Jaguar Mining Reports Q1 2017 Results, 86% Higher Production at Pilar, Exploration Success, Maintains Production Guidance for 2017
JAGUAR MINING INC.
First Canadian Place, 100 King Street West, 56th Floor, Toronto, Ontario, Canada M5X 1C9 T- 416 847 1854
NEWS RELEASE
May 11, 2017 2017 – 07
FOR IMMEDIATE RELEASE TSX:JAG
Jaguar Mining Reports Q1 2017 Results, 86% Higher Production at Pilar,
Exploration Success, Maintains Production Guidance for 2017
Toronto, Canada, May 11, 2017 - Jaguar Mining Inc. ("Jaguar" or the "Company") (TSX:JAG) today announced details
of the Company’s financial and operating results for the first quarter ended March 31, 2017 (“Q1 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.
Q1 2017 Financial Highlights
● Gold production increased 5% to 22,292 ounces and gold ounces sold increased to 24,035 ounces compared with
21,197 ounces produced and 22,881 ounces sold in Q1 2016, respectively.
● A temporary interruption of mining activities in one section of Orebody A at Turmalina was partially offset by an 86%
increase in gold production at Pilar.
● Revenue was up 9% to $29.2 million, compared with $26.7 million in Q1 2016, and the average realized gold price of
$1,215 was 4% higher compared with $1,165 in Q1 2016.
● The strengthening Brazilian Real over the US dollar had the effect of increasing unitary costs in the reporting currency.
During Q1 2017, the Brazilian Real strengthened 19% against the US dollar, compared with Q1 2016. In addition to the
currency impact, the following items impacted the costs in Q1 2017:
o Cash operating costs (“COC”) increased 25% to $924 per ounce of gold sold, compared to $742 per ounce sold
during Q1 2016, due to lower production at Turmalina and the increased cost for secondary development at Pilar.
o All in sustaining costs (“AISC”) increased 22% to $1,323 per ounce of gold sold, compared to $1,086 per ounce
sold during Q1 2016, mainly due to a 20% increase in sustaining mine development and purchases of new
equipment for Pilar.
● Operating cash flow was $1.9 million, compared to $9.5 million in Q1 2016. Lower operating cash flow with continued
investments in capital programs resulted in a cash balance of $18.2 million as of March 31, 2017, compared to a cash
balance of $26.3 million at December 31, 2016.
● During Q1 2017, the Company also continued to invest in its Growth Exploration Program, initiated in November 2016,
with approximately 25% of the drilling and development milestones achieved to date.
● The Company is maintaining 2017 production guidance of 100,000 – 110,000 ounces, which will be reviewed at the end
of Q2 2017.
● In view of the volatility in the gold price and continued strengthening of the Brazilian Real since September 2015, the
Company has initiated a cost reduction program to offset these external factors. This includes reducing the Roça Grande
operations by approximately 40% in overall headcount at that site. Company-wide general and administrative costs have
also been reviewed with the aim of reducing headcount in support functions. The Company will also continue its
assessment of the maintenance departments to further incorporate preventive procedures, improve equipment
availability, and reduce costs.
● Subsequent to the quarter end, Jaguar entered into a preliminary agreement with Sprott Private Resource Lending
(Collector) LP (“Sprott Lending”) for an additional tranche of $5 million on terms similar to those of the secured loan
facility that Jaguar entered into with Sprott Lending on November 7, 2016.
Rodney Lamond, President and Chief Executive Officer of Jaguar commented, “A significant highlight of the first quarter of
2017 was the strong performance at Pilar which increased its gold production 86% to 8,485 ounces and its grade by 17% to
3.39 g/t, reflecting the advancement of ore development into the high-grade Orebodies BF and BFII. However, consolidated
production of 22,292 ounces was much lower than targeted, mainly due to a change in mining sequence at Turmalina caused
by temporary ground control conditions on Level 9. As a result, development activities were refocused onto Level 10. Earlier
than planned advancement at Orebody C resulted in a decline in an overall average head grade to 3.79 g/t. The change in
mine sequence to Level 10 is expected to positively impact operations in the near term, allowing for an increase in mine feed
grades and will enable the recovery of Q1 gold production shortfall. The rehabilitation efforts to recover the remaining ounces
on Level 9 of Orebody A will resume in the second half of 2017.”
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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
“During the first quarter, we made investments of $6. 9 million in capital expenditures towards primary development,
exploration drilling, and new mining equipment. The recommissioning of Mill #3 at Turmalina provides operations with an
increased milling capacity that is capable of processing 2,000 tonnes per day which will support higher production and lower
unit operating costs in the future. Operating costs during the first quarter were higher than anticipated due to lower than
expected production from Turmalina and the continued appreciation of the local Brazilian currency which has increased 19%
over the US dollar since the first quarter of 2016. The AISC reflects the continued investments in sustaining capital
expenditures and will be reviewed in light of Q1 results. At Pilar, AISC included approximately $350 per ounce of sustaining
capital investment. This was largely related to the ongoing investment in primary development with additional new mining
equipment arriving during the quarter. Higher COC at Pilar was derived by a significant 614 metres of secondary ore
development.”
Mr. Lamond concluded: “Looking ahead, we are maintaining our 2017 production guidance of 100,000 – 110,000 ounces,
but we will conduct a review of guidance at the end of the second quarter. The Company is taking the necessary steps to
manage costs during this time of lower gold prices and continued strengthening of the Brazilian currency. As we continue to
experience cost pressures, we will be offsetting the impact with cost savings in other areas through operational productivity
and efficiency improvements, reductions in capital, and slowing all non-core spending.”
Q1 2017 Operating Highlights
● Consolidated gold production of 22,292 ounces, up 5% year-over-year, with 214,000 tonnes of ore processed.
● Gold recovery of 90.8% in Q1 2017 compared to 90.2% in Q1 2016 due to continuous improvement projects initiated at
both plants.
● Strong operating performance at Pilar resulted in an 86% increase in gold production to 8,485 ounces, a 17%
improvement in average grade to 3.39 g/t, and higher recovery of 90.8%. Strong gold production reflects the advancing
ore development into the higher-grade Orebodies BF and BFII.
● Turmalina produced 12,736 ounces of gold, lower than the Q1 2016 and Q4 2016 production levels, due to lower
throughput and grade as a result of a temporary interruption of mining activities in one section of Orebody A to conduct
ground control rehabilitation work. Previously scheduled high-grade mining blocks from this area were deferred later
into the mining schedule.
● Turmalina increased Measured & Indicated Mineral Resources by 22% to 540,000 ounces of gold (grade of 4.93 g/t Au),
and Proven & Probable Mineral Reserves for Orebody C by 167% to 80,000 ounces of gold (grade of 4.10 g/t Au).
● Milling capacity at Turmalina increased with the recommissioning of Mill #3, announced January 5, 2017.
Operating Summary Q1 2017 Q1 2016
Turmalina Pilar Roça
Grande Total Turmalina Pilar Roça
Grande Total
Tonnes milled (t) 113,000 74,000 27,000 214,000 128,000 56,000 12,000 196,000
Average head grade (g/t) 3.79 3.39 2.12 3.50 4.29 2.89 2.53 3.78
Recovery % 91% 91% 91% 91% 90% 90% 90% 90%
Gold ounces
Produced (oz) 12,736 8,485 1,071 22,292 15,772 4,552 873 21,197
Sold (oz) 13,536 9,422 1,076 24,035 16,635 5,369 877 22,881
Development
Primary (m) 366 470 74 910 731 312 118 1,161
Exploration (m) 104 13 34 151 - - - -
Secondary (m) 754 614 14 1,382 838 24 184 1,046
Diamond drilling (m) 6,080 5,218 567 11,864 4,691 2,508 4,693 11,892
Costs per ounce sold
Cash operating costs ($/oz) 738 1,092 1,787 924 590 1,096 1,454 742
All-in sustaining costs ($/oz) 903 1,434 2,330 1,323 780 1,414 1,609 1,086
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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
Cash Balance
As at March 31, 2017, the Company had a cash position of $18.2 million, compared to $26.3 million as at December 31,
2016, primarily due to lower gold production.
• Subsequent to the quarter end, Jaguar entered into a preliminary agreement with Sprott Lending for an additional
tranche of $5 million on terms principally similar to those of the secured loan facility that Jaguar entered into with Sprott
Lending on November 7, 2016 (the “Facility”). The preliminary agreement and the funding of the additional tranche is
conditional upon various standard conditions and approvals, including the approval of the TSX. This additional $5 million
tranche is expected to close and be funded in June 2017 and is for a term of 36 months with an interest rate of 6.5%
per annum, plus the greater of US dollar LIBOR and 1.25% per annum. In consideration for providing the financing
commitment, Jaguar expects to issue 375,000 common shares to Sprott Lending on the closing date. The proceeds
from this tranche from the Facility will be used for capital equipment.
• Following Sprott Lending’s February, 2017 site visit to Jaguar’s mineral properties and operating facilities in Brazil,
current due diligence, and in light of the preliminary agreement to fund an additional $5 million tranche from the Facility,
Sprott Lending waived the Company’s obligation regarding a positive working capital covenant from the period of April
1, 2017 through June 29, 2017.
Foreign Currency
Jaguar has been impacted by the strengthening in the Brazilian Real exchange rate relative to the US dollar, which has had
the effect of increasing cash costs in US dollar terms. The average exchange rate during Q1 2017 was R$3.15 Brazilian
Reais per US dollar compared to R$3.90 per US dollar in Q1 2016. The closing exchange rate as at March 31, 2017 was
R$3.17 per US dollar compared to R$3.26 per US dollar as at December 31, 2016.
2017 Outlook
The company has made excellent progress since Q1 2016, and expects to achieve the following for 2017:
● Turmalina will focus on accelerating Orebody C development to focus on increasing grade and ton nes. Additionally,
growth exploration at Turmalina will continue the deep drilling down-dip of the extension of Orebody C.
● Pilar will focus on opportunities to adjust timing or reducing development and contractor costs, re viewing current and
longer-term needs for development, while looking at lower cost mining methods.
● Streamlining cash operating costs at Pilar and Roça Grande, and further reduction of G&A costs.
● Commissioning of the paste-fill plant in June to improve back -fill at Turmalina, and thus improve ground control
conditions at deeper levels of the mine.
● Roça Grande to reduce from four mining shifts to two shifts per day, while maintaining the current production levels.
● Review and potentially pause all non-core expenditures and growth exploration to carefully manage our cash position
and working capital needs.
The Company maintains the 2017 consolidated guidance in the table below. A review of the guidance will be completed at
the end of the second quarter.
2017 Guidance
Turmalina Complex Caeté Complex Consolidated
Low High Low High Low High
Gold production (ounces) 60,000 65,000 40,000 45,000 100,000 110,000
Cash operating costs (per ounce sold)1
$600 $650 $ 900 $1,000 $720 $755
All-in sustaining costs (per ounce sold)1
$800 $850 $1,020 $1,180 $900 $1,000
Development
Primary (m) 2,500 2,900 2,200 2,600 4,700 5,500
Secondary (m) 2,200 2,700 3,400 3,850 5,600 6,550
Diamond drilling (m) 16,000 18,000 10,000 13,000 26,000 31,000
Growth exploration investment ($ million) $7.5 $8.0
1
Cash operating costs and all-in sustaining costs are non-gaap financial performance measures with no standard definition under IFRS. Refer to the Non-IFRS
Measures section below. 2017 cost guidance has been prepared based on a foreign exchange rate of 3.5 Brazilian Reais vs. the US dollar.
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JAGUAR MINING INC.
First Canadian Place, 100 King Street West, 56th Floor, Toronto, Ontario, Canada M5X 1C9 T- 416 847 1854
Financial and Operating Highlights
($ thousands, except where indicated) For the three months ended March 31,
2017 2016
Financial Data
Revenue $ 29,192 $ 26,664
Operating costs 21,508 17,579
Depreciation 6,576 7,702
Gross profit 1,108 1,383
Gross profit (excluding depreciation)1
7,684 9,085
Loss on change in fair value of notes payable - 17,579
Net loss (7,877) (15,001)
Per share ("EPS") (0.03) (0.13)
EBITDA1
743 (5,860)
Adjusted EBITDA1,2
4,211 6,426
Adjusted EBITDA per share1
0.01 0.06
Cash operating costs (per ounce sold)1
924 742
All-in sustaining costs (per ounce sold)1
1,323 1,086
Average realized gold price (per ounce)¹ 1,215 1,165
Cash generated from operating activities 1,855 9,526
Free cash flow1
(4,177) 3,558
Free cash flow (per ounce sold)1
(174) 156
Sustaining capital expenditures1
6,032 5,013
Non-sustaining capital expenditures1
873 382
Total capital expenditures 6,906 5,395
1
Average realized gold price, sustaining and non-sustaining capital expenditures, cash operating costs and all-in sustaining costs, 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 March 31,
2017 2016
Operating Data
Gold produced (ounces) 22,292 21,197
Gold sold (ounces) 24,035 22,881
Primary development (metres) 910 1,161
Secondary development (metres) 1,382 1,046
Definition, infill, and exploration drilling (metres) 11,864 11,892
Qualified Person
Scientific and technical information contained 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 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 black 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.
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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
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 f rom mineral claims
covering an area of approximately 191,000 hectares. The Company’s principal operating assets are in the Iron Quadrangle,
a prolific greenstone belt in the 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.
For further information please contact:
Rodney Lamond
President & Chief Executive Officer
416-847-1854
Joanne Jobin
Vice President, Investor Relations
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 providing information about management's expectations and plans relating to the future.
All of the forward-looking information made in this news release are 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 using 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 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 assumpt ions 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
an 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 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 d isruptions, 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 diffe r 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 workplac e 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 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 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 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 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
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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
total production costs for the most recent reporting period, the quarter ended March 31, 2017 is set out in the Company's first 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 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 March 31, 2017 is set out in the Company's first quarter
2017 MD&A filed on SEDAR at www.sedar.com.