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Friday, April 23, 2010

Jaguar Mining (NYSE:JAG) Lowering Production Goals?

Jaguar Mining (NYSE:JAG) has been looked upon, even until recently, as one of the top small gold mining companies, but that has changed quickly after their latest quarterly report showed earnings which were down and higher costs of doing business.

Like a young man growing to quickly as a teenager, it looks like Jaguar is getting gangly and uncoordinated, as they're having to readjust their production goals in order to align with these new realities.

Part of Jaguar's problem as far as cost go were the continuing strength of the Brazilian real, which increased the cost of doing business for them. The other challenge was they hit lower grade ore, so while costs were rising the quality of the ore was falling, creating the lower earnings.

Even with lowering the production goals from 700,000 ounces to 650,000 ounces by 2014, it's difficult to see how they're going to reach them unless they change tactics as far as how to finance it, which no doubt would dilute the stock, or possibly dropping the plans to expand for now until circumstances change.

Either way, it's hard to imagine Jaguar reaching the lofty goals they've set for themselves without some major changes. Dilution or slowing growth seems to be the only options available to them, and to do that they'll have to change their past resistance to doing that.

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