May 20, 2009


Though precious metal mining is more or less of an emerging industry, it goes unnoticed conservatively speaking. In particular, the Junior miners, where often times the best rate of return can be had. To achieve abnormal rates of return it is important to focus on those which are increasing production at high rates year over year and quietly finding a spot among the mid-tier miners. Of all the junior miners vastly increasing production, Jaguar mining is far and and away my favorite.

Jaguar has a unique ability to keep cash costs at or below $400 for the next 5+ years, which is a rarity among the junior class. Thus Jaguar should display superior operating margins relative to its peers

For a fast growing miner, the capital expenditures are very low, which gives them a high free cash flow yield ( free cash flow as a % of net income). 

As you can see the next 5 years will have an cumulative average growth rate in the neighborhood of 42-48% percent, which excludes unexpected increases in the reserve base. I have also not seen a fast growing junior so well financed as Jaguar with just 40million in net debt. 
This is a True Hidden Gem

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