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Jaguar Mining Inc. Message Board

  • celestialconstant celestialconstant Jan 4, 2013 8:35 PM Flag

    Is JAG being strategic in acquiring needed financing?

    Looking at past performance, execution of the new business plan, and with new management in place I expect financing to be closed towards the end of the 1st quarter possibly into 2nd quarter. From what little research I've done, it appears new management is drawing down on cash reserves, preventing the accumulation of unwanted interest on dead money. Once the cash is nearly depleted, then management will get serious about closing on a financing deal.
    In my opinion this is a strategic move by new management in order to get costs under control. If financing was closed in Dec 2012 or Jan 2013, the company would have accrued financing fees and interest expense on money that wouldn't be used until March 2013 or after. Keeping that off the books for a couple quarters will bolster the bottom line. This actually gives me a little encouragement that this company could be getting its act together. The negative to all this, they're letting cash be drawn down. (I like to see a cushion available..."just in case money") But then again, it makes no sense to borrow money and pay interest just so you can say you have the cash.
    With approximately 19 million in cash at the end of 3rd qrtr 2012, and an average burn rate of about 10 million/qrtr, the business should be able to run through 1 quarter 2013. After financing is closed, JAG should be good until at least years end. This period will extend along with cashflow improvement, executing the new business plan, increase in production and rising gold prices (assuming investors get bullish again)

    Sentiment: Hold

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    • Good post with some thought (uncommon on this message board for jag). In my mind the overriding issue is cash flow burn. If new management team can stop the burn then the company will have options. If it can't then whatever financing is available with be significantly dilutive to currrent shareholders. Time will allow a better deal to restructure the $150 mil. debt due in 2014 agree). By the way gold at $1,800 oz vs. gold at $1,400 oz makes will make a lot of difference in how this ends.


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