Jaguar Mining Reports Q2 2008 Adjusted Earnings and Cash Flow per Share of $0.09



    JAG - TSX/NYSE Arca

    CONCORD, NH, Aug. 11 /CNW/ - Jaguar Mining Inc. ("Jaguar" or the
"Company") (JAG: TSX/NYSE Arca, JAG.NT: TSX) reports its financial and
operational results for the period ended June 30, 2008. All figures are in US
dollars unless otherwise indicated.

    
    Q2 2008 Key Statistics

    -  Record quarterly revenue of $21.2 million.

    -  Adjusted earnings of $5.9 million or $0.09 per share.

    -  Cash flow from operations of $5.8 million before changes in non-cash
       working capital or $0.09 per share.

    -  CAPEX totaled $36.5 million.

    -  As at June 30, 2008, cash and cash equivalents of $64.4 million,
       including restricted cash of $3.1 million.
    

    Commenting on the Q2 results, Daniel R. Titcomb, Jaguar's President and
CEO stated, "We believe that the market's reaction to our preliminary results
announced on July 31 has not accurately measured the underlying value of
Jaguar by discounting our relatively low-cost investment and cost profile and
tremendous growth program. Our second quarter progress and results were
positive in several areas. We doubled mineral reserves, completed two
feasibility studies, and launched construction of our third underground mine
and CIP plant. We had record quarterly revenue, adjusted operating cash flow
and adjusted earnings per share. We also announced the iron ore royalty
off-setting the decline in cash flow from reduced 2008 production guidance.
Moreover, our operating team's ability to develop long-lasting solutions to
resolve short-term issues underscores their ability to execute on the
potential."

    
    Q2 2008 Highlights

    -  Adjusted earnings, primarily excluding the impact of an increase for
       the provision of taxes related to a revaluation of inter-company debt
       (see NON-GAAP PERFORMANCE MEASURES section below), totaled $0.09 in
       Q2 2008.

    -  Adjusted earnings, excluding the provision for taxes noted above,
       totaled $0.10 per share for the six months ended June 30, 2008.

    -  Sales in Q2 2008 increased to $21.2 million from $11.4 million in
       Q2 2007, an increase of 86% due to both an increase in ounces of gold
       sold and an increase in the average realized gold price. The number
       of ounces of gold sold in Q2 2008 increased to 23,537 from
       17,177 ounces in Q2 2007, an increase of over 37%. The average
       realized gold price in Q2 2008 increased to $900 per ounce from
       $665 in Q2 2007, an increase of over 35%. Sales for the six months
       ended June 30, 2008 totaled approximately $40.0 million compared to
       $18.0 million for the same period in 2007.

    -  Gross profit in Q2 2008 increased to $6.0 million from $4.3 million in
       Q2 2007. Gross profit for the six months ended June 30, 2008 increased
       to $13.3 million from $7.7 million for the same period in 2007 due
       primarily to the increase in sales.

    -  Net income before income taxes in Q2 2008 increased to $7.2 million
       from a loss of $2.7 million in Q2 2007. Net income before income taxes
       for the six months ended June 30, 2008 increased to $8.2 million from
       a loss of $3.2 million for the same period in 2007.

    -  Cash flow from operating activities adjusted for the change in
       non-cash operating working capital generated $5.8 million of cash
       during Q2 2008 versus $4.1 million during Q2 2007 and generated
       $10.9 million of cash during the six months ended June 30, 2008 versus
       $4.2 million for the same period in 2007 (see NON-GAAP PERFORMANCE
       MEASURES section below). This increase in cash flow adjusted for the
       change in non-cash working capital is a result of an increase in sales
       and gross profit generated by the Company.

    -  As at June 30, 2008, cash and cash equivalents totaled $64.4 million,
       including $3.1 million of restricted cash, mostly related to foreign
       exchange hedges.

    -  In Q2 2008, the Company produced 20,782 ounces of gold at an average
       cash cost of $455 per ounce compared to 17,188 ounces at an average
       cash cost of $328 per ounce during Q2 2007. Costs for Q2 2008 were
       impacted by lower grades at Sabara and Turmalina, and the weaker U.S.
       dollar ("US$") against the Brazilian real ("R$"). On a per tonne of
       ore basis, mining and processing costs at Sabara and Turmalina were on
       budget. However, as run-of-mine grades were lower, particularly at
       Turmalina due to unexpected dilution, on a per ounce of gold basis,
       cash operating costs increased. Over half of the increase in average
       cash operating costs can be attributed to the weakness of the US$
       while the balance was tied to lower grades. The average exchange rate
       in Q2 2008 was R$1.66/US$1.00 compared to R$1.98/US$1.00 in Q2 2007.
    

    Mr. Titcomb added, "As we move forward, we are confident in our ability
to deliver on our plan of becoming a highly profitable 700,000-ounce producer.
Our existing projects, our expansions and our project under construction are
the platform for creating value for those willing to invest in the Jaguar
story. To help investors better understand Jaguar, in mid-October we will be
conducting a tour of our operations near Belo Horizonte. We invite qualified
investors and shareholders to join our tour and believe that those who do will
get a better appreciation of the potential of our operations and plans and see
the passion of our employees and management."

    
    2008 Overview of Financial Results

    A summary of key operating results follows:

    (unaudited)
    ($ in 000s, except per share data)
    -------------------------------------------------------------------------
                                                   Three Months   Six Months
                                                          Ended        Ended
                                                        June 30,     June 30,
                                                           2008         2008
    -------------------------------------------------------------------------

    Gold sales                                      $    21,187  $    39,984
    Production costs                                    (11,174)     (20,569)
    Other cost of goods sold                             (1,621)      (1,572)
    Depletion and amortization                           (2,379)      (4,494)
    -------------------------------------------------------------------------
    Gross profit                                          6,013       13,349
    -------------------------------------------------------------------------

    Operating expenses:
      Exploration                                         1,037        1,849
      Stock-based compensation                              219          493
      Administration                                      2,950        6,022
      Management fees                                       186          375
      Accretion expense                                      65          135
      Other                                                (578)         416
    -------------------------------------------------------------------------
    Total operating expenses                              3,879        9,290
    -------------------------------------------------------------------------

    Income before the following                           2,134        4,059
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss on forward derivatives                               -          318
    Gain on forward foreign exchange derivatives         (1,191)      (1,584)
    Foreign exchange gain                                (5,691)      (7,939)
    Interest expense                                      3,088        7,158
    Interest income                                      (1,457)      (2,702)
    Other non-operating expenses                            231          566
    -------------------------------------------------------------------------
    Total other expenses                                 (5,020)      (4,183)

    Income (loss) before income taxes                     7,154        8,242
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Income taxes
      Current income taxes                                1,296        3,284
      Future income taxes                                 6,209        4,471
    -------------------------------------------------------------------------
    Total income taxes                                    7,505        7,755
    -------------------------------------------------------------------------

    Net income (loss) for the period                       (351)         487
    Net income (loss) adjustment:
    Future income tax expense on foreign currency
     translation of inter-company debt                    6,287        5,859
    -------------------------------------------------------------------------
    Adjusted net income for the period                    5,936        6,346
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjusted basic and diluted net income per
     share                                          $      0.09  $      0.10
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flow from operating activities as reported $    (1,155) $    (3,464)
    Adjustment:
    Change in non-cash operating working capital         (6,941)     (14,328)
    -------------------------------------------------------------------------
    Adjusted cash flow from operating activities    $     5,786  $    10,864
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Adjusted cash flow from operating activities
     per share                                      $      0.09  $      0.18
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Capital expenditures                            $    36,473  $    62,562
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash and cash equivalents (end of period)       $    61,275  $    61,275
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average sales price per ounce                   $       900  $       911
    Gold sales (ounces)                                  23,537       43,881
    -------------------------------------------------------------------------

    Approximately 23% of the Company's cash and cash equivalents of $64.4
million, including $3.1 million of restricted cash held at June 30, 2008, were
in accounts in Brazil. Variations in the relative currencies (Canadian dollar
versus US$ versus R$) will likely give rise to realized and unrealized credits
or charges in future periods, which could materially impact the Company's
reported income.

    2008 Outlook

    The Company's 2008 production and costs estimates remain as follows:

                      Actual       Estimated         Estimated     Estimated
               1ST Half 2008   2nd Half 2008       FY 2008 Est.  FY 2008 Est.
    Operation     Production      Production        Production     Cash Cost
                         (oz)            (oz)              (oz)        ($/oz)

    Turmalina         33,476   41,524-46,524     75,000-80,000      $365-380
    Paciência              -   25,000-30,000     25,000-30,000      $520-535
    Sabara             8,719    9,281-11,281     18,000-20,000      $600-620
                      -------   -------------    -------------
    Total             42,195   75,805-87,805   118,000-130,000      $435-450
    Note: Estimated cash costs based on actual 1st half exchange rate of
    R$1.69/US$1.00 and estimated 2nd half exchange rate of R$1.65/US$1.00
    

    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 certain 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 ounce processed 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. The definitions for these
performance measures and reconciliation of the non-GAAP measures to reported
GAAP measures are set out below in the Summary of Cash Operating Cost per oz
of gold produced.
    The Company uses the financial measure "adjusted cash flows from
operating activities" and "adjusted cash flow per share" to supplement its
consolidated financial statements. The presentation of adjusted cash flows
from operating activity is not meant to be a substitute for cash flows from
operating activities presented in the statement of cash flows in accordance
with GAAP, but rather should be evaluated in conjunction with such GAAP
measures. Adjusted cash flows from operating activities is calculated as
operating cash flow excluding the change in non-cash operating working
capital. The term adjusted cash flows from operating activities does not have
a standardized meaning prescribed by GAAP, and therefore the Company's
definitions are unlikely to be comparable to similar measures presented by
other companies. The Company's management believes that the presentation of
adjusted cash flows from operating activities provides useful information to
investors because it excludes certain non-cash items and is a better
indication of the Company's cash flow from operations. The items excluded from
the computation of adjusted cash flows from operating activities, which are
otherwise included in the Statements of Cash Flows prepared in accordance with
GAAP, are items that the Company does not consider to be meaningful in
evaluating the Company's past financial performance or the future prospects
and may hinder a comparison of its period to period cash flows.
    The Company uses the financial measures "adjusted net income" and
"adjusted net income per share" to supplement information in its consolidated
financial statements. The presentation of adjusted measures are not meant to
be a substitute for net income or (loss) or net income or (loss) per share
presented in accordance with GAAP, but rather should be evaluated in
conjunction with such GAAP measures. Adjusted net income and adjusted net
income per share are calculated as net income or (loss) excluding future
income tax expense on foreign currency translation of inter-company debt. The
terms "adjusted net income" and "adjusted net income per share" do not have a
standardized meaning prescribed by GAAP, and therefore the Company's
definitions are unlikely to be comparable to similar measures presented by
other companies. Management believes that the presentation of adjusted net
income and adjusted net income per share provide useful information to
investors because they are a better indication of the Company's profitability
from operations. The item excluded from the computation of adjusted income and
adjusted income per share, which are otherwise included in the determination
of net income (loss) and net income (loss) per share prepared in accordance
with GAAP, is an item that the Company does not consider to be meaningful in
evaluating the Company's past financial performance or the future prospects
and may hinder a comparison of its period to period profitability.

    
    Summary of Cash Operating Cost per oz of gold produced

                                                   --------------------------
                                                   Three Months   Six Months
                                                          Ended        Ended
                                                        June 30,     June 30,
                                                           2008         2008
                                                   --------------------------
    Production costs per statement of operations    $11,174,000  $20,569,000
    Change in inventory(1)                           (1,709,000)  (1,938,000)
    Operational cost of gold produced(2)              9,465,000   18,631,000
      divided by
    Gold produced (oz)                                   20,782       42,195
      equals
    Cost per oz of gold produced                    $       455  $       442



    Sabara Cash Operating Cost per oz processed
                                                   --------------------------
                                                   Three Months   Six Months
                                                          Ended        Ended
                                                        June 30,     June 30,
                                                           2008         2008
                                                   --------------------------
    Production costs                                $ 2,982,000  $ 5,574,000
    Change in inventory(1)                              111,000      (48,000)
    Operational cost of gold produced(2)              3,093,000    5,526,000
      divided by
    Gold produced (oz)                                    4,461        8,719
      equals
    Cost per oz of gold produced                    $       693  $       645



    Turmalina Plant Cash Operating Cost per oz processed
                                                   --------------------------
                                                   Three Months   Six Months
                                                          Ended        Ended
                                                        June 30,     June 30,
                                                           2008         2008
                                                   --------------------------
    Production costs                                $ 8,192,000  $14,995,000
    Change in inventory(1)                           (1,820,000)  (1,986,000)
    Operational cost of gold produced(2)              6,372,000   13,009,000
      divided by
    Gold produced (oz)                                   16,321       33,476
      equals
    Cost per oz of gold produced                    $       390  $       389


    (1)Under the Company's revenue recognition policy, revenue is recognized
       when legal title passes. Since total cash operating costs are
       calculated on a production basis, this change reflects the portion of
       gold production for which revenue has not been recognized in the
       period.
    (2)The basis for calculating cost per ounce produced includes the change
       to gold in process inventory, whereas the cost per tonne processed
       does not.

    Adjusted Cash Flow from Operations

    (unaudited)

    ($in 000s)
                          ---------------------------------------------------
                                Three Months Ended          Six Months Ended
                                           June 30                   June 30
                          ---------------------------------------------------
                                 2008         2007         2008         2007
                          ---------------------------------------------------
    Cash flow from
     operating activities
     as Reported          $    (1,158) $     1,825  $    (3,426) $      (469)
    Adjustment:
    Change in non-cash
     operating working
     capital                   (6,941)      (2,323)     (14,290)      (4,675)
                          ---------------------------------------------------
    Adjusted cash flow
     from operating
     activities           $     5,783  $     4,148  $    10,864  $     4,206

    Note Regarding Income Tax Expense in Q2 2008 and Subsequent Periods and
    Impact on Adjusted Net Income
    

    Income taxes for the quarter ended June 30, 2008 increased to
$7.5 million from $1.0 million for the quarter ended June 30, 2007. This large
increase in income taxes is related primarily to the significant strengthening
of the R$ and its effect on the inter-company debt, which has increased
substantially as a result of the Company making US$ loans to its Brazilian
subsidiaries for the purpose of financing construction and operations in
Brazil. The Company is required to report a future income tax expense; however
it is not actually required to pay such tax expense until such time as the
inter-company debt is repaid. The amount of the tax liability that will
actually be payable will depend on the foreign exchange rate in effect at the
time the inter-company debt is repaid, if ever.
    The Company has bank accounts in Brazil, Canada and the United States.
Monies transferred into Brazilian banks by the Company are treated as loans to
the Company's wholly-owned Brazilian subsidiaries. This debt is eliminated
during consolidation in the Company's reported financials. As a result of
changes in foreign currency valuations, specifically the exchange rate of the
R$ to the US$, the income tax expense the Company reports from period to
period will vary as the inter-company debt is revalued in R$. As a result of
the significant strengthening of the R$ from R$1.75 to R$1.60 to the US$
during the quarter ended June 30, 2008, the Company, like other gold producers
operating in Brazil, was required to record a future income tax expense of
approximately $6.3 million on the revaluation of the US$ denominated
inter-company debt.
    For the six months ended June 30, 2008, income taxes increased to
$7.8 million from $1.0 million for the same period in 2007 primarily for the
reasons described above.
    To help investors better understand this dynamic, Jaguar has provided a
quarterly and year-to-date non-GAAP reconciliation of the income tax liability
excluding the revaluation of inter-company loans to its Brazilian subsidiary,
which management believes more accurately reflects the Company's true income
tax liability. This same non-GAAP measure has been incorporated into adjusted
net income and adjusted net income per fully diluted share, both non-GAAP
measures, which management believes more accurately reflect values similar to
what other companies report and investors rely upon.
    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 Interim Consolidated Financial Statements for
the period ended June 30, 2008.

    
    Conference Call Details

    The Company will hold a conference call Tuesday morning, August 12th at
    10:00 a.m. EDT, to discuss the results.

                  From North America:  866-900-4867
                  International:       213-416-2196
                  Replay:
                  From North America:  800-675-9924
                  International:       213-416-2185
                  Replay ID:           81208
                  Webcast:             www.jaguarmining.com
    

    Analyst Meeting and Tour: October 21-24

    Jaguar will hold an analyst meeting and tour of the Company's operations
in Minas Gerais, Brazil, beginning October 21, 2008. Qualified individuals
interested in visiting Jaguar's operations should contact Valéria DioDato for
additional information.

    About Jaguar Mining

    Jaguar is one of the fastest growing gold producers in Brazil with
operations in a prolific greenstone belt in the state of Minas Gerais. Jaguar
is actively exploring and developing additional mineral resources at its
72,000 acre land base in Minas Gerais and on an additional 159,000 acres in
the state of Ceara in the Northeast of Brazil through a joint venture. The
Company has no gold hedges in place thereby providing the leverage to gold
prices directly to its investors. 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 estimates of Jaguar's cash
operating costs and gold production targets. These forward-looking statements
can be identified by the use of words "are expected" or variations of such
words. 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 ecological 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. The Company also relied on information concerning two
additional targets near the Caeté plant and the Conglomerates Target near
Paciência as accurate and reliable from the previous concession owners and
does not warrant that the information supplied reflects a potential resource.
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.
    These forward-looking statements represent our views 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 unless required to do so 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, 2007 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, 2007 filed with the United States Securities and Exchange
Commission and available at www.edgar.com.

    %CIK: 0001333849




For further information:

For further information: Investors and analysts: Bob Zwerneman, Vice
President of 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


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890