BELO HORIZONTE, Brazil, Nov. 12, 2012, 2012 (Canada NewsWire via COMTEX) -- JAG - TSX/NYSE
Jaguar Mining Inc. ("Jaguar" or the "Company") (JAG: TSX/NYSE) today reported a net loss of $21.6 million or $0.26 per fully diluted share for the quarter ended September 30, 2012. This result compares to a net loss of $51.3 million or $0.61 per fully diluted share in the third quarter of 2011. The third quarter 2012 result includes a $4.7 million unrealized non-cash loss on the conversion option embedded in convertible debt (see note 1). Excluding this non-operating item, Jaguar's third quarter result was a net loss of $16.9 million or $0.20 per fully diluted share.
For the nine month period ended September 30, 2012, Jaguar reported a net loss of $35.2 million or $0.42 per fully diluted share. This compares to a net loss of $32.0 million or $0.38 per fully diluted share in the nine month period ended September 30, 2011.
Jaguar sold 23,307 ounces of gold at an average realized price of $1,648 per ounce in the three months ended September 30, 2012 compared to 41,390 ounces of gold at an average realized price of $1,692 per ounce in the three months ended September 30, 2011. Average cash operating cost per ounce was $963 in the third quarter 2012 compared to $1,162 in the second quarter 2012 and $886 in the third quarter 2011. Cash operating margin was $685 per ounce in the third quarter 2012 compared to $446 per ounce in the second quarter 2012 and $806 per ounce in the third quarter 2011. The decrease in the Company's average cash operating cost per ounce during the third quarter 2012 as compared to the second quarter 2012 was attributable to Jaguar's on-going cost reduction program which included placing the Paciência operation on care and maintenance beginning in May 2012, reduced headcount at the mining operations and continued focus on reducing dilution and improving productivity. The increase in average cash operating cost per ounce as compared to the third quarter of 2011 was largely attributable to lower total production which resulted in higher fixed cost absorption, together with the lower feed grade at Turmalina that increased the cost by $357 per ounce. These were partially offset by the positive impact of changes in the exchange rate that reduced the cash operating cost by $180 per ounce and lower costs for labor and equipment maintenance that reduced the cash operating cost by $104 per ounce.
Commenting on the Company's results and operations, David Petroff, Jaguar's President and CEO stated, "We are continuing to see positive results from our cost reduction program. Our consolidated average cash cost per ounce improved by 17% compared to the second quarter and is down over 24% since the first quarter when we initiated the program."
"We have adopted a new ground support system which is having the desired effect of making our mines safer and lowering dilution," Petroff continued. "The introduction of these new standards lengthened the mining cycle time and caused congestion at Turmalina. We expect our productivity will improve as our crews become more familiar with the new approach to ground support, as development at Turmalina advances, and when we acquire more suitable rock bolting equipment."
Summary of Key Operating Results - Consolidated
Three months ended Sept 30 Nine months ended Sept 30
(unaudited) 2012 2011 2012 2011
($ in 000s,
except per
share
amounts)
Gold sales $ 38,412 $ 70,041 $ 135,919 $ 185,739
Ounces sold 23,307 41,390 82,378 121,368
Average
sales price 1,648 1,692 1,650 1,530
$ / ounce
Gross profit 5,522 17,716 (3,200) 41,536
(loss)
Net loss (21,625) (51,272) (35,166) (31,962)
Basic loss (0.26) (0.61) (0.42) (0.38)
per share
Diluted loss (0.26) (0.61) (0.42) (0.38)
per share
Weighted
avg. # of
shares 84,409,648 84,388,909 84,409,648 84,378,791
outstanding
- basic
Weighted
avg. # of
shares 84,409,648 84,388,909 84,409,648 84,378,791
outstanding
- diluted
Key Operating Statistics - By Operation
Three Months Ended September 30, 2012 Operating Data
Ore Feed Plant Cash Cash
Processed Grade Recovery Production Operating Operating
(t000) (g/t) Rate (%) (ounces) Cost/t Cost/ounce
Turmalina 115 2.70 89% 9,186 $ 79.60 $ 991
Paciàªncia - - - - - -
Caeté 170 3.24 88% 13,840 76.70 945
Total 285 3.03 88% 23,026 $ 77.80 $ 963
Three Months Ended September 30, 2011 Operating Data
Ore Feed Plant Cash Cash
Processed Grade Recovery Production Operating Operating
(t000) (g/t) Rate (%) (ounces) Cost/t Cost/ounce
Turmalina 179 3.11 89% 16,204 $ 80.50 $ 906
Paciàªncia 119 2.60 91% 8,572 73.00 929
Caeté 171 3.24 88% 15,885 78.10 841
Total 469 3.03 89% 40,661 $ 77.70 $ 886
Nine Months Ended September 30, 2012 Operating Data
Ore Feed Plant Cash Cash
Processed Grade Recovery Production Operating Operating
(t000) (g/t) Rate (%) (ounces) Cost/t Cost/ounce
Turmalina 427 2.32 90% 29,635 $ 79.50 $ 1,157
Paciàªncia 170 2.15 90% 9,987 92.30 1,536
Caeté 485 3.12 89% 41,526 84.10 1,006
Total 1,082 2.66 89% 81,148 $ 83.60 $ 1,126
Nine Months Ended September 30, 2011 Operating Data
Ore Feed Plant Cash Cash
Processed Grade Recovery Production Operating Operating
(t000) (g/t) Rate (%) (ounces) Cost/t Cost/ounce
Turmalina 474 3.43 90% 47,931 $ 77.00 $ 821
Paciàªncia 352 3.07 92% 32,949 65.00 683
Caeté 498 2.99 87% 41,487 72.80 879
Total 1,324 3.17 90% 122,367 $ 72.20 $ 804
Turmalina
During the quarter ended September 30, 2012, Turmalina produced 9,186 ounces of gold at a cash operating cost of $991 per ounce. This compared to 16,204 ounces at a cash operating cost of $906 per ounce during the quarter ended September 30, 2011 and 10,435 ounces at a cash operating cost of $1,125 per ounce in the quarter ended June 30, 2012.
The increase in Turmalina's cash operating cost during the quarter as compared to the same period last year was mainly attributable to lower production and lower feed grade that increased the cost by $276 per ounce, partially offset by the positive impact of exchange rates which reduced the cash operating cost by $176 per ounce. The 12% decrease in cash operating cost per ounce as compared to the second quarter of 2012 is the result of the implementation of the cost reduction program announced during the second quarter 2012.
Production was lower quarter over quarter due to instability of the hanging and footwalls created by excessively large and inadequately supported excavations in the ore horizon leading to poor ground conditions together with congestion of mining operations in the wider zone of Turmalina's Ore Body A. These issues are being addressed by a new ground control methodology and more emphasis on development. However, during the transition to the new ground control methodology, installation of roof support and ground control measures is taking additional time to complete. As a result of the extended mining cycle times, together with the shift in emphasis to development, production is not expected to increase immediately.
Caeté
During the quarter ended September 30, 2012, Caeté produced 13,840 ounces of gold at a cash operating cost of $945 per ounce. This compared to 15,885 ounces at a cash operating cost of $841 per ounce during the quarter ended September 30, 2011 and 13,804 ounces at a cash operating cost of $953 per ounce in the quarter ended June 30, 2012.
The increase in Caeté's cash operating cost during the quarter as compared to the same period last year was attributable to higher expenses for internal services, mining services and mining materials that increased the cash operating cost by $275, partially offset by the positive impact of changing exchange rates that reduced the cash operating cost by $165 per ounce.
Paciência
The Paciência operation continued on care and maintenance during the quarter ended September 30, 2012.
2012 Estimated Production and Cash Operating Cost
Based on the operating results for the first three quarters of the year and the continuing implementation of the Restructuring and Turnaround Plan, Jaguar is revising its outlook for both production and cash operating costs in 2012.
The Company now expects 2012 gold production in the range of 100,000 to 110,000 ounces. On this new volume, cash operating costs are expected to be in the range of $1,050 to $1,150 per ounce (based on an assumed exchange rate of R$2.0 per US$).
The Company is in the process of reevaluating its production and cost targets for 2013.
Conference Call Details
Jaguar will hold a conference call to discuss the third quarter results and operations on Tuesday, November 13, 2012 at 10:00 a.m. ET. The call can be accessed via telephone or webcast.
Live teleconference access: US Dial In 1-866-524-3160 (Toll Free): International 1-412-317-6760 Dial In: Live audio www.jaguarmining.com webcast: Replay: US Toll 1-877-344-7529 Free: International 1-412-317-0088 Toll: Conference 10020886 Number:
About Jaguar Mining
Jaguar is a junior gold producer in Brazil with operations in a prolific greenstone belt in the state of Minas Gerais. Jaguar also has the Gurupi Project in Northern Brazil in the state of Maranhão and additional mineral resources at its approximate 210,000-hectare land base in Brazil. Additional information is available on the Company's website at www.jaguarmining.com.
Forward Looking Statements
Certain statements in this press release constitute "Forward-Looking Statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities legislation. These Forward-Looking Statements include, but are not limited to, statements concerning the Company's 2012 estimated gold production and cash operating cost. Forward-Looking Statements can be identified by the use of words, such as "are expected", "is forecast", "is targeted", "approximately" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will" be taken, occur or be achieved. Forward-Looking Statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance to be materially different from any future results or performance expressed or implied by the Forward-Looking Statements.
These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other geological data, fluctuating gold prices and monetary exchange rates, the possibility of project cost delays and overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, uncertainties related to production rates, timing of production and the cash and total costs of production, changes in applicable laws including laws related to mining development, environmental protection, and the protection of the health and safety of mine workers, the availability of labor and equipment, the possibility of labor strikes and work stoppages and changes in general economic conditions. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in Forward-Looking Statements, there may be other factors that could cause actions, events or results to differ from those anticipated, estimated or intended.
These Forward-Looking Statements represent the Company's views as of the date of this press release. The Company anticipates that subsequent events and developments may cause the Company's views to change. The Company does not undertake to update any forward-looking statements, either written or oral, that may be made from time to time by or on behalf of the Company subsequent to the date of this discussion except as required by law. For a discussion of important factors affecting the Company, including fluctuations in the price of gold and exchange rates, uncertainty in the calculation of mineral resources, competition, uncertainty concerning geological conditions and governmental regulations and assumptions underlying the Company's forward-looking statements, see the "CAUTIONARY NOTE" regarding forward-looking statements and "RISK FACTORS" in the Company's Annual Information Form for the year ended December 31, 2011 filed on SEDAR and available at http://www.sedar.com and the Company's Annual Report on Form 40-F for the year ended December 31, 2011 filed with the United States Securities and Exchange Commission and available at www.sec.gov.
Note: As required by applicable Canadian rules, effective the first quarter of 2011, Jaguar has prepared its financial statements in accordance with International Financial Reporting Standards ("IFRS").
Additional details will be available in the Company's filings on SEDAR and EDGAR, including Management's Discussion and Analysis of Financial Condition and Results of Operations and Consolidated Financial Statements for the period ended September 30, 2012.
The following tables contain unaudited information for the quarter and nine month period ended September 30, 2012. The data presented are subject to final adjustment, but are believed to be materially accurate. Jaguar's financial statements for the period ended September 30, 2012, are expected to be filed on SEDAR and EDGAR on November 12, 2012. Readers should refer to those filings for the final financial statements and the associated footnotes which are an integral part of the tables.
JAGUAR MINING INC.
Condensed Interim Consolidated
Balance Sheets
(Expressed in thousands of
U.S. dollars)
(Unaudited)
September 30, December 31,
2012 2011
Assets
Current assets:
Cash and cash equivalents $ 19,991 $ 74,475
Inventory 26,729 34,060
Prepaid expenses and sundry 21,854 25,541
assets
Derivatives 90 -
68,664 134,076
Prepaid expenses and sundry 54,735 48,068
assets
Restricted cash 409 909
Property, plant and 350,136 388,675
equipment
Mineral exploration 94,218 88,938
projects
$ 568,162 $ 660,666
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable and accrued $ 31,892 $ 34,922
liabilities
Notes payable 28,541 22,517
Income taxes payable 17,993 18,953
Reclamation provisions 3,985 2,082
Other provisions 5,148 4,347
Deferred compensation 88 2,953
liabilities
Other liabilities - 1,475
87,647 87,249
Notes payable 237,117 228,938
Option component of 12,920 79,931
convertible notes
Deferred income taxes 10,868 8,635
Reclamation provisions 15,968 15,495
Deferred compensation 574 2,270
liabilities
Other liabilities 106 339
Total liabilities 365,200 422,857
Shareholders' equity:
Share capital 370,043 370,043
Stock options 9,163 14,207
Contributed surplus 8,777 3,414
Deficit (185,021) (149,855)
Total equity attributable to
equity shareholders of the 202,962 237,809
Company
$ 568,162 $ 660,666
JAGUAR MINING
INC.
Condensed Interim Consolidated Statements of Operations and Comprehensive Loss
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 30, 30, 30,
2012 2011 2012 2011
Gold sales $ 38,412 $ 70,041 $ 135,919 $ 185,739
Production costs (25,183) (40,602) (107,833) (110,494)
Stock-based 100 (189) 443 (212)
compensation
Depletion and (7,807) (11,534) (31,729) (33,497)
amortization
Gross profit 5,522 17,716 (3,200) 41,536
(loss)
Operating
expenses:
Exploration 730 230 801 1,281
Paciàªncia 3,126 - 3,126 -
Stock-based 427 3,818 (1,868) 734
compensation
Administration 5,885 6,044 14,831 16,718
Management - 165 - 690
fees
Amortization 297 316 878 986
Other 795 438 1,786 1,509
Total
operating 11,260 11,011 19,554 21,918
expenses
Income (loss)
before the (5,738) 6,705 (22,754) 19,618
following
(Gain) loss on (16) 1,219 (130) 805
derivatives
(Gain) loss on
conversion
option
embedded in 4,741 27,260 (67,011) 19,420
convertible debt
Foreign exchange 734 18,559 5,245 8,944
loss
Accretion 527 648 1,660 1,842
expense
Interest 7,177 7,203 21,377 19,960
expense
Interest income (617) (2,854) (3,039) (7,186)
(Gain) loss on
disposition of 197 (595) (171) (1,593)
property
Impairment of
Paciàªncia - - 47,692 -
property
Other
non-operating 2,439 (30) 2,973 (349)
expenses
(income)
Total other 15,182 51,410 8,596 41,843
expenses
Loss before (20,920) (44,705) (31,350) (22,225)
income taxes
Income taxes
Current income 303 979 924 2,911
taxes
Deferred 402 5,588 2,892 6,826
income taxes
Total income 705 6,567 3,816 9,737
taxes
Net loss and
comprehensive $ (21,625) $ (51,272) $ (35,166) $ (31,962)
loss for the
period
Basic and
diluted loss per $ (0.26) $ (0.61) $ (0.42) $ (0.38)
share
Weighted average
number of
common shares
outstanding - 84,409,648 84,388,909 84,409,648 84,378,791
basic
Weighted average
number of
common shares
outstanding - 84,409,648 84,388,909 84,409,648 84,378,791
diluted
JAGUAR MINING INC.
Condensed Interim Consolidated
Statements of Cash Flows
(Expressed in
thousands of U.S.
dollars)
(Unaudited)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 30, 30, 30,
2012 2011 2012 2011
Cash provided by
(used in):
Operating
activities:
Net loss and
comprehensive $ (21,625) $ (51,272) $ (35,166) $ (31,962)
loss for the
period
Adjustments to
reconcile net
earnings to
net cash
provided from
(used in)
operating
activities:
Unrealized
foreign (1,981) 23,151 (3,715) 16,402
exchange
(gain) loss
Stock-based
compensation 327 4,007 (2,311) 946
expense
(recovered)
Interest 7,177 7,203 21,377 19,960
expense
Accretion of
interest - - - (188)
income
Accretion 527 648 1,660 1,842
expense
Income taxes - (36) - (140)
recovered
Deferred 402 5,588 2,892 6,826
income taxes
Depletion
and 8,104 11,850 32,607 34,483
amortization
Provision
and loss on 2,586 - 3,133 -
disposition
of PPE
Write-down
of Paciàªncia - - 2,394 -
inventory
Impairment
of Paciàªncia - - 47,692 -
property
Unrealized
(gain) loss 23 1,090 (90) 1,061
on
derivatives
Unrealized
(gain) loss
on option
component of
convertible 4,741 27,260 (67,011) 19,420
note
Reclamation (73) (73) (186) (99)
expenditures
208 29,416 3,276 68,551
Change in non-cash
operating working
capital:
Inventory 1,854 388 5,586 1,321
Prepaid
expenses and (3,447) (82) (10,595) (7,559)
sundry
assets
Accounts
payable and (1,732) 1,297 (3,973) 6,678
accrued
liabilities
Income taxes 364 (785) (961) 2,540
payable
Deferred
compensation (36) (255) (2,304) (501)
liability
Other 189 - 802 -
provisions
(2,600) 29,979 (8,169) 71,030
Financing
activities:
Issuance of
common - 164 - 164
shares
Decrease in
restricted 500 - 499 -
cash
Repayment of (7,196) (7,115) (9,415) (15,049)
debt
Increase in 6,200 6,000 13,200 105,313
debt
Interest (3,229) (4,387) (10,223) (9,002)
paid
Other 1 333 (1,707) 278
liabilities
(3,724) (5,005) (7,646) 81,704
Investing
activities:
Mineral
exploration (973) (5,062) (7,935) (9,674)
projects
Purchase of
property, (6,781) (28,820) (37,795) (70,420)
plant and
equipment
Proceeds
from 187 - 869 -
disposition
of property
(7,567) (33,882) (44,861) (80,094)
Effect of foreign
exchange on
non-U.S. dollar
denominated
cash and 1,938 (14,767) 6,192 (10,138)
cash
equivalents
Increase
(decrease) in cash (11,953) (23,675) (54,484) 62,502
and cash
equivalents
Cash and cash
equivalents, 31,944 125,400 74,475 39,223
beginning of
period
Cash and cash
equivalents, end $ 19,991 $ 101,725 $ 19,991 $ 101,725
of period
Note 1 - Fair Valuation of Derivative Financial Instruments - Option Component of Convertible Notes
IFRS requires that derivative financial instruments be valued on a periodic basis. The option components of the Company's convertible notes are considered derivative financial instruments and are fair valued using the Crank - Nicolson valuation model using inputs, such as volatility and credit spread.
The carrying amount of the option components of the convertible notes was $12.9 million at September 30, 2012 (December 31, 2011 - $79.9 million). The change in fair value of $4.7 million (a loss) and $67.0 million (a gain) for the three and nine month periods ended September 30, 2012, respectively, is shown as a (gain) loss on conversion option embedded in convertible debt in the Statements of Operations and Comprehensive Income (three and nine month periods ended September 30, 2011 - $27.3 million loss and $19.4 million loss, respectively).
Non IFRS Reconciliations
Summary of Cash Operating Cost per Ounce of Gold Produced
Three months Nine Months ended
ended
September 30, September 30, 2012
2012
Production costs
per statement of $ 22,417,000 $ 93,801,000
operations
Change in inventory (234,874) (2,421,287)
Operational cost of 22,182,126 91,379,713
gold produced
divided by
Gold produced (oz) 23,026 81,146
equals
Cost per oz of gold $ 963 $ 1,126
produced
Cash Operating Margin Per Ounce of Gold
Three months ended Sep Nine months ended Sep
30 30
2012 2011 2012 2011
Average
sales price $ 1,648 $ 1,692 $ 1,650 $ 1,530
per oz of
gold
less
Cash
operating
cost per oz 963 886 1,126 804
of gold
produced
equals
Cash
operating $ 685 $ 806 $ 524 $ 726
margin per
oz of gold
Company Contacts
Roger Hendriksen, Vice President, Investor Relations
603-410-4888
rhendriksen@jaguarmining.com
Valeria Rezende DioDato, Director of Communication
011-55-31-4042-1249
valeria@jaguarmining.com