Jaguar Mining Reports Q1 2011 Earnings

May 17, 2011 Download PDF

CONCORD, NH, May 17, 2011 (Canada NewsWire via COMTEX) --

JAG - TSX/NYSE

Adjusted Q1 2011 Earnings of $0.12 Per Share and Operating Cash Flow of $0.23 Per Share

Jaguar Mining Inc. ("Jaguar" or the "Company") (JAG: TSX/NYSE) reports its financial and operational results for the period ended March 31, 2011. All figures are in U.S. dollars unless otherwise indicated.

Note: As required by applicable Canadian rules, effective Q1 2011, Jaguar has prepared its financial statements in accordance with International Financial Reporting Standards ("IFRS"), including the restatement of the comparative period previously reported under Generally Accepted Accounting Principles ("GAAP") in Canada.

Q1 2011 Highlights

    --  Record revenue of $55.1 million, an increase of 36% over Q1
        2010.

    --  Net income of $3.7 million or $0.04 per basic and fully diluted
        share.

        Adjusted net income, excluding special non-operating and
        non-recurring charges, most significant of which was a
        provision to value the conversion option embedded in
        convertible notes issued by the Company, totaled $10.3 million
        or $0.12 per basic and fully diluted share.  (See Non-IFRS
        Performance Measures)

    --  Gross profit of $11.0 million, an increase of 48% from Q1 2010.


    --  Record cash operating margin per ounce of gold of $659, an
        increase of 31% from Q1 2010.

    --  Cash generated by operating activities totaled $19.4 million or
        $0.23 per fully diluted share, an
        increase of 71% from Q1 2010.

    --  Gold production of 41,449 ounces at an average cash operating
        cost of $727 per ounce compared to 31,223 ounces at an average
        cash operating cost of $597 per ounce in Q1 2010 (see Non-IFRS
        Performance Measures).  The increase in production from the
        prior year was largely attributable to the addition of the
        CaetÃ(c) operation, which was commissioned in Q3 2010.

        Removing the effect of gold-in-process and stockpile inventory
        changes, the underlying operating
        cash cost was $663 per ounce.


    --  Gold ounces sold totaled 39,794, an increase of 8% from Q1
        2010.|

    --  The average sales price per ounce totaled $1,386, an increase
        of 24% from Q1 2010.

    --  Investments of $20.2 million in growth projects, a decrease of
        45% from Q1 2010.

Commenting on the Q1 2011 performance, Daniel R. Titcomb, Jaguar's President and CEO stated, "Our favorable Q1 2011 financial performance reflects the improvements we cited in the preliminary operating results we issued four weeks ago. As we move through the year, we expect further sequential gains in our quarterly gold production at lower costs."

Summary of Key Operating Results

The following is a summary of key operating results. Refer to the Adjusted Net Income table.

Summary of Key Operating Results

($000s)


                                        Quarter               Quarter
                                    Ended March           Ended March
                                       31, 2011              31, 2010

Gold sales                     $         55,140      $         40,670

Ounces sold                              39,794                36,888

Average sales price $/ounce               1,386                 1,102

Gross profit                             10,968                 7,405

Adjusted net income (loss)               10,313               (3,665)
(1 )

Adjusted basic and diluted    $            0.12     $          (0.04)
net income per share(1)

Weighted average number of           84,373,648            83,995,337
shares outstanding - basic

Weighted average number of           84,385,392            98,538,285
shares outstanding - diluted

(1) See Non-IFRS Performance
Measures

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 quarter ended March 31, 2011.

2011 Update of Operations

Operating results to-date are consistent with the initiatives the Company implemented during the second half of 2010 and its previously stated 2011 production target of between 195,000 and 205,000 ounces of gold.

Non-IFRS Performance Measures

The Company has included the non-IFRS performance measures discussed below in this press release. These non-IFRS performance measures do not have any standardized meaning prescribed by IFRS 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 IFRS, these non-IFRS measures provide investors with additional information that will better enable them to evaluate the Company's performance. Accordingly, these Non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared with IFRS.

The Company has included cash operating cost per ounce produced and cash operating margin per ounce because it believes these figures are a useful indicator of an operation'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 gold mining operations. Additionally, the Company has provided adjusted net income, which reflects the elimination of special non-operating and certain non-recurring charges that do not reflect on-going costs in Jaguar's operations or administrative costs; and cash flow from operations, which does not reflect the change in non-cash operating working capital. The definitions for these performance measures and reconciliation of the non-IFRS measures to reported IFRS measures are set out in the following tables.

Adjusted Net Income ($000s)


                                      Quarter                 Quarter
                                        Ended                   Ended
                                    March 31,               March 31,
                                         2011                    2010

Net income (loss) as                 $ 3,724                $  26,818
reported

Adjustments:

Loss (gain) on conversion               1,340                (32,505)
option embedded in
convertible debt

Effect of gold-in-process               2,546                       -
and stockpile inventory
changes

Non-cash interest expense               2,703                   2,022

Adjusted net income (loss)             10,313                 (3,665)

Adjusted basic and diluted             $ 0.12                $ (0.04)
net income per share




 


Cash Provided by
Operating Activities

($000s)

                              Quarter Ended           Quarter Ended
                             March 31, 2011          March 31, 2010

Cash provided by
operating activities
as reported

Net income             $              3,724    $             26,818

Adjustments to
reconcile net
earnings to net cash
provided from
(used in) operating
activities:

   Unrealized foreign
exchange (gain) loss  (2,794)                 397

   Stock-based
compensation          (2,696)                 (643)

   Non-cash interest
expense               3,064                   2,171

   Accretion of
interest income       (94)                    -

   Accretion expense
                      570                     290

   Deferred income
taxes                 455                     1,644

   Depletion and                     11,477
amortization                                  8,122

   Unrealized loss on
derivatives           -                       699

   Unrealized (gain)
loss on option
component of          1,340                   (32,505)
convertible note

Reclamation
expenditure           (18)                    (78)

                       $             15,028    $              6,915

Change in non cash
operating working     4,361                    $              4,453
capital

Cash provided by       $             19,389    $             11,368
operating activities

Cash provided by       $                       $
operating activities  0.23                    0.14
per share





Cash Operating Margin per oz gold

                                                 Quarter Ended
                                                   March 31

                                            2011                  2010

Average sales price per oz gold          $ 1,386               $ 1,102

less

Cash operating cost per oz gold produced     727                   597

equals

Cash operating margin per oz gold        $   659               $   505

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.


JAGUAR MINING
INC.



Condensed
Interim
Consolidated
Balance Sheets

(Expressed in
thousands of
U.S. dollars)



(unaudited)

                       March 31,      December 31,            January 1,
                            2011              2010                  2010

Assets

Current
assets:

  Cash and
  cash                 $               $
  equivalents            135,543            39,223     $         121,256

  Inventory
                          29,066            31,495                36,986

  Prepaid
  expenses and
  sundry
  assets                  27,693            24,523                19,050

  Derivatives
                             168               168                 1,280


                         192,470            95,409               178,572



  Prepaid
  expenses and
  sundry
  assets                  48,721            48,582                35,837

  Net smelter
  royalty                  1,006             1,006                 1,006

  Restricted
  cash                       908               908                   108

  Property,
  plant and
  equipment              356,635           348,815               262,748

  Mineral
  exploration
  projects                75,953            74,658                62,236

                       $                 $
                         675,693           569,378     $         540,507



Liabilities
and
Shareholders'
Equity

Current
liabilities:

  Accounts
  payable and
  accrued            $                 $
  liabilities             31,156            27,853    $           22,892

  Notes
  payable                 23,482            26,130                 5,366

  Income taxes
  payable                 17,687            16,677                15,641

  Reclamation
  provisions               1,780             2,167                   510

  Deferred
  compensation
  liabilities              2,305             2,436                     -

  Other
  liabilities                849               704                     -


                          77,259            75,967                44,409



  Notes
  payable                222,804           140,664               125,483

  Option
  component of
  convertible
  notes                   49,021            28,776                75,356

  Deferred
  income
  taxes                      676               215                   450

  Reclamation
  provisions              19,324            17,960                10,008

  Deferred
  compensation
  liabilities              2,125             4,829                 8,876

  Other
  liabilities                290               497                   738

  Total
  liabilities            371,499           268,908               265,320



Shareholders'
equity

  Share
  capital                369,747           369,747               365,667

  Stock
  options                 12,984            13,054                14,762

  Contributed
  surplus                  1,971             1,901                 1,167

  Deficit
                        (80,508)          (84,232)             (106,409)

  Total equity
  attributable
  to equity
  shareholders
  of the
  Company                304,194           300,470               275,187



  Commitments

                       $                 $
                         675,693           569,378     $         540,507




 


JAGUAR MINING INC.



Condensed Interim Consolidated Statements of Operations and
Comprehensive Income

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



(unaudited)

                                   Three Months            Three Months
                                          Ended                   Ended
                                      March 31,               March 31,
                                           2011                    2010



Gold sales                  $            55,140     $            40,670

Production costs                       (33,057)                (25,140)

Stock-based compensation
                                              5                   (127)

Depletion and
amortization                           (11,120)                 (7,998)

Gross profit                             10,968                   7,405



Operating expenses:

  Exploration                               334                   1,107

  Stock-based
  compensation                          (2,691)                   (770)

  Administration                          5,256                   4,297

  Management fees                           162                     339

  Amortization                              357                     124

  Other                                     836                     689

  Total operating
  expenses                                4,254                   5,786



Income before the
following                                 6,714                   1,619



Loss (gain) on
derivatives                               (287)                     253

Loss (gain) on
conversion option
embedded in convertible
debt                                      1,340                (32,505)

Foreign exchange loss
(gain)                                  (3,089)                     564

Accretion expense                           570                     290

Interest expense                          5,682                   4,028

Interest income
                                        (1,466)                 (1,361)

Gain on disposition of
property                                  (719)                   (497)

Total other expenses
(recoveries)                              2,031                (29,228)



Income before income
taxes                                     4,683                  30,847

Income taxes

  Current income taxes                      504                   2,385

  Deferred income taxes                     455                   1,644

Total income taxes                          959                   4,029



Net income and
comprehensive income for
the period                 $              3,724     $            26,818





Basic earnings per
share                     $                0.04   $                0.32

Diluted earnings per
share                     $                0.04   $                0.31



Weighted average number
of common shares
outstanding - basic                  84,373,648              83,995,337

Weighted average common
shares outstanding -
diluted                              84,385,392              98,538,285




 


JAGUAR MINING INC.



Condensed Interim
Consolidated Statements of
Cash Flows

(Expressed in thousands of
U.S. dollars)



(unaudited)

                                       Three Months        Three Months
                                              Ended               Ended
                                          March 31,           March 31,
                                               2011                2010



Cash provided by (used in):

  Operating activities:

    Net income and
    comprehensive income for
    the period                       $        3,724       $      26,818

    Adjustments to reconcile
    net earnings to net cash
    provided from (used in)
    operating activities:

      Unrealized foreign
      exchange loss (gain)                  (2,794)                 397

      Stock-based
      compensation recovered                (2,696)               (643)

      Interest expense                        3,064               2,171

      Accretion of interest
      income                                   (94)                   -

      Accretion expense                         570                 290

      Deferred income taxes                     455               1,644

      Depletion and
      amortization                           11,477               8,122

      Unrealized loss on
      derivatives                                 -                 699

      Unrealized loss (gain)
      on option component of
      convertible note                        1,340            (32,505)

    Reclamation expenditure                    (18)                (78)

  Change in non-cash
  operating working capital

      Inventory                               2,267               2,209

      Prepaid expenses and
      sundry assets                         (2,056)             (2,936)

      Accounts payable and
      accrued liabilities                     3,302               4,381

      Income taxes payable                    1,009                 799

      Deferred compensation
      liability                               (161)                   -

                                             19,389              11,368

    Financing activities:

      Issuance of common
      shares                                      -               1,501

      Increase in restricted
      cash                                        -               (800)

      Repayment of debt                     (3,818)                (68)

      Increase in debt                       99,313               3,542

      Interest paid                           (361)               (149)

      Other long - term
      liabilities                              (61)                 164

                                             95,073               4,190

    Investing activities

      Short term investments                      -             (5,811)

      Mineral exploration
      projects                              (2,345)             (1,865)

      Purchase of property,
      plant and equipment                  (17,868)            (35,065)

                                           (20,213)            (42,741)

Effect of foreign exchange on
non-U.S. dollar denominated
cash and cash equivalents                     2,071                 980

Increase (decrease) in cash
and cash equivalents                         96,320            (26,203)

Cash and cash equivalents,
beginning of period                          39,223             121,256

Cash and cash equivalents,
end of period                         $     135,543       $      95,053

Departure of Corporate Officer

Mr. Robert Zwerneman, Jaguar's Vice President of Corporate Development and Director of Investor Relations, has notified the Company he will be resigning from Jaguar in order to pursue an employment opportunity with another firm. Mr. Zwerneman has been with the Company since October 2006 and will remain for a period of time in a transitional role until a suitable replacement can be found. His service as an officer of the Company will come to an end on May 19, 2011.

Conference Call Details

The Company will hold a conference call tomorrow, May 18 at 9:00 a.m. EDT, to discuss the results.

Conference Call Details:

From North       800-476-0592
America:         213-416-2192
International:

Replay:
From North
America:
International:   800-675-9924
                 213-416-2185
Replay ID:       51811
                 www.jaguarmining.com
Webcast:

A presentation will be available prior to the call on the Company's homepage at www.jaguarmining.com.

About Jaguar

Jaguar is a gold producer in Brazil with operations in a prolific greenstone belt in the state of Minas Gerais. Jaguar is also engaged in developing the Gurupi Project in the state of Maranhão. Based on its development plans, Jaguar is one of the fastest growing gold producers in Brazil. The Company is actively exploring and developing additional mineral resources at its approximate 256,300-hectare land base in Brazil. Additional information is available on the Company's website at www.jaguarmining.com.

Forward Looking Statements

This press release contains forward-looking statements, within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, concerning the Company's expectation to realize further sequential gains in its quarterly production during 2011 as well as achieve gold production of between 195,000 and 205,000 ounces for the year ending December 31, 2011. 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 information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended.

The forward-looking statements represent our view as of the date of discussion. 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, 2010 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, 2010 filed with the United States Securities and Exchange Commission and available at www.sec.gov.