exh99_1.htm

JAGUAR MINING INC.

Condensed Interim Consolidated Financial Statements

For the three months ended

March 31, 2015 and 2014

(Unaudited)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited and expressed in thousands of US dollars)

		March 31,			December 31,
		2015			2014
ASSETS
Current assets
Cash and cash equivalents		$	10,258		$	7,161
Inventory	Note 4		13,411			19,175
Recoverable taxes	Note 5		3,530			10,614
Other accounts receivable			1,533			1,636
Prepaid expenses and advances			1,086			1,639
Derivatives			460			-
Total Current Assets			30,278			40,225
Non-current assets
Property, plant and equipment	Note 6		65,198			63,773
Mineral exploration projects	Note 7		68,645			68,544
Recoverable taxes	Note 5		15,464			21,368
Other assets			1,546			1,354
Total assets		$	181,131		$	195,264

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	Note 8	$	14,024		$	16,049
Notes payable	Note 9		26,478			29,413
Reclamation provisions	Note 10		1,656			1,202
Derivatives			-			197
Other provisions and liabilities	Note 11		20,519			16,605
Total Current Liabilities			62,677			63,466
Non-current liabilities
Notes payable	Note 9		1,473			1,538
Deferred income taxes			9,897			8,338
Other taxes payable			102			101
Reclamation provisions			17,463			20,172
Other liabilities			36			61
Total liabilities		$	91,648		$	93,676

SHAREHOLDERS' EQUITY
Capital Stock			434,465			434,465
Stock options			592			525
Deferred shares units			1,082			965
Contributed surplus			18,666			18,666
Deficit			(365,782	)		(352,836	)
Hedging Reserve			460			(197	)
Total shareholders' equity			89,483			101,588
Financial liabilities and other commitments
Total liabilities and shareholders' equity		$	181,131		$	195,264

Going Concern	Note 2

On behalf of the Board:
(signed) “Richard Falconer” (signed) “George M. Bee”

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Condensed Interim Consolidated Financial Statements

Jaguar Mining Inc. | 1 |

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

		Three Months Ended March 31,
		2015			2014

Gold Sales		$	28,747		$	31,100
Production costs	Note 14		(20,133	)		(21,337	)
Depletion and amortization			(6,404	)		(8,676	)
Gross profit			2,210			1,087

Exploration and evaluation costs			50			39
Care and maintenance costs (Paciencia mine)			284			606
Stock-based compensation			184			45
General and administration expenses			2,281			4,037
Restructuring fees			-			2,907
Amortization			243			270
Adjustment to legal and VAT provisions	Note 15		7,771			4,019
Other operating expenses			925			1,249
Operating loss			(9,528	)		(12,085	)

Foreign exchange gain			(1,924	)		(982	)
Financial instruments loss			579			-
Finance costs			1,124			4,819
Other non-operating expenses (recoveries)			(26	)		(161	)
Loss before income taxes			(9,281	)		(15,761	)
Current income tax expense			672			348
Deferred income tax expense (recovery)			2,993			(354	)
Total income tax expense (recovery)			3,665			(6	)
Net loss			(12,946	)		(15,755	)
Other comprehensive loss			657			(313	)
Total comprehensive income (loss)			(12,289	)		(16,068	)

Earnings per share
Income (loss) per share
Basic	Note 13	$	(0.12	)	$	(15.76	)
Diluted	Note 13	$	(0.12	)	$	(15.76	)
Weighted average shares outstanding
Basic			111,111,038			1,000,000
Diluted			111,111,038			1,000,000

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Condensed Interim Consolidated Financial Statements

Jaguar Mining Inc. | 2 |

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and expressed in thousands of US dollars)

	Three Months Ended March 31,
	2015			2014
OPERATING ACTIVITIES
Net loss for the year	$	(11,904	)	$	(15,755	)
Adjusted for non-cash items
Unrealized foreign exchange gain		(1,883	)		(2,304	)
Stock-based compensation expense		184			45
Interest expense		799			4,363
Accretion of interest expense		325			456
Deferred income tax expense (recovery)		2,993			(354	)
Depletion and amortization		6,647			8,946
Loss on disposition of property, plant and equipment		22			8
Write-down of inventory		32			904
Provision for VAT and other taxes		1,111			2,738
Legal provisions		5,612			-
Reclamation expenditure		(159	)		(235	)
		3,779			(1,188	)
Adjusted for changes in non-cash operating assets and liabilities
Inventory		2,949			(1,509	)
Other accounts receivable		103			1,815
Recoverable taxes		9,685			(330	)
Prepaid expenses and other assets		361			555
Accounts payable and accrued liabilities		(1,961	)		2,532
Taxes payable		1			345
Other provisions		(2,740	)		389
Net cash provided by operating activities		12,177			2,609

FINANCING ACTIVITIES
Repayment of debt		(3,200	)		-
Decrease in restricted cash		-			109
Interest paid		(718	)		(814	)
Other liabilities		(26	)		10
Net cash used in financing activities		(3,944	)		(695	)

INVESTING ACTIVITIES
Mineral exploration projects		(101	)		(188	)
Purchase of property, plant and equipment		(5,280	)		(4,136	)
Proceeds from disposition of property, plant and equipment		37			31
Net cash used in investing activities		(5,344	)		(4,293	)

Effect of exchange rate changes on cash and cash equivalents		208			373
Net increase (decrease) in cash and cash equivalents		3,097			(2,006	)
Cash and cash equivalents at the beginning of year		7,161			9,015
Cash and cash equivalents at the end of year	$	10,258		$	7,009

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Condensed Interim Consolidated Financial Statements

Jaguar Mining Inc. | 3 |

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

													Contributed Surplus		Deficit			Hedging Reserve1			Total Equity (Deficiency)
	Common Shares				Stock Options				Deferred Shares Units
	Shares		Amount		Options		Amount		Units		Amount

Balance as at January 1, 2014		86,396,356	$	371,077		1,604,028	$	917		-		-	$	17,638		(483,699	)		508		$	(93,559	)
Stock options		-		-		-		45		-		-		-		-			-			45
Other comprehensive income		-		-		-		-		-		-		-		-			(313	)		(313	)
Net loss		-		-		-		-		-		-		-		(15,755	)		-			(15,755	)
Balance as at March 31, 2014		86,396,356	$	371,077		1,604,028	$	962		-	$	-	$	17,638	$	(499,454	)	$	195		$	(109,582	)

Balance as at January 1, 2015		111,111,038	$	434,465		2,679,735	$	525		1,600,566	$	965	$	18,666	$	(352,836	)	$	(197	)	$	101,588
Stock options		-		-		-		67		-		-		-		-			-			67
Deferred shares units		-		-		-		-		-		117		-		-			-			117
Other comprehensive loss		-		-		-		-		-		-		-		-			657			657
Net loss		-		-		-		-		-		-		-		(12,946	)		-			(12,946	)
Balance as at March 31, 2015		111,111,038	$	434,465		2,679,735	$	592		1,600,566	$	1,082	$	18,666	$	(365,782	)	$	460		$	89,483
1. Hedging reserve Note 12(d)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Condensed Interim Consolidated Financial Statements

Jaguar Mining Inc. | 4 |

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

1.	Nature of business and basis of preparation:

Jaguar Mining Inc. (the “Company” or “Jaguar”) is a corporation continued under the Business Corporations Act (Ontario) engaged in the acquisition, exploration, development and operation of gold producing properties in Brazil. The address of the Company’s registered office is 67 Yonge Street, Suite 1203, Toronto, Ontario, M5E 1J8, Canada.

These condensed interim consolidated financial statements of the Company as at and for the three months ended March 31, 2015 include the accounts of the Company and its wholly-owned subsidiaries: Mineração Serras do Oeste Ltda. (“MSOL”), Mineração Turmalina Ltda. (“MTL”) and MCT Mineração Ltda. (“MCT”). All significant intercompany accounts and transactions have been eliminated on consolidation.

These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”). These condensed interim consolidated financial statements do not include all annual disclosures as required by International Financial Reporting Standards (“IFRS”) and should be read in connection with the Company’s December 31, 2014 audited annual financial statements.

The condensed interim consolidated financial statements were authorized for issue by the Board of Directors on May 25, 2015.

2.	Going Concern

These condensed interim consolidated financial statements have been prepared on a going concern basis which assumes that the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business as they become due.

The Company has reported an operating loss for the three months ended March 31, 2015. The Company considers that the near term economic outlook presents challenges in terms of commodity prices as well as input costs. Whilst the Company has instituted measures to preserve cash, improve operations and is seeking to secure additional financing, these circumstances create uncertainties over future results and cash flows.

The Company had a working capital deficiency of $32.4 million as at March 31, 2015. The Company will need to obtain additional financing in order to meet its near-term operating cash requirements, debt payments and sustaining capital expenditures. There is no assurance that the Company’s financing initiatives will be successful or sufficient.

The business of mining and exploring for minerals involves a high degree of risk and there can be no assurance that current operations or exploration programs will result in profitable mining operations. This fact, along with the factors discussed in the preceding paragraphs results in a material uncertainty that casts substantial doubt as to the Company’s ability to continue to operate as a going concern. The recoverability of the carrying value of property, plant and equipment and mineral exploration projects is dependent upon the success of the above operating, exploration and financing activities and the future gold price. Changes in future conditions could require material write-downs of the carrying value of property, plant and equipment and mineral exploration projects.

If the going concern assumption was not appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying value of assets and liabilities, the reported expenses, and the statement of financial position classifications used, and such adjustments could be material.

Condensed Interim Consolidated Financial Statements

Jaguar Mining Inc. | 5 |

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

3.	Significant accounting policies:

The accounting policies applied in these condensed interim consolidated financial statements are consistent with those used in the Company’s annual audited consolidated financial statements for the year ended December 31, 2014.

a)	Future accounting policy changes issued but not yet in effect:

The following are new pronouncements approved by the IASB. The following new standards are not yet effective and have not been applied in preparing these financial statements, however, they may impact future periods.

IFRS 9 Financial Instruments - In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments, bringing together the classification and measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. The mandatory effective date of IFRS 9 would be annual periods beginning on or after January 1, 2018, with early adoption permitted. The impact of IFRS 9 on the Company’s financial instruments has not yet been determined.

IFRS 15 Revenue from Contracts with Customers was issued by IASB in May 2014. It specifies how and when an IFRS reporter will recognize revenue as well as requiring such entities to provide users of financial statements with more informative, relevant disclosures. The standard provides a single, principles based five-step model to be applied to all contracts with customers. IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2017. The impact of IFRS 15 on the Company’s consolidated financial statements has not yet been determined.

4.	Inventory:

Inventory is composed of the following:

	March 31,		December 31,
	2015		2014
Raw material	$	2,438	$	2,524
Mine operating supplies		6,395		6,472
Ore in stockpiles		101		258
Gold in process		2,053		3,664
Unrefined gold at refinery		2,424		4,456
Finished goods (gold bullion)		-		1,801
Total Inventory	$	13,411	$	19,175

	Three Months Ended March 31,
		2015		2014
Inventory amounts recorded in production costs	$	20,125	$	19,830
Inventory amounts recorded in depletion and amortization		6,404		8,676

	Three Months Ended March 31,
		2015		2014
Inventory write down	$	32	$	904

Condensed Interim Consolidated Financial Statements

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

5.	Recoverable taxes:

	December 31, 2014			Additions/ Reversals			Accretion		Tax refunded			Applied to taxes payable			Foreign exchange			March 31, 2015
Value added taxes and other1	$	26,659		$	2,446		$	-	$	(6,063	)	$	(2,799	)	$	(5,626	)	$	14,617
Provision for VAT and other2		(7,515	)		(1,111	)		260					-			1,470			(6,896	)
Net VAT and other taxes	$	19,144		$	1,335		$	260	$	(6,063	)	$	(2,799	)	$	(4,156	)	$	7,721

ICMS3	$	15,086		$	1,013		$	-	$	-		$	(34	)	$	(2,794	)	$	13,271
Reserve for ICMS3		(2,248	)		(137	)		-		-			-			387			(1,998	)
Net ICMS	$	12,838		$	876		$	-	$	-		$	(34	)	$	(2,407	)	$	11,273
Total recoverable taxes	$	31,982		$	2,211		$	260	$	(6,063	)	$	(2,833	)	$	(6,563	)	$	18,994

Less: current portion		10,614																	3,530
Non-current portion	$	21,368																$	15,464

Receivable from sales of ICMS tax credits 4	$	889																$	736

1)	The Company is required to pay certain taxes in Brazil that are based on purchases of consumables and property, plant and equipment. These taxes are recoverable from the Brazilian tax authorities through various methods, including as cash refund or as a credit against current taxes payable.

The Company records a provision against its recoverable taxes given limited methods available to recover such taxes and the length of time it will take to recover such taxes. The provision reduces the net carrying amount of value added taxes and other taxes to their estimated present value based on the manner and timing of expected recovery, discounted at the Brazilian Central Bank’s Selic rate.

During 2014, the Company initiated procedures to obtain approval and/or refund of R$29.1 million of Federal VAT (‘Value Added Tax’) input tax credits with respect to the years 2009 through 2011 for MTL. Following an extensive audit process, in February 2015, 81.6% of the input tax credits were approved for refund. 29.7% of the approved amount was applied as a credit to reduce other federal taxes payable for prior years, while R$16.7 million (approximately $6.0 million) was refunded in cash.

ICMS – Imposto sobre circulação de mercadorias e prestação de serviços is a type of value added tax which can either be sold to other companies (usually at a discount rate of approximately 13%) or be used to purchase specified machinery and equipment. The ICMS credits can only be realized in the state where they were generated; in the case of Jaguar, in the State of Minas Gerais, Brazil.

4)	Recorded as part of Other accounts receivable is $736,000 related to ICMS tax credits sold to and still receivable from other companies (December 31, 2014 - $889,000).

Condensed Interim Consolidated Financial Statements

Jaguar Mining Inc. | 7 |

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

6.	Property, plant and equipment (“PP&E”):

	Plant			Vehicles			Equipment			Leasehold1		CIP2			Mining properties			Total
Cost
Balance as at January 1, 2015	$	13,495		$	11,522		$	229,701		$	2,380	$	2,476		$	353,616		$	613,190
Additions		-			-			813			-		627			3,908			5,348
Disposals		-			-			(82	)		-		-			(320	)		(402	)
Reclassify within PP&E		(30	)		-			-			-		30			-			-
Balance as at March 31, 2015	$	13,465		$	11,522		$	230,432		$	2,380	$	3,133		$	357,204		$	618,136

Balance as at January 1, 2014	$	15,717		$	13,793		$	230,879		$	2,380	$	3,150		$	333,731		$	599,650
Additions		-			449			3,182			-		2,351			21,667			27,649
Disposals		(3,755	)		(2,797	)		(5,429	)		-		(346	)		-			(12,327	)
Transfer from assets held for sale		1,533			77			1,069			-		(2,679	)		-			-
Reclassify within PP&E		-			-			-			-		-			(1,782	)		(1,782	)
Balance as at December 31, 2014	$	13,495		$	11,522		$	229,701		$	2,380	$	2,476		$	353,616		$	613,190

Accumulated amortization and impairment
Balance as at January 1, 2015	$	11,277		$	9,234		$	202,443		$	1,923	$	1,142		$	323,398		$	549,417
Amortization for the period		171			243			1,625			116		-			1,709			3,864
Impairment loss		-			-			-			-		-			-			-
Disposals		-			-			(23	)		-		-			(320	)		(343	)
Balance as at March 31, 2015	$	11,448		$	9,477		$	204,045		$	2,039	$	1,142		$	324,787		$	552,938

Balance as at January 1, 2014	$	10,891		$	9,575		$	132,766		$	1,459	$	-		$	289,007		$	443,698
Amortization for the year		923			1,842			16,308			464		-			10,756			30,293
Impairment loss		3,275			50			58,740			-		1,142			23,635			86,842
Disposals		(3,812	)		(2,233	)		(5,371	)		-		-			-			(11,416	)
Balance as at December 31, 2014	$	11,277		$	9,234		$	202,443		$	1,923	$	1,142		$	323,398		$	549,417

Carrying amounts
As at March 31, 2015	$	2,017		$	2,045		$	26,387		$	341	$	1,991		$	32,417		$	65,198
As at December 31, 2014	$	2,218		$	2,288		$	27,258		$	457	$	1,334		$	30,218		$	63,773
1Refers to leasehold improvements in corporate office in Brazil.
2Refers to Construction in progress.

Condensed Interim Consolidated Financial Statements

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

7.	Mineral exploration projects:

	Gurupi		Turmalina		Caeté			Pedra Branca		Total
Balance as at January 1, 2015	$	68,139	$	-	$	-		$	405	$	68,544
Additions		101		-		-			-		101
Balance as at March 31, 2015	$	68,240	$	-	$	-		$	405	$	68,645

Balance as at January 1, 2014	$	67,494	$	-	$	-		$	391	$	67,885
Additions		645		-		314			14		973
Reclass from PP&E		-		-		1,782			-		1,782
Impairment loss		-		-		(2,096	)		-		(2,096	)
Balance as at December 31, 2014	$	68,139	$	-	$	-		$	405	$	68,544

8.	Accounts payable and accrued liabilities:

	March 31,		December 31,
	2015		2014
Accounts payable (suppliers)	$	8,810	$	9,212
Accrued payroll		4,899		6,483
Interest payable		8		72
Other		307		282
Total accounts payable and accrued liabilities	$	14,024	$	16,049

9.	Notes payable:

	March 31, 2015		December 31, 2014
Notes payable - current portion
Bank indebtedness	$	14,753	$	14,954
Vale note (a)		579		458
Renvest credit facility (b)		11,146		14,001
		26,478		29,413
Notes payable - non-current portion
Vale note (a)		1,473		1,538
		1,473		1,538

Total notes payable	$	27,951	$	30,951

Vale note

The Vale note was generated in 2008, by the purchase of mineral rights regarding the Caeté Project for $13.3 million (“Vale Purchase Agreement”). Payment under the Vale Purchase Agreement was subject to satisfaction of certain conditions including perfection of the transfer of the mineral rights before the Departamento Nacional de Produção Mineral (“DNPM”). During 2010, the Company paid $3.2 million. In November 2014 the agreement was amended whereby the Company agreed to waive certain mineral rights expected to be transferred under the purchase agreement as they had not been duly conveyed. Accordingly, the outstanding indebtedness amount was reduced from $9.0 million to $3.0 million, payable in twelve installments of $250,000, maturing December and July of every year, until fully paid in 2020. The first installment was paid in December 2014. The balance outstanding as at March 31, 2015 was $2.8 million ($2.8 million as at December 31, 2014).

Condensed Interim Consolidated Financial Statements

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

b)	Renvest Credit Facility:

The features of the Renvest credit facility A and B are as follows:

Facility A:

This facility, in the amount of $5.0 million, includes a conversion feature whereby the holder can convert the debt into common shares of the Company at the greater of $200.0 million divided by the total number of fully diluted issued and outstanding common shares and Cdn$0.91. This conversion feature meets the accounting definition of a derivative instrument.

The Company performed a valuation of this feature to determine its fair value at inception and subsequently revalued it on March 31, 2015. As at March 31, 2015 there is $nil recorded as current liability ($3,000 as at December 31, 2014). The change in the fair value for the period ended March 31, 2015, in the amount of $3,000 was recorded as a gain on conversion option embedded in convertible debt as financial instruments gain in the consolidated statements of operations and comprehensive income (loss) (March 31, 2014 - $nil).

The estimated fair value of the derivative liability is classified as level 2 and was determined using the Black-Scholes model, with the following assumptions:

Black-Scholes model	Assumptions
Remaining contractual life	0.75 year
Interest rate		11	%
Volatililty		70	%
Risk free rate		0.46	%
Share price	$	0.24
Conversion price	$	1.79

This facility bears interest at 11% per annum and matures on December 31, 2015.

Facility B:

This non-revolving facility was originally in the amount of $25.0 million of which $10.0 million was repaid in April 2014.

This facility bears interest at 11% per annum, repayable $1.0 million plus accrued interest per month, commencing July 2014 and matures on December 31, 2015.

Security for Facility A and Facility B is provided by security agreements comprising all the Company’s and its subsidiaries’ present and future assets, the shares of the Company’s subsidiaries and loan guarantees by the Company’s subsidiaries. Facility A and Facility B require among other things that the Company adhere to specific financial covenants. As at March 31, 2015, the Company was in compliance with these covenants.

Condensed Interim Consolidated Financial Statements

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

10.	Reclamation provision

	December 31, 2014		Additions (Reversals)		Accretion		Payments			Foreign exchange			March 31, 2015
Reclamation provision	$	21,374	$	68	$	529	$	(159	)	$	(2,693	)	$	19,119

Less: current portion		1,202												1,656
Non-current portion	$	20,172											$	17,463

The reclamation provisions relate to the cost to reclaim land that has been disturbed as a result of mining activity. The estimated future cash flows have been discounted using the Brazilian Selic rate of 12.6% and the inflation rate used to determine future expected cost ranges from 4.5% to 8.0% per annum.

11.	Other provisions and contingent liabilities:

Various legal, environmental, tax and regulatory matters are outstanding from time to time due to the nature of the Company’s operations. In the event that management’s estimate of the future resolution of these matters changes, the Company will recognize the effects of the changes in its consolidated financial statements on the date such changes occur.

As at March 31, 2015, the Company has recognized a provision of $20.5 million (December 31, 2014 - $16.6 million) representing management’s best estimate of expenditures required to settle present obligations, as noted in the table below. The ultimate outcome or actual cost of settlement may vary materially from management estimates.

	December 31, 2014		Additions (Reversals)			Payments			Foreign exchange			March 31, 2015
Labour litigation	$	14,491	$	6,950		$	(54	)	$	(2,491	)	$	18,896
Civil litigation		1,560		-			(112	)		(269	)		1,179
Other provisions		554		(110	)		-			-			444
	$	16,605	$	6,840		$	(166	)	$	(2,760	)	$	20,519

12.	Capital stock:

a)	Common shares:

The Company is authorized to issue an unlimited number of commons shares. During the three months ended March 31, 2015, the Company did not issue or grant any common shares (three months ended March 31, 2014 – nil).

b)	Stock options:

In connection with the implementation of the CCAA Plan in April 2014, equity based compensation arrangements existing immediately prior to the implementation of the CCAA Plan, including the stock options were cancelled. No stock options were granted during the three months ended March 31, 2015 (March 31, 2014 – nil).

Condensed Interim Consolidated Financial Statements

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

The following table shows the stock options outstanding as at March 31, 2015 and December 31, 2014:

	Number of options		Exercise Price		Dividend yield		Risk-free interest rate			Forfeiture rate			Expected life (years)		Volatility factor			Fair value

Stock options 2015		2,679,735	$	1.35		-		0.46	%		0	%		3.48		75	%	$	0.30
Stock options 2014		2,679,735	$	1.35		-		1.36	%		0	%		3.87		75	%	$	0.33

For the three months ended March 31, 2015 the Company had recognized $67,000 in the condensed interim consolidated statements of operations and comprehensive income (loss) (March 31, 2014 - $45,000).

c)	Deferred share units – “DSUs”:

In connection with the implementation of the CCAA Plan in April 2014, equity based compensation arrangements existing immediately prior to the implementation of the CCAA Plan, including the DSU plan, which had been accounted for as cash-settled awards, were cancelled. No DSU was granted during the three months ended March 31, 2015 (March 31, 2014 – nil).

For the three months ended March 31, 2015 the Company had recognized $117,000 in the condensed interim consolidated statements of operations and comprehensive income (loss) (March 31, 2014 - $nil).

d)	Hedging reserve:

The hedging reserve represents hedging gains and losses recognized on the effective portion of cash flow hedges. The cumulative deferred gain or loss on the hedge is recognized in other comprehensive income until the transaction is settled at which time the gain or loss is recognized in the consolidated statements of operations.

Included in the hedging reserve, in the consolidated statements of changes in shareholders’ equity for the three months ended March 31, 2015 is an unrealized gain of $460,000 (December 31, 2014 – unrealized loss of $197,000). An aggregate realized loss in the amount of $583,000 has been recorded in the consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2015 (three months ended March 31, 2014 – $nil).

The following are the outstanding contracts as at March 31, 2015:

Settlement Date		Ounces Hedged				Average US$ per ounce				Unrealized gain
May 26, 2015			11,586			$	1,227			$	460

13)	Basic and diluted earnings per share:

Dollar amounts are in thousands.

Condensed Interim Consolidated Financial Statements

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

	Three Months Ended March 31,
	2015			2014
Numerator
Net income (loss)	$	(12,946	)	$	(15,755	)
Net income (loss) for the purpose of diluted income (loss) per share	$	(12,946	)	$	(15,755	)
Denominator
Weighted average number of common shares outstanding - basic and diluted		111,111,038			1,000,000
Basic and diluted loss per share	$	(0.12	)	$	(15.76	)

The determination of the weighted average number of common shares outstanding for the calculation of diluted earnings per share does not include effect of the following options and convertible notes since they are anti-dilutive:

	Three Months Ended March 31,
	2015		2014
Options		1,994,735		1,604,028
Convertible option Renvest Credit Facility		2,808,989		-
Deferred share units		1,224,594		-
Antidilutive shares		6,028,318		1,604,028

14)	Production costs:

	Three Months Ended March 31,
	2015			2014
Direct mining and processing costs		(19,145	)	$	(18,813	)
Royalty expense and CFEM taxes		(980	)		(1,017	)
Inventory write-down		(32	)		(904	)
Other		24			(603	)
Total cost of production	$	(20,133	)	$	(21,337	)

15)	Adjustment to legal and VAT provisions:

	Three Months Ended March 31,
	2015		2014
Legal provisions	$	6,660	$	1,281
Changes in provision against recoverability of VAT and other taxes		1,111		2,738
Total adjustment to legal provisions and VAT taxes	$	7,771	$	4,019

Condensed Interim Consolidated Financial Statements

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

16)	Commitments:

In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following table summarizes the remaining undiscounted contractual maturities of the Company’s financial liabilities and other commitments:

As at March 31, 2015	Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years		Total
Financial Liabilities
Accounts payable and accrued liabilities	$	14,024	$	-	$	-	$	-	$	14,024
Notes payable										-
Principal		26,653		1,000		1,000		250		28,903
Interest		1,193		-		-		-		1,193
Other liabilities		36		-		-		-		36
Total financial liabilities	$	41,906	$	1,000	$	1,000	$	250	$	44,156
Other Commitments
Operating lease agreements	$	188	$	76	$	-	$	-	$	264
Suppliers' agreements										-
Mine operations1		687		-		-		-		687
Other provisions and liabilities		20,519		-		-		-		20,519
Reclamation provisions2		1,721		13,370		1,090		10,386		26,567
Total other commitments	$	23,115	$	13,446	$	1,090	$	10,386	$	48,037
Total	$	65,021	$	14,446	$	2,090	$	10,636	$	92,193
1 The Company has the contractual right to cancel the mine operation contracts with 30 days advance notice. The amount included in the commitments table represents the contractual amount due within 30 days.
2 Reclamation provisions are not adjusted for inflation and are not discounted.

17)	Financial risk management and financial instruments:

The Company’s activities expose it to a variety of financial risks, including but not limited to: credit risk, liquidity risk, currency risk, interest rate risk and price risk. The condensed interim consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in connection with the Company’s annual financial statements as at December 31, 2014.

a)	Liquidity risk:

The Company had a working capital deficiency of $32.4 million and an accumulated deficit of $365.8 million as at March 31, 2015.

The Company’s financial liabilities and other commitments are listed in Note 16.

b)	Derivative financial instruments:

The Company assesses its financial instruments and non-financial contracts on a regular basis to determine the existence of any embedded derivatives which would be required to be accounted for separately at fair value and to ensure that any embedded derivatives are accounted for in accordance with the Company’s policy.

Condensed Interim Consolidated Financial Statements

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

Forward sales:

See Note 12(d).

c)	Financial instruments:

The fair value of the following financial assets and liabilities approximate their carrying amounts due to the limited terms of these instruments:

a. Cash and cash equivalents

b. Other accounts receivable

c. Accounts payable and accrued liabilities

The fair value of notes payable is disclosed below:

		March 31, 2015				December 31, 2014
Fair value of notes payable		$	27,951			$	30,951

Fair value estimation:

IFRS 7 Financial Instruments - Disclosures prescribes the following three-level fair value hierarchy for disclosure purposes based on the transparency of the inputs used to measure the fair values of financial assets and liabilities:

a. Level 1 – quoted prices (unadjusted) of identical instruments in active markets that the reporting entity has the ability to access at the measurement date.

b. Level 2 – inputs are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

c. Level 3 – one or more significant inputs used in a valuation technique that are unobservable for the instruments.

The fair value of the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis as at March 31, 2015 and December 31, 2014 are as follows:

	Level 1		Level 2		Level 3
March 31, 2015
Derivative assets		-		460		-
December 31, 2014
Derivative assets	$	-	$	197	$	-

18)	Related party transactions:

The Company incurred legal fees from Azevedo Sette Advogados (“ASA”), a law firm whose partner is Luis Miraglia, a director of Jaguar. Fees paid to ASA are recorded at the exchange amount – being the amount agreed to by the parties and included in administration expenses in the statements of operations and comprehensive loss – and amount to $23,000 for the three months ended March 31, 2015 ($16,000 for the three months ended March 31, 2014, respectively).

Condensed Interim Consolidated Financial Statements

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015 and 2014

(Unaudited and expressed in thousands of US dollars)

The Company also incurred legal fees from Goodmans LLP (“Goodmans”), a law firm where Robert Chadwick, a director of Jaguar is a partner. Fees paid to Goodmans are recorded at the exchange amount – being the amount agreed to by the parties and included in administration expenses in the statements of operations and comprehensive loss – and amount to $2,000 for the three months ended March 31, 2015 ($nil for the three months ended March 31, 2014.

Condensed Interim Consolidated Financial Statements

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