Jaguar Mining Announces Sale of CentroGold Royalty to Metalla Royalty & Streaming for up to US$18M

Rhea-AI Summary

Jaguar Mining Inc. has finalized a Definitive Agreement with Metalla Royalty & Streaming Ltd. to sell its Net Smelter Return (NSR) royalty from gold production at the CentroGold Project in Brazil, valued up to US$18 million. The deal features an upfront payment of US$7 million and potential milestone payments based on project progress. CEO Vern Baker expressed satisfaction with the transaction, highlighting expected future equity gains from Metalla. Additionally, Jaguar anticipates US$5 million in cash from Avanco as part of a prior agreement.

Positive

• Immediate monetization of a long-term royalty asset worth up to US$18 million.
• Potential for future equity gains and cash payments from Metalla based on project milestones.

Negative

• None.

TORONTO, ON / ACCESSWIRE / March 16, 2021 / Jaguar Mining Inc. ("Jaguar" or the "Company") (TSX:JAG)(OTCQX:JAGGF) is pleased to announce that it has entered into a Definitive Agreement with Metalla Royalty & Streaming Ltd. (MTA) ("Metalla") for the sale of the Company's Net Smelter Return ("NSR") royalty from gold production at the CentroGold Project (also referred to as the Gurupi Project) located in Maranhão State, Brazil. The Company has agreed that it will sell, transfer and assign to Metalla all of the Company's right, title and interest in and to the NSR for an aggregate purchase consideration valued at up to US$18,000,000.

Jaguar retained the NSR when the Company sold the Gurupi Project to Avanco Resources Limited ("Avanco") (refer to the Company's news release October 31, 2017). Avanco was subsequently acquired by Oz Minerals Limited (ASX:OZL) in March 2018. The NSR is comprised of a 1% net smelter return on the first 500,000 ounces of gold sold, a 2% net smelter return from 500,001 to 1,500,000 ounces of gold, and a 1% net smelter return on gold sales exceeding 1,500,000 ounces of gold.

Transaction Structure

Jaguar has agreed to sell the Royalty to Metalla for total consideration of up to US$18 million that includes an upfront payment of US$7 million in cash upon closing, and an additional US$11 million upon achievement of two milestones relating to the CentroGold Project.

The first milestone will be triggered upon grant of all project licenses, the lifting or extinguishment of the injunction imposed on the CentoGold Project with no pending appeals and, if necessary, the completion of any and all community relocations. The first milestone payment will be satisfied by Metalla issuing common shares to Jaguar with a value of US$7 million priced at the fifteen (15) trading day volume-weighted average price on the NYSE American on a date that is within 120 days following completion of the trigger.

The second milestone will be triggered upon the CentroGold Project achieving commercial production and will be satisfied by Metalla through a US$4 million payment to Jaguar in cash.

Vern Baker, CEO of Jaguar Mining commented; "We are very pleased with this royalty transaction that will see an immediate monetization of a long-term royalty asset on our balance sheet. Once the injunction on the project has been lifted, Jaguar will get further expected milestone payments in the form of equity in Metalla and some cash consideration. The expected equity component in Metalla will give Jaguar an upside on the CentroGold Project in the future."

Contingent Consideration on Sale of Gurupi to Avanco/Oz Minerals

As per the original earn-in agreement signed in September 2017 between Jaguar and Avanco (refer to the Company's news release September 18, 2017), upon Avanco achieving clear title and access to the CentroGold Project, Jaguar will also receive in aggregate an additional US$5 million of cash payments from Avanco, in a series of 10 instalments of US$500,000 per month.

Advisors and Counsel

PI Financial Corp. acted as financial advisors to Jaguar. Miller Thompson LLP acted as Jaguar's Canadian legal advisor and Azevedo Sette Advogados acted as Jaguar's Brazilian legal advisor in regard to this transaction.

About Jaguar Mining Inc.

Jaguar Mining Inc. is a Canadian-listed junior gold mining, development, and exploration company operating in Brazil with three gold mining complexes and a large land package with significant upside exploration potential from mineral claims. The Company's principal operating assets are located in the Iron Quadrangle, a prolific greenstone belt in the state of Minas Gerais and include the Turmalina Gold Mine Complex and Caeté Mining Complex (Pilar and Roça Grande Mines, and Caeté Plant). The Company also owns the Paciência Gold Mine Complex, which has been on care and maintenance since 2012. The Roça Grande Mine has been on temporary care and maintenance since April 2019. Additional information is available on the Company's website at www.jaguarmining.com.

For further information please contact:

Vernon Baker
Chief Executive Officer
Jaguar Mining Inc.
vernon.baker@jaguarmining.com
416-847-1854

Hashim Ahmed
Chief Financial Officer
Jaguar Mining Inc.
hashim.ahmed@jaguarmining.com
416-847-1854

Forward-Looking Statements

Certain statements in this news release constitute "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking statements and information are provided for the purpose of providing information about management's expectations and plans relating to the future. All of the forward-looking information made in this news release is qualified by the cautionary statements below and those made in our other filings with the securities regulators in Canada. Forward-looking information contained in forward-looking statements can be identified by the use of words such as "are expected," "is forecast," "is targeted," "approximately," "plans," "anticipates," "projects," "anticipates," "continue," "estimate," "believe" or variations of such words and phrases or statements that certain actions, events or results "may," "could," "would," "might," or "will" be taken, occur or be achieved. All statements, other than statements of historical fact, may be considered to be or include forward-looking information. This news release contains forward-looking information regarding, among other things, expected sales, production statistics, ore grades, tonnes milled, recovery rates, cash operating costs, definition/delineation drilling, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of projects and new deposits, success of exploration, development and mining activities, currency fluctuations, capital requirements, project studies, mine life extensions, restarting suspended or disrupted operations, continuous improvement initiatives, and resolution of pending litigation. The Company has made numerous assumptions with respect to forward-looking information contained herein, including, among other things, assumptions about the estimated timeline for the development of its mineral properties (including the CentroGold Project); the supply and demand for, and the level and volatility of the price of, gold; the accuracy of reserve and resource estimates and the assumptions on which the reserve and resource estimates are based; the receipt of necessary permits; market competition; ongoing relations with employees and impacted communities; political and legal developments in any jurisdiction in which the Company operates being consistent with its current expectations including, without limitation, the impact of any potential power rationing, tailings facility regulation, exploration and mine operating licenses and permits being obtained and renewed and/or there being adverse amendments to mining or other laws in Brazil and any changes to general business and economic conditions. Forward-looking information involves a number of known and unknown risks and uncertainties, including among others: the risk of Jaguar not meeting the forecast plans regarding its operations and financial performance; uncertainties with respect to the price of gold, labour disruptions, mechanical failures, increase in costs, environmental compliance and change in environmental legislation and regulation, weather delays and increased costs or production delays due to natural disasters, power disruptions, procurement and delivery of parts and supplies to the operations; uncertainties inherent to capital markets in general (including the sometimes volatile valuation of securities and an uncertain ability to raise new capital) and other risks inherent to the gold exploration, development and production industry, which, if incorrect, may cause actual results to differ materially from those anticipated by the Company and described herein. In addition, there are risks and hazards associated with the business of gold exploration, development, mining and production, including environmental hazards, tailings dam failures, industrial accidents and workplace safety problems, unusual or unexpected geological formations, pressures, cave-ins, flooding, chemical spills, procurement fraud and gold bullion thefts and losses (and the risk of inadequate insurance, or the inability to obtain insurance, to cover these risks). Accordingly, readers should not place undue reliance on forward-looking information. In addition, the Company has assumed that the mining license and construction injunctions applicable to the CentroGold Project will eventually be revoked or lifted, all applicable mining licenses and advancements for construction, mining and processing activities regarding the CentroGold Project will eventually be issued, and the Gurupi lawsuit will eventually be extinguished by a court within the next decade. The Company has also assumed that commercial production at the CentroGold Project will commence within the next 15 years. However, the satisfaction of the assumptions made in the previous two sentences are outside of the control of the Company and are subject to commercial, economic, political, legal, regulatory and other risks.

For additional information with respect to these and other factors and assumptions underlying the forward-looking information made in this news release, see the Company's most recent Annual Information Form and Management's Discussion and Analysis, as well as other public disclosure documents that can be accessed under the issuer profile of "Jaguar Mining Inc." on SEDAR at www.sedar.com. The forward-looking information set forth herein reflects the Company's reasonable expectations as at the date of this news release and is subject to change after such date. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law. The forward-looking information contained in this news release is expressly qualified by this cautionary statement.

SOURCE: Jaguar Mining Inc.

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FAQ

What is Jaguar Mining's recent agreement regarding the CentroGold Project?

Jaguar Mining has entered into a Definitive Agreement to sell its NSR royalty from the CentroGold Project to Metalla Royalty & Streaming for up to US$18 million.

How much will Jaguar Mining receive upfront from the sale to Metalla?

Jaguar Mining will receive an upfront payment of US$7 million upon closing of the sale.

What are the conditions for the additional payments in the Metalla agreement?

The additional US$11 million will be paid upon achieving two milestones relating to the CentroGold Project.

What is the total value of the deal between Jaguar Mining and Metalla?

The total value of the deal could reach up to US$18 million, including both upfront and milestone payments.

What additional financial benefit does Jaguar Mining expect from Avanco?

Jaguar Mining is expected to receive an additional US$5 million in cash from Avanco in a series of installments as part of a prior agreement.