MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED DECEMBER 31, 2012











TABLE OF CONTENTS



|INTRODUCTION                                                                          |  | 1 
|------------------------------------------------------------------------------------- |  | --
|                                                                                      |  |   
|FORWARD-LOOKING
    STATEMENTS                                                        |  | 1 
|                                                                                      |  |   
|CAUTIONARY NOTE TO U.S. INVESTORS                                                     |  | 2 
|                                                                                      |  |   
|CORE BUSINESS                                                                         |  | 2 
|                                                                                      |  |   
|OVERVIEW AND OBJECTIVES                                                               |  | 2 
|                                                                                      |  |   
|CHANGES TO MANAGEMENT                                                                 |  | 3 
|                                                                                      |  |   
|RENVEST CREDIT FACILITY                                                               |  | 4 
|                                                                                      |  |   
|NEW YORK STOCK EXCHANGE LISTING STANDARD                                              |  | 4 
|                                                                                      |  |   
|RESTRUCTURING AND TURNAROUND PLAN                                                     |  | 4 
|                                                                                      |  |   
|2013 ESTIMATED PRODUCTION AND CASH
    OPERATING COST                                 |  | 6 
|                                                                                      |  |   
|OPERATING MINES
    AND DEVELOPMENT PROJECTS                                          |  | 7 
|                                                                                      |  |   
|EXPLORATION                                                                           |  | 10
|                                                                                      |  |   
|MINERAL RESOURCES
    AND RESERVES                                                    |  | 10
|                                                                                      |  |   
|FINANCIAL REVIEW                                                                      |  | 13
|                                                                                      |  |   
|FINANCIAL CONDITION, CASH FLOW, LIQUIDITY
    AND CAPITAL RESOURCES                   |  | 15
|                                                                                      |  |   
|INCOME TAXES                                                                          |  | 19
|                                                                                      |  |   
|CRITICAL ACCOUNTING
    ESTIMATES                                                     |  | 19
|                                                                                      |  |   
|NON-IFRS PERFORMANCE
    MEASURES                                                     |  | 19
|                                                                                      |  |   
|DISCLOSURE CONTROLS AND PROCEDURES,
    AND INTERNAL CONTROL OVER FINANCIAL REPORTING |  | 23
|                                                                                      |  |   
|OUTSTANDING
    SHARE DATA                                                            |  | 23
|                                                                                      |  |   
|CORPORATE DIRECTORY                                                                   |  | 24











MANAGEMENT’S DISCUSSION AND ANALYSIS
OF OPERATING RESULTS AND FINANCIAL CONDITION FOR THE YEAR ENDED DECEMBER 31, 2012



All figures are in U.S. dollars unless
otherwise indicated.



INTRODUCTION



The following discussion and analysis of
operating results and financial condition of Jaguar Mining Inc., (“Jaguar” or the “Company”) contained
in this Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the December 31,
2012 annual audited and consolidated financial statements of the Company and the notes thereto for the years ended 2012 and 2011.
The annual financial statements for the year ended December 31, 2012, are prepared in accordance with International Financial
Reporting Standards (“IFRS”). The Company reports its financial statements in U.S. dollars (“US$”), however
a significant portion of the Company’s expenses are incurred in either Canadian dollars (“Cdn$”) or Brazilian
reais (“R$”).



The discussion and analysis contained in
this MD&A are as of March 21, 2013.



FORWARD-LOOKING STATEMENTS



Certain statements in this MD&A constitute
“Forward-Looking Statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian
securities legislation. These Forward-Looking Statements include, but are not limited to, statements concerning the Company’s
future objectives, measured and indicated resources, proven and probable reserves, their average grade, the commencement period
of production, cash operating costs per ounce and completion dates of feasibility studies, gold production and sales targets,
capital expenditure costs, future profitability and growth in reserves. Forward-Looking Statements can be identified by the use
of words such as, “are expected”, “is forecast”, “is targeted”, “approximately”
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. Forward-Looking Statements involve
known and unknown risks, uncertainties and other factors which may cause the actual results or performance to be materially different
from any future results or performance expressed or implied by the Forward-Looking Statements.



These factors include the inherent risks
involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results
and other geological data, fluctuating gold prices and monetary exchange rates, the possibility of project delays and cost overruns
or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, uncertainties
related to production rates, timing of production and the cash and total costs of production, changes in applicable laws including
laws related to mining development, environmental protection, and the protection of the health and safety of mine workers, the
availability of labor and equipment, the possibility of civil insurrection, labor strikes and work stoppages and changes in general
economic conditions. Although the Company has attempted to identify important factors that could cause actual actions, events
or results to differ materially from those described in the Forward-Looking Statements, there may be other factors that could
cause actions, events or results to differ from those anticipated, estimated or intended.



These Forward-Looking Statements represent
the Company’s views as of the date of this MD&A. The Company anticipates that subsequent events and developments may
cause the Company’s views to change. The Company does not undertake to update any Forward-Looking Statements, either written
or oral, that may be made from time to time by, or on behalf of the Company, subsequent to the date of this discussion, other
than as required by law. For a discussion of important factors affecting the Company, including fluctuations in the price of gold
and exchange rates, uncertainty in the calculation of mineral resources, competition, uncertainty concerning geological conditions
and governmental regulations and assumptions underlying the Company’s Forward-Looking Statements, see the “CAUTIONARY
NOTE REGARDING FORWARD LOOKING STATEMENTS” and “RISK FACTORS” in the Company’s Annual Information Form
for the year ended December 31, 2012, filed on SEDAR and available at www.sedar.com, and its filings, including the Company’s
Annual Report on Form 40-F for the year ended December 31, 2012, filed with the U.S. Securities and Exchange Commission, which
are available on EDGAR at www.sec.gov. Further information about the Company is available on its corporate website at www.jaguarmining.com.



1







CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING
ESTIMATES OF INFERRED AND MEASURED AND INDICATED RESOURCES



This document includes the terms “Inferred
Resources” and “Measured and Indicated Resources”. The Company advises U.S. investors that while such terms
are recognized and permitted under Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them.
U.S. investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted
into Proven or Probable Reserves.



“Inferred Resources” have a
great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part
of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that any
part or all of an Inferred Resource exists or is economically or legally mineable.



CORE BUSINESS



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 Company controls 27,357 hectares in the Iron Quadrangle mining district of Brazil, a prolific greenstone
belt located near the city of Belo Horizonte in the State of Minas Gerais, where the Company owns operating assets. In addition,
Jaguar holds mineral concessions totaling 141,525 hectares in the State of Maranhão, where the Company owns the Gurupi
Project and 41,578 hectares in the State of Ceará, where the Company’s Pedra Branca Project is located. The Company
may consider the acquisition, exploration, development and operation of other gold properties, primarily in Brazil.



Jaguar was formed in 2002. In 2004, the
Company constructed and began operations of a small open-pit mine, the Sabará operation. Sabará provided initial
cash flow to enable Jaguar to develop its first underground mining operation, Turmalina, where construction of a processing facility
was completed in 2006. In 2007, the Company completed the construction of its second underground mining operation and processing
facility, Paciência. Since 2007, Jaguar has developed four additional underground mines and completed construction of its
third integrated processing facility, the Caeté Plant, which was commissioned in May 2010.



As of December 31, 2012, the Company was
producing gold at its Turmalina and Caeté operations. The Company’s Paciência operation was placed on temporary
care and maintenance when the Company announced the Restructuring and Turnaround Plan on May 8, 2012. Significant potential expansion
includes the Company’s Gurupi Project, which contemplates an open-pit gold mining operation in the state of Maranhão
in Northern Brazil.



Most of Jaguar’s senior management
team is headquartered in the city of Belo Horizonte, close to the Company’s operating assets. The proximity of senior management
to the operations allows for significant operating flexibility and oversight. The Company has also consolidated its corporate
management, engineering, exploration, supply and logistics teams into the same central office in Belo Horizonte. As of December
31, 2012, the Company had 1,290 employees, 1,286 of whom are based in Brazil.



Jaguar’s common shares are listed
on the Toronto Stock Exchange (“TSX”) and on the New York Stock Exchange (“NYSE”) under the symbol “JAG”.



OVERVIEW AND OBJECTIVES



Since its founding, Jaguar has acquired
and developed a number of mining operations in Brazil. Gold production increased from zero in 2002 to 155,764 ounces in 2011.
Through acquisitions and subsequent exploration, the Company increased its total Measured and Indicated Mineral Resources from
zero in 2002 to 7.48 million ounces of gold in 2012. The Company's current total estimated Measured and Indicated Mineral Resources
is 7.48 million ounces of gold contained in 176.42 million tonnes of material at an average grade of 1.32 grams per tonne, and
1.30 million ounces of Inferred Mineral Resources contained in 17.61 million tonnes of material at an average grade of 2.29 grams
of gold per tonne.



At its southern operations in Minas Gerais,
the Company has an estimated 3.96 million ounces of Measured and Indicated Mineral Resources contained in 33.80 million tonnes
of material at an average grade of 3.65 grams of gold per tonne, and 1.13 million ounces of Inferred Mineral Resources contained
in 9.89 million tonnes of material at an average grade of 3.55 grams of gold per tonne. Estimated Proven and Probable Reserves,
which are included in the above mentioned Measured and Indicated Mineral Resources, total 1.65 million ounces of gold contained
in 17.07 million tonnes of ore at an average grade of 3.01 grams per tonne.



2







At its Gurupi Project in the Northern Brazilian
state of Maranhão, the Company has estimated Measured and Indicated Mineral Resources of 3.52 million ounces of gold contained
in 142.64 million tonnes of material at 0.77 grams per tonne. This amount is based on analysis of recent drilling results, stated
at a cutoff grade of 0.21 grams of gold per tonne. The resource pit optimization is based on an assumed gold price of $1,500 per
ounce, metallurgical recovery of 85.3%, processing and G&A costs of $8.60 per tonne processed and mining costs of $1.17 per
tonne for Cipoeiro and $1.50 per tonne for Chega Tudo. Work on the Gurupi Project for 2013 has been delayed as the Company continues
its efforts to complete the restructuring and implementation of the production programs at the Turmalina and Caeté complexes
based on the 2013 approved budget.



Most of Jaguar’s primary ore bodies
and development targets remain open at depth and along strike. Through its brownfield exploration programs, the Company has the
potential to continue to add gold resources to its mineral inventory at its operations in Minas Gerais and at the Gurupi Project.



The Company’s objective is to enhance
shareholder value by acquiring, building, operating and expanding cost-effective gold mines, by adding mineral resources and ore
reserves to its existing mineral inventory and by pursuing transactions that are expected to support its growth targets.



CHANGES TO MANAGEMENT



On September 10, 2012, David M. Petroff
was appointed President and Chief Executive Officer of the Company and joined the Board of Directors effective immediately. With
the appointment of Mr. Petroff as the President and Chief Executive Officer, Mr. John Andrews stepped down from the role of interim
Chief Executive Officer.  Mr. Petroff has nearly 30 years of experience in the mining industry. Most recently, he was the
President and Chief Executive Officer of Breakwater Resources Ltd. from November 2009 until it was acquired by Nyrstar Canada
in August 2011.  For nearly 25 years prior to that, he held senior management positions with Centerra Gold Inc., Cameco Corporation
and Denison Mines Limited. Mr. Petroff received a Bachelor of Mathematics degree from the University of Waterloo in 1978 and a
Master of Business Administration degree (finance concentration) from the Schulich School of Business, York University in 1980.



On December 11, 2012, Jaguar announced
that Gordon J. Babcock had been retained as Chief Operating Officer for the Company effective early 2013. Mr. Babcock, a professional
engineer with over 32 years of mining experience, assumed responsibility for all facets of Jaguar's mining operations on January
8, 2013. Mr. Babcock was most recently the Vice President and General Manager for Nyrstar's El Mochito Mine operation in Las Vegas,
Honduras. He has also held various executive positions in South America with Coeur d'Alene Mines and Plata Peru Resources, Inc.
He earned a Bachelor of Science degree with Honors in Mining Engineering from Queens University in Kingston, Ontario, Canada and
is a member of the Association of Professional Engineers Ontario, the American Institute of Mining and Metallurgy and the Canadian
Institute of Mining and Metallurgy.



On December 14, 2012, Jaguar announced
the appointment of Douglas Willock as the Company's new Chief Financial Officer following the resignation of James Roller who
left the Company to pursue other opportunities. Prior to assuming his responsibilities as Chief Financial Officer on January 10,
2013, Mr. Willock advised Jaguar on the $30 million line of credit as described below under Renvest Credit Facility. Mr.
Willock has over 30 years of experience in corporate finance with leading Canadian and international investment banks, as well
as managing junior resource companies. Most recently he served as President and Chief Executive Officer and Director of Polar
Star Mining Corporation, and is currently a Director and Chair of the Audit Committee for Orestone Mining Corp. Mr. Willock holds
a Master of Business Administration degree with a major in finance from the Richard Ivey School of Business, Western University,
and a Bachelor of Arts (History) degree from the University of British Columbia. He attended the Beijing Language Institute on
a joint Government of Canada and China scholarship from 1976 to 1977.



3







RENVEST CREDIT FACILITY



On December 17, 2012, Jaguar entered into
a $30 million standby credit facility (the “Credit Facility”) with Renvest Mercantile Bancorp Inc. through its Global
Resource Fund (the “Lender”). On January 25, 2013 (the “Closing Date”), Jaguar made an initial drawdown
of $5 million (the “Initial Drawdown”).



According to the terms of the Credit Facility,
interest will be applied to the outstanding balance of all amounts drawn down from the Credit Facility at a fixed rate of eleven
percent (11%) per annum, payable monthly in arrears. In addition, Jaguar will pay the Lender a monthly standby fee in cash, equal
to 0.2% of the undrawn balance of the Credit Facility, until the Credit Facility is terminated, fully drawn down, or has expired.
Jaguar will be permitted, in one or more drawdowns, to draw down the balance of the Credit Facility for a period of 12 months
from the Closing Date. All drawdowns from the Credit Facility will be fully due and payable 18 months following the Closing Date.
Jaguar will pay the Lender a drawdown fee (the “Drawdown Fee”) on all drawdowns (i.e. the Initial Drawdown and all
subsequent drawdowns) on the date of the respective drawdown equal to: (i) two percent (2%) of the amount of the respective drawdown
payable in cash and (ii) a number of common shares of Jaguar equal to two percent (2%) of the amount of the respective drawdown.



Pursuant to the terms of the Credit Facility,
the Lender received an upfront fee (the “Upfront Fee”) on the Closing Date equal to: (i) a cash fee of $50,000, being
one percent (1%) of the amount of the Initial Drawdown, (ii) 450,000 common shares of Jaguar, and (iii) a cash fee of $250,000,
being one percent (1%) of the value of the Credit Facility less the Initial Drawdown (i.e. one percent (1%) of $25 million). As
such, the Lender received an aggregate Drawdown Fee and Upfront Fee equal to 570,919 common shares in the capital of Jaguar and
$400,000 in cash.



The
remaining $25 million under the Credit Facility will be available to be drawn down by the Company once certain of the remaining
security has been registered. The Company is taking steps to register the remaining security, but due to jurisdictional issues
raised by local security registries in certain municipalities in Brazil, there can be no assurances that such security will be
registered within the timeframe prescribed by the Credit Facility.  The failure to register the remaining security within
such timeframe will result in a default by the Company of its covenants under the Credit Facility.Jaguar intends to use the proceeds from the Initial Drawdown
and any subsequent drawdowns from the Credit Facility for working capital related to its Turmalina, Paciência or Caeté
mining projects in Brazil.



NEW YORK STOCK EXCHANGE LISTING STANDARD



On December 3, 2012, Jaguar announced that
the NYSE had notified the Company that it had fallen below the NYSE's continued listing standard relating to the price of its
common shares. The NYSE requires that the average closing price of a listed company's common stock be above $1.00 per share over
a consecutive 30 trading-day period. As of November 30, 2012, the date of the NYSE notice, the 30 trading-day average closing
price of Jaguar's common stock was $0.94 per share.



Under the NYSE's rules, Jaguar has a period
of six months to bring its share price and 30 trading-day average share price back above $1.00. During this period, Jaguar's common
shares will continue to be traded on the NYSE, subject to compliance with all other NYSE continued listing requirements. As of
the date of this MD&A, the shares of Jaguar continue to trade below $1.00 per share.



RESTRUCTURING AND TURNAROUND PLAN



On May 8, 2012, Jaguar announced the implementation
of a comprehensive restructuring and turnaround plan (the “Plan”) to improve costs and efficiency at its operations
in the State of Minas Gerais, Brazil. The Plan incorporated objectives and initiatives identified by management and a number of
expert industry consultants who were retained to assist with operational and cost improvements. Highlights of the Plan included:



| | · | Placing
                                                                                                          Paciência operations
                                                                                                          on temporary care and
                                                                                                          maintenance pending
                                                                                                          underground delineation
                                                                                                          drilling and mine development.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Reducing
                                                                                                          cost and improving productivity
                                                                                                          (operational adjustment
                                                                                                          program) at the Turmalina
                                                                                                          and Caeté operations:
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



4







| | - | Focusing
                                                                                                                         on safety
                                                                                                                         to reduce
                                                                                                                         the Company’s
                                                                                                                         lost
                                                                                                                         time
                                                                                                                         incident
                                                                                                                         rate;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | - | Instituting
                                                                                                                         a ground
                                                                                                                         control
                                                                                                                         remediation
                                                                                                                         plan
                                                                                                                         to create
                                                                                                                         a safer
                                                                                                                         and more
                                                                                                                         productive
                                                                                                                         mining
                                                                                                                         environment;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | - | Employing
                                                                                                                         properly
                                                                                                                         sized
                                                                                                                         cross
                                                                                                                         section
                                                                                                                         headings
                                                                                                                         and excavations
                                                                                                                         using
                                                                                                                         correctly
                                                                                                                         sized
                                                                                                                         equipment
                                                                                                                         at Caeté
                                                                                                                         and Turmalina
                                                                                                                         to reduce
                                                                                                                         dilution;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | - | Increasing
                                                                                                                         delineation
                                                                                                                         drilling
                                                                                                                         and advancing
                                                                                                                         development;
                                                                                                                         and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | - | Utilizing
                                                                                                                         a zero-based
                                                                                                                         evaluation
                                                                                                                         of manpower
                                                                                                                         levels
                                                                                                                         in all
                                                                                                                         aspects
                                                                                                                         of the
                                                                                                                         operations.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Targeting
                                                                                                          40% reduction in overhead
                                                                                                          and administrative costs
                                                                                                          across the Company.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Significant progress was made in the implementation
of various elements of the Plan. Highlights of this progress include:



| | · | Paciência
                                                                                                          operation was placed
                                                                                                          on care and maintenance;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Implementation
                                                                                                          of new ground control
                                                                                                          system began in all
                                                                                                          operations;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | 26%
                                                                                                          reduction in total administrative
                                                                                                          expenses in 2012 compared
                                                                                                          to 2011; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | 41%
                                                                                                          reduction in total headcount
                                                                                                          from 2,197 to 1,290,
                                                                                                          including the following:
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | - | 21%
                                                                                                                         reduction
                                                                                                                         in headcount
                                                                                                                         at the
                                                                                                                         Turmalina
                                                                                                                         operation;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | - | 15%
                                                                                                                         reduction
                                                                                                                         in headcount
                                                                                                                         at the
                                                                                                                         Caeté
                                                                                                                         operation;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | - | 28%
                                                                                                                         reduction
                                                                                                                         in administrative
                                                                                                                         and support
                                                                                                                         staff
                                                                                                                         at the
                                                                                                                         Belo
                                                                                                                         Horizonte
                                                                                                                         head
                                                                                                                         office;
                                                                                                                         and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | - | Successful
                                                                                                                         implementation
                                                                                                                         of a
                                                                                                                         revised
                                                                                                                         purchasing
                                                                                                                         system
                                                                                                                         led by
                                                                                                                         a new
                                                                                                                         purchasing
                                                                                                                         manager.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Results from the cost reduction initiatives
were favourable. Consolidated cash operating cost per ounce declined by more than 28% from the first quarter 2012 to the fourth
quarter 2012. Cash operating cost per ounce at Turmalina and Caeté declined by 22% and 26%, respectively from the first
quarter 2012 to the fourth quarter 2012. Management expects to continue the downward trend in cash operating cost during 2013.



Jaguar is working towards completing the
last stages of the restructuring phase of the Turnaround Plan. Parallel to this effort is a focus on the implementation of the
turnaround plan which is based on the 2013 budget. Key activities include continued focus on safety, further optimization of the
workforce and manpower levels, completing the conversion to properly scaled mining methodology and continued emphasis on advanced
development and definition drilling. A general Human Resources/Community Social Responsibility review has been initiated by the
Company with a search underway for a new chief administration officer to complete the last portion of the Plan. Current activities
at each of the mining complexes demonstrate that the operations are well on their way to meeting budgeted costs and production
targets. The Company believes the successful implementation of these programs will enable it to further reduce cash operating
cost per ounce and deliver positive cash flow from operations in 2013 at budgeted gold prices of $1,600 per ounce.



Paciência



On August 9, 2012, the Company announced
that it had completed the transition of the Paciência operation to care and maintenance. Total manpower has been reduced
from 543 to 31. The remaining personnel are handling necessary maintenance functions.



The Paciência operations have faced
significant and increasing challenges since inception. A detailed review determined that a complete remediation plan would best
be accomplished by placing the operations on temporary care and maintenance until the necessary underground infill and extension
drilling, engineering design and structural changes have been implemented in the mines.



The remediation plans for Paciência
will include a comprehensive underground drilling and development program to delineate and prepare reserves for mining. Additionally,
the mining configuration will be changed to suit the narrow vein nature of the resource by introducing sized equipment for smaller
and flat back parallelogram development headings, reduced stope dimensions and building the developed reserve inventory prior
to restarting the plant. Implementation of the plan is expected to result in improved productivity per ounce, reduced mining dilution,
reliable and predictable production forecasts, and significant reductions in cash costs per ounce when the mines return to production.



The Company has not established a timeframe
to complete the Paciência remediation plans and restart production, as it intends to focus on optimizing production and
costs at the Turmalina and Caeté operations in 2013.



5







Turmalina and Caeté



As part of the Plan, the Company initiated
efforts during 2012 to transition the Turmalina and Caeté operations to smaller ore and waste development headings, reduced
stope dimensions and improved mechanized ground control methodologies. The new ground control methodology is progressing and work
is ongoing on the transition toward smaller ore and waste development headings. These actions are expected to improve head grade
predictability and reduce ore dilution. These changes are being implemented concurrently with continuing operations and are expected
to reduce the cash operating cost per ounce and allow for more predictable production.



Changes in Mining Methods



Historically, access to the Company’s
ore bodies has been through 5 meter by 5 meter decline ramps, haulages, crosscuts and stope development headings to accommodate
30 tonne conventional and articulated dump trucks and matching loading equipment in the stoping horizon using a modified bench
cut and fill mining technique. In some places, these excavations have been prone to ground control issues, which tend to compromise
excavation integrity and lead to increased safety risks and the production of excessive quantities of development waste.



As a result of the evaluation of ground
stability and control by external consultants, a comprehensive plan has been put to work based on determination of operational
adjustments required to optimize excavation stability and support. Detailed analyses of root causes of ground control issues were
undertaken.



Factors that determine excavation stability
were identified in extensive discussions with mine and technical services staff, including the sensitivity of potentially weak
planes to bending deflection, failure mechanisms in drifts and stopes, integration of rock reinforcement and surface support in
drifts and stopes, effective installation of support, excavation size, shape and orientation, drilling accuracy and blasting control.
Practical ground stability and control objectives were defined which included stopping undue ground displacement in good time,
accurately delineating objective ore zones, using properly scaled equipment, drilling accurately and controlling blasting to avoid
over-break and breaching of walls, identifying and deploying the appropriate equipment to ensure effective installation of support
and installing all elements of support in a timely and efficient manner.



The Company will continue in the following
year to investigate the optimum size of excavations to keep ore dilution to controllable limits. With the changes in operations
parameters, the size and dimension of the excavations on ore will be designed in a manner that does not compromise the hanging
wall and footwall contacts. The objective is to reduce dilution by a minimum of 25%. Additional benefits are also expected including,
but not limited to, ground control accessories reduction (due to smaller profile of drifting), improved geological control, reduced
ventilation costs, reduced development costs, reduced equipment costs, improved efficiencies in mining cycles, improved safety
of operations (due to new equipment and operational techniques) and reduced milling costs on a per ounce milled basis.



With the change in operating philosophy,
the size of excavations in the ore will be reduced to approximately 3.0 meters by 3.5 meters and the new trapezoidal shape of
the excavations will ensure that the hangingwall and footwall units will not be compromised. The Company believes these measures
have the potential to reduce mining dilution significantly. Additional benefits are expected, including, but not limited to, reduced
support costs, reduced ventilation costs, reduced development costs, reduced equipment costs and reduced milling costs on a per
ounce basis.



During 2013, Jaguar will continue to investigate
and implement optimum size of excavations and adequate size of equipment in order to minimize cash expenditure and maximize cash
flow.



2013 ESTIMATED PRODUCTION AND CASH OPERATING
COST



The Company expects 2013 gold production
in the range of 85,000 to 95,000 ounces. Cash operating costs are expected to be in the range of $950 to $1,100 per ounce (based
on an assumed exchange rate of R$2.0 per US$1.0). Capital expenditures for 2013 are anticipated to be approximately $35 million
of which $22 is expected to be spent at Caeté and $13 at Turmalina.



6







OPERATING MINES AND DEVELOPMENT PROJECTS



Production and Operating Performance



The following tables set forth certain
operating data for Turmalina, Paciência and Caeté for the three and twelve months ended December 31, 2012 and 2011.



|Three Months Ended December 31, 2012 Operating Data
|---------------------------------------------------
|                                                   
|Turmalina                                          
|Paciência                                          
|Caeté                                              
|Total                                              



|Twelve Months Ended December 31, 2012 Operating Data
|----------------------------------------------------
|                                                    
|Turmalina                                           
|Paciência                                           
|Caeté                                               
|Total                                               



|Three Months Ended December 31, 2011 Operating Data
|---------------------------------------------------
|                                                   
|Turmalina                                          
|Paciência                                          
|Caeté                                              
|Total                                              



|Twelve Months Ended December 31, 2011 Operating Data
|----------------------------------------------------
|                                                    
|Turmalina                                           
|Paciência                                           
|Caeté                                               
|Total                                               



During the quarter ended December 31, 2012,
the Company produced a total of 21,676 ounces of gold compared to 33,397 ounces during the same period last year. The decrease
in gold production for the quarter compared to the same period in 2011 was primarily attributable to the Company’s decision
to place the Paciência operation under care and maintenance and the decrease in Turmalina’s production as explained
below under Turmalina.



The cash operating cost for the quarter
ended December 31, 2012, was $915 per ounce as compared to $1,114 per ounce in the quarter ended December 31, 2011. The decrease
in the Company’s cash operating cost per ounce during the quarter ended December 31, 2012, compared to the same period in
2011 was attributable to Jaguar’s ongoing cost reduction program.



7







During the year ended December 31, 2012,
the Company produced a total of 102,823 ounces of gold compared to 155,764 ounces in 2011. As in the quarter above, the decrease
in gold production for the year compared to 2011 is primarily attributable to the Company’s decision to place the Paciência
operation under care and maintenance and the decrease in Turmalina’s production as explained below under Turmalina.
As a result, the Company reported increased cash operating costs for the year ended December 31, 2012 of $1,082 per ounce compared
to $870 per ounce in the year ended December 31, 2011.



Jaguar sold 21,298 ounces of gold at an
average realized price of $1,714 per ounce in the quarter ended December 31, 2012, compared to 34,157 ounces of gold at an average
realized price of $1,680 per ounce in the quarter ended December 31, 2011.



During the year ended December 31, 2012,
Jaguar sold 103,676 ounces of gold at an average realized price of $1,663 per ounce compared to 155,525 ounces of gold at an average
realized price of $1,563 per ounce in the year ended December 31, 2011.



Consolidated mine development totaled 4.1
kilometers for the quarter ended December 31, 2012, compared to 6.5 kilometers for the quarter ended December 31, 2011. During
the year ended December 31, 2012, Jaguar’s consolidated mine development totaled 19.9 kilometers, compared to 24.8 kilometers
during the year ended December 31, 2011.



Turmalina



The primary mining method utilized at the
Turmalina underground mine is “cut and fill” with some sublevel stoping also being employed. Ore produced at the Turmalina
Mine is transported to the adjacent 2,000 tonnes per day (“tpd”) carbon-in-pulp (“CIP”) processing plant.



During the quarter ended December 31, 2012,
Turmalina produced 8,206 ounces of gold at a cash operating cost of $1,057 per ounce. This compared to 13,470 ounces at a cash
operating cost of $1,117 per ounce during the quarter ended December 31, 2011 and 9,186 ounces at a cash operating cost of $991
per ounce in the quarter ended September 30, 2012.



During the year ended December 31, 2012,
Turmalina produced 37,840 ounces of gold at a cash operating cost of $1,135 per ounce. This compared to 61,400 ounces at a cash
operating cost of $886 per ounce during the year ended December 31, 2011. Cash operating costs increased year over year due to
lower production.



Production was lower quarter over quarter,
and year over year, due to instability of the hanging and footwalls leading to poor ground conditions in the wider zone of Turmalina’s
Ore Body A. These issues are being addressed by a new ground control methodology and more emphasis on development. However, during
the transition to the new ground control methodology, the installation of roof support and ground control measures are taking
additional time to complete. As a result of the extended mining cycle times, together with the shift in emphasis to development,
production is not expected to increase immediately.



Underground development drifts for drilling
at the Turmalina Mine totaled 2.1 kilometers during the quarter ended December 31, 2012, and 8.7 kilometers during the year ended
December 31, 2012. Underground delineation drilling at Turmalina totaled 5.8 kilometers during the quarter and 21.7 kilometers
during 2012.



Paciência



The Paciência operation continued
on care and maintenance during the quarter ended December 31, 2012 and therefore no gold was produced at this operation during
this quarter. During the year ended December 31, 2012, Paciência produced 9,987 ounces of gold at a cash operating cost
of $1,536 per ounce compared to 39,581 ounces at a cash operating cost of $787 per ounce during the year ended December 31, 2011,
a fully operational year.



No underground development or drilling
work was carried out by the Company at the Paciência mine during the quarter ended December 31, 2012. During the year ended
December 31, 2012, underground development drifts for drilling at Paciência totaled 2.7 kilometers and underground delineation
drilling totaled 10.0 kilometers.



As previously stated, the Company has not
established a timeframe to complete the Paciência remediation plans and restart production as it intends to focus in 2013
on optimizing production and costs at the Turmalina and Caeté operations.



8







Caeté



The Caeté mining complex has two
underground mines (Roça Grande and Pilar) that primarily utilize the “cut and fill” mining method as well as
some “sublevel stoping” at Pilar. Ore produced from these mines is transported to the 2,200 tpd CIP processing plant
adjacent to the Roça Grande mine.



During the quarter ended December 31, 2012,
Caeté produced 13,470 ounces of gold at a cash operating cost of $828 per ounce. This compared to 13,295 ounces at a cash
operating cost of $1,014 per ounce during the quarter ended December 31, 2011, and 13,840 ounces at a cash operating cost of $945
per ounce in the quarter ended September 30, 2012. The decrease in the Company’s cash operating cost per ounce during the
quarter ended December 31, 2012, as compared to the same period in 2011 was attributable to Jaguar’s ongoing cost reduction
program.



During the year ended December 31, 2012,
Caeté produced 54,996 ounces of gold at a cash operating cost of $962 per ounce. This compared to 54,783 ounces at a cash
operating cost of $912 per ounce during the year ended December 31, 2011.



Underground development drifts for drilling
at the Pilar and Roça Grande mines totaled 2.0 kilometers during the quarter ended December 31, 2012, and 8.4 kilometers
during the year ended December 31, 2012. Underground delineation drilling at the mines totaled 8.8 kilometers during the quarter
and 30.4 kilometers during 2012.



Sabará



The Sabará operation continued on
care and maintenance during the quarter ended December 31, 2012. The Company continues to evaluate the strategic alternatives
for this idled operation.



Gurupi Project



Work on a revised feasibility study for
the development of the Gurupi Project, which intends to incorporate recent drill results and resource estimates, is ongoing. The
Company anticipates that it will make a decision on the development plan, its timing and financing plan following the receipt
of that study. Work on the Gurupi Project for 2013 has been delayed as the Company continues to focus its efforts on completing
the restructuring and implementation of the production programs at the Turmalina and Caeté operations based on the 2013
approved budget.



While the Company has focused recent drilling
and exploration on the Chega Tudo and Cipoeiro deposits, the 100% Jaguar-owned Gurupi concession includes 12 additional identified
targets in 33 contiguous mineral rights totaling 141,525 hectares. These additional targets have not been included in any of the
Company's mineral resource estimates or feasibility studies related to the Gurupi Project to date. These targets have been identified
by favorable geology, structures, old artisan mine works, soil and channel sampling anomalies and exploration drilling, and represent
the potential for further increases in mineral resources at Gurupi.



In connection with the Gurupi Project acquisition
on December 2, 2009 from Kinross, Jaguar was also granted a right of first refusal on an adjacent exploration property. During
the quarter ended December 31, 2012, Jaguar received a notice from Kinross relating to such adjacent property in connection with
its right of first refusal. After evaluating the offer being made to Kinross, and other relevant factors, Jaguar elected not to
exercise its right of first refusal.



Pedra Branca Project



In March 2007, Jaguar entered into an earn-in
agreement with Xstrata to explore the Pedra Branca Project in the State of Ceará in Northeastern Brazil. The Pedra Branca
Project currently has mineral rights to 11 exploration licenses and 15 pending applications for exploration licenses totaling
41,578 hectares covering a 38-kilometer section of a regional shear zone. The concessions are located in and around municipal
areas with good infrastructure. The mineralized structures are open along the strike with potential for significant gold mineralization.
During 2007 and 2008, Jaguar completed an exploration drilling program to test the continuity of the mineralization laterally
and at depth. During 2009, Jaguar carried out geological reconnaissance in the concession area, trenching and soil geochemistry.
In 2010, Jaguar continued with the exploration program, including extensive geological mapping, drainage and soil geochemistry,
mapping of anomalous zones and trenching. During 2011, the trenching program data was thoroughly analyzed in order to prioritize
previously identified target zones. Of the original 50-kilometer strike length, a stretch of 15 kilometers of the gold-bearing
shear zone containing 18 relevant high potential targets was identified. Among the 18 mineralized zones, Mirador, Coelho, Queimadas
and Igrejinha are considered high priority targets where exploratory drilling has been performed and returned results and geological
data that suggest potential for gold deposits.



9







On April 24, 2012, Jaguar executed an amendment
to the 2007 earn-in agreement with Xstrata to acquire the remaining 40% interest in the Pedra Branca Project. The Project, which
was previously owned jointly by Jaguar and Xstrata on a 60/40 basis, is now 100% owned by Jaguar. In accordance with the terms
of the amendment, Jaguar committed to: (i) cash consideration in the amount of $400,000 to be paid in installments in the following
year; (ii) a Net Smelter Royalty (“NSR”) of one percent (1%) payable to Xstrata on future gold production; and (iii)
rights of first refusal on any Base Metal Dominant Deposit (as defined in the amendment) discovered. Upon such discovery, Xstrata
may elect to form a new company owned 30% by the Company’s wholly owned subsidiary, Mineração Serras do Oeste
Ltda. (“MSOL”) and 70% by Xstrata, by paying three hundred percent (300%) of MSOL’s exploration expenditures
incurred exclusively on the relevant Base Metal Dominant Area of the property.



EXPLORATION



Exploration activities were not conducted
by the Company during the quarter ended December 31, 2012.



MINERAL RESOURCES AND RESERVES



In March 2013, the Company completed an
internal reconciliation of its Mineral Resources and Reserves. Wilson Miola, Jaguar’s Director of Engineering, prepared
and supervised the internal reconciliation. The tables below set forth Mineral Resource and Reserve
estimates for the Turmalina, Paciência and Caeté operations and the Gurupi Project as of December 31, 2012.



At its southern operations in Minas Gerais,
the Company has an estimated 3.96 million ounces of Measured and Indicated Mineral Resources contained in 33.79 million tonnes
of material at an average grade of 3.65 grams of gold per tonne, and 1.13 million ounces of Inferred Mineral Resources contained
in 9.89 million tonnes of material at an average grade of 3.55 grams of gold per tonne. Estimated Proven and Probable Reserves,
which are included in the above mentioned Measured and Indicated Mineral Resources, total 1.65 million ounces of gold contained
in 17.07 million tonnes of ore at an average grade of 3.01 grams per tonne.



At its Gurupi Project in northern Brazil,
Jaguar has an estimated 3.52 million ounces of Measured and Indicated Mineral Resources contained in 142.64 million tonnes of
material at an average grade of 0.77 grams of gold per tonne, and 0.17 million ounces of Inferred Mineral Resources contained
in 7.72 million tonnes of material at an average grade of 0.67 grams of gold per tonne. Estimated Probable Reserves, which are
included in the above mentioned Indicated Mineral Resources, total 2.33 million ounces of gold contained in 63.76 million tonnes
of material at an average grade of 1.14 grams per tonne.



In total, Jaguar now has an estimated 7.48
million ounces of Measured and Indicated Mineral Resources contained in 176.42 million tonnes of material at an average grade
of 1.32 grams of gold per tonne, and 1.30 million ounces of Inferred Mineral Resources contained in 17.61 million tonnes of material
at an average grade of 2.29 grams of gold per tonne. Estimated Proven and Probable Mineral Reserves, which are included in the
above mentioned Measured and Indicated Mineral Resources, total 3.98 million ounces of gold contained in 80.82 million tonnes
of ore at an average grade of 1.53 grams per tonne.



10







Table 1 - Summary of Estimated Mineral Resources1



|                      |  | RESOURCES (tonnage in metric
    tonnes and grades in grams/tonne) |            |  | RESOURCES (ounces Au) | 
|--------------------- |  | ------------------------------------------------------------------ | ---------- |  | --------------------- | 
|                      |  | Measured (t)                                                       |            |  | g/t                   | 
|Southern Brazil       |  |                                                                    |            |  |                       | 
|Paciência             |  |                                                                    |            |  |                       | 
|Santa Isabel(2)       |  |                                                                    | 2,662,630  |  |                       | 
|Other(3) (4)          |  |                                                                    | 1,312,560  |  |                       | 
|Other(5) (6)          |  |                                                                    | 232,300    |  |                       | 
|Total                 |  |                                                                    | 4,207,490  |  |                       | 
|Caeté                 |  |                                                                    |            |  |                       | 
|Pilar(7)              |  |                                                                    | 2,376,590  |  |                       | 
|Roça Grande(7)        |  |                                                                    | 3,864,990  |  |                       | 
|Other(4) (8)          |  |                                                                    | 529,000    |  |                       | 
|Other(6) (9)          |  |                                                                    | 190,000    |  |                       | 
|Total                 |  |                                                                    | 6,960,580  |  |                       | 
|Turmalina             |  |                                                                    |            |  |                       | 
|Faina(10)             |  |                                                                    | 71,260     |  |                       | 
|Pontal(10)            |  |                                                                    | 119,600    |  |                       | 
|Ore Body A(11)        |  |                                                                    | 1,137,420  |  |                       | 
|Ore Body B(11)        |  |                                                                    | 342,800    |  |                       | 
|Ore Body C(11)        |  |                                                                    | 371,790    |  |                       | 
|Total                 |  |                                                                    | 2,042,870  |  |                       | 
|Total Southern Brazil |  |                                                                    | 13,210,940 |  |                       | 
|Northern Brazil       |  |                                                                    |            |  |                       | 
|Gurupi Project        |  |                                                                    |            |  |                       | 
|Cipoeiro(12)          |  |                                                                    | 25,734,250 |  |                       | 
|Chega Tudo(12)        |  |                                                                    | 20,923,100 |  |                       | 
|Total Northern Brazil |  |                                                                    | 46,657,350 |  |                       | 
|TOTAL                 |  |                                                                    | 59,868,290 |  |                       | 



11







Table 2 - Summary of Estimated Mineral Reserves



|                      |  | Proven (t) |           |  | g/t |  |      | Probable (t) |  |  | g/t        |  |  | Proven + Probable (t) |      |  | g/t |  |            | Ounces Au | 
|--------------------- |  | ---------- | --------- |  | --- |  | ---- | ------------ |  |  | ---------- |  |  | --------------------- | ---- |  | --- |  | ---------- | --------- | 
|Southern Brazil       |  |            |           |  |     |  |      |              |  |  |            |  |  |                       |      |  |     |  |            |           | 
|Paciência             |  |            |           |  |     |  |      |              |  |  |            |  |  |                       |      |  |     |  |            |           | 
|Santa Isabel(2)       |  |            | 2,439,390 |  |     |  | 2.96 |              |  |  | 703,850    |  |  |                       | 2.52 |  |     |  | 3,143,240  |           | 
|Caeté                 |  |            |           |  |     |  |      |              |  |  |            |  |  |                       |      |  |     |  |            |           | 
|Pilar(7)              |  |            | 1,921,230 |  |     |  | 2.61 |              |  |  | 3,577,720  |  |  |                       | 2.29 |  |     |  | 5,498,950  |           | 
|Roça Grande(7)        |  |            | 1,762,800 |  |     |  | 2.71 |              |  |  | 3,048,830  |  |  |                       | 3.42 |  |     |  | 4,811,630  |           | 
|Total                 |  |            | 3,684,030 |  |     |  | 2.66 |              |  |  | 6,626,550  |  |  |                       | 2.81 |  |     |  | 10,310,580 |           | 
|Turmalina             |  |            |           |  |     |  |      |              |  |  |            |  |  |                       |      |  |     |  |            |           | 
|Ore Body A(11)        |  |            | 1,007,140 |  |     |  | 5.59 |              |  |  | 697,430    |  |  |                       | 3.82 |  |     |  | 1,704,570  |           | 
|Ore Body B(11)        |  |            | 303,560   |  |     |  | 2.96 |              |  |  | 486,460    |  |  |                       | 2.99 |  |     |  | 790,020    |           | 
|Ore Body C(11)        |  |            | 328,020   |  |     |  | 3.55 |              |  |  | 789,230    |  |  |                       | 2.72 |  |     |  | 1,117,250  |           | 
|Total                 |  |            | 1,638,720 |  |     |  | 4.69 |              |  |  | 1,973,120  |  |  |                       | 3.18 |  |     |  | 3,611,840  |           | 
|Total Southern Brazil |  |            | 7,762,140 |  |     |  | 3.18 |              |  |  | 9,303,520  |  |  |                       | 2.87 |  |     |  | 17,065,660 |           | 
|                      |  |            |           |  |     |  |      |              |  |  |            |  |  |                       |      |  |     |  |            |           | 
|Northern Brazil       |  |            |           |  |     |  |      |              |  |  |            |  |  |                       |      |  |     |  |            |           | 
|Gurupi Project        |  |            |           |  |     |  |      |              |  |  |            |  |  |                       |      |  |     |  |            |           | 
|Cipoeiro(13)          |  |            | -         |  |     |  | -    |              |  |  | 45,043,500 |  |  |                       | 1.20 |  |     |  | 45,043,500 |           | 
|Chega Tudo(13)        |  |            | -         |  |     |  | -    |              |  |  | 18,713,200 |  |  |                       | 0.99 |  |     |  | 18,713,200 |           | 
|Total Northern Brazil |  |            | -         |  |     |  | -    |              |  |  | 63,756,700 |  |  |                       | 1.14 |  |     |  | 63,756,700 |           | 
|TOTAL                 |  |            | 7,762,140 |  |     |  | 3.18 |              |  |  | 73,060,220 |  |  |                       | 1.36 |  |     |  | 80,822,360 |           | 



Notes
to Tables 1 and 2

| | (1) | Mineral Resources listed include mineral reserves. 
Some columns and rows may not total due to rounding.
| | --- | --------------------------------------------------------------------------------------------------------

| | (2) | TechnoMine NI 43-101 Feasibility Study Technical Report
on the Paciência Gold Project Santa Isabel Mine filed on SEDAR on August 9, 2007.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Rio de Peixe, Bahú, and Marzagão.
| | --- | ---------------------------------

| | (4) | TechnoMine NI 43-101 Technical Report on the Quadrilátero
Gold Project filed on SEDAR on December 23, 2004.
| | --- | -----------------------------------------------------------------------------------------------------------

| | (5) | Palmital, Ouro Fino, Quati, BIF Norte, and Bocaina.
| | --- | ---------------------------------------------------

| | (6) | TechnoMine NI 43-101 Multi-Target Resource Estimate Technical
Report filed on SEDAR on June 21, 2011.
| | --- | -----------------------------------------------------------------------------------------------------

| | (7) | TechnoMine NI 43-101 Amended Feasibility Study Technical
Report on the Caeté Gold Project filed on SEDAR on March 21, 2011.
| | --- | ---------------------------------------------------------------------------------------------------------------------------

| | (8) | Juca Vieira and Morro do Adão.
| | --- | ------------------------------

| | (9) | Boa Vista, Fernandes, Camará I, Camará II,
and Serra Paraíso.
| | --- | -------------------------------------------------------------

| | (10) | TechnoMine NI 43-101 Technical Report on the Turmalina
Gold Mining Complex filed on SEDAR on November 9, 2011.
| | ---- | --------------------------------------------------------------------------------------------------------------

| | (11) | TechnoMine NI 43-101 Feasibility Study Technical Report
on the Turmalina Phase I Expansion Project filed on SEDAR on September 11, 2008.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------

| | (12) | SRK resource estimate on the Gurupi Project announced by
the Company on July 30, 2012.
| | ---- | --------------------------------------------------------------------------------------

| | (13) | TechnoMine NI 43-101 Feasibility Study Technical Report
on the Gurupi Project filed on SEDAR on January 31, 2011.
| | ---- | -----------------------------------------------------------------------------------------------------------------



Although Jaguar has carefully prepared
and verified the mineral resource and reserve figures presented herein, such figures are estimates, which are, in part, based
on forward-looking information, and no assurance can be given that the indicated level of gold will be produced. Estimated reserves
may have to be recalculated based on actual production experience. Market price fluctuations of gold as well as increased production
costs or reduced recovery rates, and other factors may render the present proven and probable reserves unprofitable to develop
at a particular site or sites for periods of time. See “Risk Factors” and “Cautionary Note Regarding
Forward-Looking Statements” in the Company’s 2012 Annual Information Form dated March 20, 2013 and available on
SEDAR and EDGAR at www.sedar.com and www.sec.gov, respectively.



12







FINANCIAL REVIEW



During the quarter ended December 31, 2012,
the market price of gold (London PM Fix) traded in a range from $1,651 to $1,792 and averaged $1,722 per troy ounce. This
was approximately 2% higher than the average price for the quarter ended December 31, 2011. Gold prices were volatile during the
quarter and have continued to be influenced by interest rates, uncertainty in the credit and financial markets, political unrest
and financial distress in the United States, Europe and the Middle East, investment patterns around the world, physical demand
and inflation expectations and other global economics factors.



The Company reports its financial statements
in US$. However, a significant portion of the Company’s expenses are incurred in either Cdn$ or R$. The average rates of
exchange for the Cdn$ per US$1.00 for the quarter ended December 31, 2012 and 2011 were 0.99 and 1.02, respectively. The average
rates of exchange for the R$ per US$1.00 for the quarter ended December 31, 2012 and 2011 were 2.06 and 1.80, respectively.



Summary of Quarterly Results



The following chart summarizes the Company’s
quarterly results of operations for the previous eight quarters:



|                                      |  | Three Months Ended |        
|------------------------------------- |  | ------------------ | -------
|                                      |  | 31-Dec             |        
|($ in 000s, except per share amounts) |  | 2012               |        
|Net sales                             |  |                    | 36,511 
|Net income (loss)                     |  |                    | (49,371
|Basic income (loss) per share         |  |                    | (0.58  
|Diluted income (loss) per share       |  |                    | (0.58  



Net sales have trended lower over the previous
five quarters due to lower production levels at the Company’s Turmalina and Caeté operations and the shutdown of
the Paciência operation.



Summary of Key Operating Results



|                                                |  | Three Months Ended Dec 31 |            |   | Twelve Months Ended Dec 31 |  
|----------------------------------------------- |  | ------------------------- | ---------- | - | -------------------------- | -
|                                                |  | 2012                      |            |   | 2011                       |  
|($ in 000s, except per share amounts)           |  |                           |            |   |                            |  
|Gold sales                                      |  | $                         | 36,511     |   |                            | $
|Ounces sold                                     |  |                           | 21,298     |   |                            |  
|Average sales price $ / ounce                   |  |                           | 1,714      |   |                            |  
|Gross profit                                    |  |                           | 9,344      |   |                            |  
|Net income (loss)                               |  |                           | (49,371    | ) |                            |  
|Basic income (loss) per share                   |  |                           | (0.58      | ) |                            |  
|Diluted income (loss) per share                 |  |                           | (0.58      | ) |                            |  
|Weighted avg. # of shares outstanding - basic   |  |                           | 84,409,648 |   |                            |  
|Weighted avg. # of shares outstanding - diluted |  |                           | 84,409,648 |   |                            |  



Quarter Ended December 31, 2012 Compared
to December 31, 2011



Gold sales for the quarter ended December
31, 2012, decreased $20.9 million or 36% from the quarter ended December 31, 2011 and $70.7 million or 29% for the year ended
December 31, 2012, compared to December 31, 2011, due to lower gold production at Turmalina and Paciência. The number of
ounces of gold sold was 21,298 in the quarter ended December 31, 2012 (103,676 in the year ended December 31, 2012) compared to
34,157 ounces in the quarter ended December 31, 2011 (155,525 ounces for the year ended December 31, 2011). The average realized
gold price increased to $1,714 per ounce for the fourth quarter of 2012 ($1,663 for the year ended December 31, 2012) from $1,680
per ounce in the same quarter in 2011 ($1,563 for the year ended December 31, 2011).



13







The Company reported a gross profit of
$9.3 million for the quarter ended December 31, 2012 compared to a gross profit of $1.8 million for the quarter ended December
31, 2011. The increase in gross profit for the quarter ended December 31, 2012 versus the same period in 2011 was primarily due
to Jaguar’s ongoing cost reduction program. The gross profit represents 26% of the total gold sales in the quarter ended
December 31, 2012, compared to 3% in the quarter ended December 31, 2011.



The Company reported a gross profit of
$6.1 million for the year ended December 31, 2012 compared to a gross profit of $43.4 million for the year ended December 31,
2011. The decrease in gross profit for the year ended December 31, 2012 compared to the same period in 2011 was primarily due
to lower production. The gross profit represents 4% of the total gold sales in the year ended December 31, 2012, compared to 18%
in the year ended December 31, 2011.



Review of Certain Operating Expenses and Other Income and
Expenses



|                                                           |  | Three Months Ended Dec 31 |        |   | Twelve Months Ended Dec 31 |  
|---------------------------------------------------------- |  | ------------------------- | ------ | - | -------------------------- | -
|                                                           |  | 2012                      |        |   | 2011                       |  
|($ in 000s)                                                |  |                           |        |   |                            |  
|Stock-based compensation expense (recovery)                |  | $                         | (11    | ) |                            | $
|Administration                                             |  |                           | 4,055  |   |                            |  
|Derivative (gain) loss                                     |  |                           | (591   | ) |                            |  
|Conversion option embedded in convertible debt (gain) loss |  |                           | (8,462 | ) |                            |  
|Foreign exchange (gain) loss                               |  |                           | 637    |   |                            |  
|Interest expense                                           |  |                           | 7,138  |   |                            |  
|Interest income                                            |  |                           | (130   | ) |                            |  
|Paciência expense                                          |  |                           | 1,224  |   |                            |  
|Impairment of mining properties                            |  |                           | 55,305 |   |                            |  



Stock-based compensation expense varies
depending upon fluctuations in Jaguar’s share price, as well as the timing of the vesting of Jaguar’s stock options,
deferred share units (“DSUs”), restricted share units (“RSUs”), and share appreciation rights (“SARs”).
The stock-based compensation expense (recovery) for the quarter ended December 31, 2012, includes option expense of $212,000 and
recoveries of $33,000 for RSUs, $154,000 for DSUs and $36,000 for SARs.



The stock-based compensation expense (recovery)
for the year ended December 31, 2012, includes option expense of $531,000 and recoveries of $807,000 for RSUs, $1.2 million for
DSUs and $810,000 for SARs.



Administrative expenses decreased 54% to
$4.0 million during the quarter ended December 31, 2012, from $8.8 million during the same period in 2011. Administrative expenses
decreased 26% to $18.9 million during the year ended December 31, 2012, from $25.5 million during the same period in 2011. Administration
expenses include legal and accounting costs, costs to maintain offices and personnel, and costs associated with being a publicly-traded
company.



The Company
recognized a realized gain of $38,000 and a loss $77,000 for the quarter and year ended December 31, 2012, respectively,
on forward foreign exchange contracts compared to a realized loss of $507,000 and $57,000 for the quarter and year ended December
31, 2011.  The Company also recognized a realized gain of $600,000 on forward sales derivatives for the quarter and
year ended December 31, 2012, versus a loss of $194,000 on commodity options contracts for the year ended December 31, 2011. The
Company incurred an unrealized loss of $47,000 for the quarter ended December 31, 2012 (unrealized gain of $893,000 for the quarter
ended December 31, 2011) and an unrealized gain of $43,000 for the year ended December 31, 2012 (unrealized loss of $168,000 for
the year ended December 31, 2011).The average price of the US$ strengthened against the R$ from 1.80 for the quarter
ended December 31, 2011, to 2.06 for the quarter ended December 31, 2012. The closing price of the US$ against the R$ was 2.04
as at December 31, 2012 compared to 1.88 as at December 31, 2011 (see Risk Management Policies – Hedging).



The conversion option component embedded
in the 4.5% convertible notes and the 5.5% convertible notes is treated as a derivative liability and recorded at fair value using
the Crank-Nicolson valuation model. The valuation model requires inputs, such as the Company’s common share price, volatility
and credit spread. The change in fair value is a non-cash item which is recorded in the statement of operations and comprehensive
loss. During the quarter ended December 31, 2012, a gain of $8.5 million was recognized ($75.5 million gain during the year ended
December 31, 2012) as compared to a loss of $12.8 million during the quarter ended December 31, 2011 ($32.3 million loss during
the year ended December 31, 2011).



14







A foreign exchange loss of $637,000 was
recognized during the quarter ended December 31, 2012, versus a gain of $463,000 during the quarter ended December 31, 2011. A
foreign exchange loss of $5.9 million was recognized during the year ended December 31, 2012, versus a loss of $8.5 million during
the year ended December 31, 2011. The foreign exchange losses on recoverable taxes assets were offset by foreign exchange gains
on reclamation provisions, and deferred tax liabilities. The foreign exchange gains and losses are due to changes in the R$ and
Cdn$ versus the US$.



Interest expense remained stable at $7.1
million during the quarter ended December 31, 2012, as compared to $7.0 million for the quarter ended December 31, 2011. Interest
expense increased to $28.5 million for the year ended December 31, 2012 from $27.0 million for the year ended December 31, 2011.
Included in interest expense for the quarter ended December 31, 2012, is $3.5 million of non-cash interest expense relating to
the amortization of the discounts on the convertible notes (quarter ended December 31, 2011 - $3.3 million). Included in interest
expense for the year ended December 31, 2012, is $13.7 million of non-cash interest expense relating to the amortization of the
discounts on the convertible notes (year ended December 31, 2011 - $12.5 million).



Interest income decreased to $130,000 during
the quarter ended December 31, 2012 ($3.2 million during the year ended December 31, 2012), from $2.1 million during the quarter
ended December 31, 2011 ($9.2 million during the year ended December 31, 2011). Interest income was earned on deposits held in
banks in Canada, the United States and Brazil.



During the year ended December 31, 2012,
the Company recorded a $4.4 million expense related to Paciência, which includes approximately $2.2 million of costs associated
with temporarily winding down its operations. These costs include severance costs and labor and services on site to prepare the
mine for temporary closure. Also included are ongoing care and maintenance costs of $2.2 million relating to the plant and mine.



The Company incurred an impairment charge
of $55.3 million during the quarter ended December 31, 2012, of which $42.4 million is related to the Paciência operation,
which continues to be on care and maintenance. This brings the year to date total for Paciência to $90.1 million. The Turmalina
operation also recorded an impairment charge of $12.9 million in the quarter ended December 31, 2012, due to high historical cash
operating costs. The total impairment charge for the year ended December 31, 2012 is $103.0 million (December 31, 2011 - $nil).



FINANCIAL CONDITION, CASH FLOW, LIQUIDITY AND CAPITAL RESOURCES



Cash Flow Highlights



($ in 000s)



|                                                                                        |  | Three months ended Dec 31 |        |   | Twelve months ended Dec 31 |  
|--------------------------------------------------------------------------------------- |  | ------------------------- | ------ | - | -------------------------- | -
|                                                                                        |  | 2012                      |        |   | 2011                       |  
|Operating activities                                                                    |  | $                         | 5,380  |   |                            | $
|Financing activities                                                                    |  |                           | (5,660 | ) |                            |  
|Investing activities                                                                    |  |                           | (6,400 | ) |                            |  
|Effect of foreign exchange on non-US$ denominated cash and cash equivalents gain (loss) |  |                           | 545    |   |                            |  
|Increase (decrease) in cash for the period                                              |  |                           | (6,135 | ) |                            |  
|Beginning cash balance                                                                  |  |                           | 19,991 |   |                            |  
|Ending cash balance(1)                                                                  |  | $                         | 13,856 |   |                            | $

(1) Cash balance excludes $609,000 of restricted
cash on December 31, 2012 and $909,000 on December 31, 2011.



As at December 31, 2012 and 2011, the Company
had cash and cash equivalents of $13.9 million and $74.5 million, respectively.



Cash flow from operating activities generated
$5.4 million of cash during the quarter ended December 31, 2012, compared to $889,000 generated during the quarter ended December
31, 2011. Cash flow from operating activities consumed $2.8 million of cash during the year ended December 31, 2012, as compared
to $71.9 generated during the year ended December 31, 2011.



15







Cash flow from financing activities consumed
$5.7 million of cash during the quarter ended December 31, 2012, and $3.1 million during the quarter ended December 31, 2011.
During the year ended December 31, 2012, cash flow from financing activities consumed $13.3 million versus a $78.7 million cash
generated during the year ended December 31, 2011, primarily as a result of the issuance of $103.5 million of 5.5% senior convertible
notes during February 2011 (see Note 10(d) to the annual financial statements).



Investing activities consumed $6.4 million
of cash during the quarter ended December 31, 2012 ($51.3 million for the year ended December 31, 2012) compared to $30.4 million
for the quarter ended December 31, 2011 ($110.5 million for the year ended December 31, 2011). The funds were primarily used for
underground development, equipment improvement and replacement throughout the Company’s southern operations and exploration
and pre-development at Gurupi.



The effect of foreign exchange on non-US$
denominated cash and cash equivalents was a $545,000 unrealized gain during the quarter ended December 31, 2012 compared to a
$5.3 million unrealized gain during the quarter ended December 31, 2011. As at the year ended December 31, 2012, this effect was
an unrealized gain of $6.7 million compared to an unrealized loss of $4.9 million as at the year ended December 31, 2011. This
reflects the fluctuations of the R$ and Cdn$ versus the US$ during the respective periods.



Cash Requirements – Capital Spending Program



($ in 000s)

|                       |  | Three months ended Dec 31, 2012 |       |  | Twelve months ended Dec 31, 2012 |  
|---------------------- |  | ------------------------------- | ----- |  | -------------------------------- | -
|Turmalina              |  | $                               | 2,834 |  |                                  | $
|Paciência              |  |                                 | -     |  |                                  |  
|Caeté                  |  |                                 | 3,737 |  |                                  |  
|Gurupi Project         |  |                                 | 517   |  |                                  |  
|Other spending         |  |                                 | -     |  |                                  |  
|Total capital spending |  | $                               | 7,088 |  |                                  | $



The Company intends to actively and closely
monitor its cash position and manage its working capital as the Plan continues to be implemented. The Company has been exploring,
and will continue to consider all of its options to maintain and raise capital when, and as needed, including selling assets or
raising capital through debt or equity offerings.



Total Capital Spending



($ in 000s)

|                                         |  | Three months ended Dec 31, 2012 |       |  | Twelve months ended Dec 31, 2012 |  
|---------------------------------------- |  | ------------------------------- | ----- |  | -------------------------------- | -
|Capital spending - excluding exploration |  | $                               | 6,381 |  |                                  | $
|Capital spending - exploration           |  |                                 | 706   |  |                                  |  
|Total capital spending                   |  | $                               | 7,088 |  |                                  | $
|Amount paid in cash                      |  |                                 | 7,088 |  |                                  |  
|Amount paid with tax credits             |  |                                 | -     |  |                                  |  
|Total capital spending                   |  | $                               | 7,088 |  |                                  | $



The primary use of capital during the quarter
and year ended December 31, 2012, was sustaining capital to maintain existing operations.



16







Contractual Obligations



The Company’s contractual obligations as of December 31,
2012 are summarized below:



|Commitments                |  | Less than 1 year |        |  | 1 - 3 years |   |         | 3 - 5 years |  |   | More than 5 years |  |  | Total |       
|-------------------------- |  | ---------------- | ------ |  | ----------- | - | ------- | ----------- |  | - | ----------------- |  |  | ----- | ------
|Financial Liabilities      |  |                  |        |  |             |   |         |             |  |   |                   |  |  |       |       
|Notes payable              |  |                  |        |  |             |   |         |             |  |   |                   |  |  |       |       
|Principal                  |  | $                | 27,736 |  |             | $ | 172,138 |             |  | $ | 103,500           |  |  | $     | -     
|Interest                   |  |                  | 14,008 |  |             |   | 18,836  |             |  |   | 2,862             |  |  |       | -     
|                           |  | $                | 41,744 |  |             | $ | 190,974 |             |  | $ | 106,362           |  |  | $     | -     
|Other Commitments          |  |                  |        |  |             |   |         |             |  |   |                   |  |  |       |       
|Operating lease agreements |  | $                | 271    |  |             | $ | 185     |             |  | $ | 92                |  |  | $     | -     
|Suppliers' agreements      |  |                  |        |  |             |   |         |             |  |   |                   |  |  |       |       
|Mine operations(1)         |  |                  | 2,672  |  |             |   | -       |             |  |   | -                 |  |  |       | -     
|Reclamation provisions(2)  |  |                  | 4,219  |  |             |   | 3,093   |             |  |   | 5,337             |  |  |       | 14,293
|                           |  | $                | 7,162  |  |             | $ | 3,278   |             |  | $ | 5,429             |  |  | $     | 14,293
|                           |  |                  |        |  |             |   |         |             |  |   |                   |  |  |       |       
|Total                      |  | $                | 48,906 |  |             | $ | 194,252 |             |  | $ | 111,791           |  |  | $     | 14,293



| | (1) | The Company has the right to cancel the mine operations contracts
                                                                with 30 days advance notice. The amount included in the contractual
                                                                obligations table represents the amount due within 30 days.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Reclamation provisions are not adjusted for inflation and
                                                                are not discounted.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------



Balance Sheet Highlights



($ in 000s)

|                      |  | December 31, 2012 |         |  | December 31, 2011 |  
|--------------------- |  | ----------------- | ------- |  | ----------------- | -
|Current assets        |  | $                 | 60,310  |  |                   | $
|Long-term assets      |  |                   | 443,565 |  |                   |  
|Total assets          |  | $                 | 503,875 |  |                   | $
|                      |  |                   |         |  |                   |  
|Current liabilities   |  | $                 | 81,629  |  |                   | $
|Long-term liabilities |  |                   | 268,443 |  |                   |  
|Total liabilities     |  | $                 | 350,072 |  |                   | $



Working capital decreased by $68.1 million,
from $46.8 million at December 31, 2011 to ($21.3) million at December 31, 2012. During the twelve months ended December 31, 2012,
the Company invested $57.4 million for capital expenditure using short-term resources (see Total Capital Spending during
the period). The Company closed a $30 million standby credit facility during the fourth quarter of 2012 (see Renvest Credit
Facility) to use as working capital for Turmalina, Paciência and Caeté mining projects.



Risk Management Policies – Hedging



Forward Foreign Exchange Contracts –
Derivative Financial Instruments



The Company manages its exposure to changes
in foreign exchange rates through the use of forward foreign exchange contracts to hedge certain future transactions denominated
in foreign currencies. The Company hedges anticipated but not yet committed foreign currency transactions when they are probable
and the significant characteristics and expected terms are identified.



17







As at December 30, 2012, the Company had
the following forward foreign exchange contracts outstanding:



|Settlement Date |  | Amount in US$
(000s) |        |  | Amount in R$  (000s) |   
|--------------- |  | -------------------- | ------ |  | -------------------- | --
|31-Jan-13       |  | $                    | 1,000  |  |                      | R$
|31-Jan-13       |  |                      | 1,000  |  |                      |   
|31-Jan-13       |  |                      | 1,000  |  |                      |   
|31-Jan-13       |  |                      | 1,000  |  |                      |   
|28-Feb-13       |  |                      | 1,000  |  |                      |   
|28-Feb-13       |  |                      | 1,000  |  |                      |   
|28-Feb-13       |  |                      | 1,000  |  |                      |   
|28-Feb-13       |  |                      | 1,000  |  |                      |   
|28-Mar-13       |  |                      | 1,500  |  |                      |   
|28-Mar-13       |  |                      | 1,500  |  |                      |   
|30-Apr-13       |  |                      | 1,000  |  |                      |   
|30-Apr-13       |  |                      | 1,000  |  |                      |   
|31-May-13       |  |                      | 1,000  |  |                      |   
|31-May-13       |  |                      | 1,000  |  |                      |   
|                |  | US$                  | 15,000 |  |                      | R$



The statement of operations and comprehensive
loss includes the following amounts of unrealized and realized gains or losses on foreign exchange derivatives ($ in 000s):



|                       |  | Three Months Ended December 31, |     |   | Twelve Months Ended December 31, |  
|---------------------- |  | ------------------------------- | --- | - | -------------------------------- | -
|                       |  | 2012                            |     |   | 2011                             |  
|Unrealized (gain) loss |  | $                               | 47  |   |                                  | $
|Realized (gain) loss   |  |                                 | (38 | ) |                                  |  
|Total                  |  | $                               | 9   |   |                                  | $



The forward exchange contracts are considered
derivative financial instruments and are used for risk management purposes and not for generating trading profits. The Company
closely monitors exchange rates and, as deemed appropriate by management, will continue to enter into forward currency contracts
with the aim of minimizing the impact of adverse changes of the R$ and US$ relationship.



The Company is exposed to credit-related
losses in the event of non-performance by two major international financial institutions handling the derivative financial instruments,
but does not expect these highly rated counterparties to fail to meet their obligations.



Hedge accounting is not applied to these
derivative financial instruments. The unrealized gains and losses are recognized in the operating income of the Company and are
primarily a result of the difference between the spot price of the R$ and the forward currency contract price as at the balance
sheet date.



Commodity Sales and Option Contracts



During October 2012, the Company purchased
gold forward sales contracts to sell 7,900 ounces of gold during the fourth quarter of 2012 at $1,775 per ounce. These contracts
were settled during the fourth quarter at a realized gain of $600,000 (December 31, 2011 - $nil). During 2011, the Company sold
European style commodity gold call options. Included in loss on derivatives is $194,000 of realized losses related to these contracts.



Off-Balance Sheet Arrangements



The Company does not have any off-balance
sheet investment or debt arrangements.



18







INCOME TAXES



The Company recorded an income tax recovery
of $1.8 million for the year ended December 31, 2012, compared to an income tax expense of $11.9 million for the year ended December
31, 2011. The income tax provision reflects a current income tax recovery of $466,000 and a deferred income tax recovery of $1.3
million. This compares to a current income tax expense of $3.5 million and a deferred income tax expense of $8.4 million for the
year ended December 31, 2011. The income tax recovery of $1.7 million for 2012 reflects the deferred tax impact of the Turmalina
property impairment offset by the strengthening of the US$ relative to the R$ during the year and the withholding of taxes on
inter-company debt interest. In addition, the current tax recovery is impacted by the reversal of certain prior year tax provisions
offset by the withholding of taxes on inter-company debt interest.



The consolidated balance sheet reflects
a current tax liability of $15.5 million as at December 31, 2012, and $19.0 million as at December 31, 2011. It also reflects
a deferred income tax liability of $6.6 million as at December 31, 2012, and $8.6 million as at December 31, 2011.



The income tax provision is subject to
a number of factors, including the allocation of income between different countries, different tax rates in the various jurisdictions,
the non-recognition of tax assets, foreign currency exchange rate movements, changes in tax laws and the impact of specific transactions
and assessments. Due to the number of factors that can potentially impact the effective tax rate and the sensitivity of the tax
provision to these factors, as discussed above, it is expected that the Company’s effective tax rate will fluctuate in future
periods.



The Company has approximately $83.1 million
of tax losses available for carryforward in Canada and $105.5 million of tax losses available for carryforward in Brazil, which
can be carried forward indefinitely. However, only 30% of taxable income in Brazil in one year can be applied against the loss
carryforward balance.



CRITICAL ACCOUNTING ESTIMATES



The preparation of consolidated financial
statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application
of accounting policies and the reported amounts of assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the period. Actual results could differ from those estimates.



Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised
and in any future periods affected.



Certain estimates, such as those related
to the valuation of mineral exploration projects, recoverable taxes, deferred tax assets and liabilities, reclamation provision,
derivatives, option component of convertible notes, liabilities associated with certain long-term incentive plans, measurement
of inventory and disclosure of contingent assets and liabilities depend on subjective or complex judgments about matters that
may be uncertain. Changes in those estimates could materially impact the Company’s condensed interim consolidated financial
statements.



The judgments that management has applied
in the application of accounting policies and related estimates that have the most significant effect on the amounts recognized
are discussed in Note 2(d) of the Company’s December 31, 2012 annual consolidated financial statements which are available
on SEDAR and EDGAR.



NON-IFRS PERFORMANCE MEASURES



The Company
has included the non-IFRS performance measures cash operating margin per ounce of gold, cash operating cost per tonne processed
and cash operating cost per ounce processed in this document. These non-IFRS performance measures do not have any standardized
meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. The Company
believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to
evaluate the Company’s performance. Accordingly, they are intended to provide additional information and should not be considered
in isolation or as a substitute for measures of performance prepared in accordance with IFRS. More specifically, management believes
that these figures are a useful indicator to investors and management of a mine’s performance as they provide (i) a measure
of the mine’s cash margin per tonne/ounce, by comparison of the cash operating costs per tonne/ounce to the price of gold;
(ii) the trend in costs as the mine matures; and (iii) an internal benchmark of performance to allow for comparison against other
mines. The definitions for these performance measures and reconciliation of the non-IFRS measures to reported IFRS measures are
as follows:



19







|                                            |  | Three months ended |       |  | Twelve months ended |  
|------------------------------------------- |  | ------------------ | ----- |  | ------------------- | -
|                                            |  | December 31, 2012  |       |  | December 31, 2012   |  
|Average sales price per oz of gold          |  | $                  | 1,714 |  |                     | $
|less                                        |  |                    |       |  |                     |  
|Cash operating cost per oz of gold produced |  |                    | 915   |  |                     |  
|equals                                      |  |                    |       |  |                     |  
|Cash operating margin per oz of gold        |  | $                  | 799   |  |                     | $



|Summary of Cash Operating Cost per Tonne Processed
|--------------------------------------------------
|                                                  
|                                                  
|Production costs per statement of operations(1)   
|Change in inventory (2)                           
|Operational cost of gold produced (3)             
|divided by                                        
|Tonnes processed                                  
|equals                                            
|Cost per tonne processed                          



|Turmalina Plant Cash Operating Cost per Tonne Processed
|-------------------------------------------------------
|                                                       
|                                                       
|Production costs                                       
|Change in inventory (2)                                
|Operational cost of gold produced (3)                  
|divided by                                             
|Tonnes processed                                       
|equals                                                 
|Cost per tonne processed                               



20







|Paciência Plant Cash Operating Cost per Tonne Processed
|-------------------------------------------------------
|                                                       
|                                                       
|Production costs                                       
|Change in inventory (2)                                
|Operational cost of gold produced (3)                  
|divided by                                             
|Tonnes processed                                       
|equals                                                 
|Cost per tonne processed                               



|Caeté Plant Cash Operating Cost per Tonne Processed
|---------------------------------------------------
|                                                   
|                                                   
|Production costs                                   
|Change in inventory (2)                            
|Operational cost of gold produced (3)              
|divided by                                         
|Tonnes processed                                   
|equals                                             
|Cost per tonne processed                           



21







|Summary of  Cash Operating Cost per Ounce of Gold Produced
|----------------------------------------------------------
|                                                          
|                                                          
|Production costs per statement of operations(1)           
|Change in inventory (2)                                   
|Operational cost of gold produced (3)                     
|divided by                                                
|Gold produced (oz)                                        
|equals                                                    
|Cost per oz of gold produced                              



|Turmalina Plant Cash Operating Cost per Ounce Produced
|------------------------------------------------------
|                                                      
|                                                      
|Production costs                                      
|Change in inventory (2)                               
|Operational cost of gold produced (3)                 
|divided by                                            
|Gold produced (oz)                                    
|equals                                                
|Cost per oz of gold produced                          



|Paciência Plant Cash Operating Cost per Ounce Produced
|------------------------------------------------------
|                                                      
|                                                      
|Production costs                                      
|Change in inventory (2)                               
|Operational cost of gold produced (3)                 
|divided by                                            
|Gold produced (oz)                                    
|equals                                                
|Cost per oz of gold produced                          



|Caeté Plant Cash Operating Cost per Ounce Produced
|--------------------------------------------------
|                                                  
|                                                  
|Production costs                                  
|Change in inventory (2)                           
|Operational cost of gold produced (3)             
|divided by                                        
|Gold produced (oz)                                
|equals                                            
|Cost per oz of gold produced                      



| | (1) | Production costs do not include cost
                                                            of goods sold adjustment of approximately $347,000, royalties of $496,000
                                                            and CFEM tax of $369,000 for the three months ended December 31, 2012.
                                                            Production costs do not include cost of goods sold adjustment of approximately
                                                            $9.6 million, royalties of $3.0 million and CFEM tax of $1.7 million
                                                            for the year ended December 31, 2012. The cost of goods sold adjustment
                                                            includes an inventory write-down recovery of $546,000, $893,000 of
                                                            idle capacity for the three months ended December 31, 2012. 
                                                            The cost of goods sold adjustment includes an inventory write-down
                                                            of $999,000 and an expense of $8.6 million of idle capacity for the
                                                            year ended December 31, 2012.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Under the Company’s revenue
                                                            recognition policy, revenue is recognized when legal title passes.
                                                            Since total cash operating costs are calculated on a production basis,
                                                            this change reflects the portion of gold production for which revenue
                                                            has not been recognized in the period.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | The basis for calculating cost per
                                                            ounce produced includes the change to gold in process inventory, whereas
                                                            the cost per tonne processed does not.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



22







DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER
FINANCIAL REPORTING



Management of the Company is responsible
for establishing and maintaining a system of disclosure control and procedures to provide reasonable assurance that all material
information relating to the Company is gathered and reported to senior management on a timely basis so that appropriate decisions
can be made regarding public disclosure.



Management is also responsible for establishing
and maintaining adequate internal controls over financial reporting (as such term is defined under rules adopted by the U.S. Securities
Exchange Commission and National instrument 52-109 as issued by the Canadian Securities Administrator).   Internal control
over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with IFRS.



There have been no changes during the quarter
and year ended December 31, 2012 that, in management’s view, would have materially affected, or that are reasonably likely
to materially affect, the Company’s internal control over financial reporting. The Company’s auditor has attested
to management's internal control over financial reporting for the year ended December 31, 2012.



OUTSTANDING SHARE DATA



The Company’s common shares are listed
on the TSX and the NYSE. As of March 21, 2013, the Company has 85,080,567 issued and outstanding common shares, as well as 1,766,250
stock options outstanding. In addition, the Company has convertible notes, which upon conversion, a maximum of 26,649,785 shares
would be issued (see Note 10(c) and (d) to the annual financial statements).



23







|CORPORATE DIRECTORY                                |  |                                        
|-------------------------------------------------- |  | ---------------------------------------
|                                                   |  |                                        
|BOARD OF DIRECTORS                                 |  | 122 North Main Street, 2nd
    Floor   
|                                                   |  | Concord, NH  03301 - USA               
|Andrew C. Burns1, 3                                |  | Phone: (603) 410-4888                  
|Gil Clausen1,2,4                                   |  | Fax: (603) 224-6143                    
|Richard Falconer2,3,
    Chairman                  |  |                                        
|Anthony F. Griffiths1, 2                           |  | REGISTERED OFFICE                      
|Frederick W. Hermann4                              |  |                                        
|Luis Ricardo Miraglia3,4                           |  | 67 Yonge Street, Suite 1203            
|David M. Petroff                                   |  | Toronto, ON M5E 1J8 – Canada           
|                                                   |  |                                        
|1.  Audit Committee                                |  | AUDITORS                               
|2.  Compensation Committee                         |  |                                        
|3.  Corporate Governance
    Committee             |  | KPMG LLP                               
|4.  Health, Safety and
    Environmental Committee |  | Toronto, ON, Canada                    
|                                                   |  | Belo Horizonte, MG, Brazil             
|OFFICERS                                           |  |                                        
|                                                   |  | LEGAL COUNSEL                          
|David M. Petroff                                   |  |                                        
|President and Chief Executive Officer              |  | Davies Ward Phillips & Vineberg
    LLP
|                                                   |  | Toronto, ON, Canada                    
|T. Douglas Willock                                 |  | New York, NY, USA                      
|Chief Financial Officer                            |  |                                        
|                                                   |  | Azevedo Sette Advogados                
|Gordon J. Babcock                                  |  | Belo Horizonte, MG, Brazil             
|Chief Operating Officer                            |  |                                        
|                                                   |  | BANKS                                  
|Marcela Rocha Barbosa de Castro                    |  |                                        
|Vice President of Treasury Management              |  | Bank of America                        
|                                                   |  | Boston, MA, USA                        
|Amira Abouali                                      |  |                                        
|General Counsel and Corporate Secretary            |  | HSBC                                   
|                                                   |  | Toronto, ON, Canada                    
|                                                   |  |                                        
|PRINCIPAL EXECUTIVE OFFICE                         |  | Royal Bank of Canada                   
|                                                   |  | Toronto, ON, Canada                    
|Rua Levindo Lopes 323 - Funcionários               |  |                                        
|CEP 30140-170 - Belo Horizonte –
    Brazil        |  | STOCK TRANSFER AGENT                   
|E-mail: info@jaguarmining.com                      |  |                                        
|Website:www.jaguarmining.com                       |  | Computershare Investor Services Inc.   
|                                                   |  | 100 University Avenue, 9th
    Floor   
|                                                   |  | Toronto, ON  M5J 2Y1 - Canada          
|ADMINISTRATIVE  OFFICES                            |  | Phone: 1 (800) 564-6253                
|                                                   |  | Fax: 1 (866) 249-7775                  
|67 Yonge Street, Suite 1203                        |  | Email: service@computershare.com       
|Toronto, ON M5E 1J8 – Canada                       |  |                                        
|Phone: (647) 494-5JAG (5524)                       |  | EXCHANGE LISTINGS                      
|Fax: (647) 494-8885                                |  |                                        
|                                                   |  | TSX/NYSE: “JAG”                        





24