Jaguar Mining Reports Q3 2010 and YTD 2010 Earnings
CONCORD, NH -- (Marketwire) -- 11/10/10 -- Jaguar Mining Inc. ('Jaguar' or the 'Company')
(NYSE: JAG) (TSX: JAG) reports its financial and operational results for
the period ended September 30, 2010. All figures are in U.S. dollars
unless otherwise indicated.
Q3 2010 Highlights
-- Q3 2010 net loss of $3.8 million or $0.05 per basic and fully diluted
share compared to net income of $6.9 million or $0.09 per basic and fully
diluted share in Q3 2009. Net income for Q3 2010 was adversely impacted by
higher cash operating costs caused by abnormally high dilution at the
Company's Turmalina Mine.
-- Q3 2010 gold sales increased to 38,861 ounces at an average price of
$1,254 per ounce yielding revenue of $48.7 million compared to Q3 2009 gold
sales of 36,314 ounces at an average price of $969 per ounce and revenue of
$35.2 million.
-- Q3 2010 gold production totaled 41,376 ounces at an average cash
operating cost of $798 per ounce compared to 41,585 ounces at an average
cash operating cost of $451 per ounce during the same period last year (see
Non-GAAP Performance Measures). The increase in cash operating costs from
the prior year were attributable to a significant decrease in run-of-mine
('ROM') grades, primarily caused by abnormally high dilution at the
Company's Turmalina operation. Despite the higher cash operating cost per
ounce, overall, the Company has witnessed a sequential decline in mining
costs over the past several quarters as result of mining efficiencies and
other actions.
-- Q3 2010 average feed grade was 2.96 grams per tonne compared to 4.12
grams per tonne during Q3 2009 or 4.38 grams per tonne excluding Sabará.
The Company continued to encounter geo-mechanical issues at Level 3 in the
Turmalina Mine (Ore Body A), which resulted in dilution averaging over 30%,
more than double the level expected. As indicated by management earlier
this year, this condition will continue to have an impact on the grades and
production at the Turmalina operation through the balance of 2010 until the
ore is mined-out of the upper elevations of the mine and replaced with ore
from Level 4 and 5, where development is nearing completion. Levels 4 and
5 of the mine (and below) will employ the cut-and-fill mining method
compared to selective sublevel stoping in the higher elevations of the Ore
Body A.
The change in mining method to cut-and-fill will significantly improve the
ROM grade and management estimates the complete changeover to this method
will be completed during Q1 2011. The test mining completed with the
cut-and-fill process has yielded sharply lower dilution and supports
management's expectations for higher ROM grades.
-- Q3 2010 gross profit decreased to $178,000 from $11.8 million in Q3
2009.
-- Q3 2010 cash provided by operating activities (see Non-GAAP Performance
Measures) was $11.3 million compared to $12.9 million in Q3 2009. The
decrease was primarily due to the higher average cash operating costs.
-- Jaguar invested $35.9 million in growth projects in Q3 2010 compared to
$27.3 million invested in Q3 2009.
-- As of September 30, 2010, the Company held cash holdings of $51.6
million, including $2.4 million of restricted cash.
Commenting on the Q3 2010 results, Daniel R. Titcomb, Jaguar's President
and CEO stated, 'The successful start-up of commercial operations at our
third mine and processing facility at Caeté is another important milestone
to enhance shareholder value. With this facility complete and running at
2,000 tonnes per day, we believe our three operating facilities have the
capability to reach our 2011 production targets. Equally important, the
changeover to the new mining method at Turmalina, which is necessary to
overcome the geo-mechanical issues encountered, is expected to be fully
in-place during Q1 2011. We remain confident the transition to a
cut-and-fill method will significantly decrease dilution, lead to improved
feed grades into the plant and sharply lower our cash operating costs.'
YTD (Jan-Sep) 2010 Highlights
-- Net loss of $14.3 million or $0.18 per basic and fully diluted share for
the nine months ended September 30, 2010 compared to net income of $21.4
million or $0.29 per basic share and $0.28 per fully diluted share for the
same period in 2009. The net loss for 2010 was unfavorably impacted by
higher costs and by the requirement to recognize non-cash interest expense
associated with Jaguar's 4.5% senior convertible notes, which totaled $6.0
million for the first nine months of 2010. An additional $1.5 million
charge taken in Q3 2010 associated with a limited no-cost gold (hedge)
collar, which is scheduled to be eliminated during Q4 2010, also negatively
impacted the year-to-date loss.
-- YTD 2010 gold sales totaled 106,397 ounces at an average price of $1,186
per ounce produced revenue of $126.2 million compared to gold sales of
107,754 ounces at an average price of $940 per ounce and revenue of $101.2
million for the same period in 2009.
-- YTD 2010 gold production totaled 103,185 ounces at an average cash
operating cost of $722 per ounce compared to 115,211 ounces at an average
cash operating cost of $444 per ounce during the same period last year (see
Non-GAAP Performance Measures). The Company's gold production for the nine
months ended September 30, 2010 decreased 10% from the comparable period in
2009 due largely to the geo-mechanical issues at Turmalina. The start-up of
Caeté in Q3 2010 offset the shutdown of Jaguar's Sabará oxide processing
plant, which produced 6,360 ounces during the first nine months of 2009 at
a cost of $680 per ounce. The Company's cash operating costs were also
impacted by the strengthening of the Brazilian real during 2010, averaging
R$1.78 per $1.00 for the first nine months compared to R$2.12 per $1.00 for
the same period in 2009. This factor alone accounted for $116 per ounce in
Jaguar's YTD 2010 cash operating costs over the prior year.
-- Gross profit for the nine months ended September 30, 2010 decreased to
$9.6 million from $32.2 million during the same period in 2009.
-- Cash provided by operating activities during the first nine months of
2010 totaled $19.6 million compared to $30.7 million during the first nine
months of 2009.
-- Jaguar invested $109.2 million in growth projects during the first nine
months of 2010, up from the $52.9 million invested during the same period
in 2009. The development and completion of the new Caeté operation
represented the single largest investment during 2010.
-- The Company achieved underground development targets of 13.9 km for the
nine months ended September 30, 2010; on plan and on pace to reach nearly
19 km for FY 2010.
Summary of Key Operating Results
The following is a summary of key operating results:
Three Months Ended Nine Months Ended
September 30 September 30
2010 2009 2010 2009
(unaudited)
($ in 000s, except per
share amounts)
Gold sales $ 48,712 $ 35,165 $ 126,234 $ 101,236
Ounces sold 38,861 36,314 106,395 107,754
Average sales price $ /
ounce 1,254 969 1,186 940
Gross profit 178 11,815 9,644 32,218
Net income (loss) (3,800) 6,906 (14,318) 21,389
Basic income (loss) per
share (0.05) 0.09 (0.18) 0.29
Diluted income (loss) per
share (0.05) 0.09 (0.18) 0.28
Weighted avg. # of shares
outstanding - basic 84,224,952 78,173,757 79,507,045 74,952,395
Weighted avg. # of shares
outstanding - diluted 84,224,952 80,736,853 79,507,045 76,595,985
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 September 30, 2010.
2010 Outlook
The Company's production and cash operating cost estimates for 2010 are
shown below. Cash operating cost estimates are based on an assumed R$1.75
per $1.00 exchange rate.
Estimated Estimated
Operation 2010 FY 2010
Production Cash Operating Cost
(oz) ($/oz)
Turmalina 63,233 - 65,733 $ 775 - $ 785
Paciência 61,479 - 63,479 $ 730 - $ 740
Caeté 23,500 - 25,000 $ 785 - $ 795
Total 148,212 -154,212 $ 755 - $ 765
The Company has provided its 2010 quarterly production and grades for its
operations as follows:
2010 Estimated Gold Production, By Operation
Q1 Q2 Q3
Operation Actual Actual Actual Q4 Estimate FY 2010
------ ------ ------ ---------------- ----------------
Turmalina 16,987 15,896 16,350 14,000 -16,500 63,233 - 65,733
Paciência 14,236 14,717 16,526 16,000 -18,000 61,479 - 63,479
Caeté - - 8,500 15,000 -16,500 23,500 - 25,000
Total 31,223 30,613 41,376 45,000 -51,000 148,212 -154,212
2010 Estimated Feed Grades, By Operation
Q1 Q2 Q3
Operation Actual Actual Actual Q4 Estimate FY 2010
------ ------ ------ ---------------- ----------------
Turmalina 4.16 3.13 2.78 3.27 3.33
Paciência 3.32 3.21 3.24 3.48 3.31
Caeté - - 2.85 3.43 3.14
Average 3.74 3.17 2.98 3.40 3.32
Cash Operating Cost $ 595 $ 746 $ 798 $ 800 $ 755 - 765
Note: The FY 2010 total represents the range of cash operating costs for
the year whereas quarterly figures represent the target.
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. Cash provided by
operating activities has also been included as an overall measure of cash
generation capability on a standardized basis. The definitions for these
performance measures and reconciliation of the non-GAAP measures to
reported GAAP measures are set out in the following tables.
Cash provided by
operating activities
($000s)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 2010 30, 2009 30, 2010 30, 2009
Cash provided by operating
activities as reported
Net income (loss) $ (3,800) $ 6,906 $ (14,318) $ 21,389
Items not involving cash:
Unrealized foreign exchange
(gain) loss (2,556) 363 51 (8,302)
Stock-based compensation (4,233) 1,942 (2,679) 4,207
Non-cash interest expense 2,040 (894) 6,024 150
Accretion expense 451 192 1,177 572
Future income taxes 848 1,058 1,154 3,540
Depletion and amortization 11,474 5,558 28,576 15,610
Unrealized loss on forward
sales derivatives 1,502 - 1,502 -
Unrealized loss (gain) on
foreign exchange contracts (570) (1,108) 602 (3,529)
Disposition of property - - (4,625) -
Accretion of interest
revenue (94) - (94) -
Reclamation expenditure (539) (34) (1,613) (317)
--------- ---------
$ 4,523 $ 13,983 $ 15,757 $ 33,320
Change in non cash operating
working capital 6,822 $ (1,119) 3,850 $ (2,586)
--------- --------- --------- ---------
Cash provided by operating
activities $ 11,345 $ 12,864 $ 19,607 $ 30,734
Cash provided by operating
activities per share $ 0.13 $ 0.16 $ 0.25 $ 0.41
Three Months Nine Months
Summary of Cash Operating Cost per tonne Ended Sept Ended Sept
processed 30, 2010 30, 2010
Production costs per statement of operations(1) $ 31,022,000 $ 75,804,000
Change in inventory (2) (2,661,000) (4,606,000)
Operational cost of gold produced (3) 28,361,000 71,198,000
divided by
Tonnes processed 468,000 1,141,000
equals
Cost per tonne processed $ 60.60 $ 62.40
Three Months Nine Months
Turmalina Cash Operating Cost per tonne Ended Sept Ended Sept
processed 30, 2010 30, 2010
Production costs $ 14,344,000 $ 38,290,000
Change in inventory (2) (2,379,000) (3,199,000)
Operational cost of gold produced (3) 11,965,000 35,091,000
divided by
Tonnes processed 200,000 549,000
equals
Cost per tonne processed $ 59.80 $ 63.90
Three Months Nine Months
Paciência Cash Operating Cost per tonne Ended Sept Ended Sept
processed 30, 2010 30, 2010
Production costs $ 11,274,000 $ 32,110,000
Change in inventory (2) (1,216,000) (2,345,000)
Operational cost of gold produced (3) 10,058,000 29,765,000
divided by
Tonnes processed 167,000 491,000
equals
Cost per tonne processed $ 60.20 $ 60.60
Three Months Nine Months
Ended Sept Ended
Caeté Cash Operating Cost per tonne processed 30, 2010 Sept 30, 2010
Production costs $ 5,404,000 $ 5,404,000
Change in inventory (2) 934,000 938,000
Operational cost of gold produced (3) 6,338,000 6,342,000
divided by
Tonnes processed 101,000 101,000
equals
Cost per tonne processed $ 62.70 $ 62.70
Three Months Nine Months
Summary of Cash Operating Cost per oz of gold Ended Sept Ended Sept
produced 30, 2010 30, 2010
Production costs per statement of operations(1) $ 31,022,000 $ 75,804,000
Change in inventory (2) 1,996,000 (1,304,000)
Operational cost of gold produced (3) 33,018,000 74,500,000
divided by
Gold produced (oz) 41,376 103,185
equals
Cost per oz of gold produced $ 798 $ 722
Three Months Nine Months
Turmalina Plant Cash Operating Cost per oz Ended Sept Ended Sept
produced 30, 2010 30, 2010
Production costs $ 14,344,000 $ 38,290,000
Change in inventory (2) 577,000 (1,472,000)
Operational cost of gold produced (3) 14,921,000 36,818,000
divided by
Gold produced (oz) 16,350 49,206
equals
Cost per oz of gold produced $ 912 $ 748
Three Months Nine Months
Paciência Plant Cash Operating Cost per oz Ended Sept Ended Sept
produced 30, 2010 30, 2010
Production costs $ 11,274,000 $ 32,110,000
Change in inventory (2) 222,000 (1,036,000)
Operational cost of gold produced (3) 11,496,000 31,074,000
divided by
Gold produced (oz) 16,526 45,479
equals
Cost per oz of gold produced $ 695 $ 683
Three Months Nine Months
Ended Sept Ended
Caeté Cash Operating Cost per oz produced 30, 2010 Sept 30, 2010
Production costs $ 5,404,000 $ 5,404,000
Change in inventory (2) 1,197,000 1,204,000
Operational cost of gold produced (3) 6,601,000 6,608,000
divided by
Gold produced (oz) 8,500 8,500
equals
Cost per oz of gold produced $ 776 $ 776
(1) Production costs do not include cost of goods sold adjustment of
approximately $4.4 million, royalties of $1.3 million and CFEM tax of
$479,000 for the three months ended September 30, 2010; and of goods sold
adjustment of approximately $7.0 million, royalties of $3.9 million and
CFEM tax of $1.3 million for the nine months ended September 30, 2010. The
cost of goods sold adjustment includes idle capacity costs of $3.6 million
for the three months ended September 30, 2010 and 5.0 million for the nine
months ended September 30, 2010.
(2) 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.
(3) The basis for calculating cost per ounce produced includes the change to
gold in process inventory, whereas the cost per tonne processed does not.
Conference Call Details
The Company will hold a conference call tomorrow, November 10 at 10:00 a.m.
EST, to discuss the results. Management will review a presentation during
the conference call that includes graphics related to the third quarter's
performance and details concerning the current initiatives at the Company's
operations. The presentation can be downloaded from the Company's website
at www.jaguarmining.com. See below dial-in instructions for the call.
From North America: 800-218-5691
International: 213-416-2192
Replay:
From North America: 800-675-9924
International: 213-416-2185
Replay ID: 111010
Webcast: www.jaguarmining.com
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 and
has plans to develop the Gurupi Project in northern Brazil in the state of
Maranhão. Jaguar is actively exploring and developing additional mineral
resources at its approximate 575,000-acre land base in Brazil. Additional
information is available on the Company's website at www.jaguarmining.com.
The Company uses the financial measure 'adjusted cash flows from operating
activities' to supplement its consolidated financial statements. The
presentation of adjusted cash flows from operating activities 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 changes and is a better indication of the
Company's cash flow from operations. The non-cash charges excluded from the
computation of adjusted cash flows from operating activities, which are
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.
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. This press release
contains forward-looking statements, including statements concerning 2010
production, cash operating costs and expected grades. Forward-looking
statements involve known and unknown risks, uncertainties and other
factors, which may cause the actual timing of commissioning, production and
results of operations 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 labour and
equipment, the possibility of labour 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. These
forward-looking statements represent the Company's views as of the date
hereof. Subsequent events and developments could 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 other
than 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, 2009 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, 2009 filed with the
United States Securities and Exchange Commission and available at
www.edgar.com.
For Information:
Investors and analysts:
Bob Zwerneman
Vice President Corporate Development and Director of Investor Relations
603-224-4800
bobz@jaguarmining.com
Media inquiries:
Valéria Rezende DioDato
Director of Communication
603-224-4800
valeria@jaguarmining.com