Jaguar Mining Reports Financial Results for the Second Quarter 2022 Provides an updated production result for Q2 2022 __________________________________________________________________________________________
NEWS RELEASE
August 8, 2022 TSX:JAG FOR IMMEDIATE RELEASE OTCQX:JAGGF
Jaguar Mining Reports Financial Results for the Second Quarter 2022 Provides an updated production result for Q2 2022
__________________________________________________________________________________________
Toronto, August 8, 2022 – Jaguar Mining Inc. ("Jaguar" or the "Company") (TSX:JAG, OTCQX:JAGGF) today announced financial results for the second quarter (“Q2 2022”) ended June 30. 2022. All figures are in US Dollars, unless otherwise expressed.
Q2 2022 Production Revision
- The Company reported a revised consolidated gold production of 22,028 ounces in Q2 2022, compared to 21,036 ounces reported in its press release dated July 12, 2022, reflecting an additional 993 ounces found within the Turmalina electrowinning tank walls during a Q2 metallurgical reconciliation.
- The Revised Consolidated Production Table for Q2 2022 is shown below on page 3.
Q2 2022 Financial Highlights
- Revenue for Q2 2022 increased 4% to $37.9 million, compared with $36.3 million in Q2 2021, mainly due to an increase in the average realized gold price of $1,852/oz in Q2 2022 as compared to $1,795/oz. for Q2 2021.
- Operating costs totaled $21.1 million in Q2 2022 compared to $17.4 million in Q2 2021. The 21% increase in operating costs was mainly due to inflation in the past twelve months. Higher operating costs were also impacted by increase in secondary development, which is fully expensed as operating costs, from 1,166 metres in Q2 2021 to 1,221 metres in Q2 2022, as well as due to the strengthening of the Brazilian Real versus the US dollar, with the average rate during Q2 2022 being R$4.93 per US dollar compared to R$5.29 in Q2 2021.
- Net Income was $9.5 million in Q2 2022 compared to $3 million in Q2 2021 resulting in an increase of $6.5 million. This gain was mainly due to the foreign exchange impact on translation of monetary assets and liabilities of $6.5 million (exchange rate on June 30, 2022, was R$5.24 per US dollar as compared to R$4.74 per US dollar on March 31, 2022), $1.6 million higher revenue, a reduction of $2.4 million in income taxes, partially offset by an increase of $3.7 million in operating costs. The exchange rate closed at R$5.24 per US dollar on June 30, 2022 (R$5.00 per US dollar on June 30, 2021).
- Cash operating costs¹ per ounce sold increased 20% to $1,029 per ounce of gold in Q2 2022 up from $858 in Q2 2021 as a result of the 21% increase in operating costs, due to inflationary pressure on consumables and labour, combined with the valuation of the Brazilian Real versus the US dollar, with a 7% increase in the average exchange rate during Q2 2022 being R$4.93 per US dollar compared to R$5.29 per US dollar in Q2 2021.
- Free cash flow¹ was $5.5 million for Q2 2022 based on operating cash flow plus asset retirement obligation expenditures less capital expenditures, compared to $5.8 million in Q2 2021. Free cash flow was $270 per ounce sold in Q2 2022 compared to $285 per ounce sold in Q2 2021.
_________________________________ 1 This is a Non-GAAP financial performance measure with no standard definition under IFRS. For more details, refer to the Non-GAAP Performance Measures section of the MD&A.
Cash Position and Working Capital¹
- As of June 30, 2022, the Company had cash and cash equivalents of $30.5 million, compared to $40.4 million reported for December 31, 2021.
- As of June 30, 2022, working capital¹ was $22.4 million, compared to $32 million on December 31, 2021, which includes $3 million (December 31, 2021 – $3 million) in short-term loans from Brazilian banks. The decrease in working capital is due to lower operating cash flow generated during YTD 2022, combined with the strength of the Brazilian Real as compared to the US dollar, during the same period.
Q2 2022 Quarterly Dividend
- The Company is also pleased to announce that its Board of Directors has declared a cash dividend of C$0.04 per common share of the Company, to be paid on Aug 31, 2022, to shareholders of record as of the close of business on Aug 23, 2022. The dividend qualifies as an eligible dividend for Canadian income tax purposes.
- The Board of Directors intends to review, among other things, the Company's budget, cash flow forecast and existing market conditions on a quarterly basis to determine whether any additional dividends will be declared on Shares for subsequent quarters.
H2 2022 Guidance
The Company is expecting to produce 45,000 ounces, with an AISC1 of $1,325 per ounce, ± 5% variance in the second half (H2 2022) of the year.
Vern Baker, President and CEO of Jaguar Mining stated: “The Jaguar team worked hard to bring Q2 2022 back on track with our goals and objectives after a challenging period in Q1 of this year. Our performance in Q2 2022 showed that the team can operate in a manner consistent with producing at sustainable rates while we are increasing total development rates and investing in projects and exploration for the future. Jaguar continued to produce the cash flow that allows our company to fund exploration in a great gold jurisdiction, invest in new projects and turn that exploration success into real value for all our stakeholders.
All of us at Jaguar are committed to effectively execute the second half of 2022 where we expect to keep costs down, produce at sustainable rates, invest in great exploration, develop reserves, continue projects that grow our company, and evaluate M&A opportunities.”
_________________________________ 1 This is a Non-GAAP financial performance measure with no standard definition under IFRS. For more details, refer to the Non-GAAP Performance Measures section of the MD&A.
Q2 2022 Financial Results
Three months ended Six months ended June 30, June 30,
($ thousands, except where indicated)
2022 2021 2022 2021
Financial Data
Revenue $ 37,927 $ 36,330 $ 68,546 $ 68,015 Operating costs 21,075 17,365 40,692 32,126 Depreciation 4,866 5,636 9,561 10,396 Gross profit 11,986 13,329 18,293 25,493 Net income 9,478 2,980 3,444 9,088 Per share ("EPS") 0.13 0.04 0.05 0.13 EBITDA1 15,177 11,468 16,911 24,544 Adjusted EBITDA1,2 12,535 15,089 19,321 27,040 Adjusted EBITDA per share1,2 0.17 0.21 0.27 0.37 Cash operating costs (per ounce sold)1 1,029 858 1,100 847 All-in sustaining costs (per ounce sold)1 1,366 1,281 1,506 1,288 Average realized gold price (per ounce)1 1,852 1,795 1,853 1,794 Cash generated from operating activities 9,440 12,634 17,147 19,100 Free cash flow1 5,535 5,761 8,133 5,956 Free cash flow (per ounce sold)1 270 285 220 157 Sustaining capital expenditures1 4,612 6,873 10,425 13,144 Non-sustaining capital expenditures1 6,805 3,654 11,284 6,461 Total capital expenditures 11,417 10,527 21,709 19,605 1 Average 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, and adjusted EBITDA per share are non-GAAP financial performance measures with no standard definition under IFRS. Refer to the Non-GAAP Financial Performance Measures section of the MD&A.
2 Adjusted EBITDA excludes non-cash items such as impairment, foreign exchange and write downs. For more details refer to the Non-GAAP Performance Measures section of the MD&A.
Three months ended Six months ended June 30, June 30,
| 2022 | 2021 | 2022 |
| 22,028 20,482 1,627 1,221 30,631 | 38,691 36,989 3 ,001 2,467 56,936 |
2021
38,372 37,912 1,990 2,304 41,492
Revised Consolidated Production Table Q2 2022
| Quarterly Summary | Q2 2022 | Q2 2021 |
| Turmalina Pilar Total | Turmalina Pilar Total | |
| Tonnes milled (t) Average head grade (g/t) Recovery % | 101,000 127,000 228,000 3.10 3.73 3.45 87% 87% 87% | 100,000 114,000 214,000 3.01 3.65 3.35 88% 87% 87% |
| Gold ounces Produced (oz) Sold (oz) | 8,816 13,212 22,028 7,643 12,839 20,482 | 8,581 11,631 20,212 8,846 11,389 20,235 |
| Development Primary (m) Secondary (m) | 937 690 1,627 695 526 1,221 | 742 370 1,111 649 517 1,166 |
| Definition, infill, and exploration drilling (m) | 20,790 9,815 30,605 | 11,007 7,658 18,665 |
Non-GAAP performance
The Company has included the following Non-GAAP performance measures in this document: cash operating costs per ounce of gold sold, all-in sustaining costs per ounce of gold sold, average realized gold price (per ounce of gold sold), sustaining capital expenditures, non-sustaining capital expenditures, adjusted operating cash flow, free cash flow, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA and working capital. These Non-GAAP performance measures do not have any standardized meaning prescribed by IFRS 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 IFRS, certain investors use this information to evaluate the Company’s performance. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. More specifically, Management believes that these figures are a useful indicator to investors and management 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 of these performance measures and reconciliation of the Non-GAAP measures to reported IFRS measures are outlined below.
Reconciliation of Cash Operating Costs, All-In Sustaining Costs and All-In Costs per Ounce Sold1
| Three months ended Six months ended ($ thousands, except where indicated) June 30, June 30, | |||
|---|---|---|---|
| 2022 | 2021 | 2022 | |
| Operating costs | $ 21,075 | $ 17,365 | $ 40,692 |
| General & administration expenses | 1,850 | 1,555 115 6,873 | 3,627 |
| 447 | 970 | ||
| Sustaining capital expenditures¹ | 4,612 | 10,425 | |
| All-in sustaining cash costs Reclamation (operating sites) | 27,984 - | 25,908 7 | 55,714 8 |
| All-in sustaining costs | $ 27,984 | $ 25,915 | $ 55,722 |
| Non-sustaining capital expenditures | 6,805 | 3,654 1,309 21 283 | 11,284 |
| 1,599 | 3,120 | ||
| Reclamation (non-operating sites) | 1 | 57 | |
| 132 | 311 | ||
| All-in costs | $ 36,521 | $ 31,182 | $ 70,494 |
| Ounces of gold sold | 20,482 | 20,235 | 36,989 |
| Cash operating costs per ounce sold² | $ 1 ,029 | $ 858 | $ 1 ,100 |
| All-in sustaining costs per ounce sold² | $ 1 ,366 | $ 1 ,281 | $ 1 ,506 |
| All-in costs per ounce sold² | $ 1 ,783 | $ 1 ,541 | $ 1 ,906 |
| Average realized gold price | $ 1 ,852 | $ 1 ,795 | $ 1 ,853 |
| $ 823 | $ 937 | $ 753 | |
| $ 486 | $ 514 | $ 347 |
1 Capital expenditures are included in our calculation of all-in sustaining costs and all-in costs.
2 Cash operating costs, all-in sustaining costs and all-in costs are all non-GAAP financial performance measures with no standard definition under IFRS. Result may not calculate due to rounding.
Cash operating costs per ounce sold is calculated by dividing operating costs per the consolidated statement of comprehensive income (loss) by the gold ounces sold. Operating expenses include mine site operating costs such as mining, processing and administration as well as royalties, but excludes depreciation.
All-in sustaining cost performance reflects all of the expenditures that are required to produce an ounce of gold from current operations. While there is no standardized meaning of the measure across the industry, the Company’s definition conforms to the all-in sustaining cost definition as set out by the World Gold Council in its guidance dated June 27, 2013. The World Gold Council is a non-regulatory, non-profit organization established in 1987 whose members include global senior mining companies. The Company believes that this measure will be useful to external users in assessing operating performance and the ability to generate free cash flow from current operations.
The Company defines all-in sustaining costs as the sum of operating cash costs (per above), sustaining capital (capital required to maintain current operations at existing levels), corporate administration costs and sustaining exploration. All-in sustaining costs excludes capital expenditures for significant improvements at existing operations that are expansionary in nature, exploration related to growth projects, financing costs, debt repayments and taxes.
Reconciliation of sustaining capital and non-sustaining capital expenditures1
Three months ended Six months ended ($ thousands) June 30, June 30,
| 2022 | 2021 $ 4 ,165 243 - - 2,465 - | 2022 | |
| Sustaining capital1 Primary development Brownfield exploration Mine-site sustaining Engineering Equipment Other sustaining capital2 | $ 3,221 239 1,061 - 1,061 91 | $ 7,048 636 2,545 - 2,545 196 | |
| Total sustaining capital1 | 4,612 | 6,873 | 10,425 |
| Non-sustaining capital (including capital projects)1 Mine-site non-sustaining Asset retirement obligation - non-sustaining3 | 6,098 707 | 3,654 - | 9,873 1,411 |
| 6,805 $ 11,417 | 11,284 $ 21,709 |
2021
$ 7,382
- - 5,238 - 13,144
6,461 - 6,461 $ 19,605 1 Sustaining and non-sustaining capital are non-GAAP financial measures with no standard definition under IFRS. Refer to the non-GAAP Financial Performance Measures section of the MD&A. Capital expenditures are included in the calculation of all-in sustaining costs and all-in costs.
2 Other sustaining and non-sustaining capital are related to Belo Office and others projects.
3 Asset retirement obligation - non-sustaining is related to expenditures with dam closing projects. Payments related to the Company asset retirement obligation are classified as operating activities in accordance with IFRS financial measures.
Reconciliation of Free Cash Flow1
| Three months ended Six months ended ($ thousands, except where indicated) June 30, June 30, | ||||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| $ 9,440 | $ 12,634 - (6,873) | $ 17,147 | ||
| 707 | 1,411 | |||
| Sustaining capital expenditures2 | (4,612) | (10,425) | ||
| Free cash flow | $ 5,535 | $ 5,761 | $ 8,133 | |
| Ounces of gold sold | 20,482 | 20,235 | 36,989 | |
| Free cash flow per ounce sold | $ 270 | $ 285 | $ 220 | |
| 1 This is a non-GAAP financial performance measure with no standard definition under IFRS. 2 Further detail on the sustaining capital expenditures composition can be found on the reconciliation of sustaining capital and non-sustaining capital expenditures in the non-GAAP reconciliation. |
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA1
Three months ended Six months ended
($ thousands, except where indicated) June 30, June 30, 2022 2021 2022 2021 Net Income $ 9,478 $ 2,980 $ 3,444 $ 9,088
| Income tax expense | 146 | 2,552 | 2,542 | 4,448 |
| Finance costs | 668 | 285 | 1,326 | 579 |
| Depreciation and amortization | 4,885 | 5,651 | 9,599 | 10,429 |
EBITDA $ 15,177 $ 11,468 $ 16,911 $ 24,544 Changes in other provisions and VAT taxes 90 225 23 926 Foreign exchange loss (gain) (3,179) 3,281 1,417 988 Stock-based compensation 447 115 970 582 Adjusted EBITDA1 $ 12,535 $ 15,089 $ 19,321 $ 27,040
Weighted average outstanding shares 72,465,756 73,501,972 72,463,674 73,501,972 Adjusted EBITDA per share1 $ 0.17 $ 0.16 $ 0.27 $ 0.16 1 This is a non-GAAP financial performance measure with no standard definition under IFRS.
Working Capital1
| ($ thousands) | June 30, 2022 | |
|---|---|---|
| Cash and cash equivalents Non-cash working capital Other current assets: Restricted cash Inventory Recoverable taxes Other accounts receivable Prepaid expenses and advances Current liabilities: Accounts payable and accrued liabilities Notes payable Lease liabilities Current tax liability Other taxes payable Reclamation provisions Legal and other provisions | $ 30,495 498 16,971 3,757 2,913 2,469 (19,139) (3,032) (1,464) (146) (1,063) (6,131) (3,773) | |
| Working capital¹ | $ 22,355 | $ 31,990 |
| 1 This is a non-GAAP financial performance measure with no standard definition under IFRS. |
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), FAUSIMM, Vice President Geology and Exploration, 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 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 Third 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. 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. The Roça Grande Mine has been on temporary care and maintenance since April 2019. Additional information is available on the Company's website at www.jaguarmining.com.
For further information please contact:
Vernon Baker Hashim Ahmed Chief Executive Officer Chief Financial Officer Jaguar Mining Inc. Jaguar Mining Inc.
[email protected] [email protected] 416-847-1854 416-847-1854
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 "August," "could," "would," "might," or "will" be taken, occur or be achieved. All statements, other than statements of historical fact, August 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 and 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 involves 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, August 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 below stated footnotes where the Company expands 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 June 30. 2022, is set out in the Company's second quarter 2022 Management Discussion and Analysis (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 June
30. 2022, is set out in the Company's second quarter 2022 MD&A filed on SEDAR at www.sedar.com.