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Jaguar reports 4Q profit, reduced debt, hedges cleared

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(Kitco News) - Jaguar Mining Inc. (TSX: JAG) flipped to a profit in the fourth quarter as both gold prices and output rose, the company announced Monday. The company also said it has cleared its hedges as its debt level has been significantly reduced.

Jaguar listed fourth-quarter net income of $2.7 million, or zero cents per share, a turnaround from a loss of $15.1 million, or 5 cents, in the same period of 2018.

Gold production increased 18% to 20,029 ounces from 17,622 ounces in the year-ago period, the company said. All-in sustaining costs fell 3% to $1,239 an ounce. Meanwhile, the average realized gold prices rose to $1,372 an ounce from $1,213 in the same quarter a year earlier.

Helped by these factors, Jaguar’s revenue climbed to $28.9 million from $21.4 million in the same quarter of 2018. Vern Baker, president and chief executive officer, said the company closed out 2019 with its best quarter.

“We are moving forward over time, building a sustainable production platform of 25,000 ounces per quarter,” he said. “The improvement is reflected in a positive free cash flow for the first quarter since the end of 2017.”

Jaguar listed fourth-quarter cash from operating activities of $9.7 million. Free cash flow was $1.2 million, after sustaining capital expenditures of $8.5 million.

“With the completion of our financial hedges this year, the current trend of gold price, our improving production, and our decreasing AISC, we expect to see consistently stronger financials each quarter this year,” Baker said. “In Q4 2019, we were able to clear our debt with Auramet, removing the biggest limiting factor i.e. hedges on our realized gold price. We also delivered on a large portion of our option contracts in 2019 and started 2020 with only 6,700 ounces at $1,363 per ounce in option instruments. Those options were cleared in February 2020, and the company is completely unhedged now.”

Repayment of the Auramet loan should provide more liquidity to the balance sheet and cash flow for 2020, the company said, adding that that its remaining debt of $4.5 million is now comprised of short-term loans from Brazilian banks.

Full-year 2019 gold output was 74,084 ounces, compared to 75,048 in 2018.

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