TSX: JAG
TORONTO, Nov. 8, 2016 /PRNewswire/ -- Jaguar Mining
Inc. ("Jaguar" or the "Company") (TSX: JAG) today
announced details of the Company's financial and operating results
for the three and nine months ended September 30, 2016 ("Q3 2016" and "YTD
2016"). Complete Financial Statements and Management
Discussion and Analysis are available on SEDAR and on the Company's
website at www.jaguarmining.com. All figures are in US dollars
unless otherwise expressed.
Q3 2016 Highlights
- Strong third quarter production of 25,782 ounces, compared to
25,235 ounces for Q3 2015.
- Cash operating costs ("COC") of $645 per ounce sold decreased 9% compared to
$711 for Q3 2015.
- All-in sustaining costs ("AISC") of $1,011 per ounce sold increased 4% compared to
$970 for Q3 2015.
- Capital expenditures of $7.5
million, up 73%, including a 51% increase in sustaining
capital expenditures, compared to Q3 2015.
- 20% increase in revenue to $33.6
million from 25,317 gold ounces sold at an average realized
gold price of $1,328 per ounce.
- Operating cash flow of $9.4
million, representing a 155% increase compared to
$3.7 million for Q3 2015.
- Cash and cash equivalents of $17.3
million as at September 30,
2016 after $4.7 million
invested in accelerated capital programs to advance development
metres across operating mines, $0.9
million in interest payments, and the impact of a
strengthened Brazilian Real, compared to a cash balance of
$15.3 million as at December 31, 2015.
- Adjusted EBITDA (excluding non-cash items) for Q3 2016 was
$14.4 million compared to
$6.4 million for Q3 2015.
YTD 2016 Highlights
- Strong gold production of 71,202 ounces; on track to deliver on
2016 production guidance of 90,000 to 95,000 ounces.
- COC decreased 11% to $713 per
ounce sold compared to $800 per ounce
sold in YTD 2015.
- AISC of $1,091 per ounce sold
decreased 1% compared to $1,100 for
YTD 2015.
- 64% increase in operating cash flow to $29.3 million compared to $17.5 million for YTD 2015.
- Free cash flow of $9.1 million,
compared to no free cash flow for YTD 2015.
- Capital expenditures of $22.0
million, includes $19.2
million of increased sustaining capital expenditures. The
Company continues to successfully advance primary development and
exploration drilling across all three mines.
- Subsequent to quarter end, Jaguar also entered into an
agreement (the "Agreement") with Sprott Private Resource Lending
(Collector) LP ("Sprott Lending") for a secured $10.0 million loan facility that will fund the
Company's recently announced $8.0
million accelerated growth exploration program across
operating mines.
- As at the date of this news release, 100% of the principal
amount of the $21.5 million
convertible debentures were converted into approximately 189
million common shares.
Rodney Lamond, President and
Chief Executive Officer of Jaguar commented, "We are
extremely pleased with our third quarter results which delivered
strong operating performance, marked by increased gold production,
accelerated development, increased revenues, and lower cash
operating costs of $645 per
ounce sold. This performance resulted
in quarterly operating cash flow of $9.4 million bringing our year-to-date operating
cash flow to $29.3 million, 68% higher than the same period
last year. As we continue to position our operating mines for
future growth, third quarter AISC increased to $1,011 per
ounce sold, reflecting increased investment
in capital expenditures for accelerated primary
development. We also invested and advanced two key
projects at Turmalina relating to the paste fill plant
and the rebuild of Mill #3, both of which are expected to
be commissioned before the end of the year.
"While we experienced an active third quarter,
we maintained a solid cash position of $17.3 million after capital investment programs
and payments on debt facility and convertible debentures interest.
In October, we announced the earn-in agreement with Avanco to
divest of our non-core Gurupi development project and we also
announced that the Company has commenced an expanded and
accelerated growth exploration initiative focused on
brownfield exploration targets located in and around existing mine
infrastructure that have a strong potential to further grow
sustainable production, lower unit costs, increase cash flows and
extend mine life. We remain focused on our top priority of
executing on our capital investment plans and delivering
sustainable physical and financial results that drive the Companies
growth strategy."
Consolidated 2016
Summary Results
|
|
|
|
For the three
months
ended September 30,
|
For the nine
months
ended September 30,
|
|
2016
|
2015
|
2016
|
2015
|
Gold produced
(ounces)
|
25,782
|
25,235
|
71,202
|
67,253
|
Gold sold
(ounces)
|
25,317
|
25,160
|
72,167
|
68,572
|
Primary development
(metres)
|
1,353
|
1,152
|
4,371
|
2,810
|
Secondary development
(metres)
|
1,182
|
718
|
3,545
|
1,490
|
Definition, infill,
and exploration drilling (metres)
|
6,749
|
9,096
|
28,126
|
29,480
|
Cash operating costs
(per ounce sold)1
|
$
|
645
|
$
|
711
|
$
|
713
|
$
|
800
|
All-in sustaining
costs (per ounce sold)1
|
1,011
|
970
|
1,091
|
1,100
|
Average realized gold
price (per ounce)¹
|
1,328
|
1,118
|
1,251
|
1,162
|
Cash generated from
operating activities
|
9,353
|
3,670
|
29,314
|
17,485
|
Free cash flow
1
|
2,972
|
(543)
|
9,055
|
(1,531)
|
Sustaining capital
expenditures1
|
6,370
|
4,213
|
19,246
|
11,638
|
Non-sustaining
capital expenditures1
|
1,152
|
139
|
2,781
|
1,291
|
Total capital
expenditures
|
7,522
|
4,352
|
22,027
|
12,929
|
1 Average
realized gold price, sustaining and non-sustaining capital
expenditures, free cash flow, cash operating costs and all-in
sustaining costs 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.
|
|
|
|
Consolidated 2016
Financial Highlights
|
|
|
($ thousands, except
where indicated)
|
For the three
months
ended September 30,
|
For the nine
months
ended September 30,
|
|
2016
|
2015
|
2016
|
2015
|
Revenue
|
$
|
33,618
|
$
|
28,126
|
$
|
90,278
|
$
|
79,692
|
Operating
costs
|
16,191
|
17,892
|
51,657
|
54,833
|
Depreciation
|
9,509
|
3,254
|
25,599
|
12,891
|
Gross
margin
|
7,918
|
6,980
|
13,022
|
11,968
|
Gross margin
(excluding depreciation)1
|
17,427
|
10,234
|
38,621
|
24,859
|
Loss on change in
fair value of notes payable
|
31,672
|
-
|
77,616
|
(3)
|
Net (loss)
income
|
(31,648)
|
4,445
|
(73,515)
|
(12,884)
|
|
Per share
("EPS")
|
(0.22)
|
0.04
|
(0.60)
|
(0.12)
|
EBITDA1
|
(17,802)
|
12,020
|
(41,710)
|
10,374
|
|
Adjusted
EBITDA1,2
|
14,394
|
6,415
|
30,298
|
13,757
|
|
Adjusted EBITDA per
share1
|
0.10
|
0.06
|
0.25
|
0.12
|
1EBITDA
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.
|
2Adjusted
EBITDA excludes non-cash items such as impairment, changes in
provisions and write downs. For more details refer
to the Non-IFRS Performance Measures section of the
MD&A.
|
Corporate Update Highlights
- On July 13, 2016, the Company
announced multiple high-grade drill intercepts generated from 46
infill drill holes (7,310 metres ("m") from a 7,842 m drill
program) designed to test the current indicated and inferred
resource envelope of Orebody A at Turmalina.
- On September 26, 2016, the
Company announced positive drill results generated from 40
underground diamond drill holes from a 5,369 m drill program
designed to test the current resource envelope and to test the
down-plunge extensions of the Pilar ore bodies.
- On October 4, 2016, the Company
announced that it has entered into an earn-in agreement with Avanco
Resources Limited ("Avanco") pursuant to which Avanco may earn up
to a 100% interest in the Gurupi Project. Proceeds from this
transaction will be used to grow the Company's Mineral Reserves and
Resources in the Iron Quadrangle area of Brazil.
- As at the date of this news release, 100% of the principal
amount of the $21.5 million
convertible debentures have been converted into common shares of
the Company. The Company has significantly strengthened its balance
sheet and increased its market capitalization with the conversion
of the senior secured convertible debentures and added savings of
$0.6 million per quarter in interest
payments.
- On October 27, 2016, the Company
announced the commencement of an $8
million major growth capital investment program which will
focus on prioritizing targets that increase the Mineral Reserve
base around the operating assets and build confidence in mine plans
in the near to medium term, and the potential discovery of new
resources near existing infrastructure at its operating mines.
- On November 7, 2016, the Company
entered into an Agreement (the "Agreement") with Sprott Private
Resource Lending (Collector) LP ("Sprott Lending"), that is an
indirectly wholly-owned subsidiary of Sprott Inc., of which the
Chairman is Mr. Eric Sprott. Mr.
Sprott is a shareholder and held approximately 19% of the common
shares of the Company as at the date of this news release. The
Agreement is a secured loan facility (the "Facility") totaling
$10.0 million to fund accelerated
growth exploration initiatives. The Facility is expected to be
received on November 8, 2016 and is
for a term of 30 months with an interest rate of 6.5% per annum,
plus the greater of US dollar LIBOR and 1.25% per annum. In
consideration for the structuring and syndication of the Facility,
the Company has made a cash payment to Sprott Lending for
structuring and legal fees. In consideration for and providing the
financing commitment, the Company has issued an aggregate of
650,000 common shares of the Company to Sprott Lending and to
Natural Resource Income Investing Limited Partnership. The Toronto
Stock Exchange has provided conditional approval of the relevant
terms of this transaction. The Agreement constitutes a "related
party transaction" within the meaning of Multilateral Instrument
61-101 – Protection of Minority Security Holders in Special
Transactions ("MI 61-101"). Because the value of the Facility
and the consideration for the transaction is less than 25% of
Jaguar's market capitalization, the Company is exempt from the
formal valuation and minority shareholder approval requirements of
MI 61-101. A material change report in respect of the Facility will
be filed less than 21 days before the closing of the transaction
which Jaguar considers to be reasonable and necessary given the
time required to settle the terms of the Agreement and to conclude
other definitive documentation in respect of the Facility.
2016 Guidance
The following is the Company's 2016 production and cost guidance
compared to year-to-date results:
|
|
|
|
2016 Production
& Cost Guidance
|
Turmalina
|
Caeté
Complex
|
Consolidated
|
Operations
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
YTD
Actual
|
Gold production
(ounces)
|
62,000
|
65,000
|
28,000
|
30,000
|
90,000
|
95,000
|
71,202
|
Cash operating costs
(per ounce sold)1
|
$600
|
$650
|
$925
|
$975
|
$700
|
$750
|
$713
|
All-in sustaining
costs (per ounce sold)1
|
$850
|
$900
|
$1,150
|
$1,200
|
$950
|
$1,000
|
$1,091
|
Recovery
(%)
|
90%
|
90%
|
90%
|
90%
|
90%
|
90%
|
90%
|
Development
|
|
|
|
|
|
|
|
Primary
(m)
|
3,000
|
3,300
|
1,700
|
1,900
|
4,700
|
5,200
|
4,371
|
Secondary
(m)
|
3,200
|
3,400
|
2,500
|
2,700
|
5,700
|
6,100
|
3,545
|
Definition, infill,
and exploration drilling (m)
|
18,000
|
20,000
|
10,000
|
12,000
|
28,000
|
32,000
|
28,126
|
|
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.
|
Operational Summary
Tumalina Gold Mine
During the third quarter of
2016, Turmalina produced 16,304 ounces of gold compared to 13,994
ounces in the corresponding 2015 period, an increase of 17% or
2,310 ounces. The increase in ounces produced was a result of a 27%
increase in the tonnes processed from 101,000 in Q3 2015 to 128,000
in Q3 2016, offset by a 9% decrease in the average head grade from
4.77 g/t in Q3 2015 to 4.36 g/t in Q3 2016.
The cash operating costs per ounce sold for the third quarter of
2016 decreased by 10%, or $59 per
ounce, as compared to the same period in 2015, due to the impact of
a 27% increase in tonnes of ore processed, an increase in recovery,
and certain cost control measures in operations, which were
partially offset by the strengthening of the Brazilian Real and an
increase in the cost of materials due to inflation. The cash
operating costs per ounce sold for Q3 2016 decreased by 10%, or
$58 per ounce, as compared to Q2
2016, due to the impact of a 6% increase in average head grade, a
3% increase in tonnes processed, and an increase in recovery.
Primary development at the Turmalina mine totaled 605 and 2,502
metres for the three and nine months ended September 30, 2016, respectively, compared to
1,061 and 2,604 metres in the comparative 2015 periods. In
July 2016, the Company demobilized
the development contractor at Turmalina, thereby bringing 100% of
the development activities in-house. On a per metre basis, the cost
of primary development for the first nine months of 2016 remained
consistent with the first nine months of 2015.
Caeté Complex (Pilar and Roça Grande (RG) Gold
Mines)
The Caeté Gold Mining Complex has two underground
mines, Pilar and RG. The Pilar mine provides 1,000 tonnes per day,
or two-thirds of the Caeté complex ore, while the RG mine provides
500 tonnes per day from the underground RG-1 deposit.
During Q3 2016, the Caeté plant achieved gold recovery of 90.6%
utilizing gravity, flotation, and CIL treatment of flotation
concentrate. Optimization of the plant offers opportunities for
both increased gold extraction and reduced unit processing costs.
Various options are being explored and evaluated to better use the
currently underutilized processing facility.
Pilar Gold Mine
During
the third quarter of 2016, Pilar produced 7,923 ounces of gold
compared to 8,340 ounces in Q3 2015, a decrease of 5% due to the 5%
decrease in average head grade. Production increased 2% from Q2
2016 to Q3 2016 as a net result of an 8% increase in tonnes
processed, an increase in recovery, and a 3% decline in average
head grade. During Q3 2016, the Caeté plant processed 78,000 tonnes
from Pilar at an average grade of 3.51 g/t compared to 78,000
tonnes at 3.70 g/t in Q3 2015. Recovery for the quarter was 90.6%,
which was higher than the Q3 2015 recovery of 89.5%.
The cash operating costs per ounce sold for the third quarter of
2016 increased by 4%, or $27 per
ounce, as compared to Q3 2015 due to the increased costs associated
with the restart of secondary development during 2016, and
decreased by 20%, or $196 per ounce,
as compared to Q2 2016 due to the impact of a decrease in the costs
from the allocation of a greater amount of the mine-site fixed
overheads to capital expenditures due to a 24% increase in primary
development from Q2 2016 to Q3 2016.
Primary development at Pilar was suspended during Q4 2014 and
was restarted in Q1 2016 due to the success of the exploration
drilling program initiated in 2015. Primary development totaled 741
and 1,654 metres in the three and nine months ended September 30, 2016 compared to 91 and 150 metres
in the comparative 2015 periods.
Roça Grande Mine
During the third quarter of 2016, RG
produced 1,556 ounces of gold compared to 2,901 ounces in the
corresponding 2015 period, a decrease of 46% or 1,345 ounces.
Operational delays have occurred in 2016 due to the shortage of
developed stopes as the primary focus has been on infill drilling
and development in an effort to extend mine life. During Q3 2016,
the Caeté plant processed 25,000 tonnes from RG at an average grade
of 2.12 g/t compared to 44,000 tonnes at 2.26 g/t in Q3 2015.
Recovery for the quarter was 90.6%, which was higher than the Q3
2015 recovery of 89.5%.
The cash operating costs per ounce sold for the third quarter of
2016 increased 5% compared to Q3 2015 due to the increased costs
associated with the restart of secondary development during 2016,
and decreased 21% compared to Q2 2016 due to lower maintenance
expenditures.
Outlook & Growth
The Company continues to be
focused on safely delivering positive and sustainable physical
performance, profitability, and cost optimization. The Company has
established the following strategic initiatives that are expected
to create significant shareholder value:
- Safe and Sustainable Physical Results: Safely delivering
on the near-term mine plans to drive positive physical results and
ensure a sustainable production performance.
- Cost Reduction and Optimization: Developing a
value-driven culture that will identify and eliminate waste, lower
costs, and improve productivities with the end goal of creating and
delivering results. Cost control measures will be reviewed and
implemented across the operations to centralize and streamline
various functions company-wide.
- Generating Positive Cash Flow: Operations are focused on
generating cash flow, after sustaining capital, with mine plans
focused on achieving the right amount of tonnes, at the right grade
and with exploration programs that ensure sustainability.
Management is focused on expanding operational excellence programs
and developing a value-driven culture to increase operating cash
flow.
- Strategic Investment: Investment in exploration and
development will be prioritized to targets that increase the
mineral reserve base around the operating assets and build
confidence in our mine plans in the near to medium term. Expanding
brownfield exploration programs to grow organically and take
advantage of the underutilized processing capacity currently
installed.
- Continued Divestiture of Non-Core Assets: Reviewing
opportunities to divest non-core assets and land positions across
all sites to minimize carrying costs of these assets.
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 approximately 191,000 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 ("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 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 September 30,
2016 is set out in the Company's third 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 September 30,
2016 is set out in the Company's third quarter 2016 MD&A
filed on SEDAR at www.sedar.com.
For further information: Rodney
Lamond, President & CEO, rodney.lamond@jaguarmining.com,
416-628-9601; Hashim Ahmed, Chief
Financial Officer, hashim.ahmed@jaguarmining.com, 416-628-9601;
Joanne Jobin, Vice President,
Investor Relations, joanne.jobin@jaguarmining.com, 416-628-9601