BELO HORIZONTE, Brazil, Aug. 14, 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 $16.4 million or $0.19 per fully diluted share for the quarter ended June 30, 2012. This result compares to net income of $15.6 million or $0.18 per fully diluted share in the second quarter of 2011. The second quarter 2012 result includes a $57.4 million unrealized non-cash gain on the conversion option embedded in convertible debt (see note 1), a $7.7 million loss from changing foreign exchange rates and a $47.7 million impairment charge on the assets at Paciência (see note 2). Excluding these items, Jaguar's second quarter result was a net loss of $18.4 million or $0.22 per fully diluted share.
For the six month period ended June 30, 2012, Jaguar reported a net loss of $13.5 million or $0.16 per fully diluted share. This compares to net income of $19.3 million or $0.23 per fully diluted share in the six month period ended June 30, 2011.
Jaguar sold 28,933 ounces of gold at an average realized price of $1,608 per ounce in the three months ended June 30, 2012 compared to 40,184 ounces of gold at an average realized price of $1,507 per ounce in the three months ended June 30, 2011. Average cash operating cost per ounce was $1,162 in the second quarter 2012 compared to $1,268 in the first quarter 2012 and $799 in the second quarter 2011. Cash operating margin was $446 in the second quarter 2012 compared to $423 per ounce in the first quarter 2012 and $708 per ounce in the second quarter 2011. Excluding the limited production and sales from Paciência, the average cash operating cost in the second quarter 2012 was $1,027 per ounce.
The decrease in the Company's average cash operating cost per ounce during the second quarter 2012 as compared to the first quarter 2012 was attributable to Jaguar's on-going cost reduction program which included placing the Paciência operation on care and maintenance beginning in May 2012. The increase in average cash operating cost per ounce as compared to the second quarter of 2011 was attributable to higher mining dilution, lower total production which resulted in higher fixed cost absorption per ounce, and increased costs for labor, services, equipment maintenance and mining materials.
Commenting on the Company's results and operations, John Andrews, Jaguar's Interim CEO stated, "We are beginning to see some positive results from our cost reduction program. At our continuing operations, Turmalina and Caeté, average cash cost per ounce improved by 16% and 15%, respectively, when compared to the first quarter of 2012. We believe this is a good start but we recognize that we have much more work ahead of us before we reach our objectives for improved productivity and profitability."
Summary of Key Operating Results - Consolidated
Three months ended June 30 Six months ended June 30
2012 2011 2012 2011
(unaudited)
($ in 000s,
except per
share amounts)
Gold sales $ 46,535 $ 60,557 $ 97,507 $ 115,697
Ounces sold 28,933 40,184 59,071 79,978
Average sales 1,608 1,507 1,651 1,447
price $ / ounce
Gross profit (5,044) 12,849 (8,722) 23,818
(loss)
Net income (16,350) 15,586 (13,541) 19,310
(loss)
Basic income
(loss) per (0.19) 0.18 (0.16) 0.23
share
Diluted income
(loss) per (0.19) 0.18 (0.16) 0.23
share
Weighted avg. #
of shares 84,409,648 84,373,648 84,409,648 84,373,648
outstanding -
basic
Weighted avg. #
of shares 84,409,648 84,376,376 84,409,648 84,377,786
outstanding -
diluted
Key Operating Statistics - By Operation
Three Months Ended June 30, 2012 Operating Data
Plant
Ore Feed Recovery Cash Cash
Processed Grade Rate Production Operating Operating
(t000) (g/t) (%) (ounces) Cost/t Cost/ounce
Turmalina 154 2.35 90% 10,435 $ 73.70 $ 1,125
Paciàªncia 37 1.91 87% 2,649 140.00 2,219
Caeté 160 3.05 90% 13,804 81.10 953
Total 351 2.62 89% 26,888 $ 84.00 $ 1,162
Six Months Ended June 30, 2012 Operating Data
Plant
Ore Feed Recovery Cash Cash
Processed Grade Rate Production Operating Operating
(t000) (g/t) (%) (ounces) Cost/t Cost/ounce
Turmalina 312 2.18 90% 20,448 $ 79.50 $ 1,232
Paciàªncia 170 2.15 90% 9,987 92.30 1,536
Caeté 315 3.06 90% 27,685 88.20 1,036
Total 797 2.52 90% 58,120 $ 85.70 $ 1,191
Three Months Ended June 30, 2011 Operating Data
Plant
Ore Feed Recovery Cash Cash
Processed Grade Rate Production Operating Operating
(t000) (g/t) (%) (ounces) Cost/t Cost/ounce
Turmalina 158 3.30 90% 15,872 $ 75.40 $ 800
Paciàªncia 116 3.39 92% 12,263 66.70 637
Caeté 161 2.83 86% 12,122 71.00 961
Total 435 3.15 89% 40,257 $ 71.60 $ 799
Six Months Ended June 30, 2011 Operating Data
Plant
Ore Feed Recovery Cash Cash
Processed Grade Rate Production Operating Operating
(t000) (g/t) (%) (ounces) Cost/t Cost/ounce
Turmalina 294 3.63 90% 31,727 $ 74.90 $ 778
Paciàªncia 234 3.32 93% 24,378 61.00 596
Caeté 327 2.86 87% 25,601 70.00 903
Total 855 3.25 90% 81,706 $ 69.30 $ 763
2012 Estimated Production and Cash Operating Cost
Based on the first half operating results and the continuing implementation of its restructuring and cost reduction program, 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 110,000 to 120,000 ounces. On this new volume, cash operating costs are expected to be in the range of $900 to $1,000 per ounce (based on an assumed exchange rate of R$2.00 per US$) as the planned benefits of the turnaround plan will not be fully realized until 2013. The Company's revised preliminary annual targets for its Southern operations is 105,000 to 115,000 ounces in 2013 at cash operating costs in the range $600 to $700 per ounce.
Conference Call Details
Members of the Jaguar senior management team will hold a conference call to discuss the second quarter results and operations on Wednesday, August 15, 2012 at 12:00 p.m. ET. The call can be accessed via telephone or webcast.
Conference call access details: Live teleconference access: US Dial In 1-866-524-3160 (Toll Free): 1-412-317-6760 International Dial In: Live audio www.jaguarmining.com webcast: Replay: US Toll Free: 1-877-344-7529 International Toll: 1-412-317-0088 Conference Number: 10016976
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 is developing the Gurupi Project in Northern Brazil in the state of Maranhão. The Company is actively exploring and developing additional mineral resources at its approximate 220,000-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. 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 Q1 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 June 30, 2012.
The following tables contain unaudited information for the quarter and six month period ended June 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 June 30, 2012 are expected to be filed on SEDAR and EDGAR on August 15, 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)
June 30, December 31,
2012 2011
Assets
Current assets:
Cash and cash equivalents $ 31,944 $ 74,475
Inventory 27,921 34,060
Prepaid expenses and sundry assets 31,550 25,541
Derivatives 114 -
91,529 134,076
Prepaid expenses and sundry assets 42,039 48,068
Restricted cash 909 909
Property, plant and equipment 352,486 388,675
Mineral exploration projects 94,743 88,938
$ 581,706 $ 660,666
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued $ 33,133 $ 34,922
liabilities
Notes payable 29,138 22,517
Income taxes payable 17,628 18,953
Reclamation provisions 1,877 2,082
Other provisions 4,960 4,347
Deferred compensation liabilities 59 2,953
Other liabilities - 1,475
86,795 87,249
Notes payable 233,844 228,938
Option component of convertible 8,179 79,931
notes
Deferred income taxes 10,504 8,635
Reclamation provisions 17,522 15,495
Deferred compensation liabilities 489 2,270
Other liabilities 105 339
Total liabilities 357,438 422,857
Shareholders' equity:
Share capital 370,043 370,043
Stock options 12,155 14,207
Contributed surplus 5,466 3,414
Deficit (163,396) (149,855)
Total equity attributable to equity 224,268 237,809
shareholders of the Company
Contingent liability
Subsequent event
$ 581,706 $ 660,666
JAGUAR MINING
INC.
Condensed Interim Consolidated Statements of Operations and
Comprehensive Income (Loss)
(Expressed in thousands of U.S. dollars,
except per share amounts)
(Unaudited)
Three Three Six Months Six Months
Months Months Ended Ended
Ended Ended June 30, June 30,
June 30, June 30, 2012 2011
2012 2011
Gold sales $ 46,535 $ 60,557 $ 97,507 $ 115,697
Production costs (41,250) (36,837) (82,650) (69,893)
Stock-based 301 (28) 343 (23)
compensation
Depletion and (10,630) (10,843) (23,922) (21,963)
amortization
Gross profit (5,044) 12,849 (8,722) 23,818
(loss)
Operating
expenses:
Exploration 26 717 71 1,051
Stock-based (1,487) (393) (2,295) (3,084)
compensation
Administration 2,601 5,419 8,946 10,674
Management - 363 - 524
fees
Amortization 292 313 581 670
Other 590 234 991 1,071
Total 2,022 6,653 8,294 10,906
operating
expenses
Income (loss) (7,066) 6,196 (17,016) 12,912
before the
following
Gain on (114) (126) (114) (413)
derivatives
Gain on (57,427) (9,180) (71,752) (7,840)
conversion
option embedded
in convertible
debt
Foreign exchange 7,685 (6,527) 4,511 (9,616)
loss (gain)
Accretion 537 624 1,133 1,194
expense
Interest 7,077 7,074 14,201 12,757
expense
Interest income (566) (2,867) (2,424) (4,332)
Gain on (90) (472) (368) (998)
disposition of
property
Impairment of 47,692 - 47,692 -
Paciàªncia
property
Other 566 (128) 534 (321)
non-operating
expenses
(income)
Total other 5,360 (11,602) (6,587) (9,569)
expenses
(income)
Income (loss) (12,426) 17,798 (10,429) 22,481
before income
taxes
Income taxes
Current income 302 1,428 621 1,933
taxes
Deferred 3,622 784 2,491 1,238
income taxes
Total income 3,924 2,212 3,112 3,171
taxes
Net income $ (16,350) $ 15,586 $ (13,541) $ 19,310
(loss) and
comprehensive
income (loss)
for the period
Basic and $ (0.19) $ 0.18 $ (0.16) $ 0.23
diluted earnings
(loss) per
share
Weighted average 84,409,648 84,373,648 84,409,648 84,373,648
number of common
shares
outstanding -
basic
Weighted average 84,409,648 84,376,376 84,409,648 84,377,786
common shares
outstanding -
diluted
JAGUAR MINING INC.
Condensed Interim
Consolidated
Statements of Cash
Flows
(Expressed in
thousands of U.S.
dollars)
(Unaudited)
Three Three Six Months Six Months
Months Months Ended Ended
Ended Ended June 30, June 30,
June 30, June 30, 2012 2011
2012 2011
Cash provided by
(used in):
Operating
activities:
Net income $ (16,350) $ 15,586 $ (13,541) $ 19,310
(loss) and
comprehensive
income (loss)
for the period
Adjustments to
reconcile net
earnings to
net cash
provided from
(used in)
operating
activities:
Unrealized 3,318 (3,955) (1,734) (6,749)
foreign
exchange
loss (gain)
Stock-based (1,788) (365) (2,638) (3,061)
compensation
expense
recovered
Interest 7,077 7,074 14,201 12,757
expense
Accretion of - (94) - (188)
interest
income
Accretion 537 624 1,133 1,194
expense
Income taxes - (104) - (104)
recovery
Deferred 3,622 784 2,491 1,238
income taxes
Depletion 10,922 11,156 24,503 22,633
and
amortization
Loss on 532 - 547 -
disposition
of property,
plant and
equipment
Write-down 3,222 - 2,394 -
of Paciàªncia
inventory
Impairment 47,692 - 47,692 -
of Paciàªncia
property
Unrealized (114) (28) (114) (29)
gain on
derivatives
Unrealized (57,427) (9,180) (71,752) (7,840)
gain on
option
component of
convertible
note
Reclamation (10) (8) (113) (26)
expenditure
1,233 21,490 3,069 39,135
Change in
non-cash
operating
working capital
Inventory 5,844 (1,334) 3,732 933
Prepaid (4,365) (5,420) (7,148) (7,476)
expenses and
sundry
assets
Accounts (863) 4,697 (2,241) 5,380
payable and
accrued
liabilities
Income taxes (917) 2,315 (1,325) 3,325
payable
Provisions 296 - 613 -
Deferred (656) (83) (2,268) (244)
compensation
liabilities
572 21,665 (5,568) 41,053
Financing
activities:
Repayment of (1,119) (4,117) (2,218) (7,935)
debt
Increase in 1,000 - 7,000 99,313
debt
Interest (3,841) (4,254) (6,994) (4,615)
paid
Other (1,630) 7 (1,709) (55)
liabilities
(5,590) (8,364) (3,921) 86,708
Investing
activities:
Mineral (1,800) (2,266) (6,963) (4,611)
exploration
projects
Purchase of (12,029) (23,735) (31,017) (41,602)
property,
plant and
equipment
Proceeds 659 - 684 -
from
disposition
of property
(13,170) (26,001) (37,296) (46,213)
Effect of foreign
exchange on
non-U.S. dollar
denominated
cash and 269 2,557 4,254 4,629
cash
equivalents
Increase (17,919) (10,143) (42,531) 86,177
(decrease) in cash
and cash
equivalents
Cash and cash 49,863 135,543 74,475 39,223
equivalents,
beginning of
period
Cash and cash $ 31,944 $ 125,400 $ 31,944 $ 125,400
equivalents, end
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 $8.2 million at June 30, 2012 (December 31, 2011 - $79.9 million). The change in fair value of $57.4 million and $71.8 million for the three and six month periods ended June 30, 2012, respectively, is shown as a gain on conversion option embedded in convertible debt in the Statements of Operations and Comprehensive Income (three and six month periods ended June 30, 2011 - $9.2 million gain and $7.8 million gain, respectively).
Note 2 - Impairment on Paciência Property
Over the past year the Paciência (CPA) operations have faced significant and increasing challenges. Recent reviews determined that a complete remediation plan would best be accomplished by placing the operations on a temporary care and maintenance program until the necessary design and structural changes have been implemented in the mines. The remediation plans for CPA include an adaptation of the narrow vein overhand stoping methods, a changeover to smaller scale equipment, smaller development headings, reduced stope dimensions and building the developed reserve inventory prior to restarting the plant. Implementation of the plan is expected to result in improved productivity per ounce, reduced mining dilution, reliable and predictable production forecasts, and significant reductions in cash costs per ounce when the mines return to production. As a result of the temporary shutdown the company considered this an indicator of impairment and prepared an impairment test on the Paciência operation.
The impairment test resulted in an impairment loss of $47.7 million during the second quarter of 2012 and is recorded in 'Impairment of Paciência property" in the Interim Consolidated Statements of Operations and Comprehensive Income (Loss), (three and six months ended June 2011 - $nil). The Paciência property is a cash generating unit ("CGU") which includes Property, plant and equipment assets including land, and plant, mineral rights, deferred exploration costs, and asset retirement obligations net of amortization relating to properties formerly in production. The CGU also includes Mineral exploration project assets relating to properties not in production such as mineral rights and deferred exploration costs. $46.3 million of the loss was taken against assets in Property, plant and equipment and $1.4 million of the loss was recognized relating to assets included in Mineral exploration projects. The recoverable amount of the project is the cash generating unit's fair value less costs to sell. The following assumptions were used to value the property:
Discount Rate: 8% Gold price: $1,275 - 1,600
Non IFRS Reconciliations
Summary of Cash Operating Cost per Ounce of Gold Produced
Three months ended Six Months ended
June 30, 2012 June 30, 2012
Production costs per $ 33,786,000 $ 71,384,000
statement of operations
Change in inventory (4,209,493) (2,162,606)
Operational cost of gold 29,576,507 69,221,394
produced
divided by
Gold produced (oz) 26,888 58,120
equals
Cost per oz of gold $ 1,162 $ 1,191
produced
Cash Operating Margin Per Ounce of Gold
Three months ended Six months ended
June 30, 2012 June 30, 2012
Average sales price per $ 1,608 $ 1,651
oz of gold
less
Cash operating cost per 1,162 1,191
oz of gold produced
equals
Cash operating margin per $ 446 $ 460
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