Listened to the call. Petroff is doing everything he promised, and he realizes he will need to do even more in view of the POG. He is still sandbagging on cash costs, but you can't blame him in view of the Titcomb/German legacy issues. Also, JAG owes it workers at least a 7% raise pursuant to Brazil's labor laws. Based on his cost comments, it appears he is looking to get costs under $800 by the end of this quarter, and hoping for some stabilization of the POG around $1,500.
All options are on the table regarding refinancing. Sounds like they are getting ready to approach creditors this quarter or next. He acknowledged they do not believe they can pay off debt as currently scheduled (no great surprise). I suspect the pitch to creditors will be that JAG has demonstrated progress turning around the company, they need more time and would you rather have Petroff run JAG or the trustee in bankruptcy. Creditors may be open to an extended deal if they get conversion at a substantially lower strike price and some security for their debt. Of course, if POG keeps falling, all of the above might not be enough to save JAG from BK.
I listened to it too. JAG is making good progress it appears but somethings bother me, what about the feed grade being up 30% compared to Q1 2012, is 3.3 g/t sustainable, if so how long? I have noticed other miners are also going in this direction, increase the grade and reduce the size of the deposit.
Also they reduced cost by laying of almost half their workforce, dont they need these people? It seems to me that JAG is heading in the direction of downsizing, possibly producing less at higher rates of profit. On the other hand, maybe JAG's operations were being run very poorly and they had too many people on board anyway. I cant tell yet, I have to dig in more deep.
POG is also heading back down, probably to 1400-1300, maybe 1200 who knows, that will not fare well with the share price.
A good thing I noticed is that they spent some money on Paciencia. 700k might indicate that they are getting ready to bring it back online sometime in the next few quarters.
Historically, feed grade in 2011 and 2010 was 3.12 g/t and 3.09 g/t . Paciencia was a drag in 2012 at 2.15g/t, along with the lack of focus on actual management of the mines. Therefore, with the change in management and a historical increase of around 10%, I think it is sustainable. As regards the work force, Jag, prior to Petroff, was one of, if not the poorest run, mining operation in North or South America. Most of the focus was on finance, potential buyouts and proxy fights. There is little evidence that anyone was minding the store on the operations side. Petroff alluded to this during the call: "In regards to the current challenges, unfortunately, there seems to be many additional items that pertain to past circumstances." I think this is credible, and more than just a case of new management bashing old management.
If you are correct about POG, JAG is in trouble. I think Petroff can get cash costs down to around $700, which is still slightly above industry average, but he needs POG around $1500 to account for the $200 shortfall from planned POG to current POG. There are really only two big issues at JAG at this point:
2. Whether creditors ultimately believe more time and Petroff's plan can save JAG.
Nice analysis.. THey are really trying their best to steer this ship right.. If cold stablizes this might be a winner. I think a lot of the fears were around bankruptcy.. That is def off the table. They are trying to tighten up the operation..and they are doing that wthout loosing on the production side which is quite impressive. I believe once that is done they will get the other mines back on line and we'll be sitting on 1.00 plus shares! we'll all be happy then.