Growing Jaguar Mining Closes $86M Offering

Jaguar Mining (JAG-T, JAG-N) has raised $86 million through an offering of 13.9 million shares at $6.20 per share to fund the development of Caete, its fourth mine.

Depending on gold prices over the next few years, Jaguar expects Caete will produce about 100,000- 110,000 oz. gold in 2012.

With three operating gold mines and the Caete project fully permitted and licensed, Jaguar is one of the fastest-growing gold producers in Brazil. Its assets are in the prolific greenstone belt known as the Iron Quadrangle in the historic mining state of Minas Gerais.

“We believe this transaction will help us continue to pursue our strategy to become a mid-sized gold producer with production of between 620,000 to 700,000 oz. (gold) by 2014,” Daniel Titcomb, Jaguar’s president and chief executive, said in a statement.

The offering was underwritten by a syndicate led by RBC Capital Markets and Blackmont Capital, and included TD Securities and M Partners.

The Caete project holds measured and indicated resources of 9.34 million tonnes averaging 4.44 grams gold per tonne for a total of 1.33 million oz. In the inferred category, Caete hosts 2.99 million tonnes grading 5.6 grams gold for contained gold of 539,580 oz.

The unhedged gold producer is actively exploring and developing additional mineral resources at its 291-sq.-km land base in Minas Gerais and on an additional 643.5 sq. km in the state of Ceara in northeastern Brazil through a joint venture.

Jaguar’s three operating gold mines are its underground Turmalina gold mine, about 140 km northwest of Belo Horizonte, the capital of Minas Gerais; Sabara, an openpit mine that has been producing since 2004; and the underground Paciencia mine — also called Saint Isabel– 132 km southwest of Sabara and about 50 km from Belo Horizonte.

Jaguar was to release its fourth-quarter and full-year results on March 23.

At the end of the third quarter, Jaguar had working capital of US$45 million, including US$41 million in cash, and long-term debt of $80 million, due in 2012.

Jaguar churned out 72% more gold (34,935 oz.) in the third quarter of 2008 than it did in the same quarter a year ago.

Revenues reached a record US$25.8 million, while gross profits climbed to US$6.9 million, up from US$2.6 million in the corresponding quarter of 2007.

The company is confident that depending on gold prices, its mines will be producing about 700,000 oz. gold each year by 2014. In the meantime, it expects to reach an annual run rate of more than 200,000 oz. gold in 2010.

Turmalina produces about 1,300 tonnes of ore per day and the company is embarking on a three-phase expansion program to increase capacity by about 25% to 100,000 oz. gold per year.

The first phase of the expansion is expected to be complete in the third quarter of 2009. The goal for 2009 is to produce between 75,000 and 80,000 oz. gold, an amount Jaguar hopes will rise to 180,000 oz. gold annually in 2013.

Turmalina has a measured and indicated resource of 5.6 million tonnes with an average grade of 5.58 grams gold per tonne for contained gold of 1.1 million oz. In addition, the inferred resource totals 1 million tonnes grading 5.55 grams gold for 290,100 contained ounces.

Jaguar expects its Sabara openpit mine will produce about 20,000 oz. gold in 2009. (Its carbon-in-column plant processes 1,200 tonnes of ore per day.)

Sabara has measured and indicated resources of 2.1 million tonnes averaging 3.83 grams gold per tonne for total contained gold of about 264,220 oz. In the inferred category, Sabara contains 1.26 million tonnes grading 3.33 grams gold for 135,970 oz.

The Paciencia underground mine is expected to produce between 65,000 and 70,000 oz. gold this year.

Paciencia’s measured and indicated resource stands at 7.97 million tonnes grading 3.62 grams gold per tonne for 929,280 oz. gold. Inferred resources total 1.35 million tonnes at 3.67 grams gold for 160,000 oz.

At presstime, Jaguar shares were trading at $7.15 apiece. The company has a 52-week trading range of $2.39-13.50 and 77.9 million shares outstanding.