Jaguar Mining Announces Fourth Quarter and Full Year 2012 Financial Results and Adoption of Advance Notice By-Law
PRESS RELEASE
March 21, 2013 2013 -03 For Immediate Release JAG - TSX/NYSE
Jaguar Mining Announces Fourth Quarter and Full Year 2012 Financial Results and Adoption of Advance Notice By-Law
Belo Horizonte, Brazil, March 21, 2013 - Jaguar Mining Inc. ("Jaguar" or "the Company") (JAG: TSX/NYSE) today reported a net loss of $49.4 million or $0.58 per fully diluted share for the quarter ended December 31, 2012. This result compares to a net loss of $33.7 million or $0.40 per fully diluted share in the fourth quarter of 2011. The fourth quarter 2012 result includes an impairment charge of $55.3 million and an $8.5 million unrealized non-cash gain on the conversion option embedded in convertible debt (see note 1). The impairment consists of an additional charge of $42.4 million relating to the Paciência operation, which remains on care and maintenance, and $12.9 million attributable to the Turmalina operation where operating costs have been historically high. Excluding these non-operating items, Jaguar’s fourth quarter result was a net loss of $6.9 million or $0.08 per fully diluted share.
For the full year 2012, Jaguar reported a net loss of $84.5 million or $1.00 per fully diluted share. This compares to a net loss of $65.6 million or $0.78 per fully diluted share in the full year 2011. The full year result for 2012 includes an impairment charge of $103.0 million and a $75.5 million unrealized non-cash gain on the conversion option embedded in convertible debt (see note 1). The full year result for 2011 includes a $32.3 million unrealized non-cash loss on the conversion option embedded in convertible debt. Excluding these non-operating items, Jaguar’s full year 2012 result was a net loss of $61.4 million or $0.73 per fully diluted share compared to net a net loss of $33.4 million or 0.40 per share in the full year 2011.
During the fourth quarter 2012, Jaguar sold 21,298 ounces of gold at an average realized price of $1,714 per ounce. This compared to sales of 34,157 ounces of gold at an average realized price of $1,680 per ounce in the three months ended December 30, 2011. Average cash operating cost per ounce was $915 in the fourth quarter 2012 compared to $963 in the third quarter 2012 and $1,114 in the fourth quarter 2011. Cash operating margin was $799 per ounce in the fourth quarter 2012 compared to $685 per ounce in the third quarter 2012 and $566 per ounce in the fourth quarter 2011. The decrease in the Company’s average cash operating cost per ounce during the fourth quarter 2012 as compared to the fourth quarter 2011 was attributable to Jaguar’s on-going cost reduction and operational improvement program which included placing the Paciência operation on care and maintenance beginning in May 2012, reduced headcount at the mining operations and continued focus on reducing dilution and improving safety and productivity.
For the full year 2012 Jaguar sold 103,676 ounces at an average realized price of $1,663 per ounce. Average cash operating cost for the year was $1,082 per ounce resulting in an average cash operating margin of $581 per ounce for the year. These figures compared to 155,525 ounces of gold sold at an average realized price of $1,563 per ounce, average cash operating cost per ounce of $870 and average cash operating margin of $693 per ounce in the full year 2011.
Gold production for the quarter ended December 31, 2012 totaled 21,676 ounces and for the full year totaled 102,823 ounces. These production results compare to 33,397 ounces of gold in the fourth quarter of 2011 and 155,764 ounces for the full year 2011. The decline in comparative quarterly and annual production levels was the result of the Company’s decision to place the Paciência operation on care and maintenance beginning in May 2012 and a transition of mining and ground support methods which, during the course of implementation, negatively impacted production cycle times in the Turmalina operation.
Commenting on the Company’s results, David Petroff, Jaguar’s President and CEO stated, “2012 was a challenging year for Jaguar and these results reflect the magnitude of the challenges and the temporary disruptive impact related to the implementation of new mining and ground control methods. Reducing the carrying value of the Paciência and Turmalina operations is a non-cash accounting charge that reflects Paciência remaining on care and maintenance and the high historical operating costs recorded at Turmalina. The reduced book value of these properties does not alter the importance of the properties in the Company’s long term future. We have made continual improvement in each of the last three quarters in terms of bringing our operating cash costs down. We believe this is an indication that we are on the right track. Further, preliminary operating results in the first two months of 2013 showed a continuation of this positive trend of lower production cost per ounce.”
“The Caeté operation had a very good year meeting production targets and developing a sound production cycle,” Petroff continued. “The Turmalina operation is making progress with development now moving out ahead of production and providing some additional operational flexibility. The change in ground control method implemented in 2012 is having the desired effect of improving safety and structural stability in the mines. The temporary negative impact of the implementation has begun to ease as the operations have incorporated the revised program into to the production cycle.”
“With a new permanent management team now in place we will continue to focus on and implement continuous improvement at the operations throughout 2013. We are encouraged by our many opportunities as we build and strengthen for the future,” Petroff concluded.
Summary of Key Operating Results – Consolidated
Three Months Ended Dec 31 Twelve Months Ended Dec 31 2012 2011 2012 2011 ($ in 000s, except per share amounts)
Gold sales $ 36,511 $ 57,398 $ 172,430 $ 243,137 Ounces sold 21,298 34,157 103,676 155,525 Average sales price $ / ounce 1,714 1,680 1,663 1,563 Gross profit 9,344 1,817 6,143 43,352 Net income (loss) (49,371) (33,661) (84,537) (65,623) Basic income (loss) per share (0.58) (0.40) (1.00) (0.78) Diluted income (loss) per share (0.58) (0.40) (1.00) (0.78) Weighted avg. # of shares outstanding - basic 84,409,648 84,409,648 84,409,648 84,386,569 Weighted avg. # of shares outstanding - diluted 84,409,648 84,409,648 84,409,648 84,386,569
Key Operating Statistics by Operation
| Three Months Ended December 31, 2012 Operating Data | ||||||
|---|---|---|---|---|---|---|
| Ore Processed (t000) | Feed Grade (g/t) | Plant Recovery Rate (%) | Production (ounces) | Cash Operating Cost/t | Cash Operating Cost/ounce | |
| Turmalina Paciência Caeté | 113 - 172 | 2.64 - 3.16 | 87% - 88% | 8,206 - 13,470 | $ 7 4.20 - 66.30 | $ 1 ,057 - 828 |
| Total | 285 | 2.96 | 88% | 21,676 | $ 6 9.40 | $ 9 15 |
| Twelve Months Ended December 31, 2012 Operating Data | ||||||
|---|---|---|---|---|---|---|
| Ore Processed (t000) | Feed Grade (g/t) | Plant Recovery Rate (%) | Production (ounces) | Cash Operating Cost/t | Cash Operating Cost/ounce | |
| Turmalina Paciência Caeté | 541 170 657 | 2.39 2.15 3.13 | 89% 90% 89% | 37,840 9,987 54,996 | $ 7 8.40 92.30 79.50 | $ 1 ,135 1,536 962 |
| Total | 1,368 | 2.72 | 89% | 102,823 | $ 8 0.70 | $ 1 ,082 |
| Three Months Ended December 31, 2011 Operating Data | ||||||
|---|---|---|---|---|---|---|
| Ore Processed (t000) | Feed Grade (g/t) | Plant Recovery Rate (%) | Production (ounces) | Cash Operating Cost/t | Cash Operating Cost/ounce | |
| Turmalina Paciência Caeté | 181 108 176 | 3.03 2.63 3.15 | 87% 91% 87% | 13,470 6,632 13,295 | $ 8 7.50 81.40 81.70 | $ 1 ,117 1,307 1,014 |
| Total | 465 | 2.98 | 88% | 33,397 | $ 8 3.90 | $ 1 ,114 |
| Twelve Months Ended December 31, 2011 Operating Data | ||||||
| Ore Processed (t000) | Feed Grade (g/t) | Plant Recovery Rate (%) | Production (ounces) | Cash Operating Cost/t | Cash Operating Cost/ounce | |
| Turmalina Paciência Caeté | 655 460 674 | 3.32 2.97 3.03 | 89% 92% 87% | 61,400 39,581 54,783 | $ 7 9.90 68.90 75.10 | $ 8 86 787 912 |
| Total | 1,789 | 3.12 | 89% | 155,764 | $ 7 5.30 | $ 8 70 |
2013 Outlook
Jaguar expects 2013 gold production in the range of 85,000 to 95,000 ounces. On this planned production volume, cash operating costs are expected to be in the range of $950 to $1,100 per ounce (based on an assumed exchange rate of R$2.00 per US$). Capital expenditures for 2013 are anticipated to be approximately $35 million of which $22 million is expected to be spent at Caeté and $13 million at Turmalina. Costs are expected to continue to trend downward throughout 2013 as the planned benefits of the operational improvements and changes in mining methodology implemented in 2012 are realized incrementally throughout the year.
Conference Call Details
Members of the Jaguar senior management team will hold a conference call to discuss the fourth quarter results and operations on Monday, March 25, 2013 at 10:00 a.m. ET. The call can be accessed via telephone or webcast.
Live teleconference access:
US Dial In (Toll Free): 1-866-524-3160
International Dial In: 1-412-317-6760
Live audio webcast: www.jaguarmining.com Replay:
US Toll Free: 1-877-344-7529 International Toll: 1-412-317-0088 Conference Number: 10026555
Availability of Annual Financial Statements
Jaguar expects to file its audited financial statements for the year ended December 31, 2012 on March 22, 2013. These financial statements, along with the related notes, can be viewed at the investor relations page of the Company’s website at www.jaguarmining.com. A hard copy of the financial statements and the Company’s annual report can be obtained free of charge by sending a request via email to [email protected] or by calling 1-647-5JAG (5524).
Advance Notice By-Law
On March 20, 2013, the Board of Directors of Jaguar approved the adoption of an advance notice by-law (the “By-law”) which requires advance notice to the Company in circumstances where nominations of persons for election as a director of the Company are made by shareholders other than pursuant to: (i) a requisition of a meeting made pursuant to the provisions of the Business Corporations Act (Ontario) (the “Act”); or (ii) a shareholder proposal made pursuant to the provisions of the Act.
Among other things, the By-law fixes a deadline by which shareholders must submit a notice of director nominations to the Company prior to any annual or special meeting of shareholders where directors are to be elected and sets forth the information that a shareholder must include in the notice for it to be valid.
In the case of an annual meeting of shareholders, notice to the Company must be made not less than 30 nor more than 65 days prior to the date of the annual meeting; provided, however, that in the event that the annual meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be made not later than the close of business on the 10th day following such public announcement.
In the case of a special meeting of shareholders (which is not also an annual meeting), notice to the Company must be made not later than the close of business on the 15th day following the day on which the first public announcement of the date of the special meeting was made.
The By-law is effective as at the date of approval by the Board. At the next meeting of shareholders, shareholders will be asked to confirm and ratify the By-law and if the By-law is not confirmed at the meeting by ordinary resolution of shareholders, the By-law will terminate and be of no further force and effect following the termination of the meeting.
The Company believes that adopting the By-law is considered to be good corporate governance. The By-law facilitates an orderly and efficient annual or special meeting process and it ensures that all shareholders receive adequate notice of director nominations with sufficient information with respect to all nominees. This allows the Corporation and its shareholders to evaluate the proposed nominees' qualifications and suitability as directors, which further allows shareholders to cast an informed vote for the election of directors.
The full text of the By-Law will be available via SEDAR at www.sedar.com.
About Jaguar Mining
Jaguar is a junior gold producer in Brazil with operations in a prolific greenstone belt in the state of Minas Gerais and owns the Gurupi Project in Northern Brazil in the state of Maranhão. The Company also owns additional mineral resources at its approximate 210,000-hectare land base in Brazil. Additional information is available on the Company’s website at www.jaguarmining.com.
Company Contacts
Roger Hendriksen Vice President, Investor Relations 603-410-4888 [email protected] Valéria Rezende DioDato Director of Communication 011-55-31-4042-1249 [email protected]
Forward Looking Statements
Certain statements in this press release constitute “Forward-Looking Statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities legislation. These Forward-Looking Statements include, but are not limited to, statements concerning the Company’s 2013 estimated gold production and cash operating cost. Forward-Looking Statements can be identified by the use of words, such as “are expected”, “is forecast”, “is targeted”, “approximately” 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. Forward-Looking Statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance to be materially different from any future results or performance expressed or implied by the Forward-Looking Statements.
These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other geological data, fluctuating gold prices and monetary exchange rates, the possibility of project cost delays and overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, uncertainties related to production rates, timing of production and the cash and total costs of production, changes in applicable laws including laws related to mining development, environmental protection, and the protection of the health and safety of mine workers, the availability of labor and equipment, the possibility of labor strikes and work stoppages and changes in general economic conditions. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in Forward-Looking Statements, there may be other factors that could cause actions, events or results to differ from those anticipated, estimated or intended.
These Forward-Looking Statements represent the Company’s views as of the date of this press release. The Company anticipates that subsequent events and developments may cause the Company’s views to change. The Company does not undertake to update any forward-looking statements, either written or oral, that may be made from time to time by or on behalf of the Company subsequent to the date of this discussion except as required by law. For a discussion of important factors affecting the Company, including fluctuations in the price of gold and exchange rates, uncertainty in the calculation of mineral resources, competition, uncertainty concerning geological conditions and governmental regulations and assumptions underlying the Company's forward-looking statements, see the "CAUTIONARY NOTE" regarding forward-looking statements and "RISK FACTORS" in the Company's Annual Information Form for the year ended December 31, 2012 filed on SEDAR and available at http://www.sedar.com and the Company's Annual Report on Form 40-F for the year ended December 31, 2012 filed with the United States Securities and Exchange Commission and available at www.sec.gov.
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Note: As required by applicable Canadian rules, effective the first quarter of 2011, Jaguar has prepared its financial statements in accordance with International Financial Reporting Standards (“IFRS”).
Additional details will be available in the Company’s filings on SEDAR and EDGAR, including Management’s Discussion and Analysis of Financial Condition and Results of Operations and Consolidated Financial Statements for the period ended December 31, 2012.
The following tables contain information for the quarter (unaudited) and year ended December 31, 2012. The data presented are subject to final adjustment, but are believed to be materially accurate. Jaguar's audited financial statements for the period ended December 31, 2012 are were filed on SEDAR and EDGAR on March 20, 2013. Readers should refer to those filings for the final audited financial statements and the associated footnotes which are an integral part of the tables.
Consolidated Balance Sheets (Expressed in thousands of U.S. dollars)
2012 2011
Assets Current assets:
Cash and cash equivalents $ 13,856 $ 74,475
| Inventory | 26,342 | 34,060 |
| Prepaid expenses and sundry assets | 20,069 | 25,541 |
| Derivatives | 43 | - |
60,310 134,076
| Prepaid expenses and sundry assets | 56,886 | 48,068 |
| Restricted cash | 609 | 909 |
| Assets available for sale | 612 | - |
| Property, plant and equipment | 301,383 | 388,675 |
| Mineral exploration projects | 84,075 | 88,938 |
$ 503,875 $ 660,666
Liabilities and Shareholders' Equity Current liabilities:
Accounts payable and accrued liabilities $ 29,745 $ 34,922
| Notes payable | 27,388 | 22,517 |
| Income taxes payable | 15,451 | 18,953 |
| Reclamation provisions | 4,124 | 2,082 |
| Other provisions | 4,796 | 4,347 |
| Deferred compensation liabilities | 105 | 2,953 |
| Other liabilities | 20 | 1,475 |
81,629 87,249
| Notes payable | 240,158 | 228,938 |
| Option component of convertible notes | 4,458 | 79,931 |
| Deferred income taxes | 6,624 | 8,635 |
| Reclamation provisions | 16,927 | 15,495 |
| Deferred compensation liabilities | 216 | 2,270 |
| Other liabilities | 60 | 339 |
| Total liabilities | 350,072 | 422,857 |
Shareholders' equity:
| Share capital | 370,043 | 370,043 |
| Stock options | 2,137 | 14,207 |
| Contributed surplus | 16,015 | 3,414 |
| Deficit | (234,392) | (149,855) |
| Total equity attributable to equity shareholders of the Company | 153,803 | 237,809 |
$ 503,875 $ 660,666
Consolidated Statements of Operations and Comprehensive Loss (Expressed in thousands of U.S. dollars, except share and per share amounts)
Year Ended Year Ended
2012 2011
Gold sales $ 172,430 $ 243,137
| Production costs | (127,851) | (153,331) |
| Stock-based compensation | 457 | (347) |
| Depletion and amortization | (38,893) | (46,107) |
| Gross profit | 6,143 | 43,352 |
Operating expenses:
| Exploration | 700 | 1,953 |
| Paciência shut down & care and maintenance | 4,350 | - |
| Stock-based compensation (recovery) | (1,864) | 2,970 |
| Administration | 18,886 | 25,506 |
| Management fees | 30 | 3,016 |
| Amortization | 1,168 | 1,249 |
| Other | 3,595 | 2,596 |
| Total operating expenses | 26,865 | 37,290 |
| Income (loss) before the following | (20,722) | 6,062 |
| Loss (gain) on derivatives | (720) | 420 |
| Loss (gain) on conversion option embedded in convertible debt | (75,473) | 32,250 |
| Foreign exchange loss | 5,882 | 8,480 |
| Accretion expense | 3,585 | 2,454 |
| Interest expense | 28,511 | 27,001 |
| Interest income | (3,168) | (9,237) |
| Loss (gain) on disposition of property | 2,805 | (2,029) |
| Impairment of properties | 102,997 | - |
| Other non-operating expense | 1,164 | 453 |
| Total other expenses | 65,583 | 59,792 |
| Loss before income taxes | (86,305) | (53,730) |
Income taxes
| Current income taxes (recoveries) | (466) | 3,450 |
| Deferred income taxes (recoveries) | (1,302) | 8,443 |
| Total income taxes | (1,768) | 11,893 |
Net loss and comprehensive loss for the year $ (84,537) $ (65,623)
Basic and diluted loss per share $ (1.00) $ (0.78)
Weighted average number of common shares outstanding - basic and diluted 84,409,648 84,386,569 Consolidated Statements of Cash Flows (Expressed in thousands of U.S. dollars)
Year Ended Year Ended December 31, December 31, 2012 2011
Cash provided by (used in):
Operating activities:
Net loss and comprehensive income (loss) for the year $ (84,537) $ (65,623) Adjustments to reconcile net earnings to net cash provided from (used in) operating activities:
| Unrealized foreign exchange (gain) loss | (4,184) | 11,618 |
| Stock-based compensation expense (recovery) | (2,321) | 3,317 |
| Interest expense | 28,511 | 27,001 |
| Accretion of interest income | - | (188) |
| Accretion expense | 3,585 | 2,454 |
| Deferred income taxes (recovery) | (1,302) | 8,443 |
| Depletion and amortization | 40,061 | 47,356 |
| Impairment of properties | 102,997 | - |
| Write-down of Paciência inventory | 1,825 | 2,242 |
| Unrealized (gain) loss on derivatives | (43) | 168 |
| Unrealized loss (gain) on option component of convertible note | (75,473) | 32,250 |
| Provision and loss on disposition of PPE | 4,460 | 1,618 |
| Impairment mineral exploration projects | - | 528 |
| Reclamation expenditures | (298) | (556) |
| Current income tax paid | - | (140) |
13,281 70,488 Change in non-cash operating working capital:
| Inventory | 7,146 | 286 |
| Prepaid expenses and sundry assets | (12,183) | (8,845) |
| Accounts payable and accrued liabilities | (5,597) | 8,419 |
| Income taxes payable | (3,502) | 2,416 |
| Other provisions | 449 | 1,725 |
| Deferred compensation liabilities | (2,383) | (2,570) |
(2,789) 71,919 Financing activities:
| Issuance of common shares � | - | 164 | |
| Decrease in restricted cash | 300 | - | |
| Repayment of debt | (20,703) | (24,163) | |
| Increase in debt | 23,200 | 115,313 | |
| Interest paid | (14,370) | (13,276) | |
| Other liabilities | (1,733) | 613 |
(13,306) 78,651 Investing activities:
| Mineral exploration projects | (8,554) | (15,723) |
| Purchase of property, plant and equipment | (44,263) | (95,107) |
| Proceeds from disposition of property, plant and equipment | 1,556 | 365 |
(51,261) (110,465)
Effect of foreign exchange on non-U.S. dollar denominated
| cash and cash equivalents | 6,737 | (4,853) |
| Increase (decrease) in cash and cash equivalents | (60,619) | 35,252 |
| Cash and cash equivalents, beginning of year | 74,475 | 39,223 |
Cash and cash equivalents, end of year $ 13,856 $ 74,475
Note 1 - Fair Valuation of Derivative Financial Instruments - Option Component of Convertible Notes
IFRS requires that derivative financial instruments be valued on a periodic basis. The option components of the Company's convertible notes are considered derivative financial instruments and are fair valued using the Crank - Nicolson valuation model using inputs, such as volatility and credit spread.
The carrying amount of the option components of the convertible notes was $4.5 million at December 31, 2012 (December 31, 2011 - $79.9 million). The change in fair value of $75.5 million for the year ended December 31, 2012 is shown as a gain on conversion option embedded in convertible debt in the statements of operations and comprehensive loss (December 31, 2011 - $32.3 million loss).