NEW YORK (AP) -- U.S. shares of Primero Mining Corp. surged more than 30 percent Friday after the company got a favorable tax ruling from Mexican authorities.
The Canadian mining company said Mexico's Servicio de Administracion Tributaria confirmed that the company has correctly recorded revenue and taxes from certain silver sales at realized prices, rather than spot prices, since August, 2010.
The ruling is good news for Primero, because it has an agreement to supply silver from its San Dimas mine in Mexico to Silver Wheaton Corp. until Aug. 6, 2014 for as little as $4.08 per ounce, significantly lower than current spot prices of about $34.90 per ounce.
The company said it will only receive spot prices for its silver after an annual threshold amount is delivered.
The ruling applies to Primero's 2010 through 2014 fiscal years. Assuming the company continues to sell its silver from the mine on the same terms and Mexican laws do not change, Primero expects to pay taxes on realized prices, rather than spot prices, for the life of the mine.
Primero U.S. shares climbed by $1.69, or 31.3 percent, to $7.09 in very heavy morning trading, after peaking at $7.92 earlier in the day and shooting past their previous 52-week high of $5.82.
