Company Achieves Record Grade at Pilar, Lowers
Cash Costs, Increases Operating Cash Flow and Reduces Higher Cost
Brazilian Debt by $2M
TSX: JAG
TORONTO, Oct. 17, 2017 /CNW/ - Jaguar Mining Inc.
("Jaguar" or the "Company") (TSX:JAG) today announced
preliminary third quarter 2017 ("Q3 2017") operating results for
its core assets located in the Iron Quadrangle area of Minas
Gerais, Brazil. All figures are in
US Dollars unless otherwise expressed. Full Q3 2017 financial
results are expected to be released on or around November 8, 2017.
Q3 2017 Highlights
- Consolidated gold production of 20,781 ounces, improved grade
of 3.36 g/t Au and recovery of 90%. First 9 months consolidated
production totalled 62,840 ounces.
- New record grade at Pilar Gold Mine ("Pilar") of 3.77 g/t Au
for the quarter as mining activity increases into the higher-grade
BFII ore body, resulting in 9,674 ounces of gold produced in Q3
2017, an increase of 26% quarter over quarter. September gold grade
for Pilar was 4.48 g/t Au. The higher average head grade and lower
tonnage reduced consolidated Cash Operating Costs ("COC") per ounce
sold in Q3 2017.
- Turmalina Mine ("Turmalina") gold production of 9,616 ounces,
grading 3.10 g/t Au, declined compared to Q2 2017 gold production
of 10,870 ounces grading 3.37 g/t Au, due to less overall tonnes
mined and a delay in accessing the next in-line higher grade ore
from Orebody A, resulting in higher contribution of material from
lower grade Orebody C.
- Increasing grade at Roça Grande Mine ("Roça Grande") of 2.89
g/t Au contributed to gold production of 1,491 ounces, which was
25% higher compared to Q2 2017. Improved performance and
operational efficiencies, including optimization of working shifts
from four to two per day, resulted in positive operational cash
flows for Roça Grande.
Definitions: g/t Au – grams per tonne gold
Improving Third Quarter Cash Operating Costs
- Improved consolidated COC per ounce sold to $819, an 11.4% reduction compared to $924 in Q1 2017, and a reduction of 4.4% compared
to $857 in Q2 2017. The COC per ounce
sold decreased significantly in September
2017 to $743.
- Lower unit costs are a result of a continued focus on
profitable ounce production, waste reduction and solid progress
made on company-wide cost reduction programs, despite a continuing
impact of a strong Brazilian Real vs. the US Dollar. The Company
estimates that the Q3 2017 operating cash flow will be between
$5-6M with net free cash flow of
between $1-2M (excluding
Gurupi-Avanco proceeds).
- Preliminary cash balance of approximately $19.2M as of September 30,
2017, compared to a cash balance of $20.7 million at June 30,
2017. In addition to the regular repayment of financing
obligations of $3.2M, the Company
also made an additional debt repayment of $2M to reduce part of its higher cost Brazilian
debt.
2017 Outlook
- The Company continues to focus on generating positive operating
cash flow and improving COC per ounce sold. Further improvement in
operating cash flow and net positive free cash flow is expected to
be generated in the fourth quarter of 2017 ("Q4 2017").
- A re-forecast for 2017 has been completed resulting in lower
estimated gold production for the full year. The reduction is
mainly due to lower than anticipated production from Turmalina as a
result of mining less higher-grade material from Orebody A than
planned and an increase in lower grade ore from Orebody C. In the
midst of lower production, the Company increased its focus on
maximizing operating cash flow from all three mines in order to
achieve its key milestones to support its current operations and
contribute towards future growth plans.
- 2017 production is now expected to be between 87,000–92,000
ounces of gold, compared with approximately 95,000 ounces
previously announced.
Rodney Lamond, President and CEO
of Jaguar, commented: "Third quarter production was highlighted by
strong operating performance at Pilar which has progressed
extremely well throughout 2017, including posting a record
quarterly grade of 3.77 g/t Au and decreasing cash costs compared
to the second quarter of 2017. Overall consolidated grade improved
over the second quarter by 5.7% to 3.36 g/t Au driven by higher
grades at Pilar and Roça Grande, resulting in an increase of 5.1%
in overall gold production quarter over quarter."
"Operationally, we have kept a sharp focus on reducing costs and
delivering profitable ounces to provide us with the flexibility to
reinvest capital in key near mine exploration growth projects. Cash
operating costs per ounce continue to steadily improve and
decreased 9% to $819 per ounce for Q3
2017 compared to $895 per ounce in
the first half of 2017. The improvement is partially attributed to
the strong results at Pilar, from mining the higher-grade BFII ore
body, which also continues to perform at consistently higher
production levels each month. Additionally, cost containment and
cash flow monitoring efforts across all mine sites have contributed
to the expected positive financial results for the third quarter of
2017."
"After completing a gold production re-forecast for 2017, we
expect to improve production performance at Turmalina into Q4 2017
as the team is focused on achieving key milestones to support
future production. Although we have deferred approximately 12,000
ounces of production we had previously forecasted in 2017 to 2018,
we are pleased with these assets returning back to generating
positive operating cash flows."
"Looking ahead, we have made excellent progress on our
exploration growth projects with highly encouraging drill results
that have increased our confidence in the resource upside of Pilar
and its ability to have a very positive impact on the Company's
future. We are also optimistic that the drill program commenced at
Turmalina, now about 40% complete, may deliver similar exploration
success and we look forward to reporting these drill results before
year-end."
Quarterly Operating Summary
|
|
|
|
Operating
Summary
|
Q3
2017
|
Q3
2016
|
Q2
2017
|
Turmalina
|
Pilar
|
Roça
Grande
|
Total
|
Turmalina
|
Pilar
|
Roça
Grande
|
Total
|
Turmalina
|
Pilar
|
Roça
Grande
|
Total
|
Tonnes milled
(t)
|
107,000
|
88,000
|
18,000
|
213,000
|
128,000
|
78,000
|
25,000
|
231,000
|
112,000
|
85,000
|
19,000
|
216,000
|
Average head grade
(g/t)
|
3.10
|
3.77
|
2.89
|
3.36
|
4.36
|
3.51
|
2.12
|
3.83
|
3.37
|
3.16
|
2.15
|
3.18
|
Recovery %
|
91%
|
90%
|
90%
|
90%
|
92%
|
91%
|
91%
|
91%
|
91%
|
90%
|
90%
|
91%
|
Gold
ounces
|
|
|
|
|
|
|
|
|
|
|
|
|
Produced
(oz)
|
9,616
|
9,674
|
1,491
|
20,781
|
16,304
|
7,923
|
1,556
|
25,783
|
10,870
|
7,702
|
1,197
|
19,769
|
Sold (oz)
|
9,082
|
9,820
|
1,519
|
20,421
|
15,945
|
7,821
|
1,551
|
25,317
|
10,815
|
6,625
|
1,013
|
18,453
|
Financial
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Operating Costs
(per oz)
|
758
|
817
|
1,197
|
819
|
528
|
762
|
1249
|
645
|
695
|
1033
|
1439
|
857
|
Avg. Realized gold
price ($/oz)
|
|
|
|
1,276
|
|
|
|
1,328
|
|
|
|
1,266
|
Avg. US$:BRL FX
(US$1:BRL)
|
|
|
|
3.16
|
|
|
|
3.25
|
|
|
|
3.22
|
Development
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary
(m)
|
443
|
471
|
18
|
932
|
605
|
741
|
7
|
1,353
|
504
|
218
|
102
|
824
|
Exploration
(m)
|
11
|
-
|
-
|
11
|
-
|
22
|
-
|
22
|
56
|
-
|
-
|
56
|
Secondary
(m)
|
337
|
518
|
67
|
922
|
623
|
284
|
275
|
1,182
|
292
|
577
|
120
|
989
|
Diamond drilling
(m)
|
8,355
|
3,237
|
-
|
11,592
|
2,793
|
2,811
|
1,145
|
6,749
|
4,676
|
6,206
|
186
|
11,068
|
Update on Progress at Turmalina to End of September 2017
Management is focused on supporting current and future
production targets at Turmalina by achieving certain key milestones
including the following:
- Increasing the number of working areas in an effort to
stabilize the mining cycles in order to have a consistent gold
production.
- Increasing gold production from Orebody C while the mining
cycle is normalized in Orebody A and until access to lower Orebody
C containing higher grades can be established. Production from
Orebody C is expected to continue to impact consolidated grade in
the short term.
- Completing the review of the upper levels of the mine in
Orebody A to identify areas of high-grade blocks that can be
recovered. Several areas have already been identified and two
mining blocks within these areas are expected to be recovered by
year-end.
- Completed the newly designed paste-fill plant. Commissioning of
the plant is expected to begin in the fourth quarter.
The completion of the key milestones outlined above is critical
to ensuring the flexibility and consistency in the production plan
at Turmalina and realizing the full potential of the higher grades
in Orebody A.
Outlined below is the trailing consolidated COC summary for the
past three quarters:
|
|
|
|
Consolidated
Cost
Summary
|
Q1
2017
|
Q2
2017
|
Q3
2017
|
Jan
|
Feb
|
Mar
|
Q1
|
Apr
|
May
|
June
|
Q2
|
Jul
|
Aug
|
Sep
|
Q3
|
Cash Operating Costs
(per oz)
|
891
|
937
|
945
|
924
|
1,017
|
823
|
797
|
857
|
908
|
828
|
743
|
819
|
Third Quarter Cost Reduction and Operational Excellence
Initiatives Highlights
- Renegotiated haulage costs for ore from Pilar to the Caeté Mill
combined with a new, shorter access road are expected to decrease
future operating costs of Pilar by approximately $20-25 per ounce of gold sold.
- Efficiency initiatives at Pilar and Turmalina are yielding
tangible results. Operating improvements include initiatives such
as management of ventilation shut-offs to reduce electrical
consumption, increasing fan-drill efficiency by metres drilled per
shift, tracking of full-load haul trucks, and increasing drill and
blast efficiency of jumbo drills to achieve more break per metre
drilled.
- Invested $1.2M and acquired a new
33 tonne haul truck, replacing two older trucks, which will improve
equipment availability and lower cash operating costs.
Preliminary Cash Balance
Preliminary cash balance of approximately $19.2M as of September 30,
2017, compared to a cash balance of $20.7M at June 30,
2017. During the third quarter, the Company received
$2M from Avanco for the first
instalment of the Accelerated Earn-in Agreement signed for the
Gurupi Project on September 18,
2017.
In addition to the regular repayment of financing obligations of
$3.2M during the quarter, the Company
used the initial proceed from the Gurupi Avanco transaction to make
an additional debt repayment of $2M
for part of the high cost Brazilian debt, thus reducing the future
debt servicing and improving the working capital.
2017 Growth Exploration and Mineral Resources
Highlights
Jaguar provided an update on its recent Exploration Growth
Program (see news release dated September
20, 2017) and announced the acquisition of a new strategic
land position (see news release dated June
21, 2017) located 4.5 km west of the Caeté Mill, increasing
the total registered RG Mine concession by 1,000 hectares.
- Recent results from Pilar included drill results that continued
to intersect high-grade visible gold mineralization down-plunge of
current resources. Key intercepts included 15.9 g/t Au over
11.8 m (ETW 9.6 m), 25.3 g/t Au over 6.0 m (ETW 5.2 m) and 5.3 g/t
Au over 49.3 m (ETW 38.7 m) and confirm the thick, high-grade
intercepts from earlier holes, previously reported in August 2017, which included 10.8 g/t Au over
29.3 m (ETW 22.5 m). A further 3,200 m of infill diamond drilling
at Pilar aimed at increasing drilling density in these areas for
inclusion in updated Mineral Resource and Ore Reserve estimates for
this operation are scheduled for release in early 2018. This
drilling commenced with one rig in the last week of September 2017.
- At Turmalina, three diamond drill rigs commenced 11,355 m of
growth exploration drilling in July
2017 which are targeting down-plunge extensions to the
high-grade Orebody A at depth, and shallower extensions of Orebody
C. Approximately 40% of the planned program has been completed to
date including fourteen holes (eleven holes for Orebody A and three
holes for Orebody C) with a combined meterage totalling 4,520
m.
Definitions: ETW – estimated true width m – metres
Qualified Person
Scientfic and technical information contained in this press
release has been reviewed and approved by Jonathan Victor Hill, BSc (Hons) (Economic
Geology - UCT), Senior Expert Advisor Geology and Exploration to
the Jaguar Mining Management Committee, who is also an employee of
Jaguar Mining Inc., and is a "qualified person" as defined by
National Instrument 43-101 - Standards of Disclosure for
Mineral Projects ("NI 43-101").
Quality Control
Jaguar continues to use a quality-control program that includes
insertion of blanks and commercial standards in order to ensure
best practice in sampling and analysis.
HQ, NQ, and BQ size drill core is sawn in half with a diamond
saw. Samples are selected for analysis in standard intervals
according to geological characteristics such as lithology and
hydrothermal alteration contents. All diamond drill hole collars
are accurately surveyed using a Total Stations instrument and
down-hole deviations are surveyed using non-magnetic equipment with
Icefield Tools' Gyro Path® NSG equipment and SPT Stockholm
Precision Tools with GyroMaster™ Solid State [North Seeker].
Mean grades are calculated using a variable lower grade cut-off
(generally 0.5 g/t Au). No upper gold grade cut has been applied to
the data. However, the requirement for assay top cutting will be
assessed during future resource work.
Half of the sawed sample is forwarded to the analytical
laboratory for analysis while the remaining half of the core is
stored in a secure location. The drill core samples are transported
in securely sealed bags and sent for physical preparation to the
independent ALS Brasil (subsidiary of ALS Global) laboratory
located in Vespasiano, Minas Gerais, Brazil. The analysis is conducted at ALS
Global's respective facilities (fire assay is conducted by ALS
Global in Lima, Peru and
multi-elementary analysis are conducted by ALS Global in
Vancouver, Canada). ALS has
accreditation in global management system that meets all
requirements of international standards ISO/IEC 17025:2005 and ISO
9001:2015. All major ALS geochemistry analytical laboratories are
accredited to ISO/IEC 17025:2005 for specific analytical
procedures.
The Iron Quadrangle
The Iron Quadrangle has been an area of mineral exploration
dating back to the 16th century. The discovery in 1699-1701 of
black 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 multi-million-ounce gold
deposits such as Morro Velho, Cuiabá and São Bento. Jaguar holds
the second largest gold land position in the Iron Quadrangle with
just over 25,000 hectares.
About Jaguar Mining Inc.
Jaguar Mining Inc. 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 192,000
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 Caeté
Mining Complex (Pilar and Roça Grande
Mines, and Caeté Plant) which combined, produce more than
95,000 ounces of gold annually. The Company also owns the Paciência
Gold Mine Complex, which has been on care and maintenance since
2012. Additional information is available on the Company's website
at www.jaguarmining.com.
Forward-Looking Statements
Certain statements in this news release constitute
"forward-looking information" within the meaning of applicable
Canadian securities legislation. Forward-looking statements and
information are provided for the purpose of providing information
about management's expectations and plans relating to the future.
All of the forward-looking information made in this news release is
qualified by the cautionary statements below and those made in our
other filings with the securities regulators in Canada. Forward-looking information contained
in forward-looking statements can be identified by the use of words
such as "are expected," "is forecast," "is targeted,"
"approximately," "plans," "anticipates," "projects," "anticipates,"
"continue," "estimate," "believe" 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. All statements, other than statements of historical fact,
may be considered to be or include forward looking information.
This news release contains forward-looking information regarding,
among other things, expected sales, production statistics, ore
grades, tonnes milled, recovery rates, cash operating costs,
definition/delineation drilling, the timing and amount of estimated
future production, costs of production, capital expenditures, costs
and timing of the development of projects and new deposits, success
of exploration, development and mining activities, currency
fluctuations, capital requirements, project studies, mine life
extensions, restarting suspended or disrupted operations,
continuous improvement initiatives, and resolution of pending
litigation. The Company has made numerous assumptions with respect
to forward-looking information contained herein, including, among
other things, assumptions about the estimated timeline for the
development of its mineral properties; the supply and demand for,
and the level and volatility of the price of, gold; the accuracy of
reserve and resource estimates and the assumptions on which the
reserve and resource estimates are based; the receipt of necessary
permits; market competition; ongoing relations with employees and
impacted communities; political and legal developments in any
jurisdiction in which the Company operates being consistent with
its current expectations including, without limitation, the impact
of any potential power rationing, tailings facility regulation,
exploration and mine operating licenses and permits being obtained
an renewed and/or there being adverse amendments to mining or other
laws in Brazil and any changes to
general business and economic conditions. Forward-looking
information involve a number of known and unknown risks and
uncertainties, including among others: the risk of Jaguar not
meeting the forecast plans regarding its operations and financial
performance; uncertainties with respect to the price of gold,
labour disruptions, mechanical failures, increase in costs,
environmental compliance and change in environmental legislation
and regulation, weather delays and increased costs or production
delays due to natural disasters, power disruptions, procurement and
delivery of parts and supplies to the operations; uncertainties
inherent to capital markets in general (including the sometimes
volatile valuation of securities and an uncertain ability to raise
new capital) and other risks inherent to the gold exploration,
development and production industry, which, if incorrect, may cause
actual results to differ materially from those anticipated by the
Company and described herein. In addition, there are risks and
hazards associated with the business of gold exploration,
development, mining and production, including environmental
hazards, tailings dam failures, industrial accidents and workplace
safety problems, unusual or unexpected geological formations,
pressures, cave-ins, flooding, chemical spills, and gold bullion
thefts and losses (and the risk of inadequate insurance, or the
inability to obtain insurance, to cover these risks). Accordingly,
readers should not place undue reliance on forward-looking
information.
For additional information with respect to these and other
factors and assumptions underlying the forward-looking information
made in this news release, see the Company's most recent Annual
Information Form and Management's Discussion and Analysis, as well
as other public disclosure documents that can be accessed under the
issuer profile of "Jaguar Mining Inc." on SEDAR at www.sedar.com.
The forward-looking information set forth herein reflects the
Company's reasonable expectations as at the date of this news
release and is subject to change after such date. The Company
disclaims any intention or obligation to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise, other than as required by
law. The forward-looking information contained in this news release
is expressly qualified by this cautionary statement.
Non-IFRS Measures
This news release provides certain financial measures that do
not have a standardized meaning prescribed by IFRS. Readers are
cautioned to review the above stated footnotes where the Company
expanded on its use of non-IFRS measures.
- Cash operating costs and cash operating cost per ounce are
non-IFRS measures. In the gold mining industry, cash operating
costs and cash operating costs per ounce are common performance
measures but do not have any standardized meaning. Cash operating
costs are derived from amounts included in the Consolidated
Statements of Comprehensive Income (Loss) and include mine-site
operating costs such as mining, processing and administration, as
well as royalty expenses, but exclude depreciation, depletion,
share-based payment expenses, and reclamation costs. Cash operating
costs per ounce are based on ounces produced and are calculated by
dividing cash operating costs by commercial gold ounces produced;
US$ cash operating costs per ounce produced are derived from the
cash operating costs per ounce produced translated using the
average Brazilian Central Bank R$/US$ exchange rate. The Company
discloses cash operating costs and cash operating costs per ounce,
as it believes those measures provide valuable assistance to
investors and analysts in evaluating the Company's operational
performance and ability to generate cash flow. The most directly
comparable measure prepared in accordance with IFRS is total
production costs. A reconciliation of cash operating costs per
ounce to total production costs for the most recent reporting
period, the quarter ended June 30,
2017, is set out in the Company's second quarter 2017
Management Discussion and Analysis (MD&A) filed on SEDAR
at www.sedar.com.
SOURCE Jaguar Mining Inc.