Jaguar Mining Reports Q4 and FY 2010 Earnings

JAG - TSX/NYSE

CONCORD, NH, March 21 /CNW/ - Jaguar Mining Inc. ("Jaguar" or the "Company") (JAG: TSX/NYSE) reports its financial and operational results for the period ended December 31, 2010. The Company is also providing the date it intends to issue its preliminary Q1 2011 operating results and progress within this release. All figures are in U.S. dollars unless otherwise indicated.

FY 2010 Highlights

  • Revenue of $170.8 million, an increase of 21% over 2009.
  • Net loss of $23.8 million or ($0.28) per basic and fully diluted share for the year ended December 31, 2010 compared to a net loss of $8 million or ($0.10) per basic and fully diluted share for the same period in 2009.  Adjusted net loss, excluding special non-operating and non-recurring charges, totaled $12.2 million or ($0.15) per share (See Non-GAAP Performance Measures).
  • Gross profit of $12.4 million, a decrease of 71% from 2009, largely due to higher operating costs caused by the stronger Brazilian real and geo-mechanical operational issues at Jaguar's Turmalina mining operation.
  • Gold production of 137,867 ounces at an average cash operating cost of $732 per ounce compared to 148,742 ounces at an average cash operating cost of $462 per ounce during 2009 (see Non-GAAP Performance Measures).  The primary reason for the decline in production was primarily attributable to the geo-mechanical problems at the Turmalina Mine during the second half of 2010. The Sabará operation has been excluded from the 2009 figures as it was placed on long-term care and maintenance during the second half of 2009.
  • Cash generated by operating activities totaled $19.6 million, a decrease of 39% from 2009.
  • Investments of $131.9 million in growth projects, an increase of 54% from 2009.
  • As of December 31, 2010, the Company held cash, cash equivalents and short-term investments of approximately $39.2 million.  On February 9, 2011, the Company closed a $103.5 million private offering of convertible notes that increased its cash and short term investments to $119.5 million as of February 28, 2011.
  • Achieved underground development targets by completing 18.8 kilometers of development.
  • Commissioned the Caeté operation, Jaguar's third integrated mining-processing facility.

Q4 2010 Highlights

  • Revenue of $44.6 million, an increase of 13% over 2009.
  • Net loss of $9.5 million or ($0.11) per basic and fully diluted share compared to a net loss of $29.4 million or ($0.36) per basic and fully diluted share in Q4 2009. Adjusted net loss, excluding special non-operating and non-recurring charges, totaled $6.4 million or ($0.08) per basic and fully diluted share compared to a Q4 2009 adjusted net loss of $3.7 million or ($0.05) per basic and fully diluted share in Q4 2009. (See Non-GAAP Performance Measures).
  • Gross profit of $2.8 million, a decrease of 73% from Q4 2009.
  • Gold production of 34,682 ounces at an average cash operating cost of $762 per ounce compared to 39,891 ounces at an average cash operating cost of $539 per ounce in Q4 2009 (see Non-GAAP Performance Measures).  The decrease in production from the prior year was largely attributable to management's decision to halt ore production in the Turmalina Ore Body A due to geo-mechanical issues during the quarter and divert efforts to forward development.
  • Cash generated by operating activities totaled $24,000, a decrease of 98% from Q4 2009. Cash flow from operations, excluding changes in non-cash operating working capital, totaled approximately $3 million in Q4 2010 (see Non-GAAP Performance Measures).
  • Investments of $22.6 million in growth projects in Q4 2010, a decrease of 31% from Q4 2009.

Commenting on the 2010 performance, Daniel R. Titcomb, Jaguar's President and CEO stated, "We faced a challenging year at our Turmalina and Paciência operations where both production and cash operating costs were adversely affected.  Over the past eight months, our operating teams have worked diligently to improve these operations into healthier, more productive and sustainable mines.  Turmalina required a change in the mining method, which we completed in early-2011.  At each of our underground mines we have significantly increased the backfill systems and development of the infrastructure, adding more stopes and faces which adds to our flexibility.  Through this effort, we now have between 10 and 18 months of fully developed reserves, ready for mining to support our 2011 production target.  Our progress is in part tied to recent management changes implemented in the operations.  We expect significant improvements as we move through 2011.  As important, the successful commissioning of our new Caeté operation, the third such integrated mining complex we have built, should represent a significant source of gold production and a platform for further growth for years to come."  

Summary of Key Operating Results

The following is a summary of key operating results.

  Three Months Ended   Year Ended
  December 31   December 31
  2010   2009   2010   2009
(unaudited)               
($ in 000s, except per share amounts)              
Gold sales   $     44,554    $     39,497    $  170,788    $ 140,734
Ounces sold         34,134           35,944        140,530      143,698
Average sales price $ / ounce           1,306             1,099           1,215             979
Gross profit            2,777           10,363         12,420        42,583
Net income (loss) (9,474)          (29,381)        (23,792)         (7,992)
Basic income (loss) per share           (0.11)             (0.36)            (0.28)           (0.10)
Diluted income (loss) per share           (0.11)             (0.36)            (0.28)           (0.10)
Weighted avg. # of shares  outstanding - basic 84,259,191     80,738,919   84,152,914   76,410,916
Weighted avg. # of shares outstanding - diluted 84,259,191     80,738,919   84,152,914   76,410,916

 

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 year ended December 31, 2010.

Q1 2011 Update of Operations

The Company intends to provide an update of its preliminary Q1 2011 operating results on Tuesday, April 19, 2011. In aggregate, the Company expects to produce between 38,000 and 40,000 ounces of gold for the quarter ending March 31, 2011.  The first quarter results are consistent with the initiatives the Company implemented during the second half of 2010 and its 2011 target of between 195,000 and 205,000 ounces.

Non-GAAP Performance Measures

The Company has included the non-GAAP performance measures discussed below in this press release.  These non-GAAP performance measures do not have any standardized meaning prescribed by Canadian GAAP ("GAAP") and, therefore, may not be comparable to similar measures presented by other companies.  The Company believes that, in addition to conventional measures prepared in accordance with GAAP, these non-GAAP measures provide investors with additional information that will better enable them to evaluate the Company's performance.  Accordingly, these Non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP.

The Company has included cash operating cost per tonne processed, cash operating cost per ounce produced and cash operating margin per ounce because it believes these figures are a useful indicator of a mine's performance as they provide: (i) a measure of the mine's cash margin per ounce, by comparison of the cash operating costs per ounce to the price of gold; (ii) the trend in costs as the mine matures; and (iii) an internal benchmark of performance to allow for comparison against other mines. 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-GAAP measures to reported GAAP measures are set out in the following tables.

Adjusted Net Loss      
A Non-GAAP Measure      
($000s except per share amounts)      
       
  Three Months
Ended
December 31, 2010
  Year Ended
December 31, 2010
Net (loss) as reported  $           (9,474)    $       (23,792)
Adjustments:      
Non-cash interest expense                2,074                8,098
Additional depletion on unconverted resources                     -                  1,800
Loss on forward derivatives                  686                   686
Loss on sale of Sabará  inventory                     -                     677
Write-down of Sabará operation                  313                   313
Adjusted net income (loss)  $           (6,401)    $       (12,218)
Adjusted EPS  $             (0.08)    $           (0.15)
       

Cash Flow From Operations      
Non GAAP Measure      
       
$ in thousands (except per share amounts) Three Months
Ended
December 31, 2010
  Year Ended
December 31, 2010
Cash provided by operating activities as reported      
Net income (loss)  $       (9,474)    $   (23,792)
Items not involving cash:      
   Unrealized foreign exchange (gain) loss               (203)               (151)
   Stock-based compensation              1,109           (1,571)
   Non-cash interest expense              2,074              8,098
   Accretion expense                  520              1,697
   Future income taxes               (981)                 172
   Depletion and amortization            10,746           39,322
   Write down on Sabara property                  313                 313
   Unrealized (gain) loss on forward sales derivatives            (1,502)                     -  
   Unrealized (gain) loss on foreign exchange contracts                  509              1,111
   Disposition of property                     -             (4,625)
   Accretion of interest revenue                  (94)               (188)
Reclamation expenditure                  (51)           (1,662)
Cash provided by operating activities before change in non cash operating working capital              2,966           18,724
Cash provided by operating activities per share  $            0.04    $          0.22
     

       
Cash Operating Margin per oz of gold  Three Months
Ended 
December 31, 2010
  Year Ended
December 31, 2010
Average sales price per oz of gold  $              1,306    $           1,215
    less      
Cash operating cost per oz of gold produced                    762                    732
     equals      
Cash operating margin per oz of gold  $                544    $              483
       

The following tables set forth certain operating data for Turmalina, Paciência and Caeté for the three and twelve months ended December 31, 2010 and 2009.

Quarter Ended December 31, 2010 Operating Data
             
  Ore
Processed
(t 000)
Feed
grade
(g/t)
Plant
Recovery
rate
Production
(ounces)
Cash
Operating
cost/t
Cash
Operating
cost/ounce
Turmalina           143        2.89 88%          10,275 $    66.70 $         899
Paciência           135        3.57 94%          13,808        61.80             628
Caeté           156        2.84 88%          10,599        63.40             804
Total           434        3.09 92%          34,682 $    64.00 $         762
             
Year Ended December 31, 2010 Operating Data
             
  Ore
Processed
(t 000)
Feed
grade
(g/t)
Plant
Recovery
rate
Production
(ounces)
Cash
Operating
cost/t
Cash
Operating
cost/ounce
Turmalina           692        3.20 87%          59,481 $    64.50 $         774
Paciência           626        3.32 93%          59,287        60.90             670
Caeté           258        2.85 91%          19,099        63.10             792
Total        1,576        3.19 90%        137,867 $    62.80 $         732
             
Quarter Ended December 31, 2009 Operating Data
             
  Ore
Processed
(t 000)
Feed
grade
(g/t)
Plant
Recovery
rate
Production
(ounces)
Cash
Operating
cost/t
Cash
Operating
cost/ounce
Turmalina           179        3.93 89%          21,184 $    63.00 $         523
Paciência           178        3.41 93%          18,707        59.30             556
Caeté             -             -             -                   -               -                 -  
Total           357        3.67 91%          39,891 $    61.20 $         539
             
Year Ended December 31, 2009 Operating Data
             
  Ore
Processed
(t 000)
Feed
grade
(g/t)
Plant
Recovery
rate
Production
(ounces)
Cash
Operating
cost/t
Cash
Operating
cost/ounce
Turmalina           588        4.81 89%          82,071 $    59.60 $         424
Paciência           646        3.42 93%          66,671        51.20             502
Caeté             -             -             -                   -               -                 -  
Total        1,234        4.14 91%        148,742 $    55.50 $         462

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.      
         
Consolidated Balance Sheet      
(Expressed in thousands of U.S. dollars)      
         
          December 31,
2010
    December 31,
2009
         
Assets      
Current assets:      
  Cash and cash equivalents    $           39,223  $         121,256
  Inventory                 31,495              36,986
  Prepaid expenses and sundry assets                24,523              19,050
  Unrealized foreign exchange gains                      168                1,280
                   95,409             178,572
         
  Prepaid expenses and sundry assets                48,582              35,837
  Net smelter royalty                   1,006                1,006
  Restricted cash                     908                   108
  Property, plant and equipment               343,363             205,329
  Mineral exploration projects                 90,008             129,743
       $         579,276  $         550,595
         
Liabilities and Shareholders' Equity      
Current liabilities:      
  Accounts payable and accrued liabilities    $           27,853  $           22,892
  Notes payable                 26,130                5,366
  Income taxes payable                 16,677              15,641
  Asset retirement obligations                   2,167                   510
  Deferred compensation liability                   2,436                       -
  Other liabilities                      704                       -
                   75,967              44,409
         
  Notes payable               141,766             126,784
  Future income taxes                 12,558              11,821
  Asset retirement obligations                19,462              12,331
  Deferred compensation liability                  3,816                8,616
  Other liabilities                      497                   738
  Total liabilities               254,066             204,699
         
Shareholders' equity      
  Common shares                369,747             365,667
  Stock options                 13,054              14,762
  Contributed surplus                 42,762              42,028
  Deficit              (100,353)             (76,561)
                  325,210             345,896
  Commitments       
  Subsequent events       
       $         579,276  $         550,595
         

 

JAGUAR MINING INC.      
       
Consolidated Statements of Operations and Comprehensive Loss      
(Expressed in thousands of U.S. dollars, except per share amounts)    
       
  Year Ended
December 31,
2010
Year Ended
December 31,
2009
Year Ended
December 31,
2008
       
Gold sales  $         170,788  $         140,734  $           93,657
Production costs            (119,124)             (74,287)             (53,610)
Stock-based compensation                   (482)                  (600)                    (24)
Depletion and amortization             (38,762)             (23,264)             (12,669)
Gross profit              12,420              42,583 27,354
       
Operating expenses:      
  Exploration                3,553                3,079                3,536
  Stock-based compensation                (2,053)              10,644                1,238
  Administration              20,600              16,411              12,571
  Management fees                 1,131                1,604                   854
  Amortization                   560                   452                   264
  Accretion expense                1,697                   786                   490
  Other                5,051                2,440                   379
  Total operating expenses              30,539              35,416              19,332
       
Income (loss) before the following             (18,119)                7,167                8,022
       
Loss on forward derivatives                   686                       -                   318
Loss (gain) on forward foreign exchange derivatives                (1,391)               (2,642)                2,623
Foreign exchange gain               (1,697)             (17,307)               (2,477)
Interest expense              16,638              28,847              11,584
Interest income               (3,870)               (4,203)               (3,850)
Gain on disposition of property               (6,794)               (2,043)                  (452)
Write down on Sabará property                    313                3,522                       -
Other non-operating expenses                       -                   145                       -
Total other expenses                3,885                6,319                7,746
       
Income (loss) before income taxes             (22,004)                   848                   276
Income taxes       
  Current income taxes                1,616                4,979                6,172
  Future income taxes (recovered)                   172                3,861               (1,640)
Total income taxes                 1,788                8,840                4,532
       
Net loss and comprehensive loss for the year             (23,792)               (7,992)               (4,256)
   

 

JAGUAR MINING INC.      
       
Consolidated Statements of Cash Flows      
(Expressed in thousands of U.S. dollars)      
       
  Year Ended
December 31,
2010
Year Ended
December 31,
2009
Year Ended
December 31,
2008
       
Cash provided by (used in):      
  Operating activities:      
    Net loss and comprehensive loss for the year  $        (23,792)  $          (7,992)  $          (4,256)
    Items not involving cash:      
      Unrealized foreign exchange gain                (151)              (3,227)              (3,471)
      Stock-based compensation              (1,571)               7,962               1,262
      Non-cash interest expense               8,098             15,320               1,982
      Accretion of interest revenue                (188)                      -                      -
      Accretion expense               1,697                 786                 490
      Future income taxes (recovered)                 172               3,861              (1,640)
      Depletion and amortization             39,322             23,716             12,933
      Write down on Sabará property                  313               3,522                      -
      Amortization of net smelter royalty                      -                      -                 219
      Unrealized loss (gain) on foreign exchange contracts               1,111              (3,701)               4,102
      Gain on disposition of property              (4,625)                      -                      -
    Reclamation expenditure              (1,662)                (328)                      -
  Change in non-cash operating working capital      
      Inventory               8,064            (11,106)              (4,361)
      Prepaid expenses and sundry assets            (12,607)            (13,612)            (14,200)
      Accounts payable and accrued liabilities               4,960               9,707                 423
      Current taxes payable               1,036               7,015               5,107
      Deferred compensation liabilities                (546)                      -                      -
              19,631             31,923              (1,410)
  Financing activities:      
    Issuance of common shares, special
    warrants and warrants, net
              2,895           114,294           105,803
    Shares purchased for cancellation                      -                      -              (6,381)
    Settlement of forward derivatives                      -                      -            (14,500)
    Decrease (increase) in restricted cash                (800)               2,998                    (4)
    Repayment of debt              (4,158)            (84,614)            (18,654)
    Increase in debt             31,099           118,204               3,848
    Other long term liabilities                 463                 738                      -
              29,499           151,620             70,112
  Investing activities      
    Mineral exploration projects            (29,275)            (25,200)            (37,087)
    Purchase of property, plant and equipment          (102,089)            (60,300)            (52,210)
    Proceeds from disposition of property               1,250                      -                      -
           (130,114)            (85,500)            (89,297)
       
Effect of foreign exchange on non-U.S. dollar denominated
cash and cash equivalents
             (1,049)               2,653              (4,556)
Increase (decrease) in cash and cash equivalents            (82,033)           100,696            (25,151)
Cash and cash equivalents, beginning of year           121,256             20,560             45,711
Cash and cash equivalents, end of year  $         39,223  $       121,256  $         20,560

 

Conference Call Details

The Company will hold a conference call tomorrow, March 22 at 10:00 a.m. EDT, to discuss the results.

From North America: 
International: 
Replay:
From North America: 
International: 
Replay ID: 
Webcast:
800-392-9307
213-416-2192

800-675-9924
213-416-2185
32211
www.jaguarmining.com

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

About Jaguar Mining

Jaguar is 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.  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 a forward-looking statement, within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, concerning the Company's belief that Caeté should represent a significant source of gold production for years to come.  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.

This forward-looking statements represents 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

 

 

For further information:
Investors and analysts:
Bob Zwerneman
Vice President Corporate Development and
Director of Investor Relations
603-224-4800
bobz@jaguarmining.com


     Media inquiries:
     Valéria Rezende DioDato
     Director of Communication
     603-224-4800
     valeria@jaguarmining.com