JAG - TSX/NYSE
BELO HORIZONTE, Brazil, May 14, 2012 /CNW/ - Jaguar Mining Inc. ("Jaguar" or the "Company") (JAG: TSX/NYSE) today reported net income of $2.8 million or $0.03 per fully diluted
share for the quarter ended March 31, 2012. This result compares to
net income of $3.7 million or $0.04 per fully diluted share in the
first quarter of 2011. The first quarter 2012 result includes a $14.3
million unrealized non-cash gain on the conversion option embedded in
convertible debt (see note 1) and a $3.2 million gain from changing
foreign exchange rates. Excluding these items, Jaguar's first quarter
result was a net loss of $14.7 million or $0.17 per fully diluted
share.
Commenting on the Company's results and operations, Gary German,
Jaguar's Chairman stated, "We were clearly dissatisfied with our
operations in the first quarter, especially at Paciência where
production has continued well below plan. This operation has now been
placed on temporary care and maintenance and this will immediately
result in improvements in our average cash cost per ounce of gold
produced. We are moving aggressively forward with the implementation
of our restructuring and turnaround plan which we expect to have a
positive impact on our cash generation."
Summary of Key Operating Results
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Three months ended March 31 |
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2012
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2011
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(unaudited)
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($ in 000s, except per share amounts)
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Gold sales
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$
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50,972
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$
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55,140
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Ounces sold
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30,138
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39,794
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Average sales price $ / ounce
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1,691
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1,386
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Gross profit (loss)
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(3,677)
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10,968
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Net income
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2,809
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3,724
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Basic income (loss) per share
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0.03
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0.04
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Diluted income (loss) per share
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0.03
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0.04
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Weighted avg. # of shares outstanding - basic
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84,409,648
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84,373,648
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Weighted avg. # of shares outstanding - diluted
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84,431,344
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84,385,392
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Jaguar sold 30,138 ounces of gold at an average realized price of $1,691
per ounce in the three months ended March 31, 2012 compared to 39,794
ounces of gold at an average realized price of $1,386 per ounce in the
three months ended March 31, 2011. Average cash operating cost per
ounce was $1,268 and cash operating margin was $423 per ounce. This
compared to average cash operating cost per ounce of $727 and a cash
operating margin of $659 per ounce in the three months ended March 31,
2011. The increase in the Company's average cash operating cost during
the three months ended March 31, 2012 as compared to the same period in
2011 was attributable to higher mining dilution, lower total production
which resulted in higher fixed cost absorption per ounce, and increased
costs for labor, services, equipment maintenance and mining materials.
Turmalina
During the three months ended March 31, 2012, Turmalina produced 10,014
ounces of gold at a cash operating cost of $1,342 per ounce as compared
to 15,855 ounces at a cash operating cost of $755 per ounce during the
three months ended March 31, 2011. Production was lower quarter over
quarter due to the instability of the hanging wall and poor ground
conditions at Level 5 of Turmalina's Ore Body A. The increase in
Turmalina's cash operating cost during the quarter as compared to the
same period last year was attributable to higher mining dilution,
higher fixed cost absorption per ounce and increased costs for labor,
services, equipment maintenance and mining materials.
Development at the Turmalina Mine totaled 2.1 kilometers during the
three months ended March 31, 2012.
Caeté
During the three months ended March 31, 2012, Caeté produced 13,881
ounces of gold at a cash operating cost of $1,118 per ounce as compared
to 13,480 ounces at a cash operating cost of $850 per ounce during the
three months ended March 31, 2011. The increase in Caeté's cash
operating cost during the quarter as compared to the same period last
year was attributable to higher mining dilution and increased costs for
labor, services, equipment maintenance and mining materials.
Development at the Pilar and Roça Grande mines totaled 2.2 kilometers
during the three months ended March 31, 2012.
Paciência
During the three months ended March 31, 2012, Paciência produced 7,338
ounces of gold at a cash operating cost of $1,451 per ounce as compared
to 12,114 ounces at a cash operating cost of $555 per ounce during the
three months ended March 31, 2011.
Production was lower quarter over quarter at Paciência due to continued
challenges with adapting mining methods and properly scaled equipment
to match the narrow vein geology. In addition, a collapse of the
hanging wall and rock mechanics issues at the Santa Isabel Mine
resulted in lack of mining flexibility at the operation during the
quarter. Excessive rain also contributed to lower production levels.
The increase in Paciência's cash operating cost during the quarter as
compared to the same period last year was attributable to higher mining
dilution, higher fixed cost absorption per ounce and increased costs
for labor, services, equipment maintenance and mining materials.
Combined development for the mines supplying the Paciência Plant totaled
2.0 kilometers during the three months ended March 31, 2012.
Subsequent to the conclusion of the first quarter 2012, the Paciência
operations were placed on a care and maintenance program associated
with a comprehensive restructuring and turnaround program as previously
announced. The operations will continue on care and maintenance while
a remediation plan is implemented. The remediation plans for Paciência
include an adaptation of the narrow vein overhand stoping methods, a
changeover to smaller scale equipment, smaller development headings,
reduced stope dimensions and building the developed reserve inventory
prior to restarting the plant. Implementation of the plan is expected
to result in improved productivity per ounce, reduced mining dilution,
reliable and predictable production forecasts, and significant
reductions in cash costs per ounce when the mines return to production.
Gurupi Project
During the three months ended March 31, 2012, Jaguar received the
installation license which authorizes the construction of the
processing plant for the Gurupi open pit project. The license was a
critical step in the development of the Project and brings the Company
closer to being able to realize the full value of its assets in
Northern Brazil.
The licensing decisions for the Project's mining operations, tailings
management facilities and other infrastructure are pending subject to
the Company's acquisition of surface land rights. The Company is
engaging in negotiations with land holders.
Jaguar continued exploration and development during the quarter at
Gurupi with a drilling program to further expand the resource base. An
updated feasibility study for the Gurupi Project is due for submission
to management and the Board in the third quarter of 2012. The Board
anticipates that it will make a decision on the development plan, its
timing and its financing plan following the receipt of that study.
Exploration
Jaguar's exploration activities during the quarter ended March 31, 2012,
focused on completion of the 30,000 meter drilling program at the
Gurupi Project as well as the expansion of resources and reserves,
laterally and at depth, on targets in and around existing operations.
The table below presents a summary of the Company's exploration drilling
program during the quarter:
Region | Target | Operation/Project | Meters Drilled | Drill Holes |
Southern Brazil |
Ore Bodies A and B
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Turmalina
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1,370
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4
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Faina
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Turmalina
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878
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10
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Santa Isabel Mine
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Paciência
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4,304
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30
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Ouro Fino
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Paciência
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1,114
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8
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Northern Brazil |
Cipoeiro
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Gurupi Project
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1,294
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7
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Mandiocal & Santa Paz
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Gurupi Project
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2,822
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11
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Total |
11,782
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70
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Southern Brazil
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Turmalina - Ore Bodies A and B: As part of a drilling program to test
the continuity at depth of the 60o dipping and NE-plunging mineralized structure, underground drilling was
conducted from a 370-meter long exploration drift located on Mine Level
4. The drilling was completed during the three months ended March 31,
2012 and the results confirmed the continuity of the ore bodies at
depth, down to Mine Levels 9 and 10.
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Paciência - Santa Isabel Mine and NW1 Target: The drilling program at
the Santa Isabel Mine continued from the 530-meter long underground
exploration drift developed on Mine Level 4. The objective of this
program is to confirm the extension of the ore bodies to Mine Levels 6
and 7.
Drilling results have confirmed the continuity of the mineralized
structures in all the above mentioned targets, including locally
high-grade gold mineralization.
Northern Brazil(Gurupi Project)
During the quarter ended March 31, 2012, Jaguar continued with the
30,000-meter drilling program at the Gurupi Project. The goal is to
upgrade "inferred mineral resources" to "indicated mineral resources"
in the lateral and deeper portions of the Project's Cipoeiro and Chega
Tudo deposits as well as to add mineral resources in targets around the
future Cipoeiro Plant.
The results to date confirm the potential to significantly increase gold
indicated mineral resources at the Gurupi deposits. The infill drilling
at Cipoeiro and Chega Tudo confirms that the mineralization is
consistent with the grade and width indicated from previous drilling
programs and the step-out drilling demonstrates that the mineralization
is open down-dip in both ore bodies as a pervasive pyrite-gold
assemblage associated with NW-SE shear zones. At Chega Tudo, six deep
drill holes intercepted the extension of the mineralization to a
vertical depth of at least 300 meters. Previous resource drilling
campaigns at the Project had delineated the mineralization down to
depths of 130 to 150 meters.
During the quarter, the Company completed the exploration program at the
Cipoeiro deposit and initiated a program consisting of infill and
exploratory drill holes at the Mandiocal and Santa Paz targets, which
are part of 12 identified targets within the Project's concession
package in addition to Cipoeiro and Chega Tudo. These 12 additional
targets have not been included in any of the Company's resource
estimates or feasibility studies related to the Gurupi Project. These
targets have been identified as high potential by favorable geology,
structures, old artisan mine works, soil and channel sampling anomalies
and exploration drilling.
2012 Estimated Production and Cash Operating Cost
Based on the planned 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 120,000 to 130,000 ounces. On this new volume, cash
operating costs are expected to be in the range of $900 to $1,000 per
ounce (based on an assumed exchange rate of R$1.75 per US$) as the
planned benefits of the turnaround plan will not be fully realized
until 2013. Looking to mid 2013 and beyond, the Company's revised
preliminary annual targets for its Southern operations (excluding any
Gurupi potential production) is 170,000 to 190,000 ounces at cash
operating costs in the range $700 to $800 per ounce.
2012 Estimated Year End Cash and Cash Equivalents
As the Company starts to implement its previously announced
restructuring and turnaround plan, management is closely monitoring its
cash position and cash needs. Based on the planned implementation and
the expected significant resulting cost savings, the Company expects to
have cash or cash equivalents of approximately $40 million at the end
of 2012.
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. The
Company is actively exploring and developing additional mineral
resources at its approximate 240,000-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 Restructuring and Turnaround Plan
and 2012 production, cost and cash balance guidance. 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 System
for Electronic Document Analysis and Retrieval on March 26, 2012 and
available at http://www.sedar.com and the Company's Annual Report on Form 40-F for the year ended
December 31, 2011 expected to be filed with the United States
Securities and Exchange Commission on March 26, 2012 and available at www.sec.gov.
[###]
Note: As required by applicable Canadian rules, effective Q1 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 March 31, 2012.
The following tables contain unaudited information for the quarter ended
March 31, 2012. The data presented are subject to final adjustment,
but are believed to be materially accurate. Jaguar's financial
statements for the period ended March 31, 2012 are expected to be filed
on SEDAR and EDGAR on May 15, 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. |
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Condensed Interim Consolidated Balance Sheets
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(Expressed in thousands of U.S. dollars)
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Unaudited
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March 31,
2012
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December 31,
2011
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Assets
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Current assets:
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Cash and cash equivalents
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$
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49,863
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$
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74,475
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Inventory
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37,262
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34,060
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Prepaid expenses and sundry assets
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28,471
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25,541
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115,596
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134,076
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Prepaid expenses and sundry assets
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49,800
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48,068
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Restricted cash
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909
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909
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Property, plant and equipment
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394,187
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388,675
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Mineral exploration projects
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94,107
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88,938
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| $ |
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| 654,599 |
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| $ | 660,666 |
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Liabilities and Shareholders' Equity
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Current liabilities:
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Accounts payable and accrued liabilities
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$
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34,163
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$
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34,922
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Notes payable
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28,543
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22,517
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Income taxes payable
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18,545
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18,953
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Reclamation provisions
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2,200
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2,082
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Other provisions
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4,664
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4,347
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Deferred compensation liabilities
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766
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2,953
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Other liabilities
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1,226
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1,475
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90,107
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87,249
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Notes payable
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231,367
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228,938
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Option component of convertible notes
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65,606
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79,931
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Deferred income taxes
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7,758
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8,635
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Reclamation provisions
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16,621
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15,495
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Deferred compensation liabilities
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2,012
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2,270
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Other liabilities
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510
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339
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Total liabilities
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413,981
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422,857
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Shareholders' equity:
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Share capital
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370,043
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370,043
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Stock options
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14,207
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14,207
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Contributed surplus
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3,414
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3,414
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Deficit
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(147,046)
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(149,855)
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Total equity attributable to equity shareholders of the Company
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240,618
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237,809
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| $ |
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| 654,599 |
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| $ | 660,666 |
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JAGUAR MINING INC. |
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Condensed Interim Consolidated Statements of Operations and
Comprehensive Income
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(Expressed in thousands of U.S. dollars, except per share amounts)
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(Unaudited)
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Three Months
Ended
March 31,
2012
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Three Months
Ended
March 31,
2011
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Gold sales
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$
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50,972
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$
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55,140
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Production costs
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(41,399)
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(33,057)
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Stock-based compensation
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43
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5
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Depletion and amortization
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(13,293)
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(11,120)
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Gross profit (loss)
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(3,677)
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10,968
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Operating expenses:
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Exploration
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45
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334
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Stock-based compensation
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(808)
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(2,691)
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Administration
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6,315
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5,256
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Management fees
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30
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162
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Amortization
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289
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357
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Other
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401
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836
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Total operating expenses
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6,272
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4,254
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|
|
Income (loss) before the following
|
|
|
|
|
(9,949)
|
|
|
|
6,714
|
|
|
|
|
|
|
|
|
|
|
Gain on derivatives
|
|
|
|
|
-
|
|
|
|
(287)
|
Loss (gain) on conversion option embedded in convertible debt
|
|
|
|
|
(14,325)
|
|
|
|
1,340
|
Foreign exchange gain
|
|
|
|
|
(3,175)
|
|
|
|
(3,089)
|
Accretion expense
|
|
|
|
|
595
|
|
|
|
570
|
Interest expense
|
|
|
|
|
7,123
|
|
|
|
5,682
|
Interest income
|
|
|
|
|
(1,858)
|
|
|
|
(1,466)
|
Gain on disposition of property
|
|
|
|
|
(278)
|
|
|
|
(719)
|
Other non-operating expense recoveries
|
|
|
|
|
(27)
|
|
|
|
-
|
Total other expenses (income)
|
|
|
|
|
(11,945)
|
|
|
|
2,031
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
|
1,996
|
|
|
|
4,683
|
Income taxes
|
|
|
|
|
|
|
|
|
|
Current income taxes
|
|
|
|
|
319
|
|
|
|
504
|
Deferred income taxes (recoveries)
|
|
|
|
|
(1,132)
|
|
|
|
455
|
Total income taxes (recoveries)
|
|
|
|
|
(813)
|
|
|
|
959
|
|
|
|
|
|
|
|
|
|
|
Net income and comprehensive income for the period
|
|
|
|
$
|
2,809
|
|
|
$
|
3,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share
|
|
|
|
$
|
0.03
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic
|
|
|
|
|
84,409,648
|
|
|
|
84,373,648
|
Weighted average number of common shares outstanding - diluted
|
|
|
|
|
84,431,344
|
|
|
|
84,385,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JAGUAR MINING INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Interim Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Expressed in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
2012
|
|
|
|
Three Months
Ended
March 31,
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income and comprehensive income for the period
|
|
|
|
|
|
|
|
$
|
2,809
|
|
|
$
|
3,724
|
Adjustments to reconcile net earnings to net cash provided from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign exchange gain
|
|
|
|
|
|
|
|
|
(5,053)
|
|
|
|
(2,794)
|
Stock-based compensation expense (recovery)
|
|
|
|
|
|
|
|
|
(851)
|
|
|
|
(2,696)
|
Interest expense
|
|
|
|
|
|
|
|
|
7,123
|
|
|
|
5,682
|
Accretion of interest income
|
|
|
|
|
|
|
|
|
-
|
|
|
|
(94)
|
Accretion expense
|
|
|
|
|
|
|
|
|
595
|
|
|
|
570
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
(1,132)
|
|
|
|
455
|
Depletion and amortization
|
|
|
|
|
|
|
|
|
13,582
|
|
|
|
11,477
|
Unrealized loss (gain) on option component of convertible note
|
|
|
|
|
|
|
|
|
(14,325)
|
|
|
|
1,340
|
Inventory write-down (recovery)
|
|
|
|
|
|
|
|
|
(828)
|
|
|
|
-
|
Reclamation expenditure (recovery)
|
|
|
|
|
|
|
|
|
(103)
|
|
|
|
(18)
|
|
|
|
|
|
|
|
|
|
1,817
|
|
|
|
17,646
|
Change in non-cash operating working capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory
|
|
|
|
|
|
|
|
|
(2,080)
|
|
|
|
2,267
|
Prepaid expenses and sundry assets
|
|
|
|
|
|
|
|
|
(2,783)
|
|
|
|
(2,056)
|
Accounts payable and accrued liabilities
|
|
|
|
|
|
|
|
|
(1,378)
|
|
|
|
430
|
Income taxes payable
|
|
|
|
|
|
|
|
|
(408)
|
|
|
|
1,009
|
Other provisions
|
|
|
|
|
|
|
|
|
317
|
|
|
|
254
|
Deferred compensation liabilities
|
|
|
|
|
|
|
|
|
(1,612)
|
|
|
|
(161)
|
|
|
|
|
|
|
|
|
|
(6,127)
|
|
|
|
19,389
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of debt
|
|
|
|
|
|
|
|
|
(1,100)
|
|
|
|
(3,818)
|
Increase in debt
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
99,313
|
Interest paid
|
|
|
|
|
|
|
|
|
(3,152)
|
|
|
|
(361)
|
Other liabilities
|
|
|
|
|
|
|
|
|
(79)
|
|
|
|
(61)
|
|
|
|
|
|
|
|
|
|
1,669
|
|
|
|
95,073
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral exploration projects
|
|
|
|
|
|
|
|
|
(5,162)
|
|
|
|
(2,345)
|
Purchase of property, plant and equipment
|
|
|
|
|
|
|
|
|
(18,976)
|
|
|
|
(17,868)
|
|
|
|
|
|
|
|
|
|
(24,138)
|
|
|
|
(20,213)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange on non-U.S. dollar denominated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash and cash equivalents
|
|
|
|
|
|
|
|
|
3,984
|
|
|
|
2,071
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
|
|
|
|
|
(24,612)
|
|
|
|
96,320
|
Cash and cash equivalents, beginning of year
|
|
|
|
|
|
|
|
|
74,475
|
|
|
|
39,223
|
Cash and cash equivalents, end of year
|
|
|
|
|
|
|
|
$
|
49,863
|
|
|
$
|
135,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 $65.6 million at March 31, 2012 (December 31, 2011 - $79.9
million). The change in fair value of $14.3 million for the period
ended March 31, 2012 is shown as a gain on conversion option embedded
in convertible debt in the Statements of Operations and Comprehensive
Income (Period ended March 31, 2011 - $1.3 million loss).
<p> </p> <p> Roger Hendriksen<br/> Vice President, Investor Relations<br/> 603-410-4888<br/> <a href="mailto:rhendriksen@jaguarmining.com">rhendriksen@jaguarmining.com</a> </p> <p> Valéria Rezende DioDato<br/> Director of Communication<br/> 011-55-31-4042-1249<br/> <a href="mailto:valeria@jaguarmining.com">valeria@jaguarmining.com</a> </p>