Gross Profit of $27.4 Million Up 91% Over 2007 JAG - TSX/NYSE Arca
Jaguar Mining Inc. ("Jaguar" or the "Company") (JAG: TSX/NYSE Arca, JAG.NT: TSX) reports its financial and operational results for the period ended December 31, 2008. All figures are in U.S. dollars unless otherwise indicated. Fiscal year ("FY") information is based on the year ending December 31, 2008.
FY 2008 Highlights - FY 2008 net loss of $4.3 million or $0.07 per basic and fully diluted share compared to a net loss of $27.7 million or $0.52 per basic and fully diluted share in FY 2007. - FY 2008 net income was impacted by net realized and unrealized charges for foreign exchange derivatives of $2.6 million, stock- based compensation charges of an additional $1.3 million and a pause in the development of the Caeté Project because of the retraction of anticipated credit due to global credit market conditions. - FY 2008 revenue totaled $93.7 million, up 96% over prior year. - FY 2008 gold sales totaled 108,944 ounces at an average price of $860 compared to FY 2007 gold sales of 67,350 ounces at an average price of $710. - FY 2008 gold production of 115,348 ounces of gold at an average cash operating cost of $429 per ounce compared to gold production of 70,113 ounces at an average cash operating cost of $346 per ounce compared to FY 2007. - Cash operating costs in 2008 increased primarily due to the initial costs associated with the commissioning of the Paciência operation and less favorable exchange rates, with the Brazilian real ("R$") reaching a record high against the U.S. dollar of R$1.56 per US$1.00 during the commissioning phase. The average exchange rate for the year ended December 31, 2008 was R$1.84 per US$1.00 compared to R$1.95 per US$1.00 for the year ended December 31, 2007. - FY 2008 gross profit totaled $27.4 million compared to $14.3 million in FY 2007, an increase of 91%. - Adjusted cash flows from operating activities totaled $11.6 million in FY 2008 compared to $4.1 million in FY 2007. - Invested $97.1 million in growth projects in FY 2008, a 36% increase from FY 2007. - Bettered the Company's safety benchmark by 37%. - Retained and continued training programs for key personnel. - Increased proven and probable reserves 97% to 2.0 million ounces. - Exploration: drilled 68,270 meters, an increase of 76% from 2007. - Underground development: 12.7 kilometers added during 2008, over 30 kilometers in-place to achieve 2009 production targets. Commenting on the 2008 results, Daniel R. Titcomb, Jaguar's President and CEO stated, "Our fourth quarter operating performance marked the 2008 achievements and was a real turning point. The Paciência processing circuit reached commercial design rates and sequencing issues in the mining technique at Turmalina were resolved and the project met plan in Q4. Exploration programs, conversion of resources to reserves and underground development were also on plan to prepare the mines to achieve our 2009 production objectives. Operations in early 2009 are on plan with costs favorably supported by improved exchange rates. With the recent financing now complete, we have re-taken the Caeté Project and detailed engineering and civil works are underway. The expansion at Turmalina remains on-track for completion during Q3 2009 and our production and cost guidance targets appear sound." Q4 2008 Highlights - Q4 2008 net loss of $3.4 million or $0.05 per basic and fully diluted share compared to a net loss of $14.8 million or $0.28 per basic and fully diluted share in Q4 2007. - Net income for Q4 2008 was impacted by realized and unrealized charges for foreign exchange derivatives and foreign exchange losses totaling $3.0 million, higher administration charges and stock-based compensation charges of $0.6 million. - Q4 2008 revenue totaled $27.9 million, an increase of 87% from the same period last year. - Q4 2008 gold sales totaled 35,138 ounces at an average price of $793 compared to Q4 2007 figures of 18,742 ounces at an average price of $796. - Q4 2008 gold production of 37,916 ounces of gold at an average cash operating cost of $396 per ounce compared to gold production of 20,463 ounces at an average cash operating cost of $405 per ounce compared to Q4 2007. - Gross profit for Q4 2008 totaled $7.1 million compared to $4.0 million for the same period in 2007, an increase of 77% from Q4 2007. - Adjusted cash flows from operating activities totaled ($3.4) million compared to $4.0 million in Q4 2007. - Jaguar invested $13.9 million in growth projects in Q4 2008, down from the $23.1 million invested in Q4 2007. The curtailment of the Caeté Project and brownfield exploration during Q4 2008 was largely the reason for the lower capital spending from the prior year. - The Company deemed the processing operations at Paciência reached commercial design rates in Q4 2008 and mining operations at the St. Isabel mine reached design rates in Q1 2009. - All permits, energy contracts and key equipment needed for development of the projects underway have been granted, including those required for construction and further mine development at the Caeté Project. Summary of Key Operating Results A summary of key operating results follows: ------------------------------------------------ Three Months Ended Year Ended December 31 December 31 ------------------------------------------------ 2008 2007 2008 2007 ------------------------------------------------ (unaudited) ($ in 000s, except per share amounts and shares outstanding) Gold sales 27,874 14,915 93,657 47,834 Ounces sold 35,138 18,742 108,944 67,350 Average sales price $/ounce 793 796 860 710 Gross profit 7,103 4,007 27,354 14,289 Net income (loss) (3,443) (14,825) (4,256) (27,660) Basic and diluted earnings (loss) per share (0.05) (0.28) (0.07) (0.52) Weighted avg. No. of shares outstanding - basic 63,982,281 55,494,155 62,908,676 53,613,175 Weighted avg. No. of shares outstanding - diluted 63,982,281 55,494,155 62,908,676 53,613,175
Additional details are available in the Company's filings on SEDAR and EDGAR, including Management's Discussion and Analysis of Financial Condition and Results of Operations and Interim Consolidated Financial Statements for the period ended December 31, 2008.
Non-GAAP Performance Measures
The Company has included the non-GAAP performance measures discussed below in this press release. These non-GAAP performance measures do not have any standardized meaning prescribed by Canadian GAAP ("GAAP") and, therefore, may not be comparable to similar measures presented by other companies. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, these non-GAAP measures provide certain investors with additional information that will better enable them to evaluate the Company's performance. Accordingly, these Non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP.
The Company has included cash operating cost per ounce processed because it believes these figures are a useful indicator of a mine's performance as they provide: (i) a measure of the mine's cash margin per ounce, by comparison of the cash operating costs per ounce to the price of gold; (ii) the trend in costs as the mine matures; and, (iii) an internal benchmark of performance to allow for comparison against other mines. The definitions for these performance measures and reconciliation of the non-GAAP measures to reported GAAP measures are set out in the following tables.
Cash Operating Cost per ounces Processed -------------------------- Three Months 12 Months Ended Ended Summary of Cash Operating Cost December 31, December 31, per oz of gold produced 2008 2008 -------------------------- Production costs per statement of operations $15,286,000 $50,355,000 Change in inventory(1) (258,000) (871,000) Operational cost of gold produced(2) 15,028,000 49,484,000 divided by Gold produced (oz) 37,916 115,348 equals Cost per oz of gold produced $ 396 $ 429 -------------------------- Three Months 12 Months Ended Ended Sabara Cash Operating Cost December 31, December 31, per oz produced 2008 2008 -------------------------- Production costs $ 2,702,000 $12,143,000 Change in inventory(1) 186,000 (4,000) Operational cost of gold produced(2) 2,888,000 12,139,000 divided by Gold produced (oz) 4,506 18,199 equals Cost per oz of gold produced $ 641 $ 667 -------------------------- Three Months 12 Months Ended Ended Turmalina Plant Cash Operating Cost December 31, December 31, per oz produced 2008 2008 -------------------------- Production costs $ 6,636,000 $28,608,000 Change in inventory(1) (40,000) (2,056,000) Operational cost of gold produced(2) 6,596,000 26,552,000 divided by Gold produced (oz) 19,987 72,785 equals Cost per oz of gold produced $ 330 $ 364 -------------------------- Three Months 12 Months Ended Ended Paciência Plant Cash Operating Cost December 31, December 31, per oz produced 2008 2008 -------------------------- Production costs $ 5,948,000 $ 9,604,000 Change in inventory(1) (404,000) 1,189,000 Operational cost of gold produced(2) 5,544,000 10,793,000 divided by Gold produced (oz) 13,423 24,364 equals Cost per oz of gold produced $ 413 $ 443 (1) Under the Company's revenue recognition policy, revenue is recognized when legal title passes. Since total cash operating costs are calculated on a production basis, this change reflects the portion of gold production for which revenue has not been recognized in the period. (2) The basis for calculating cost per ounce produced includes the change to gold in process inventory, whereas the cost per tonne processed does not. The following tables are included in Jaguar's audited financial statements as filed on SEDAR and readers should refer to those filings for the associated footnotes which are an integral part of the tables. JAGUAR MINING INC. Consolidated Balance Sheet (Expressed in thousands of U.S. dollars) ------------------------------------------------------------------------- December 31, December 31, 2008 2007 ------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 20,560 $ 45,711 Cash in trust - 837 Inventory 19,946 10,724 Prepaid expenses and sundry assets 5,351 11,897 Unrealized foreign exchange gains - 1,680 Forward purchases derivative asset - 924 ------------------------------------------------------------------------- 45,857 71,773 Prepaid expenses and sundry assets 26,164 13,913 Net smelter royalty 1,006 1,225 Restricted cash 3,106 3,102 Property, plant and equipment 148,422 82,945 Mineral exploration projects 79,279 61,273 ------------------------------------------------------------------------- $ 303,834 $ 234,231 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued liabilities $ 13,416 $ 12,993 Notes payable 4,319 11,699 Income taxes payable 8,626 3,519 Asset retirement obligations 1,337 269 Forward sales derivative liability - 9,844 Unrealized foreign exchange losses 2,421 - ------------------------------------------------------------------------- 30,119 38,324 Forward sales derivative liability - 5,580 Deferred compensation liability 434 - Notes payable 69,729 83,920 Future income taxes - 2,182 Asset retirement obligations 6,828 2,706 ------------------------------------------------------------------------- Total liabilities 107,110 132,712 Shareholders' equity Common shares 245,067 141,316 Warrants - 245 Stock options 19,059 19,218 Contributed surplus 1,167 1,153 Deficit (68,569) (60,413) ------------------------------------------------------------------------- 196,724 101,519 Commitments Subsequent events ------------------------------------------------------------------------- $ 303,834 $ 234,231 ------------------------------------------------------------------------- ------------------------------------------------------------------------- JAGUAR MINING INC. Consolidated Statements of Operations and Comprehensive Loss (Expressed in thousands of U.S. dollars, except per share amounts) ------------------------------------------------------------------------- Year Ended Year Ended Year Ended December 31, December 31, December 31, 2008 2007 2006 ------------------------------------------------------------------------- Gold sales $ 93,657 $ 47,834 $ 21,179 Production costs (50,355) (25,172) (13,195) Other cost of goods sold (3,255) (3,141) (447) Stock-based compensation (24) - - Depletion and amortization (12,669) (5,232) (2,376) ------------------------------------------------------------------------- Gross profit 27,354 14,289 5,161 ------------------------------------------------------------------------- Operating expenses: Exploration 3,536 2,365 183 Stock-based compensation 1,238 10,750 5,990 Administration 12,571 9,617 6,334 Management fees 854 747 739 Amortization 264 - - Accretion expense 490 138 27 Other 379 2,782 1,527 ------------------------------------------------------------------------- Total operating expenses 19,332 26,399 14,800 ------------------------------------------------------------------------- Income (loss) before the following 8,022 (12,110) (9,639) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Loss on forward derivatives 318 9,908 6,823 Loss (gain) on forward foreign exchange derivatives 2,623 (3,690) (1,555) Foreign exchange gain (2,477) (2,280) (1,871) Amortization of deferred financing expense - - 698 Interest expense 11,584 11,170 270 Interest income (3,850) (4,601) (1,582) Gain on disposition of property (452) (381) - Other non-operating expenses - 230 - ------------------------------------------------------------------------- Total other expenses 7,746 10,356 2,783 Income (loss) before income taxes 276 (22,466) (12,422) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Income taxes Current income taxes 6,172 3,519 591 Future income taxes (recovered) (1,640) 1,675 (267) ------------------------------------------------------------------------- Total income taxes 4,532 5,194 324 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net loss and comprehensive loss for the year (4,256) (27,660) (12,746) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted net loss per share $ (0.07) $ (0.52) $ (0.30) Weighted average number of common shares outstanding 62,908,676 53,613,175 43,114,563 JAGUAR MINING INC. Consolidated Statements of Cash Flows (Expressed in thousands of U.S. dollars) ------------------------------------------------------------------------- Year Ended Year Ended Year Ended December 31, December 31, December 31, 2008 2007 2006 ------------------------------------------------------------------------- Cash provided by (used in): Operating activities: Net loss and comprehensive loss for the year $ (4,256) $ (27,660) $ (12,746) Items not involving cash: Unrealized foreign exchange (gain) loss (3,471) 7,907 (97) Stock-based compensation 1,262 10,750 5,990 Amortization of deferred financing costs - - 698 Non-cash interest expense 1,982 2,953 - Accretion expense 490 138 27 Future income taxes (recovered) (1,640) 1,675 (267) Depletion and amortization 12,933 5,232 2,376 Amortization of net smelter royalty 219 310 - Interest on loans receivable - - (102) Unrealized loss on forward sales derivatives - 4,284 6,823 Unrealized loss (gain) on foreign exchange contracts 4,102 (972) (709) Gain on disposition of property - (381) - Reclamation expenditure - (157) (105) Change in non-cash operating working capital Accounts receivable - 1,742 (1,161) Inventory (4,361) (2,624) (2,193) Prepaid expenses and sundry assets (14,200) (11,659) (8,041) Accounts payable and accrued liabilities 423 6,991 1,269 Current taxes payable 5,107 2,928 591 ------------------------------------------------------------------------- (1,410) 1,457 (7,647) Financing activities: Issuance of common shares, special warrants and warrants, net 105,803 30,138 56,102 Shares purchased for cancellation (6,381) (2,089) (4) Settlement of forward derivatives (14,500) - - Increase in restricted cash (4) 2,925 (6,027) Repayment of debt (18,654) (6,086) (2,078) Increase in debt 3,848 64,604 14,965 ------------------------------------------------------------------------- 70,112 89,492 62,958 Investing activities Mineral exploration projects (37,087) (27,233) (24,663) Purchase of property, plant and equipment (52,210) (35,859) (25,422) ------------------------------------------------------------------------- (89,297) (63,092) (50,085) Effect of foreign exchange on non-U.S. dollar denominated cash and cash equivalents (4,556) 3,095 - Increase (decrease) in cash and cash equivalents (25,151) 30,951 5,226 Cash and cash equivalents, beginning of year 45,711 14,759 9,533 ------------------------------------------------------------------------- Cash and cash equivalents, end of year $ 20,560 $ 45,711 $ 14,759 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Conference Call Details The Company will hold a conference call tomorrow, March 24 at 10:00 a.m. EDT, to discuss the results. From North America: 800-218-5691 International: 213-416-2975 Replay: From North America: 800-675-9924 International: 213-416-2185 Replay ID: 32409 Webcast: www.jaguarmining.com
About Jaguar Mining
Jaguar is one of the fastest growing gold producers in Brazil with operations in a prolific greenstone belt in the state of Minas Gerais. Jaguar is actively exploring and developing additional mineral resources at its 65,500 acre land base in Minas Gerais and on an additional 186,600 acres in the state of Ceara in the Northeast of Brazil through a joint venture. The Company has no gold hedges in place thereby providing the leverage to gold prices directly to its investors. Additional information is available on the Company's website at www.jaguarmining.com.
The Company uses the financial measure "adjusted cash flows from operating activities" to supplement its consolidated financial statements. The presentation of adjusted cash flows from operating activities is not meant to be a substitute for cash flows from operating activities presented in the statement of cash flows in accordance with GAAP, but rather should be evaluated in conjunction with such GAAP measures. Adjusted cash flows from operating activities is calculated as operating cash flow excluding the change in non-cash operating working capital. The term adjusted cash flows from operating activities does not have a standardized meaning prescribed by Canadian GAAP, and therefore the Company's definitions are unlikely to be comparable to similar measures presented by other companies. The Company's management believes that the presentation of adjusted cash flows from operating activities provides useful information to investors because it excludes certain non-cash changes and is a better indication of the Company's cash flow from operations. The non-cash charges excluded from the computation of adjusted cash flows from operating activities, which are included in the Statements of Cash Flows prepared in accordance with Canadian GAAP, are items that the Company does not consider to be meaningful in evaluating the Company's past financial performance or the future prospects and may hinder a comparison of its period to period cash flows.
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. This press release contains Forward-Looking Statements, including statements concerning expected date of completion of the Turmalina expansion and use of proceeds from the Company's March 2009 equity financing. Forward-Looking Statements involve known and unknown risks, uncertainties and other factors, which may cause the actual timing of commissioning, completion dates or use of proceeds 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 ecological 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 labour and equipment, the possibility of labour 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 information, there may be other factors that 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 hereof. Subsequent events and developments could 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. 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, 2008 filed on System for Electronic Document Analysis and Retrieval and available at http://www.sedar.com and the Company's Annual Report on Form 40-F for the year ended December 31, 2008 filed with the United States Securities and Exchange Commission and available at www.edgar.com.
This press release presents estimates of "total cash cost per ounce" that are not recognized measures under generally accepted accounting principles ("GAAP"). This data may not be comparable to data presented by other gold producers. A reconciliation of the Company's total cash cost per ounce to the most comparable financial measures calculated and presented in accordance with GAAP for the Company's historical results of operations is set forth in the management discussion and analysis filed with the United States Securities and Exchange Commission as well as the Company's most recent annual financial statements filed with the Canadian Securities Administrators.
Investors and analysts: Bob Zwerneman,
Vice President Corporate Development and
Director of Investor Relations,
(603) 224-4800,
bobz@jaguarmining.com;
Media inquiries: Valéria Rezende DioDato,
Director of Communication,
(603) 224-4800,
valeria@jaguarmining.com