Jaguar Mining Announces First Quarter 2013 Financial Results

May 13, 2013 Download PDF

TORONTO, May 13, 2013, 2013 (Canada NewsWire via COMTEX) - JAG - TSX/NYSE

Jaguar Mining Inc. ("Jaguar" or the "Company") (JAG: TSX/NYSE) today reported a net loss of $6.9 million or $0.08 per fully diluted share for the quarter ended March 31, 2013. This result compares to a net income of $2.8 million or $0.03 per fully diluted share in the first quarter of 2012. The first quarter 2013 result includes an interest expense of $8.2 million, a loss on disposition of property of $1.7 million, and a $1.1 million unrealized non-cash gain on the conversion option embedded in convertible debt (see note 1). Excluding these non-operating items, Jaguar's first quarter result was a net income of $1.9 million or $0.04 per fully diluted share.

First Quarter Highlights

  • 4% increase in gold production (excluding Paciàªncia) from 23,895 ounces in Q1 2012 to 24,836 ounces in Q1 2013;
  • 32% decrease in cash operating cost per ounce (excluding Paciàªncia) from $1,212 in Q1 2012 to $826 in Q1 2013;
  • 45% reduction in total headcount (including Paciàªncia) from 2,202 in Q1 2012 to 1,210 in Q1 2013;
  • 33% reduction in total administrative expenses from $6.3 million in Q1 2012 to $2.4 million in Q1 2013;
  • New COO and CFO appointed;
  • $30.0 million Renvest Credit Facility closed;
  • $18.4 million quarter ending cash balance as at March 31, 2013;
  • $3.8 million increase in working capital, from ($21.3) million at December 31, 2012 to ($17.5) million at March 31, 2013.

During the first quarter 2013, Jaguar sold 25,316 ounces of gold at an average realized price of $1,626 per ounce. This compared to sales of 30,138 ounces of gold at an average realized price of $1,691 per ounce in the three months ended March 31, 2012. Average cash operating cost per ounce was $826 in the first quarter 2013 compared to $1,268 in the first quarter 2012. Cash operating margin was $800 per ounce in the first quarter 2013 compared to $423 per ounce in the first quarter 2012. The decrease in the Company's average cash operating cost per ounce during the first quarter 2013 as compared to the first quarter 2012 was attributable to Jaguar's on-going cost reduction and operational improvement 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 safety and productivity.

Gold production for the quarter ended March 31, 2013 totaled 24,836 ounces compared to 31,233 ounces of gold in the first quarter of 2012. The decline in comparative quarterly production levels was the result of the Company's decision to place the Paciência operation on care and maintenance beginning in May 2012 and a transition of mining and ground support methods which, during the course of implementation, negatively impacted production cycle times in the Turmalina operation.

Commenting on the Company's results, David Petroff, Jaguar's President and CEO stated: "The operating team is continuing to deliver on the budget set in December 2012. Production targets are being met. The focus remains on stabilizing operations, to ensure safety is a priority and that the gains made in the first quarter can be continued during the balance of the year. Renvest has confirmed the $25 million undrawn amount under the $30 million credit facility is now available. In light of the recent reduction in the price of gold, the Company is re-examining all sources and uses of cash with a view to reducing net cash outlays while maintaining the turnaround efforts. The support from all levels of Jaguar's employees, management and other service providers has been crucial in delivering these results. Their efforts are much appreciated and we look forward to building on them".

Summary of Key Operating Results - Consolidated

                                        Three Months Ended March 31,

                                                 2013           2012

($ in 000s, except per share amounts)

Gold sales                               $     41,170   $     50,972

Ounces sold                                    25,316         30,138

Average sales price $ / ounce                   1,626          1,691

Cash operating cost $ / ounce                     826          1,268

Gross profit (loss)                            10,382        (3,677)

Net income (loss)                             (6,926)          2,809

Basic income (loss) per share                  (0.08)           0.03

Diluted income (loss) per share                (0.08)           0.03

Weighted avg. # of shares outstanding -    84,906,423     84,409,648

Weighted avg. # of shares outstanding -    84,906,423     84,431,344

Key Operating Statistics by Operation

             Three Months Ended March 31, 2013 Operating Data

              Ore    Feed   Plant   Production   Cash       Cash
           Processed Grade Recovery  (ounces)  Operating Operating
            (t000)   (g/t) Rate (%)             Cost/t   Cost/ounce

Turmalina        108  3.33      89%     10,321      $     $     862

Caeté            157  3.26      88%     14,515     73.38        801

Total            265  3.30      88%     24,836      $     $     826

             Three Months Ended March 31, 2012 Operating Data

              Ore    Feed   Plant   Production   Cash       Cash
           Processed Grade Recovery  (ounces)  Operating Operating
            (t000)   (g/t) Rate (%)             Cost/t   Cost/ounce

Turmalina        157  2.02      90%     10,014      $          $
                                                   85.30      1,342

Paciàªncia        134  2.21      90%      7,338     79.20      1,451

Caeté            156  3.08      89%     13,881     95.50      1,118

Total            447  2.45      90%     31,233      $          $
                                                   87.00      1,268

2013 Outlook

The Company reiterates 2013 gold production guidance of between 85,000 to 95,000 ounces and cash operating costs are expected to be in the range of $950 to $1,100 per ounce (based on an assumed exchange rate of R$2.0 per US$1.0). Capital expenditures for 2013 are anticipated to be approximately $36.6 million of which $21.7 million is expected to be spent at Caeté and $12.7 million at Turmalina. Capital expenditures for 2013 are targeted at development, infill diamond drilling and resource diamond drilling to improve the quality of information available to the mining teams so appropriate decisions can be made concerning grade control and plant feed.

Conference Call Details

Members of the Jaguar senior management team will hold a conference call to discuss the first quarter results and operations on Tuesday, May 14, 2013 at 1:00 p.m. ET. The call can be accessed via telephone or webcast.

Live Teleconference Access:

US/Canada Toll-Free Dial-In Number: (877) 201-0168 with Conference ID:

International Dial In:              (647) 788-4901 with Conference ID:

Live audio webcast:


US/Canada Dial-In:        (855) 859-2056 with Conference ID:  68812305

International Dial-In:    (404) 537-3406 with Conference ID: 68812305

About Jaguar Mining

Jaguar is a junior gold producer in Brazil with operations in a prolific greenstone belt in the state of Minas Gerais and owns the Gurupi Project in Northern Brazil in the state of Maranhão. The Company also owns additional mineral resources at its approximate 210,000-hectare land base in Brazil. Additional information is available on the Company's website at

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 2013 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, 2012 filed on SEDAR and available at and the Company's Annual Report on Form 40-F for the year ended December 31, 2012 filed with the United States Securities and Exchange Commission and available at

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 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 Consolidated Financial Statements for the period ended March 31, 2013.

The following tables contain information for the quarter ended March 31, 2013. The data presented are subject to final adjustment, but are believed to be materially accurate. Jaguar's unaudited interim financial statements for the period ended March 31, 2013 were filed on SEDAR and EDGAR on May 13, 2013. Readers should refer to those filings for the final unaudited interim financial statements and the associated footnotes which are an integral part of the tables.


Condensed Interim Consolidated Balance Sheets

(Expressed in thousands
of U.S. dollars)


                                          March 31, December 31,
                                               2013         2012


Current assets:

  Cash and cash                         $    18,385  $    13,856

  Inventory                                  25,829       26,342

  Recoverable taxes                           8,615        9,031

  Prepaid expenses and                       12,351       11,038
  sundry assets

  Derivatives                                   141           43

                                             65,321       60,310

  Prepaid expenses and                        3,026        2,428
  sundry assets

  Restricted cash                               109          609

  Assets held for sale                        1,843          612

  Recoverable taxes                          53,771       54,458

  Property, plant and                       296,059      301,383

  Mineral exploration                        84,435       84,075

                                        $   504,564   $  503,875

Liabilities and
Shareholders' Equity

Current liabilities:

  Accounts payable and                 $     27,148  $    29,745
  accrued liabilities

  Notes payable                              27,561       27,388

  Income taxes payable                       16,015       15,451

  Reclamation                                 4,257        4,124

  Other provisions                            7,767        4,796

  Deferred compensation                          55          105

  Other liabilities                              19           20

                                             82,822       81,629

  Notes payable                             247,395      240,158

  Option component of                         3,336        4,458
  convertible notes

  Deferred income                             6,587        6,624

  Reclamation                                16,611       16,927

  Deferred compensation                         193          216

  Other liabilities                              73           60

  Total liabilities                         357,017      350,072

Shareholders' equity:

  Share capital                             370,603      370,043

  Stock options                               1,705        2,137

  Contributed surplus                        16,557       16,015

  Deficit                                 (241,318)    (234,392)

  Total equity attributable to equity       147,547      153,803
  shareholders of the Company

                                        $   504,564  $   503,875


Condensed Interim Consolidated Statements of Operations and
Comprehensive Income (Loss)

(Expressed in thousands of U.S. dollars,
except per share amounts)


                                              Three Months Three Months
                                                     Ended        Ended
                                                 March 31,    March 31,
                                                      2013         2012

Gold sales                                     $    41,170  $    50,972

Production costs                                  (22,819)     (41,399)

Stock-based compensation                                 -           43

Depletion and amortization                         (7,969)     (13,293)

Gross profit (loss)                                 10,382      (3,677)

Operating expenses:

  Exploration                                          327           45

  Paciàªncia care and maintenance                       708            -

  Stock-based compensation                             222        (808)

  Administration                                     4,213        6,315

  Management fees                                        -           30

  Amortization                                         292          289

  Other                                              2,984          401

  Total operating expenses                           8,746        6,272

Income (loss) before the                             1,636      (9,949)

Gain on derivatives                                  (482)            -

Gain on conversion option                          (1,122)     (14,325)
embedded in convertible debt

Foreign exchange gain                                (647)      (3,175)

Accretion expense                                      457          595

Interest expense                                     8,174        7,123

Interest income                                      (260)      (1,858)

Loss (gain) on disposition of                        1,735        (278)

Other non-operating expenses                           504         (27)

Total other expenses (income)                        8,359     (11,945)

Income (loss) before income                        (6,723)        1,996

Income taxes

  Current income taxes                                 338          319

  Deferred income taxes                              (135)      (1,132)

Total income taxes (recoveries)                        203        (813)

Comprehensive income (loss) for               $    (6,926)   $    2,809
the period


Condensed Interim Consolidated Statements of
Cash Flows

(Expressed in thousands of U.S. dollars)


                                             Three Months Three Months
                                                    Ended        Ended
                                                March 31,    March 31,
                                                     2013         2012

Cash provided by (used in):

  Operating activities:

    Net income (loss) and comprehensive       $   (6,926)    $   2,809
    income (loss) for the period

    Adjustments to reconcile net earnings
    to net cash provided by

    (used in) operating activities:

      Unrealized foreign exchange gain            (1,202)      (5,053)

      Stock-based compensation expense                222        (851)

      Interest expense                              8,174        7,123

      Accretion expense                               457          595

      Deferred income taxes                         (135)      (1,132)

      Depletion and amortization                    8,261       13,582

      Unrealized gain on derivatives                 (98)            -

      Unrealized gain on option component         (1,122)     (14,325)
      of convertible note

      Provision and loss on disposition of          2,224            -
      property, plant and equipment

      Inventory recovery                                -        (828)

    Reclamation expenditure                          (12)        (103)

                                                    9,843        1,817

  Change in non-cash operating working

      Inventory                                       436      (2,080)

      Recoverable taxes                             3,017      (1,957)

      Prepaid expenses and sundry assets          (2,601)        (826)

      Accounts payable and accrued                (3,095)      (1,378)

      Income taxes payable                            564        (408)

      Other provisions                              2,971          317

      Deferred compensation liabilities              (64)      (1,612)

                                                   11,071      (6,127)

  Financing activities:

    Repayment of debt                             (7,098)      (1,100)

    Increase in debt                               11,762        6,000

    Decrease in restricted cash                       500            -

    Interest paid                                 (3,963)      (3,152)

    Other liabilities                                  11         (79)

                                                    1,212        1,669

  Investing activities:

    Mineral exploration projects                    (367)      (5,162)

    Purchase of property, plant and               (7,316)     (18,976)

    Proceeds from disposition of property,            227            -
    plant and equipment

                                                  (7,456)     (24,138)

Effect of foreign exchange on non-U.S.
dollar denominated

     cash and cash equivalents                      (298)        3,984

Increase (decrease) in cash and cash                4,529     (24,612)

Cash and cash equivalents, beginning of            13,856       74,475

Cash and cash equivalents, end of period       $   18,385   $   49,863

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 $3.3 million at March 31, 2013 (December 31, 2012 - $4.5 million). The change in fair value of $1.1 million for the three-months ended March 31, 2013 is shown as a gain on conversion option embedded in convertible debt in the statements of operations and comprehensive loss (period ended March 31, 2012 - $14.3 million gain).

Company Contacts
T. Douglas Willock, Chief Financial Officer
(647) 494-5524