of sales	(26,210)	(28,246)	(22,451)	(19,026)	(19,990)	(32,338)	(36,204)	(38,262)	
Earnings from mine operations	$10,622	$4,286	$1,185	($2,794)	($621)	$1,751	$377	$4,316	
 	 	 	 	 	 	 	 	 	
Impairment charges	-	(108,858)	-	(195,000)	-	(111,000)	-	-	
Exploration expenses	(156)	(215)	(306)	(350)	(474)	(733)	(206)	(612)	
Share-based compensation	(624)	(469)	(972)	(922)	(1,786)	(1,466)	(2,268)	(1,801)	
General and administrative expenses	(3,234)	(3,137)	(2,513)	(2,883)	(2,946)	(2,647)	(3,344)	(4,209)	
Idle and restart costs incurred during strike at San Dimas	-	-	-	-	(6,207)	-	-	-	
Othercharges	(2,607)	(2,622)	(1,116)	(1,702)	(1,604)	(594)	(2,284)	(1,443)	
Earnings (loss) from operations	$4,001	($111,015)	($3,722)	($203,651)	($13,638)	($114,689)	($7,725)	($3,749)	
Other (expenses) income	(28,391)	(4,383)	(4,834)	(2,476)	5,950	10,816	(171)	(4,467)	
Income tax (expense)recovery	(2,573)	2,304	(1,837)	(14,906)	18,832	32,212	(3,394)	(11,272)	
Net (loss) income from continuing operations	($26,963)	($113,094)	($10,393)	($221,033)	$11,144	($71,661)	($11,290)	($19,488)	
Net income (loss) from discontinued operations, net of income taxes	$-	($2,119)	$2,817	($79,434)	$2,427	($118,426)	($442)	$58	
Net (loss) income for the period	(26,963)	(115,213)	(7,576)	(300,467)	13,571	(190,087)	(11,732)	(19,430)	
 	 	 	 	 	 	 	 	 	
Basic and diluted (loss)income per share from continuing operations	($0.14)	($0.59)	($0.05)	($1.15)	$0.06	($0.38)	($0.06)	($0.12)	
Basic and diluted (loss)income per share from discontinued operations	$-	($0.01)	$0.01	($0.42)	$0.01	($0.63)	$-	$-	
Diluted (loss) income per share including discontinued operations	($0.14)	($0.60)	($0.04)	($1.57)	$0.07	($1.01)	($0.06)	($0.12)	
1 Black Fox Complex and the Cerro del Gallo project have been retroactively classified as discontinued operations.

•	When the Company reaches its annual threshold for deliveries under the silver purchase agreement, the Company realizes silver sales at spot prices, increasing both revenue and net income. Revenue in Q4 2016 and Q3 2016 included $0.1 million and $2.9 million, respectively, of silver sales at spot prices.	
 	 	
•	The Company recorded the following non-cash mining interest impairments: Q4 2017 $109.0 million related to San Dimas, Q3 2017 $5.0 million relating to the Black Fox Complex, Q2 2017 $285.0 million, comprising $195.0 million relating to the San Dimas mine, $40.0 million relating to the Black Fox Complex and $50.0 million relating to the Cerro del Gallo Project, Q4 2016 $228.0 million, comprising $111.0 million and $117.0 million on mining interests relating to San Dimas and Black Fox, respectively.	
 	 	
•	Exploration expenses reflect the costs incurred in the Company’s exploration properties.	
 	 	
•	Share-based compensation fluctuates based on the share price of the Company and vesting of grants in previous periods.	
 	 	
•	Other charges include legal costs associated with legal proceedings in Mexico (APA and NAFTA), advisor and legal costs associated with the strategic review process, and termination payments apart from Q1 and Q2 2017 which also includes period costs incurred during the San Dimas strike, costs associated with the strategic review process in Q3 and Q4 2017 and a loss on disposition of Cerro del Gallo in Q4 2017.	
14

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017

•	Interest and finance expense varies quarterly depending on the amount of debt held by the Company.	
 	 	
•	The 5.75% Convertible Debentures and common share purchase warrants are marked-to- market each quarter.	
 	 	
•	Other income (expense) largely includes foreign exchange gains or losses from the revaluation of certain local denominated assets and liabilities at San Dimas and Black Fox to U.S. dollars.	
 	 	
•	Income tax expense (recovery) is impacted by the effects of foreign exchange fluctuations on Mexican peso denominated non-cash deferred income taxes, which were significant in certain periods such as Q2 2017, Q1 2017, and Q4 2016.	
RELATED PARTY TRANSACTIONS
As at March 31, 2018, the Company’s related parties include its subsidiaries, associates over which it exercises significant influence, and key management personnel. During its normal course of operations, the Company enters into transactions with its related parties for goods and services.
Other than payments to key management, there were no further related party transactions for the three months ended March 31, 2018 that have not been disclosed in the Company’s condensed consolidated interim financial statements.
CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGEMENTS
The Company’s significant accounting policies, estimates and judgements were presented in Notes 2 and 3 of the audited annual consolidated financial statements for the year ended December 31, 2017 and have been consistently applied in the preparation of the condensed consolidated interim financial statements for the period ended March 31, 2018, except for those noted in note 1 ii) of the condensed consolidated interim financial statements for the period ended March 31, 2018.
The Company’s management makes judgements in its process of applying the Company’s accounting policies in the preparation of its unaudited condensed consolidated interim financial statements. In addition, the preparation of the financial data requires that the Company’s management make assumptions and estimates of the impacts from uncertain future events on the carrying amounts of the Company’s assets and liabilities at the end of the reporting period, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates as the estimation process is inherently uncertain. Estimates are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates and the resulting impacts on the carrying amounts of the Company’s assets and liabilities are accounted for prospectively.
15

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
FINANCIAL INSTRUMENTS
The Company’s financial instruments at March 31, 2018 consist of cash and cash equivalents, trade and other receivables, restricted cash, an equity investment in Fortune Bay Corp. (“Fortune Bay”), trade and other payables, financial lease liabilities, the convertible debentures and the revolving credit facility.
At March 31, 2018, the carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables, and the RCF are considered to be a reasonable approximation of their fair values due to their short-term nature. The fair value of the financial lease liabilities approximate their carrying value as the interest rate implicit in the leases approximate current market rates.
The fair value of the 5.75% Convertible Debentures which closed on February 9, 2015 is based on the market price of the debenture on the TSX Exchange. Gains and losses from fluctuations in the market price are recognized in the statement of operations and comprehensive income (loss) as mark-to-market gain or loss on convertible debentures.
The levels in the fair value hierarchy that the Company’s financial assets and liabilities that are measured and recognized at a fair value on a recurring basis are as follows:

 	 	March 31	 	 	December 31	 	
Level 1	 	2018	 	 	2017	 	
Investment in Fortune Bay (1)	$	825	 	$	910	 	
5.75% convertible debentures (2,3)	 	73,875	 	 	47,625	 	
Warrantl iability (2)	 	43	 	 	44	 	

(1)	Fortune Bay is a publicly-listed company and the fair value is based on the trading price of its shares as at the date of the statement of financial position.	
(2)	The fair value of the 5.75% convertible debentures and the warrant liability are calculated using the respective market prices on the TSX Exchange as at the date of the statement of financial position.	
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 March 31, 2018 or December 31, 2017.
RISKS AND UNCERTAINTIES
The Company’s business contains significant risk due to the nature of mining, exploration, and development activities. For additional discussion of these and other risk factors, please refer to the Company’s Annual Information Form for the year ended December 31, 2017, which can be found under the Company’s profile at www.sedar.com.
16

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
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 CONTROL OVER FINANCIAL REPORTING
The Company’s management, with the participation of its CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company’s internal control over financial reporting includes policies and procedures that:

•	pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, the transactions and dispositions of assets of the Company;	
•	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that the Company’s receipts and expenditures are made only in accordance with authorizations of management and the Company’s Directors; and	
•	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s condensed consolidated interim financial statements.	
There has been no change in internal controls over financial reporting during the three months ended March 31, 2018 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.
17

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain statements made and information contained in this MD&A constitute “forward-looking information” within the meaning of Canadian securities laws, such as, references to the Company’s ability to extend or replace its existing financing, future gold and silver production, and the future profitability and viability of the Company’s operations. Forward –looking information and statements in this MD&A include those that relate to:

•	continued production at the San Dimas mine,	
•	the satisfaction of conditions necessary and the expected timing to close the arrangement with First Majestic,	
•	the ability of the Company to continue as a going concern,	
•	the Company’s ability to repay amounts under the RCF and its ability to further extend the maturity date of the RCF,	
•	the available alternatives to sustain operations should the arrangement with First Majestic be delayed or not close,	
•	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 ability of the Company to manage its work force and its adherence to standard work practices as well and management of union agreements with each operating site,	
•	the timing of the development of new mineral deposits,	
•	future prices of precious and base metals,	
•	expected ore grades, recovery rates, and throughput,	
•	that plant, equipment or processes will operate as anticipated,	
•	the occurrence of accidents, labour disputes, road blocks and other risks associated with 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 (which is currently intended to be sold before year end),	
•	the SAT’s challenge to the APA ruling and the basis for calculating taxes on silver sold pursuant to the Silver Purchase Agreement for past and future periods and the impact of future adverse tax assessments on the economic viability of the San Dimas mine,	
•	the ability of the Company to comply with environmental, safety and other regulatory requirements,	
•	expectations regarding currency fluctuations,	
•	the timing and possible outcome of pending litigation, and	
18

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017

•	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; that all regulatory approvals for the transaction with First Majestic will be timely received; assumptions relating to the Company’s ability to extend, repay or refinance its RCF; that there are no significant disruptions affecting operations, whether due to 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 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 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 to support near term mining and production plans; 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 the APA is not nullified and that the Company pays taxes on a similar basis for future periods; 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 or that the Company is able to achieve another acceptable resolution with the SAT; 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.
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: regulatory approvals may be delayed or denied, 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, exploration and development plans; insufficient capital to continue development and exploration plans; litigation risks; risks inherent in the execution of significant transactions; currency fluctuations; cessation of mining operations due to uneconomic conditions; financing of additional capital requirements; cost of exploration and development programs; 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; and other 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.
19

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
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, 2017 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
The disclosure in this MD&A uses terms that comply with reporting standards in Canada and certain estimates are made in accordance with National Instrument 43-101 “Standards of Disclosure for Mineral Projects” (“NI 43-101”). NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Unless otherwise indicated, all reserve and resource estimates contained in or incorporated by reference in this MD&A have been prepared in accordance with NI 43-101. These standards differ significantly from the requirements of the United States Securities and Exchange Commission (the “SEC”), SEC Industry Guide 7 as amended (“Guide 7”) and reserve and resource information contained herein and incorporated by reference herein may not be comparable to similar information disclosed by U.S. companies.
This MD&A uses the terms “Mineral Reserve”, “Proven Mineral Reserve” and “Probable Mineral Reserve” which are terms defined in the Canadian Institute of Mining, Metallurgy and Petroleum which were adopted by the Canadian Securities Administrators’ NI 43-101. Under SEC standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC standards. Accordingly, Mineral Reserve estimates contained in this MD&A may not qualify as “reserves” under SEC standards. In addition, disclosure of “contained ounces” is permitted disclosure under Canadian regulations; however, the SEC only permits issuers to report mineralization as in place tonnage and grade without reference to unit measures.
20

PRIMERO MINING CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
This MD&A also uses the terms “Measured Mineral Resources”, “Indicated Mineral Resources” and “Inferred Mineral Resources”. We advise investors that while such terms are recognized and required by Canadian securities regulations, the SEC does not recognize them. Inferred Mineral Resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian regulations, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies, except in limited circumstances. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Investors are cautioned not to assume that all or any part of Measured Mineral Resources or Indicated Mineral Resources will ever be converted into Mineral Reserves. Investors are also cautioned not to assume that any part or all of an Inferred Mineral Resource exists, or is economically or legally mineable.
NI 43-101 also permits the inclusion of disclosure regarding the potential quantity and grade, expressed as ranges, of a target for further exploration provided that the disclosure (i) states with equal prominence that the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the target being delineated as a Mineral Resource, and (ii) states the basis on which the disclosed potential quantity and grade has been determined. Disclosure regarding exploration potential has been included in this MD&A. United States investors are cautioned that disclosure of such exploration potential is conceptual in nature by definition and there is no assurance that exploration of the mineral potential identified will result in any category of NI 43-101 Mineral Resources being identified.
For the above reasons, information contained in this MD&A may not be comparable to similar information disclosed by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.
On behalf of the Board
“ Signed”
____________________
Joseph F. Conway
Vice Chairman, Interim President & CEO
21

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Joseph F. Conway , Interim President and 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 March 31, 2018 .
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings , for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 	A.	designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that	
 	 	 	 	
 		I.	material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and	
 	 	 	 	
 		II.	information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and	

 	B.	designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.	
5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework ( 2013 ) published by the Committee of Sponsoring Organizations of the Treadway Commission.
5.2 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

 	(a)	a description of the material weakness;	
 	 	 	
 	(b)	the impact of the material weakness on the issuer’s financial reporting and its ICFR; and	
 	 	 	
 	(c)	the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.	
5.3 N/A
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2018 and ended on March 31, 2018 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date: May 9, 2018
“signed”
_______________________
Joseph F. Conway
Interim President and Chief Executive Officer

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Ryan Snyder , 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 March 31, 2018 .
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings , for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 	A.	designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that	
 	 	 	 	
 		I.	material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and	
 	 	 	 	
 		II.	information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and	

 	B.	designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.	
5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework ( 2013 ) published by the Committee of Sponsoring Organizations of the Treadway Commission.
5.2 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

 	(a)	a description of the material weakness;	
 	 	 	
 	(b)	the impact of the material weakness on the issuer’s financial reporting and its ICFR; and	
 	 	 	
 	(c)	the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.	
5.3 N/A
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2018 and ended on March 31, 2018 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date: May 9, 2018
“signed”
_______________________
Ryan Snyder
Chief Financial Officer