Jaguar Mining Announces Q2 2017 Financial Results, Comments on Progress at Turmalina
JAGUAR MINING INC.
First Canadian Place, 100 King Street West, 56th Floor, Toronto, Ontario, Canada M5X 1C9 T- 416 847 1854
NEWS RELEASE
August 10, 2017 2017 – 16
FOR IMMEDIATE RELEASE TSX:JAG
Jaguar Mining Announces Q2 2017 Financial Results, Comments on Progress at Turmalina
Toronto, Canada, August 10, 2017 - Jaguar Mining Inc. ("Jaguar" or the "Company") (TSX:JAG) today announced details of the
Company’s financial and operating results for the second quarter ended June 30, 2017 (“Q2 2017”). Complete Financial Statements and
Management Discussion and Analysis are available on SEDAR and on the Company’s website at www.jaguarmining.com. All figures are in
US dollars, unless otherwise expressed.
Update on Progress at Turmalina to End of July 2017
Emerging from the second quarter, Turmalina has successfully transitioned mining activities to Level 10 in Orebody A. This transition follows
management’s decision to leave Level 9 as a result of challenging ground conditions previously disclosed.
Management is focused on supporting current and future production targets at Turmalina by achieving certain key milestones including the
following:
● Increasing the number of working areas in an effort to stab ilize the mining cycles in order to have a consistent gold production.
● Increasing gold production from Orebody C while the mining cycl e is normalized in Orebody A and until access to lower Orebody C
containing higher grades can be established. Production from Orebody C is expected to impact consolidated grade in the short term.
● Completing the review of the upper levels of the mine in Or ebody A to identify areas of high grade blocks that can be recovere d.
Several areas have already been identified and two mining blocks within these areas are expected to be recovered by year-end.
● Completion of the newly designed paste-fill plant, currently more than 90% complete. Commissioning is expected to begin in the fourth
quarter.
The completion and sustaining of the key milestones outlined above is critical to ensuring the flexibility and consistency in t he production
plan at Turmalina and realizing the full potential of the higher grades in Orebody A. Subject to achieving and sustaining impro ved
performance at Turmalina, the Company is targeting full year production of 95,000 ounces.
Q2 2017 Financial Highlights
● Continued company-wide cost reduction programs and a focus on profitable ounce production and waste reduction resulted in lowe r
consolidated cash operating costs (“COC”) per ounce sold in Q2 2017 of $857, compared to $924 in Q1 2017 and compared with $758
for Q2 2016.
● Consolidated all-in sustaining costs (“AISC ”) per ounce sold in Q2 2017 were $1,262, compared with $1,203 for Q2 2016. The average
realized gold price for Q2 2017 was $1,266.
● With a focus on operating cash flow, despite lower gold ounce pr oduction, Turmalina COC in Q2 2017 were $695 compared to $738 in
Q1 2017 and $586 in Q2 2016. AISC for Turmalina in Q2 2017 were $956, compared to $903 in Q1 2017 and $860 in Q2 2016.
● 18,453 ounces of gold ounces sold in Q2 2017 and 42,487 ounces fo r the first half of 2017, compared with 23,970 ounces in Q2 2 016
and 46,851 for the first half of 2016. Revenue for Q2 2017 decreas ed 22% to $23.4 million, compared with $30.0 million in Q2 20 16,
due to 23% lower ounces sold.
● Adjusted EBITDA for Q2 2017 was $3.7 million, or $0.01 per share, compared to $8.9 million, or $0.08 per share for Q2 2016, wh ile
adjusted EBITDA for the first half of 2017 was $7.9 million, or $0.03 per share, compared to $14.1 million, or $0.13 per share, in the first
half of 2016.
● Cost guidance revised to reflect lower th an expected production as previously announced, and a stronger Brazilian Real currency. 2017
COC guidance revised to between $750 - $850 per ounce sold and AISC to between $1,050 - $1,150.
● Cash balance of approximately $20.7 million as of June 30, 2017, compared to a cash balance of $18.2 million at March 31, 2017. The
cash position includes $5.0 million in proceeds from a second tranche drawn on a secured facility from Sprott Private Resource Lending
(Collector) LP, and a non-brokered private placement for gro ss proceeds of approximately $5.8 million, which closed in
June 2017.
Rodney Lamond, President and Chief Executive Officer of Jaguar commented, “We have made progress on a number of fronts in the second
quarter of 2017. We reduced costs while continuing to invest capital on near-mine growth exploration projects and on upgrading our mining
fleet. We have made excellent progress at Pilar and expect to see continued improvement in su stainable production levels. At Tu rmalina,
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JAGUAR MINING INC.
First Canadian Place, 100 King Street West, 56th Floor, Toronto, Ontario, Canada M5X 1C9 T- 416 847 1854
mining activities successfully transitioned to Level 10 in Orebody A. Orebody A will take some time to increase the number of working faces
before reaching a more normal mining cycle that will yield a consistent level of production. In the interim, we are increasing production from
Orebody C, which will affect our average grades for 2017 as we mine more tonnes from this Orebody. The Company is targeting 95, 000
ounces of gold production from the revised forecast for 2017. Additionally, as we continue to build our understanding of the Tu rmalina and
Pilar mines through growth exploration efforts, we are encouraged with the results to date and look forward to updating explora tion results
before the end of the third quarter.”
Q2 2017 Financial and Operating Summary
($ thousands, except where indicated)
For the three months
ended June 30,
For the six months ended
June 30,
2017 2016 2017 2016
Financial Data
Revenue $23,352 $29,996 $52,544 $56,660
Operating costs 15,990 17,887 37,498 35,466
Depreciation 4,796 8,389 11,372 16,091
Gross profit 2,566 3,720 3,674 5,103
Gross profit (excluding depreciation)1 7,362 12,109 15,046 21,194
Loss on change in fair value of notes payable - 25,189 - 45,944
Net (loss) income (3,323) (26,866) (11,200) (41,867)
Per share ("EPS") (0.01) (0.24) (0.04) (0.38)
EBITDA1 3,709 (18,044) 4,452 (23,904)
Adjusted EBITDA1,2 3,712 8,859 7,923 14,075
Adjusted EBITDA per share1 0.01 0.08 0.03 0.13
Cash operating costs (per ounce sold)1 857 758 895 750
All-in sustaining costs (per ounce sold)1 1,262 1,203 1,296 1,134
Average realized gold price (per ounce)¹ 1,266 1,251 1,237 1,209
Cash generated from operating activities 216 10,435 2,071 19,961
Adjusted operating cash flow1 4,391 8,575 8,553 12,014
Free cash flow1 (5,156) 2,570 (9,333) 6,130
Free cash flow (per ounce sold)1 (279) 107 (220) 131
Sustaining capital expenditures1 4,577 7,865 10,609 12,876
Non-sustaining capital expenditures1 1,390 1,245 2,263 1,629
Total capital expenditures 5,966 9,110 12,872 14,505
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, adjusted EBITDA per share, and gross profit (excluding
depreciation) are non-IFRS financial performance measures with no standard definition under IFRS. Refer to the Non-IFRS Financial
Performance Measures section of the MD&A.
2 Adjusted EBITDA excludes non-cash items such as impairment and write downs. For more details refer to the Non-IFRS
Performance Measures section of the MD&A.
For the three months
ended June 30,
For the six months ended
June 30,
2017 2016 2017 2016
Operating Data
Gold produced (ounces) 19,769 24,222 42,061 45,419
Gold sold (ounces) 18,453 23,970 42,487 46,851
Primary development (metres) 824 1,857 1,734 3,018
Secondary development (metres) 989 1,317 2,370 2,363
Definition, infill, and exploration drilling (metres) 11,069 9,486 22,933 21,377
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JAGUAR MINING INC.
First Canadian Place, 100 King Street West, 56th Floor, Toronto, Ontario, Canada M5X 1C9 T- 416 847 1854
2017 Cost Guidance Revised
In light of the lower production guidance previously announced and a stronger Brazilian Real, the Company has increased its cost guidance
as outlined below.
2017 Guidance Turmalina Complex Caeté Complex Consolidated
Low High Low High Low High
Cash operating costs (per ounce sold)1 $650 $700 $1,000 $1,100 $750 $850
All-in sustaining costs (per ounce sold)1 $875 $925 $1,100 $1,300 $1,050 $1,150
1 COC and AISC are non-gaap financial performance measures with no standard definition under IFRS. Refer to the Non-IFRS Measure s section below. 2017 cost guidance
has been prepared on the basis of a foreign exchange ratio of 3.5 Brazilian Reias vs. the US dollar.
2 COC guidance increased from $725 - $755 per ounce sold and consolidated AISC guidance increased from $900 - $1,000 per ounce s old.
Liquidity, Cash Flow and Foreign Exchange
● The Company had working capital of $9.6 million as at June 30, 2017 ($11.3 million as at December 31, 2016). Working capital a s at
June 30, 2017 is net of $8.8 million in loans from Brazilian banks ($10.3 million as at December 31, 2016) which are renewed every six
months, and are expected to continue to be rolled forward. Work ing capital excluding the Brazili an bank loans was $18.4 million as at
June 30, 2017 ($21.7 million as at December 31, 2016). As at J une 30, 2017, the Company had cash and cash equivalents of $20.7
million compared to $26.3 million as at December 31, 2016.
● The average exchange rate during Q2 2017 was R$3.22 Brazilian Reai s per US dollar compared to R$3.51 per US dollar in Q2 2016,
an 8% strengthening of the Real against the US dollar.
Operating Summary
Operating
Summary
Q2 2017 Q2 2016 Q1 2017
Turmalina Pilar Roça
Grande Total Turmalina Pilar Roça
Grande Total Turmalina Pilar Roça
Grande Total
Tonnes milled (t) 112,000 85,000 19,000 216,000 124,000 72,000 21,000 217,000 113,000 84,000 17,000 214,000
Average head
grade (g/t) 3.37 3.16 2.15 3.18 4.10 3.62 2.18 3.76 3.79 3.39 2.12 3.50
Recovery % 91 90 90 91 91 91 91 91 91 91 91 91
Gold ounces
Produced (oz) 10,870 7,702 1,197 19,769 15,083 7,804 1,335 24,222 12,736 8,485 1,071 22,292
Sold (oz) 10,815 6,625 1,013 18,453 15,035 7,622 1,313 23,970 13,536 9,422 1,076 24,035
Financial data
Cash operating
costs (per oz sold) $695 $1,033 $1,439 $857 $586 $958 $1,578 $758 $738 $1,092 $1,787 $924
All-in sustaining
costs (per oz sold) $956 $1,235 $1,842 $1,262 $860 $1,383 $1,961 $1,203 $903 $1,434 $2,330 $1,323
Average realized
gold price ($/oz) $1,266 $1,251 $1,215
Development
Primary (m) 504 218 102 824 1,166 600 91 1,857 366 470 74 910
Exploration (m) 56 - - 56 - 44 - 44 104 13 34 151
Secondary (m) 292 577 120 989 693 267 357 1,317 754 614 14 1,382
Diamond
drilling (m) 4,676 6,206 186 11,068 5,251 3,231 1,004 9,486 6,080 5,218 567 11,864
Operating Summary Highlights
● Q2 2017 consolidated gold production tota led 19,769 ounces, compared to 24,222 ounces produced in Q2 2016. Tonnes milled were
216,000, with an average head grade of 3.18 g/t and recovery of 91%. The Q2 2017 consolidated operating performance included
recovery from ground control issues at the Turmalina, especially improved production in May and June 2017. Overall production during
the first half of the year was 42,061 ounces.
● Turmalina produced 10,870 ounces of gold compared to 15,083 ounc es in the corresponding 2016 period, a decrease of 28% or 4,213
ounces; however, production at Turmalina demonstrated steady improvement during the quarter.
o Development and mining of Level 10 of Orebody A is ongoing after mining in Level 9 was temporarily interrupted due to ground
rehabilitation issues during Q1 2017. Level 10 continues to perform in line with ex pectations and mining is expected to ramp ba ck
up to normal levels during the second half of 2017 as development and mining return to a more standard cycle.
o Turmalina is reviewing the stabilization and isolation of areas of Level 9 with the intention of extracting more ore from thi s area in
the next 12 months.
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JAGUAR MINING INC.
First Canadian Place, 100 King Street West, 56th Floor, Toronto, Ontario, Canada M5X 1C9 T- 416 847 1854
● Pilar production of 7,702 ounces in Q2 2017 was marginally lower by 2% compared to Q2 2016. Average head grade was 3.16 g/t and
recovery was steady at 91%. The impact of lower average head grade was offset by 18% higher tonnage at Pilar. Production gradually
increased in the later part of the quarter, reflecting the advancing ore development into the higher-grade Orebodies BF and BFII.
● Roça Grande produced 1,197 ounces of gold in Q2 2017, a decreas e from Q2 2016, and a slight improvement compared to Q1 2017,
with average head grades of 2.15 g/t.
Q2 2017 Operating Improvements
● The Company has made significant progress with its cost r eduction and operational excellence programs supported by the consulting
group Aquila Institute.
● Throughout the first half of 2017, the Company worked with all sites to set up operational excellence teams responsible for re viewing
business processes to identify efficiency and productivity opportunities as well as direct cost reduction opportunities.
● Several process improvements have been implemented including equipm ent utilization, availability, and shut down for off workin g
hours. Other initiatives include working with the sites to improve tire life on underground equipment.
● The Company also implemented direct cost reductions at the mi nes to improve overall costs. These initiatives include renegotia ting
and rationalizing contracts, and the purchase of new equipment to retire older equipment with higher operating costs.
● On June 1, 2017, the Roça Grande mine changed from four crews work ing three shifts per day, seven days per week to two crews
working two shifts per day, five days per week. The reduced crews are expected to achieve a similar level of production at a lower cost
per tonne produced.
2017 Growth Exploration and Mineral Resources Highlights
● Jaguar provided an update on its Exploration Growth Program and announced the acquisition of a new strategic land position (see news
release dated June 21, 2017) located 4.5 km west of the Caeté M ill, increasing the total registered RG Mine concession by 1,000
hectares. The Company believes that the expanded land position, adds significant value to the over all RG concession area as it is
strategically located just west of the RG Mine, and contains 7.5 km of contiguous Banded Iron Formation (“BIF”) as well as a la rge
number of historic Portuguese workings from the late 17th and 18th centuries.
o At Pilar, the deep horizon exploration drive in the hanging wall of the mine at Level 7-4 is now complete, with three contract diamond
drills currently in operation. The drilling program is designed to extend resources targeting Levels 11-16 up to 350 m below current
development and 250 vertical m below the current Inferred Resour ces. The program will test the down-plunge extension and
continuity of Orebodies BFII, BF, and BA. Drilling results for this program will be announced in the second half of 2017. It is expected
that the drilling results will add to the Mineral Reserves and Mine ral Resources of Pilar, which are expected to be updated in early
Q1 2018.
o At Turmalina, the deep horizon exploration platform on Level 10-1 is now complete. Diamond drilling from the platform is inte nded
to reach Levels 12-16, up to 420 vertical m below the current development and 300 m below the current Inferred Resources.
Currently one contracted underground exploration drill has been set up and two additional contracted underground exploration drills
will be moved from Pilar to Turmalina to complete deep drilling once the exploration program is completed at Pilar.
Qualified Person
Scientific and technical information contai ned in this press release has been reviewed and approved by Geraldo Guimarães Vieira dos
Santos, BSc Geo., MAIG-3946 (CP), Geology Manager, who is an empl oyee 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 dati ng back to the 16th century. The discovery in 1699-1701 of blac k gold
contaminated with iron and platinum-group metals in the southeastern corner of the Iron Quadrangle gave rise to the name of the town Ouro
Preto (Black Gold). The Iron Quadrangle contains world-class multi-million-ounce gold deposits such as Morro Velho, Cuiabá, and São
Bento. Jaguar holds the second largest gold land position in the Iron Quadrangle with just over 25,000 hectares.
About Jaguar Mining Inc.
Jaguar Mining Inc. is a Canadian-listed junior gold mining, development, and exploration company operating in Brazil with three gold mining
complexes, and a large land package with significant upside expl oration potential from mineral claims covering an area of appro ximately
192,000 hectares. The Company’s principal operating assets are loca ted in the Iron Quadrangle, a prolific greenstone belt in th e state of
Minas Gerais and include the Turmalina Gold Mine Complex and Caeté Gold Mine Complex (Pilar and Roça Grande mines, and Caeté
Plant) which combined, produce more than 95, 000 ounces of gold annually. The Company also owns the Paciência Gold Mine Complex,
which has been on care and maintenance since 2012. Additional information is available on the Company's website
at www.jaguarmining.com.
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JAGUAR MINING INC.
First Canadian Place, 100 King Street West, 56th Floor, Toronto, Ontario, Canada M5X 1C9 T- 416 847 1854
For further information please contact:
Rodney Lamond
President & Chief Executive Officer
416-847-1854
Hashim Ahmed
Chief Financial Officer
416-847-1854
FORWARD-LOOKING STATEMENTS
Certain statements in this news release constitute "forward -looking information" within the meaning of applicable Canadian secu rities 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 ar e qualified by the cautionary statements below and those made in our other filings with the
securities regulators in Canada. Forward-looking information co ntained in forward-looking statem ents 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 look ing information. This news release contains forward-looking information
regarding, among other things, expected sale s, production statistics, or e grades, tonnes milled, recovery rates, cash operating costs, definition/delineation
drilling, the timing and amount of estimated future production, co sts of production, capital expenditures, costs and timing of the development of projects and
new deposits, success of explorat ion, development and mining activities, currency fluctuations, capital requirements, project s tudies, mine life extensions,
restarting suspended or disrupted operations, continuous impr ovement initiatives, and resolution of pending litigation. The Co mpany has made numerous
assumptions with respect to forward-looking information contai ned 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 ar e based; the receipt of necessa ry permits; market competition ; ongoing relations with
employees and impacted communities; political and legal developmen ts in any jurisdiction in which the Company operates being co nsistent with its current
expectations including, without limitation, the impact of any potential power rationi ng, tailings facility regulation, explorat ion and mine operating licenses and
permits being obtained an renewed and/or ther e being adverse amendments to mining or other laws in Brazil and any changes to ge neral business and
economic conditions. Forward-looking information involve a number of known and unknown risks and uncertainties, including among others: the risk of Jaguar
not meeting the forecast plans regarding its operations and financial performance; uncertainties with respect to the price of gold, labor disruptions, mechanical
failures, increase in costs, environmental compliance and change in environmental legislation and regulation, weather delays and increased costs or production
delays due to natural disasters, power disruptions, procurement and delivery of parts and supplies to the operations; uncertainties inherent to capital markets
in general (including the sometimes volatile valuation of securities and an uncertain ability to raise new capital) and other risks inherent to the gold exploration,
development and production industry, which, if incorrect, may cause actual results to differ materially from those anticipated by the Company and described
herein. In addition, there are risks and hazards associated with the business of gold exploration, development, mining and production, including environmental
hazards, tailings dam failures, industrial accidents and workplace safety problems, unusual or unexpected geological formations, pressures, cave-ins, flooding,
chemical spills, and gold bullion thefts and losses (and the risk of inadequate insurance, or the inability to obtain insurance, to cover these risks). Accordingly,
readers should not place undue reliance on forward-looking information.
For additional information with respect to these and other fact ors 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 af ter 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 Compr ehensive Income (Loss) and include mine-site oper ating costs such as mining, processing and administration
as well as royalty expenses, but exclude depreciation, depletion, share-based payment expenses, and reclamation costs. Cash operating costs per ounce
are based on ounces sold and are calculated by dividing cash operating costs by commercial gold ounces sold. The Company discloses cash operating
costs and cash operating costs per ounce as it believes those measures provide valuable assistance to investors and analysts in evaluating the Company's
operational performance and ability to generate cash flow. The most directly comparable measure prepared in accordance with IFRS is total production
costs. A reconciliation of cash operating costs per ounce to tota l production costs for the most recent reporting period, the quarter ended June 30, 2017
is set out in the Company's second quarter 2017 MD&A filed on SEDAR at www.sedar.com.
2. All-in sustaining cost is a non-IFRS measure. This measure is intended to assist readers in evaluating the total costs of produ cing 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, sust aining capital (capital required to maintain current operations at existing levels), c orporate general and
administrative expenses, and in-mine exploration expenses. All-in sustaining cost excludes growth capital, reclamation cost acc retion 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, 2017 is set out in the Company's second quarter 2017 MD&A filed on SEDAR at www.sedar.com.