Jaguar Mining Reports Third Quarter 2012 Financial Results, Sees Further Cash Cost Improvement

JAG - TSX/NYSE

BELO HORIZONTE, Brazil, Nov. 12, 2012 /CNW/ - Jaguar Mining Inc. ("Jaguar" or the "Company") (JAG: TSX/NYSE) today reported a net loss of $21.6 million or $0.26 per fully diluted share for the quarter ended September 30, 2012.  This result compares to a net loss of $51.3 million or $0.61 per fully diluted share in the third quarter of 2011. The third quarter 2012 result includes a $4.7 million unrealized non-cash loss on the conversion option embedded in convertible debt (see note 1).  Excluding this non-operating item, Jaguar's third quarter result was a net loss of $16.9 million or $0.20 per fully diluted share.

For the nine month period ended September 30, 2012, Jaguar reported a net loss of $35.2 million or $0.42 per fully diluted share.  This compares to a net loss of $32.0 million or $0.38 per fully diluted share in the nine month period ended September 30, 2011.

Jaguar sold 23,307 ounces of gold at an average realized price of $1,648 per ounce in the three months ended September 30, 2012 compared to 41,390 ounces of gold at an average realized price of $1,692 per ounce in the three months ended September 30, 2011.  Average cash operating cost per ounce was $963 in the third quarter 2012 compared to $1,162 in the second quarter 2012 and $886 in the third quarter 2011.  Cash operating margin was $685 per ounce in the third quarter 2012 compared to $446 per ounce in the second quarter 2012 and $806 per ounce in the third quarter 2011.  The decrease in the Company's average cash operating cost per ounce during the third quarter 2012 as compared to the second 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, reduced headcount at the mining operations and continued focus on reducing dilution and improving productivity.  The increase in average cash operating cost per ounce as compared to the third quarter of 2011 was largely attributable to lower total production which resulted in higher fixed cost absorption, together with the lower feed grade at Turmalina that increased the cost by $357 per ounce.  These were partially offset by the positive impact of changes in the exchange rate that reduced the cash operating cost by $180 per ounce and lower costs for labor and equipment maintenance that reduced the cash operating cost by $104 per ounce.

Commenting on the Company's results and operations, David Petroff, Jaguar's President and CEO stated, "We are continuing to see positive results from our cost reduction program.  Our consolidated average cash cost per ounce improved by 17% compared to the second quarter and is down over 24% since the first quarter when we initiated the program."

"We have adopted a new ground support system which is having the desired effect of making our mines safer and lowering dilution," Petroff continued.  "The introduction of these new standards lengthened the mining cycle time and caused congestion at Turmalina.  We expect our productivity will improve as our crews become more familiar with the new approach to ground support, as development at Turmalina advances, and when we acquire more suitable rock bolting equipment."

Summary of Key Operating Results - Consolidated

                                   
        Three months ended Sept 30     Nine months ended Sept 30
(unaudited)          2012       2011       2012       2011
                                   
($ in 000s, except per share amounts)                                  
Gold sales        $ 38,412     $ 70,041     $ 135,919     $ 185,739
Ounces sold         23,307       41,390       82,378       121,368
Average sales price $ / ounce         1,648       1,692       1,650       1,530
Gross profit (loss)         5,522       17,716       (3,200)       41,536
Net loss         (21,625)       (51,272)       (35,166)       (31,962)
Basic loss per share         (0.26)       (0.61)       (0.42)       (0.38)
Diluted loss per share         (0.26)       (0.61)       (0.42)       (0.38)
Weighted avg. # of shares outstanding - basic         84,409,648       84,388,909       84,409,648       84,378,791
Weighted avg. # of shares outstanding - diluted         84,409,648       84,388,909       84,409,648       84,378,791
                                   

Key Operating Statistics - By Operation

                                   
Three Months Ended September 30, 2012 Operating Data 
    Ore
Processed
(t000)
    Feed Grade
(g/t)
    Plant
Recovery
Rate (%)
    Production
(ounces)
    Cash
Operating
Cost/t
    Cash
Operating
Cost/ounce
Turmalina    115     2.70     89%     9,186      $ 79.60      $ 991
Paciência    -      -     -      -      -      -
Caeté   170     3.24     88%     13,840     76.70     945
Total   285     3.03     88%     23,026      $ 77.80      $ 963
                                   
Three Months Ended September 30, 2011 Operating Data 
    Ore
Processed
(t000)
    Feed Grade
(g/t)
    Plant
Recovery
Rate (%)
    Production
(ounces)
    Cash
Operating
Cost/t
    Cash
Operating
Cost/ounce
Turmalina    179     3.11     89%     16,204      $ 80.50      $ 906
Paciência   119     2.60     91%     8,572     73.00     929
Caeté   171     3.24     88%     15,885     78.10     841
Total   469     3.03     89%     40,661      $ 77.70      $ 886
                                   
Nine Months Ended September 30, 2012 Operating Data 
    Ore
Processed
(t000)
    Feed Grade
(g/t)
    Plant
Recovery
Rate (%)
    Production
(ounces)
    Cash
Operating
Cost/t
    Cash
Operating
Cost/ounce
Turmalina    427     2.32     90%     29,635      $ 79.50      $ 1,157
Paciência   170     2.15     90%     9,987     92.30     1,536
Caeté   485     3.12     89%     41,526     84.10     1,006
Total   1,082     2.66     89%     81,148      $ 83.60      $ 1,126
                                   
Nine Months Ended September 30, 2011 Operating Data 
    Ore
Processed
(t000)
    Feed Grade
(g/t)
    Plant
Recovery
Rate (%)
    Production
(ounces)
    Cash
Operating
Cost/t
    Cash
Operating
Cost/ounce
Turmalina    474     3.43     90%     47,931      $ 77.00      $ 821
Paciência   352     3.07     92%     32,949     65.00     683
Caeté   498     2.99     87%     41,487     72.80     879
Total   1,324     3.17     90%     122,367      $ 72.20      $ 804
                                   

 

Turmalina

During the quarter ended September 30, 2012, Turmalina produced 9,186 ounces of gold at a cash operating cost of $991 per ounce.  This compared to 16,204 ounces at a cash operating cost of $906 per ounce during the quarter ended September 30, 2011 and 10,435 ounces at a cash operating cost of $1,125 per ounce in the quarter ended June 30, 2012.

The increase in Turmalina's cash operating cost during the quarter as compared to the same period last year was mainly attributable to lower production and lower feed grade that increased the cost by $276 per ounce, partially offset by the positive impact of exchange rates which reduced the cash operating cost by $176 per ounce. The 12% decrease in cash operating cost per ounce as compared to the second quarter of 2012 is the result of the implementation of the cost reduction program announced during the second quarter 2012.

Production was lower quarter over quarter due to instability of the hanging and footwalls created by excessively large and inadequately supported excavations in the ore horizon leading to poor ground conditions together with congestion of mining operations in the wider zone of Turmalina's Ore Body A.  These issues are being addressed by a new ground control methodology and more emphasis on development.  However, during the transition to the new ground control methodology, installation of roof support and ground control measures is taking additional time to complete.  As a result of the extended mining cycle times, together with the shift in emphasis to development, production is not expected to increase immediately.

Caeté

During the quarter ended September 30, 2012, Caeté produced 13,840 ounces of gold at a cash operating cost of $945 per ounce.  This compared to 15,885 ounces at a cash operating cost of $841 per ounce during the quarter ended September 30, 2011 and 13,804 ounces at a cash operating cost of $953 per ounce in the quarter ended June 30, 2012.

The increase in Caeté's cash operating cost during the quarter as compared to the same period last year was attributable to higher expenses for internal services, mining services and mining materials that increased the cash operating cost by $275, partially offset by the positive impact of changing exchange rates that reduced the cash operating cost by $165 per ounce.

Paciência

The Paciência operation continued on care and maintenance during the quarter ended September 30, 2012.

2012 Estimated Production and Cash Operating Cost

Based on the operating results for the first three quarters of the year and the continuing implementation of the Restructuring and Turnaround Plan, 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 100,000 to 110,000 ounces.  On this new volume, cash operating costs are expected to be in the range of $1,050 to $1,150 per ounce (based on an assumed exchange rate of R$2.0 per US$).

The Company is in the process of reevaluating its production and cost targets for 2013.

Conference Call Details

Jaguar will hold a conference call to discuss the third quarter results and operations on Tuesday, November 13, 2012 at 10:00 a.m. ET.  The call can be accessed via telephone or webcast.

Live teleconference access:        
         
US Dial In (Toll Free):       1-866-524-3160
International Dial In:       1-412-317-6760
Live audio webcast:          www.jaguarmining.com
         
Replay:        
         
US Toll Free:           1-877-344-7529
International Toll:          1-412-317-0088
Conference Number:          10020886

About Jaguar Mining

Jaguar is a junior gold producer in Brazil with operations in a prolific greenstone belt in the state of Minas Gerais.  Jaguar also has the Gurupi Project in Northern Brazil in the state of Maranhão and additional mineral resources at its approximate 210,000-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.  These Forward-Looking Statements include, but are not limited to, statements concerning the Company's 2012 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, 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 the first quarter of 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 September 30, 2012.

The following tables contain unaudited information for the quarter and nine month period ended September 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 September 30, 2012, are expected to be filed on SEDAR and EDGAR on November 12, 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)                  
          September 30,
2012
      December 31,
2011
                   
                   
Assets                  
Current assets:                  
  Cash and cash equivalents        $ 19,991     $ 74,475
  Inventory         26,729       34,060
  Prepaid expenses and sundry assets         21,854       25,541
  Derivatives         90       -
            68,664       134,076
                     
  Prepaid expenses and sundry assets          54,735       48,068
  Restricted cash          409       909
  Property, plant and equipment          350,136       388,675
  Mineral exploration projects          94,218       88,938
                     
          $ 568,162     $ 660,666
                     
Liabilities and Shareholders' Equity                  
Current liabilities:                  
  Accounts payable and accrued liabilities       $ 31,892     $ 34,922
  Notes payable          28,541       22,517
  Income taxes payable          17,993       18,953
  Reclamation provisions         3,985       2,082
  Other provisions         5,148       4,347
  Deferred compensation liabilities         88       2,953
  Other liabilities          -       1,475
            87,647       87,249
                     
  Notes payable          237,117       228,938
  Option component of convertible notes         12,920       79,931
  Deferred income taxes          10,868       8,635
  Reclamation provisions         15,968       15,495
  Deferred compensation liabilities         574       2,270
  Other liabilities          106       339
  Total liabilities         365,200       422,857
                     
Shareholders' equity:                  
  Share capital         370,043       370,043
  Stock options          9,163       14,207
  Contributed surplus          8,777       3,414
  Deficit         (185,021)       (149,855)
  Total equity attributable to equity shareholders of the Company         202,962       237,809
                     
          $ 568,162     $ 660,666
                     
                     

 

JAGUAR MINING INC.                                
                                 
Condensed Interim Consolidated Statements of Operations and Comprehensive Loss
(Expressed in thousands of U.S. dollars, except per share amounts)    
                                 
(Unaudited)                                
        Three Months
Ended
September 30,
2012
      Three Months
Ended
September 30,
2011
      Nine Months
Ended
September 30,
2012
      Nine Months
Ended
September 30,
2011
                                 
Gold sales     $ 38,412     $ 70,041     $ 135,919     $ 185,739
Production costs       (25,183)       (40,602)       (107,833)       (110,494)
Stock-based compensation       100       (189)       443       (212)
Depletion and amortization       (7,807)       (11,534)       (31,729)       (33,497)
Gross profit (loss)       5,522       17,716       (3,200)       41,536
                                 
Operating expenses:                                
  Exploration       730       230       801       1,281
  Paciência       3,126       -       3,126       -
  Stock-based compensation        427       3,818       (1,868)       734
  Administration       5,885       6,044       14,831       16,718
  Management fees       -       165       -       690
  Amortization       297       316       878       986
  Other       795       438       1,786       1,509
  Total operating expenses       11,260       11,011       19,554       21,918
                                 
Income (loss) before the following       (5,738)       6,705       (22,754)       19,618
                                 
(Gain) loss on derivatives       (16)       1,219       (130)       805
(Gain) loss on conversion option                                 
   embedded in convertible debt       4,741       27,260       (67,011)       19,420
Foreign exchange loss       734       18,559       5,245       8,944
Accretion expense       527       648       1,660       1,842
Interest expense        7,177       7,203       21,377       19,960
Interest income       (617)       (2,854)       (3,039)       (7,186)
(Gain) loss on disposition of property       197       (595)       (171)       (1,593)
Impairment of Paciência property       -       -       47,692       -
Other non-operating expenses (income)       2,439       (30)       2,973       (349)
Total other expenses       15,182       51,410       8,596       41,843
                                 
Loss before income taxes       (20,920)       (44,705)       (31,350)       (22,225)
Income taxes                                 
  Current income taxes       303       979       924       2,911
  Deferred income taxes        402       5,588       2,892       6,826
Total income taxes        705       6,567       3,816       9,737
                                 
Net loss and comprehensive loss for the period     $ (21,625)     $ (51,272)     $ (35,166)     $ (31,962)
                                 
Basic and diluted loss per share      $ (0.26)     $ (0.61)     $ (0.42)     $ (0.38)
                                 
Weighted average number of                                 
  common shares outstanding - basic       84,409,648       84,388,909       84,409,648       84,378,791
Weighted average number of                                 
  common shares outstanding - diluted       84,409,648       84,388,909       84,409,648       84,378,791
                                   
                                   

 

JAGUAR MINING INC.                                
                                 
Condensed Interim Consolidated Statements of Cash Flows                      
(Expressed in thousands of U.S. dollars)                                
                                 
(Unaudited)                                
        Three Months
Ended
September 30,
2012
      Three Months
Ended
September 30,
2011
      Nine Months
Ended
September 30,
2012
      Nine Months
Ended
September 30,
2011
                                 
Cash provided by (used in):                                
  Operating activities:                                
    Net loss and comprehensive loss for the period     $ (21,625)     $ (51,272)     $ (35,166)     $ (31,962)
    Adjustments to reconcile net earnings to net cash                                
     provided from (used in) operating activities:                                
      Unrealized foreign exchange (gain) loss        (1,981)       23,151       (3,715)       16,402
      Stock-based compensation expense (recovered)       327       4,007       (2,311)       946
      Interest expense       7,177       7,203       21,377       19,960
      Accretion of interest income       -       -       -       (188)
      Accretion expense       527       648       1,660       1,842
      Income taxes recovered       -       (36)       -       (140)
      Deferred income taxes       402       5,588       2,892       6,826
      Depletion and amortization       8,104       11,850       32,607       34,483
      Provision and loss on disposition of PPE       2,586       -       3,133       -
      Write-down of Paciência inventory        -       -       2,394       -
      Impairment of Paciência property       -       -       47,692       -
      Unrealized (gain) loss on derivatives       23       1,090       (90)       1,061
      Unrealized (gain) loss on option                                 
      component of convertible note       4,741       27,260       (67,011)       19,420
  Reclamation expenditures       (73)       (73)       (186)       (99)
        208       29,416       3,276       68,551
Change in non-cash operating working capital:                                
      Inventory       1,854       388       5,586       1,321
      Prepaid expenses and sundry assets       (3,447)       (82)       (10,595)       (7,559)
      Accounts payable and accrued liabilities       (1,732)       1,297       (3,973)       6,678
      Income taxes payable       364       (785)       (961)       2,540
      Deferred compensation liability       (36)       (255)       (2,304)       (501)
      Other provisions       189       -       802       -
        (2,600)       29,979       (8,169)       71,030
Financing activities:                                
      Issuance of common shares    
-       164       -       164
      Decrease in restricted cash       500       -       499       -
      Repayment of debt       (7,196)       (7,115)       (9,415)       (15,049)
      Increase in debt       6,200       6,000       13,200       105,313
      Interest paid       (3,229)       (4,387)       (10,223)       (9,002)
      Other liabilities       1       333       (1,707)       278
        (3,724)       (5,005)       (7,646)       81,704
Investing activities:                                
      Mineral exploration projects       (973)       (5,062)       (7,935)       (9,674)
      Purchase of property, plant and equipment       (6,781)       (28,820)       (37,795)       (70,420)
      Proceeds from disposition of property       187       -       869       -
        (7,567)       (33,882)       (44,861)       (80,094)
Effect of foreign exchange on non-U.S. dollar                                
      denominated cash and cash equivalents       1,938       (14,767)       6,192       (10,138)
Increase (decrease) in cash and cash equivalents       (11,953)       (23,675)       (54,484)       62,502
Cash and cash equivalents, beginning of period       31,944       125,400       74,475       39,223
Cash and cash equivalents, end of period     $ 19,991     $ 101,725     $ 19,991     $ 101,725
                                 

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 $12.9 million at September 30, 2012 (December 31, 2011 - $79.9 million). The change in fair value of $4.7 million (a loss) and $67.0 million (a gain) for the three and nine month periods ended September 30, 2012, respectively, is shown as a (gain) loss on conversion option embedded in convertible debt in the Statements of Operations and Comprehensive Income (three and nine month periods ended September 30, 2011 - $27.3 million loss and $19.4 million loss, respectively).

Non IFRS Reconciliations

Summary of  Cash Operating Cost per Ounce of Gold Produced
              Three months ended       Nine Months ended
              September 30, 2012       September 30, 2012
Production costs per statement of operations           $ 22,417,000     $ 93,801,000
Change in inventory             (234,874)       (2,421,287)
Operational cost of gold produced             22,182,126       91,379,713
  divided by                       
Gold produced (oz)             23,026       81,146
  equals                      
Cost per oz of gold produced           $ 963     $ 1,126
                     

 

Cash Operating Margin Per Ounce of Gold
            Three months ended Sep 30     Nine months ended Sep 30
              2012       2011       2012       2011
Average sales price per oz of gold           $ 1,648     $ 1,692     $ 1,650     $ 1,530
  less                                      
Cash operating cost per oz of gold produced             963       886       1,126       804
  equals                                      
Cash operating margin per oz of gold           $ 685     $ 806     $ 524     $ 726

 

 

 

SOURCE: Jaguar Mining Inc.

For further information:

Company Contacts

Roger Hendriksen
Vice President, Investor Relations
603-410-4888
rhendriksen@jaguarmining.com

Valéria Rezende DioDato
Director of Communication
011-55-31-4042-1249
valeria@jaguarmining.com