Jaguar Mining Inc.
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TICKER: TSX:JAG, NYSE:JAG
DESCRIPTION: Jaguar is one of the fastest growing gold producers in Brazil, with operations in a prolific greenstone belt in the state of Minas Gerais. Jaguar is actively exploring and developing additional mineral resources at its 65,500 acre land base in Minas Gerais and on an additional 186,600 acres in the state of Ceará in the Northeast of Brazil through a joint venture.
WEBSITE: jaguarmining.com
2008 Annual Report
The information below is based on the most recent information we have received from analysts and the companies participating in The Gold Report. We encourage you to visit the company's web site for updates.
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"Jaguar Mining hosted a tour of its operations last week and in general, we came away impressed with the progress being made at Turmalina and Paciência, as well as the exploration results from the new high-grade discovery at Marzagão. The company continues to benefit from excellent infrastructure and a stable workforce and with the injection of capital from the recent equity financing, is increasing its focus on the plethora of brownfield (near-mine) exploration targets.
We expect the company to post increased production for each of the next seven quarters due to improved grades at Paciência (Q2/09), a resumption of production at Sabará (Q2/09), the mill expansion at Turmalina (Q1/10), and initial production from the Caeté operation (Q3/10). Unlike certain emerging producers with one mine and one startup, Jaguar's growth is more gradual and more sustained, and in our view, lower risk.
We believe the company provides the sector's best combination of growth (32% CAGR over next six years) and valuation (0.45x NAV, 5.4x 2010 CFPS). We also note that the company will go from a producer with three 75,000 oz/yr mines at the end of 2010 to one with three 200,000 oz/yr operations by 2013, a quality that should elevate Jaguar to the top of the list for mid-tier takeover candidates. We are maintaining our BUY recommendation and our C$12.00 target price. Jaguar continues to be one of our top picks in the gold sector."
-RICHARD GRAY, BLACKMONT CAPITAL (04/21/09)
"Last week, we attended an analyst trip to Brazil to visit Jaguar's existing and planned operations.
Jaguar Mining is an emerging gold producer focused on Brazil, one of our favorite jurisdictions globally, for the combination of above-average geological potential and well established mining-friendly government/infrastructure. We expect increased investor interest in Jaguar as the company delivers on its 'growing producer story' through the successful delivery of feasibility studies, new mine construction, and expansion plans during the next few years.
The recent trip reinforced our positive view on Jaguar Mining as one of the better growth stories among the Tier III golds. We have increased our longer-term growth expectations, from 300Koz/yr to 400Koz/yr, which still remain conservative versus JAG mgt's target of 600-700Koz/yr by 2014."
-MICHAEL CURRAN, RBC CAPITAL MARKETS (04/21/09)
"We are re-initiating coverage on Jaguar Mining Inc. with a Market Outperform rating and a 12-month price target of $14.50. JAG is a growing junior gold producer and has the potential to become a pure gold mid-tier producer as it continues to expand. The company in our view is highly leveraged to gold price, which is what makes it very attractive. The assets of the company are in mining friendly Brazil, a growth profile for the next 4-5 years, and an experienced management team.
Jaguar deserves a higher NAV multiple than the peers. Jaguar is one of the few gold companies that could be categorized as a pure gold producer. The company expects to increase its reserve base from 2.0 Moz in 2008 to 3.8 Moz by 2014 including the 2.6 Moz it expects to produce till 2014 as it drills and defines resources deeper.
Overlooked by the markets but perhaps not so by potential suitors. Jaguar is a compelling investment opportunity not only to investors seeking to find underappreciated gold assets with solid growth prospects, producing in mining-friendly jurisdiction with sound management, but potentially to acquirers seeking these same attributes to bolster their own growth profiles via accretive acquisitions. Jaguar has indicated that it has signed confidentiality agreements with a number of gold companies; however, nothing has transpired as of yet."
-ALKA SINGH, RODMAN & RENSHAW (03/30/09)
"We continue to believe that JAG presents one of the most attractive growth profiles in the mid-cap gold space and think that there is potential upside beyond what we have considered in our valuation due to the following factors:
Finding More Gold Under Its Feet: Although we do not expect JAG to expend a great deal of capital on exploration this year, we believe that what does get spent will provide the market with a good indication of the upside at all of its operations. We expect JAG to provide further clarity on the potential of the NW01 and Conglomerates at Paciencia and a new target at Turmalina, the Fazenda Experimental, where JAG's preliminary drilling has intersected grades ranging from 2.9 to 6.5g/t Au. As our valuation is based only on what JAG has on its books currently, further resources would contribute positively to our valuation.
Savings on Capital Equipment: JAG has indicated that it may consider adding a small debt revolver in Brazil in order to take advantage of savings that are available on capital equipment due to the reduction in demand. While this would cause our CAPEX to increase in the short term, it could provide JAG with the ability to ramp up operations sooner than anticipated or result in decreased mine operating costs as the equipment targeted would be larger trucks that were originally meant to be introduced to the mines in the mid-term.
Greenfield Upside: Although JAG doesn't direct too much attention towards its Greenfield JV with Xstrata at Pedra Branca, we believe that work over the next 24 months could provide the market with a better indication of the potential at this asset. Early results have been encouraging for JAG and we anticipate that it could surprise the market with some positive news from this asset.
We are increasing our target price for Jaguar Mining to CDN$10.50 (from CDN $10.00) to reflect updates to our Q1'09 gold price and exchange rate, as well as revisions to our production profile assumptions, CAPEX spending and the recently completed equity raise. We maintain our Buy recommendation and our target price remains based on a 1.2x multiple of our NAV calculation."
-TARA HASSAN, M PARTNERS (03/26/09)
"Jaguar reported Q4 operating EPS of -$0.02, slightly below our estimate of $0.00 and consensus of $0.03. The difference is mainly attributable to higher-than-expected tax expense and realized losses on real hedges.
No surprises in the quarter with operational results having been previously released. Despite a weaker production outlook for Q1 with Sabará having been temporarily suspended, we expect Jaguar to start generating positive earnings in Q1 with higher gold prices and lower expected operating costs.
We believe Jaguar has low-risk operations in a geopolitically safe region with production upside, and believe the company is a potential takeover candidate as a result. We are maintaining our BUY rating and $9.00 target price."
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