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Jaguar Mining Inc (2)
Symbol JAG
Shares Issued 722,769,500
Close 2019-08-15 C$ 0.235
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Jaguar Mining loses $2.13-million (U.S.) in Q2

2019-08-15 07:13 ET - News Release

Mr. Vernon Baker reports


Jaguar Mining Inc. has released its financial and operating results for the three months and six months ended June 30, 2019. Detailed financial results for the second quarter of 2019 are available on SEDAR and on the company's website. All figures are in U.S. dollars, unless otherwise expressed.

Q2 2019 operating summary:

  • Consolidated gold production of 18,366 ounces (184,000 tonnes milled, average grade of 3.48 grams per tonne) increased 12 per cent compared with 16,365 in the first quarter of 2019, however, decreased 2 per cent compared with 18,819 in Q2 2018.
  • Pilar mine gold production of 10,543 ounces up 19 per cent over 8,840 ounces in Q1 2019, however, a 4-per-cent decrease compared with 10,995 ounces in Q2 2018.
  • Turmalina mine gold production up 4 per cent to 7,823 over 7,525 ounces in Q1 2019 and flat compared with 7,824 ounces in Q2 2018.
  • Primary development increased 3 per cent to 1,310 m compared with 1,277 completed in Q2 2018.
  • Sustaining capital expenditures of $8.4-million invested in mining equipment and development.

Q2 2019 financial results summary:

  • Gross profit of $5.8-million decreased 5 per cent compared with $6.1-million in Q2 2018 due to higher operating cash costs year over year and increased compared with $3.2-million in Q1 2019.
  • Consolidated cash operating costs (COC) increased 9.6 per cent to $786 per ounce compared with $717 in Q2 2018, however, improved compared with $870 COC in Q1 2019 due to the increase in ounces produced.
  • Consolidated all-in sustaining costs (AISC) increased 7 per cent to $1,366 compared with $1,277 in Q2 2018 due to increased sustaining capital expenditures.
  • Operating cash flow of $7.5-million; adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $6.0-million.
  • Net loss of $2.2-million, or net loss per share of one cent.
  • The company completed a $25-million non-brokered private placement on July 18, 2019, which included two of the company's major shareholders, Eric Sprott and Tocqueville Gold Fund.

                                       Q2 2019 FINANCIAL RESULTS
                                (in thousands, except where indicated) 

                                                   For the three months          For the six months
                                                         ended June 30,              ended June 30, 
                                                     2019          2018          2019          2018
Financial data
Revenue                                           $23,923       $22,888       $45,339       $48,116
Operating costs                                    14,627        12,356        29,246        27,755
Depreciation                                        3,499         4,407         7,109         9,293
Gross profit                                        5,797         6,125         8,984        11,068
Net (loss)                                         (2,137)       (1,334)       (3,976)       (3,115)
Per share (loss) (EPS)                              (0.01)        (0.00)        (0.01)        (0.01)
EBITDA                                              2,581         4,262         5,234         8,417
Adjusted EBITDA                                     6,003         5,303         9,906        10,876
Adjusted EBITDA per share                            0.02          0.02          0.03          0.03
Cash operating costs (per ounce sold)                 786           717           826           761
All-in sustaining costs (per ounce sold)            1,366         1,277         1,395         1,283
Average realized gold price (per ounce)             1,286         1,328         1,280         1,319
Cash generated from operating activities            7,505         4,460        10,028         9,438
Free cash flow (loss)                                (877)       (2,501)       (5,441)       (4,191)
Free cash flow (loss) (per ounce sold)                (47)         (145)         (154)         (115)
Sustaining capital expenditures                     8,382         6,961        15,469        13,629
Non-sustaining capital expenditures                   245           592           433         1,600
Total capital expenditures                          8,627         7,553        15,902        15,229

                                         Q2 2019 OPERATING RESULTS
Quarterly summary                                           Q2 2019                                Q2 2018
                                Turmalina        Pilar        Total    Turmalina        Pilar        Total

Tonnes milled (t)                  75,000      109,000      184,000       77,000       94,000      171,000
Average head grade (g/t)             3.55         3.44         3.48         3.46         4.03         3.77
Recovery (%)                        90.6%        87.3%        88.6%        91.1%        89.8%        90.4%
Gold ounces
Produced (oz)                       7,823       10,543       18,366        7,824       10,995       18,819
Sold (oz)                           7,999       10,599       18,598        7,610        9,620       17,230
Cash operating costs (COC)            766          802          786          761          683          717
Primary (m)                           783          527        1,310          740          537        1,277
Secondary (m)                         330          369          699          302          275          577
Definition, infill and
exploration drilling (m)            4,963        3,226        8,189        5,623        3,141        8,764

Financing and repayment of bridge loan facility:

  • Subsequent to the second quarter ended June 30, 2019, the company completed a $25-million non-brokered private placement on July 18, 2019, which included an investment from two of the company's major shareholders, Mr. Sprott and Tocqueville Gold Fund. In addition, the company fully repaid its senior secured bridge facility with Auramet International LLC for $7.85-million (U.S.) from the proceeds of the private placement and $1.6-million of a local Brazilian loan.
  • Mr. Sprott invested $15-million (U.S.) in the private placement representing 60 per cent of the entire offering, resulting in 42.6-per-cent posttransaction ownership of the company's outstanding common shares on a non-diluted basis. Tocqueville Gold Fund, a long-term Jaguar Mining investor, represents 19.6 per cent of the company's outstanding common shares on a non-diluted basis.

Cash position, working capital and corporate:

  • As at June 30, 2019, the company had a cash position of $5.2-million, compared with $6.3-million as at Dec. 31, 2018. The June 30, 2019, cash balance excludes a $2-million restricted cash deposit held with Auramet.
  • As at June 30, 2019, prior to the equity financing, working capital was negative $13.1-million, compared with negative $2.4-million as at Dec. 31, 2018, which includes $5.1-million (Dec. 31, 2018 -- $7.3-million) in loans from Brazilian banks, which mature every six months and are expected to be rolled forward.
  • As at June 30, 2019, the company's outstanding gold forward contracts covered 17,404 ounces hedged at a weighted average price of $1,328 (U.S.)/ounce.

Corporate update:

  • Vernon Baker was appointed new chief executive officer effective Aug. 6, 2019. Mr. Baker brings over 35 years of experience with mining companies with deep management and operations expertise at globally focused mid-tier and senior mining companies. Most recently he was general manager at Goldcorp's Cerro Negro mine in Argentina from December, 2015, overseeing 3,000 tonnes per day of high-grade production and successfully implemented several high-value programs to reduce costs, grow production and development, and strong safety improvement to lead the corporation with an AIFR (all injury frequency rate) of 0.28 in 2017. Previously, Mr. Baker held management and senior leadership roles with various mining companies including president at Duluth Metals Ltd., vice-president of operations at FNX Mining, general manager at Barrick Goldstrike Mines Inc., and general manager of Hemlo Operations, a joint venture of Teck Cominco and Barrick Gold.
  • Rodney Lamond was appointed to the board of directors on Aug. 6, 2019. Mr. Lamond was previously on the board and chief executive officer of Jaguar Mining from December, 2015, to August, 2018. The company also announced the acceptance of Richard Falconer's resignation as an independent director.

Thomas Weng, chairman of Jaguar, stated: "On behalf of the board of directors I am pleased to welcome Mr. Baker as our new CEO and to thank Ben Guenther for his interim leadership. I would also like to welcome back Mr. Lamond to the board and look forward to working with Vern and the board on advancing Jaguar's turnaround. I also thank Mr. Falconer for his many contributions to Jaguar during his tenure and wish him success on his future endeavours."

Mr. Baker stated: "I am excited to now be in my new role at Jaguar and by the opportunity to lead our team in unlocking the value of our great gold assets in the Iron Quadrangle area of Brazil. I am looking forward to driving the operating improvements that will bring the company to a strong financial position over the next several quarters."

Qualified persons

Scientific and technical information contained in this press release has been reviewed and approved by Jonathan Victor Hill, BSc (honours) (economic geology -- UCT), senior expert adviser, geology and exploration, to the Jaguar Mining management committee, who is also an employee of Jaguar Mining, and is a qualified person as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects.

The Iron Quadrangle

The Iron Quadrangle has been an area of mineral exploration dating back to the 16th century. The discovery in 1699 to 1701 of gold contaminated with iron and platinum group metals in the southeastern corner of the Iron Quadrangle gave rise to the name of the town Ouro Preto (Black Gold). The Iron Quadrangle contains world-class multimillion-ounce gold deposits such as Morro Velho, Cuiaba and Sao Bento.

About Jaguar Mining Inc.

Jaguar Mining is a Canadian-listed junior gold mining, development and exploration company operating in Brazil with three gold mining complexes and a large land package with significant upside exploration potential from mineral claims covering an area of approximately 64,000 hectares. The company's principal operating assets are located in the Iron Quadrangle, a prolific greenstone belt in the state of Minas Gerais, and include the Turmalina gold mine complex and Caete mining complex (Pilar and Roca Grande mines and Caete plant). The company also owns the Paciencia gold mine complex, which has been on care and maintenance since 2012, and the Roca Grande mine, which has been on care and maintenance since April, 2018.

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