TSX: JAG
TORONTO, Aug. 9, 2016 /PRNewswire/ - Jaguar Mining Inc.
("Jaguar" or the "Company") (TSX: JAG) today announced details
of the Company's financial and operating results for the second
quarter ("Q2 2016") ended June 30,
2016. All figures are in US dollars unless otherwise
expressed.
Rodney Lamond, President and
Chief Executive Officer of Jaguar commented, "We ended the
second quarter achieving strong gold production of 24,222 ounces,
$10.4 million in operating cash flow,
and development and exploration success. We are well positioned to
deliver on our 2016 production guidance of 90,000 – 95,000 ounces
and we are pleased with the progress we have made over the last few
months with our development and exploration initiatives. As we
continue to generate significant operating cash flow, we will also
continue to prudently accelerate capital investment to strengthen
and enhance our current operating assets and priority exploration
targets. Executing our capital investment program remains a key
driver to the growth of our sustainable production profile in 2016
and will enable us to realize the exciting future potential of our
assets. We are pleased to end the quarter with a cash balance of
$17.5 million after capital
investment of $9.1 million,
reflecting a 95% increase in primary development, a 182% increase
in secondary development, and $0.6
million of interest payments on the convertible debentures
and $0.9 million in debt principal
and interest payments."
Q2 2016 Key Financial Highlights
- Revenue increased 31% to $30.0
million, compared with $22.8
million in Q2 2015, due to a 25% increase in ounces sold and
a 5% increase in the average realized gold price to $1,251 in Q2 2016 compared with $1,190 in Q2 2015.
- Strong operating cash flow of $10.4
million (excluding cash tax refunds) compared to
$0.3 million in Q2 2015.
- Consolidated cash operating costs ("COC") decreased 13% to
$758 per ounce sold, compared to
$876 per ounce sold for Q2 2015.
- Consolidated all-in sustaining costs ("AISC") of $1,203 per ounce sold, reflecting a significant
increase in sustaining capital expenditures, consistent with AISC
in Q2 2015.
- Sustaining capital expenditures of $7.9
million reflects higher investment in development and
exploration, compared to $2.5 million
in Q2 2015.
- Cash and cash equivalents of $17.5
million as at June 30, 2016
after capital investment programs and payments on debt facility and
convertible debentures interest, compared to a cash balance of
$18.0 million as at March 31, 2016.
- On August 3, 2016, the Company's
common shares and senior secured convertible debentures commenced
trading on the Toronto Stock Exchange ("TSX").
Q2 2016 Key Operating Highlights
- Strong consolidated gold production of 24,222 ounces based on a
10% increase in average head grade to 3.76 g/t compared to 20,682
ounces produced and average head grade of 3.41 g/t in Q2 2015.
- Favourable market conditions and strong operating cash flow
enabled accelerated investment in significant development to
position the Company for growing gold production; completed over
3,018 metres ("m") of primary and 2,363 m of secondary ore
development during the first half of 2016 ("H1 2016").
- Primary development increased 95% to 1,857 m for Q2 2016
(compared to 951 m for Q2 2015) to increase the number of working
areas across all mines to support near term production and 1,317 m
of secondary development for Q2 2016 (compared to 467 m in Q2 2015)
in support of stope planning, preparation, and design for future
growth.
- Total development metres increased 121% for H1 2016 to 5,381 m
compared to 2,430 m for H1 2015.
- Advanced a newly designed paste-fill plant and initiated a
significant rebuild of Mill #3 at Turmalina, to be completed in Q4
2016.
- Total definition, infill, and exploration drilling of 9,486 m
completed during Q2 2016 focused on key targets at Turmalina and
Caeté. A total of 21,377 m of drilling has occurred for H1
2016.
- On July 13, 2016, positive drill
results from Turmalina were announced showing significant
high-grade intercepts. The drill program was designed to test the
current indicated and inferred resource envelope of Orebody A at
Turmalina.
Complete Financial Statements and Management Discussion and
Analysis are available on SEDAR and on the Company's website at
www.jaguarmining.com.
Q2 2016 Financial & Operating Highlights
($ thousands, except where
indicated)
|
For the three months
ended June 30,
|
For the six months
ended June 30,
|
|
2016
|
2015
|
2016
|
2015
|
Financial Data
|
|
|
|
|
Revenue
|
$29,996
|
$22,820
|
$56,660
|
$51,567
|
Operating expenses
|
17,887
|
16,808
|
35,466
|
36,941
|
Depreciation
|
8,389
|
3,233
|
16,091
|
9,637
|
Gross margin
|
3,720
|
2,779
|
5,103
|
4,989
|
|
Gross margin (excluding
depreciation)1
|
12,109
|
6,012
|
21,194
|
14,626
|
Loss on conversion option embedded in convertible
debt
|
25,189
|
-
|
45,944
|
(3)
|
Net loss
|
(26,866)
|
(4,383)
|
(41,867)
|
(17,328)
|
|
Per share ("EPS")
|
(0.24)
|
(0.04)
|
(0.38)
|
(0.16)
|
EBITDA1
|
(18,044)
|
(137)
|
(23,904)
|
(1,646)
|
|
Adjusted
EBITDA1,2
|
8,859
|
2,208
|
14,075
|
7,277
|
|
Adjusted EBITDA per
share1
|
0.08
|
0.02
|
0.13
|
0.07
|
Cash operating costs (per ounce
sold)1
|
758
|
876
|
750
|
850
|
All-in sustaining costs (per ounce
sold)1
|
1,203
|
1,203
|
1,134
|
1,174
|
Average realized gold price ($ per
ounce)¹
|
1,251
|
1,190
|
1,209
|
1,188
|
Cash generated from operating
activities
|
10,435
|
1,638
|
19,961
|
13,815
|
Sustaining capital
expenditures1,3
|
7,864
|
2,518
|
12,877
|
7,307
|
Non-sustaining capital
expenditures1,3
|
1,245
|
678
|
1,629
|
1,270
|
Total capital
expenditures3
|
9,109
|
3,196
|
14,506
|
8,577
|
Operating Data
|
|
|
|
|
Gold produced
(ounces)
|
24,222
|
20,682
|
45,419
|
42,018
|
Gold sold (ounces)
|
23,970
|
19,184
|
46,851
|
43,412
|
Primary development
(metres)
|
1,857
|
951
|
3,018
|
1,657
|
Secondary development
(metres)
|
1,317
|
467
|
2,363
|
773
|
Definition, infill, and exploration drilling
(metres)
|
9,486
|
11,416
|
21,377
|
20,384
|
|
1 Average realized gold price, sustaining
and non-sustaining capital expenditures, cash operating costs and
all-in sustaining costs, EBITDA and Adjusted EBITDA, Adjusted
EBITDA per share, and gross margin (excluding depreciation) are
non-IFRS financial performance measures with no standard definition
under IFRS. Refer to the Non-IFRS Financial Performance
Measures section of the MD&A.
|
2 Adjusted EBITDA excludes non-cash items
such as impairment and write downs. For more details refer to the
Non-IFRS Performance Measures section of the
MD&A.
|
3 These amounts are presented on accrual
basis. Capital expenditures are included in our calculation
of all-in sustaining costs.
|
Cash and Gold Bullion
|
|
($ thousands)
|
|
|
June 30, 2016
|
December 31, 2015
|
Cash and cash
equivalents
|
|
|
$17,535
|
$15,319
|
Gold bullion
|
|
|
-
|
-
|
Total cash and gold
bullion
|
|
|
$17,535
|
$15,319
|
Q2 2016 Financial Highlights
Revenue, Net Income
(Loss), and External Factors
- Gold ounces sold for the three and six months ended
June 30, 2016 were 23,970 and 46,851
ounces, respectively, compared with 19,184 and 43,412 ounces sold
for the comparative 2015 periods.
- Revenue increased 31% to $30.0
million, compared with $22.8
million in Q2 2015, due to a 5% increase in average realized
gold price to $1,251 in Q2 2016
compared with $1,190 in Q2 2015, and
a 25% increase in ounces sold.
- Net loss for the six months ended June
30, 2016 was impacted negatively due to the change in the
fair value of the convertible debentures ($45.9 million) based on the significant increase
in the share price from December 31,
2015 to June 30, 2016, which
was partially offset by a decrease in the litigation provision
amounting to $7.9 million primarily
due to a change in the estimate.
- The convertible debentures cumulative inception-to-date
non-cash valuation loss of $50.8
million will reverse on conversion or redemption.
- Adjusted EBITDA (excluding non-cash items) for Q2 2016 was
$8.9 million compared to $2.2 million for Q2 2015, while adjusted EBITDA
for the first half of 2016 was $14.1
million compared to $7.3
million for the first half of 2015.
Cash Operating Costs, Capital Expenditures, and
All-In-Sustaining Costs ("AISC")
- Cash operating costs decreased 13% to $758 per ounce of gold sold, compared to
$876 per ounce sold in Q2 2015, and
have decreased 12% to $750 per ounce
on a year-to-date basis.
- AISC remained consistent at $1,203 per ounce of gold sold, compared to
$1,202 per ounce sold in Q2
2015.
- Sustaining capital expenditures totaled $7.9 million and focused on increasing primary
development and exploration drilling across all three mines
compared to $2.5 million in Q2
2015.
- Operating cash flow (excluding cash tax refunds) was
$10.4 million, compared to
$0.3 million in Q2 2015. For H1 2016,
operating cash flow (excluding cash tax refunds) was $19.0 million compared to $6.5 million for H1 2015.
- Free cash flow was $1.3 million,
based on operating cash flow (excluding cash tax refunds) less
total capital expenditures, compared to negative $2.9 million in Q2 2015.
Cash Position, Working Capital, TSX Listing, and
Operational Excellence
- The Company's cash position at June 30,
2016 was $17.5 million,
compared to a cash balance of $18.0
million as at March 31,
2016.
- Capital investments in Q2 2016 have been primarily funded
through operating cash flow during the first half of 2016, a trend
expected to continue into Q3 2016. In addition to the increase in
capital expenditures, Jaguar also paid $0.6
million of interest on the convertible debentures and
$0.9 million in debt principal and
interest payments during the second quarter.
- Working capital declined to $0.9
million, compared to $2.0
million as at December 31,
2015, reflecting a year-to-date increase of 82% in primary
development and a 206% increase in secondary development.
- On August 3, 2016, the Company's
common shares and senior secured convertible debentures commenced
trading on the TSX.
Q2 2016 Operational Highlights
Strong Gold
Production, Recovery, and Primary and Secondary
Development
- Consolidated gold production increased 17% to 24,222 ounces
compared to 20,682 ounces in Q2 2015 and is on track to achieve
2016 production guidance of 90,000 to 95,000 ounces of gold.
- Gold recovery increased to 91.4% compared to 90.0% in Q2
2015.
- Turmalina production increased 45% to 15,083 ounces compared to
10,420 ounces in Q2 2015, while average head grade increased 5% to
4.10 g/t. Turmalina production has increased 39% to 30,855 ounces
in H1 2016.
- Primary development increased 95% with 1,857 m completed
compared to 951 m in Q2 2015. A total of 3,018 m has been completed
in H1 2016, an increase of 82% compared to 1,657 m in the first six
months of 2015.
- Secondary development increased 182% with 1,317 m completed
compared to 467 m in Q2 2015. A total of 2,363 m has been completed
in H1 2016, an increase of 206% compared to 773 m in H1 2015.
Improving Consolidated Grades
- Consolidated average head grade increased 10% to 3.76 g/t
compared to 3.41 g/t in Q2 2015, and has improved 13% to 3.77 g/t
in the first half of 2016 compared to 3.33 g/t in the first half of
2015.
- Total processing was 217,000 tonnes (Q2 2015 – 210,000 tonnes)
at an average head grade of 3.76 g/t (Q2 2015 – 3.41 g/t).
- Turmalina processed 124,000 tonnes (Q2 2015 – 94,000 tonnes) at
an average head grade of 4.10 g/t (Q2 2015 – 3.91 g/t).
- Caeté processed 93,000 tonnes (Q2 2015 – 116,000 tonnes) at an
average head grade of 3.30 g/t (Q2 2015 – 3.00 g/t).
- Total processing for H1 2016 was 413,000 tonnes, a 5% decrease
from 436,000 tonnes processed in H1 2015.
Positive Drill Results at Turmalina
- On July 13, 2016, the Company
announced multiple high-grade drill intercepts from 46 infill drill
holes (7,310 m from a total 7,842 m program) designed to test the
current indicated & inferred resource envelope of Orebody A.
Significant drill intercepts include 21.66 g/t Au over 8.48 m
(estimated true width ("ETW") – 7.1 m), 18.26 g/t Au over 8.39 m
(ETW – 5.9 m), and 12.87 g/t Au over 20.70 m (ETW – 17.5 m),
including 29.48 g/t Au over 6.64 m (ETW – 5.6 m) and 22.24 g/t Au
over 2.94 m (ETW – 2.5 m).
- The Company completed a total of 9,486 m of definition, infill,
and exploration drilling in Q2 2016 (Q2 2015 – 11,416 m), for a
total of 21,377 m of drilling in H1 2016, an increase of 5% over
20,333 m in H1 2015.
Outlook
Looking ahead, the Company continues to be
focused on delivering positive and sustainable physical
performance, profitability, and cost optimization. The Company has
established the following consolidated production and cost guidance
for 2016 which represents achievable results from operations:
2016 Guidance
|
|
|
|
|
Turmalina
Complex
Caeté
Complex
Consolidated
|
Operations
|
|
Low
High
|
Low
High
|
Low
High
|
Gold production
(ounces)
|
|
62,000
|
65,000
|
28,000
|
30,000
|
90,000
|
95,000
|
Cash operating costs (per ounce
sold)1
|
|
$600
|
$650
|
$925
|
$975
|
$700
|
$750
|
All-in sustaining costs (per ounce
sold)1
|
|
$850
|
$900
|
$1,150
|
$1,200
|
$950
|
$1,000
|
Recovery (%)
|
|
90
|
90
|
90
|
90
|
90
|
90
|
Development
|
|
|
|
|
|
|
|
|
Primary (metres)
|
|
3,000
|
3,300
|
1,700
|
1,900
|
4,700
|
5,200
|
|
Secondary (metres)
|
|
3,200
|
3,400
|
2,500
|
2,700
|
5,700
|
6,100
|
Definition, infill, and exploration drilling
(metres)
|
|
18,000
|
20,000
|
10,000
|
12,000
|
28,000
|
32,000
|
|
1. Cash operating costs and
All-in sustaining costs are non-GAAP financial performance measures
with no standard definition under IFRS. Refer to Non-IFRS Financial
Performance Measures below. 2016 cost guidance has been prepared on
the basis of a foreign exchange rate of 3.8 Brazilian Reais vs. the
US dollar and a gold price of US$1,150 per
ounce.
|
2016 Key Growth Drivers
- Completing 2016 capital investment program to increase number
of available working areas through increased development and
exploration to grow sustainable production across all operating
mines. Capital investments funded through operating cash flow
during first half of 2016 with capital spending set to reduce in Q3
and Q4 2016.
- Growing mine production, increasing throughput and reducing
cash operating costs towards lower end of 2016 cost guidance.
- Commencing mine-wide Operational Excellence Program ("OEP") at
Turmalina Gold Mine to identify and eliminate waste, lower costs,
and improve productivity to create and deliver results, which will
drive future growth.
- Reviewing alternatives for the Company to exercise its right to
provide notice of redemption of the convertible debentures on the
anniversary date of October 27,
2016.
Qualified Person
Scientific and technical information
contained in this press release has been reviewed and verified by
Marcos Dias Alvim, BSc Geo., MAusIMM (CP), Project Development
Manager, who is an employee of Jaguar Mining Inc., and is a
"qualified person" as such term is defined by National Instrument
43-101 ("NI 43-101").
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 approximate 191,000 hectares. The Company's
principal operating assets are located in a prolific greenstone
belt in the state of Minas Gerais and include the Turmalina Gold
Mine Complex ("Mineração Turmalina Ltda" or "MTL") and Caeté Gold
Mine Complex ("Mineração Serras do Oeste Ltda" or "MSOL") which
combined produce more than 90,000 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 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. This news release contains forward-looking information
regarding expected production, grades, tonnes milled, recovery
rates, cash operating costs, and definition/delineation drilling,
in addition to overall expenditures and results of operations
during 2016. 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; and 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, the uncertainties with respect to the price
of gold, labor disruptions, mechanical failures, increase in costs,
environmental compliance and change in environmental legislation
and regulation, procurement and delivery of parts and supplies to
the operations, uncertainties inherent to capital markets in
general 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. 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 press 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,
2016 is set out in the Company's second quarter 2016
MD&A filed on SEDAR at www.sedar.com.
- All-in sustaining cost is a non-IFRS measure. This measure is
intended to assist readers in evaluating the total costs of
producing gold from current operations. While there is no
standardized meaning across the industry for this measure, except
for non-cash items the Company's definition conforms to the all-in
sustaining cost definition as set out by the World Gold
Council in its guidance note dated June 27, 2013. The
Company defines all-in sustaining cost as the sum of production
costs, sustaining capital (capital required to maintain current
operations at existing levels), corporate general and
administrative expenses, and in-mine exploration expenses. All-in
sustaining cost excludes growth capital, reclamation cost accretion
related to current operations, interest and other financing costs,
and taxes. A reconciliation of all-in sustaining cost to total
production costs for the most recent reporting period, the quarter
ended June 30, 2016 is set out in the Company's second
quarter 2016 MD&A filed on SEDAR at www.sedar.com.
SOURCE Jaguar Mining Inc.