TSX:
JAG
TORONTO, Nov. 7, 2017 /PRNewswire/ - Jaguar Mining
Inc. ("Jaguar" or the "Company") (TSX:JAG) today announced
details of the Company's financial and operating results for the
third quarter ended
September 30, 2017 ("Q3 2017").
Complete Financial Statements and Management's 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 2017 Financial Highlights
- Focused efforts on delivering the highest profitable ounce
production and company-wide expense reduction programs, despite
strong Brazilian currency, have resulted in decreasing cash
operating costs ("COC") to $809 per
ounce sold, a 6% reduction compared to $857 in Q2 2017 and a 12% reduction compared to
$924 in Q1 2017.
- All in sustaining costs ("AISC") decreased 7% to $1,169 per ounce sold compared to $1,262 per in Q2 2017, up compared to
$1,011 during Q3 2016, reflecting
increased exploration drilling programs in 2017.
- Significantly increased operating cash flow quarter over
quarter, to $7.5 million compared
with $0.2 million in Q2 2017, but was
lower compared with $9.4 million in
Q3 2016 mainly due to lower production.
- Sustaining capital expenditures of $4.6
million and total capital expenditures of $5.8 for Q3 2017, compared with $6.4 and $7.5
million respectively in Q3 2016. Total capital expenditures
of $18.6 million year-to-date to the
end of Q3 2017.
- Free cash flow turns positive for first time in 2017 with
$2.2 million in Q3 2017, based on
operating cash flow less sustaining capital expenditures, compared
to $2.9 million in Q3 2016.
- Net loss of ($7.7 million), or
($0.02) per share reflecting the
impact of non-cash adjustments, primarily the impairment write-down
on the sale of Jaguar's non-core asset, Gurupi Project, and changes
in some legal and tax provisions; this compares to net loss of
($31.6 million), or ($0.22) per share for Q3 2016.
- Ended the quarter with a strong cash balance of $19.2 million and stable adjusted working
capital. Initial $2 million
instalment received from Avanco for the Gurupi Project's
Accelerated Earn-in Agreement was used to make an additional
$2 million payment towards reducing
higher cost Brazilian bank debt.
Rodney Lamond, President and CEO
of Jaguar, commented: "We continued to see improving performance
throughout Q3 2017 with a focus on generating the highest level of
operating cash flow in 2017, through profitable ounce production.
Increased operating cash flow of $7.5
million in the third quarter allowed the company to continue
to invest in sustaining capital, as committed, priority growth
exploration programs and pay down debt. Cost reduction initiatives
combined with strong production results from Pilar contributed to
significantly improved consolidated cash costs of $809 per ounce sold compared to the first half of
2017 of $895. In particular,
Pilar and Roca Grande reduced cash
costs 22% and 17%, respectively, in Q3 2017 compared to Q2
2017."
"As of the end of Q3 2017, we have invested total capital of
approximately $19 million year
to-date 2017, with $15.2 million
invested in sustaining expenditures and exploration drilling that
has yielded significantly positive results. Recent drill results at
Pilar are extremely encouraging and we are becoming increasingly
confident in the resource upside at Pilar which we expect to report
with a mineral resource update in early 2018."
"We ended the quarter with a solid cash balance of $19.2 million and repaid $5.2 million on our credit facilities which
included an additional $2 million of
proceeds from an initial instalment of the Accelerated Earn-in
Agreement signed for the Gurupi Project. Moving forward, our first
priority will be to deliver profitable ounce production and
generate higher operating cash flow that can be redeployed towards
higher priority near-mine sustaining and growth exploration
projects, and paying down debt."
Corporate and Strategic Updates
- The Company continues to advance several initiatives towards
executing its growth strategy to become an annual 200,000 ounce
gold producer, while also continuing to restore and grow the
production profile at Turmalina from its historic levels during
2016.
- Key growth exploration drilling programs completed to date at
Pilar and Turmalina have generated excellent results are expected
to support the sustainability of the core assets for future
production. Pilar's recent strong performance and increased gold
production demonstrates that the investments made over the last 12
months, to access the new higher-grade mining fronts from the BF II
orebody, were necessary to drive increased production and also a
key component of the Company's growth Strategy. The ounce per
vertical meter profile at Pilar is very encouraging and has reached
over 2,000 ounces per vertical meter.
- The Company is currently exploring options and solutions to an
operating agreement as a first step effort to resume operations at
the Paciência gold mine. Paciência mine produced 66,671 oz and
59,287 oz in 2009 and 2010 respectively before being placed on care
and maintenance in Q3 2012. Once an acceptable solution is found
for the operating agreement, the company will begin a growth
exploration drilling program to explore the down plunge extension
of the main deposits near the mine.
- The Company is also conducting reviews at the Roca Grande Gold
Mine in an effort to solve the complex issues due to a perched
water table at the RG2 orebody. This orebody has delineated over
500,000 ounces in Mineral Resources but was abandoned in 2010 due
to the water issues. The sizable mineral resource was the reason
the Caeté Plant was built and expanded in 2010.
- The company continues to advance the two key growth exploration
programs at Pilar and Turmalina. Deep drilling at Pilar has
successfully confirmed (announced on September 20, 2017) the down plunge extension of
the main BFII and BF ore bodies. There are three growth exploration
diamond drills working at Turmalina drilling the down plunge
extensions to Orebody A and Orebody C and the company anticipates
releasing drilling results within the Q4 2017.
Appointment of New Board Director
The Company also announces the appointment of Ben Guenther to its Board of Directors as
independent non-executive director. Mr. Guenther is a Mining
Engineer with a wide range of management and executive experience
and over 40 years in the global mining industry. Mr. Guenther
graduated from the Colorado School of
Mines. Mr. Guenther's appointment as an independent Board
member reflects the Company's commitment to best practices in
corporate governance.
Financial and Operating Highlights
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($ thousands, except
where indicated)
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For the three
months ended
September 30,
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For the nine
months ended
September 30,
|
|
2017
|
2016
|
2017
|
2016
|
Financial
Data
|
|
|
|
|
Revenue
|
$
|
26,062
|
$
|
33,618
|
$
|
78,606
|
$
|
90,278
|
Operating
costs
|
16,116
|
16,191
|
53,614
|
51,657
|
Depreciation
|
5,898
|
9,509
|
17,271
|
25,599
|
Gross
profit
|
4,048
|
7,918
|
7,721
|
13,022
|
|
Gross profit
(excluding depreciation)1
|
9,946
|
17,427
|
24,992
|
38,621
|
Loss on change in
fair value of notes payable
|
-
|
31,672
|
-
|
77,616
|
Net loss
|
(7,664)
|
(31,648)
|
(18,861)
|
(73,515)
|
|
Per share
("EPS")
|
(0.02)
|
(0.22)
|
(0.06)
|
(0.60)
|
EBITDA1
|
(507)
|
(17,802)
|
3,949
|
(41,710)
|
|
Adjusted
EBITDA1,2
|
6,094
|
14,394
|
14,020
|
30,299
|
|
Adjusted EBITDA per
share1
|
0.02
|
0.10
|
0.04
|
0.25
|
Cash operating costs
(per ounce sold)1
|
809
|
645
|
867
|
713
|
All-in sustaining
costs (per ounce sold)1
|
1,168
|
1,011
|
1,249
|
1,092
|
Average realized gold
price (per ounce)¹
|
1,276
|
1,328
|
1,250
|
1,251
|
Cash generated from
operating activities
|
7,509
|
9,353
|
9,583
|
29,314
|
Adjusted operating
cash flow1
|
6,076
|
11,275
|
15,002
|
23,289
|
Free cash
flow1
|
2,212
|
2,972
|
(7,118)
|
9,055
|
Free cash flow (per
ounce sold)1
|
108
|
117
|
(113)
|
125
|
Sustaining capital
expenditures1
|
4,624
|
6,370
|
15,233
|
19,246
|
Non-sustaining
capital expenditures1
|
1,138
|
1,152
|
3,401
|
2,781
|
Total capital
expenditures
|
5,763
|
7,522
|
18,634
|
22,027
|
1Average
realized gold price, sustaining and non-sustaining capital
expenditures, cash operating costs and all-in sustaining costs,
adjusted operating cash flow, 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
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2Adjusted
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
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For the three
months ended
September 30,
|
For the nine
months ended
September 30,
|
|
2017
|
2016
|
2017
|
2016
|
Operating
Data
|
|
|
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|
Gold produced
(ounces)
|
20,781
|
25,782
|
62,842
|
71,201
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Gold sold
(ounces)
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20,422
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25,316
|
62,909
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72,167
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Primary development
(metres)
|
932
|
1,353
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2,666
|
4,371
|
Secondary development
(metres)
|
922
|
1,182
|
3,292
|
3,545
|
Definition, infill,
and exploration drilling (metres)
|
11,592
|
6,749
|
34,525
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28,126
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Liquidity Position and Working Capital
- As at September 30, 2017, the
Company had a cash balance of $19.2M,
compared to a cash balance of $20.7
million 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 repayments of financing obligations of $3.2M during the quarter, the Company used the
initial proceeds 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.
- Subsequent to the quarter end, the Company closed the sale of
the Gurupi transaction with Avanco Resources. On closing the
transaction, the Company received an additional $2 million and recorded an impairment (non-cash)
write down of $5.1 million on the
asset, leading to a net loss for the quarter.
- Significantly improved working capital quarter over quarter. As
September 30, 2017, working capital
was $28.2 million compared to
$11.3 million as at December 31, 2016 mainly due to a temporary
reclassification of Gurupi asset as Asset Held for Sale as part of
current assets. Working capital includes $6.0 million of short term payable loan to
Brazilian banks which mature every six months and are expected to
continue to be rolled forward. Adjusted Working Capital (excluding
the temporary reclassification of Gurupi asset as held for sale)
was $6 million. With the closing of
the Gurupi earn-in transaction that occurred in Q4 2017, an
additional $5-6 million is expected
to be added to the Adjusted Working Capital.
Quarterly Operating Summary
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Operating
Summary
|
Q3
2017
|
Q3
2016
|
Q2
2017
|
Turmalina
|
Pilar
|
Roça Grande
|
Total
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Turmalina
|
Pilar
|
Roça Grande
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Total
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Turmalina
|
Pilar
|
Roça Grande
|
Total
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Tonnes milled
(t)
|
107,000
|
88,000
|
18,000
|
213,000
|
128,000
|
78,000
|
25,000
|
231,000
|
112,000
|
85,000
|
19,000
|
216,000
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Average head grade
(g/t)
|
3.10
|
3.77
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2.89
|
3.36
|
4.36
|
3.51
|
2.12
|
3.83
|
3.37
|
3.16
|
2.15
|
3.18
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Recovery %
|
91%
|
90%
|
90%
|
90%
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92%
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91%
|
91%
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91%
|
91%
|
90%
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90%
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91%
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Financials
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COC ($/oz)
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749
|
804
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1,195
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809
|
528
|
726
|
1,249
|
645
|
695
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1,033
|
1,439
|
857
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AISC
($/oz)
|
|
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1,168
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|
|
|
1,011
|
|
|
|
1,262
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Realized Gold Price
($/oz)
|
|
|
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1,276
|
|
|
|
1,328
|
|
|
|
1,266
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Gold
ounces
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Produced
(oz)
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9,616
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9,674
|
1,491
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20,781
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16,304
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7,923
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1,556
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25,783
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10,870
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7,702
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1,197
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19,769
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|
Sold (oz)
|
9,082
|
9,820
|
1,520
|
20,422
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15,945
|
7,821
|
1,551
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25,317
|
10,815
|
6,625
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1,013
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18,453
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Development
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|
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Primary
(m)
|
443
|
471
|
18
|
932
|
605
|
741
|
7
|
1,353
|
504
|
218
|
102
|
824
|
|
Exploration
(m)
|
11
|
-
|
-
|
11
|
-
|
22
|
-
|
22
|
56
|
-
|
-
|
56
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|
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
|
Q3 2017 Operational Update
- Consolidated gold production decreased 19% to 20,781 ounces in
Q3 2017 compared to 25,783 ounces in Q3 2016. Consolidated gold
production for YTD 2017 was 62,842 ounces compared to 71,202 ounces
in the first nine months of 2016.
-
- Pilar production of 9,674 ounces in Q3 2017 compared to 7,923
ounces produced in Q3 2016; production improvements in the later
part of the quarter started to reflect the advancing ore
development into the higher-grade Orebodies BF II and BF.
- Turmalina produced 9,674 ounces in Q3 2017 compared to 16,304
ounces in Q3 2016; however, with the mining issues encountered at
level 9 during Q1 and Q2 2017, the Company is 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.
- The Company completed 932 metres and 2,666 metres of primary
development during the three and nine months ended September 30, 2017, respectively, compared to
1,353 metres and 4,371 metres in the comparative 2016 periods.
- Ore processed was 212,000 tonnes in Q3 2017 (Q3 2016 – 231,000
tonnes) at an average head grade of 3.36 g/t (Q3 2016 – 3.83
g/t).
-
- In Q3 2017, Turmalina processed 107,000 tonnes (Q3 2016 –
128,000 tonnes) at an average head grade of 3.10 g/t (Q3 2016 –
4.36 g/t). 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, is expected
to continue to impact consolidated grade in the short term.
- Caeté plant processed 105,000 tonnes in Q3 2017 (Q3 2016 –
103,000 tonnes) at an average head grade of 3.62 g/t (Q3 2016 –
3.17 g/t).
- New record grade at Pilar Gold Mine ("Pilar") of 3.77 g/t Au
for the quarter as mining activity increased 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.
- Increasing grade at Roça Grande Mine ("Roça Grande") of 2.88
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,
resulted in positive operational cash flows for Roça Grande.
- Total production for YTD 2017 was 643,000 tonnes (average head
grade of 3.35 g/t), as compared to 644,000 tonnes processed in the
first nine months of 2016 (average head grade of 3.79 g/t).
Qualified Person
Scientific 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").
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 OuroPreto (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 64,000
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). 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, procurement fraud
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 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,
2017, is set out in the Company's third quarter 2017
Management Discussion and Analysis (MD&A) filed on SEDAR
at www.sedar.com.
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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 September 30, 2017 is
set out in the Company's third quarter 2017 MD&A filed on SEDAR
at www.sedar.com.
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SOURCE Jaguar Mining Inc.