Gold prices are going crazy, and it’s only going to get better. The threat of inflation, currency collapse, and the potential end of the EuroZone will all push gold higher. It’s the “go to” investment for safety these days.
This week we’re looking at mining and mineral stocks. Here’s a small gold producer you should take a look at.
QUICK FACTS
Ticker JAG
Industry Gold
Recent Price $6.18
Market Cap $521.4 m
Shares Outstanding 84.4 m
Average Volume 425,283
Dividend Yield N/A
Website http://www.jaguarmining.com/
COMPANY DESCRIPTION
Jaguar Mining (JAG) primarily operates in the Brazilian state of Minas Gerais. They own and operate three mines in the ‘Iron Quadrangle.’ That region has a renowned greenstone belt, which often contains gold, silver, copper, zinc and lead.
They produce gold at the Turmalina, Paciência and Caeté mines.
Jaguar has also been exploring in the state of Maranhão where they control 293,000 acres.
How good are their operations? Consider this… they sold 40,184 ounces of gold in the second quarter of 2011.
FINANCIALS
Jaguar is in the middle of a financial turnaround. Their revenue in the first half of 2011 was up nearly 50%.
Their adjusted net income improved from a loss in the first half of 2010 to profits of $17.4 million. And their operating cash flow is up approximately 207%. Talk about a turnaround!
Before the turnaround this company had some issues with efficiency and middle management. It looks like their focused effort on fixing these issues has paid off. Despite unfavorable currency conversion rates the company still managed to cut costs at some of their mines.
For example, at their Paciência property each ounce of gold cost about $700 in Q2-10. Jaguar’s got that down to $637 in Q2-2011.
The other obvious boost to this business is the price of gold. Jaguar’s ‘Realized Gold Price’ was $1,148 in the first half of last year. This year it was $1,447.
Couple that with their 18.5% increase in ounces sold and you’ve got a pretty rosy outlook.
KEY METRICS ANALYSIS
Trailing P/E N/A
Price / Sales 2.6 x
Return on Assets N/A
Insider ownership 3.25%
Short Ratio 8.6 x
Current Ratio 2.4 x
Total Debt To Equity N/A
RECENT EVENTS
Jaguar has been working towards establishing the Gurupi project and mine. Located in the northeastern state of Maranhão, it’s expected to produce nearly 150,000 ounces annually.
They’ve got a 30,000 meter exploratory hole being drilled. They’re also working on dragging a glorified extension cord out to the property. Not to mention the tiny village they had to relocate.
That all may seem like a lot of work, but it hasn’t stopped other companies from envying the property. According to management, Jaguar’s been approached by potential investors who want in on Gurupi. Management’s considering the offers as a potential option for additional funding.
MANAGEMENT TEAM
Daniel R. Titcomb – President and CEO
James M. Roller – CFO
Lúcio Cardoso – COO
Adriano Luiz do Nascimento – VP of Exploration & Engineering
STOCK ANALYSIS
Chart Courtesy of StockCharts.com
This stock tends to bounce around a lot. But the fundamentals have really improved over the past year and a half. And the Gurupi project looks like it could be a big win once it starts producing. If gold prices continue to stay at this inflated level this company is going to have some great results.
TC’s 52-week low was $4.11 and the 52-week high was $7.90. Right now the stock is trading at $6.18. The 50-day moving average is near $5.39 a share and the 200-day moving average is at $5.16. The company has a market cap of $521.4 million and 84.4 million shares outstanding.
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