Jaguar Mining Reports Q1 2011 Earnings Adjusted Q1 2011 Earnings of $0.12 Per Share and Operating Cash Flow of $0.23 Per Share
PRESS RELEASE
May 17, 2011 2011-09 Concord, New Hampshire JAG - TSX/NYSE
Jaguar Mining Reports Q1 2011 Earnings
Adjusted Q1 2011 Earnings of $0.12 Per Share and Operating Cash Flow of $0.23 Per Share
Jaguar Mining Inc. (“Jaguar” or the “Company”) (JAG: TSX/NYSE) reports its financial and operational results for the period ended March 31, 2011. All figures are in U.S. dollars unless otherwise indicated.
Note: As required by applicable Canadian rules, effective Q1 2011, Jaguar has prepared its financial statements in accordance with International Financial Reporting Standards (“IFRS”), including the restatement of the comparative period previously reported under Generally Accepted Accounting Principles (“GAAP”) in Canada.
Q1 2011 Highlights
- Record revenue of $55.1 million, an increase of 36% over Q1 2010.
- Net income of $3.7 million or $0.04 per basic and fully diluted share.
Adjusted net income, excluding special non-operating and non-recurring charges, most significant of which was a provision to value the conversion option embedded in convertible notes issued by the Company, totaled $10.3 million or $0.12 per basic and fully diluted share. (See Non-IFRS Performance Measures).
- Gross profit of $11.0 million, an increase of 48% from Q1 2010.
- Record cash operating margin per ounce of gold of $659, an increase of 31% from Q1 2010.
- Cash generated by operating activities totaled $19.4 million or $0.23 per fully diluted share, an increase of 71% from Q1 2010.
- Gold production of 41,449 ounces at an average cash operating cost of $727 per ounce compared to 31,223 ounces at an average cash operating cost of $597 per ounce in Q1 2010 (see Non-IFRS Performance Measures). The increase in production from the prior year was largely attributable to the addition of the Caeté operation, which was commissioned in Q3 2010.
Removing the effect of gold-in-process and stockpile inventory changes, the underlying operating cash cost was $663 per ounce.
- Gold ounces sold totaled 39,794, an increase of 8% from Q1 2010.
125 North State Street Concord, NH 03301 Phone: (603) 224-4800 Fax: (603) 228-8045 [email protected] www.jaguarmining.com
- The average sales price per ounce totaled $1,386, an increase of 24% from Q1 2010.
- Investments of $20.2 million in growth projects, a decrease of 45% from Q1 2010.
Commenting on the Q1 2011 performance, Daniel R. Titcomb, Jaguar’s President and CEO stated, “Our favorable Q1 2011 financial performance reflects the improvements we cited in the preliminary operating results we issued four weeks ago. As we move through the year, we expect further sequential gains in our quarterly gold production at lower costs.”
Summary of Key Operating Results
The following is a summary of key operating results. Refer to the Adjusted Net Income table.
Summary of Key Operating Results
($000s)
Quarter Quarter Ended March Ended March 31, 2011 31, 2010
Gold sales $ 55,140 $ 40,670
| Ounces sold | 39,794 | 36,888 |
| Average sales price $/ounce | 1,386 | 1,102 |
| Gross profit | 10,968 | 7,405 |
| Adjusted net income (loss)1 | 10,313 | (3,665) |
| Adjusted basic and diluted net income per share1 | $0.12 | $ |
(0.04)
Weighted average number of shares outstanding - basic 84,373,648 83,995,337 Weighted average number of shares outstanding - diluted 84,385,392 98,538,285 1 See Non-IFRS Performance Measures
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 Consolidated Financial Statements for the quarter ended March 31, 2011.
2011 Update of Operations
Operating results to-date are consistent with the initiatives the Company implemented during the second half of 2010 and its previously stated 2011 production target of between 195,000 and 205,000 ounces of gold.
Non-IFRS Performance Measures
The Company has included the non-IFRS performance measures discussed below in this press release. These non-IFRS 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, these non-IFRS measures provide investors with additional information that will better enable them to evaluate the Company’s performance. Accordingly, these Non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared with IFRS.
The Company has included cash operating cost per ounce produced and cash operating margin per ounce because it believes these figures are a useful indicator of an operation’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 gold mining operations. Additionally, the Company has provided adjusted net income, which reflects the elimination of special non-operating and certain non-recurring charges that do not reflect on-going costs in Jaguar’s operations or administrative costs; and cash flow from operations, which does not reflect the change in non-cash operating working capital. The definitions for these performance measures and reconciliation of the non-IFRS measures to reported IFRS measures are set out in the following tables.
Adjusted Net Income
($000s)
Quarter Quarter Ended Ended March 31, March 31, 2011 2010
Net income (loss) as reported $ 3,724 $ 26,818 Adjustments:
| Loss (gain) on conversion option embedded in convertible debt | 1,340 | (32,505) |
| Effect of gold-in-process and stockpile inventory changes | 2,546 | - |
| Non-cash interest expense | 2,703 | 2,022 |
| Adjusted net income (loss) | 10,313 | (3,665) |
| Adjusted basic and diluted net income per share | $0.12 | $ |
(0.04)
Cash Provided by Operating Activities
($000s)
Quarter Ended Quarter Ended March 31, 2011 March 31, 2010 Cash provided by operating activities as reported Net income $ 3,724 $ 26,818 Adjustments to reconcile net earnings to net cash provided from (used in) operating activities:
| Unrealized foreign exchange (gain) loss | (2,794) | 397 |
| Stock-based compensation | (2,696) | (643) |
| Non-cash interest expense | 3,064 | 2,171 |
| Accretion of interest income | (94) | - |
| Accretion expense | 570 | 290 |
| Deferred income taxes | 455 | 1,644 |
| Depletion and amortization | 11,477 | 8,122 |
| Unrealized loss on derivatives | - | 699 |
| Unrealized (gain) loss on option component of convertible note | 1,340 | (32,505) |
| Reclamation expenditure | (18) | (78) |
$ 15,028 $ 6,915 Change in non cash operating working capital 4,361 $ 4,453 Cash provided by operating activities $ 19,389 $ 11,368 Cash provided by operating activities per share $ 0.23 $ 0.14
Cash Operating Margin per oz gold Quarter Ended March 31 2011 2010
Average sales price per oz gold $ 1,386 $ 1,102 less Cash operating cost per oz gold produced 727 597 equals Cash operating margin per oz gold $ 659 $
The following tables are included in Jaguar’s audited financial statements as filed on SEDAR and EDGAR. Readers should refer to those filings for the associated footnotes which are an integral part of the tables.
Condensed Interim Consolidated Balance Sheets
(unaudited)
| March 31, 2011 | December 31, January 1, 2010 2010 | |
|---|---|---|
| Assets Current assets: Cash and cash equivalents Inventory Prepaid expenses and sundry assets Derivatives | $ 1 35,543 29,066 27,693 168 | $ 3 9,223 $ 1 21,256 31,495 36,986 24,523 19,050 168 1,280 |
| Prepaid expenses and sundry assets Net smelter royalty Restricted cash Property, plant and equipment Mineral exploration projects | 192,470 48,721 1,006 908 356,635 75,953 | 95,409 178,572 48,582 35,837 1,006 1,006 908 108 348,815 262,748 74,658 62,236 |
| $ 6 75,693 | $ 5 69,378 $ 5 40,507 | |
| Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued liabilities Notes payable Income taxes payable Reclamation provisions Deferred compensation liabilities Other liabilities | $ 3 1,156 23,482 17,687 1,780 2,305 849 | $ 2 7,853 $ 2 2,892 26,130 5,366 16,677 15,641 2,167 510 2,436 - 704 - |
| Notes payable Option component of convertible notes Deferred income taxes Reclamation provisions Deferred compensation liabilities Other liabilities | 77,259 222,804 49,021 676 19,324 2,125 290 | 75,967 44,409 140,664 125,483 28,776 75,356 215 450 17,960 10,008 4,829 8,876 497 738 |
| Total liabilities Shareholders' equity Share capital Stock options Contributed surplus Deficit | 371,499 369,747 12,984 1,971 (80,508) | 268,908 265,320 369,747 365,667 13,054 14,762 1,901 1,167 (84,232) (106,409) |
| Total equity attributable to equity shareholders of the Company Commitments | 304,194 | 300,470 275,187 |
| $ 6 75,693 | $ 5 69,378 $ 5 40,507 |
Condensed Interim Consolidated Statements of Operations and Comprehensive Income (Expressed in thousands of U.S. dollars, except per share amounts)
(unaudited)
| Three Months Ended March 31, 2011 | Three Months Ended March 31, 2010 | |
|---|---|---|
| Gold sales Production costs Stock-based compensation Depletion and amortization | $ 55,140 (33,057) 5 (11,120) | $ 40,670 (25,140) (127) (7,998) |
| Gross profit | 10,968 | 7,405 |
| Operating expenses: Exploration Stock-based compensation Administration Management fees Amortization Other | 334 (2,691) 5,256 162 357 836 | 1,107 (770) 4,297 339 124 689 |
| Total operating expenses | 4,254 | 5,786 |
| Income before the following | 6,714 | 1,619 |
| Loss (gain) on derivatives Loss (gain) on conversion option embedded in convertible debt Foreign exchange loss (gain) Accretion expense Interest expense Interest income Gain on disposition of property | (287) 1,340 (3,089) 570 5,682 (1,466) (719) | 253 (32,505) 564 290 4,028 (1,361) (497) |
| Total other expenses (recoveries) Income before income taxes | 2,031 4,683 | (29,228) 30,847 |
| Income taxes Current income taxes Deferred income taxes | 504 455 | 2,385 1,644 |
| Total income taxes | 959 | 4,029 |
| Net income and comprehensive income for the period | $ 3,724 | $ 26,818 |
| Basic earnings per share Diluted earnings per share Weighted average number of common shares outstanding - basic Weighted average common shares outstanding - diluted | $ 0 .04 $ 0 .04 84,373,648 84,385,392 | $ 0 .32 $ 0 .31 83,995,337 98,538,285 |
Condensed Interim Consolidated Statements of Cash Flows
(unaudited)
| Three Months Ended March 31, 2011 | Three Months Ended March 31, 2010 | |
|---|---|---|
| Cash provided by (used in): Operating activities: Net income and comprehensive income for the period Adjustments to reconcile net earnings to net cash provided from (used in) operating activities: Unrealized foreign exchange loss (gain) Stock-based compensation recovered Interest expense Accretion of interest income Accretion expense Deferred income taxes Depletion and amortization Unrealized loss on derivatives Unrealized loss (gain) on option component of convertible note Reclamation expenditure Change in non-cash operating working capital Inventory Prepaid expenses and sundry assets Accounts payable and accrued liabilities Income taxes payable Deferred compensation liability | $ 3,724 (2,794) (2,696) 3,064 (94) 570 455 11,477 - 1,340 (18) 2,267 (2,056) 3,302 1,009 (161) | $ 26,818 397 (643) 2,171 - 290 1,644 8,122 699 (32,505) (78) 2,209 (2,936) 4,381 799 - |
| Financing activities: Increase in restricted cash Repayment of debt Increase in debt Interest paid Other long - term liabilities | 19,389 - - (3,818) 99,313 (361) (61) | 11,368 1,501 (800) (68) 3,542 (149) 164 |
| Investing activities Short term investments Mineral exploration projects Purchase of property, plant and equipment | 95,073 - (2,345) (17,868) | 4,190 (5,811) (1,865) (35,065) |
| Effect of foreign exchange on non-U.S. dollar denominated cash and cash equivalents Increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period | (20,213) 2,071 96,320 39,223 | (42,741) 980 (26,203) 121,256 |
| Cash and cash equivalents, end of period | $ 135,543 | $ 95,053 |
Departure of Corporate Officer
Mr. Robert Zwerneman, Jaguar’s Vice President of Corporate Development and Director of Investor Relations, has notified the Company he will be resigning from Jaguar in order to pursue an employment opportunity with another firm. Mr. Zwerneman has been with the Company since October 2006 and will remain for a period of time in a transitional role until a suitable replacement can be found. His service as an officer of the Company will come to an end on May 19, 2011.
Conference Call Details
The Company will hold a conference call tomorrow, May 18 at 9:00 a.m. EDT, to discuss the results.
Conference Call Details:
From North America: 800-476-0592 International: 213-416-2192
Replay:
From North America: 800-675-9924 International: 213-416-2185 Replay ID: 51811 Webcast: www.jaguarmining.com
A presentation will be available prior to the call on the Company’s homepage at www.jaguarmining.com.
About Jaguar
Jaguar is a gold producer in Brazil with operations in a prolific greenstone belt in the state of Minas Gerais. Jaguar is also engaged in developing the Gurupi Project in the state of Maranhão. Based on its development plans, Jaguar is one of the fastest growing gold producers in Brazil. The Company is actively exploring and developing additional mineral resources at its approximate 256,300-hectare land base in Brazil. Additional information is available on the Company’s website at www.jaguarmining.com.
For Information:
Valéria Rezende DioDato Director of Communication 603-224-4800 [email protected]
Forward Looking Statements
This press release contains forward-looking statements, within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, concerning the Company’s expectation to realize further sequential gains in its quarterly production during 2011 as well as achieve gold production of between 195,000 and 205,000 ounces for the year ending December 31, 2011. 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 information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended.
The forward-looking statements represent our view as of the date of discussion. 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, 2010 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, 2010 filed with the United States Securities and Exchange Commission and available at www.sec.gov.
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