VANCOUVER (miningweekly.com) – The TSX-listed stock of Canadian precious metals producer Primero Mining on Wednesday took a 10% knock after the company announced a 24% year-over-year decrease in gold reserves.

The Vancouver-based company, which operates mines in Canada and Mexico, also reported a 20% year-on-year decrease in silver reserves. The declines in reserves of metals were attributed to depletion and modified modelling parameters.

Depletion accounted for 155 000 oz of gold reserves and 5.3-million ounces of silver reserves over year-end 2015 estimates, with its two operating assets San Dimas’ and Black Fox’s contained gold falling 36% to 517 000 oz and 53% to 111 000 oz, respectively.

Despite the drilling completed over 2016, measured and indicated resources fell 3% and inferred resources also dropped by 6%. Total measured and indicated resources now total three-million ounces of contained gold and 83.7-million ounces of contained silver.

Primero said the average reserve grade at San Dimas decreased to 40 g/t in 2016, from 4.8 g/t in 2015, and at Black Fox it rose to 4.1 g/t in 2016, from 3.6 g/t in 2015. The tonnage of 800 000 t at Black Fox fell by about 60% year-over-year, which drove the lower reserve ounces.

Desjardins Capital Markets analyst Michael Parkin on Wednesday said San Dimas has a long history of reserve replacement and that Primero has nearly doubled its 2017 exploration budget from 2016 levels, with the goal of improving its reserve replacement going forward.

“Management noted that it is currently reviewing potential impairments and, with a mineral reserve drop at each asset, we would not be surprised at a write down at both operating assets,” he said in a note to clients.

For its mineral reserve calculations, Primero assumed a gold price of $1 200/oz, the same as in 2015; a silver price of $17/oz, compared with $18/oz in 2015; and a Mexican peso/US dollar and Canadian dollar/US dollar assumption of 18 and 1.30, respectively, compared with 15.5 and 1.25 applied in 2015.

The stock fell C$0.10 on Wednesday to C$0.90 apiece.