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Executives

Roger Hendriksen – VP, IR

David Petroff – President and CEO

Fred Hermann – Director

Jim Roller – CFO and Treasurer

Analysts

John Bridges – JP Morgan

Eric Opal – Glass Capital Management

David Epstein – CRT Capital

Anna Povinelli – Bristol Investment Partners

Fabio Zamith – CarVal Investors

Jaguar Mining, Inc. (JAG) Q3 2012 Earnings Call November 13, 2012 10:00 AM ET

Operator

Good morning everyone, and welcome to the Jaguar Mining Third Quarter 2012 Financial Results Conference Call. All participants will be in a listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. Please also note that today’s event is being recorded.

I would now like to turn your conference call over to Mr. Roger Hendriksen, Vice President of Investor Relations. Sir, you may begin.

Roger Hendriksen

Thank you, Jamie. Good morning, everyone. Thanks for taking the time to participate in our call this morning. We appreciate your continuing interest in Jaguar Mining.

As you know, we distributed our third quarter earnings release last evening and filed our Q3 2012 financial package as well. If any of you have not had a chance to view these materials, they are available through the Investor Relations page of our website and on SEDAR and EDGAR. The members of our management team, who are participating on the call this morning, are David Petroff, President and Chief Executive Officer; and Fred Hermann, member of our Board of Directors who is currently focused on the turnaround of our operations. Jim Roller, our Chief Financial Officer is also on the call and we’ll be available to answer your questions during Q&A.

Before we begin, I need to remind you that the statements made in this presentation, which are not historical in nature, are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on current factual information and certain assumptions, which management currently believes to be reasonable.

Financial and operational results for future periods may differ materially from current management projections as a result of factors outside the company’s control. Information concerning those factors is available on the company’s Annual Report and other periodic public filings on SEDAR and EDGAR.

With those formalities out of the way, I’ll now turn the call over David.

David Petroff

Good day everyone. And thank you for joining us. I trust that you’ve all seen and read our third quarter results and while we continue to make progress in bringing our cost down, overall I believe the operational and financial results can be greatly improved. I’m sure that we are turning the corner for the better and we will provide you with some detail on this in a few minutes.

In our presentation this morning, I intend to confine my comments to the overall short-term strategy that I envisioned for the company going forward. I’ve asked Fred Hermann, a member of our Board of Directors who’s very experienced and capable on the operational front, to comment on the turnaround of the mines.

As we consider what will be the best short-term strategy for Jaguar, we can begin with three key facts. Jaguar has a solid base of three producing underground mines. It has excellent potential to increase reserves and resources at the existing operations. And Jaguar has a broad portfolio of quality properties and resources that represent excellent growth potential. In short, Jaguar’s future potential is bright.

In the recent past, the company has lacked the CEO, struggled with its producing assets and experienced a significant cash outflow. In contrast, today, there is executive leadership in place, a plan to solidly improve the operations and measures taken to strengthen the financial profile. With the implementation of this plan the mine’s challenges are being addressed and with time improvements will flow to the financial results.

While we are making progress, the implementation of the turnaround plan will still take several more quarters to complete. And we needed to ensure that we have sufficient funds to stay the course, to allow for the duration of operational improvements. And that is the genesis of pursuing a $30 million line of credit. Renvest was the most reasonable and flexible option of the many that we considered and therefore we signed a term sheet with them.

We are currently in the process of completing documentation and providing security. We expect the facility to be in place by year-end. And we intend to make an initial drawdown of $5 million on closing. Thereafter, we intend to use it as a safety net and minimize drawdowns to the greatest extent possible.

Our short-term strategy continue to focus on improving our operational results. Also our near-term strategy calls for instituting tighter measures to manage our financial situation including enforcing robust controls on procurements and warehousing, proactively managing our working capital, protecting our foreign exchange financial exposure within our modest means and temporarily slowing our investment directed at our growth opportunities.

As we begin to generate positive free cash flow, which is after capital, after debt service, and after our overhead costs we will initially invest in additional equipment to increase the underground activities in production. Only when we are operationally stable, will we increase our investments to fund the growth opportunities.

Going forward on this basis we anticipate to finish the year with total production of 100,000 ounces to 110,000 ounces and an average per ounce cash cost of $1,050 to $1,150. I want to reiterate that we have plenty of upside, which includes the restart Paciência, Gurupi development, Pedro Broncho exploration and Brownfield exploration.

Now I’d like to ask Fred to take a few minutes to discuss our operational situation.

Fred Hermann

Thanks, David and good day everyone. Thanks for joining us. I believe it is clear to all that Jaguar’s operations are in a state of transition. Under new leadership we are continuing with a comprehensive turnaround plan to return our operations to sustainable profitability. Significant progress has been made to date, which is evidenced by the notable reduction in cash operating cost per ounce in the third quarter. Hence we initiated our cost reduction program in the first quarter of the year.

Total average cash cost per ounce declined by more than 24%. Average cash cost per ounce at Turmalina and Caeté declined by 24% and 15% respectively from Q1 to Q3. Total head count has been reduced by 36% since the first quarter. Placing Paciência on current maintenance was the biggest driver the head count reduction but we also cut head count by 14% at Turmalina, 9% at Caeté and more than 25% at our administrative offices in Belo and Concord, New Hampshire.

Our staff reductions are largely complete for now, but we will continue to make adjustments as required or as improvements in productivity allow. The process of implementing our revised ground control in mining methods is ongoing. The short-term effects of this have been to increase the development cycle times and ground support costs. The increased development cycle times were significant contributor to the lower production at Turmalina during the quarter.

We will not recognize the full positive impacts of the change in ground control for several months, but we expect them to be significant. Most importantly, we will achieve a significant reduction in the risk to our workers which will reduce loss time injuries, improve our morale and motivation.

Additional benefits will be a reduction in unplanned dilution and increase productivity over the long haul as interruptions of production due to ground falls will be minimized. The turnaround plan is in a work-in progress, and while the broad categories will remain specific actions will be varied as we determine areas of greatest potential or need.

The three main components to remain in the turnaround plan are cost reductions, improving operational efficiency and becoming more data-driven. The process of reducing costs in a mining operation never ends. Beyond the continued implementation of our new mining methodology, Jaguar will continue to look for methods or procedures which will contribute to cost reduction while maintaining health, safety and environmental standards.

Some examples of work ongoing in this area are reduction in inventory levels, examination of the use of outside consultants, aggressive purchasing to obtain best pricing and most importantly making sure we do what is necessary correctly and we do not spend time on non-essential items. We are currently examining all outside consultants for the following. It is something we need to do. It is something we can do ourselves at a lower cost or is it a low cross qualified consultant available. Every facet of the operation is open to examination to identify areas for efficiency improvement and productivity gains.

We will start with a development cycle as this is our most critical area, but we will continue the process through all facets of the operation. The process will continue indefinitely over the life of each operation and each property. Mining is a dynamic process and quick decisions are often needed, but effective mine planning and decisions governing fundamental change must be developed and implemented based on proper data in order to be successful.

Nowhere it is more evident than need to have proper geological information in front of us. Infill drilling will be a priority for the coming year and moving forward. Proper information will give us the ability to reach our goal of having 12 months production blocked out in front of us. While we will avoid becoming data dependent, we will also avoid for the most part making the line decisions.

I believe with effective management and effective implementation of the plans we have laid out and described to you, there is a lot of upside potential on our existing operations. I am optimistic about the future.

Now let me turn the call back over to David.

David Petroff

Thanks Fred. To summarize, I want to ensure that you take away these key points. One, I believe that we have passed in adhere of our performance and the future is brighter. Two, we are starting to see traction and success from a turnaround and cost reduction efforts. And three, we’re taking measured thought-out steps in the execution of a comprehensive strategy designed to restore profitability and deliver improved value for our shareholders. And fourth, we have every intention of succeeding.

Before including my prepared comments, I would like to take this opportunity to acknowledge the support and conviction shown by the Jaguar work (audio gap) to move forward and build a safer, more effective and profitable enterprise. I invite you now to ask any questions you may have.

Question-and-Answer Session

Operator

(Operator Instructions). And our first question comes from John Bridges from JP Morgan. Please go ahead with your question.

John Bridges – JP Morgan

Hi morning everybody. What exactly are you doing in terms of ground support, which is confused the mining situation there temporarily?

David Petroff

Fred do you want to answer that?

Fred Hermann

Sure good morning John. The old ground support method in use primarily at Turmalina and Caeté involved the application of split sets as a primary means of ground support. Given the ground conditions we had and the openings we had, they were insufficient to continue to hold the – particularly the hanging wall and back over the long period of time that was part of the mining cycle.

So, we had it switched with the help of a very well-known international consultant, Hendrik Kirsten. We have re-modified the ground support so that we’re now putting in rebars as a short height support and longer cable bolts to hold the hanging wall in place. This support mechanism takes longer to install than the split sets. And as a result our cycle time, particularly at Turmalina where we were – was tight on itself to begin with, backed up so that we had different groups working on top of each other.

We are now working on our way out of that. We are working in multiple areas again having cut off a bit on the ground support and are moving forward, but it is a bit of a longer cycle time and you’ll notice that it is also a more costly means of ground support in the short-term. In the long-term, the productivity gains will get from not having to deal with ground falls and the reduced delusion will pay-off to a large degree.

John Bridges – JP Morgan

Okay. So the first – there’s a transition from open sloping to call it Turmalina, so what sort of span are you trying to support at the moment?

David Petroff

It varies. At Turmalina we’re probably in main block. We’re probably in a 5 meter span across the ore body, but it can be 100 meters long and in the cut and fill stopes it’s not quite as difficult to support that as it was in the open stooping. The move to cotton field stopes at Turmalina is basically in the new horizon and in ore body A we’re still continuing with the open stoping.

John Bridges – JP Morgan

Okay. And are we just trying to support 5 meter spends with 2 meter split sets?

David Petroff

That’s was tried and the biggest problem though John was the hanging wall. It was not necessary to span across the back as you took the open stope, the exposure of the hanging wall was much more than five meters. At the end of the day, the exposure of the hanging wall would be 1,250 meters.

John Bridges – JP Morgan

Okay. David, maybe one for you, what you brought you to this company, what do you see as being the opportunities here?

David Petroff

Well, I think what brought be to the company was the potential that the assets have and the opportunity to turn it around and make it successful.

John Bridges – JP Morgan

And looking at the results, it looks as if the targets that John Andreas put in place last quarter seemed to have been that’s a touch optimistic and you have to pull them back, how disappointed are you with that?

David Petroff

Well, I would say that we have been onboard now for 65 days and we have to call it as we see it. I mean he had a different view that’s slightly a different approach to ours. So, we are – let me say we are not disappointed because I think we are kind of setting out our first targets and our objective is to set out targets that are reasonably achievable and hopefully whereas I can understand that the market has been disappointed about missing what the expectations were for third quarter. Our goal is to not disappoint investors on any quarter and so the fourth quarter is going to be out first.

John Bridges – JP Morgan

Okay. Well operationally you were down to sort of close to a cash breakeven, but you – what’s sort of sustaining capital do you think you’re going to need going forward?

David Petroff

I don’t have a figure for that. I think that one of the challenges is that we want to make sure that development and delineation drilling as well ahead of mining, that’s not the case today. So we’re going to have to spend whatever we have really to get in front of the mining in the short-term.

John Bridges – JP Morgan

Hence the debt financing?

David Petroff

Pardon me.

John Bridges – JP Morgan

Hence the debt financing?

Fred Hermann

Well we – as I mentioned, we after the first $5 million drawer, our plan is to hopefully keep that in reserves solely as a safety net. We’re going to try and – our goal is to live within our means.

John Bridges – JP Morgan

Okay, great. I’ll get out of the way. Thanks for that. Good luck.

David Petroff

Thanks John.

Operator

Our next question comes from Eric Opal, from Glass Capital Management. Please go ahead with your question.

Eric Opal – Glass Capital Management

Hey, guys. So it’s just a follow-up from the previous investor. Regarding the new targets for production, for cost reduction, so as I understand a new guy comes on board and wants to set the bar at some level where he’s comfortable with. Couple of questions on that, is the bar set as low as you believe it’s going to go with upsides from here, and what would cause you to bring that bar down once again?

David Petroff

Well, I think in setting the bar for the fourth quarter we’re setting something that we think is realistic and achievable, but it is not necessarily a slam dunk, it’s – the mines have to be working reasonably I’d say reasonably in the context of how they have been working. We expect there’s a lot of upside in there operations and as we demonstrate to ourselves that we can do better on a consistent basis at a sustainable then we will be raising bar as we go along. At this point of time, we’re not prepared to make any judgment as to what that part might be for 2013.

Eric Opal – Glass Capital Management

Okay, would the expectation from our standpoint – be that that bar adjustments are upward from here? See, that’s what I’m trying to understand, now coming into 2013, are we going to see lower production numbers as far as what the company believes is possible or we already there at the bottom and there’s room for improvement, is this still downside risk for next year?

David Petroff

Well, I’m not going to answer the question about 2013. All I can tell you is that it takes time to turnaround in operation. And it’s not always monotone increasing step that you are taking, you’re going forward for sometimes there’s a pause, or a small step backwards. So in terms of expectations as we go, we’re going to plan next year based on the people and equipment that we have and to the extent that we generate cash flow from operations or free cash flow we’re going to reinvest it in improving the processes and improving the equipment that we have. So, we think that, yes, there’s going to be improvement as we go forward, but it’s not necessarily that it would be consistently one quarter after the next.

Eric Opal – Glass Capital Management

Just one other question. If you – the company is streamlined. At what point would you as the new CEO want to consider potential M&A transaction. Does that even in your playbook, doesn’t have to be in yet or even near-term or intermediate term, is it in your playbook?

David Petroff

Well, it’s always in the playbook. And it’s just a question of where we – today, we have to focus our efforts on getting the ship in order. And with regard to M&A, you take your blanket off and you just have to be aware that something can walk in the door at any day, but certainly we’re not going to pursue anything aggressively till we get our own ship in order, because we think that by doing the best with our own assets, first we create the best value for shareholders and second of all it gives our shareholders a better negotiating position to the extent that an M&A transaction is to occur.

Eric Opal – Glass Capital Management

Okay. Actually, I do have one other question. The assumptions for, I don’t know if you actually have an economics department, but do you have any assumptions for the average price of gold for next year?

David Petroff

We don’t have an economics department, if we did and I am not aware they might be looking for another job so...

Eric Opal – Glass Capital Management

Okay. I appreciate it.

David Petroff

We are bullish on the price of gold.

Eric Opal – Glass Capital Management

Okay. Thank you, guys.

David Petroff

I think, just basically I don’t think the U.S. can print so many trillions of dollars and I think the gold is going to be unaffected and things that they can print their way out of their problems.

Eric Opal – Glass Capital Management

Okay. Thanks.

David Petroff

Okay. Thank you, Eric.

Operator

Our next question comes from (inaudible). Please go ahead with your question.

Unidentified Analyst

Hey guys, first question was how much of the mine that you put on maintenance – care and maintenance, how much of I thought that there was a $3 million charge in the – I think the G&A related to it and there was also some other, could you just kind of break that out for us like how much you spent on that which would be like one time and not be a recurring charge?

David Petroff

Jim, do you have any answers to that?

Fred Hermann

Yes. The onetime charge was €2 million.

Unidentified Analyst

Okay.

Fred Hermann

$2.1 million and the ongoing charge or the type of cost that we’re ongoing was $1 million. We think that that’s high and we expect to bring that as an ongoing cost of care and maintenance down in the future.

Unidentified Analyst

Okay. And then I mean so what happened with the admin cost, it went from $3 million to $6 million quarter-over-quarter, so what was behind the increase over there?

Fred Hermann

Jim?

David Petroff

You want me to take that? Oh, we had two things going on there. One is we had some cost reversals in the second quarter that mitigate low and in the second quarter we had some charges that had to do with the turnaround including severance.

Unidentified Analyst

Okay. So, there was $2.1 million separately and then how much was the severance cost in that admin number. I guess could you just tell us how much quarterly admin you expect going forward?

Fred Hermann

We are looking at admin of being something like $1 million. Our target is to have it be between $1 million and $1.5 million a month, which is $3 million to $4 million a quarter.

Unidentified Analyst

Okay, that is helpful. And then what is the timing of the Gurupi study and if you could give us any color on I guess anyone, any interest you have gotten on that asset and are you still considering a sale of that asset?

David Petroff

So that’s a good question. We did get quite a bit of interest in the assets and basically what we are doing right now is we are saying we need to focus our efforts on the operations and that focus requires our full technical team to help us gather the data that we need to get the mines working well. So, in that regard, we’ve kind of pulled back and temporarily suspended our action with Gurupi other than to keep the licenses up and everything in good order and while we spend the next quarter or two turning the shipment.

Unidentified Analyst

Okay, I mean I just want to understand like you took on somewhat expensive debt financing and you must have – I would think that you would have compare that option to just sending a non-core asset. So, was that considered and I guess do you believe that selling it now would be kind of like – selling it at a low valuation or what was the thought behind it, was it not selling the asset and raising debt financing?

David Petroff

Are you referring to Gurupi, are you?

Unidentified Analyst

Yeah, yeah – versus you could have maybe, the market was expecting that maybe you could sell the Gurupi asset instead of raising expensive debt, so that?

David Petroff

Sure. I think that whether or not we sell Gurupi is still an open question with us. You make the statement that is a non-core asset, I’m not convinced that that’s the proper characterization of it and so we need more time to study what we think we can do with the assets that we have including Gurupi and I think that if you look at some of the recent transactions in the marketplace, there was an incredible value to Gurupi and it’s not a short-term process, just open the door and say let’s go. I mean everybody wants to go and get the tires and walk the property and stuff like that. So, in the short-term it is really where we need the safety net because we’re turning around the operations and we’re – and cash is tight today, not a necessarily a year from now. So it’s the expedient thing to do, and it’s relatively expensive in a normal world, but in the world of a company that’s struggling it’s not that expensive at all we think.

Unidentified Analyst

Okay. I thought that you guys locked in about 8,000 ounces at around 1,775 for the fourth quarter. I’ve not, maybe I missed it, but I’ve never seen these forward contracts being done, is this something new and do you – is there like kind of a guidance of how much you’re thinking of locking in going forward?

David Petroff

It’s not guidance for the future. What it is, while we were looking at the short-term cash flow forecast, we thought that – and our forecasts are based on $1,600 gold. We thought okay, it’s a good price to walk-in something better than the forecast and ensure that we have a decent revenue on the gold that we produce. So, at a modest level of 3,000 ounces a month, our October, November and December, we entered into these contracts.

Unidentified Analyst

Yes. Great move. One last question I had, you know, historically, whenever I’ve spoken to the last management, on CapEx I’ve heard that it costs around $20 million per mine to keep the mines going. Is – I know you – early in the call you said you’re not ready to like give a guidance, but does that number, I mean can you reflect on that number, is that high, low or any thoughts on that?

David Petroff

So, I have thoughts but I would say that at this point in time, we’ll just have to wait till we get through our 2013 budgeting process, and when we provide guidance for, we can also address the capital expenditures.

Unidentified Analyst

Thank you.

David Petroff

Thanks, Bashir.

Operator

And our next question comes from David Epstein from CRT Capital. Please go ahead with your question.

David Epstein – CRT Capital

Hi. I apologize if I missed this, you’d mentioned earlier that you’re going to live within your means. So, were you saying other than the $5 million that you draw down that you expect cash from operations to cover CapEx or would you need to draw some more of that $30 million I think it was...

David Petroff

Well, David you tell me what the gold prices (inaudible) the real answer to that question is. But aside I would say we’re going to drive down the $5 million and otherwise we are going to hope to generate positive cash flow from operations to cover our debt service and our overhead and hopefully some left over to be reinvested in the mines.

David Epstein – CRT Capital

Right, okay.

Fred Hermann

Happen instantaneously and therefore we’ve got the $5 million and the extra $25 million after that.

David Epstein – CRT Capital

Right, but you’re hopeful of gold is so much stable that you won’t need the extra $25 million?

Fred Hermann

Correct.

David Epstein – CRT Capital

Okay and then on the Gurupi, so in trying to be – it’s exercised the greatest prudence at the end of the day if there’s a little bit of sort of time value of money lost from not doing anything, selling it or developing it over a couple of quarters, so be it until you have time to sort of do it properly, is that a fair characterization?

Fred Hermann

We want to do it properly that’s a fair characterization. Time value of money is always one thing to consider, but that you will think that waiting would increase the value of Gurupi more than the discount rate.

David Epstein – CRT Capital

And there was a glitch in the connection, you said just because of – was it because of your appreciation of gold, is that what you said?

Fred Hermann

Yes.

David Epstein – CRT Capital

Okay, great. Thank you.

David Petroff

Thank you, David.

Operator

Our next question comes from Greg (inaudible) Royal Securities. Please go ahead with your question.

Unidentified Analyst

Yeah, it’s partly – good morning. It’s partly been answered, but I was wondering about some of the people in the formal management was seeking out a strategic partner. Is there anything, any task or any other gold miners about coming into helping to develop these assets?

David Petroff

So you’re asking is that a possibility?

Unidentified Analyst

Not only a possibility but also it seems like people just don’t go away. If you – I heard that the former management had a deal like last November with a company who stacked between November and April fill like 40% and deal was called off and there were a minor in the South American areas?

David Petroff

They never mentioned who it was, but there was like a stock deal for Jaguar Mining after the Chinese thing fell off.

Fred Hermann

Greg, I can tell you that today there are no direct discussions with any counterparty regarding a business combination that involves Jaguar and Gurupi. It’s not – it’s just one of the events that might transpire with time but today nothing is going on in that regard.

Unidentified Analyst

Okay. Thank you.

David Petroff

Thanks Greg.

Operator

Our next question comes from Anna Povinelli from Bristol Investment Partners. Please go ahead with your question.

Anna Povinelli – Bristol Investment Partners

Hi. It’s actually two parts. David, prior to accepting the position, how much due diligence did you perform on the company and what were your impressions?

David Petroff

Is that the two parts or is there....

Anna Povinelli – Bristol Investment Partners

No, that’s just one part.

David Petroff

So before I accepted the position, I probably watched the company through reading press releases and items filed with on the internet for about a year. And then when it became interesting to me, then Fred Hermione and I took a trip down to Brazil and we spent five days there walking in the properties and talking to people. I spent some time talking with most of the directors before that and my impression was that there is a – first of all that the operations are for all the problems that may have had they’re all fixable. And the big challenge was where we run out of money before we turn it around, and I thought that there was opportunity to be able to turn it around. And I found that I would have to say that there are many very talented, dedicated people working at Jaguar and that was also something that impressed me.

Anna Povinelli – Bristol Investment Partners

Okay. And my second part was Renvest Mercantile Bancorp. How did you find them?

David Petroff

Okay, the truth is that they found me, they went and based on another transaction they were thinking of doing an – and needed senior management and through our discussions and in the course those discussions I ended up choosing to join Jaguar and so I invited them to participate in the – in all the biz that we had for the financing.

Anna Povinelli – Bristol Investment Partners

Okay. Thank you.

Operator

Our next question comes from Fabio Zamith from CarVal Investors. Please go ahead with your question.

Fabio Zamith – CarVal Investors

Hi, guys good morning. My question is on the debt and on the cash flow. You said a couple of times now that you don’t intend to draw down on the full facility of the event. I just those numbers assuming the amount of debt that’s coming due not only in the fourth quarter and next year based on the guidance you gave for this year. Can you walk us through, is there anything that we’re missing here because it looks like not only you need to draw this full $5 million, but the full facility, just to cover the debt amortization?

David Petroff

Are you referring to the short-term debt on our balance sheet, is that which you’re thinking of Fabio?

Fabio Zamith – CarVal Investors

Yes. I see there is a few bank debts that including the promissory note and the CBRD notes, are you able to refinance that or where the money is....

Fred Hermann

Sure, the CVRD note we’re going to repay. It’s a small amount, I think it’s about $2 million and the balance, the majority of the balance is from two Brazilian bank lenders and some of it is lease financing, which we’ll pay in the normal course, but the majority of it is that was called export-related loans, almost like loans against our receivables for example, although they are not secured and therefore a certain term and we actually expect that those lenders will simultaneously that will be repaid and redrawn, which has happened this year. So, we’re not expecting those loans to term out.

Fabio Zamith – CarVal Investors

What do you expect those finances to be – how much more expensive driven that is compared to...

Fred Hermann

They are short-term, so it’s like six months at a time.

Fabio Zamith – CarVal Investors

Okay.

David Petroff

So when one comes due, we will paid off and simultaneous re-draw it and part of our plan really is to manage the relationship with the local bankers and so they feel good to comfortable about continuing to do business with us on that basis.

Fabio Zamith – CarVal Investors

If that how you are operating in the past or this is the first time that it’s coming due in December?

David Petroff

These are not new.

Fabio Zamith – CarVal Investors

Okay and then if you don’t mind I just have a couple of questions regarding the event that I understand that they are secured by the properties, do you know what type of securities was granted for those for that debt?

David Petroff

Securities for which debt?

Fabio Zamith – CarVal Investors

For the Renvest capital?

David Petroff

For Renvest?

Fabio Zamith – CarVal Investors

Yeah.

David Petroff

Sorry, Revest is going to be secured on basically all our assets as are unsecured.

Fabio Zamith – CarVal Investors

And are those the type of security on the Brazilian type of channel mortgage that they used on the assets including the equipment and the mines or just the equipment?

David Petroff

No, it’s going to be on all of Jaguar’s assets.

Fabio Zamith – CarVal Investors

Okay. And they get the 450,000 shares regardless if you draw $5 million or the full amount?

David Petroff

I think so. Jim do you have – am I right there?

Jim Roller

Yes you’re right David. They’ll get the full amount.

Fabio Zamith – CarVal Investors

Okay. Thanks for clarifying that.

David Petroff

Thank you Fabio.

Jim Roller

Thanks Fabio.

Operator

Our next question comes from (inaudible) from TBC Securities.

Unidentified Analyst

Hello. Can you guys hear me?

David Petroff

Yes we hear you.

Unidentified Analyst

Oh yes. So I just have a question right now. So basically this also right around the full year, just for the record. So, last quarter be, I get the previous CEO John Andrews, right, she made several comments about – they were several interested stakeholders in looking at Jaguar Mining and also Gurupi in particular. I should – so I just have a question regarding that. So, when are this pointed again how – I’m just wondering how would Jaguar turn its operations around to a profitable mining to price? And to pay off all that debt, there’s many questions surrounding I guess the survivability of the company right at this point? But is there anything of aside turning the company around completely for example like some kind of asset sale or maybe notable mine sale to help the company survive I guess, I think that’s the key question right now?

David Petroff

Okay. I presume what you’re doing is looking forward to...

Unidentified Analyst

Yes

David Petroff

To our convertible debentures and how we’re going to address those, is that correct?

Unidentified Analyst

Yeah. I think that’s a key issue right now. I think the number one question.

Fred Hermann

Yeah. So before we can address those, we really have to fix the operations that we have and then you asked a question can you sell some assets to address the debt. And the answer is we can. You have to ask though which ones and how far will they go in terms of addressing the $265 million that places us in the future and if you can’t address all of that, then you have to really think long and hard about whether you’re going to do that.

So I don’t have an answer today on what’s going to transpire over the next two years. That is going to address the first maturity except we’re going to work hard and turning around the operations. If we think that reopening as CNCS is going to be the biggest value increased to our shareholders we’ll do that and whatever else we think in terms of adding value, we’ll continue to do that and hopefully that will have a significant enough size, market capitalizations so that we can deal with the debentures that are due in November of 2014.

Unidentified Analyst

Right, yeah, so I had hoped. At the same time, I just hope that you guys can appreciate as a management diagonal from your shareholders such as myself and many other people on the phone here. Jaguar has been – not been a very pleasing company to hold for the last couple of years in fact and in each quarter the management has not failed to surprise us with disappointing results one quarter after another. In fact, every time, there’s a conference call, there’s always a lowering guidance in terms of production, higher cash cost. So far, this is the first quarter in which cash costs actually slowed down, but again production has failed miserably. So, going forward, I really want to make sure that there is a consistent improvement. We just have to take a word for it at this point honestly. There’s no other way to go about it, right?

David Petroff

I can appreciate how frustrated you are and unhappy you are with the – if you just look at the stock price of the Jaguar, it’s been an unhappy story.

Unidentified Analyst

Right, even as on today?

David Petroff

And you can take our word for it, but we hope to in next quarter and every quarter demonstrate progress to you and demonstrate that what our intentions are coming to fruition. So, yes, take our word for it now, but next quarter hopefully we’ll demonstrate that our word is good. That’s our plan.

Unidentified Analyst

Okay. And then just one last question here, I guess (inaudible) again in terms of assets of Gurupi and such is the main concern right now that, I mean in terms of the mining and grades and also the reserves available on Gurupi, is that a concern for not – is that a part of the reason why I guess you guys are not considering for selling now, is there anything other than what’s available on the market probably public information wise, we don’t know about Gurupi.

This is part I’m wondering because on numerous occasions including previous conference call, right, there’s always many different interested parties in Gurupi and in Jaguar Mining. So from an investment perspective, we always get this impression that the company and also Gurupi is a very attractive asset out in the market. And according to the transcript from the past quarter’s right, there were I think around 20 plus parties interested in Jaguar but eventually I think five went on in the process and at the end I think there were two parties including Chinese.

I think Shandong Gold Company along with another unnamed gold company. And nothing’s happened from here in last quarter when John Andrews stated that there were several interested parties in Gurupi, again after three months based on what you’ve said in this conference call that it’s not going to be any I guess plans with Gurupi’s sale in the foreseeable future. Is there anything that we should be known, I mean is there anything that we will know about regarding the asset sold in terms of quality or in terms of its reserve ounces or pretty much everything in the public market is what the public already know.

David Petroff

Okay. Well let me just first say that I hope I was clear that, I was clear that I didn’t say that we were not going to sell Gurupi and as – and I didn’t say that we’re taking it off the market or anything like that. I’m just keeping our options open at this point in time, while we reassess it. With regard to the asset itself, it’s an outstanding asset.

Unidentified Analyst

Okay

David Petroff

It’s available – let me say it’s one of the bets assets around as an independent self-sustaining asset if you have the capital to develop that and not only is there the resources that we’ve reported but there is a feeling amongst our exploration team that there is a tremendous amount of up sight in terms of adding to the resource base. So, it’s – all the news about Gurupi is good news, not bad news. And it’s a valuable asset. And the question is; what’s the right thing to do with it and that something that we’re considering while we focus on turning around the mines.

Operator

Our next question comes from (inaudible). Please go ahead with your question.

Unidentified Analyst

Good morning, I was just curious if you could you give us some more details on the competitive process you mentioned to line up that financing that you ultimately did with Renvest?

David Petroff

We canvassed the market, we had about a dozen interested parties and we took their indicative offers and we went back to them based on what suited us. We were left with about six, and that we’re interested in and we lined them up in terms of ability to close, ability to cost, dilution per shareholders, flexibility, and a variety of other things, and we chose Renvest as the leading candidate of the group. Does that answer your question?

Unidentified Analyst

What sort of, I mean I think some of the other people on the call, had similar reactions to me, like, it’s not a company I heard of before or thought of – it’s one of the main ones in the space, and you also mentioned that it’s someone that already familiar with and then they approached you to do this financing transaction which seems pretty punitive so, I mean I’m just kind of curious how that process out and then specific question about the terms of it, are there any restrictions within that facility – obviously assuming its drawn on terms of asset sales i.e. would this prevent you from doing some sort of transaction regarding Gurupi?

David Petroff

So, in the space that we’re in today and with the capital markets being unfriendly as they are, I will say that relatively speaking Renvest was the least expensive, least punitive, most flexible offer that was there. Renvest, their bread and butter is secured loans to mining companies and so there may not be a household name, but they have been in the space for long time. There will certainly with the secured facility, you always have restrictions and if there’s a restriction on sale of assets, it’s most likely that would be, we’re still negotiating the credit agreements. So, I don’t know what the final terms and conditions will be, but it’s to be expect it that if they are secured, they want to make sure that their securities is not alluded by future transactions. Is that answer your question?

Unidentified Analyst

Yes, thank you.

Operator

Okay, thank you.

Operator

And we have a follow-up question from (inaudible). Please go ahead with your question.

Unidentified Analyst

Hey, guys, just one follow-up, when you are signing this new facility was the size, the $30 million size, how did you guys come up with that number, was that a maximum that anyone was trying to was willing land or could you give us some thought on that?

Fred Hermann

It wasn’t maximum, it was what we thought was proved amount to have based on what might transpire over the next few months in terms of cash flow stresses. We could have upsize it, but we didn’t want to embed too much dilution for our shareholders.

Unidentified Analyst

Okay, understood. And one more follow-up, a clarification between the bank debt and the CVRD note you have around $35 million, could you just tell us how much of that you plan to repay and how much of that will you think that the banks will I guess extend and refinance?

David Petroff

Jim, do you have the breakdown of the numbers?

Jim Roller

Roughly $5 million will be repaid through the – as part of the CVRD note that we have and as part of the debt that we have, which is capital equipment financing, which is going to be which repaid on a monthly basis in the ordinary course. The other gap that we have is the local too earlier, which is export loan financing and we expect that loan continue to no longer...

Unidentified Analyst

Thank you.

David Petroff

You are welcome.

Operator

And at this time, it showing no additional questions. I would like to turn the conference call back over for any closing remarks.

Roger Hendriksen

Thank you everybody for joining our call. We look forward to speaking with you in the future. And if you have further questions, you can certainly follow-up with me, Roger Hendriksen, Vice President of Investor Relations, and we’ll do our best to answer whatever questions you may have. Thanks again for joining our call. Bye, bye.

David Petroff

Thank you, bye.

Operator

Ladies and gentlemen, that concludes today’s conference call. We do thank you for attending. You may now disconnect your telephone lines.

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