Primero Mining : Reports Fourth Quarter and Full-Year 2015 Results;Record Revenues Drive Increased Cash Flows

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DECEMBER 31, 2015

TABLE OF CONTENTS

Management's discussion and analysis of financial condition and results of operations 1 - 56

Management's Responsibility for Financial Reporting 57

Independent Auditors' Report of Registered Public Accounting Firm 58

Report of Independent Registered Public Accounting Firm

on Internal Control Over Financial Reporting 60

Report of Independent Registered Public Accounting Firm 62

Consolidated statements of operations and comprehensive income (loss) 64

Consolidated statements of financial position 65

Consolidated statements of changes in equity 66

Consolidated statements of cash flows 67

Notes to the consolidated financial statements 68 - 112

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 consolidated financial statements of the Company as at and for the year ended December 31, 2015. Additional information on the Company, including its Annual Information Form for the year ended December 31, 2015, which is expected to be filed by March 31, 2016, 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 US 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 February 17, 2016.

OVERVIEW OF THE BUSINESS

Primero is a Canadian-based precious metals producer with operations in both Mexico and Canada. The Company is focused on building a portfolio of high quality, low cost precious metals assets in the Americas through acquiring, exploring, developing and operating mineral resource properties. The Company owns two producing properties, the San Dimas gold-silver mine, located in Mexico's San Dimas district, on the border of Durango and Sinaloa states, and as of March 5, 2014, with the

acquisition of Brigus Gold Corp. ("Brigus"), the Black Fox mine located in the Township of Black River‐

Matheson, Ontario, Canada. The Company owns 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, comprise the Black Fox Complex.

In addition, the Company owns one development-stage project; the Cerro del Gallo gold-silver-copper project, located in the state of Guanajuato in central Mexico and one exploration property, Ventanas, located in Durango State, Mexico.

The profitability and operating cash flow of the Company are affected by numerous factors, including the amount of gold and silver produced and sold, market prices of gold and silver, operating costs, regulatory and environmental compliance, as well as currency exchange rates, 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.

Commodity prices continue to be volatile as economies around the world continue to experience economic challenges. Volatility in the price of gold and silver impacts the Company's revenue, while volatility in the foreign exchange rates and certain input costs have an impact on the Company's operating costs and capital expenditures.

The Company's shares are listed on the Toronto Stock Exchange ("TSX") under the symbol "P" and on the New York Stock Exchange ("NYSE") under the symbol "PPP". In addition, Primero has convertible debentures trading on the TSX under the symbols "P.DB.U" and "P.DB.V".

SELECTED CONSOLIDATED ANNUAL INFORMATION

Years ended December 31	2015	20141	2013
Key Performance Data
Tonnes of ore milled	1,868,926	1,593,005	766,930
Produced
Gold equivalent (ounces)	259,474	225,054	143,114
Gold (ounces)	221,060	189,943	111,983
Silver (million ounces)	8.30	6.15	6.05
Sold
Gold equivalent (ounces)	255,951	220,067	143,972
Gold (ounces)	218,194	185,286	112,846
Silver (million ounces)	8.12	5.94	6.17
Average realized prices
Gold ($/ounce)3	$1,136	$1,243	$1,394
Silver($/ounce)3	$5.34	$7.46	$6.97
Total cash costs (per gold ounce)2
Gold equivalent basis	$637	$687	$599
By-product basis	$548	$579	$389
All-in sustaining costs (per gold ounce)2	$972	$1,222	$1,077
Financial Data (in thousands of US dollars except per share amounts)
Revenues	$291,304	$274,612	$200,326
Earnings from mine operations	50,473	52,663	76,004
Net loss	(106,910)	(224,384)	(4,250)
Adjusted net income2	6,556	5,365	38,668
Basic loss per share	(0.66)	(1.48)	(0.04)
Diluted loss per share	(0.66)	(1.48)	(0.04)
Adjusted net income per share2	0.04	0.04	0.36
Operating cash flows before working capital changes	83,166	73,658	72,396
Operating cash flows before working capital changes per share	0.51	0.48	0.67
Weighted average shares outstanding (basic)(000's)	162,341	152,064	108,528
Weighted average shares outstanding(diluted) (000's)	162,341	152,064	108,528
As At December 31	2015	20141	2013
Assets
Mining interests	$790,118	$881,480	$636,253
Total assets	$924,968	$1,002,820	$800,822
Liabilities
Long-term liabilities	$162,427	$190,213	$94,039
Total liabilities	$276,092	$254,835	$139,732
Equity	$648,876	$747,985	$661,090

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1. Includes the results for the period for which the Black Fox Complex assets, acquired March 5, 2014, were owned by Primero (March 5, 2014 to December 31, 2015).

2. See "NON-GAAP measurements "

3. 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 Silver Wheaton Caymans at the San Dimas mine (see "Other liquidity considerations").

HIGHLIGHTS

Developments

• On February 9, 2015, the Company issued $75.0 million aggregate principal amount of 5.75% convertible unsecured subordinated debentures maturing on February 28, 2020. Using the proceeds from the issuance the Company repaid $40 million it had drawn from its revolving credit facility. At December 31, 2015, the credit facility still remained fully undrawn and available to the Company.

  
  

• The Company achieved key milestones at both the San Dimas mine and the mill tracking towards the completion of its expansion from 2,500 tonnes per day (TPD) to 3,000 TPD in Q3 2016.

  
  

• At the Black Fox mine, the development ramp to the Deep Central Zone was well advanced and had reached the 620 metre level at December 31, 2015. Underground throughput continues to track higher averaging 620 TPD in Q4 2015, on track to meet the 850 TPD target expected in Q4 2016.

  
  

• Current economic conditions and results of additional studies at Grey Fox and Cerro Del Gallo resulted in the Company electing to defer the development of both of these projects. Both projects do not generate a sufficient internal rate of return at current metal prices to justify the required capital expenditure.

• On February 3, 2016 the Company announced that its Mexican subsidiary, Primero Empresa Minera, S.A. de C.V. (PEM), received a legal claim from the Mexican tax authorities, Servicio de Administración Tributaria (SAT), seeking to nullify the Advance Pricing Agreement (APA) issued by SAT in 2012. The APA confirmed the Company's basis for paying taxes on realized silver prices for the years 2010 to 2014 and represented SAT's agreement to accept that basis for those years. The legal claim initiated does not identify any different basis for paying taxes. The Company intends to vigorously defend the validity of its APA. See "Challenge to the 2012 APA" elsewhere in the MD&A for additional details.

• The Company announced on February 10, 2016, that it has elected to satisfy its obligation to pay the entire redemption price of the 6.5% convertible debentures using cash on the maturity date of March 31, 2016. The debentures are redeemable for an amount equal to the principal amount of the debentures plus accrued unpaid interest up to, but excluding, the maturity date, which is estimated to total $1.6 million. On the date of the announcement, the Company drew down $50 million on its revolving credit facility to satisfy this obligation.