A Canadian miner's NAFTA challenge against Mexico could throw a wrench into the "Three Amigos" summit late this month, when the leaders of Canada, the United States and Mexico will gather in Ottawa.
Primero Mining Corp., (PPP) which owns the San Dimas gold-silver mine in Durango, Mexico, has launched the challenge against the Mexican government saying the Mexican tax authorities are trying to improperly collect more taxes from the company, something the company's CEO says could cost it $100 million U.S.
The dispute is about how the company is taxed on the sale of silver.
In 2012, a Mexican court ruled Primero should be taxed based on what's known as the "realized price" of its silver, which is a little over $4.00 U.S. an ounce.
The realized value is much lower than the market price for silver, which is currently above $16.00 U.S. per ounce.
Primero had argued it should be taxed at the lower rate as it is contractually obliged to sell a large portion of its silver to another company, Vancouver-based Silver Wheaton Corp. (T.SLW), at the lower realized price.
But in February, Mexico's tax authority announced it was retroactively overturning that 2012 agreement.
On Thursday, Primero announced it had issued a notice of intent seeking international arbitration on that decision, which it says violates Mexico's commitments under NAFTA.
The Ottawa summit is set for Wednesday, June 29.
The company also announced today after market close that it has entered into an agreement with a syndicate of underwriters, led by BMO Capital Markets, to buy on a bought deal basis, 19,150,000 units of the Corporation at a price of C$2.35 per Unit, representing aggregate gross proceeds to Primero of C$45,002,500.
Primero was down 7.5% in after hours trading Monday.
