Net Income of $0.09/share and Operating Cash Flow of $12.9 Million, Core Mines on Plan
JAG - TSX/NYSE
Jaguar Mining Inc. ("Jaguar" or the "Company") (JAG: TSX/NYSE, JAG.NT: TSX) reports its financial and operational results for the period ended September 30, 2009. All figures are in U.S. dollars.
Q3 2009 Highlights
- Q3 2009 net income of $6.9 million or $0.09 per basic and fully diluted share compared to a net loss of $1.3 million or ($0.02) per basic and fully diluted share in Q3 2008. Net income for Q3 2009 benefitted from a 21% increase in the number of ounces of gold sold during the quarter, a 10% increase in average gold price realizations and foreign exchange gains attributable to the Company's treasury management program.
- Q3 2009 gold sales rose to 36,314 ounces at an average price of $969 per ounce yielding revenue of $35.2 million compared to Q3 2008 gold sales of 29,926 ounces at an average price of $862 per ounce and revenue of $25.8 million. This represents a 36% increase in gold sales revenue.
- Q3 2009 gold production totaled 41,585 ounces at an average cash operating cost of $451 per ounce compared to 34,935 ounces at an average cash operating cost of $461 per ounce during the same period last year, a production increase of 19% (see Non-GAAP Performance Measures).
- Q3 2009 gross profit increased to $11.8 million from $6.9 million in Q3 2008, a gross profit increase of 71%.
- Q3 2009 cash provided by operating activities totaled $12.9 million compared to $7.6 million in Q3 2008.
- Jaguar invested $32.9 million in growth projects in Q3 2009, up 66% from the $19.8 million invested in Q3 2008.
- In September, the Company completed the construction of the Phase I expansion at Turmalina to boost annual gold production capacity from 80,000 ounces per year to 100,000 ounces per year.
- As of September 30, 2009 the Company held cash, cash equivalents and short-term investments of approximately $231.2 million.
Commenting on the Q3 2009 results, Daniel R. Titcomb, Jaguar's President and CEO stated, "During the third quarter our management team delivered solid operating results at the same time we continued to expand production capacity and develop a third major project. With our core operating assets meeting production targets and cost objectives, and the progress on the build-out of Caeté on-plan, our ability to generate positive cash flow to fund our plan to reach a mid-tier gold producer in 2011 remains on-track. As we detailed in our MD&A and will discuss further on our earnings conference call, in the local currency we continue to drive our costs significantly lower."
Mr. Titcomb added, "Our recent announcement concerning the acquisition of the Gurupi property in Northern Brazil underscores our Board's confidence in our outstanding management team in Brazil to further capitalize on growth opportunities. In December 2009, a new resource model will be completed and in early-2010 we plan to complete the updated feasibility study on the project. The completion of the technical programs should lead to an even stronger growth plan, positioning Jaguar as one of the largest gold producers in Brazil."
Y-T-D 2009 Highlights
- For the nine months ended September 30, 2009 net income of $21.4 million or $0.29 per basic share and $0.28 per fully diluted share compared to a net loss of $0.8 million or ($0.01) per basic and fully diluted share for the same period in 2008. Net income during the first nine months of 2009 benefitted from a 46% increase in the number of ounces of gold sold during the quarter as well as foreign exchange gains.
- Year-to-date 2009 gold sales through September 30, 2009 rose to 107,754 ounces at an average price of $940 per ounce yielding revenue of $101.2 million compared to gold sales of 73,806 ounces at an average price of $891 per ounce and revenue of $65.8 million for the same period in 2008.
- Year-to-date 2009 gold production totaled 115,211 ounces of gold at an average cash operating cost of $444 per ounce compared to 77,130 ounces at an average cash operating cost of $450 per ounce during the same period last year (see Non-GAAP Performance Measures).
- Gross profit for the nine months ended September 30, 2009 increased to $32.2 million from $20.3 million during the same period in 2008.
- Cash provided by operating activities during the first nine months of 2009 totaled $30.7 million compared to $4.1 million during the first nine months of 2008.
- Invested $58.6 million in growth projects during the first nine months of 2009, down from the $75.4 million invested during the same period in 2008.
- Achieved underground development targets of 10.7 km for the nine months ended September 30, 2009 and since the inception of the Company to nearly 40 km.
- Completed the Turmalina expansion on-schedule in September and commissioned the new circuits on October 5, 2009. Remained on- schedule for the development of Caeté, the Company's third major project.
- Raised a net $159.1 million through a private offering of 4.5% senior convertible notes due 2014.
- Commenced a consent solicitation to purchase the Company's outstanding 10.5% Secured Notes due March 23, 2012 to eliminate this higher cost debt and regain control of valuable collateral that was pledged in the indenture.
Summary of Key Operating Results
The following is a summary of key operating results.
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Three Months Ended Nine Months Ended
September 30 September 30
---------------------------------------------------
2009 2008 2009 2008
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(unaudited)
($ in 000s, except
per share amounts)
Gold sales $ 35,165 $ 25,799 $ 101,236 $ 65,783
Ounces sold 36,314 29,926 107,754 73,806
Average sales price
$/ounce 969 862 940 891
Gross profit 11,815 6,901 32,218 20,251
Net income (loss) 6,906 (1,301) 21,389 (814)
Basic earnings
(loss) per share 0.09 (0.02) 0.29 (0.01)
Diluted earnings
(loss) per share 0.09 (0.02) 0.28 (0.01)
Weighted avg. #
of shares outstanding
- basic 78,173,757 64,035,732 74,952,395 62,548,196
Weighted avg. #
of shares outstanding
- diluted 80,736,853 64,035,732 76,595,985 62,548,196
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 September 30, 2009.
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 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 tonne processed, cash operating cost per ounce processed and cash operating margin per ounce 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.
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Three Months Nine Months
Ended Ended
September September
Cash Operating Margin per oz of gold 30, 2009 30, 2009
--------------------------
Average sales price per oz of gold $ 969 $ 940
less
Cost per oz of gold produced 451 444
equals
Cash operating margin per oz of gold $ 518 $ 496
--------------------------
Summary of Cash Operating Cost per tonne Three Months Nine Months
processed Ended Ended
September September
30, 2009 30, 2009
--------------------------
Production costs per statement of operations(1) $17,294,000 $50,811,000
Change in inventory(2) 1,396,000 (24,000)
Operational cost of gold produced(3) 18,690,000 50,787,000
divided by
Tonnes processed 356,000 1,045,000
equals
Cost per tonne processed $ 52.50 $ 48.60
--------------------------
Turmalina Cash Operating Cost per tonne Three Months Nine Months
processed Ended Ended
September September
30, 2009 30, 2009
--------------------------
Production costs $ 8,386,000 $23,733,000
Change in inventory(2) 762,000 35,000
Operational cost of gold produced(3) 9,148,000 23,768,000
divided by
Tonnes processed 154,000 409,000
equals
Cost per tonne processed $ 59.40 $ 58.10
--------------------------
Paciencia Cash Operating Cost per tonne Three Months Nine Months
processed Ended Ended
September September
30, 2009 30, 2009
--------------------------
Production costs $ 8,076,000 $23,657,000
Change in inventory(2) 286,000 (1,101,000)
Operational cost of gold produced(3) 8,362,000 22,556,000
divided by
Tonnes processed 167,000 467,000
equals
Cost per tonne processed $ 50.10 $ 48.30
--------------------------
Sabara Cash Operating Cost per tonne Three Months Nine Months
processed Ended Ended
September September
30, 2009 30, 2009
--------------------------
Production cost $ 832,000 $ 3,421,000
Change in inventory(2) 348,000 719,000
Operational cost of gold produced(3) 1,180,000 4,140,000
divided by
Tonnes processed 35,000 169,000
equals
Cost per tonne processed $ 33.70 $ 24.50
--------------------------
Summary of Cash Operating Cost per oz of gold Three Months Nine Months
produced Ended Ended
September September
30, 2009 30, 2009
--------------------------
Production costs per statement of operations(1) $17,294,000 $50,811,000
Change in inventory(2) 1,461,000 343,000
Operational cost of gold produced(3) 18,755,000 51,154,000
divided by
Gold produced (oz) 41,585 115,211
equals
Cost per oz of gold produced $ 451 $ 444
--------------------------
Turmalina Plant Cash Operating Cost per oz Three Months Nine Months
produced Ended Ended
September September
30, 2009 30, 2009
--------------------------
Production costs $ 8,386,000 $23,733,000
Change in inventory(2) 762,000 (36,000)
Operational cost of gold produced(3) 9,148,000 23,697,000
divided by
Gold produced (oz) 22,250 60,887
equals
Cost per oz of gold produced $ 411 $ 389
--------------------------
Paciencia Plant Cash Operating Cost per oz Three Months Nine Months
produced Ended Ended
September September
30, 2009 30, 2009
--------------------------
Production costs $ 8,076,000 $23,657,000
Change in inventory(2) 317,000 (526,000)
Operational cost of gold produced(3) 8,393,000 23,131,000
divided by
Gold produced (oz) 17,927 47,965
equals
Cost per oz of gold produced $ 468 $ 482
--------------------------
Sabara Cash Operating Cost per oz Three Months Nine Months
produced Ended Ended
September September
30, 2009 30, 2009
--------------------------
Production costs $ 832,000 $ 3,421,000
Change in inventory(2) 382,000 905,000
Operational cost of gold produced(3) 1,214,000 4,326,000
divided by
Gold produced (oz) 1,408 6,359
equals
Cost per oz of gold produced $ 860 $ 680
(1) Production costs do not include cost of goods sold adjustment of
approximately $439,000 for the three months ended September 30, 2009
and $2.6 million for the nine months ended September 30, 2009.
(2) 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.
(3) 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 EDGAR. Readers should refer to those filings for the
associated footnotes which are an integral part of the tables.
Interim Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
-------------------------------------------------------------------------
September 30, December 31,
2009 2008
-------------------------------------------------------------------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 225,582 $ 20,560
Short-term investments 5,625 -
Inventory 31,103 19,946
Prepaid expenses and sundry assets 10,721 5,351
Unrealized foreign exchange gains 1,108 -
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274,139 45,857
Prepaid expenses and sundry assets 46,709 26,164
Net smelter royalty 1,006 1,006
Restricted cash 107 3,106
Property, plant and equipment 182,040 148,422
Mineral exploration projects 79,522 79,279
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$ 583,523 $ 303,834
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 23,451 $ 13,416
Notes payable 76,695 4,319
Income taxes payable 13,359 8,626
Asset retirement obligations 1,120 1,337
Unrealized foreign exchange losses - 2,421
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114,625 30,119
Deferred compensation liabilities 4,764 434
Notes payable 124,908 69,729
Future income taxes 3,540 -
Asset retirement obligations 7,300 6,828
-------------------------------------------------------------------------
Total liabilities 255,137 107,110
Shareholders' equity
Common shares 316,854 245,067
Stock options 16,641 19,059
Contributed surplus 42,071 1,167
Deficit (47,180) (68,569)
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328,386 196,724
Commitments
Subsequent events
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$ 583,523 $ 303,834
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Interim Consolidated Statements of Operations and Comprehensive Income
(Expressed in thousands of U.S. dollars, except per share amounts)
(unaudited)
-------------------------------------------------------------------------
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
-------------------------------------------------------------------------
Gold sales $ 35,165 $ 25,799 $101,236 $ 65,783
Production costs (17,733) (15,621) (53,384) (37,762)
Stock-based compensation (180) - (362) -
Depletion and
amortization (5,437) (3,277) (15,272) (7,770)
-------------------------------------------------------------------------
Gross profit 11,815 6,901 32,218 20,251
-------------------------------------------------------------------------
Operating expenses:
Exploration 547 800 1,877 2,648
Stock-based
compensation 1,762 205 3,845 698
Administration 2,798 3,227 10,618 9,142
Management fees 481 180 1,283 554
Amortization 121 73 338 180
Accretion expense 192 174 572 309
Other 596 298 1,491 715
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Total operating
expenses 6,497 4,957 20,024 14,246
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Income before the
following 5,318 1,944 12,194 6,005
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Loss on forward
derivatives - - - 318
Loss (gain) on forward
foreign exchange
derivatives (1,108) 1,489 (1,935) (95)
Foreign exchange
loss (gain) (3,080) 5,189 (16,072) (2,749)
Interest expense 1,525 2,934 6,388 10,091
Interest income (1,047) (758) (2,797) (3,459)
Gain on disposition
of property (542) - (1,456) -
Other non-operating
expenses (recovery) (596) 83 145 (287)
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Total other expenses
(recoveries) (4,848) 8,937 (15,727) 3,819
Income (loss) before
income taxes 10,166 (6,993) 27,921 2,186
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Income taxes
Current income taxes 2,202 813 2,992 5,034
Future income taxes
(recovery) 1,058 (6,505) 3,540 (2,034)
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Total income taxes 3,260 (5,692) 6,532 3,000
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income (loss) and
comprehensive income
(loss) for the period 6,906 (1,301) 21,389 (814)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic net income
(loss) per share $ 0.09 $ (0.02) $ 0.29 $ (0.01)
Diluted net income
(loss) per share $ 0.09 $ (0.02) $ 0.28 $ (0.01)
Weighted average
number of common
shares outstanding
- Basic 78,173,757 64,035,732 74,952,395 62,548,196
Weighted average
number of common
shares outstanding
- Diluted 80,736,853 64,035,732 76,595,985 62,548,196
Interim Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
(unaudited)
-------------------------------------------------------------------------
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
-------------------------------------------------------------------------
Cash provided by (used in):
Operating activities:
Net income (loss)
and comprehensive
income (loss) $ 6,906 $ (1,301) $ 21,389 $ (814)
Items not involving
cash:
Unrealized foreign
exchange loss
(gain) 363 5,502 (8,302) 3,807
Stock-based
compensation 1,942 205 4,207 698
Non-cash interest
expense
(recovery) (894) 605 150 2,584
Accretion expense 192 174 572 309
Future income
taxes (recovery) 1,058 (6,505) 3,540 (2,034)
Depletion and
amortization 5,558 3,277 15,610 7,770
Amortization of
net smelter
royalty - 62 - 219
Unrealized loss
(gain) on
foreign exchange
contracts (1,108) 2,113 (3,529) 2,456
Reclamation
expenditure (34) - (317) -
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13,983 4,132 33,320 14,995
Change in non-cash
operating working
capital
Accounts receivable - 7,800 - -
Inventory (4,476) (1,702) (7,640) (4,072)
Prepaid expenses
and sundry assets (5,066) (4,982) (9,945) (13,121)
Accounts payable
and accrued
liabilities 5,406 1,494 10,265 2,350
Current taxes
payable 3,017 811 4,734 3,976
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12,864 7,553 30,734 4,128
Financing activities:
Issuance of common
shares, special
warrants and
warrants, net 44,271 - 107,963 105,803
Decrease in
restricted cash 3,000 - 2,998 (3)
Shares purchased
for cancellation - (2,939) - (6,381)
Settlement of
forward
derivatives - - - (14,500)
Repayment of debt (152) (2,242) (2,712) (17,108)
Increase in debt 118,328 63 118,328 4,002
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165,447 (5,118) 226,577 71,813
Investing activities
Short term
investments (5,625) - (5,625) -
Mineral
exploration
projects (8,475) (9,386) (15,583) (31,779)
Purchase of
property, plant
and equipment (18,808) (10,387) (37,348) (43,614)
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(32,908) (19,773) (58,556) (75,393)
Effect of foreign
exchange on non-U.S.
dollar denominated cash
and cash equivalents 959 (2,841) 6,267 (5,163)
Increase (decrease) in
cash and cash
equivalents 146,362 (20,179) 205,022 (4,615)
Cash and cash
equivalents,
beginning of period 79,220 61,275 20,560 45,711
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Cash and cash
equivalents,
end of period $225,582 $ 41,096 $225,582 $ 41,096
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Conference Call Details
The Company will hold a conference call tomorrow, November 10 at 10:00 a.m. ET, to discuss the results.
From North America: 800-218-5691
International: 213-416-2192
Replay:
From North America: 800-675-9924
International: 213-416-2185
Replay ID: 111009
Webcast: www.jaguarmining.com
A presentation will be available prior to the call on the Company's homepage at 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 93,000-acre land base in Minas Gerais and on an additional 182,000 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.
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 steadily gain of the Company's financial performance, including operating cash flow and earnings. 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 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 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 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.
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