Jaguar Mining Reports Q1 2010 Earnings Adj. Net Income of ($0.01)/share, Adj. Cash Flow of $0.13/share
PRESS RELEASE
May 11, 2010 2010-08 Concord, New Hampshire JAG - TSX/NYSE
Jaguar Mining Reports Q1 2010 Earnings
Adj. Net Income of ($0.01)/share, Adj. Cash Flow of $0.13/share
Jaguar Mining Inc. (“Jaguar” or the “Company”) (JAG: TSX/NYSE) reports its financial and operational results for the period ended March 31, 2010. All figures are in U.S. dollars unless otherwise indicated.
Q1 2010 Highlights
- Q1 2010 adjusted net loss of $1.1 million or ($0.01) per basic and fully diluted share compared to an adjusted net gain of $6.2 million or $0.09 per basic and fully diluted share in Q1 2009. (See Non-GAAP Performance Measures.) Adjusted net income decreased from the prior period primarily due to the strengthening of the Brazilian real (“R$”), which increased 29% from the year before. Lower grades at the Turmalina operation, coupled with items noted below, also contributed to the lower adjusted net income.
The adjusted net loss excludes two significant items: (a) non-cash interest expense associated with Jaguar’s 4.5% Senior Convertible Notes issued in September 2010 totaling $2.0 million, which is required to be recognized under Generally Accepted Accounting Principles in Canada (“GAAP”) to reflect the value of the conversion option afforded to note holders separate from the value of the bond and (b) other (non-recurring) cost of goods sold in the amount of $1.5 million, approximately one-half of which was related to additional charges to place the Sabará operation on long-term idle status. The Company’s reported earnings were further impacted by:
1. the distribution of fixed overhead and idle plant charges resulting from reduced production, in-part stemming from 10-day scheduled maintenance shutdowns at Turmalina and Paciência plants,
2. charges for development costs related to non-converted resources (into reserves) and,
3. expenditures to adopt forthcoming International Financial Reporting Standards.
- Q1 2010 adjusted cash flow of $11.2 million or $0.13 per basic and fully diluted share compared to $6.0 million or $0.09 per basic and fully diluted share in Q1 2009. (See Non- GAAP Performance Measures.) The adjusted cash flow figure takes into account non-cash
125 North State Street Concord, NH 03301 Phone: (603) 224-4800 Fax: (603) 228-8045 [email protected] www.jaguarmining.com changes in working capital of approximately $4.5 million in Q1 2010 and ($0.8) million in Q1 2009.
- Q1 2010 net loss of $4.6 million or ($0.05) per basic and fully diluted share compared to a net gain of $4.8 million or $0.07 per basic and fully diluted share in Q1 2009.
- Q1 2010 cash flow of $6.8 million compared to $6.7 million in Q1 2009.
- Q1 2010 gold sales rose to 36,888 ounces at an average price of $1,102 per ounce yielding revenue of $40.7 million compared to Q1 2009 gold sales of 35,879 ounces at an average price of $928 per ounce and revenue of $33.3 million. This represents a 22% increase in gold sales revenue and a 3% increase in the number of ounces sold.
- Q1 2010 gold production totaled 31,223 ounces at an average cash operating cost of $597 per ounce compared to 32,868 ounces at an average cash operating cost of $409 per ounce during the same period last year, a decrease of 5% in gold production (see Non-GAAP Performance Measures). Beginning in Q1 2010, the Company adopted a definition of "to the refinery" for measuring gold production. As a result of this change, the Q1 2010 production figure does not include gold in-process or in unfinished inventory as was the case for quarterly production data prior to Q1 2010.
- Q1 2010 gross profit decreased to $7.4 million from $11.2 million in Q1 2009, a decrease of 34% caused primarily by a significantly stronger R$.
- Jaguar invested $36.9 million in growth projects in Q1 2010, up significantly from the $5.6 million invested in Q1 2009 when the Company implemented substantial investing curbs in response to the global financial crisis.
- As of March 31, 2010 the Company held cash, cash equivalents and short-term investments of approximately $100.9 million as compared to $84.7 million as of March 31, 2009.
Caeté Project Update:
The Company has initiated partial commissioning of its new Caeté processing complex with the successful start of the crushing circuit. Over the next two weeks it is expected the milling, flotation and leaching circuits will be charged and full commissioning will commence. The Caeté Project was completed within the budget and schedule, 13 months from the start of construction. Management anticipates the plant should reach commercial production status by Q4 2010.
Commenting on the Q1 2010 results, Daniel R. Titcomb, Jaguar’s President and CEO stated, “Our 2010 targets for production and costs remain largely unchanged and take into account the impact of the first quarter performance. With Caeté now entering the commissioning phase, along with operating refinements initiated at the Turmalina and Paciência operations, we are confident our production, revenue and cash flow will trend significantly higher through the end of the year, given the status of projects and current gold prices.”
Summary of Key Operating Results
The following is a summary of key operating results:
Three Months Ended March 31 2010 2009
(unaudited)
($ in 000s, except per share and per ounce amounts)
| Gold sales | $ 40,670 | $ 33,285 |
| Ounces sold | 36,888 | 35,879 |
| Average sales price per ounce | 1,102 | 928 |
| Gross profit | 7,370 | 11,292 |
| Net income (loss) | (4,605) | 4,758 |
| Basic income (loss) per share | (0.05) | 0.07 |
| Diluted income (loss) per share | (0.05) | 0.07 |
| Weighted avg. # of shares outstanding - basic | 83,995,337 | 68,621,449 |
| Weighted avg. # of shares outstanding - diluted | 83,995,337 | 69,779,608 |
Additional details are available in the Company’s filings on SEDAR and EDGAR, including Management’s Discussion and Analysis of Financial Condition and Results of Operations and Interim Consolidated Financial Statements for the period ended March 31, 2010.
2010 Outlook
The Company’s production and cash operating cost estimates for 2010 are shown below. Estimated cash operating costs are based on R$1.75 per $1.00.
Estimated Estimated
Operation 2010 FY 2010 Production Cash Operating Cost
(oz) ($/oz)
Turmalina 98,000 - 101,000 $475 - 485 Paciência 72,000 - 74,000 $540 - 550 Caeté 30,000 - 35,000 $590 - 600* Total 200,000 - 210,000 $515 - 527
- Caeté costs based on development ore during the commissioning phase.
The Company has provided its 2010 quarterly production and grades for its operations as follows:
2010 Estimated Gold Production, By Operation
| Operation | Q1 Actual | Q2 Estimate | Q3 Estimate | Q4 Estimate | FY 2010 |
|---|---|---|---|---|---|
| Turmalina | 16,987 | 23,000 | 30,500 | 29,000 | 98,000 - 101,000 |
| Paciência | 14,236 | 18,250 | 20,500 | 20,250 | 72,000 - 74,000 |
| Caeté* | - | - | 16,250 | 16,250 | 30,000 - 35,000 |
| Total | 31,223 | 41,250 | 67,250 | 65,500 | 200,000 - 210,000 |
Note: The FY 2010 represents the range of production for the year whereas quarterly figures represent the target.
- Caeté Q3/Q4 based on development ore during the commissioning phase.
2010 Estimated Feed Grades, By Operation
| Operation | Q1 Actual Q2 Estimate | Q3 Estimate | Q4 Estimate | FY 2010 | |
|---|---|---|---|---|---|
| Turmalina | 4.16 | 3.85 | 5.15 | 5.00 | 4.57 |
| Paciência | 3.32 | 3.38 | 3.60 | 3.60 | 3.49 |
| Caeté | - | - | 3.39 | 3.39 | 3.39 |
| Average | 3.74 | 3.63 | 4.11 | 4.05 3.93 | |
| Cash Operating Cost | $597 | $560 | $498 | $480 | $515-$527 |
Non-GAAP Performance Measures
The Company has included the non-GAAP performance measures discussed below in this press release. These non-GAAP performance measures do not have any standardized meaning prescribed by GAAP and, therefore, may not be comparable to similar measures presented by other companies. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, these non-GAAP measures provide investors with additional information that will better enable them to evaluate the Company’s performance. Accordingly, these Non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP.
The Company uses the financial measures "adjusted net income" and "adjusted cash flows from operating activities” to supplement its consolidated financial statements. Adjusted net income and adjusted cash flows from operating activities reflect the elimination of special non-operating and certain non-recurring charges that do not reflect on-going costs. The Company believes that these measures are useful to investors because each excludes certain non-cash charges that the Company does not consider to be meaningful in evaluating the Company's past financial performance or future prospects and may hinder a comparison of its period to period cash flows.
The Company has also included cash operating cost per ounce processed because it believes these figures are a useful indicator of a mine’s performance as they provide: (i) a measure of the mine’s cash margin per ounce, by comparison of the cash operating costs per ounce to the price of gold; (ii) the trend in costs as the mine matures; and (iii) an internal benchmark of performance to allow for comparison against other mines.
The definitions for these performance measures and reconciliation of the non-GAAP measures to reported GAAP measures are set out in the following tables.
Adjusted net income
($000s)
Three Three Months Months Ended Ended March 31, March 31, 2010 2009
Net (loss) as reported $ (4,605) $ 4,758 Adjustments:
Non-cash interest 1,975 361 Other costs of goods sold 1,519 1,100 Adjusted net income $ (1,111) $ 6,219 Adjusted basic net income per share $ (0.01) $ 0.09
Cash provided by operating activities
($000s)
Three Three Months Months Ended Ended March 31, March 31, 2010 2009
Cash provided by operating activities as reported Net income (loss) $ (4,605) $ 4,758 Items not involving cash:
| Unrealized foreign exchange (gain) loss | 323 | (3,032) |
| Stock-based compensation | 54 | 1,021 |
| Non-cash interest expense | 1,975 | 361 |
| Accretion expense | 400 | 188 |
| Future income taxes (recovered) | (159) | - |
| Depletion and amortization | 8,157 | 4,985 |
| Unrealized loss (gain) on foreign exchange contracts | 699 | (1,541) |
| Reclamation expenditure | (78) | - |
$ 6,766 $ 6,740 Change in non cash operating working capital 4,453 $ (763)
11,219 $ 5,977 Cash provided by operating activities $ Cash provided by operating activities per share $ 0.13 $ 0.09
Summary of Cash Operating Cost per tonne processed Three Months
Change in inventory 2 (2,939,000) Operational cost of gold produced 3 18,777,000
Tonnes processed 299,000
Cost per tonne processed $ 62.80
Turmalina Cash Operating Cost per tonne processed Three Months
Production costs $ 11,549,000 Change in inventory 2 (2,061,000) Operational cost of gold produced 3 9,488,000 divided by Tonnes processed 151,000 equals Cost per tonne processed $ 62.90
Paciência Cash Operating Cost per tonne processed Three Months
31, 2010 Production costs $ 10,167,000 Change in inventory 2 (878,000) Operational cost of gold produced 3 9,289,000 divided by Tonnes processed 148,000 equals Cost per tonne processed $ 62.80
Summary of Cash Operating Cost per oz of gold produced Three Months
Change in inventory 2 (3,075,000)
Operational cost of gold produced 3 18,641,000
Gold produced (oz) 31,223
Cost per oz of gold produced $
Turmalina Plant Cash Operating Cost per oz produced Three Months
Production costs $ 11,549,000 Change in inventory 2 (2,189,000)
Operational cost of gold produced 3 9,360,000 divided by Gold produced (oz) 16,987 equals Cost per oz of gold produced $
Paciência Plant Cash Operating Cost per oz produced Three Months
31, 2010
Production costs $ 10,167,000 Change in inventory 2 (971,000)
Operational cost of gold produced 3 9,196,000 divided by Gold produced (oz) 14,236 equals Cost per oz of gold produced $
1. Production costs do not include cost of goods sold adjustment of approximately $1.5 million, royalties of $1.5 million and CFEM tax of $410,000 for the three months ended March 31, 2010.
2. Under the Company’s revenue recognition policy, revenue is recognized when legal title passes. Since total cash operating costs are calculated on a production basis, this change reflects the portion of gold production for which revenue has not been recognized in the period.
3. The basis for calculating cost per ounce produced includes the change to gold in process inventory, whereas the cost per tonne processed does not.
The following tables are included in Jaguar’s unaudited interim financial statements and Management Discussion and Analysis of Financial Condition and Results of Operations for the period ended March 31, 2010 as filed on SEDAR and EDGAR and readers should refer to those filings for the associated footnotes which are an integral part of the tables.
Interim Consolidated Balance Sheets
March 31, December 31, 2010 2009 (unaudited)
Assets Current assets:
Cash and cash equivalents $ 95,053 $ 121,256
| Short-term investments | 5,811 | - |
| Inventory | 35,194 | 36,986 |
| Prepaid expenses and sundry assets | 18,047 | 19,050 |
| Unrealized foreign exchange gains | 581 | 1,280 |
154,686 178,572
| Prepaid expenses and sundry assets | 38,339 | 35,837 |
| Net smelter royalty | 1,006 | 1,006 |
| Restricted cash | 908 | 108 |
| Property, plant and equipment | 225,631 | 205,329 |
| Mineral exploration projects | 138,187 | 129,743 |
$ 558,757 $ 550,595
Liabilities and Shareholders' Equity Current liabilities:
Accounts payable and accrued liabilities $ 27,273 $ 22,892
| Notes payable | 6,382 | 5,366 |
| Income taxes payable | 16,440 | 15,641 |
| Asset retirement obligations | 539 | 510 |
50,634 44,409
| Deferred compensation liability | 8,767 | 8,616 |
| Notes payable | 131,489 | 126,784 |
| Future income taxes | 11,470 | 11,821 |
| Asset retirement obligations | 12,624 | 12,331 |
| Other liabilities | 902 | 738 |
| Total liabilities | 215,886 | 204,699 |
Shareholders' equity
| Common shares | 367,791 | 365,667 |
| Stock options | 14,218 | 14,762 |
| Contributed surplus | 42,028 | 42,028 |
| Deficit | (81,166) | (76,561) |
342,871 345,896 Commitments
$ 558,757 $ 550,595
Interim Consolidated Statements of Operations and Comprehensive Income (Loss)
(Expressed in thousands of U.S. dollars, except per share amounts)
Three Months Three Months Ended Ended March 31, March 31, 2010 2009
Gold sales $ 40,670 $ 33,285
| Production costs | (25,140) | (17,083) |
| Stock-based compensation | (127) | (27) |
| Depletion and amortization | (8,033) | (4,883) |
| Gross profit | 7,370 | 11,292 |
Operating expenses:
| Exploration | 1,107 | 639 |
| Stock-based compensation (recovery) | (73) | 994 |
| Administration | 4,297 | 3,761 |
| Management fees | 339 | 525 |
| Amortization | 124 | 102 |
| Accretion expense | 400 | 188 |
| Other | 689 | 753 |
| Total operating expenses | 6,883 | 6,962 |
| Income before the following | 487 | 4,330 |
| Loss (gain) on forward foreign exchange derivatives | 253 | (287) |
| Foreign exchange loss (gain) | 489 | (2,578) |
| Interest expense | 3,982 | 2,214 |
| Interest income | (1,361) | (499) |
| Gain on disposition of property | (497) | (459) |
| Other non-operating expenses | - | 741 |
| Total other expenses | 2,866 | (868) |
| Income (loss) before income taxes | (2,379) | 5,198 |
Income taxes
| Current income taxes | 2,385 | 440 |
| Future income taxes | (159) | - |
| Total income taxes | 2,226 | 440 |
| Net income (loss) and comprehensive income (loss) for the period | (4,605) | 4,758 |
Basic and diluted net income (loss) per share $ (0.05) $ 0.07
Weighted average number of common shares outstanding - Basic 83,995,337 68,621,449 Weighted average number of common shares outstanding - Diluted 83,995,337 69,779,608 Interim Consolidated Statements of Cash Flows
Three Months Three Months Ended Ended March 31, March 31, 2010 2009
Cash provided by (used in):
Operating activities:
Net income (loss) for the period $ (4,605) $ 4,758 Items not involving cash:
| Unrealized foreign exchange (gain) loss | 323 | (3,032) | |
| Stock-based compensation | 54 | 1,021 | |
| Non-cash interest expense | 1,975 | 361 | |
| Accretion expense | 400 | 188 | |
| Future income taxes | (159) | - | |
| Depletion and amortization | 8,157 | 4,985 | |
| Unrealized loss (gain) on foreign exchange contracts | 699 | (1,541) | |
| Reclamation expenditure | (78) | - |
6,766 6,740
Change in non-cash operating working capital
| Inventory | 2,209 | (304) |
| Prepaid expenses and sundry assets | (2,936) | (210) |
| Accounts payable and accrued liabilities | 4,381 | (419) |
| Current taxes payable | 799 | 170 |
11,219 5,977 Financing activities:
Issuance of common shares, special
| warrants and warrants, net | 1,501 | 63,401 | |
| Increase in restricted cash | (800) | - | |
| Repayment of debt | (68) | (288) | |
| Increase in debt | 3,542 | - | |
| Other long term liabilities | 164 | - |
4,339 63,113
Investing activities
| Short term investments | (5,811) | - |
| Mineral exploration projects | (8,393) | (1,667) |
| Purchase of property, plant and equipment | (28,537) | (3,897) |
(42,741) (5,564)
Effect of foreign exchange on non-U.S. dollar denominated
| cash and cash equivalents | 980 | 605 |
| Increase (decrease) in cash and cash equivalents | (26,203) | 64,131 |
| Cash and cash equivalents, beginning of period | 121,256 | 20,560 |
Cash and cash equivalents, end of period $ 95,053 $ 84,691
Conference Call Details
The Company will hold a conference call tomorrow, May 12 at 10:00 a.m. EST, to discuss the results.
From North America: 800-218-5691 International: 213-416-2192 Replay:
From North America: 800-675-9924 International: 213-416-2185 Replay ID: 51210 Webcast: www.jaguarmining.com
About Jaguar Mining
Jaguar is one of the fastest growing gold producers in Brazil with operations in a prolific greenstone belt in the state of Minas Gerais and has plans to develop the Gurupi Project in northern Brazil in the state of Maranhão. Jaguar is actively exploring and developing additional mineral resources at its approximate 575,000-acre land base in Brazil. The Company has no gold hedges in place thereby providing the leverage to gold prices directly to its investors. Additional information is available on the Company’s website at www.jaguarmining.com.
For Information:
Investors and analysts: Media inquiries:
Bob Zwerneman Valéria Rezende DioDato Vice President Corporate Development and Director of Communication Director of Investor Relations 603-224-4800 603-224-4800 [email protected] [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. This press release contains forward-looking statements, including statements concerning when commissioning and commercial production will commence at Caeté, future trends in production, revenue and cash flow and estimates for 2010 production and cash operating costs. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual timing of commissioning, production and results of operations 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 labour and equipment, the possibility of labour 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 information, there may be other factors that 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 hereof. Subsequent events and developments could 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 other than 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, 2009 filed on System for Electronic Document Analysis and Retrieval and available at http://www.sedar.com and the Company's Annual Report on Form 40-F for the year ended December 31, 2009 filed with the United States Securities and Exchange Commission and available at www.edgar.com.
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