TSX:JAG
TORONTO, May 11, 2017 /PRNewswire/ - Jaguar Mining Inc.
("Jaguar" or the "Company") (TSX:JAG) today announced details
of the Company's financial and operating results for the first
quarter ended March 31, 2017 ("Q1
2017"). 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.
Q1 2017 Financial Highlights
- Gold production increased 5% to 22,292 ounces and gold ounces
sold increased to 24,035 ounces compared with 21,197 ounces
produced and 22,881 ounces sold in Q1 2016, respectively.
- A temporary interruption of mining activities in one section of
Orebody A at Turmalina was partially offset by an 86% increase in
gold production at Pilar.
- Revenue was up 9% to $29.2
million, compared with $26.7
million in Q1 2016, and the average realized gold price of
$1,215 was 4% higher compared with
$1,165 in Q1 2016.
- The strengthening Brazilian Real over the US dollar had the
effect of increasing unitary costs in the reporting currency.
During Q1 2017, the Brazilian Real strengthened 19% against the US
dollar, compared with Q1 2016. In addition to the currency impact,
the following items impacted the costs in Q1 2017:
-
- Cash operating costs ("COC") increased 25% to $924 per ounce of gold sold, compared to
$742 per ounce sold during Q1 2016,
due to lower production at Turmalina and the increased cost for
secondary development at Pilar.
- All in sustaining costs ("AISC") increased 22% to $1,323 per ounce of gold sold, compared to
$1,086 per ounce sold during Q1 2016,
mainly due to a 20% increase in sustaining mine development and
purchases of new equipment for Pilar.
- Operating cash flow was $1.9
million, compared to $9.5
million in Q1 2016. Lower operating cash flow with continued
investments in capital programs resulted in a cash balance of
$18.2 million as of March 31, 2017, compared to a cash balance of
$26.3 million at December 31, 2016.
- During Q1 2017, the Company also continued to invest in its
Growth Exploration Program, initiated in November 2016, with approximately 25% of the
drilling and development milestones achieved to date.
- The Company is maintaining 2017 production guidance of 100,000
– 110,000 ounces, which will be reviewed at the end of Q2
2017.
- In view of the volatility in the gold price and continued
strengthening of the Brazilian Real since September 2015, the Company has initiated a cost
reduction program to offset these external factors. This includes
reducing the Roça Grande operations by approximately 40% in overall
headcount at that site. Company-wide general and administrative
costs have also been reviewed with the aim of reducing headcount in
support functions. The Company will also continue its assessment of
the maintenance departments to further incorporate preventive
procedures, improve equipment availability, and reduce costs.
- Subsequent to the quarter end, Jaguar entered into a
preliminary agreement with Sprott Private Resource Lending
(Collector) LP ("Sprott Lending") for an additional tranche of
$5 million on terms similar to those
of the secured loan facility that Jaguar entered into with Sprott
Lending on November 7, 2016.
Rodney Lamond, President and
Chief Executive Officer of Jaguar commented, "A significant
highlight of the first quarter of 2017 was the strong performance
at Pilar which increased its gold production 86% to 8,485 ounces
and its grade by 17% to 3.39 g/t, reflecting the advancement of ore
development into the high-grade Orebodies BF and BFII. However,
consolidated production of 22,292 ounces was much lower than
targeted, mainly due to a change in mining sequence at Turmalina
caused by temporary ground control conditions on Level 9. As a
result, development activities were refocused onto Level 10.
Earlier than planned advancement at Orebody C resulted in a decline
in an overall average head grade to 3.79 g/t. The change in mine
sequence to Level 10 is expected to positively impact operations in
the near term, allowing for an increase in mine feed grades and
will enable the recovery of Q1 gold production shortfall. The
rehabilitation efforts to recover the remaining ounces on Level 9
of Orebody A will resume in the second half of
2017."
"During the first quarter, we made investments of
$6.9 million in capital expenditures
towards primary development, exploration drilling, and new mining
equipment. The recommissioning of Mill #3 at Turmalina provides
operations with an increased milling capacity that is capable of
processing 2,000 tonnes per day which will support higher
production and lower unit operating costs in the future. Operating
costs during the first quarter were higher than anticipated due to
lower than expected production from Turmalina and the continued
appreciation of the local Brazilian currency which has increased
19% over the US dollar since the first quarter of 2016. The AISC
reflects the continued investments in sustaining capital
expenditures and will be reviewed in light of Q1 results. At Pilar,
AISC included approximately $350 per
ounce of sustaining capital investment. This was largely related to
the ongoing investment in primary development with additional new
mining equipment arriving during the quarter. Higher COC at Pilar
was derived by a significant 614 metres of secondary ore
development."
Mr. Lamond concluded: "Looking ahead, we are maintaining our
2017 production guidance of 100,000 – 110,000 ounces, but we will
conduct a review of guidance at the end of the second quarter. The
Company is taking the necessary steps to manage costs during this
time of lower gold prices and continued strengthening of the
Brazilian currency. As we continue to experience cost pressures, we
will be offsetting the impact with cost savings in other areas
through operational productivity and efficiency improvements,
reductions in capital, and slowing all non-core spending."
Q1 2017 Operating Highlights
- Consolidated gold production of 22,292 ounces, up 5%
year-over-year, with 214,000 tonnes of ore processed.
- Gold recovery of 90.8% in Q1 2017 compared to 90.2% in Q1 2016
due to continuous improvement projects initiated at both
plants.
- Strong operating performance at Pilar resulted in an 86%
increase in gold production to 8,485 ounces, a 17% improvement in
average grade to 3.39 g/t, and higher recovery of 90.8%. Strong
gold production reflects the advancing ore development into the
higher-grade Orebodies BF and BFII.
- Turmalina produced 12,736 ounces of gold, lower than the Q1
2016 and Q4 2016 production levels, due to lower throughput and
grade as a result of a temporary interruption of mining activities
in one section of Orebody A to conduct ground control
rehabilitation work. Previously scheduled high-grade mining blocks
from this area were deferred later into the mining schedule.
- Turmalina increased Measured & Indicated Mineral Resources
by 22% to 540,000 ounces of gold (grade of 4.93 g/t Au), and Proven
& Probable Mineral Reserves for Orebody C by 167% to 80,000
ounces of gold (grade of 4.10 g/t Au).
- Milling capacity at Turmalina increased with the
recommissioning of Mill #3, announced January 5, 2017.
|
|
|
Operating
Summary
|
Q1
2017
|
Q1
2016
|
|
Turmalina
|
Pilar
|
Roça
Grande
|
Total
|
Turmalina
|
Pilar
|
Roça
Grande
|
Total
|
|
Tonnes milled
(t)
|
113,000
|
74,000
|
27,000
|
214,000
|
128,000
|
56,000
|
12,000
|
196,000
|
|
Average head grade
(g/t)
|
3.79
|
3.39
|
2.12
|
3.50
|
4.29
|
2.89
|
2.53
|
3.78
|
|
Recovery %
|
91%
|
91%
|
91%
|
91%
|
90%
|
90%
|
90%
|
90%
|
Gold
ounces
|
|
|
|
|
|
|
|
|
|
Produced
(oz)
|
12,736
|
8,485
|
1,071
|
22,292
|
15,772
|
4,552
|
873
|
21,197
|
|
Sold (oz)
|
13,536
|
9,422
|
1,076
|
24,035
|
16,635
|
5,369
|
877
|
22,881
|
Development
|
|
|
|
|
|
|
|
|
|
Primary
(m)
|
366
|
470
|
74
|
910
|
731
|
312
|
118
|
1,161
|
|
Exploration
(m)
|
104
|
13
|
34
|
151
|
-
|
-
|
-
|
-
|
|
Secondary
(m)
|
754
|
614
|
14
|
1,382
|
838
|
24
|
184
|
1,046
|
|
Diamond drilling
(m)
|
6,080
|
5,218
|
567
|
11,864
|
4,691
|
2,508
|
4,693
|
11,892
|
Costs per ounce
sold
|
|
|
|
|
|
|
|
|
|
Cash operating costs
($/oz)
|
738
|
1,092
|
1,787
|
924
|
590
|
1,096
|
1,454
|
742
|
|
All-in sustaining
costs ($/oz)
|
903
|
1,434
|
2,330
|
1,323
|
780
|
1,414
|
1,609
|
1,086
|
Cash Balance
As at March 31,
2017, the Company had a cash position of $18.2 million, compared to $26.3 million as at December 31, 2016, primarily due to lower gold
production.
- Subsequent to the quarter end, Jaguar entered into a
preliminary agreement with Sprott Lending for an additional tranche
of $5 million on terms principally
similar to those of the secured loan facility that Jaguar entered
into with Sprott Lending on November 7,
2016 (the "Facility"). The preliminary agreement and the
funding of the additional tranche is conditional upon various
standard conditions and approvals, including the approval of the
TSX. This additional $5 million
tranche is expected to close and be funded in June 2017 and is for a term of 36 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 providing the
financing commitment, Jaguar expects to issue 375,000 common shares
to Sprott Lending on the closing date. The proceeds from this
tranche from the Facility will be used for capital equipment.
- Following Sprott Lending's February, 2017 site visit to
Jaguar's mineral properties and operating facilities in
Brazil, current due diligence, and
in light of the preliminary agreement to fund an additional
$5 million tranche from the Facility,
Sprott Lending waived the Company's obligation regarding a positive
working capital covenant from the period of April 1, 2017 through June
29, 2017.
Foreign Currency
Jaguar has been impacted by the
strengthening in the Brazilian Real exchange rate relative to the
US dollar, which has had the effect of increasing cash costs in US
dollar terms. The average exchange rate during Q1 2017 was
R$3.15 Brazilian Reais per US dollar
compared to R$3.90 per US dollar in
Q1 2016. The closing exchange rate as at March 31, 2017 was R$3.17 per US dollar compared to R$3.26 per US dollar as at December 31, 2016.
2017 Outlook
The company has made excellent progress
since Q1 2016, and expects to achieve the following for 2017:
- Turmalina will focus on accelerating Orebody C development to
focus on increasing grade and tonnes. Additionally, growth
exploration at Turmalina will continue the deep drilling down-dip
of the extension of Orebody C.
- Pilar will focus on opportunities to adjust timing or reducing
development and contractor costs, reviewing current and longer-term
needs for development, while looking at lower cost mining
methods.
- Streamlining cash operating costs at Pilar and Roça Grande, and
further reduction of G&A costs.
- Commissioning of the paste-fill plant in June to improve
back-fill at Turmalina, and thus improve ground control conditions
at deeper levels of the mine.
- Roça Grande to reduce from four mining shifts to two shifts per
day, while maintaining the current production levels.
- Review and potentially pause all non-core expenditures and
growth exploration to carefully manage our cash position and
working capital needs.
The Company maintains the 2017 consolidated guidance in the
table below. A review of the guidance will be completed at the end
of the second quarter.
|
|
|
|
2017
Guidance
|
Turmalina
Complex
|
Caeté
Complex
|
Consolidated
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
Gold production
(ounces)
|
60,000
|
65,000
|
40,000
|
45,000
|
100,000
|
110,000
|
Cash operating costs
(per ounce sold)1
|
$600
|
$650
|
$ 900
|
$1,000
|
$720
|
$755
|
All-in sustaining
costs (per ounce sold)1
|
$800
|
$850
|
$1,020
|
$1,180
|
$900
|
$1,000
|
Development
|
|
|
|
|
|
|
|
Primary
(m)
|
2,500
|
2,900
|
2,200
|
2,600
|
4,700
|
5,500
|
|
Secondary
(m)
|
2,200
|
2,700
|
3,400
|
3,850
|
5,600
|
6,550
|
Diamond drilling
(m)
|
16,000
|
18,000
|
10,000
|
13,000
|
26,000
|
31,000
|
Growth exploration
investment ($ million)
|
|
|
|
|
$7.5
|
$8.0
|
1 Cash
operating costs and all-in sustaining costs are non-gaap financial
performance measures with no standard definition under IFRS.
Refer to the Non-IFRS Measures section below. 2017 cost guidance
has been prepared based on a foreign exchange rate
of 3.5 Brazilian Reais vs. the US dollar.
|
Financial and Operating Highlights
|
|
($ thousands, except
where indicated)
|
For the three
months ended March 31,
|
|
2017
|
2016
|
Financial
Data
|
|
|
Revenue
|
$
|
29,192
|
$
|
26,664
|
Operating
costs
|
21,508
|
17,579
|
Depreciation
|
6,576
|
7,702
|
Gross
profit
|
1,108
|
1,383
|
|
Gross profit
(excluding depreciation)1
|
7,684
|
9,085
|
Loss on change in
fair value of notes payable
|
-
|
17,579
|
Net loss
|
(7,877)
|
(15,001)
|
|
Per share
("EPS")
|
(0.03)
|
(0.13)
|
EBITDA1
|
743
|
(5,860)
|
|
Adjusted
EBITDA1,2
|
4,211
|
6,426
|
|
Adjusted EBITDA per
share1
|
0.01
|
0.06
|
Cash operating costs
(per ounce sold)1
|
924
|
742
|
All-in sustaining
costs (per ounce sold)1
|
1,323
|
1,086
|
Average realized gold
price (per ounce)¹
|
1,215
|
1,165
|
Cash generated from
operating activities
|
1,855
|
9,526
|
Free cash
flow1
|
(4,177)
|
3,558
|
Free cash flow (per
ounce sold)1
|
(174)
|
156
|
Sustaining capital
expenditures1
|
6,032
|
5,013
|
Non-sustaining
capital expenditures1
|
873
|
382
|
Total capital
expenditures
|
6,906
|
5,395
|
1 Average
realized gold price, sustaining and non-sustaining capital
expenditures, cash operating costs and all-in sustaining costs,
free cash flow, EBITDA and Adjusted EBITDA, Adjusted EBITDA per
share, and gross profit (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.
|
|
|
|
|
For the three
months ended March 31,
|
|
2017
|
2016
|
Operating
Data
|
|
|
Gold produced
(ounces)
|
22,292
|
21,197
|
Gold sold
(ounces)
|
24,035
|
22,881
|
Primary development
(metres)
|
910
|
1,161
|
Secondary development
(metres)
|
1,382
|
1,046
|
Definition, infill,
and exploration drilling (metres)
|
11,864
|
11,892
|
Qualified Person
Scientific and technical information
contained in this press release has been reviewed and approved by
Geraldo Guimarães Vieira dos Santos, BSc Geo., MAIG-3946 (CP),
Geology Manager, who is 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").
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 191,000 hectares. The Company's
principal operating assets are in the Iron Quadrangle, a prolific
greenstone belt in the state of Minas Gerais and include the
Turmalina Gold Mine Complex and Caeté Gold Mine 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
providing information about management's expectations and plans
relating to the future. All of the forward-looking information made
in this news release are 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 using 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, labor 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.
1.
|
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 sold and are calculated by dividing cash operating costs by
commercial gold ounces sold. 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 March 31,
2017 is set out in the Company's first quarter 2017 MD&A
filed on SEDAR at www.sedar.com.
|
|
|
2.
|
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 March 31, 2017 is
set out in the Company's first quarter 2017 MD&A filed on SEDAR
at www.sedar.com.
|
SOURCE Jaguar Mining Inc.