Jaguar Mining Reports Q1 2011 Earnings

JAG - TSX/NYSE

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

CONCORD, NH, May 17 /CNW/ - 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 Caeté 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
Ended March
31, 2011
  Quarter
Ended March
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)  
Adjusted basic and diluted net income per share1  $            0.12    $          (0.04)  
Weighted average number of shares outstanding - basic      84,373,648        83,995,337  
Weighted average number of shares outstanding - diluted      84,385,392        98,538,285  
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
Ended
March 31,
2011
  Quarter
Ended
March 31,
2010
 
Net income (loss) as reported  $ 3,724     $  26,818  
Adjustments:                          
Loss (gain) on conversion option embedded in convertible debt
             1,340                (32,505)  
Effect of gold-in-process and stockpile inventory changes            2,546          -  
Non-cash interest expense            2,703               2,022  
Adjusted net income (loss) 10,313   (3,665)  
Adjusted basic and diluted net income per share $ 0.12        $ (0.04)  

 

Cash Provided by Operating Activities          
($000s)          
  Quarter Ended
March 31, 2011
  Quarter Ended
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 amortization                11,477                    8,122    
   Unrealized loss on derivatives                       -                         699    
   Unrealized (gain) loss on option component of convertible note                  1,340                 (32,505)    
Reclamation expenditure                     (18)                       (78)    
   $             15,028    $              6,915    
Change in non cash operating working capital                  4,361    $              4,453    
Cash provided by operating activities  $             19,389    $             11,368    
Cash provided by operating activities per share  $                0.23    $                0.14    

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,
2011
December 31,
2010
January 1,
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
Ended
March 31,
2011
Three Months
Ended
March 31,
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
Ended
March 31,
2011
Three Months
Ended
March 31,
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 America: 
International:  
800-476-0592
213-416-2192
Replay:
From North America: 
International:   
Replay ID:       
Webcast:          

800-675-9924
213-416-2185
51811
www.jaguarmining.com

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.

SOURCE Jaguar Mining Inc.

For further information:

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


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