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The Gold Stock Strategist analyzes leading junior gold producers and major gold mining companies.

Comments are welcomed!

Friday, May 9, 2008

Jaguar Mining Has Record Production/Sales in Q1; Reserves to Double in Q2

I listened to Jaguar Mining's conference call today and read their press release in advance of their Annual Shareholders Meeting on May 8, 2008 in Toronto, Canada.

Q1 was outstanding by all accounts. Here are a few highlights from the release.

- Record revenue for Q1 2008 totaled $18.8 million, an increase of 187% from the same period last year.

- Gold sales for Q1 2008 totaled 20,344 oz at an average price of $924/oz compared to Q1 2007 figures of 9,885 oz at $662/oz.

- As of March 31, 2008, cash and cash equivalents totaled $99.8 million including $3.1 million of restricted cash, mostly related to foreign exchange hedges.

- In Q1 2008, the Company produced 21,414 oz of gold at an average cash cost of $428/oz.

What was that? Average cash cost of $428!!!

Cash costs in Q1 were higher in Q1 as 4 days of production were lost in order to repair operations at Turmalina, a weaker US$, and processing of low grade ore at Sabara along with other minor problems. Processing higher grades at Sabara and smoothing of operations at Turmalina should improve the cash cost per ounce of production going forward.

Jaguar is planning to have a first pour at Paciência in a few weeks, a mine projected to produce 49,000 ounces of gold in 2008 and projected to ramp up to 258,000 ounces by 2013 when production will level off. Everything is on schedule for Paciência.

More good news is that Blackmont has reiterated a BUY recommendation on Jaguar with a C$18.50 target price.

Blackmont's valuation on Jaguar is similar to mine.

Finally, and importantly, Jaguar is likely to announce a doubling of proven and probable reserves in a few weeks from about 1 million ounces gold to about 2 million ounces of gold.

Here is Jaguar Mining's May 8, 2008 presentation.

All in all it was a good week for Jaguar Mining.

I still like Jaguar as a long term hold as they ramp up production from 70,000 ounces in 2007; 160,000 in 2008; 270,000 in 2009; and up to about 700,000 by 2014.


Gold Stock Strategist

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