UNITED STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C.  20549
 
 FORM
40-F
 
 o  REGISTRATION
STATEMENT PURSUANT TO SECTION 12 OF THE
 SECURITIES
EXCHANGE ACT OF 1934
 
 x  ANNUAL
REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE
 SECURITIES
EXCHANGE ACT OF 1934
 
 For
      the fiscal year ended December 31, 2007
              
              Commission
      File Number 001-33548
  
 
 Jaguar
Mining Inc.
 (Exact
name of Registrant as specified in its charter)
 
 Ontario
                (Province
      or other Jurisdiction of Incorporation or Organization)
              1040
                (Primary
      Standard Industrial
                Classification
      Code Number)
              98-6396253
                (I.R.S.
      Employer Identification No.)
 
 125
North State St.
 Concord,
New Hampshire 03301
 (603)
224-4800
 (Address
and telephone number of Registrants' principal executive offices)
 
 Hinkley
Allen Snyder LLP
 43
North Main Street
 Concord,
NH, 03301
 (603)
225-4334
 (Name,
address (including zip code) and telephone number
 (including
area code) of agent for service in the United States)
  
  Securities
registered or to be registered pursuant to Section 12(b) of the
Act:
 
 Title
      of Each Class
              
              Name
      of Each Exchange
                on
      which RegisteredCommon
      Shares, No Par Value
                Rights
              
              NYSE
      Arca, Inc.
                NYSE
      Arca, Inc.
 
 Securities
registered or to be registered pursuant to Section 12(g) of the
Act:  None
 
 Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act:  None
 
 For
annual reports, indicate by check mark the information filed with this
Form:
 
 x  Annual
      information form
              x  Audited
      annual financial statements
 
 Indicate
the number of outstanding shares of each of the issuer’s classes of capital or
common stock as of the close of the period covered by the annual
report:
 The
Registrant had 55,734,400Common Shares
outstanding as at December 31, 2007
 
 Indicate
by check mark whether the Registrant by filing the information contained in this
Form is also thereby furnishing the information to the Commission pursuant to
Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the "Exchange
Act").  If "Yes" is marked, indicate the filing number assigned to the
registrant in connection with such rule.
 
 Yes
      _____
              82-_____
              No 
      x
 
 Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the Registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days.
 
 Yes
      x
              
              No 
      o
    
  
  DOCUMENTS FILED UNDER COVER
OF THIS FORM
  Document
No.
 
 1.
              Annual
      Information Form for the year ended December 31,
  2007.
 2.
              Audited
      Annual Financial Statements for the years ended December 31, 2007 and
      December 31, 2006.
 3.
              Management's
      Discussion and Analysis for the years ended December 31, 2007 and
      2006.



















DOCUMENT
1
   JAGUAR
MINING INC.
 
 
 
 
 
 
 
 Annual
Information Form
 for
the year ended December 31, 2007
 
 
 
 
 
 
 
 Dated
March 24, 2008
 
 
 
 
 
 
 TABLE OF
CONTENTS
 
 
 CAUTIONARY
      NOTE REGARDING FORWARD LOOKING STATEMENTS
                
                
                3CORPORATE
      STRUCTURE
                
                
                4GENERAL
      DEVELOPMENT OF THE BUSINESS
                
                
                4DESCRIPTION
      OF THE BUSINESS
                
                
                12JAGUAR
      GOLD OPERATIONS AND PROJECTS
                
                
                17RISK
      FACTORS
                
                
                53DIVIDENDS
                
                
                59DESCRIPTION
      OF CAPITAL STRUCTURE
                
                
                59MARKET
      FOR SECURITIES
                
                
                60DIRECTORS
      AND EXECUTIVE OFFICERS
                
                
                61INTEREST
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
                
                
                65TRANSFER
      AGENTS AND REGISTRAR
                
                
                66MATERIAL
      CONTRACTS
                
                
                66INTERESTS
      OF EXPERTS
                
                
                67ADDITIONAL
      INFORMATION
                
                
                67APPENDIX
      A CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
                
                
                68
 
 2
 
 CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
 
 Certain
information contained herein and in the documents incorporated by reference
herein constitutes forward-looking statements. Forward-looking statements are
frequently characterized by words such as “plan”, “goal”, “strategy”, “budget”,
“estimates”, “schedule”, “expect”, “project”, “intend”, “believe”, “anticipate”
and other similar words, or statements that certain events or conditions “may”,
“could”, “might”, or “will” occur.  Statements relating to “mineral
reserves” or “mineral resources” are deemed to be forward-looking statements, as
they involve the implied assessment, based on certain estimates and assumptions,
that the mineral reserves and mineral resources described can be profitably
produced in the future.  Forward-looking statements are based on the
opinions and estimates of management at the date the statements are made, and
are subject to a variety of risks and uncertainties and other factors that could
cause actual events or results to differ materially from those projected in 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 ecological data, fluctuating
metal prices, the possibility of project cost overruns or unanticipated costs
and expenses, uncertainties relating to the availability and costs of financing
needed in the future, political risks and other factors described in this annual
information form under the heading “Risk Factors”.
 
 Actual
results and developments are likely to differ, and may differ materially, from
those expressed or implied by the forward-looking statements contained in this
annual information form.  Such statements are based on a number of
assumptions which may prove to be incorrect, including, but not limited to, the
following assumptions:  that there is no material deterioration in
general business and economic conditions; that there is no unanticipated
fluctuation of interest rates and foreign currency exchange rates; that the
supply and demand for, deliveries of, and the level and volatility of prices of
gold as well as oil and petroleum products develop as expected; that we receive
regulatory and governmental approvals for our development projects and other
operations on a timely basis; that we are able to obtain financing for our
development projects on reasonable terms; that there is no unforeseen
deterioration in our costs of production or our production and productivity
levels; that we are able to procure mining equipment and operating supplies in
sufficient quantities and on a timely basis; that engineering and construction
timetables and capital costs for our development and expansion projects are not
incorrectly estimated or affected by unforeseen circumstances; that costs of
closure of various operations are accurately estimated; that there are no
unanticipated changes to market competition, that our reserve estimates are
within reasonable bounds of accuracy (including with respect to size, grade and
recoverability) and that the geological, operational and price assumptions on
which these are based are reasonable; that we realize expected premiums over
London Metal Exchange cash and other benchmark prices; and that we maintain our
ongoing relations with our employees and with our business partners and joint
venturers.
 
 Although
Jaguar Mining Inc. (“Jaguar”) has attempted to identify important factors that
could cause actual actions, events or results to differ materially from those
described in forward-looking information, there may be other factors that cause
actions, events or results to differ from those anticipated, estimated or
intended.  The forward-looking statements contained in this annual
information form and the documents incorporated by reference herein are
expressly qualified by this cautionary statement.  Jaguar undertakes
no obligation to update forward-looking statements if circumstances or
management’s estimates or opinions should change. There can be no assurance that
the forward-looking statements contained in this annual information form and the
documents incorporated by reference herein will prove to be accurate as actual
results and future events could differ materially from those anticipated,
estimated or intended in such statements.  Accordingly, the reader is
cautioned not to place undue reliance on forward-looking
statements.
 
 3
 CORPORATE
STRUCTURE
 
 Jaguar
was incorporated on March 1, 2002 pursuant to the Business Corporations Act
(New Brunswick).  On March 30, 2002, Jaguar issued initial common
shares to Brazilian Resources, Inc. (“Brazilian”) and IMS Empreendimentos Ltda.
(“IMS”) in exchange for property.  In that transaction, Brazilian
contributed to Jaguar all of the issued and outstanding shares in Mineração
Serras do Oeste, Ltda. (“MSOL”), a Brazilian mining company that controlled the
mineral rights, concessions and licenses to certain property located near the
community of Sabará, east of Belo Horizonte in the state of Minas Gerais, Brazil
(the “Sabará Property”), and IMS contributed to Jaguar a 1,000-tonne per day
production facility located near the community of Caeté east of Belo Horizonte
in the state of Minas Gerais, Brazil (the “Caeté Plant”) and the mineral rights
to a nearby property related to National Department of Mineral Production
(“DNPM”) Mineral Exploration Request no. 831.264/87 and DNPM Mineral Exploration
Request nos. 830.590/83 and 830.592/83 (the “Rio de Peixe
Property”).
 
 On
October 9, 2003, pursuant to an amalgamation agreement dated July 16, 2003,
Jaguar amalgamated with Rainbow Gold, Ltd. (“Rainbow”), a New Brunswick
corporation and a then inactive reporting issuer listed on the TSX Venture
Exchange (the “TSX-V”), through a reverse take-over.  Each shareholder
of Rainbow received one common share of Jaguar (a “Common Share”) for every 14
common shares of Rainbow owned.  The amalgamated entity adopted the
name “Jaguar Mining Inc.”  Jaguar was approved for listing on the
TSX-V on October 14, 2003 and began trading on October 16,
2003.  Jaguar subsequently graduated from the TSX-V to the Toronto
Stock Exchange (the “TSX”) and began trading on the TSX on February 17, 2004
under the symbol “JAG”.  On July 23, 2007, trading of Jaguar’s common
shares commenced on the NYSE Arca Exchange (“NYSE Arca”) under the symbol
“JAG”.
 
 Jaguar
was continued into Ontario in October 2003 pursuant to the Business Corporations Act
(Ontario) and is currently a corporation existing under the laws of
Ontario.  Jaguar retains its pre-amalgamation management team, and no
former Rainbow directors serve on Jaguar’s board of
directors.  Jaguar’s head office is located at 125 North State Street,
Concord, New Hampshire (USA) 03301, and its registered office is located at 1
First Canadian Place, 100 King Street West, Suite 4400, Box 63, Toronto,
Ontario, Canada M5X 1B1.
 
 Jaguarhas one wholly-owned
direct subsidiary, MSOL, incorporated under the laws of the Republic of
Brazil.  The registered and head office of MSOL is located at Rua
Fernandes Tourinho, 487, 7th Floor,
Bairro Savassi, Belo Horizonte, Minas Gerais, CEP 30.112-000,
Brazil.  Jaguar has one indirect wholly-owned subsidiary, Mineração
Turmalina Ltda. (“MTL”).  MTL is incorporated under the laws of the
Republic of Brazil, and is a direct wholly-owned subsidiary of
MSOL.  The registered and head office of MTL is located at Rua
Fernandes Tourinho, 487, 7th Floor,
Bairro Savassi, Belo Horizonte, Minas Gerais, CEP 30.112-000,
Brazil.
 
 GENERAL DEVELOPMENT OF THE
BUSINESS
 
 Corporate
History
 
 In
2001, the principals of Brazilian and IMS recognized that an opportunity existed
to create a mid-sized gold producer in the Quadrilátero Ferrífero (“Iron
Quadrangle”) region of Brazil by acquiring various late-stage gold exploration
properties with existing resources and relatively new plant and equipment, at
prices reflecting the comparatively distressed state of the gold mining industry
at that time.  Gold prices were depressed compared to historical
levels and, for different reasons, Mineração AngloGold Ltda., a subsidiary of
AngloGold Ashanti Limited (“AngloGold Ashanti”), Companhia Vale do Rio Doce
(“Vale”) and Rio Tinto Desenvolvimentos Minerais Ltda. (“RTZ”) were all
contemplating the rationalization of their gold property and equipment
portfolios.  Brazilian and IMS believed that no junior mining
companies operating in the region were in a strong enough financial condition to
broadly negotiate to acquire the available properties.
 
 Mining
Exploration, Production History and Corporate Transactions
 
 Mining
Properties Generally
 
 Jaguar’s
properties are located in or adjacent to the Iron Quadrangle region of Brazil, a
greenstone belt located east of the city of Belo Horizonte in the state of Minas
Gerais.  Jaguar has two operations currently in production, located at
the Sabará and Turmalina properties, respectively.  In addition,
Jaguar has two properties under development: the Paciência and Caeté
projects.  Jaguar has also entered into a joint venture agreement with
Xstrata plc. (“Xstrata”) to explore the Pedra Branca property in northeastern
Brazil, as further described under “Pedra Branca”,
below.  Jaguar commissioned TechnoMine Services, LLC (“TechnoMine”) to
prepare a technical report in accordance with NI 43-101 to set forth the
resources of all Jaguar’s concessions in the Iron
Quadrangle.  TechnoMine issued its report (the “Quadrilátero Technical
Report”) on March 16, 2004 and revised it on September 17, 2004 and further
revised it on December 20, 2004.  Additional information regarding
each property is set forth below.
 
 4
 Sabará
Project
 
 In
2003, Jaguar commissioned TechnoMine to produce studies of its Sabará
Property.  Jaguar filed a Feasibility Study of Zone B of the Sabará
Property on SEDAR on June 30, 2003 and filed a revised study on January 28,
2004, both of which can be found at http://www.sedar.com.
 
 In
July 2003, Jaguar commenced pre-mining operations at the Sabará Zone B
Property.  In December 2003 Jaguar began pouring gold from the Sabará
Zone B Property at the Caeté Plant.  Mining operations at Sabará Zone
B concluded in the fourth quarter of 2005.
 
 MSOL
and AngloGold Ashanti own adjacent properties in the Lamego area in the Iron
Quadrangle region of Brazil.  On November 21, 2003, MSOL entered into
an agreement with an AngloGold Ashanti subsidiary, Mineração Morro Velho Ltda.
(“Morro Velho”) regarding exploration at the adjacent
properties.  AngloGold Ashanti has applied for concession of mining
rights for sulfide mineral resources on its property, and MSOL already has
received concessions for oxide mineral resources on its
property.  Through Morro Velho, AngloGold Ashanti granted to MSOL the
right to explore for oxide resources on AngloGold Ashanti’s Lamego property, and
in exchange MSOL granted to AngloGold Ashanti the right to explore for sulfide
resources on MSOL’s Lamego property.  On November 21, 2007, Jaguar and
AngloGold Ashanti entered into an agreement, pursuant to which Jaguar
transferred its interests in the Lamego property (valued at US$8,060,560) in
consideration of (i) satisfaction of the US$350,000 note payable related to the
purchase of quota shares of MTL, (ii) elimination of US$153,960 payable in
connection with leaching services provided by AngloGold Ashanti, and (iii) a
reduction in future net smelter royalty payments for the Paciência mine equal to
US$7,556,600 (net smelter royalty payments are generally due on a monthly basis
on a sliding scale from 1.5% to 4.5% on gross revenues from gold produced, the
percentage of such royalty being determined based on the US$ price of gold at a
given time).
 
 In
January 2005, Jaguar completed a feasibility study on the remaining gold oxides
at Sabará, which included Zones A and B and Lamego, and commissioned Scott
Wilson Roscoe Postle Associates Inc. (formerly Roscoe Postle Associates Inc.)
(“Scott Wilson RPA”) to audit the feasibility study and issue a technical report
in accordance with NI 43-101.  Scott Wilson RPA’s report was issued on
February 17, 2006 and can be found at http://www.sedar.com.
 
 In
December 2005, Jaguar began crushing ore at its new gold oxide heap leach
facility and recovery plant at Sabará.
 
 In
January 2006, Jaguar began mining operations at Catita and started hauling its
sulfide ore to the Queiróz plant of AngloGold Ashanti (the “Queiróz
Plant”).  Mining operations at Catita concluded in the fourth quarter
of 2006.
 
 During
the third quarter of 2007, Jaguar concluded drilling activities at an oxide zone
near the Sabará mining and processing complex.  Jaguar hopes that this
zone, known as the Serra Paraíso target (the “Serra Paraíso Target”), will add
oxide resources to be processed at the Sabará Plant and therefore increase the
mine life at Sabará.  Metallurgical recovery tests have commenced and
Jaguar plans to complete its analysis of the drill program and report estimates
of resources at the Serra Paraíso Target during the second quarter of
2008.  Jaguar intends to begin mining activities at the Serra Paraíso
Target after the completion of such tests and analysis.
 
 In
addition, Jaguar is conducting channel sampling, soil geochemistry and trenching
at three different targets near the Sabará operations.  Preliminary
results of such exploration have given rise to a defined drill program, which
will be executed in the months ahead.
 
 5
 Caeté
Project (Roça Grande and Pilar Targets)
 
 In
November 2005, Jaguar entered into a mutual exploration and option agreement
with Vale providing Jaguar with the right to explore and acquire mineral rights
of seven properties, known as Roça Grande, near the Caeté Plant until March
2008.  The contract also grants Vale the right to explore a Jaguar
property for iron ore and acquire its iron mineral rights until November
2008.  In November 2007, Jaguar notified Vale of its intent to
exercise the option to acquire all seven Roça Grande
concessions.  Jaguar expects to execute the final transfer agreement
in connection with the acquisition of the Roça Grande concessions during the
second quarter of 2008.
 
 Jaguar
has been exploring its Pilar target during the last two years and initially
contemplated building a sulfide plant on site, but the acquisition of the Roça
Grande property created an opportunity to develop a project with greater plant
capacity to receive ore from several mineral properties.  Jaguar
contemplates mining underground non-refractory sulfide ore at the Pilar target
and truck the ore for processing at the expanded Caeté Plant, which will also
process sulfide ore from the Roça Grande target.
 
 During
2007, Jaguar commissioned TechnoMine to prepare studies with respect to the
expansion project that includes the Roça Grande and Pilar targets (the “Caeté
Project”).
 
 In
May 2007, TechnoMine completed a scoping study on the Caeté
Project.  Based on the scoping study prepared by TechnoMine, Jaguar
plans to construct a centralized carbon-in-leach (CIL) processing plant to
process the sulfide ore from Pilar, Roça Grande, and other nearby
targets.  This new plant is expected to utilize much of the existing
infrastructure of the recently closed Caeté heap leach and carbon-in-column
(“CIC”) facility.  By utilizing the existing Caeté plant site, Jaguar
expects to minimize any environmental impact.
 
 In
July 2007, Jaguar received the Implementation License (LI) for the Caeté
Project.
 
 During
the third quarter of 2007, Jaguar secured the power contract for a 2009 start-up
of the Caeté Project.
 
 In
November 2007, TechnoMine completed a NI-43101 technical report on the Caeté
Project resources, which included both the Roça Grande and Pilar
targets.  Such report was filed on SEDAR and is available at http://www.sedar.com.  Jaguar
expects to complete the feasibility study for the Caeté Project during the
second quarter of 2008.
 
 As
part of Jaguar’s effort to identify and add to the estimated gold resources
reported in the November 2007 technical report, 75,000 meters of additional
drilling are planned over the next five years in the mineral properties
identified to supply the Caeté plant.
 
 During
the fourth quarter of 2007, Jaguar started a 22,000 meter drill program between
the Roça Grande and Pilar targets.  Most of that effort will be
conducted at the Roça Grande target, where seven drill rigs are currently in
operation.  At the Pilar target, where one drill rig is currently
operating, Jaguar will also conduct drilling to a depth of 800 meters to define
the continuity of the structure.
 
 Paciência
Project
 
 During
2007, Jaguar commissioned TechnoMine to complete a feasibility study for the
Santa Isabel Mine, which is part of its Paciência Project.  In August
2007, Jaguar completed a NI 43-101 compliant feasibility study on the Santa
Isabel Mine, which can be viewed at http://www.sedar.com.
 
 Construction
at the Paciência property is in the final stages with commissioning and start of
production expected by Jaguar in early April 2008.  All permits
required to commence operations have been received.
 
 Through
January 31, 2008, Jaguar had invested approximately $39.3 million in
exploration, infrastructure and mine development at the Paciência
Project.  To date, Jaguar has committed approximately $50.9 million
overall to the overall project.
 
 6
 Jaguar
intends to use a cut and fill mining method at the Santa Isabel Mine, which
contemplates a treated tailings backfill system. Ore produced at the Santa
Isabel Mine will be transported to the carbon-in-pulp (“CIP”) processing plant
currently under construction. The processing facilities will include crushing
and grinding circuits followed by a gravity separation circuit, which is
expected to initially recover approximately 40 percent of the available (“free”)
gold, along with a leaching and carbon-in-pulp adsorption/desorption/recovery
(CIP-ADR) plant to process the downstream gravity-removed ore pulp. The
metallurgical circuit is expected to raise the overall recovery to an estimated
93 percent.
 
 During
late 2007, Jaguar opened a second mine entrance approximately 2 kilometers to
the north of the Santa Isabel Mine.  Approximately 250 meters of
excavation has been completed to date, with approximately 2 kilometers of
excavation expected to take place to connect to the ramp system at the Santa
Isabel Mine to the second level.
 
 During
2007, Jaguar successfully concluded a land swap agreement with another gold
producer whereby Jaguar expanded the concession package at the Paciência Project
to a contiguous 20 km area adjacent to the São Vicente
lineament.  This land area was first mined in the 17th century
by the Portuguese and the old works are highly visible, even from satellite
photography.  Jaguar’s exploration efforts today are along this same
strike at depths deeper than the Portuguese could access without modern mining
equipment.
 
 Jaguar
plans to conduct extensive exploration at the NW01 Target and the Conglomerates,
including drifts for mine development, to add additional tonnes vertically as
well as horizontally in an effort to increase the resource base for the
Paciência Project.
 
 NW01
Target (Marzagão):  Through mid-October, a total of 24 holes have been
drilled to depths of 200 meters in the NW 01 target, which is located just North
of the new mine entrance. Drill results revealed gold intersections ranging from
2.5 g/t to 15.6 g/t. The intervals for these holes ranged from 0.8 to 4.4
meters. Of significance, the characteristics of this new mineralized zone are
similar to the grades and widths observed at the Santa Isabel Mine. During 2008,
Jaguar plans to drill an additional 12,000 meters at this target with the intent
of delineating a resource to meet NI 43-101 standards.
 
 Conglomerates:  A
second zone of mineralization at the Paciência Project, not related to the São
Vicente lineament where Jaguar has a resource and reserve base, is referred to
as the Conglomerates. The zone entails several concessions, which are located
approximately 5 km to the East of the Santa Isabel Mine main entrance. In 1989
and 1990, two previous concession owners conducted exploration drilling
consisting of 75 underground and surface drill holes and underground
development. These efforts gave rise to a third-party-estimated resource of over
200,000 oz based on an average grade of 5.72 g/t. These resources are not
included in Jaguar’s latest mineral inventory of gold resources as these efforts
pre-dated the NI 43-101 standards. In order to estimate the resources held in
the conglomerates consistent with NI 43-101 standards, Jaguar is conducting a
9,000 meter in-fill drilling program inside this target zone.  Jaguar
currently has three drill rigs operating in the area and has recently completed
18 drill holes totaling 4,275 meters.  The drilling program will be
concluded during the second quarter of 2008.
 
 Turmalina
 
 On
September 30, 2004, Jaguar acquired MTL and the 13,183 acre Turmalina gold
project located in Minas Gerais, Brazil from AngloGold
Ashanti.  Jaguar, through MSOL, agreed to pay US$1.35 million over
three years for 100 percent ownership and operational control of the Turmalina
concessions, which amount has been paid in full.
 
 The
Turmalina concessions are subject to a participation interest as
follows:  (i) for production obtained as a result of washing of
dragline-mined placers, open pit hydraulic mining or other similar method, MSOL
shall pay a royalty to AngloGold Ashanti equal to (a) 10 percent of annual net
revenue up to US$500,000, (b) five percent of annual net revenue between
US$500,000 and US$1,000,000, and (c) 2.5 percent of annual net revenue over
US$1,000,000; and (ii) for production obtained as a result of in situ mineral reserves, in
fresh or altered rocks, via underground or open pit mining, MSOL shall pay a
royalty to AngloGold Ashanti equal to (a) two percent of net revenue for the
first 6 operational months, (b) two percent of net revenue during the 7th through
48th
operational months (however, at least US$200,000 shall be paid every 12 months
after the seventh month of production), (c) five percent after the first four
years of production sale up to and including US$10,000,000, and (d) three
percent after the first four years of production sale in excess of
US$10,000,000.
 
 7
 During
2006, Jaguar completed a feasibility study on Turmalina and commissioned Scott
Wilson RPA to audit it and issue a technical report in compliance with NI
43-101.  Scott Wilson RPA issued its report on September 16, 2005,
revised it on March 10, 2006, supplemented it on March 14, 2006 and, upon the
completion of Phase II of the Turmalina exploration program in the Main and
Northeast targets, further updated the report on July 31, 2006 (the “Scott
Wilson RPA Turmalina Technical Report”).
 
 Commissioning
at Turmalina began in November 2006 and the first gold pour was conducted in
January 2007.  As of the fourth quarter of 2007, the Turmalina
processing plant has operated at the design production level of 1,200
t/day.
 
 Additional
exploration efforts by Jaguar in the area surrounding the Main and Northeast
targets have led to the discovery of a third mineralized area, referred to as
the Satinoco target, where three new areas of mineralization have been
identified. The Satinoco target is located approximately 300 meters from the
Main ore body at the Turmalina Mine.
 
 Jaguar
initially completed a two-phase diamond drilling program at the Satinoco target
and commissioned TechnoMine to prepare a resource estimate technical report. A
technical report was issued in October 2007, based on exploration data achieved
until July 2007.  Jaguar completed an additional, Phase III
exploration campaign in December 2007. The results generated during Phase III
program were integrated to the previous exploration database and gave rise to a
re-evaluation of the Satinoco target resource base.  In February 2008,
Jaguar filed a technical report in accordance with NI 43-101 in connection with
the upgrade of inferred to measured and indicated resources at the Satinoco
target, which technical report can be found at http://www.sedar.com.
 
 During
the fourth quarter of 2007, Jaguar completed the underground crosscut to access
the Satinoco mineralization through the existing ramp developed by Jaguar to
mine the Main and Northeast ore bodies at Turmalina.  The crosscut
will be utilized to transport ore from the Satinoco Target out the Turmalina
Mine entrance.  During the excavation process of the crosscut to the
Satinoco Target, economic grades of gold were discovered in channel
samples.  Jaguar is concluding a complementary 12,000 meter in-fill
diamond drill program as part of the feasibility work in an effort to convert
resources to reserves to expand Turmalina’s operation.  Preliminary
engineering to expand the processing circuits above ground at Turmalina is
underway with a projected start-up date during the first quarter of
2009.  The feasibility study for the expansion of Turmalina is
expected to be completed during the second quarter of 2008.
 
 Pedra
Branca
 
 In
March 2007, Jaguar entered into a joint venture agreement with Xstrata to
explore the Pedra Branca gold project (the “Pedra Branca Project”) in the State
of Ceará in northern Brazil (the “Joint Venture Agreement”).  Under
the Joint Venture Agreement, a new company or companies will be formed to mine
economic gold deposits.  Jaguar shall pay an aggregate fee of
US$150,000 over a two year period in exchange for an option to hold a 51 percent
ownership interest in the new company or companies by investing an aggregate of
US$3.85 million in exploration expenditures within the next four
years.  Jaguar is subject to annual exploration expenditure targets
for each year in which it maintains such option.  Furthermore, Jaguar
may increase its ownership interest in certain gold deposits to 60 percent
through an additional investment of US$3 million by the fifth anniversary of the
Joint Venture Agreement, subject to the rights of Xstrata to return to their 49
percent interest through additional contributions to the joint venture for
certain properties which have gold deposits of two million ounces or
more.   Certain properties within the Pedra Branca Project that
are dominated by base metal deposits, or which have gold deposits of less than
one million ounces, may be held in different ownership percentages and be
subject to different conditions, or removed from the joint venture.
 
 The
Pedra Branca Project has mineral rights to 37 concessions totaling approximately
159,000 acres in a 65-km shear zone.  The concessions are located in
and around municipal areas with good infrastructure.
 
 Xstrata
carried out a preliminary exploration program that covered only 25-km of the
shear zone.  The program identified 10 km of soil anomalies, including
two large anomalies referred to as Coelho and Mirador.  For the most
part, the mineralized formations uncovered by Xstrata’s preliminary efforts are
open along the extremity and lead both companies’ geologists to believe the area
has significant potential for gold mineralization, which could include the
presence of both oxide and sulfide formations in large structures.
 
 8
 Jaguar
is currently conducting a comprehensive exploration program at the Pedra Branca
Project.  During the third quarter of 2007, Jaguar began a diamond
drill program to test the continuity of the mineralization at
depth.  To date, 44 drill holes totaling 3,775 meters have been
completed.
 
 Contracts
with AngloGold Ashanti
 
 On
November 21, 2003, MSOL also entered an agreement with AngloGold Ashanti’s
subsidiary, Morro Velho, in which AngloGold Ashanti agreed to provide to MSOL
certain ore treatment services at the Queiróz Plant, gold refining services and
marketing services.  The treatment operations began in the first
quarter of 2006.  MSOL agreed to deliver for treatment a certain
number of metric tons of gold each year for four years starting in January 2006
and ending in 2009.  If AngloGold Ashanti fails to treat the scheduled
amount of ore, it will pay a penalty to MSOL.  AngloGold Ashanti will
provide gold refining services and each year will refine the amount of gold
agreed upon by the parties by December 30th of the preceding
year.  AngloGold Ashanti further agreed to market MSOL’s
gold.  As a fee for the refining and marketing aspects of the
contract, MSOL will pay one percent of the gross income from sales resulting
from the refining and marketing services.  The agreement is in effect
with respect to the treatment services until December 31, 2009, and with respect
to the refining and marketing services until 2017, or a previous date if the
sources of natural resources are exhausted.  MSOL may terminate the
agreement if it determines through a mineral survey that the exploitation of
certain specified deposits is not feasible.  In January 2007, Jaguar
notified AngloGold Ashanti that it elected not to exercise its rights to process
non-refractory ore at the Queiróz Plant.  This decision was based on
an internal assessment of other production alternatives, which Jaguar has
determined should generate a greater level of profitability in the future by
processing available ore through a Jaguar-owned facility.
 
 On
November 21, 2003, Jaguar acquired its Paciência, Juca Vieira, Catita, Bahú,
Marzagão, Camará and Morro do Adão properties in the Iron Quadrangle region from
AngloGold Ashanti.  Under the terms of such transaction, AngloGold
Ashanti has the right, following exhaustion of the reserves developed from the
known resources at the Paciência, Juca Vieira, Catita, Bahú, Marzagão, Camará
and Morro do Adão properties, to develop a full valuation of any of such
properties, including drilling works.  If the valuation identifies the
existence, in one or more areas, of measured and indicated resources of a
minimum of 750,000 ounces, AngloGold Ashanti will have the right to reacquire up
to 70 percent of any of such properties at an ascribed value of US$10.50 per
ounce of the new measured and indicated resources.
 
 AngloGold
Ashanti’s rights pertain to only three of the twelve concessions at the
Paciência property (Paciência, Bahú and Marzagão) and four concessions at the
Sabará property (Juca Vieira, Catita, Camará and Morro do Adão).  The
mineralization potential at Sabará is not considered substantial.  These
seven concessions represent only 16% of the hectares of Jaguar’s concession base
in Minas Gerais.  At this time, none of Jaguar’s resources, operations and
projections for the next five years are impacted by this provision nor expected
to be in the next several years.
 
 Laboratory
 
 During
the third quarter of 2005, Jaguar began construction of its own testing
laboratory adjacent to the Caeté Plant.  The laboratory was completed
and became operational in the fourth quarter of 2005.  Jaguar’s
on-site testing laboratory expedites process control and certain exploration
testing and alleviates some of the delays experienced by excessive demand on the
independent laboratories due to surging mining activity.  Jaguar also
utilizes the services of a local, independent laboratory.
 
 Corporate
Transactions
 
 On
December 20, 2005, MTL obtained a secured financing facility from RMB
International (“RMB”) in an amount of up to US$14,000,000 (the “Turmalina
Facility”) which was used primarily to finance the construction and start-up of
the Turmalina mine.  Up to US$2,250,000 of the Turmalina Facility
could be used for reimbursement of costs for Sabará.  In connection
with the Turmalina Facility, (i) MTL and MSOL provided security interests in the
cash flow, equipment and other assets of Turmalina and Sabará Zones A and C and
a pledge, (ii) Jaguar issued a guaranty of MTL’s obligations under the Turmalina
Facility, and (iii) Jaguar issued 1,093,835 unlisted warrants to the Turmalina
Facility lenders (exercisable at a price of Cdn.$4.50 and with an expiry date to
be between June 30, 2009 and March 31, 2010 as such date shall be determined
with reference to the date of the first draw-down under the loan), 350,000
listed warrants to the lenders’ agent (all of such warrants were exercised at a
price of Cdn.$4.50), and 300,000 unlisted warrants to Auramet Trading, LLC in
its capacity as an advisor to Jaguar with respect to the Turmalina Facility (all
of such warrants were exercised at a price of Cdn.$3.90), in each case with each
warrant entitling the holder to purchase one common share of
Jaguar.  In the fourth quarter of 2005, Jaguar entered into a forward
sales contract agreement with the lender under the Turmalina Facility to
implement a risk management strategy to manage commodity price exposure on gold
sales.  In February 2006, MTL made its first draw down of the
Turmalina Facility in the amount of US$7,600,000.  In the third
quarter of 2006 Jaguar drew down the remaining US$6.4 million of the Turmalina
Facility.   As of December 31, 2007, Jaguar had repaid US$4.2
million outstanding under the Turmalina Facility.   On March 13,
2008, Jaguar paid RMB US$9.8 million plus US$181,000 accrued interest to repay
the Turmalina facility agreement in full.
 
 9
 In
September 2007, Jaguar received an amendment to the loan facility agreement from
RMB, which allowed Jaguar to close the forward sales contracts. As of December
31, 2007, forward sales contracts for 48,556 ounces were outstanding at an
average cost of US$517.10 per ounce and forward purchase contracts for 48,556
ounces were outstanding at an average cost of US$823.81. On March 14, 2008,
Jaguar paid RMB US$22.1 million to close the forward sales contracts. On March
12, 2008, Jaguar closed the forward purchase contracts realizing a gain of
US$7.4 million, effectively reducing the net loss of the forward contracts to
US$14.8 million, of which US$14.5 million was accrued as of December 31, 2007.
No additional charges will be realized during 2008 for the forward contracts
and, as of March 24, 2008, no forward gold production is currently
hedged.
 
 On
March 27, 2006, Jaguar completed a public offering in Canada and private
placement offering in the United States of 10,100,000 common shares at a price
of Cdn.$5.25 pursuant to an Underwriting Agreement dated March 9, 2006 among
Jaguar and Blackmont Capital Inc. (“BCI”), BMO Nesbitt Burns Inc. (“BMO”), RBC
Dominion Securities Inc. (“RBC”), TD Securities Inc. (“TD Securities”) and
Paradigm Capital Inc. as underwriters. The underwriters received a cash
commission equal to 5.5 percent of the gross proceeds of the offering,
underwriter options to purchase up to 1,335,000 common shares at a price of
Cdn.$5.25, which they exercised at the closing on March 27, 2006, and
compensation warrants to purchase up to 343,050 common shares at a price of
Cdn.$5.25 with an expiry date of March 27, 2008.  As of January 31,
2008, 198,969 common shares were purchased as a result of the exercise of such
compensation warrants.
 
 On
February 1, 2007, the Board adopted a shareholder rights plan (the “Shareholder
Rights Plan”) which is intended to ensure the fair treatment of shareholders in
connection with any take-over bid for common shares.  The Shareholder
Rights Plan was not being adopted in response to any proposal to acquire control
of Jaguar.  The Shareholder Rights Plan seeks to provide shareholders
with adequate time to properly assess a take-over bid without undue
pressure.  It also is intended to provide the Board with more time to
fully consider an unsolicited take-over bid and, if considered appropriate, to
identify, develop and negotiate other alternatives to maximize shareholder
value.  The rights issued under the Shareholder Rights Plan will
become exercisable only when a person, including its affiliates and associates
and persons acting jointly or in concert with it, acquires or announces its
intention to acquire beneficial ownership of common shares which when aggregated
with its current holdings total 20 percent or more of the outstanding common
shares (determined in the manner set out in the Shareholder Rights Plan) without
complying with the “Permitted Bid” provisions of the Shareholder Rights Plan or
without approval of the Board.  Under the Shareholder Rights Plan
those bids that meet certain requirements intended to protect the interests of
all shareholders deemed to be “Permitted Bids”.  Permitted Bids must
be made by way of a take-over bid circular prepared in compliance with
applicable securities laws and, among other conditions, must remain open for at
least sixty (60) days.  In the event a take-over bid does not meet the
Permitted Bid requirements of the Shareholder Rights Plan, the rights will
entitle shareholders, other than the person making the take-over bid and its
affiliates and associates and persons acting jointly or in concert with it, to
purchase additional common shares at a substantial discount to the market price
of the common shares at that time.  The TSX accepted notice of the
Shareholder Rights Plan and the shareholders ratified the adoption of the
Shareholder Rights Plan on May 10, 2007.
 
 10
 On
February 27, 2007, Jaguar filed a final short form prospectus to issue up to
340,090 common shares to the holders of 5,398,250 common share purchase
warrants, upon early exercise of the warrants.  Each warrant entitled
the holder thereof to acquire one common share of Jaguar at a price of Cdn.$4.50
at any time prior to 5:00 p.m. (Eastern Standard Time) on December 31,
2007.  Each warrant entitled the holder thereof to acquire an
additional 0.063 of one common share if such holder exercised his or her
warrants during the thirty (30) day early exercise period commencing on February
28, 2007, and ending at 5:00 p.m. (Eastern Standard Time) on March 30,
2007.  The additional 0.063 of a common share issued upon the exercise
of the warrants during the early exercise period represented a value of
Cdn.$0.43 based on the closing price on February 26, 2007 of
Cdn.$6.79.  If at least 66 2/3 percent of the warrants outstanding on
February 28, 2007 were exercised at or before the early warrant expiry time,
each warrant that had not been so exercised during the early exercise period
(except in limited circumstances with respect to U.S. warrant holders) would be
exchanged, without any further action on the part of the warrant holder,
including payment of the exercise price thereof or any other additional
consideration, for a fraction of a common share equal to: (A) one plus (B) 0.063
multiplied by 50 percent minus (C) Cdn.$4.50 divided by the lesser of (i) the
volume weighted average trading price of the common shares on the TSX for the
five trading days ending on the early exercise expiry date, and (ii) the closing
price of the common shares on the early exercise expiry date.  As a
result of the early exercise program described in this paragraph, 4,818,852
warrants were exercised resulting in the issuance of 5,122,428 common shares to
the warrant holders.  No agency fee was paid by Jaguar in connection
with the distribution of the early exercise shares or the exchange shares being
qualified under the short form prospectus.  BCI acted as financial
advisor and soliciting dealer manager to Jaguar in connection with the issuance
of the early exercise shares and the exchange shares.  Jaguar paid BCI
a financial advisory fee of 3 percent of the exercise price for each warrant
that is submitted for exercise in connection with the early exercise and
automatically exchanged for exchange shares.  The early exercise
warrant transaction was approved by shareholders on February 27, 2007 and by
warrant holders on February 28, 2007.
  On
March 22, 2007, Jaguar closed a private placement of 75,000
units.  The units were sold by a syndicate led by TD Securities and
included BCI, BMO and RBC.  The underwriters exercised their option to
purchase an additional 15 percent of the number of the units offered to cover
over-allotments, resulting in aggregate gross proceeds of Cdn.$86.3 million
(US$74.5 million) from the sale of 86,250 units.  The units are
comprised of a secured note in the principal amount of Cdn.$1,000, bearing a
coupon of 10.5 percent, payable semi-annually in arrears, and 25 common shares
of Jaguar.  A total of 2.16 million new shares were issued relating to
the private placement. The notes were listed on the TSX on July 26, 2007, under
the symbol “JAG.NT”.
 
 On
July 23, 2007, Jaguar common shares began trading under the symbol “JAG” on the
NYSE Arca Exchange.
 
 On
February 21, 2008, Jaguar issued 8,250,000 common shares at a price of
Cdn.$13.40 per share for proceeds of Cdn.$110,550,000. The offering price was
determined by negotiation between Jaguar and a syndicate led by RBC and included
TD Securities, BCI, BMO, and Raymond James Ltd.  Jaguar granted the
underwriters an over-allotment option, exercisable in whole or in part up to 30
days following the closing of the transaction, to purchase up to an additional
1,237,500 common shares at a price of Cdn.$13.40 per common share, which would
have increased the aggregate proceeds of the offering to Cdn.$127,132,500 if the
over-allotment option had been fully exercised.  The over-allotment
option was not exercised and no additional shares were issued subsequent to the
closing.
 
 11
 DESCRIPTION OF THE
BUSINESS
 
 General
 
 Jaguar
is a gold mining company currently engaged in gold production and in the
acquisition, exploration, development and operation of gold mineral properties
in Brazil.  In addition, Jaguar may consider the acquisition and
subsequent exploration, development and operation of non-gold producing
properties in Brazil.
 
 Jaguar’s
gold producing properties and projects are located in the Iron Quadrangle region
near Belo Horizonte, Minas Gerais, Brazil:  Sabará, Turmalina, the
Paciência Project and the Caeté Project.  Through its wholly-owned
subsidiaries, MSOL and MTL, Jaguar has interests in, and controls the mineral
rights, concessions and licenses to the mineral resources and reserves presented
in Tables 1 and 2 under the section entitled “Mineral Resources and
Reserves”.  The Turmalina Technical Reports, as defined below,
contains further details with respect to reported gold reserves and gold
resources at Turmalina.  See “Turmalina Gold Project”
below.  The Scott Wilson RPA Sabará Technical Report, as defined
below, contains additional details regarding reported gold resources and
reserves at Sabará.  The Paciência Project Technical Report, as
defined below, contains additional details regarding currently reported gold
resources and reserves in the Paciência Project.  The Caeté Project
Technical Report, as defined below, contains additional details regarding
currently reported gold resources in the Caeté Project.  The Satinoco
Target Technical Report, as defined below, contains additional details regarding
currently reported gold resources in the Satinoco Target.  See “Mining
Projects” below.
 
 In
addition to the mining properties described in the preceding paragraph, in March
2007, Jaguar entered into the Joint Venture Agreement with Xstrata with respect
to the Pedra Branca Project located in the State of Ceará in northeastern
Brazil.  Pursuant to the Joint Venture Agreement, Jaguar is currently
conducting a comprehensive exploration program at the Pedra Branca
Project.
 
 The
Technical Reports (as defined below) contain additional information regarding
gold reserves and gold resources on Jaguar’s properties.  See “Mining
Projects” below.
 
 Gold
production and sales
  Jaguar
began pouring gold in December 2003.  During 2007, Jaguar produced a
total of 70,113 ounces of gold at an average cash operating cost of US$346 per
ounce compared to 37,876 ounces produced at an average cash operating cost of
US$370 per ounce during 2006. For the year ended December 31, 2007, gold sales
totaled 67,350 ounces at an average price of US$710 per ounce compared to 34,880
ounces sold at an average price of US$607 per ounce for the year ended December
31, 2006.  Increases in gold production during 2007 primarily resulted
from the commencement of gold production at Turmalina, which was under
construction during fiscal 2006 and commenced gold production in January
2007.
 
 The
table below provides greater detail regarding total gold production at Turmalina
and Sabará for the year ended December 31, 2007:
 
 Project
                Ore
      processed
                  (000t)
                Feed
      grade
                  (g/t)
                Recovery
                  grade
      (g/t)
                Production
                  (oz)
                Cash
      operating
                  (cost/t)
      US$
                Cash
      operating
                  (cost/oz)
      US$Turmalina
                347
                5.10
                4.37
                45,527
                $42.80
                $283Sabará
                504
                2.07
                1.40
                24,586
                $22.70
                $462TOTAL
                851
                3.31
                2.61
                70,113
                $30.90
                $346
 
 During
2008, Jaguar estimates it will produce 160,000 ounces of gold as follows: 88,000
ounces at Turmalina at a total operating cash cost between US$275 and US$285 per
ounce, 23,000 ounces at Sabará at a total operating cash cost between US$495 and
US$505 per ounce, and 49,000 ounces at Paciência at a total operating cash cost
between US$335 and US$340 per ounce.  At Paciência, commissioning and
start of production is expected in early April 2008.  Operating cash
cost estimates for 2008 are based on an average exchange rate of R$1.85 per
US$1.00.  As of March 20, 2008, the exchange rate is R$1.74 per
US$1.00.  If the exchange rate relationship remains at this level
during the remainder of 2008, the result would be approximately six percent
higher costs in equivalent US currency than previously
estimated.
 
 12
 With
respect to the Caeté Project, Jaguar targets initial annual gold production of
39,000 ounces commencing in 2009, expanding to 160,000 ounces per year in
2012.
 
 All
of Jaguar’s production facilities are, or will be, near Jaguar’s mineral
concessions and are accessible via existing roads.  Jaguar believes it
has an advantage over other gold mine operators due to the clustered nature of
its resource concessions and the proximity of its concessions to its processing
facilities and existing infrastructure.
 
 Jaguar
has contracted with AngloGold Ashanti for AngloGold Ashanti to arrange sales of
Jaguar’s gold bullion with gold brokers at Jaguar’s request and direction, which
provides Jaguar with ready access to gold markets.
 
 Specialized
Skill and Knowledge
 
 Jaguar
is staffed by an experienced senior management team with over 100 years of
collective experience exploring, developing and operating gold mines in
Brazil.  Jaguar’s Chief Executive Officer and President, Daniel R.
Titcomb, has been involved in continuous mining exploration and development in
Brazil since 1993.  Jaguar’s Chief Operating Officer, Juvenil T.
Felix, was formerly chief executive officer of AngloGold Ashanti’s subsidiaries
in Brazil, and has over 40 years experience in the Brazilian mining
sector.  Jaguar’s Vice President of Operations, Lúcio Cardoso, was
formerly superintendent of AngloGold Ashanti's gold division and has over 30
years experience in the Brazilian mining sector. Jaguar’s Vice President of
Exploration and Engineering, Adriano L. Nascimento, also has approximately 30
years experience in the Brazilian mining industry and held the position of
senior engineer at AngloGold Ashanti for 11 years, where he was responsible for
the production department of several mines, including Mina Grande, the deepest
and one of the oldest mines in Brazil.  Jaguar’s Chief Geologist, Jaime
Duchini, has over 25 years experience in exploration in the Iron
Quadrangle.
 
 Competitive
Conditions
 
 The
gold exploration and mining business is a competitive business in all its
phases.  Jaguar competes with numerous other companies and individuals
in the search for and the acquisition of mineral licenses, permits and other
mineral interests, as well as for acquisition of equipment and the recruitment
and retention of qualified employees.  There is also significant
competition for the limited number of gold property acquisition
opportunities.  The ability of Jaguar to acquire gold mineral
properties in the future will depend not only on its ability to develop its
present properties, but also on its ability to select and acquire suitable
producing properties or prospects for gold development or mineral
exploration.
 
 Jaguar
has an ongoing relationship with AngloGold Ashanti through contractual royalty
rights in certain of the properties and an agreement to provide Jaguar’s
operating company with gold refining and marketing services.
 
 Jaguar
has built its base upon the acquisition of later-stage gold exploration
properties in the Iron Quadrangle region of Brazil at relatively depressed
prices.  Jaguar believes that its asset acquisition costs combined
with the clustered nature of its mineral assets and production facilities gives
it an advantage over other similarly-sized competitors.
 
 Environmental
Protection
 
 In
Brazil, mining activity requires the grant of concessions from the DNPM, an
agency of the Brazilian federal government responsible for controlling and
applying the Brazilian Mining Code.  Government concessions consist of
exploration awards, exploration licenses, and mining
permits.  Exploration awards permit the holder to begin exploration of
the property, exploration licenses allow the holder to proceed with exploration
to determine feasibility of mining the property, and mining permits allow the
holder to mine the property.
 
 Applications
for mining concessions must include an independently-prepared environmental plan
that deals with water treatment, soil erosion, air quality control,
re-vegetation and reforestation (where necessary) and
reclamation.  Mining concessions will not be granted unless the mining
plan, including the environmental plan, is approved by the state
authorities.
 
 13
 Based
on the experience of management in obtaining licenses, Jaguar has made estimates
anticipated time frames for receiving licenses, which are described in “Mineral Projects”, upon
which it has based projections for capital expenditures, revenues and
earnings.  The time frames in which licenses are issued are dependent
upon the actions of regulatory authorities and third parties.
 
 Employees
 
 Jaguar
had 996 employees as of the end of 2007 and intends to have between 1,200 and
1,300 employees by the end of 2008.
 
 Foreign
Operations
 
 All
of Jaguar’s mineral projects are owned and operated though its wholly-owned
subsidiaries, MSOL and MTL.  All of the properties are located near
Belo Horizonte, Minas Gerais, Brazil.  Jaguar is entirely dependent on
its foreign operations for the exploration and development of gold properties
and for production of gold.
 
 Mineral
Projects
 
 Except
as otherwise noted, the following descriptions and summaries of Jaguar’s
material projects, are derived from (i) the Quadrilátero Technical Report dated
September 17, 2004 and revised on December 20, 2004 (the “Quadrilátero Technical
Report”), which covers the Sabará, Paciência and Santa Bárbara Regions, (ii) the
Technical Report on the Sabará Project dated February 17, 2006 (the “Sabará
Technical Report”), which covers Zones A and B and Lamego (also called Zone C)
and Queimada in Sabará, (iii) the Technical Report on the Caeté Project dated
November 23, 2007 (the “Caeté Technical Report”), which covers the Pilar and
Roça Grande properties located in the Santa Bárbara and Caeté Regions,
respectively, (iv) the Technical Report on the Paciência-Santa Isabel Project
dated August 7, 2007, which covers the Paciência-Santa Isabel property (the
“Paciência Technical Report”), (v) the Technical Report on the Turmalina Gold
Project dated September 10, 2005 and revised on March 10, 2006, as supplemented
by a Technical Report on Turmalina Gold Project dated March 14, 2006 and as
further revised on July 31, 2006, which cover the Turmalina Region (the “Scott
Wilson RPA Turmalina Technical Report”), and (vi) the Technical Report on the
Satinoco portion (the “Satinoco Target”) of the Turmalina Gold Project dated
November 23, 2007, which covers the Satinoco Target (the “Satinoco Technical
Report”, together with the Scott Wilson RPA Turmalina Technical Report, the
“Turmalina Technical Reports”; the Turmalina Technical Reports, together with
the Quadrilátero Technical Report, the Sabará Technical Report, the Caeté
Technical Report and the Paciência Technical Report, the “Technical
Reports”).  This Annual Information Form contains only summary
information regarding Jaguar’s properties.  A complete description of
Jaguar’s properties and associated maps, photographs and references can be found
in the Technical Reports filed on SEDAR (at www.sedar.com), and such reports are
hereby incorporated by reference herein.
 
 The
Qualified Person, as such term is defined in NI 43-101, who prepared the
Quadrilátero Technical Report, the Paciência Technical Report, the Satinoco
Technical Report, the Caeté Technical Report, and the TechnoMine Turmalina
Technical Report referred to below was Ivan C. Machado, M.Sc., P.E.,
P.Eng.  Mr. Machado is a principal of TechnoMine and is independent
for the purposes of NI 43-101.  The Qualified Persons who prepared the
Scott Wilson RPA Turmalina Technical Report, the Technical Report on the
Turmalina Gold Project dated March 14, 2006, and the Sabará Technical Report
were Graham G. Clow, P.Eng., and Wayne W. Valliant, P.Geo.  Mr. Clow
is a principal of Scott Wilson RPA, and Mr. Clow and Mr. Valliant are
independent for the purposes of NI 43-101.
 
 14
 Mineral
Resources and Reserves
 
 The
tables below reflect the estimated mineral resource and reserve information
available to Jaguar as of January 1, 2008, except as noted
below.  Ivan C. Machado, M.Sc., P.E., P.Eng. revised the resources and
reserves of Jaguar listed in such tables.  Mr. Machado is a Qualified
Person as such term is defined in NI-43101.
 
 Table
1 - Summary of Estimated Mineral Resources*
  RESOURCES
                          (tonnage
      and grades in grams/tonne)
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        RESOURCES
                          (ounces
      Au)Measured
                          (t)
                        
                        
                        
                        g/t
                        
                        
                        Indicated
                          (t)
                        
                        
                        
                        g/t
                        
                        
                        Measured
                          +
                          Indicated
      (t)
                        
                        
                        
                        g/t
                        
                        
                        Inferred
                          (t)
                        
                        
                        
                        g/t
                        
                        
                        Measured
                          +
                          Indicated
                        
                        
                        InferredSabaráSabará
                        
                        
                        198,230
                        
                        
                        
                        2.11
                        
                        
                        
                        541,380
                        
                        
                        
                        1.96
                        
                        
                        
                        739,610
                        
                        
                        
                        2.00
                        
                        
                        
                        329,450
                        
                        
                        
                        2.01
                        
                        
                        
                        47,560
                        
                        
                        
                        21,290Other(1)
                        
                        
                        518,900
                        
                        
                        
                        5.56
                        
                        
                        
                        704,300
                        
                        
                        
                        5.40
                        
                        
                        
                        1,223,200
                        
                        
                        
                        5.47
                        
                        
                        
                        830,000
                        
                        
                        
                        3.91
                        
                        
                        
                        215,020
                        
                        
                        
                        104,100Paciência ProjectSanta
      Isabel(2)
                          Other(1)
                        
                        
                        871,170
      1,642,000
                        
                        
                        
                        5.59
                          3.68
                        
                        
                        
                        1,702,230
      1,567,000
                        
                        
                        
                        5.00
                          3.97
                        
                        
                        
                        2,573,400
      3,209,000
                        
                        
                        
                        5.20
                          3.82
                        
                        
                        
                        420,700
      500,000
                        
                        
                        
                        5.44
                          5.00
                        
                        
                        
                        430,260
      394,040
                        
                        
                        
                        73,580
      80,380Caeté ProjectPilar(3)
                          Roça
      Grande(3)
                        
                        
                        713,800
      727,700
                        
                        
                        
                        5.99
                          5.38
                        
                        
                        
                        978,400
      1,270,500
                        
                        
                        
                        5.91
                          5.19
                        
                        
                        
                        1,692,200
      1,998,200
                        
                        
                        
                        5.94
                          5.26
                        
                        
                        
                        168,600
      558,000
                        
                        
                        
                        7.41
                          4.42
                        
                        
                        
                        323,400
      337,800
                        
                        
                        
                        40,150
      79,300TurmalinaFaina
      and Pontal(4)
                          Principal
      and NE
                          Satinoco(5)
                        
                        
                        339,600
      276,000
      467,000
                        
                        
                        
                        5.64
                          6.10
                          3.76
                        
                        
                        
                        1,191,000
      2,577,000
      1,274,000
                        
                        
                        
                        5.70
                          7.10
                          3.71
                        
                        
                        
                        1,531,600
      2,854,000
      1,741,000
                        
                        
                        
                        5.69
                          7.00
                          3.72
                        
                        
                        
                        120,000
      1,027,000
      523,000
                        
                        
                        
                        5.70
                          6.40
                          3.85
                        
                        
                        
                        280,000
      644,000
      208,560
                        
                        
                        
                        22,000
      211,000
      64,750TOTAL
      IN SITU RESOURCES
                        
                        
                        
                        17,562,210
                        
                        
                        
                        5.10
                        
                        
                        
                        4,476,750
                        
                        
                        
                        4.84
                        
                        
                        
                        2,880,640
                        **
                        
                        
                        696,550
   Table
2 - Summary of Estimated Mineral Reserves*
 Proven
                  (t)
                
                
                
                g/t
                
                
                Probable
                  (t)
                
                
                
                g/t
                
                
                Proven
      + Probable (t)
                
                
                
                g/t
                
                
                Ounces
                  AuSabaráSabará
                
                
                156,730
                
                
                
                1.86
                
                
                
                351,880
                
                
                
                1.65
                
                
                
                508,610
                
                
                
                1.71
                
                
                
                27,970TurmalinaPrincipal
      and NE
                
                
                234,000
                
                
                
                5.50
                
                
                
                2,682,000
                
                
                
                6.30
                
                
                
                2,916,000
                
                
                
                6.30
                
                
                
                587,000Paciência ProjectSanta
      Isabel(2)
                
                
                987,900
                
                
                
                4.52
                
                
                
                1,726,000
                
                
                
                4.52
                
                
                
                2,713,900
                
                
                
                4.52
                
                
                
                394,450TOTAL
                
                
                1,378,630
                
                
                
                4.38
                
                
                
                4,759,880
                
                
                
                5.31
                
                
                
                6,138,510
                
                
                
                5.11
                
                
                
                1,009,420
                **
 
 *   Mineral
resources listed in Table 1 include mineral reserves listed in Table
2.  Some columns and rows may not total due to rounding.
 **
Estimated resources and reserves as at January 1, 2008 are lower than indicated
in Tables 1 and 2, as such figures do not take into account 2007 production or
the amount of gold rejected to the tailings at the Turmalina
operations.  2007 Turmalina production was 347,000 tonnes at 5.10
grams per tonne containing 45,527 ounces of gold.  In addition,
figures do not reflect test mining production at Paciência during 2006 of 21,742
tonnes at 3.23 grams per tonne containing 2,260 ounces of gold.
 (1)
TechnoMine Services, LLC (“TechnoMine”) NI 43-101 Technical Report on the
Quadrilátero Gold Project filed on SEDAR on
December 20, 2004.
 (2)
TechnoMine NI 43-101 Feasibility Study Report on the Paciência Gold Project
Santa Isabel Mine filed on SEDAR on August 9, 2007.
 (3)
TechnoMine NI 43-101 Technical Report on the Caeté Gold Project filed on SEDAR
on November 23, 2007.
 (4)
TechnoMine NI 43-101 Technical Report on the Turmalina Gold Project filed on
SEDAR on December 20, 2004.
 (5)
TechnoMine NI 43-101 Technical Report on the Satinoco Target filed on SEDAR on
February 5, 2008.
 15
 The
Qualified Person, as such term is defined in NI 43-101, who prepared the
Quadrilátero Gold Project Technical Report, the Turmalina Gold Project Technical
Report, the Satinoco Target Technical Report, the Paciência Gold Project Santa
Isabel Mine Feasibility Study Report and the Caeté Gold Project Technical Report
is Ivan C. Machado, M.Sc., P.E., P.Eng. Mr. Machado is a principal of TechnoMine
and is independent for the purposes of NI 43-101.
 Scott
Wilson RPA prepared NI 43-101 Technical Reports for Sabará and Turmalina, dated
February 17, 2006 and July 31, 2006, respectively, and filed on SEDAR on March
2, 2006 and August 1, 2006, respectively.  These reports have not been
updated to reflect any new information since the dates of the reports,
including, but not limited to, resources and reserves, mine and plant
production, metallurgy, operating and capital costs and environmental
data.  The Qualified Persons who prepared the reports were Graham G.
Clow, P.Eng., and Wayne W. Valliant, P.Geo. Mr. Clow and Mr. Valliant are
employees of Scott Wilson RPA and are independent for the purposes of NI 43-101.
 
 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”.
 
 Mining
Concession and Exploration Permitting Requirements and Status
 
 In
Brazil mining activity requires the grant of concessions from the DNPM, an
agency of the Brazilian federal government responsible for controlling and
applying the Brazilian Mining Code.  Government concessions consist of
exploration awards, exploration licenses, and mining
permits.  Applications for mining concessions must include an
independently-prepared environmental plan that deals with water treatment, soil
erosion, air quality control, re-vegetation and reforestation (where necessary)
and reclamation.  Mining concessions will not be granted unless the
mining plan, including the environmental plan, is approved by the state
authorities.  Exploration awards permit the holder to begin
exploration of the property, exploration licenses allow the holder to proceed
with exploration to determine feasibility of mining the property, and mining
permits allow the holder to mine the property.  The following table
lists the status of Jaguar’s awards, licenses and permits.
 
 Property
                PermitsPhase
                StatusSabaráSabará
      Plant
                Implementation
      License
                Received
      September 2005Sabará
      Plant
                Operation
      License
                Received
      December 2006Sabará
      Zone A Mine
                Implementation
      License
                Received
      September 2006Sabará
      Zone A Mine
                Operation
      License
                Received
      November 2006Paciência
      ProjectSanta
      Isabel Mine and Plant
                Implementation
      License
                Received
      May 2007Santa
      Isabel Mine and Plant
                Operation
      License
                Expected
      March 2008Caeté
      ProjectCaeté
      Plant
                Implementation
      License
                Received
      July 2007Caeté
      Plant
                Operation
      License
                Expected
      June 2008Caeté
      Tailing Dam
                Previous
      License
                Received
      November 2007Caeté
      Tailing Dam
                Implementation
      License
                Expected
      August 2008Caeté
      Tailing Dam
                Operation
      License
                Expected
      March 2009Roça
      Grande Mine
                Operation
      License
                Expected
      April 2008Pilar
      Mine
                Implementation
      License
                Expected
      April 2008Pilar
      Mine
                Operation
      License
                Expected
      July 2008TurmalinaTurmalina
      Mine and Plant
                Implementation
      License
                Received
      August 2006Turmalina
      Mine and Plant
                Operation
      License
                Received
      March 2007Turmalina
      Tailing Dam
                Operation
      License
                Expected
      April 2008
  
 16
 JAGUAR GOLD OPERATIONS AND
PROJECTS
 
 In
the state of Minas Gerais in Brazil, Jaguar has two operating properties (Sabará
and Turmalina) and two properties under development (the Paciência and Caeté
projects).   See detailed description of each property
below.
 
 Sabará Operations
                Paciência Project
                Caeté Project
                Turmalina OperationsSabará
      Plant
                Paciência
      Plant*
                Caeté
      Plant
                Turmalina
      PlantSabará
      Zone A Mine
                Santa
      Isabel Mine
                Roça
      Grande Target
                Turmalina
      MineSerra
      Paraíso Target
                Bahú
      Target
                Pilar
      Target
                Satinoco
      TargetRio
      de Peixe Oxide
                Marzagão
      Target
                Juca
      Vieira Target
                Faina
      TargetCatita
                Rio
      de Peixe Sulfide
                Morro
      do Adão Target
                Pontal
      TargetPalmital
      TargetOuro
      Fino Target
 *  Commissioning and start of
production is expected by Jaguar in early April 2008.
 
 The
following description of the Sabará Zone A, Santa Isabel Mine, Bahú, Marzagão,
Rio de Peixe, Pilar (former Santa Bárbara), and Paciência is based on the
summary contained in the Quadrilátero Technical Report.
 
 All
of the Quadrilátero Gold Project regions are located in the Iron Quadrangle
greenstone belt of the state of Minas Gerais, Brazil.  The regions are
located within 60 kilometers of the city of Belo Horizonte, which serves as the
commercial center for Brazil’s gold mining industry and has excellent
infrastructure to support world-class gold mining operations.
 
 The
Iron Quadrangle region has historically produced significant quantities of gold
at reasonable capital and operating costs from open pit and large scale
underground mining operations.
 
 The
gold metallogeny in the Iron Quadrangle has a complex
history.  Initially, in the Archean era, volcanic exhalative
sedimentary processes in the greenstone belts produced BIFs and chemical
sedimentary rock (“chert”), which hosted sulfide-rich gold
deposits.  Shear zone-related gold deposits were also generated at
that time.
 
 The
stratigraphy for the Iron Quadrangle is as follows from oldest (Archean) to
youngest (Upper Proterozoic):
 
 ·
                Tonalities,
      trondjemite, gneiss basement
  ·
                Rio
      das Velhas Supergroup (Greenstone
Belt)
  ·
                Espinhaço
      Supergroup lying  unconformably on the Rio das Velhas
      Supergroup
  ·
                Minas
      Supergroup overlying with a tectonic angular and erosional unconformities
      the Espinhaço Supergroup
  ·
                Itacolomi
      Group overlying with a tectonic angular and erosional unconformities the
      Minas Supergroup
  The
Rio das Velhas Supergroup is subdivided into two groups: Nova Lima and Maquiné.
The Nova Lima Group consists of a greater-than-four kilometer thick
eugeosynclinal succession including greywacke, carbonate schist, immature
quartzite, quartz schist, conglomerate, banded iron formations, schistose tuff,
graphitic schist, carbonate chert, phyllite, greenschist, and meta-ultramafic
rocks.  The Maquiné Group consists of a 1.8 kilometer thick
eugeosynclinal molasse including protoquartzite, grit conglomerate, phyllite,
greywacke, and minor basal conglomerate.
 
 A
portion of the Archean-aged Nova Lima Group underlies all of Jaguar’s
properties.  This group consists of a sequence of intensely folded and
faulted volcanic and sedimentary rocks. These rocks consist of phyllite, mafic
volcanic tuff, lesser conglomerate, dolomite, graphitic schist, banded iron
formations, and chert.
 
 Gold
mineralization occurs in both sulfide and oxide forms and is hosted primarily in
a narrow belt of BIFs and chert.  The width of the BIFs varies from 1
to 30 meters.  Gold is found to be associated to the sulfide-richer
bands, essentially represented by pyrite and arsenopyrite.  The
mineralized bodies are controlled by mineral stretching lineations and fold axis
showing an average attitude (strike and dip) S70oE - 45oE.
  17
 The
mineralization bodies are dominantly stratabound and are congruently folded and
deformed with the host rocks. The deformation style is thrust fault-related
folding with a westerly transport direction on the thrusts, followed by late
east - west trending brittle faults (likely due to post-thrusting extensional
stress relief) that aided in the orientation of quartz lodes and
veining.
 
 Mining
in the Iron Quadrangle has consistently shown gold-bearing structures that
display very consistent lateral and vertical persistence.  TechnoMine
prepared a study for Jaguar on the depth continuity of gold-bearing
mineralization in the Iron Quadrangle: “Potential Resource Base Increase due
to possible depth continuity of mineralized bodies”.  The study
was issued on October 29, 2002, and parts of it are addressed further in the
Quadrilátero Technical Report.
 
 Mina
Grande is a good example of ore body persistence.  Mina Grande was the
deepest mine ever operated in Brazil (more than 2,000 meters
deep).  It was also one of the oldest mines in terms of continuous
operations worldwide (from 1836 until 1995).  Mina Grande lies in what
could be considered the center of the Iron Quadrangle’s gold-bearing area where
all of Jaguar’s mineral regions are located.
 
 As
of the date of the Quadrilátero Technical Report, Jaguar controlled the mineral
rights, concessions and licenses to approximately 51,200 ounces of gold reserves
at Sabará Zone B, 1,752,400 ounces of measured and indicated gold resources and
628,400 ounces of inferred gold resources.  Also as of such date,
Jaguar’s proven reserves were contained within 641,000 tonnes of in situ measured resources at
an average grade of 3.61 grams/tonne.  As presented in TechnoMine’s
feasibility study issued on June 30, 2003, total ROM production for Zone B was
estimated to enclose 61,700 ounces Au.  As of the date of the
Quadrilátero Technical Report, proven reserves were estimated (based on a
metallurgical recover of 83%) to total 51,200 ounces.  Mining
operations at Zone B began in December 2003, and ceased in the fourth quarter of
2005.  At the time of the Quadrilátero Technical Report, Jaguar had
measured resources of 7.57 million tones at an average grade of 4.38
grams/tonne, indicated resources of 4.29 million tones at an average grade of
4.73 grams/tonne and inferred resources of approximately 3.86 million tones with
an estimated average grade of 5.07 grams/tonne.  As of the date of the
Quadrilátero Technical Report, measured and indicated resources together totaled
approximately 11.86 million tones with an average grade of about 4.60
grams/tonne.  Some of the mineral resources and reserves in the Iron
Quadrangle have been updated since the date of the Quadrilátero Technical
Report.  For updated information on Jaguar’s mineral resources and
reserves in the Iron Quadrangle, see Table 1 under “Mineral Resources”,
above.
 
  Exploration
and Development
  In
January 2004 Jaguar commenced a 24-month exploration effort that included both
surface and underground exploration in several properties.  As of the
date of the Quadrilátero Technical Report, Zone A exploration was complete and
the corresponding results were used by TechnoMine to complete the Sabará
Technical Report (see below under “Sabará Technical Report” for
a description of the Sabará Technical Report).  The total cost
originally estimated for  the campaign was US$8,797,000, out of which
US$4,881,000 (approximately 55 percent of the total estimated cost) was for
developing underground ramps and drifts, and US$3,916,000 (approximately 45
percent of the total estimated cost) was for maps, surface and underground
drilling, sampling, studies, environmental permitting and associated
activities.
 
 18
 The
original budget for the initial 24 month exploration program, as of the date of
the Quadrilátero Technical Report, is set forth below.
 
 ORIGINAL
BUDGET FOR 24-MONTH EXPLORATION PROGRAM (US$)
  FROM
THE QUADRILÁTERO REPORT
 (EXCLUDES
TURMALINA PROJECT)
  2004
                  
                  
                  2005
                  
                  
                  TotalMaps,
      Drilling, Sampling, Studies, Environmental Permits and Associated
      ActivitiesSabará
      RegionSabará
      Zone A
                  
                  
                  273,000
                  
                  
                  
                  0
                  
                  
                  
                  273,000Catita/Juca
      Vieira
                  
                  
                  497,000
                  
                  
                  
                  304,000
                  
                  
                  
                  801,000Paciência
      RegionPaciência
                  
                  
                  1,109,000
                  
                  
                  
                  0
                  
                  
                  
                  1,109,000Rio
      de Peixe
                  
                  
                  217,000
                  
                  
                  
                  17,000
                  
                  
                  
                  234,000Santa
      Bárbara RegionMina
      do Pilar
                  
                  
                  498,000
                  
                  
                  
                  496,000
                  
                  
                  
                  994,000New
      sites
                  
                  
                  505,000
                  
                  
                  
                  0
                  
                  
                  
                  505,000Subtotal
                  
                  $
                  3,099,000
                  
                  
                  $
                  817,000
                  
                  
                  $
                  3,916,000
  Underground
Exploratory Developments: Ramps and Drifts
 
 Sabará
      RegionCatita/Juca
      Vieira
                
                
                898,000
                
                
                
                2,689,000
                
                
                
                3,587,000Santa
      Bárbara RegionMina
      do Pilar
                
                
                466,000
                
                
                
                828,000
                
                
                
                1,294,000Subtotal
                
                $
                1,364,000
                
                
                $
                3,517,000
                
                
                $
                4,881,000
 
 Total
                
                $
                4,463,000
                
                
                $
                4,334,000
                
                
                $
                8,797,000
 
 Jaguar
conducted exploration at the Sabará Zone A during 2005 and 2006.  On
February 17, 2006, Scott Wilson RPA completed a technical report on February 17,
2006 concerning mining and milling gold-bearing mineralization from the Sabará
Zone A, Lamego (oxide) and Queimada properties and the remaining resources in
Zone B, which are contained within the Quadrilátero Gold Project.  The
results of this report are discussed below in “Sabará Technical
Report”.
 
 Since
the date of the Quadrilátero Technical Report, Jaguar received the permit to
complete construction of the new 1,500 tpd oxide Sabará plant in September
2005.  The new plant began crushing ore from Sabará Zone A in December
2005 and began producing gold in January 2006.
 
 Mining
operations at Sabará Zone B mine ended in the fourth quarter of
2005.  It is currently under reclamation, notwithstanding the results
of Scott Wilson RPA’s Sabará Technical Report.  See “Sabará Technical
Report”.
 
 At
the time of the Quadrilátero Technical Report, exploration work was underway at
Catita and such the results of the this work are discussed below under “Sabará Technical
Report”.  At such time, exploration work was also underway at
Paciência/Santa Isabel Mine and is further discussed below under “Paciência-Santa Isabel
Project”.  Finally, at that time exploration work was also
underway with respect Mina do Pilar; the developments with respect to the
Pilar-Santa Bárbara Project are discussed below in “Pilar – Santa Bárbara
Project”.
 
 The
Quadrilátero Technical Report stated that Catita’s trenching and drill programs
had intersected mineralized zones confirming previous exploration results and
identifying new zones for additional exploration.  Initial core and
trench assays had returned interesting results with visible gold occurring in
both the oxide and sulfide zones.  The Catita mine began formal
production in June 2005, supplying the Caeté Plant.
 
 19
 Jaguar
utilized two laboratories for the preparation and analysis of its samples:
Lakefield Geosol Laboratórios Ltda. (“Lakefield”) in Belo Horizonte-MG and SGS
do Brasil Ltda. (“SGS”) in Betim-MG.  These labs are widely recognized
and follow the standards established by the international
community.  The labs merged in 2005.  Jaguar continues to
use the surviving lab, SGS Geosol Laboratórios Ltda., for reporting results, but
established its own lab adjacent to the Caeté Plant in the fourth quarter of
2005 for internal testing purposes.
 
 The
author of the Quadrilátero Technical Report stated that the sampling method and
approach, entailing sample preparation, security and analytical procedures were
adequate and were acceptable vis-á-vis the principles of good engineering
practice.  They further stated that they did not personally verify any
sampling or analytical data.  Such verification was performed by
Jaguar’s Chief Geologist.  TechnoMine and the authors of the
Quadrilátero Technical Report stated that the sample verification criteria,
methods and procedures, were adequate and were acceptable vis-á-vis the
principles of good engineering practice.
 
 Based
on the encouraging 2004 exploration results, the expanded geological knowledge
of the several sites and favorable underground workings that provide required
maneuverability to proceed with underground exploration, the Quadrilátero
Technical Report recommended that Jaguar establish the scope of the 2005 portion
of the Quadrilátero Gold Project’s Complementary Exploration Campaign as
outlined in the budget shown below.  The budget shown below replaced
the 2005 portion of the previous budget for the 24-month exploration
campaign.  The author of the Quadrilátero Technical Report also
recommended, at the time of the Quadrilátero Technical Report,  that
Jaguar proceed with a staged preparation of feasibility studies for the
implementation and operation of the diverse projects that comprised the
Quadrilátero Gold Project, within design criteria, plans, processes, and
schedules compatible with good engineering practices and standards.
 
 ORIGINAL
BUDGET FOR PREPARATION OF FEASIBILITY STUDIES
 (FROM
THE QUADRILÁTERO TECHNICAL REPORT)
  Regions/
                  Projects
                Estimated
      Cost
                  (US$
      1,000)Sabará
      Region
                  (Catita
      (sulfide))
                600Paciência
      Region
                  (Santa
      Isabel, Marzagão, Rio de Peixe)
                1,600Santa
      Bárbara Region
                1,000Total
                $
      3,200
 
 REVISED
BUDGET FOR 24-MONTH EXPLORATION PROGRAM
 (FROM
THE QUADRILÁTERO TECHNICAL REPORT)
 
 Project
                Site
                Drilling
      (m)
                Drifts
      (m)
                Cost
      Estimate (US$ 1,000)Sabará
                Camará
                1,000
                
                100Catita
      (sulfide)
                4,000
                2,500
                4,150Morro
      do Adão
                2,500
                400
                850Serra
      Paraíso
                5,500
                
                550Paciência
                Santa
      Isabel
                3,500
                400
                950Marzagão
                3,000
                
                300R
      de Peixe (oxide)
                2,000
                
                200R
      de Peixe (sulfide)
                1,400
                500
                890Santa
      Bárbara
                Pilar
      (Sulfide)
                4,000
                1,000
                1,900TOTAL
                
                26,900
                4,800
                $     9,890
   
 20
 Certain
recent developments in the Sabará Region are described below in “Sabará Technical Report”,
recent developments in the Paciência-Santa Isabel project are described below
under “Paciência-Santa Isabel
Technical Report”, and recent developments in the Caeté-Roça Grande and
Santa Bárbara-Pilar projects are described below under “Caeté Technical
Report”.
 
 Sabará Technical
Report
 
 Jaguar
completed a feasibility study of mining and processing mineralization at Zones
A, B, C (Lamego) and Queimada and retained Scott Wilson RPA to prepare an
independent technical report compliant with NI43-101.  Scott Wilson
RPA issued its report on February 17, 2006.  The Scott Wilson RPA
report has not been updated to reflect any new information since the date of the
report, including but not limited to, resources and reserves, mine and plant
production, metallurgy, operating and capital costs and
environmental.  The following description of this project is derived
from the summary contained in the Sabará Technical Report.
 
 The
Sabará Project comprises development of a 400,000 tpa mining and heap leach
facility, forecast to produce approximately 134,000 ounces of gold over a five
year period.  Prestripping had been completed and the first bench of
mineralization had been exposed before the issuance of the Sabará Technical
Report.  Mining, crushing, heap leaching, and the carbon
column/adsorption facilities were started in January 2006.
 
 Economic
Analysis
 
 The
Base Case estimated cash flow for the life of mine is shown in Table 1-1. The
projection was based on the following parameters.
 
 Physicals
 
 •
                Mine
      life:
                5.1
      years, 400,000 tonnes per year•
                Start
      of production:
                January
      2006•
                Total
      millfeed:
                2,046,000
      tonnes at a grade of 2.8 g/t Au.
                  Mine
      call factor 97%•
                Strip
      Ratio:
                4.2
      to 1•
                Operations
      at 360 days per year
 
 ·
                Mine
      production:
  Zones
      A&C - up to 33,000 tonnes per month ore from a reserve of 1,564,000
      tonnes at a grade of 2.07 g/t Au and a strip ratio of
    4.11:1.
 Queimada
      - up to 16,700 tonnes per month ore from a reserve of 407,000 tonnes at a
      grade of 5.28 g/t Au and a strip ratio of
  4.24:1.
 Zone
      B oxides - up to 3,500 tonnes per month ore from a reserve of 20,000
      tonnes at a grade of 3.61 g/t Au.
 Zone
      B sulphides - up to 5,100 tonnes per month ore from a reserve of 55,000
      tonnes at a grade of 5.07 g/t Au.
 Zone
      B stripping – 4.46:1 overall.
 
 ·
                Processing
      – Zones A&C, Queimada, and Zone B Oxide at Sabará heap leach and ADR
      plant.  Zone B Sulphide at Queiróz CIL
  plant.
 
 ·
                Gold
      recovery:
 
 Zones
      A&C – 74%
 Queimada
      – 74%
 Zone
      B Oxide – 70%
 Zone
      B Sulphide – 92%
 
 ·
                Total
      gold produced: 134,100 ounces, annual range from 18,800 ounces to 38,700
      ounces.
   21
  Costs
 ·
                Operating
      cost: US$10.98 per tonne processed, ranging from US$10.39 per tonne to
      US$13.25 per tonne. Open pit mining is by
  contractor.
 ·
                Capital
      cost: Pre-production capital is estimated to be US$5.6
    million
 ·
                Sustaining
      capital: Ranges from US$40,000 to
US$380,000
 ·
                Closure
      costs: US$190,000.
 ·
                Exchange
      rate: US$1.00 = 2.60 Reais
  Revenue
 ·
                Gold
      price:         US$375 per
  ounce
 ·
                Transport
      and insurance:     
      US$3.00 per ounce
 ·
                Refining:                                      
      1% of gross sales
 ·
                CFEM
      (federal) royalty:                
      1% of gross sales
 ·
                Royalty
      to previous
      owners:           
      3.25% NSR
 
 The
Sabará Technical Report concluded that the pre-tax cash flow at US$375 per ounce
gold was US$19.5 million.  At a discount rate of 8.0%, the pre-tax NPV
was US$14.3 million.  The GI Total Cash Cost was US$182 per
ounce.  The GI Total Production Cost is US$230 per ounce.
 
 Jaguar’s
after-tax NPV estimate at 8.0% discount rate was US$7.8 million, with a Project
IRR of 82%.  Scott Wilson RPA did not review Jaguar’s tax
model.
 
 Figure
1-1 shows the Project sensitivity to various factors, including:
   ·
                  Head Grade
 ·
                  Recovery
 ·
                  Gold Price
 ·
                  Operating Cost
 ·
                  Capital Cost·
                  Exchange Rate
 
 FIGURE
1-1
 SENSITIVITY
ANALYSIS
  22
 
 TABLE
1-1 PRE-TAX CASH FLOW
 JAGUAR
MINING INC. - SABARÁ PROJECT
  2005
                  
                  2006
                  
                  
                  2007
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2011
                  
                  
                  TotalMiningZones A
      +
      C
                  000
      tonnes
                  
                  
                  
                  139
                  
                  
                  
                  199
                  
                  
                  
                  385
                  
                  
                  
                  400
                  
                  
                  
                  400
                  
                  
                  
                  41
                  
                  
                  
                  1,564g/t
      Au
                  
                  
                  
                  
                  2.47
                  
                  
                  
                  2.09
                  
                  
                  
                  1.86
                  
                  
                  
                  2.12
                  
                  
                  
                  2.03
                  
                  
                  
                  2.45
                  
                  
                  
                  2.07Waste
                  000
      tonnes
                  
                  
                  
                  937
                  
                  
                  
                  1,094
                  
                  
                  
                  1,800
                  
                  
                  
                  1,116
                  
                  
                  
                  1,429
                  
                  
                  
                  49
                  
                  
                  
                  6,425Strip
      Ratio
                  
                  
                  
                  
                  6.7
                  
                  
                  
                  5.5
                  
                  
                  
                  4.7
                  
                  
                  
                  2.8
                  
                  
                  
                  3.6
                  
                  
                  
                  1.2
                  
                  
                  
                  4.11Total
      Moved
                  000
      tonnes
                  
                  
                  
                  1,076
                  
                  
                  
                  1,293
                  
                  
                  
                  2,185
                  
                  
                  
                  1,516
                  
                  
                  
                  1,829
                  
                  
                  
                  90
                  
                  
                  
                  7,989Queimada
                  000
      tonnes
                  
                  
                  
                  191
                  
                  
                  
                  201
                  
                  
                  
                  15
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  407g/t
      Au
                  
                  
                  
                  
                  3.85
                  
                  
                  
                  6.26
                  
                  
                  
                  10.06
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  5.28Waste
                  000
      tonnes
                  
                  
                  
                  658
                  
                  
                  
                  1,008
                  
                  
                  
                  60
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,725Strip
      Ratio
                  
                  
                  
                  
                  3.4
                  
                  
                  
                  5.0
                  
                  
                  
                  3.9
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  4.24Total
      Moved
                  000
      tonnes
                  
                  
                  
                  848
                  
                  
                  
                  1,208
                  
                  
                  
                  75
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,132Zone
      B Oxide
                  000
      tonnes
                  
                  
                  
                  20
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  20g/t
      Au
                  
                  
                  
                  
                  3.61
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  3.61Zone
      B Sulphide
                  000
      tonnes
                  
                  
                  
                  55
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  55g/t
      Au
                  
                  
                  
                  
                  5.07
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  5.07Zone
      B Total
                  000
      tonnes
                  
                  
                  
                  75
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  75g/t
      Au
                  
                  
                  
                  
                  4.68
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  4.68Waste
                  000
      tonnes
                  
                  
                  
                  335
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  335Strip
      Ratio
                  
                  
                  
                  
                  4.5
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  4.46Total
      Moved
                  000
      tonnes
                  
                  
                  
                  411
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  411Total
                  000
      tonnes
                  
                  
                  
                  405
                  
                  
                  
                  400
                  
                  
                  
                  400
                  
                  
                  
                  400
                  
                  
                  
                  400
                  
                  
                  
                  41
                  
                  
                  
                  2,046g/t
      Au
                  
                  
                  
                  
                  3.53
                  
                  
                  
                  4.18
                  
                  
                  
                  2.17
                  
                  
                  
                  2.12
                  
                  
                  
                  2.03
                  
                  
                  
                  2.45
                  
                  
                  
                  2.80Waste
                  000
      tonnes
                  
                  
                  
                  1,930
                  
                  
                  
                  2,101
                  
                  
                  
                  1,860
                  
                  
                  
                  1,116
                  
                  
                  
                  1,429
                  
                  
                  
                  49
                  
                  
                  
                  8,486Strip
      Ratio
                  
                  
                  
                  
                  4.8
                  
                  
                  
                  5.3
                  
                  
                  
                  4.7
                  
                  
                  
                  2.8
                  
                  
                  
                  3.6
                  
                  
                  
                  1.2
                  
                  
                  
                  4.15Total
      Moved
                  000
      tonnes
                  
                  
                  
                  2,335
                  
                  
                  
                  2,501
                  
                  
                  
                  2,260
                  
                  
                  
                  1,516
                  
                  
                  
                  1,829
                  
                  
                  
                  90
                  
                  
                  
                  10,532ProcessingPlant
      feed
                  000
      tonnes
                  
                  
                  
                  405
                  
                  
                  
                  400
                  
                  
                  
                  400
                  
                  
                  
                  400
                  
                  
                  
                  400
                  
                  
                  
                  41
                  
                  
                  
                  2,046Mine
      Call Factor
                  
                  
                  
                  
                  97
                  %
                  
                  
                  97
                  %
                  
                  
                  97
                  %
                  
                  
                  97
                  %
                  
                  
                  97
                  %
                  
                  
                  97
                  %
                  
                  
                  97
                  %Grade g/t
      Au
                  
                  
                  
                  
                  3.42
                  
                  
                  
                  4.06
                  
                  
                  
                  2.10
                  
                  
                  
                  2.06
                  
                  
                  
                  1.97
                  
                  
                  
                  2.38
                  
                  
                  
                  2.72Recovery Zone A
      + C
                  
                  
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %Recovery
      Quiemada
                  
                  
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %Recovery Zone B
       Oxide
                  
                  
                  
                  
                  70
                  %
                  
                  
                  70
                  %
                  
                  
                  70
                  %
                  
                  
                  70
                  %
                  
                  
                  70
                  %
                  
                  
                  70
                  %
                  
                  
                  70
                  %Recovery Zone B
      Sulphide
                  
                  
                  
                  
                  92
                  %
                  
                  
                  92
                  %
                  
                  
                  92
                  %
                  
                  
                  92
                  %
                  
                  
                  92
                  %
                  
                  
                  92
                  %
                  
                  
                  92
                  %Overall
      Recovery
                  
                  
                  
                  
                  77
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  74
                  %
                  
                  
                  75
                  %Production
                  000
      oz
                  
                  
                  
                  34.5
                  
                  
                  
                  38.7
                  
                  
                  
                  20.1
                  
                  
                  
                  19.7
                  
                  
                  
                  18.8
                  
                  
                  
                  2.3
                  
                  
                  
                  134.1
    23
  
  
 
  TABLE
1-1 PRE-TAX CASH FLOW
  JAGUAR
MINING INC. - SABARÁ PROJECT
 2005
                    
                    
                    2006
                    
                    
                    2007
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2011
                    
                    
                    TotalRevenueGold
      Price
                    US$/oz
                    
                    
                    375
                    
                    
                    
                    375
                    
                    
                    
                    375
                    
                    
                    
                    375
                    
                    
                    
                    375
                    
                    
                    
                    375
                    
                    
                    
                    375
                    
                    
                    
                    375Gross
      Revenue
                    US$ '000
                    
                    
                    
                    
                    
                    
                    12,956
                    
                    
                    
                    14,521
                    
                    
                    
                    7,531
                    
                    
                    
                    7,371
                    
                    
                    
                    7,053
                    
                    
                    
                    863
                    
                    
                    
                    50,2950.75%Transport
                    US$
      '000
                    
                    
                    
                    
                    
                    
                    97
                    
                    
                    
                    109
                    
                    
                    
                    56
                    
                    
                    
                    55
                    
                    
                    
                    53
                    
                    
                    
                    6
                    
                    
                    
                    3771.0%Refining
                    US$
      '000
                    
                    
                    
                    
                    
                    
                    130
                    
                    
                    
                    145
                    
                    
                    
                    75
                    
                    
                    
                    74
                    
                    
                    
                    71
                    
                    
                    
                    9
                    
                    
                    
                    5031.0%CFEM Tax
                    US$
      '000
                    
                    
                    
                    
                    
                    
                    130
                    
                    
                    
                    145
                    
                    
                    
                    75
                    
                    
                    
                    74
                    
                    
                    
                    71
                    
                    
                    
                    9
                    
                    
                    
                    503Sub-total
                    US$ '000
                    
                    
                    
                    
                    
                    
                    12,600
                    
                    
                    
                    14,122
                    
                    
                    
                    7,324
                    
                    
                    
                    7,169
                    
                    
                    
                    6,859
                    
                    
                    
                    839
                    
                    
                    
                    48,9120.5%Landowner
      Royalty
                    
                    
                    
                    
                    
                    
                    
                    65
                    
                    
                    
                    73
                    
                    
                    
                    38
                    
                    
                    
                    37
                    
                    
                    
                    35
                    
                    
                    
                    4
                    
                    
                    
                    2512.75%Anglo Royalty
                    US$
      '000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    17
                    
                    
                    
                    111
                    
                    
                    
                    155
                    
                    
                    
                    23
                    
                    
                    
                    307Revenue
                    US$ '000
                    
                    
                    
                    
                    
                    
                    12,489
                    
                    
                    
                    13,967
                    
                    
                    
                    7,306
                    
                    
                    
                    7,057
                    
                    
                    
                    6,704
                    
                    
                    
                    816
                    
                    
                    
                    48,339NSR
                    US$/ t ore
                    
                    
                    
                    
                    
                    
                    30.82
                    
                    
                    
                    34.92
                    
                    
                    
                    18.27
                    
                    
                    
                    17.64
                    
                    
                    
                    16.76
                    
                    
                    
                    20.12
                    
                    
                    
                    23.63Capital CostsOpen Pit Mining
                    US$
      '000
                    
                    
                    219
                    
                    
                    
                    0
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    219Mine Equipment
                    US$ '000
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    0Plant
Equipment
                    US$
      '000
                    
                    
                    783
                    
                    
                    
                    101
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    884Plant Construction
                    US$
      '000
                    
                    
                    2,552
                    
                    
                    
                    642
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    3,194Infrastructure Construction
                    US$
      '000
                    
                    
                    453
                    
                    
                    
                    296
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    749Land Acquisition
                    US$
      '000
                    
                    
                    54
                    
                    
                    
                    0
                    
                    
                    
                    31
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    85EPCM
                    US$
      '000
                    
                    
                    393
                    
                    
                    
                    0
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    393Contingency
                    US$
      '000
                    
                    
                    0
                    
                    
                    
                    66
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    66Commissioning
                    US$ '000
                    
                    
                    52
                    
                    
                    
                    0
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    52Environment
                    US$
      '000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    190
                    
                    
                    
                    190Sustaining
      Capital
                    US$
      '000
                    
                    
                    
                    
                    
                    
                    384
                    
                    
                    
                    40
                    
                    
                    
                    40
                    
                    
                    
                    40
                    
                    
                    
                    40
                    
                    
                    
                    10
                    
                    
                    
                    554Salvage
                    US$
      '000
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    0Total
                    US$
      '000
                    
                    
                    4,508
                    
                    
                    
                    1,488
                    
                    
                    
                    71
                    
                    
                    
                    40
                    
                    
                    
                    40
                    
                    
                    
                    40
                    
                    
                    
                    200
                    
                    
                    
                    6,387Operating
      CostsZone B
      Sulphide Mining, Transport, Processing
                    US$
      '000
                    
                    
                    
                    
                    
                    
                    1,677
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,677All
      Oxides Open Pit Mining
                    US$
      '000
                    
                    
                    
                    
                    
                    
                    1,813
                    
                    
                    
                    2,070
                    
                    
                    
                    2,070
                    
                    
                    
                    2,070
                    
                    
                    
                    2,070
                    
                    
                    
                    210
                    
                    
                    
                    10,305Processing
                    US$ '000
                    
                    
                    
                    
                    
                    
                    1,446
                    
                    
                    
                    1,652
                    
                    
                    
                    1,652
                    
                    
                    
                    1,652
                    
                    
                    
                    1,652
                    
                    
                    
                    167
                    
                    
                    
                    8,220G&A
                    US$
      '000
                    
                    
                    
                    
                    
                    
                    372
                    
                    
                    
                    372
                    
                    
                    
                    372
                    
                    
                    
                    372
                    
                    
                    
                    372
                    
                    
                    
                    93
                    
                    
                    
                    1,953Environment
                    US$
      '000
                    
                    
                    
                    
                    
                    
                    61
                    
                    
                    
                    60
                    
                    
                    
                    60
                    
                    
                    
                    60
                    
                    
                    
                    60
                    
                    
                    
                    6
                    
                    
                    
                    307Total
                    US$ '000
                    
                    
                    
                    
                    
                    
                    5,368
                    
                    
                    
                    4,154
                    
                    
                    
                    4,154
                    
                    
                    
                    4,154
                    
                    
                    
                    4,154
                    
                    
                    
                    476
                    
                    
                    
                    22,4610
                    
                    
                    
                    3,631
                    
                    
                    
                    4,094
                    
                    
                    
                    4,094
                    
                    
                    
                    4,094
                    
                    
                    
                    4,094
                    
                    
                    
                    470
                    
                    
                    
                    20,478Zone B
      Sulphide Open Pit Mining
                    US$/t
      moved
                    
                    
                    
                    
                    
                    
                    0.71
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    0.71Open Pit Mining
                    US$/t
      milled
                    
                    
                    
                    
                    
                    
                    3.90
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    3.90Transport
                    US$/t
      milled
                    
                    
                    
                    
                    
                    
                    3.60
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    3.60Transport
                    US$/t
      milled
                    
                    
                    
                    
                    
                    
                    23.00
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    23.00Subtotal
                    US$/t
      milled
                    
                    
                    
                    
                    
                    
                    30.50
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    30.50All
      Oxides Open Pit Mining
                    US$/t
      moved
                    
                    
                    
                    
                    
                    
                    0.89
                    
                    
                    
                    0.83
                    
                    
                    
                    0.92
                    
                    
                    
                    1.37
                    
                    
                    
                    1.13
                    
                    
                    
                    2.34
                    
                    
                    
                    1.01Open Pit
Mining
                    US$/t
      milled
                    
                    
                    
                    
                    
                    
                    5.18
                    
                    
                    
                    5.18
                    
                    
                    
                    5.18
                    
                    
                    
                    5.18
                    
                    
                    
                    5.18
                    
                    
                    
                    5.18
                    
                    
                    
                    5.18Processing
                    US$/t
      milled
                    
                    
                    
                    
                    
                    
                    4.13
                    
                    
                    
                    4.13
                    
                    
                    
                    4.13
                    
                    
                    
                    4.13
                    
                    
                    
                    4.13
                    
                    
                    
                    4.13
                    
                    
                    
                    4.13All Ore
      G&A
                    US$/t
      milled
                    
                    
                    
                    
                    
                    
                    0.92
                    
                    
                    
                    0.93
                    
                    
                    
                    0.93
                    
                    
                    
                    0.93
                    
                    
                    
                    0.93
                    
                    
                    
                    2.29
                    
                    
                    
                    0.95Environment
                    US$/t
      milled
                    
                    
                    
                    
                    
                    
                    0.15
                    
                    
                    
                    0.15
                    
                    
                    
                    0.15
                    
                    
                    
                    0.15
                    
                    
                    
                    0.15
                    
                    
                    
                    0.15
                    
                    
                    
                    0.15Total
                    US$/t
      milled
                    
                    
                    
                    
                    
                    
                    13.25
                    
                    
                    
                    10.39
                    
                    
                    
                    10.39
                    
                    
                    
                    10.39
                    
                    
                    
                    10.39
                    
                    
                    
                    11.75
                    
                    
                    
                    10.98Pre-Tax
      Cash Flow
                    US$
      '000
                    
                    
                    (4,508
                    )
                    
                    
                    5,632
                    
                    
                    
                    9,742
                    
                    
                    
                    3,112
                    
                    
                    
                    2,863
                    
                    
                    
                    2,510
                    
                    
                    
                    139
                    
                    
                    
                    19,491Cumulative 
      US$ '000
                        
                        Pre-tax
      NPV US$ '000
                    
                    
                    (4,508
                    )
                    
                    
                    1,124
                    
                    
                    
                    10,866
                    
                    
                    
                    13,979
                    
                    
                    
                    16,842
                    
                    
                    
                    19,352
                    
                    
                    
                    19,4915.0%
                    
                    
                    16,0078.0%
                    
                    
                    14,28810.0%
                    
                    
                    13,268Unit
      Cost of Production  Operating1
                    US$/oz
                    
                    
                    
                    
                    
                    
                    168
                    
                    
                    
                    119
                    
                    
                    
                    220
                    
                    
                    
                    229
                    
                    
                    
                    241
                    
                    
                    
                    229
                    
                    
                    
                    182Capital
                    US$/oz
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    48Total2
                    US$/oz
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    230
  Notes:
                  1.
                  Equivalent to
      Gold Institute Total Cash Cost.2.
                  Equivalent to Gold
      Institute Total Production Cost.
  
 24
 
 The
Sabará Project is most sensitive to head grade and recovery.  At a
then-current gold price of US$550 per ounce, the pre-tax NPV at 8 percent
discount rate was US$32 million. The break even gold price resulting in zero
pre- tax NPV at 8 percent was approximately US$235 per ounce.
 
 The
exchange rate used in the Sabará Technical Report for the Project was US$1.00 =
2.60 Reais, vs. the rate in effect at noon on March 29, 2007 of 2.05
Reais.
 
 Conclusions
and Recommendations
 
 The
feasibility work completed by Jaguar to date has demonstrated that the Sabará
Project is robust at current gold prices and shows an acceptable operating
margin at the Base Case gold price of US$375 per ounce. Project construction is
essentially complete, and production commenced in January 2006. The Project is
located in an area of current mining by Jaguar and could be considered as an
extension of the prior Zone B operation.  In this context, some
infrastructure and operating practices already exist, thereby minimizing some of
the startup risks of a greenfields project.
 
 Scott
Wilson RPA made the following comments as observations on the Project
development plan:
 
 ·
                Mineral
      Resources and Mineral Reserves have been estimated according to the
      requirements of CIM Definitions and, in Scott Wilson RPA’s opinion, are
      compliant with NI43-101 and appropriate for use in the Life of Mine
      Plan.
 
 ·
                Metallurgical
      recoveries have been based on testwork, with the exception of the Queimada
      Zone, for which recoveries were assumed based on similarity of the deposit
      to Zones A&C.  In Scott Wilson RPA’s opinion, this is a
      reasonable assumption based on the proximity of the deposits and nature of
      the mineralization, however, as Queimada represents 37% of the forecast
      production, there is some higher risk associated with this
      zone.
 
 ·
                Prior
      production experience from Zone B showed heap leach recoveries to be lower
      than expected due to difficulty in establishing the oxide/sulphide
      transition. Some risk remains in this area, however, Jaguar mitigated this
      by processing the Zone B sulphide ore at the Queiróz
      Plant.  Mining at Zone B concluded in the fourth quarter of
      2005.
 
 ·
                Operating
      and capital costs have been estimated from first principles, using
      Jaguar’s extensive experience in the area, particularly with
      contractors.  The Project capital cost risk is minimal in that
      the plant and pads are essentially complete.  All mining is to
      be done by contractors.
 
 ·
                Permits
      are in place for the Project, with the exception of Zone C, for which
      permitting is being completed. This is in progress, and Scott Wilson RPA
      does not consider the permitting to be a significant
  risk.
 
 Based
on the review, Scott Wilson RPA made the following recommendations:
 
 1.
                Monitor
      the oxide/sulphide boundary closely in Zone B to ensure that the two types
      of mineralization are sent to the correct
  plants.
 2.
                Mine
      and leach ore from Queimada as soon as possible in the mine life to
      establish that leaching characteristics are in line with those forecast in
      the Life of Mine Plan.
 3.
                Carry
      out quarterly or semi-annual reconciliations between the resource model
      for each zone and grade delivered to the heaps or the
    plant.
 4.
                Continue
      to expedite and monitor the permitting process for Zone
  C.
 5.
                Consideration
      should be given to widening the berms in the pit designs from 2.5 m, which
      is relatively narrow, to 7.5 m by triple
  benching.
 
 Technical
Information
 
 The
Sabará Project is located approximately 40 km east of Belo Horizonte, Minas
Gerais, Brazil, and is accessed from Belo Horizonte by paved highway to the town
of Sabará, then by eight kilometers of dirt roads.  Scott Wilson RPA
visited the Sabará Project site in April and June 2005 and January 2006. The
Property comprises Zone B, which was in operation from October 2003 until the
fourth quarter of 2005, as well as Zones A, C (Lamego), and
Queimada.  The history and geology of the project area is described
above in “QuadriláteroGold Project”.
 
 25
 Mineral
Resources and Mineral Reserves
 
 Mineral
resources and mineral reserves have been estimated by Jaguar and reviewed by
Scott Wilson RPA. They are presented in the following two tables.
 
  TABLE
1-2 MINERAL RESOURCES – DECEMBER 31, 2005
 Jaguar
Mining Inc. - Sabará Project
 Measured
      ResourcesZone
                    
                    Tonnes
                    
                    
                    Grade
      (g/t)
                    
                    
                    Cont.
      Ounces (oz)Zone
      A
                    
                    
                    282,000
                    
                    
                    
                    2.29
                    
                    
                    
                    21,000Zone
      B
                    
                    
                    71,000
                    
                    
                    
                    5.23
                    
                    
                    
                    12,000Zone
      C
                    
                    
                    438,000
                    
                    
                    
                    2.31
                    
                    
                    
                    33,000Queimada
                    
                    
                    133,000
                    
                    
                    
                    6.68
                    
                    
                    
                    28,000Subtotal
                    
                    
                    924,000
                    
                    
                    
                    3.15
                    
                    
                    
                    94,000Indicated
      ResourcesZone
                    
                    Tonnes
                    
                    
                    Grade
      (g/t)
                    
                    
                    Cont.
      Ounces (oz)Zone
      A
                    
                    
                    810,000
                    
                    
                    
                    2.05
                    
                    
                    
                    53,000Zone
      C
                    
                    
                    461,000
                    
                    
                    
                    2.07
                    
                    
                    
                    31,000Queimada
                    
                    
                    298,000
                    
                    
                    
                    5.27
                    
                    
                    
                    51,000Subtotal
                    
                    
                    1,569,000
                    
                    
                    
                    2.67
                    
                    
                    
                    135,000Measured
      + IndicatedZone
                    
                    Tonnes
                    
                    
                    Grade
      (g/t)
                    
                    
                    Cont.
      Ounces (oz)Zone
      A
                    
                    
                    1,092,000
                    
                    
                    
                    2.11
                    
                    
                    
                    74,000Zone
      B
                    
                    
                    71,000
                    
                    
                    
                    5.23
                    
                    
                    
                    12,000Zone
      C
                    
                    
                    899,000
                    
                    
                    
                    2.19
                    
                    
                    
                    64,000Queimada
                    
                    
                    431,000
                    
                    
                    
                    5.71
                    
                    
                    
                    79,000Subtotal
                    
                    
                    2,493,000
                    
                    
                    
                    2.85
                    
                    
                    
                    229,000Inferred
      ResourcesZone
                    
                    Tonnes
                    
                    
                    Grade
      (g/t)
                    
                    
                    Cont.
      Ounces (oz)Zone
      A
                    
                    
                    397,000
                    
                    
                    
                    2.26
                    
                    
                    
                    29,000Zone
      C
                    
                    
                    42,000
                    
                    
                    
                    2.06
                    
                    
                    
                    3,000Queimada
                    
                    
                    4,000
                    
                    
                    
                    2.37
                    
                    
                    <1,000Total
                    
                    
                    443,000
                    
                    
                    
                    2.24
                    
                    
                    
                    32,000
 
 Notes:
 1.
                CIM
      definitions were followed for Mineral
Resources.
 2.
                Mineral
      Resources are estimated at a cutoff grades of 0.80 g/t Au (2.50 g/t Au in
      Zone B)
 3.
                Mineral
      Resources are estimated using an average long-term gold price of US$375
      per ounce.
 4.
                A
      minimum mining width of 2.0 metres was
used.
 5.
                Measured
      and Indicated Mineral Resources are inclusive of Mineral
      Reserves.
   26
  TABLE
1-3 MINERAL RESERVES – DECEMBER 31, 2005
 Jaguar
Mining Inc. - Sabará Project
   Proven
      Reserves Zone
                  
                  Tonnes
      Grade
                  
                  
                  Cont.
      Gold(Kt)
                  
                  
                  
                  (g/t)
                  
                  
                  (oz)A
      + C Pit
                  
                  
                  651
                  
                  
                  
                  2.20
                  
                  
                  
                  46,000Queimada
      Pit
                  
                  
                  136
                  
                  
                  
                  6.18
                  
                  
                  
                  27,000B
      Pit
                  
                  
                  75
                  
                  
                  
                  4.68
                  
                  
                  
                  11,000Total
      Proven
                  
                  
                  862
                  
                  
                  
                  3.04
                  
                  
                  
                  84,000Probable
      Reserves Zone
                  
                  Tonnes
      Grade
                  
                  
                  Cont.
      Gold(Kt)
                  
                  
                  
                  (g/t)
                  
                  
                  (oz)A
      + C Pit
                  
                  
                  913
                  
                  
                  
                  1.98
                  
                  
                  
                  58,000Queimada
      Pit
                  
                  
                  271
                  
                  
                  
                  4.86
                  
                  
                  
                  42,000B
      Pit
                  
                  
                  1,184
                  
                  
                  
                  2.63
                  
                  
                  
                  100,000Total
      ProbableProven
      + Probable Reserves Zone
                  
                  Tonnes
      Grade
                  
                  
                  Cont.
      Gold(Kt)
                  
                  
                  
                  (g/t)
                  
                  
                  (oz)A
      + C Pit
                  
                  
                  1,564
                  
                  
                  
                  2.07
                  
                  
                  
                  104,000Queimada
      Pit
                  
                  
                  407
                  
                  
                  
                  5.28
                  
                  
                  
                  69,000B
      Pit
                  
                  
                  75
                  
                  
                  
                  4.68
                  
                  
                  
                  11,000Total
                  
                  
                  2,046
                  
                  
                  
                  2.80
                  
                  
                  
                  184,000
  Notes:
 1.
                CIM
      definitions were followed for Mineral
Reserves.
 2.
                Mineral
      Reserves are estimated at a cutoff grades of 0.80 g/t Au (2.50 g/t Au in
      Zone B Sulphides)
 3.
                Mineral
      Reserves are estimated using an average long-term gold price of US$375 per
      ounce.
 
 Mining
 
 Mining
operations are carried out in three locations – Zones A & C Pit, Queimada
Pit, and, formerly, Zone B Pit.  Zone B was operated as an open pit
mine by Jaguar commencing in 2003.  The ore is hauled by truck to the
Caeté Plant for processing.  The Zone B operation was shut down in
mid-2005 due to poor economics related to lower than expected recoveries,
associated with the oxide/sulphide transition ore.
 
 Ore
is hauled to the Sabará plant approximately one kilometer from Zones A & C
and approximately two kilometers from Zone B.  Waste is hauled to
local dumps, on average, approximately 500 m from the respective
pits.
 
 Mineral
reserves were derived from the resources for Zone A&C and Queimada by adding
dilution and preparing optimized pit designs.  Zone B mineral reserves
were determined by depletion of the original resource and reconciliation to
production.
 
 The
dilution factor for Zone A & C and Queimada is based on experience at Zone
B.  The extractions for Zone A & C and Queimada are based on the
actual pit design.  The dilution and extraction for Zone B are based
on mining experience with the deposit.
 
 27
 TABLE
1-4 MINERAL RESERVE SUMMARY – DECEMBER 31, 2005
 Jaguar
Mining Inc. - Sabará Project
 
 Resource
                Reserve
                Dilution
                Extraction‘000
      tonnes
                g/t
      Au
                ‘000
      tonnes
                g/t
      AuZone
      A&C
                1,991
                2.15
                1,564
                2.07
                10%Queimada
                431
                5.71
                407
                5.28
                10%Zone
      B Oxides
                19
                4.04
                20
                3.61
                12%
                95%Zone
      B Sulphides
                52
                5.67
                55
                5.07
                12%
                95%Total
                2,493
                2.85
                2,046
                2.80
 
 The
waste stripping for the three zones is based on the design waste stripping and
diluted ore tonnes. The overall stripping ratios are:
 
 •
                Zone
      A&C
                6.42
      million tonnes, SR = 4.1 to 1•
                Queimada
                1.73
      million tonnes, SR = 4.2 to 1•
                Zone
      B
                0.34
      million tonnes, SR = 4.5 to 1•
                Overall
                8.5
      million tonnes, SR = 4.2 to 1
 
 In
the cash flows, a Mine Call Factor of 97 percent has been applied based on local
area experience, in particular that of AngloGold Ashanti.
 
 Metallurgy
and Processing
 
 The
process design for Zones A, C, and Queimada is based largely on testwork carried
out by the Central Technological Foundation of Minas Gerais
(CETEC).  No metallurgical testwork was done on the Queimada
mineralization since Jaguar considers that the Queimada mineralization has the
same physical properties and mineralogical composition as Zones A and
C.  In Scott Wilson RPA’s opinion, the metallurgical recovery of the
Queimada mineralization should be monitored during the early stages of the
operation to ensure this assumption is valid.
 
 The
mineral processing, with the exception of the Zone B transitional
mineralization, will comprise agglomeration, on-off heap leaching, CIC (carbon
in column adsorption), and DR (Desorption-Recovery) stages.  In Zones
A, C, and Queimada, leaching and ADR recoveries of 77 percent and 96.4 percent,
respectively, are estimated for an overall metallurgical recovery of 74.2
percent.
 
 The
leaching system is based on an on-off cycle.  Heaps will be cured and
leached for a nominal 46 days followed by 20 days of washing, neutralization,
and removal.  Spent heaps will be moved to an area near the
plant.  The spent heaps will be compacted by the haulage trucks, and
drainage ditches around the spent heap area will be constructed to divert
rainwater.  Jaguar already uses this system successfully at its nearby
Caeté Plant.
 
 Infrastructure
 
 Power
and water are available locally. Access roads have been constructed to the plant
and mine sites.
 
 Manpower
 
 Manpower
for the Sabará Project operating period totaled 95 as of the date of the Sabará
Technical Report and skilled workers are available in the local
area.  The mining will be carried out by a contractor.
 
 28
 Environment
and Permitting
 
 Implementation
of a mining project in Brazil entails application for a Licença Prévia (LP) and
is subject to scrutiny by various agencies, including:
  ·
                  State Environmental Policy Council
  (COPM)
 ·
                    State Environmental Foundation
(FEAM)
 ·
                      State Forest Institute
(IEF)
 ·
                        State Water Management Institute
  (IGAM)
 The
application for a LP must be supported by the following studies/reports that
describe the impact on the physical, biological, and anthropological ecosystems,
as well as plans for mitigation and closure:
 ·
                  Environmental Impact Study/Report (EIA) (EIS)
      (RIMA)
 ·
                    Environmental Control Plan
(PCA)
 ·
                      Degraded Areas Recovery Plan
(PRAD)
 ·
                        Environmental Control Report
(RCA)
 The
RCA is required only for special cases where the area has already been impacted
by a previous operation.
 
 Upon
approval of the foregoing studies, the applicant was granted an Implementation
License (LI) that permits the completion of work, such as the preparation of the
heap leaching area, the erection of the mineral processing plant, construction
of the tailings dam, opening of accesses, development of the open pit mines,
installation of the infrastructure, and preparation of the waste
dump.
 
 After
obtaining the LI and mining concession and implementation of the mining project,
Jaguar applied for, and in December 2006 received, the Operation License (LO)
that permits the startup of operations.
 
 The
environmental permitting process for the Sabará plant was facilitated by the
fact that MSOL had previously been awarded permits to operate a processing
facility in the area. Previously submitted environmental reports were considered
admissible, including the plant LP and associated Environmental Impact Study
(EIA-RIMA). Additional reports included an Environmental Control Report (RCA), a
Degraded Areas Recovery Plan (PRAD), and an Environmental Control Plan (PCA),
all authored by the Consultoria e Empreendimentos de Recursos Naturais Ltda.,
except for the Mine RCA that was prepared by Sênior Engenharia.
 
 Jaguar’s
RCA/PCA includes an assessment of possible environmental impacts caused by the
construction and operations phases of the heap leaching
facility.  Mitigation measures were outlined for issues such as noise
and dust control, discharge water quality, slope stability, and reagent storage.
The report also includes a closure plan with a strategy to address removal and
stockpiling the fertile soil layer, neutralization of spent heap leach material,
rehabilitation of the mined areas, topographic restoration, revegetation of
impacted areas, and drainage rehabilitation.
 
 The
LI for plant construction was awarded in September 2005.
 
 The
application for an LP for the mining operation required only an RCA. The open
pit is designated as a lower environmental hazard and does not require a full
Environmental Study.  The LP for Zone A, Queimada, and part of Zone C
was awarded in November 2005.
 
 In
addition to State approvals, exploration and mining applications must also be
made to the DNPM, an agency of the federal government responsible for control
and application of the Brazilian Mining Code, and awarding of exploration
licenses and mining concessions.  The applications must include the
exploration/exploitation plans prepared by an authorized professional such as a
geologist or mining engineer.  The granting of a mining concession
remains valid until full depletion of the mineral deposit, subject to submitting
Annual Operations Reports, and compliance with safety and environmental
regulations.  Jaguar currently holds mining rights to five concessions
for a total of 2,231 ha, issued by DNPM, as described in Section 4.
 
 29
 Capital
Costs
 
 Total
pre-production capital costs have been estimated by MSOL and TechnoMine and are
summarized in the following table.  The costs include a contingency of
1.2 percent.
 
 TABLE
1-5 CAPITAL COSTS
 Jaguar
Mining Inc. - Sabará Project
 
 US$
      ‘000’sOpen
      Pit Mining
                
                
                219Mine
      Equipment
                
                ContractorPlant
      Equipment
                
                
                884Plant
      Construction
                
                
                3,194Infrastructure
      Construction
                
                
                749Land
      Acquisition
                
                
                54EPCM
                
                
                393Commissioning
                
                
                52Contingency
                
                
                66Total
                
                $
                5,611
 
 Most
of the capital expenditures for the Sabará Project were completed in 2005 in
advance of startup in the first quarter of 2006.  Mining and plant
startup commenced in January 2006.
 
 Operating
Costs
 
 Operating
costs have been estimated from first principles and are shown in the following
table.
 
 TABLE
1-6 OPERATING COSTS
 Jaguar
Mining Inc. - Sabará Project
 
 US$/tonne
      milledZone
      B Sulphides
                  (mining,
      transport, and processing)
                
                
                30.50Oxide
      Mining
                
                
                5.18Oxide
      Processing
                
                
                4.13G&A
                
                
                0.92Environment
                
                
                0.15Total
      typical year – oxides only
                
                $
                US10.38
 
 All
costs are based on contractor prices – US$0.70 per tonne moved for mining,
US$0.41 per tonne kilometer for hauling, and US$23.00 per tonne milled for
processing.
 
 Oxide
ores from Zones A and C and Queimada will be mined and processed on
site.  The costs are shown in Table 1-6 above.
 
 30
 Paciência Technical
Report
 
 Introduction
 
 TechnoMine
was retained by Jaguar to prepare an NI 43-101 compliant feasibility study on
the Paciência-Santa Isabel Project located 81 km from Belo Horizonte and 23 km
from Itabirito, in the state of Minas Gerais, Brazil. The area has good
infrastructure and the Paciência-Santa Isabel Project site can be accessed by
18-wheel trucks on paved and dirt roads.
 
 MSOL,
Jaguar’s 100%-owned subsidiary, purchased several properties from AngloGold
Ashanti in 2003, including the Paciência-Santa Isabel Mine Property (the
“Paciência-Santa Isabel Property” or the “Paciência-Santa Isabel Target”), which
was the object of the Paciência Technical Report. The Paciência-Santa Isabel
Property comprises one mineral right covering an area of 1,000 ha. The
Paciência-Santa Isabel Property is part of Jaguar’s Paciência Region, which
includes several mineral rights covering an area of approximately 17,500
acres.
 
 During
the first year of operations (2008) the Paciência-Santa Isabel Project will
demand 4.5 MW, to be partially supplied (in 13.8 kV) by CEMIG, the local power
utility company. It is anticipated that a total diesel-generated installed power
of 4.2 MVA (3.5 MW; one 0.5 MW generator in stand by) will be implemented to
replace high-cost energy, specially during peak demand hours. During 2008 only
0.45 MW will be supplied by CEMIG.
 
 Fresh
water to supply the mine and plant will be provided by the Tejuco Creek, a
tributary to the Rio das Velhas (“das Velhas River”). A pump station will be
located in the river about 2.6 km from the Santa Isabel Project’s Main Water
Tank. The total fresh water to be provided is currently estimated at 80 m3/hr.
 
 A
digital-technology based telephone communication system will be supplied by
Embratel, a leader in corporate communication solutions. The system will
accommodate a 30-channel link for voice communication and a digital data
connection with MSOL’s head office in Belo Horizonte, where a shared link will
provide safe Internet and Intranet access.
 
 Geology
 
 The
Paciência Region hosted various productive and historical mines during the
Brazilian Gold Cycle (17Th an
18Th
centuries), such as the Cata Branca Mine, the Rainha Mine, Morro de São Vicente,
Marzagão, Bahú, etc. The Project properties are situated in the Iron Quadrangle,
including the Paciência-Santa Isabel Target (which is the object of the
Paciência-Santa Isabel feasibility study). This well-known prolific mining area
comprises rocks ranging in age from Archean to Upper Proterozoic. Numerous gold
and iron deposits are associated with these rocks.
 
 The
gold metallogeny in the Iron Quadrangle has a complex history. Initially, in the
Archean period, volcanic exhalative sedimentary processes in the greenstone
belts produced banded iron formations and chert-hosted, sulfide-rich gold
deposits. Shear zone related gold deposits were also generated at that
time.
 
 Gold
mineralization at the Paciência-Santa Isabel Project’s area occurs in two forms.
The dominant form is associated with disseminated sulfide in quartz veins and
sericite/chlorite schists, as a result of the hydrothermal alteration
development in the shear zone.  The second form is in the basal
conglomerate of the Moeda Formation. The second type of mineralization is not
considered in the Paciência-Santa Isabel feasibility study.
 
 The
gold mineralization of the Santa Isabel Mine is related to the Paciência Trend.
This trend was discovered and intensively mined in the 17th and
18th
centuries and now it is recognized by large surface excavations and old
mines distributed in a continuous straight line. The ore shoots are composed of
concentrations of the microcrystalline quartz veins in a sericite/chlorite
schist matrix. The gold occurs in small visible nuggets in the quartz or inside
the sulfide. These quartz-rich zones exhibit boudinage shapes, with thicknesses
variable from centimeters up to 30 meters, width between 10 and 200 m and
hundreds of meters of continuity following the plunge. The gold grades are
variable, and grades between 100 to 500 g/t are not uncommon due to the
existence of coarse gold.
   31
  Mineral
Resources
 
 The
mineral resource estimate was prepared by Moreno & Associados (“Moreno”), a
Belo Horizonte based consulting company, under the supervision of the author of
the Paciência-Santa Isabel feasibility study, and is shown in the table
below.
 
 Table 1.3.1.1: Paciência Gold
Project Santa Isabel Mine – Resource Estimate
 Category
                    
                    Tonnage
                      (t)
                    
                    
                    Grade
                      (g
      Au/t)
                    
                    
                    Ounces
                      (oz
      Au)Measured
      (M)
                    
                    
                    871,170
                    
                    
                    
                    5.59
                    
                    
                    
                    156,590(36.4
                    %)Indicated
      (I)
                    
                    
                    1,702,230
                    
                    
                    
                    5.00
                    
                    
                    
                    273,670(63.6
                    %)(M
      + I)
                    
                    
                    2,573,400
                    
                    
                    
                    5.20
                    
                    
                    
                    430,260Inferred
                    
                    
                    420,700
                    
                    
                    
                    5.44
                    
                    
                    
                    73,580
 
 The
software used was MineSight. The adopted capping grade was 95 g/t, while the
cut-off grade selected for the estimation was 1.5 g/t. Poor variography
eliminated the option of kriging and the ISD method was adopted to weigh
composites grades within the blocks. See Appendix 01 of the Caeté Technical
Report for Moreno’s Mineral Resource Final Report.
 
 Mineral
Reserves
 
 Table
1.3.2.1: Paciência Gold Project Santa Isabel Mine – Reserve
Estimate
 
 Tonnage
                  (t)
                
                
                Grade
                  (g
      Au/t)
                
                
                Ounces
                  (oz
      Au)Proven
      (Pv)
                
                
                987,900
                
                
                
                4.52
                
                
                
                143,580Probable
      (Pb)
                
                
                1,726,000
                
                
                
                4.52
                
                
                
                250,870Total
      (Pv + Pb)*
                
                
                2,713,900
                
                
                
                4.52
                
                
                
                394,450
   * 2,260 oz of gold,
corresponding to test mining production during 2006 (21,742 t at 3.23 g/t) have
not been deducted from the above stated reserves.
 
 The
Cut and Fill Method has been adopted for the Paciência-Santa Isabel Project. The
Mining Plan showed a 91.7% recovery and a dilution of 15%.  Hence, the
estimated total tonnage that will be mined is:
 
 [(2,573,400
t)*(0.917)*(1.15)] = 2,714,000
t.
 
 The
ROM average diluted average is estimated at:
 [(5.20
g/t)]/(1.15) =4.52
g/t
 
 (Proven
+ Probable) Reserves are currently estimated at:
 
 Pv + Pb = (2,714,000 t) *
(4.52 g / t) = 394,450
oz Au
 
 Proven Reserves =
(0.364)*(2,714,000) = 987,900 t @ 4.52 g/t = 143,580 oz Au
 Probable Reserves= (0.636)*(2,714,000) =
1,726,100 t @ 4.52 g/t =250,870 oz Au
 
 A
Mine Call Factor (“MCF”) of 97% has also been adopted based on the experience of
the feasibility study’s mining team. Therefore, the estimated Mill Feed grade
is:
 
 4.52
* 0.97 = app 4.384 g/t and the estimated to-the-mill amount of
ounces of gold is (394,450 oz Au) * (0.97) = (2,714,000 t) * (4.384 g/t)
= approx. 382,600 oz
Au
 
 32
 Considering
the Overall Metallurgical Recovery (93%), the estimated total salable ounces of
gold is (382,600)*(0.93) = 356,000 oz
Au.
 
 Project
Summary Data
  ØProject
      Life:
                  9.7
      semesters, starting in the second quarter of 2008ØPre-production
      period:
                  5
      monthsØMeasured
      and IndicatedResources:
                  2,573,400
      t at 5.20 g/t (average) = 430,260 oz AuØMining
      Method:
                  Cut
      and FillØProduction
      Rates (ROM):
                  400
      kt / year (2008) and 600 kt / year (following years),514
      kt in 2012ØMining
      Average Dilution:
                  15%ØMining
      Average Recovery:
                  91.7%ØProven
      and ProbableReserves
      (ROM):
                  2,714,000
      t at 4.52 g/t = 394,450 oz AuØMining
      Call Factor:
                  97%ØTo-the-Mill
      Grade:
                  4.39
      g/tØTo-the-Mill
      Gold:
                  382,600
      oz AuØProcess
      Route:
                  Crushing/Screening
      – Grinding – Gravity Separation –Leaching
      - CIP – ADR (including Elution and Electrowinning)ØMetallurgical
      Recovery:
                  93%ØTotal
      salable oz of gold:
                  356,000
      oz AuØProduct:
                  Gold
      (bullion)
   Permitting
 
 On
January 24, 2005 MSOL applied for the Previous License (“LP”) related to the
Paciência-Santa Isabel Project. The LP was awarded to MSOL on July 27,
2006.  The environmental study, submitted along with the LP
application, was an EIA/RIMA – as defined in item 21.4.1.  The
Paciência-Santa Isabel Target’s EIA/RIMA is filed at Jaguar’s office in Belo
Horizonte, Brazil.
 
 On
December 26, 2006 Jaguar submitted an application for the Implementation License
(“LI”).  The environmental study submitted along with the LI
application was an RCA, whose approval allows the completion of important works
that need to be constructed in the area, such as the erection of the Mineral
Processing Plant, construction of the Tailings Dam, opening of Accesses,
development of the Underground Mine, installation of the Infrastructure (power
and water supply systems, roads, etc.), and preparation of the Waste Dump
Area.
 
 MSOL
holds the Mineral Right DNPM 830.375/79 related to the
property.  Jaguar applied for the Mining Concession last year. Jaguar
was awarded the LI on May 17, 2007 and informed the National Department of
Mineral Production (“DNPM”) shortly thereafter. This is the last requirement
that must be fulfilled by a mining company in order to be granted the related
Mining Concession (the ultimate status of Mineral Right).  Therefore,
it is anticipated that MSOL will be awarded the Mining Concession for the Santa
Isabel target soon.
 
 33
 After
the installation of the Paciência-Santa Isabel Project and provided that all
environmental requirements are met, Jaguar will apply for the Operation License
(“LO”).  After the LO application is submitted, operations can start
under a Provisional Operation License, which is issued 10 (ten days) after the
filing date, as established in the state of Minas Gerais Decree No 44.309/06,
dated June 5, 2006.
 
 Project
Status
 
 The
Paciência-Santa Isabel Project is currently under construction and start-up will
take place during the second quarter of 2008.
 
 The
status of construction as of the date of issuance of the Paciência Technical
Report is described below.
 
 Ø
                Communition
      Area
 
 The
communition area, which encompasses the crushing and screening plant, and the
grinding plant are 100% complete for cut and fill.
 
 Planned
and accomplished volumes are:
  Planned(m3)
                  
                  
                  Accomplished(m3)
                  
                  
                  Progress(%)Cut
                  
                  
                  74,987
                  
                  
                  
                  75,500
                  
                  
                  
                  100Fill
                  
                  
                  2,227
                  
                  
                  
                  2,175
                  
                  
                  
                  100
 
 A
portion of the material from the earth cut in this area was used as fill in the
hydrometallurgical plant.
 
 Ø
                Hydrometallurgical
      Plant
 
 The
plant will be built over a 17,000 m2 area. Both the cut and fill are 100%
complete.
 
 Planned
and Accomplished volumes are:
  Planned(m3)
                  
                  
                  Accomplished(m3)
                  
                  
                  Progress(%)Cut
                  
                  
                  25,000
                  
                  
                  
                  26,300
                  
                  
                  
                  100Fill
                  
                  
                  38,000
                  
                  
                  
                  37,750
                  
                  
                  
                  100
  Ø
                Civil
      Works (Industrial Areas)
 
 Civil
works started on May 20, 2007. The anticipated timeframe for completion is 80
days for the communition area and 110 days for the hydrometallurgical plant.
Approximately 5,000 m3 of
concrete will be consumed.
 
 Ø
                Drainage
      (Industrial Areas)
 
 The
construction of the drainage systems started in April 2007 and will encompass
3,200 m of ditches, requiring approximately 350 m3of
concrete.
 
 Ø
                Ancillary
      Buildings
 
 The
entirety of the construction of the ancillary buildings has been
completed.
 
 Ø
                Internal
      Roads
 
 The
3.5 km of the internal planned roads have been constructed.
 
 34
 Capital
Costs
 
 The
total nondiscounted investment estimate is US$ 47.7 million as shown
below.
 
 Investments
                
                Unit: US$
      1,000Operation
      Shutdown
                
                
                (2,126
                )Environmental
      Operation & Closure CAPEX
                
                
                (515
                )Work
      Capital
                
                
                (722
                )Work
      Capital Recovery
                
                
                722Salvage
                
                
                7,256Stay
      in Business
                
                
                (450
                )CAPEX
      - Pre- Operational  Investments
                
                
                (43,388
                )CAPEX
      - Operational  Investments
                
                
                (8,505
                )TOTAL
      INVESTMENTS
                
                
                (47,729
                )
 
 Operating
Costs
 
 The
total nondiscounted life of mine operating cost for the Paciência-Santa Isabel
Project has been estimated at US$ 86.5 million.
 
 Economic
Analysis
 
 The
following economic results are based on the criteria utilized in the discounted
cash flow model for the Base Case Scenario:
  ØGold
      price
                    US$
      600 per troy oz of goldØROM
      Total Tonnage
                    2,714,000
      tØMineral
      Reserves
                    2,714,000
      t @ 4.52 g/t Au, containing approximately 394,450 ozØMill
      Feed Grade (average)
                    4.39
      g/tØMining
      Rate
                    400,000
      t in 2008;600,000
      t per year starting in 2009;513,700
      t in 2012ØROM
      Average “Cruise” Production
                    1,755
      tpd ROM (600,000 tpy: 342 days/year)ØMetallurgical
      Recovery
                    93%ØGold
      Total Production
                    356,000
      oz AuØGold
      Average Annual Production
                    73,300
      opyØProject
      life (LOM)
                    9.7
      semestersØCAPEX  (total)
                    US$
      47.7 million (straight)ØAverage
      Cash Cost
                    US$
      252 per oz AuØTotal
      Production Cost
                    US$
      386 per oz, including invested capitalØProduction
      Start
                    Second
      quarter of 2008ØExchange
      rate
                    Construction
      Period: US$ 1.00 = R$2.00Production
      Period: US$ 1.00 = R$2.30 (average)ØDepreciation
      and amortization have been prorated over the Paciência-Santa Isabel
      Project life.
   35
 The
Cumulative Operating Profit has been estimated at US$ 123.8 million, while the
After-Tax Cumulative Profit estimate is US$ 98.0 million and the Cumulative Net
Cash Flow estimate is US$ 49.5 million.
 
 The
primary after-tax economic indicators from the Cash Flow Model (Appendix 02 of
the Paciência Technical Report, which also includes a Sensitivity Analysis) are
summarized in Table 1.9.1.  The indicators point to an economically
feasible project.
 
 Table
1.9.1 - Base Case Scenario: Summary of Economic Results
 Paciência
      Gold Project
                  Santa
      Isabel Mine
                Economic
      Indicators  sIRR
      (% per year)
                26.2NPV
      @ 0%   - [US$]
                49.5
      millionNPV
      @ 5%   - [US$]
                26.4.
      millionNPV
      @ 8 % - [US$]
                17.8
      millionNPV
      @ 10% - [US$]
                13.6
      millionNPV
      @ 12% - [US$]
                10.2
      millionPayback
      Period (straight)
                4.81
      semestersPayback
      Period @ 8%
                5.36
      semestersPayback
      Period @ 10%
                5.44
      semestersPayback
      Period @ 12%
                6.04
      semestersLife
      of Mine  Production
                9.7
      semesters
 
 The
sensitivity analysis indicated the following variations to the IRR:
  Gold
      Price = US$ 520/oz Au
                  IRR
      = 17.3 % pyGold
      Price = US$ 680/oz Au
                  IRR
      = 34.4 % pyMetallurgical
      Recovery = 92%
                  IRR
      = 25.5 % pyMetallurgical
      Recovery = 91%
                  IRR
      = 24.8 % pyInvestment
      + 10%
                  IRR
      = 24.1 % pyInvestment  -
      10%
                  IRR
      = 28.4 % pyOPEX
      + 10%
                  IRR
      = 23.5 % pyOPEX  -
      10%
                  IRR
      = 28.7 % pyMill
      Feed Grade + 10% (4.83 g/t)
                  IRR
      = 34.2% pyMill
      Feed Grade – 10% (3.95 g/t)
                  IRR
      = 21.7% py
  Interpretation
And Conclusions
 
 It
is TechnoMine’s conclusion that the Paciência-Santa Isabel Project is low-risk
and robust. It has been extensively studied from a technical standpoint and is
supported by significant exploration, metallurgical testwork, and conceptual and
basic engineering, in addition to special front-end engineering tests and
studies. The aforementioned technical work for this Paciência-Santa Isabel
Project was performed by reputable entities in Canada, USA, Germany, and
Brazil.
 
 Most
CAPEX and OPEX estimates are supported by vendor quotes, contracts, and
receipts. Key pieces of equipment have been purchased. Cost estimates are based
on solidly supported process routes, mining methods, and plans, being within the
+/- 15% accuracy range.
 
 36
 Based
on the economic results yielded from the cash flow model and sensitivity
analysis, TechnoMine considers the Paciência-Santa Isabel Project to be feasible
and attractive. Related technical and economic risks are small.
 
 Recommendations
 
 Ø
                TechnoMine
      recommends Jaguar to proceed with the Paciência-Santa Isabel Project’s
      implementation.
 
 Ø
                Although
      the Paciência-Santa Isabel Project is feasible and robust at its current
      size, it is our recommendation that the exploration efforts continue not
      only at the Paciência-Santa Isabel Property, but also at other targets in
      the Paciência Region. An increased resource base will give rise, via a
      consolidated feasibility study, to increased reserves, which, in turn,
      will significantly improve the financial performance of the
      Paciência-Santa Isabel Project.
 
 Ø
                The
      same or higher technical standards related to the front-end engineering
      activities (such as exploration, metallurgical testwork, and conceptual
      and basic engineering) and the required special front-end engineering
      tests and studies should be maintained for the augmented
      project.
 
 Ø
                The
      recommended additional exploration and remaining front-end engineering
      activities should start as soon as possible in order to support a
      technically sound and smooth project size
  transition.
 
 Ø
                The
      basic project of the CIP tailings Detox Plant should start as soon as the
      process route is defined, based upon the ongoing Degussa/CyPlus test work
      being carried out by CyPlus at their research center facility at Hanau,
      Germany (Purchase Order issued on April 24,
  2007).
 
 Paciência
Update
 
 Construction
at the Paciência property is in the final stages with commissioning and start of
production expected by Jaguar in early April 2008.  All permits
required to commence operations have been received.  As of March 10,
2008, the overall project was 95 percent complete and the Santa Isabel mine
development is 100 percent complete.
 
 During
late 2007, Jaguar opened a second mine entrance approximately 2 kilometers to
the north of the Santa Isabel Mine.  Approximately 250 meters of
excavation has been completed to date, with approximately 2 kilometers of
excavation expected to take place to connect to the ramp system at the Santa
Isabel Mine to the second level.
 
 IAMGold
 
 In
2005, Jaguar acquired rights with respect to properties located on approximately
2,307 acres in the aggregate in Rio Acima and Itabirito, Brazil (the “IAMGold
Project”).  The IAMGold Project represents an opportunity for Jaguar
to eventually further exploration and upgrade and expand Paciência’s aggregate
mineral resources and overall production.
 
 During
2007, Jaguar conducted exploration at the IAMGold Project’s Palmital Target,
including geological mapping and diamond drilling.  A total of 15 holes and
3,638 meters have been drilled to date.  Under the governing contract,
Jaguar may eventually begin mining activities in certain
properties.  In addition, Jaguar also has the right to purchase the
mineral rights during the term of the contract.
 
 Caeté
Project
 
 Jaguar
is in the process of an expansion project with respect to the Pilar and Roça
Grande targets.   The Pilar target is described in the
Quadrilátero Technical Report and updated in the Caeté Technical Report
described below.   The Roça Grande target is also described in
the Caeté Technical Report.
 
 Jaguar
contemplates mining underground non-refractory sulfide ore at Pilar, which is
expected to be trucked to and processed at the expanded Caeté Plant located 30
km away.  Jaguar initially contemplated building a sulfide plant on
site, but the acquisition of the Roça Grande property created an opportunity to
develop a project with greater plan capacity to receive ore from several mineral
properties.  During 2006 Jaguar produced small amounts of oxide ore at
Pilar, which was transported to the Caeté Plant for processing.  Oxide
production has been combined with exploration, resulting in the discovery of new
mineralized zones.  The surface work provided data to Jaguar, allowing
Jaguar to project the mineralization at depth.  During 2006 Jaguar
excavated the 5m by 5m ramp toward the sulfide zones at Pilar and reached the
mineralized zone during the third quarter of 2006.  Jaguar continued
to drill in 2007, with seven drill rigs in operation at the Roça Grande target
and two drill rigs in operation at the Pilar target.
 
 37
 In
the fourth quarter of 2005, Jaguar acquired rights from Vale for the Roça Grande
target with respect to properties located on 9,500 acres of highly prospective
gold properties along 25 kilometers of a key geological trend in the Iron
Quadrangle.  The contract between Jaguar and Vale provides Jaguar with
the exclusive right over a twenty-eight month period beginning November 28, 2005
to explore and conduct feasibility studies and to acquire gold mining rights in
the Vale properties if the studies support economical mining
operations.  The contract grants corresponding rights for Vale to
explore the Jaguar property for iron and acquire mineral rights in the property
during a three year period.
 
 Caeté
Technical Report
 
 Introduction
 
 TechnoMine
was retained by Jaguar to prepare an NI 43-101 compliant Technical Report on the
resources contained in the Roça Grande and Pilar Targets, which make up the
Caeté Project (“CTX Project” or “CTX”).
 
 Jaguar,
through its fully-owned subsidiary MSOL, intends to implement a new gold project
to take advantage of the infrastructure and the Crushing and Screening Plant of
its recently closed Caeté heap leach CIC operation in the state of Minas Gerais,
Brazil, located 51 km from Belo Horizonte.
 
 Based
on a Scoping Study prepared by TechnoMine in May 2007 and on exploration data
obtained from the Roça Grande and Pilar Targets, Jaguar plans to construct a
centralized Leaching - CIP (carbon-in-pulp) – ADR (adsorption / Desorption /
recovery) or a CIL (carbon-in-leach) – ADR processing plant (depending on the
results of the metallurgical testwork currently underway).  Based on
previous experience in the area, the Caeté Technical Report assumes that a CIP –
ADR Plant will be chosen as the hydrometallurgical process route.
 
 This
new plant would process the sulfide ore from Pilar, sulfide, transition, and
oxide ore from Roça Grande, and from other nearby targets in the future. Jaguar
expects to minimize environmental matters by utilizing the existing Caeté plant
site and anticipates that it will be faster to obtain the required LIs for the
plant, mine and tailings dam under this scenario than if a new processing plant
were to be designed and built to operate at a greenfield location.
 
 Fresh
water to supply the future Pilar and Roça Grande mines would be provided by two
of the rivers or creeks crossing the Project’s area. The plant would have its
raw water come from the same source that supplied the former plant.
 
 Geology
 
 The
Roça Grande and Pilar Targets lie within an elongated NE-SW Archean to the Upper
Proterozoic metamorphic belt, defined as the eastern part of the Iron
Quadrangle. This well-known prolific mining region hosts numerous gold and iron
deposits.  During the Brazil Gold Cycle (17th and
18th
centuries) several productive and historical gold mines were active within the
Project area, such as Brumal, Gongo Soco, and Luis Soares.
 
 The
dominant host for the gold mineralization in the CTX Project region was a thick
sequence of rocks composed of mafic-felsic volcanic flows, tuffs,
volcanoclastics, and banded iron formations and cherts, tightly folded and
intensely sheared, named the Rio das Velhas Super Group.
 
 At
the Pilar and Roça Grande targets, the mineralized rocks occur within banded
iron formation and shear zones, represented by disseminated gold-bearing
sulfides associated to silic-sericitic-carbonatic solutions originating from
hydrotermal activity.
 
 38
 Mineral
Resources Estimates
 
 Mineral
resources estimates were prepared by MCB – Geologia e Mineração Ltda.’s (“MCB”)
Chief Resource Geologist, Rogério Moreno, under the supervision of Jaime
Duchini, Jaguar’s Chief Geologist, and TechnoMine. The adopted methodology and
criteria for the resource estimates are presented in Appendix 01 and Appendix 02
of the Caeté Technical Report.  The estimated Mineral Resources are
shown in the tables below.  The adopted cut-off grade was 1.0 g/t and
a capping was set at 45 g/t for Pilar, while 0.5 g/t and 30 g/t were set for
Roça Grande.
 
 Table
1.3.1: CTX Project – Pilar Target – Resource Estimate (sulfide
mineralization)
 Category
                
                Tonnage
                  (t)
                
                
                Grade
                  (g
      Au/t)
                
                
                Ounces
                  (oz
      Au)Measured
      (M)
                
                
                713,800
                
                
                
                5.99
                
                
                
                137,400Indicated
      (I)
                
                
                978,400
                
                
                
                5.91
                
                
                
                185,920(M
      + I)
                
                
                1,692,200
                
                
                
                5.94
                
                
                
                323,400Inferred
                
                
                168,600
                
                
                
                7.41
                
                
                
                40,150
 
 Table 1.3.2: CTX Project – Roça
Grande Target – Resource Estimate (sulfide, transition, and oxide
mineralization)
 Category
                
                Tonnage
                  (t)
                
                
                Grade
                  (g
      Au/t)
                
                
                Ounces
                  (oz
      Au)Measured
      (M)
                
                
                727,700
                
                
                
                5.38
                
                
                
                125,800Indicated
      (I)
                
                
                1,270,500
                
                
                
                5.19
                
                
                
                212,000(M
      + I)
                
                
                1,998,200
                
                
                
                5.26
                
                
                
                337,800Inferred
                
                
                558,000
                
                
                
                4.42
                
                
                
                79,300
 
 Table 1.3.3: CTX Project – (Total:
Pilar + Roça Grande) – Resource Estimate
 Category
                
                Tonnage
                  (t)
                
                
                Grade
                  (g
      Au/t)
                
                
                Ounces
                  (oz
      Au)Measured
      (M)
                
                
                1,441,500
                
                
                
                5.68
                
                
                
                263,200Indicated
      (I)
                
                
                2,248,900
                
                
                
                5.50
                
                
                
                398,000(M
      + I)
                
                
                3,690,400
                
                
                
                5.57
                
                
                
                661,200Inferred
                
                
                726,600
                
                
                
                5.11
                
                
                
                119,450
 
 Permitting
 
 MSOL
currently holds the mineral rights related to the Pilar and Roça Grande
properties, as detailed in Section 6 - History of the Caeté Technical
Report.  The environmental authorities waived the Previous Licensing
stage for a new metallurgical plant since it would be located in the same place
and utilize much of the infrastructure of Jaguar’s existing Caeté Plant,
including the same crushing and screening section. The new Leaching - CIP - ADR
plant is envisioned to be a modification and expansion of the Caeté Plant. The
application for the new plant’s LI was submitted on April 17, 2007 and was
received during July 2007.
 
 The
Environmental Control Report and the Environmental Control Plan were prepared by
Virtual Engenharia Ambiental (“Virtual”), a local consulting company, and were
filed along with the application for the new plant’s LI, as requested by law.
Both reports were reviewed by TechnoMine.
 
 A
total of 3 (three) Provisional Environmental
Authorization for Operations (known in Brazil as “AAF”) for the Pilar and Roça
Grande targets have been granted to MSOL.  Each AAF allows for mining
of up to a 100,000 tpy, totaling 300,000 tpy.
 
 39
 The
LP for the Tailings Disposal System (“TDS”) was applied for on July 23,
2007.  A conceptual project for the TDS was completed in November
2007.
 
 Conclusions
and Recommendations
 
 Exploration
services carried out so far led to a total estimated amount of measured and
indicated resources of about 337,800 oz Au for the Pilar Target and 337,800 oz
Au for the Roça Grande Target.  Inferred Resources estimates are
approximately 40,150 oz Au for Pilar and 79,300 oz Au for Roça
Grande.
 
 Since
CEMIG (the local electrical power utility company) will be able to supply
electrical power to the CTX Project starting in Q1 2009, TechnoMine endorsed an
ongoing complementary drilling campaign that will total about 22,000 m, out of
which approximately 19,000 m will be drilled at Roça Grande and 3,000 m will be
drilled at Pilar.
 
 The
objectives of the drilling campaign are to increase the Project’s resource base
and generate information to safely lower the existing exhausted oxide open
pits.
 
 Turmalina Technical
Report
 
 Background
 
 Scott
Wilson RPA prepared a NI 43-101 Technical Report for Turmalina, dated July 31,
2006, filed on SEDAR August 1, 2006.  This report has not been updated
to reflect any new information since the date of the report, including, but not
limited to, resources and reserves, mine and plant production, metallurgy,
operating and capital costs and environmental data.
 
 This
description of the Turmalina Project is derived from the summary contained in
the Scott Wilson RPA Turmalina Technical Report.  Gold was first
discovered in the Turmalina area in the sixteenth century.  AngloGold
Ashanti explored the area extensively between 1979 and 1988 utilizing
geochemistry, trenching, drilling and 3.9 km of underground development. This
exploration program led to the discovery of the following mineralized bodies:
Turmalina, Satinoco, Faina and Pontal.  During 1992 and 1993,
AngloGold Ashanti mined 373,000 tonnes of oxide mineralization from an open pit
on the Turmalina zone and recovered 35,500 ounces of gold using heap leach
technology.  Subsequently, AngloGold Ashanti explored a possible
downward sulphide extension by driving a ramp beneath the pit and drifting on
two levels in the mineralized zone at approximately 50 and 75 meters below the
pit floor.   Jaguar acquired the Turmalina Gold Project from
AngloGold Ashanti on September 30, 2004.
 
 Mining
Status and Permitting
 
 Jaguar
received an implementation license for the Turmalina Gold Project in December
2005.  In the fourth quarter of 2005 Jaguar commenced construction of
the 60,000 ounce per year Turmalina facility.  The majority of the
infrastructure, such as roads, power, ramp and access to the underground
orebody, is in place.  Jaguar received the operation license with
respect to the Turmalina Gold Project in March 2007.
 
 Jaguar
submitted environmental plans for the Turmalina Gold Project and received
approval prior to the issuance of its Turmalina operation
license.  The Turmalina operation license was received in March
2007.
 
 40
 Economic
Analysis
 
 A
pre-tax Cash Flow Projection has been generated from the Life of Mine production
schedule and capital and operating cost estimates, and is summarized in Table
1-1. A summary of the key criteria is provided below.
  PhysicalsMine
      life:
                  8.6
      years, beginning in October 2006Total
      millfeed:
                  2,916,000
      tonnes at a grade of 6.1 g/t AuOperations:
                  360
      days per yearOpen
      pit production:
                  92,400
      tonnes at a grade of 5.4 g/t AuStrip
      Ratio:
                  2.57Underground
      production:
                  1,000
      tonnes per day at a grade of 6.1 g/t AuMill
      throughput:
                  1,000
      tonnes per day, 360,000 tons per yearGold
      recovery:
                  90%
      to doréTotal
      gold produced:
                  512,000
      ouncesRevenueGold
      price:
                  US$450
      per ounceTransport and
      insurance:
                  US$3.60
      per ounceRefining:
                  1%
      of gross salesCFEM
      (federal) royalty:
                  1%
      of gross salesRoyalty
      to landowner:
                  5%
      NSR on first US$10 M/year, 3% on remainderCostsOperating
      cost:
                  US$33.23
      per tonne milledPre-production
      Capital cost:
                  US$28.7
      millionSustaining
      capital:
                  US$2.8
      million (includes closure)Exchange
      Rate:
                  reverting
      from current rates to long-term rate of US$1.00 = R $2.501
 1 The
long-term exchange rate used for the Turmalina Project is US$1.00 = R$2.50,
compared to the rate as of the date of the Scott Wilson RPA Turmalina Technical
Report of US$1.00 = R$2.29. The long-term rate was chosen based on economic
forecasts by Brazilian banks. For Base Case cash flow estimation, actual
exchange rates were used for costs incurred up to June 30, 2006. The remainder
of pre­-production capital to be spent was converted using an exchange rate
of US$1.00 = R$2.19.  As of March 11, 2008, the exchange rate is
US$1.00 = R$1.70.
   41
   TABLE
1-1 PRE-TAX CASH FLOW $450/OZ GOLD
  JAGUAR
MINING INC. – TURMALINA PROJECT
  Year
                  
                  
                  2004
                  
                  
                  2005
                  
                  
                  2006
                  
                  
                  2007
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2010Semester
                  
                  
                  
                  -4
                  
                  
                  
                  -3
                  
                  
                  
                  -2
                  
                  
                  
                  -1
                  
                  
                  
                  1
                  
                  
                  
                  2
                  
                  
                  
                  3
                  
                  
                  
                  4
                  
                  
                  
                  5
                  
                  
                  
                  6
                  
                  
                  
                  7
                  
                  
                  
                  8
                  
                  
                  
                  9Mining
                  Open
      Pit Ore
                  
                  tonnes
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  10,000
                  
                  
                  
                  82,440
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -g/t
      Au
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5.41
                  
                  
                  
                  5.41
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -(Principal)
                  Underground
      Development Ore
                  
                  tonnes
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,766
                  
                  
                  
                  883
                  
                  
                  
                  19,342
                  
                  
                  
                  14,352
                  
                  
                  
                  17,178
                  
                  
                  
                  15,765
                  
                  
                  
                  15,942
                  
                  
                  
                  18,547
                  
                  
                  
                  16,472
                  
                  
                  
                  13,955g/t
      Au
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5,81
                  
                  
                  
                  5.81
                  
                  
                  
                  6.44
                  
                  
                  
                  9.01
                  
                  
                  
                  5.22
                  
                  
                  
                  7.95
                  
                  
                  
                  8.57
                  
                  
                  
                  8.21
                  
                  
                  
                  5.93
                  
                  
                  
                  7.21(Principal)
                  Underground
      Stoping Ore
                  
                  tonnes
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  117,188
                  
                  
                  
                  123,647
                  
                  
                  
                  113,668
                  
                  
                  
                  117,023
                  
                  
                  
                  110,135
                  
                  
                  
                  116,804
                  
                  
                  
                  112,695
                  
                  
                  
                  121,395g/t
      Au
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5.38
                  
                  
                  
                  8.22
                  
                  
                  
                  9.35
                  
                  
                  
                  8.63
                  
                  
                  
                  10.18
                  
                  
                  
                  6.24
                  
                  
                  
                  5.59
                  
                  
                  
                  6.56(NE)
                  Underground
      Development Ore
                  
                  tonnes
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  8,920
                  
                  
                  
                  7,860
                  
                  
                  
                  -
                  
                  
                  
                  7,154
                  
                  
                  
                  5,211
                  
                  
                  
                  11,923
                  
                  
                  
                  2,650
                  
                  
                  
                  8,832
                  
                  
                  
                  2,650g/t
      Au
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  4.64
                  
                  
                  
                  4.64
                  
                  
                  
                  -
                  
                  
                  
                  4.28
                  
                  
                  
                  4.28
                  
                  
                  
                  3.73
                  
                  
                  
                  3.73
                  
                  
                  
                  4.85
                  
                  
                  
                  4.85(NE)
                  Underground
      Stoping Ore
                  
                  tonnes
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  9,000
                  
                  
                  
                  42,000
                  
                  
                  
                  42,000
                  
                  
                  
                  42,000
                  
                  
                  
                  42,000
                  
                  
                  
                  42,000
                  
                  
                  
                  42,000
                  
                  
                  
                  42,000g/t
      Au
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  4.64
                  
                  
                  
                  4.64
                  
                  
                  
                  4.64
                  
                  
                  
                  4.64
                  
                  
                  
                  4.45
                  
                  
                  
                  4.22
                  
                  
                  
                  3.73
                  
                  
                  
                  4.33TOTAL
                  
                  tonnes
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  11,766
                  
                  
                  
                  92,244
                  
                  
                  
                  153,391
                  
                  
                  
                  179,999
                  
                  
                  
                  180,000
                  
                  
                  
                  179,999
                  
                  
                  
                  179,999
                  
                  
                  
                  180,001
                  
                  
                  
                  179,999
                  
                  
                  
                  179,999g/t
      Au
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5.47
                  
                  
                  
                  5.34
                  
                  
                  
                  5.43
                  
                  
                  
                  7.45
                  
                  
                  
                  7.65
                  
                  
                  
                  7.51
                  
                  
                  
                  8.27
                  
                  
                  
                  5.93
                  
                  
                  
                  5.15
                  
                  
                  
                  6.07Open
      Pit Waste
                  
                  tonnes
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  25,700
                  
                  
                  
                  211,872
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Strip
      Ratio
                  
                  2.57Underground
      Waste
                  
                  tonnes
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  36,477
                  
                  
                  
                  293,817
                  
                  
                  
                  53,980
                  
                  
                  
                  41,577
                  
                  
                  
                  41,316
                  
                  
                  
                  37,823
                  
                  
                  
                  34,698
                  
                  
                  
                  41,345
                  
                  
                  
                  35,977
                  
                  
                  
                  41,310TOTAL
      Waste
                  
                  tonnes
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  62,177
                  
                  
                  
                  505,689
                  
                  
                  
                  53,980
                  
                  
                  
                  41,577
                  
                  
                  
                  41,316
                  
                  
                  
                  37,823
                  
                  
                  
                  34,698
                  
                  
                  
                  41,345
                  
                  
                  
                  35,977
                  
                  
                  
                  41,310Processing
                  Plant
      Feed
                  
                  tonnes
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  11,766
                  
                  
                  
                  92,244
                  
                  
                  
                  153,391
                  
                  
                  
                  179,999
                  
                  
                  
                  180,000
                  
                  
                  
                  179,999
                  
                  
                  
                  179,999
                  
                  
                  
                  180,001
                  
                  
                  
                  179,999
                  
                  
                  
                  179,99997%
      Grade (including MCF)
                  
                  g/t
      Au
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5.47
                  
                  
                  
                  5.34
                  
                  
                  
                  5.43
                  
                  
                  
                  7.45
                  
                  
                  
                  7.65
                  
                  
                  
                  7.51
                  
                  
                  
                  8.27
                  
                  
                  
                  5.93
                  
                  
                  
                  5.15
                  
                  
                  
                  6.07Recovery
                  
                  90%
                  
                  
                  
                  90
                  %
                  
                  
                  90
                  %
                  
                  
                  90
                  %
                  
                  
                  90
                  %
                  
                  
                  90
                  %
                  
                  
                  90
                  %
                  
                  
                  90
                  %
                  
                  
                  90
                  %
                  
                  
                  90
                  %
                  
                  
                  90
                  %
                  
                  
                  90
                  %
                  
                  
                  90
                  %
                  
                  
                  90
                  %Production
                  
                  Oz.
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,861
                  
                  
                  
                  14,242
                  
                  
                  
                  24,108
                  
                  
                  
                  38,795
                  
                  
                  
                  39,866
                  
                  
                  
                  39,131
                  
                  
                  
                  43,095
                  
                  
                  
                  30,909
                  
                  
                  
                  26,820
                  
                  
                  
                  31,593Revenue
                  Gold
      Price ($/oz.)
                  
                  450
                  
                  
                  
                  450
                  
                  
                  
                  450
                  
                  
                  
                  450
                  
                  
                  
                  450
                  
                  
                  
                  450
                  
                  
                  
                  450
                  
                  
                  
                  450
                  
                  
                  
                  450
                  
                  
                  
                  450
                  
                  
                  
                  450
                  
                  
                  
                  450
                  
                  
                  
                  450
                  
                  
                  
                  450Gross
      Revenue
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  838
                  
                  
                  
                  6,409
                  
                  
                  
                  10,848
                  
                  
                  
                  17,458
                  
                  
                  
                  17,940
                  
                  
                  
                  17,609
                  
                  
                  
                  19,393
                  
                  
                  
                  13,909
                  
                  
                  
                  12,069
                  
                  
                  
                  14,217Transport
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  7
                  
                  
                  
                  51
                  
                  
                  
                  87
                  
                  
                  
                  139
                  
                  
                  
                  143
                  
                  
                  
                  141
                  
                  
                  
                  155
                  
                  
                  
                  111
                  
                  
                  
                  96
                  
                  
                  
                  1131%
      Refining
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  8
                  
                  
                  
                  64
                  
                  
                  
                  108
                  
                  
                  
                  175
                  
                  
                  
                  179
                  
                  
                  
                  176
                  
                  
                  
                  194
                  
                  
                  
                  139
                  
                  
                  
                  121
                  
                  
                  
                  1421%
      CFEM Tax
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  8
                  
                  
                  
                  64
                  
                  
                  
                  108
                  
                  
                  
                  173
                  
                  
                  
                  178
                  
                  
                  
                  175
                  
                  
                  
                  192
                  
                  
                  
                  138
                  
                  
                  
                  120
                  
                  
                  
                  141Sub-total
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  814
                  
                  
                  
                  6,230
                  
                  
                  
                  10,546
                  
                  
                  
                  16,970
                  
                  
                  
                  17,439
                  
                  
                  
                  17,117
                  
                  
                  
                  18,852
                  
                  
                  
                  13,521
                  
                  
                  
                  11,732
                  
                  
                  
                  13,8203%
      Royalty
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  41
                  
                  
                  
                  289
                  
                  
                  
                  420
                  
                  
                  
                  614
                  
                  
                  
                  629
                  
                  
                  
                  619
                  
                  
                  
                  671
                  
                  
                  
                  510
                  
                  
                  
                  456
                  
                  
                  
                  519Revenue
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  773
                  
                  
                  
                  5,941
                  
                  
                  
                  10,126
                  
                  
                  
                  16,356
                  
                  
                  
                  16,810
                  
                  
                  
                  16,499
                  
                  
                  
                  18,180
                  
                  
                  
                  13,011
                  
                  
                  
                  11,276
                  
                  
                  
                  13,301NSR
                  
                  US$/t
      ore
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  65.70
                  
                  
                  
                  64.41
                  
                  
                  
                  66.01
                  
                  
                  
                  90.87
                  
                  
                  
                  93.39
                  
                  
                  
                  91.66
                  
                  
                  
                  101.00
                  
                  
                  
                  72.28
                  
                  
                  
                  62.65
                  
                  
                  
                  73.90CapitalCosts
                  Underground
      Mine Development
                  
                  US$
      ‘000
                  
                  
                  
                  84
                  
                  
                  
                  285
                  
                  
                  
                  780
                  
                  
                  
                  2,191
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Open
      Pit Mining
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  374
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Mine
      Equipment
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  684
                  
                  
                  
                  471
                  
                  
                  
                  2,808
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Plant
      Equipment
                  
                  US$
      ‘000
                  
                  
                  
                  190
                  
                  
                  
                  -
                  
                  
                  
                  1,023
                  
                  
                  
                  4,047
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Plant
      Construction
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,474
                  
                  
                  
                  5,510
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Infrastructure
      Construction
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  982
                  
                  
                  
                  915
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Land
      Acquisition
                  
                  US$
      ‘000
                  
                  
                  
                  1,226
                  
                  
                  
                  543
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  350
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -EPCM
                  
                  US$
      ‘000
                  
                  
                  
                  186
                  
                  
                  
                  1,053
                  
                  
                  
                  1,911
                  
                  
                  
                  870
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Commissioning
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  45
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Environment
                  
                  US$
      ‘000
                  
                  
                  
                  18
                  
                  
                  
                  1
                  
                  
                  
                  8
                  
                  
                  
                  60
                  
                  
                  
                  23
                  
                  
                  
                  10
                  
                  
                  
                  10
                  
                  
                  
                  11
                  
                  
                  
                  11
                  
                  
                  
                  11
                  
                  
                  
                  -
                  
                  
                  
                  4
                  
                  
                  
                  -Tailings
      Dam
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Total
                  
                  US$
      ‘000
                  
                  
                  
                  1,704
                  
                  
                  
                  2,565
                  
                  
                  
                  7,649
                  
                  
                  
                  16,821
                  
                  
                  
                  23
                  
                  
                  
                  360
                  
                  
                  
                  10
                  
                  
                  
                  11
                  
                  
                  
                  11
                  
                  
                  
                  11
                  
                  
                  
                  -
                  
                  
                  
                  4
                  
                  
                  
                  -OperatingCosts
                  Open
      Pit Mining
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Underground
      Mining
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,538
                  
                  
                  
                  3,243
                  
                  
                  
                  3,310
                  
                  
                  
                  3,188
                  
                  
                  
                  3,333
                  
                  
                  
                  3,163
                  
                  
                  
                  3,247
                  
                  
                  
                  3,168
                  
                  
                  
                  3,186Processing
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  878
                  
                  
                  
                  2,466
                  
                  
                  
                  2,507
                  
                  
                  
                  2,507
                  
                  
                  
                  2,507
                  
                  
                  
                  2,507
                  
                  
                  
                  2,507
                  
                  
                  
                  2,507
                  
                  
                  
                  2,507G&A
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  168
                  
                  
                  
                  454
                  
                  
                  
                  454
                  
                  
                  
                  454
                  
                  
                  
                  454
                  
                  
                  
                  454
                  
                  
                  
                  454
                  
                  
                  
                  454
                  
                  
                  
                  454Environment
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  22
                  
                  
                  
                  99
                  
                  
                  
                  23
                  
                  
                  
                  75
                  
                  
                  
                  14
                  
                  
                  
                  50
                  
                  
                  
                  14
                  
                  
                  
                  19
                  
                  
                  
                  12Total
                  
                  US$
      ‘000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,606
                  
                  
                  
                  6,262
                  
                  
                  
                  6,295
                  
                  
                  
                  6,224
                  
                  
                  
                  6,309
                  
                  
                  
                  6,175
                  
                  
                  
                  6,223
                  
                  
                  
                  6,149
                  
                  
                  
                  6,159Open
      Pit Mining
                  
                  US$/t
      moved
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Open
      Pit Mining
                  
                  US$/t
      milled
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Underground
      Mining
                  
                  US$/t
      milled
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  16.67
                  
                  
                  
                  21.14
                  
                  
                  
                  18.39
                  
                  
                  
                  17.71
                  
                  
                  
                  18.52
                  
                  
                  
                  17.57
                  
                  
                  
                  18.04
                  
                  
                  
                  17.60
                  
                  
                  
                  17.70Processing
                  
                  US$/t
      milled
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  9.51
                  
                  
                  
                  16.07
                  
                  
                  
                  13.93
                  
                  
                  
                  13.93
                  
                  
                  
                  13.93
                  
                  
                  
                  13.93
                  
                  
                  
                  13.93
                  
                  
                  
                  13.93
                  
                  
                  
                  13.93G&A
                  
                  US$/t
      milled
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1.83
                  
                  
                  
                  2.96
                  
                  
                  
                  2.52
                  
                  
                  
                  2.52
                  
                  
                  
                  2.52
                  
                  
                  
                  2.52
                  
                  
                  
                  2.52
                  
                  
                  
                  2.52
                  
                  
                  
                  2.52Environment
                  
                  US$/t
      milled
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  0.24
                  
                  
                  
                  0.64
                  
                  
                  
                  0.13
                  
                  
                  
                  0.41
                  
                  
                  
                  0.08
                  
                  
                  
                  0.28
                  
                  
                  
                  0.08
                  
                  
                  
                  0.11
                  
                  
                  
                  0.07Total
                  
                  US$/t
      milled
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  28.25
                  
                  
                  
                  40.82
                  
                  
                  
                  34.97
                  
                  
                  
                  34.58
                  
                  
                  
                  35.05
                  
                  
                  
                  34.31
                  
                  
                  
                  34.57
                  
                  
                  
                  34.16
                  
                  
                  
                  34.22Pre-Tax
      Cash Flow
                  
                  
                  US$
      ‘000
                  
                  
                  
                  (1,704
                  )
                  
                  
                  (2,565
                  )
                  
                  
                  (7,649
                  )
                  
                  
                  (16,048
                  )
                  
                  
                  3,313
                  
                  
                  
                  3,504
                  
                  
                  
                  10,051
                  
                  
                  
                  10,575
                  
                  
                  
                  10,178
                  
                  
                  
                  11,994
                  
                  
                  
                  6,788
                  
                  
                  
                  5,124
                  
                  
                  
                  7,142Cumulative
      US$ ‘000
                  
                  
                  
                  (1,704
                  )
                  
                  
                  (4,269
                  )
                  
                  
                  (11,919
                  )
                  
                  
                  (27,966
                  )
                  
                  
                  (24,653
                  )
                  
                  
                  (21,149
                  )
                  
                  
                  (11,098
                  )
                  
                  
                  (523
                  )
                  
                  
                  9,655
                  
                  
                  
                  21,649
                  
                  
                  
                  28,437
                  
                  
                  
                  33,561
                  
                  
                  
                  40,703Pre-tax
      NPV US$ ‘000
                  
                  
                  
                  32,95712
                  %IRR
                  
                  
                  
                  47.5
                  %Unit
      Cost ofProduction
                  Operating1
                  
                  US$/oz
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  30
                  
                  
                  
                  211
                  
                  
                  
                  285
                  
                  
                  
                  186
                  
                  
                  
                  180
                  
                  
                  
                  185
                  
                  
                  
                  167
                  
                  
                  
                  226
                  
                  
                  
                  254
                  
                  
                  
                  219Capital
                  
                  US$/ozTotal2
                  
                  US$/oz
  Notes:    1.  Equivalent
to Gold Institute Total Cash Cost.
 2.  Equivalent
to Gold Institute Total Production Cost.
 3.  Working
capital estimated at $0.9 M by Jaguar Mining Inc. has been
excluded.
 4.  Salvage
estimated at $3.4 M by Jaguar Mining Inc.
 
 
 42
   TABLE
1-1 PRE-TAX CASH FLOW $450/OZ GOLD
  JAGUAR
MINING INC. – TURMALINA PROJECT
  Year
                
                
                2011
                
                
                2012
                
                
                2013
                
                
                2014
                
                
                2015
                
                
                TOTALSemester
                
                
                
                10
                
                
                
                11
                
                
                
                12
                
                
                
                13
                
                
                
                14
                
                
                
                15
                
                
                
                16
                
                
                
                17
                
                
                
                18
                
                
                
                19
                
                
                TOTALMining
                Open
      Pit Ore
                
                tonnes
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                92,440g/t
      Au
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                5.41Underground
      Development Ore
                
                tonnes
                
                
                
                17,355
                
                
                
                10,908
                
                
                
                25,083
                
                
                
                28,527
                
                
                
                23,007
                
                
                
                26,319
                
                
                
                9,539
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                274,940g/t
      Au
                
                
                
                5.25
                
                
                
                4.57
                
                
                
                6.05
                
                
                
                4.67
                
                
                
                6.47
                
                
                
                4.99
                
                
                
                4.31
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                6.25Underground
      Stoping Ore
                
                tonnes
                
                
                
                110,047
                
                
                
                115,610
                
                
                
                101,877
                
                
                
                113,481
                
                
                
                107,044
                
                
                
                111,681
                
                
                
                135,957
                
                
                
                138,000
                
                
                
                17,247
                
                
                
                -
                
                
                
                1,883,501g/t
      Au
                
                
                
                7.70
                
                
                
                5.23
                
                
                
                4.80
                
                
                
                6.66
                
                
                
                3.69
                
                
                
                5.95
                
                
                
                6.33
                
                
                
                4.67
                
                
                
                4.27
                
                
                
                -
                
                
                
                6.55(NE)
                Underground
      Development Ore
                
                tonnes
                
                
                
                10,598
                
                
                
                11,482
                
                
                
                11,040
                
                
                
                2,650
                
                
                
                7,949
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                98,918g/t
      Au
                
                
                
                7.52
                
                
                
                5.60
                
                
                
                3.54
                
                
                
                3.54
                
                
                
                5.77
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                4.84(NE)
                Underground
      Stoping Ore
                
                tonnes
                
                
                
                42,000
                
                
                
                42,000
                
                
                
                42,000
                
                
                
                35,342
                
                
                
                42,000
                
                
                
                42,000
                
                
                
                18,044
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                566,386g/t
      Au
                
                
                
                4.85
                
                
                
                6.47
                
                
                
                5.60
                
                
                
                3.55
                
                
                
                3.92
                
                
                
                5.77
                
                
                
                5.77
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                4.72TOTAL
                
                tonnes
                
                
                
                180,000
                
                
                
                180,000
                
                
                
                180,000
                
                
                
                180,000
                
                
                
                180,000
                
                
                
                180,000
                
                
                
                163,540
                
                
                
                138,000
                
                
                
                17,247
                
                
                
                -
                
                
                
                2,916,185g/t
      Au
                
                
                
                6.79
                
                
                
                5.50
                
                
                
                5.08
                
                
                
                5.69
                
                
                
                4.19
                
                
                
                5.77
                
                
                
                6.15
                
                
                
                4.67
                
                
                
                4.27
                
                
                
                -
                
                
                
                6.07Open
      Pit Waste
                
                tonnes
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                237,572Strip
      Ratio
                
                
                2.57Underground
      Waste
                
                tonnes
                
                
                
                48,372
                
                
                
                30,511
                
                
                
                14,603
                
                
                
                16,623
                
                
                
                8,969
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                777,397TOTAL
      Waste
                
                tonnes
                
                
                
                48,372
                
                
                
                30,511
                
                
                
                14,603
                
                
                
                16,623
                
                
                
                8,969
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,014,969Processing
                Plant
      Feed
                
                tonnes
                
                
                
                180,000
                
                
                
                180,000
                
                
                
                180,000
                
                
                
                180,000
                
                
                
                180,000
                
                
                
                180,000
                
                
                
                163,540
                
                
                
                138,000
                
                
                
                17,247
                
                
                
                -
                
                
                
                2,916,18597%
      Grade (including MCF)
                
                g/t
      Au
                
                
                
                6.79
                
                
                
                5.50
                
                
                
                5.08
                
                
                
                5.69
                
                
                
                4.19
                
                
                
                5.77
                
                
                
                6.15
                
                
                
                4.67
                
                
                
                4.27
                
                
                
                -
                
                
                
                6.07Recovery
                
                
                90
                %
                
                
                90
                %
                
                
                90
                %
                
                
                90
                %
                
                
                90
                %
                
                
                90
                %
                
                
                90
                %
                
                
                90
                %
                
                
                90
                %
                
                
                90
                %
                
                
                90
                %
                
                
                90
                %Production
                
                Oz.
                
                
                
                35,368
                
                
                
                28,650
                
                
                
                26,462
                
                
                
                29,627
                
                
                
                21,827
                
                
                
                30,038
                
                
                
                29,115
                
                
                
                18,663
                
                
                
                2,133
                
                
                
                -
                
                
                
                512,301Revenue
                Gold
      Price ($/oz.)
                
                
                450
                
                
                
                450
                
                
                
                450
                
                
                
                450
                
                
                
                450
                
                
                
                450
                
                
                
                450
                
                
                
                450
                
                
                
                450
                
                
                
                450
                
                
                
                450
                
                
                
                450Gross
      Revenue
                
                US$
      ‘000
                
                
                
                15,916
                
                
                
                12,893
                
                
                
                11,908
                
                
                
                13,332
                
                
                
                9,822
                
                
                
                13,517
                
                
                
                13,102
                
                
                
                8,398
                
                
                
                960
                
                
                
                -
                
                
                
                230,535Transport
                
                US$
      ‘000
                
                
                
                127
                
                
                
                103
                
                
                
                95
                
                
                
                106
                
                
                
                78
                
                
                
                108
                
                
                
                105
                
                
                
                67
                
                
                
                8
                
                
                
                -
                
                
                
                1,8401%
      Refining
                
                US$
      ‘000
                
                
                
                159
                
                
                
                129
                
                
                
                119
                
                
                
                133
                
                
                
                98
                
                
                
                135
                
                
                
                131
                
                
                
                84
                
                
                
                10
                
                
                
                -
                
                
                
                2,3051%
      CFEM Tax
                
                US$
      ‘000
                
                
                
                158
                
                
                
                128
                
                
                
                118
                
                
                
                132
                
                
                
                97
                
                
                
                134
                
                
                
                130
                
                
                
                83
                
                
                
                10
                
                
                
                -
                
                
                
                2,287Sub-total
                
                US$
      ‘000
                
                
                
                15,471
                
                
                
                12,533
                
                
                
                11,576
                
                
                
                12,960
                
                
                
                9,548
                
                
                
                13,140
                
                
                
                12,736
                
                
                
                8,164
                
                
                
                933
                
                
                
                -
                
                
                
                224,1033%
      Royalty
                
                US$
      ‘000
                
                
                
                569
                
                
                
                480
                
                
                
                451
                
                
                
                493
                
                
                
                389
                
                
                
                498
                
                
                
                486
                
                
                
                347
                
                
                
                47
                
                
                
                -
                
                
                
                8,528Revenue
                
                US$
      ‘000
                
                
                
                14,903
                
                
                
                12,053
                
                
                
                11,125
                
                
                
                12,467
                
                
                
                9,159
                
                
                
                12,642
                
                
                
                12,250
                
                
                
                7,817
                
                
                
                886
                
                
                
                -
                
                
                
                215,575NSR
                
                US$/t
                
                
                
                82.79
                
                
                
                66.96
                
                
                
                61.81
                
                
                
                69.26
                
                
                
                50.88
                
                
                
                70.23
                
                
                
                74.91
                
                
                
                56.64
                
                
                
                51.36
                
                
                
                -
                
                
                
                73.92CapitalCosts
                Underground
      Mine Development
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,341Open
      Pit Mining
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                374Mine
      Equipment
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,963Plant
      Equipment
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                5,260Plant
      Construction
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                7,984Infrastructure
      Construction
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,897Land
      Acquisition
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                2,118EPCM
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                4,020Commissioning
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                45Environment
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,374
                
                
                
                -
                
                
                
                1,543Tailings
      Dam
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                1,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,000Total
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                1,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,374
                
                
                
                -
                
                
                
                31,545OperatingCosts
                Open
      Pit Mining
                
                US$
      ‘000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Underground
      Mining
                
                US$
      ‘000
                
                
                
                3,466
                
                
                
                3,054
                
                
                
                2,943
                
                
                
                2,929
                
                
                
                2,637
                
                
                
                2,326
                
                
                
                1,945
                
                
                
                1,548
                
                
                
                193
                
                
                
                -
                
                
                
                48,418Processing
                
                US$
      ‘000
                
                
                
                2,507
                
                
                
                2,507
                
                
                
                2,507
                
                
                
                2,507
                
                
                
                2,507
                
                
                
                2,507
                
                
                
                2,410
                
                
                
                1,922
                
                
                
                351
                
                
                
                -
                
                
                
                40,623G&A
                
                US$
      ‘000
                
                
                
                454
                
                
                
                454
                
                
                
                454
                
                
                
                454
                
                
                
                454
                
                
                
                454
                
                
                
                454
                
                
                
                454
                
                
                
                76
                
                
                
                -
                
                
                
                7,515Environment
                
                US$
      ‘000
                
                
                
                12
                
                
                
                12
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                351Total
                
                US$
      ‘000
                
                
                
                6,440
                
                
                
                6,028
                
                
                
                5,905
                
                
                
                5,891
                
                
                
                5,599
                
                
                
                5,288
                
                
                
                4,810
                
                
                
                3,925
                
                
                
                620
                
                
                
                -
                
                
                
                96,906Open
      Pit Mining
                
                US$/t moved
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Open
      Pit Mining
                
                US$/t
      milled
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Underground
      Mining
                
                US$/t
      milled
                
                
                
                19.26
                
                
                
                16.97
                
                
                
                16.35
                
                
                
                16.27
                
                
                
                14.65
                
                
                
                12.92
                
                
                
                11.90
                
                
                
                11.22
                
                
                
                11.22
                
                
                
                -
                
                
                
                16.60Processing
                
                US$/t
      milled
                
                
                
                13.93
                
                
                
                13.93
                
                
                
                13.93
                
                
                
                13.93
                
                
                
                13.93
                
                
                
                13.93
                
                
                
                14.74
                
                
                
                13.93
                
                
                
                20.34
                
                
                
                -
                
                
                
                13.93G&A
                
                US$/t
      milled
                
                
                
                2.52
                
                
                
                2.52
                
                
                
                2.52
                
                
                
                2.52
                
                
                
                2.52
                
                
                
                2.52
                
                
                
                2.78
                
                
                
                3.29
                
                
                
                4.40
                
                
                
                -
                
                
                
                2.58Environment
                
                US$/t
      milled
                
                
                
                0.07
                
                
                
                0.07
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                0.12Total
                
                US$/t
      milled
                
                
                
                35.78
                
                
                
                33.49
                
                
                
                32.81
                
                
                
                32.73
                
                
                
                31.11
                
                
                
                29.38
                
                
                
                29.41
                
                
                
                28.44
                
                
                
                35.96
                
                
                
                -
                
                
                
                33.23Pre-Tax
      Cash Flow
                
                
                US$
      ‘000
                
                
                
                8,463
                
                
                
                6,025
                
                
                
                4,220
                
                
                
                6,576
                
                
                
                3,560
                
                
                
                7,354
                
                
                
                7,440
                
                
                
                3,892
                
                
                
                (1,109
                )
                
                
                0
                
                
                
                87,124Cumulative
      US$ ‘000
                
                
                
                49,165
                
                
                
                55,191
                
                
                
                59,410
                
                
                
                65,987
                
                
                
                69,547
                
                
                
                76,901
                
                
                
                84,341
                
                
                
                88,233
                
                
                
                87,124
                
                
                
                87,124Pre-tax
      NPV US$ ‘000IRRUnit
      Cost ofProduction
                Operating1
                
                US$/oz
                
                
                
                206
                
                
                
                235
                
                
                
                248
                
                
                
                224
                
                
                
                282
                
                
                
                201
                
                
                
                190
                
                
                
                237
                
                
                
                321
                
                
                
                -
                
                
                
                214Capital
                
                US$/oz
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                62Total2
                
                US$/oz
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                275
 
 Notes:          
1.  Equivalent to Gold Institute Total Cash Cost.
 2.  Equivalent
to Gold Institute Total Production Cost.
 3.  Working
capital estimated at $0.9 M by Jaguar Mining Inc. has been
excluded.
 4.  Salvage
estimated at $3.4 M by Jaguar Mining Inc.
 
  43
  Considering
the Turmalina Project on a stand-alone basis, the Base Case undiscounted pre-tax
cash flow totals US$87.1 million over the mine life, and simple payback occurs
near the mid-point of 2008 (approximately 21 months from start of
production).
 
 The
Gold Institute Total Cash Cost is US$214 per ounce of gold.  The mine
life capital unit cost is US$62 per ounce, for a Gold Institute Total Production
Cost of US$275 per ounce of gold.  Average annual gold production
during operations is 60,000 ounces per year.
 
 At
a discount rate of 12%, the pre-tax NPV at the time of the Scott Wilson RPA
Turmalina Technical Report was US$33.0 million and the IRR is
47.5%.
 
 Jaguar’s
after-tax NPV estimate at 12% discount rate at the time of the Scott Wilson RPA
Turmalina Technical Report was US$14.2 million, with a project IRR of
30.7%.  Scott Wilson RPA did not review Jaguar’s tax
model.
 
 Sensitivity
Analysis
 Figure
1-1 shows the project sensitivity to various factors, including:
 •    Head
Grade
 •    Gold
Price
 •    Operating
Cost
 •    Capital
Cost
 •    Exchange
Rate
 •    Mine
Life
 
 FIGURE 1-1
SENSITIVITY ANALYSIS
 
 
 
  44
  The
Turmalina Project is most sensitive to gold price and head grade. The break even
gold price resulting in zero pre-tax NPV at 12% at the time of the Scott Wilson
RPA Turmalina Technical Report was approximately US$300 per ounce. At a gold
price of US$635 per ounce (July 27, 2006), the pre-tax NPV at 12% was US$74.7
million.  Possible impacts on head grades include assay bias and
increased dilution.  If assaying proves to be biased 10% low, head
grades may be 10% higher, which would result in a pre-tax NPV at 12% of US$43
million.  If dilution rates are 20% (AngloGold Ashanti test results)
rather than 15% (Base Case estimate), head grades will be reduced by 5%, which
would result in a pre-tax NPV at 12% of approximately US$28
million.
 
 The
long-term exchange rate used for the Turmalina Project is US$1.00 = R$2.50,
compared to the rate as of the date of the Scott Wilson RPA Turmalina Technical
Report of US$1.00 = R$2.29.  The long-term rate was chosen based on
economic forecasts by Brazilian banks.  For Base Case cash flow
estimation, actual exchange rates were used for costs incurred up to June 30,
2006.  The remainder of pre­-production capital to be spent was
converted using an exchange rate of US$1.00 = R$2.19.  Sustaining
capital and operating costs use the long-term exchange rate.
 
 Other
key sensitivities, in addition to the aforementioned, are operating costs, and
capital cost, and mine life.  The sensitivities are summarized in the
following table as pre­-tax NPV at 12% discount.
 
 TABLE
1-2 SENSITIVITY DATA
 Jaguar
Mining Inc - Turmalina Project
  -20%
                -10%
                Base
      Case
                +10%
                +20%Gold
      Price (US$/oz)
                  Pre-tax
      NPV (US$ million)
                360
                  $
      12.7
                405
                  $
      22.8
                450
                  $
      33.0
                495
                  $
      43.1
                540
                  $53.2Grade
      (g/t)
                  Pre-tax
      NPV (US$ million)
                4.86
                  $
      12.8
                5.46
                  $
      22.9
                6.07
                  $
      33.0
                6.68
                  $
      43.0
                7.28
                  $53.1Operating
      Costs (US$ million)
                  Pre-tax
      NPV (US$ million)
                $
      62.0
                  $
      41.8
                $
      78.5
                  $
      37.4
                $
      96.9
                  $
      33.0
                $
      117.3
                  $
      28.5
                $
      139.6
                  $
      24.1Capital
      Costs (US$ million)
                  Pre-tax
      NPV (US$ million)
                $
      20.2
                  $
      37.5
                $
      25.6
                  $
      35.2
                $
      31.6
                  $
      33.0
                $
      38.2
                  $
      30.7
                $
      45.4
                  $
      28.4Exchange
      Rate (R$/US$)
                  Pre-tax
      NPV (US$ million)
                2.00
                  $
      14.5
                2.25
                  $
      24.9
                2.50
                  $
      33.0
                2.75
                  $
      39.7
                3.00
                  $
      45.2Mine
      Life (Mt)
                  Pre-tax
      NPV (US$ million)
                2.3
                  $
      25.6
                2.6
                  $
      28.7
                2.9
                  $
      33.0
                3.2
                  $
      36.0
                3.5
                  $
      38.9
 
 The
base case sensitivity to discount rate is shown as follows:
 •      12%
- pre-tax NPV = US$33.0 million
 •      10%
- pre-tax NPV = US$38.6 million
 •      7.5%
- pre-tax NPV = US$47.2 million
 •      5%
- pre-tax NPV = US$57.7 million
 
 Technical
Summary
 
 The
Turmalina Project lies approximately 120 km northwest of Belo Horizonte and six
kilometres south of the town of Pitangui, Minas Gerais, Brazil.  The
Turmalina Project comprises seven contiguous concessions covering an area of
5,337 ha and was acquired from AngloGold Ashanti in September 2004 for US$4.0
million, payable in three equal installments of US$1.35
million.  Jaguar has 100% ownership subject to a 5% net revenue
interest up to US$10 million, and 3% thereafter, to an unrelated third party. In
addition, there is a 0.5% net revenue interest payable to the legal
landowner.
 
 Gold
was first discovered in the area in the 16th
century. During 1992 and 1993, AngloGold Ashanti (AngloGold Limited at that
time) mined 373,000 t of oxide mineralization from an open pit on the Turmalina
Zone and recovered 35,500 oz of gold using heap leach technology. Subsequently,
AngloGold Ashanti explored a possible downward sulphide extension by driving a
ramp beneath the pit and drifting on two levels in the mineralized zone at
approximately 50 m and 75 m below the pit floor.
 
  45
  The
Turmalina Deposit is hosted by rocks of the Archaean Rio das Velhas greenstone
belt in the Iron Quadrangle region, one of the major gold provinces in the
world.  The Pitangui area is underlain by rocks of Archaean and
Proterozoic age.  Archaean units include a granitic basement, overlain
by the Pitangui Group, a sequence of ultramafic to intermediate volcanic flows
and pyroclastics, and associated sediments.  The predominant rock
types in the deposit are metamorphosed pelites and tuffs. Gold mineralization is
associated with higher levels of sericite, quartz, and biotite.  Some
fraction of the gold mineralization in the Turmalina Deposit may be due to
primary, exhalative deposition associated with the banded iron formation,
however, the deposit can be broadly classified as epigenetic, related to a
mesothermal system that localized auriferous silicification in local structural
features within a wider shear zone.
 
 The
Turmalina Deposit comprises three zones, the Principal, NE, and CD
Zones.  The Principal Zone strikes azimuth 110° and dips at
55°-60°.  Gold grade zoning indicates a SE plunge of approximately
65°.  The zone is 200 m to 250 m long and ranges in horizontal width
from two metres to 30 m, averaging approximately eight metres.  The NE
Zone lies 50 m to 100 m east of the Principal Zone and has a similar
attitude.  It is approximately 200 m long and ranges from one metre to
12 m in horizontal width, averaging approximately three metres. Mineralization
extends to at least 350 m below surface. The CD Zone includes two narrow
sub-zones approximately 50 m vertically by 50 m horizontally, ten metres in the
hangingwall and ten metres in the footwall of the Principal Zone.
 
 Since
September 2004, Jaguar has completed a three-phase surface exploration program
consisting of 93 diamond drill holes for a total of 30,196 m.  The
sampling approach and methodology, sample preparation and analysis, data
verification, and quality assurance/quality control systems conform to industry
standards.
 
 Jaguar
geology staff completed the correlation of the mineralized zones using a 1.0 g/t
Au cutoff grade and a 1.0 m minimum width. Moreno & Associados of Belo
Horizonte, Minas Gerais, Brazil, completed the mineral resource estimate using a
block model methodology.  The mineral resources are summarized in
Table 1-3.
 
 TABLE
1-3 MINERAL RESOURCES - JULY 2006
 Jaguar
Mining Inc. - Turmalina Project
 Principal
    Zone
                    
                    
                    NE Zone
                    
                    CD Zone
                    
                    
                    TOTALTonnes
                    
                    
                    Grade
                    
                    
                    Tonnes
                    
                    
                    Grade
                    
                    Tonnes
                    
                    Grade
                    
                    
                    Tonnes
                    
                    
                    Grade
                    
                    
                    Cont. Au(t)
                    
                    
                    
                    (g/t)
                    
                    
                    (t)
                    
                    
                    
                    (g/t)
                    
                    (t)
                    
                    
                    (g/t)
                    
                    
                    (t)
                    
                    
                    
                    (g/t)
                    
                    
                    (oz)Measured
                    
                    
                    276,000
                    
                    
                    
                    6.1
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    276,000
                    
                    
                    
                    6.1
                    
                    
                    
                    54,000Indicated
                    
                    
                    1,830,000
                    
                    
                    
                    7.8
                    
                    
                    
                    748,000
                    
                    
                    
                    5.6
                    
                    
                    
                    
                    
                    
                    
                    
                    2,577,000
                    
                    
                    
                    7.1
                    
                    
                    
                    590,000Meas +
Indic
                    
                    
                    2,106,000
                    
                    
                    
                    7.6
                    
                    
                    
                    748,000
                    
                    
                    
                    5.6
                    
                    
                    
                    
                    
                    
                    
                    
                    2,854,000
                    
                    
                    
                    7.0
                    
                    
                    
                    644,000Inferred
                    
                    
                    554,000
                    
                    
                    
                    7.0
                    
                    
                    
                    256,000
                    
                    
                    
                    5.5
                    
                    218,000
                    
                    
                    5.8
                    
                    
                    
                    1,027,000
                    
                    
                    
                    6.4
                    
                    
                    
                    211,000
 
 Notes:
 1.
                CIM
      definitions were followed for Mineral
Resources.
 2.
                Mineral
      Resources are estimated at a cutoff grade of 1.0 g/t
  Au.
 3.
                A
      minimum mining width of 1.0 metres was
used.
 4.
                Rows
      and columns may not total due to
rounding.
 5.
                Mineral
      resources exclude previous
production.
 6.
                The
      mineral resources are inclusive of mineral
  reserves.
 
 Mineral
reserves have been estimated based on the mineral resources. Mining factors have
been applied. The breakeven cutoff grade based on operating costs of US$33.23
per tonne and a gold price of US$450 is approximately 2.6 g/t Au. The
incremental cutoff is approximately 1.5 g/t Au. Due to the lack of selectivity
in the mining method, all resources within the 1.0 g/t Au envelope have been
considered for reserves.
 
  46
  TABLE
1-4 MINERAL RESERVES - JULY 2006
 Jaguar
Mining Inc. - Turmalina Project
 Principal
    Zone
                  
                  
                  NE Zone
                  
                  CD Zone
                  
                  TOTALTonnes
                  
                  
                  Grade
                  
                  
                  Tonnes
                  
                  
                  Grade
                  
                  Tonnes
                  Grade
                  
                  Tonnes
                  
                  
                  Grade
                  
                  
                  Cont. Au(t)
                  
                  
                  (g/t)
                  
                  
                  (t)
                  
                  
                  (g/t)
                  
                  (t)
                  (g/t)
                  
                  (t)
                  
                  
                  (g/t)
                  
                  
                  (oz)Proven
                  
                  
                  234,000
                  
                  
                  
                  5.5
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  234,000
                  
                  
                  
                  5.5
                  
                  
                  
                  41,000Probable
                  
                  
                  2,017,000
                  
                  
                  
                  6.8
                  
                  
                  
                  665,000
                  
                  
                  
                  4.9
                  
                  
                  
                  
                  
                  2,682,000
                  
                  
                  
                  6.3
                  
                  
                  
                  546,000Total
                  
                  
                  2,252,000
                  
                  
                  
                  6.7
                  
                  
                  
                  665,000
                  
                  
                  
                  4.9
                  
                  
                  
                  
                  
                  2,916,000
                  
                  
                  
                  6.3
                  
                  
                  
                  587,000
 Notes:
 1.
                Based
      on a gold price of US$450 per ounce
 2.
                Cutoff
      grade = 1.0 g/t
 3.
                Dilution
      overall = 15%
 4.
                Extraction
      = 89%
 5.
                Reserves
      estimated according to CIM
definitions
 6.
                Rows
      and columns may not add exactly due to
rounding
 
 Production
based on the mineral reserves in Table 1-4 is further modified by a mine call
factor of 97%, applied to grade. Base Case production totals 2,916,000 tonnes at
a grade of 6.1 g/t Au.
 
 Jaguar
proposes an open pit operation to mine approximately 3% of the mineral reserves.
The open pit mine will produce 92,000 tonnes of ore at a grade of 5.4 g/t Au,
and a strip ratio of 2.57:1. The open pit phase will be followed by an
underground mining operation using sublevel stoping with paste backfill in the
Principal Zone, and mechanized cut and fill in the NE Zone, to produce 1,000
tpd.
 
 The
open pit is a remnant of the original AngloGold Ashanti pit. The open pit design
assumes approximately 40% of total stripping (238,000 t) is weathered and
altered material that will not require blasting. Mining is in progress by
contractor, with approximately 75% of stripping complete as of July 2006. Ore
mining has commenced. Ore is hauled to a stockpile at the plant, approximately
1.3 km, and waste is hauled to the dumps, approximately one
kilometer.
 
 The
underground mine will supply the large majority of millfeed during the mine
life. Mining will be carried out in two zones - the Principal Zone, comprising
77% of the underground reserve and the NE Zone, comprising 23%.
 
 The
Principal Zone was explored previously during the AngloGold Ashanti open pit
program. An access ramp at a grade of 12% was developed from outside the open
pit and two levels were developed. Test mining extracted approximately 17,000 t
of ore, grading 5.24 g/t Au. Dilution was estimated to be 20%.
 
 The
Scott Wilson RPA Turmalina Technical Report proposed to mine the Principal Zone
by sublevel stoping with paste backfill and the NE Zone by mechanized cut and
fill, using waste fill.
 
 The
Principal Zone is a tabular body, dipping at approximately 55° to 75°. The Zone
is an average of 8.3 m wide over a strike length of approximately 200 m to 250
m. The zone has been traced from surface at the bottom of the open pit at 690
masl to a depth of approximately minus 50 masl. Present reserves extend to the
150 masl elevation. Inferred resources extend to depth, offering good potential
for extension of the mine life. Ore grade mineralization occurs in two main
plunging shoots within the zone.
 
 The
NE Zone is tabular as well, dipping the same as the Principal Zone, but is much
narrower, averaging approximately 2.7 m in width. The NE Zone reserves extend
from 675 masl to a depth of approximately 200 masl and resources extend to
approximately 0 masl. The Zone strike length is approximately 150 m to 200
m.
 
  47
  The
Principal Zone will be mined using longitudinal sublevel stoping. Access will be
by extension of the existing ramp (5 mx 5 m, minus 15% grade). Sublevels will be
at 20 m intervals with a five metre sill pillar left at every sixth sublevel, or
120 m. A 15 m crown pillar will be left beneath the open pit. Stope access (4 m
x 4 m) will be via a central drift, with mining on a retreat basis within the
stope. The stopes will be blasted in rings from sublevels on 20 m lifts, with
three lifts per stope. The plan calls for extracting all of the ore in a volume
60 m high by full strike length (up to 200 m) by ore width (8.3 m average), then
backfilling. Paste fill will be used to fill the stope before mining commences
on the sublevel above. The paste, containing 4% cement, will be piped from the
paste fill plant on surface through boreholes and be distributed in the mine by
a piping network. In Scott Wilson RPA’s opinion, there is some risk related to
the size of the openings to be filled and consideration should be given to
filling smaller openings on a more frequent basis. This can be done with the
present layout, however, it will introduce curing time to the cycle and stoping
productivity will be affected. This can be mitigated by having more workplaces
available. Another option is to leave sacrificial pillars in the stopes. Scott
Wilson RPA recommends that these options be studied for incorporation into the
mine schedule.
 
 For
the NE Zone, a separate ramp will branch off from the Principal Zone
ramp.  Stopes will be approximately 60 m vertical, with five metre
sill pillars. Access to the stope will be by jump ramps from the main ramp.
Backfilling material will come from two sources - waste generated at the open
pit mine and waste generated by the underground development work. Surface waste
will be excavated by loader/truck and dumped in a fill pass. Underground waste
will trucked to the required area.
 
 The
process plant will employ a conventional CIP circuit for gold recovery. The
estimated overall metallurgical recovery is 90%, based on a 92% leaching
recovery and 97.8% adsorption/smelting recovery. The process flowsheet includes
three-stage crushing/screening to minus 3/8”, primary grinding using a rod mill,
secondary grinding using a ball mill, thickening, leaching, CIP carbon
adsorption, elution, electrowinning, and smelting.
 
 Tailings
from the process plant will be pumped to a paste fill plant, where they will be
dewatered. Cement will be added and the paste will be delivered underground by
gravity. During times when underground fill is not required, the paste will be
directed to the mined out open pit or, later, a tailings pond facility. Jaguar
estimates that approximately 60% of tailings will be re-used as backfill, 10%
will go into the open pit, and 30% will be stored in the tailings pond. Future
changes in reserves would impact these ratios.
 
 Tailings
pond location, design, and cost estimation have not been finalized - an
allowance of US$1 million has been included in the Base Case, based on Jaguar’s
experience in building tailings ponds at other operations.
 
 Manpower
for the Turmalina Project operating period totals 248.  It is based on
productivity estimates for mining, and general convention for the other areas.
Salaries have been established to be competitive in the region. Monthly base
salaries range from US$250 for an entry level position to US$400 for a tradesman
or experienced miner. A senior engineer salary is in the order of US$2,700 per
month. Senior management salaries are approximately US$4,800 per month. Burden
on top of the base salaries averages approximately 115%.
 
 As
of the time of the Scott Wilson RPA Turmalina Technical Report, Jaguar had
obtained all permits required for construction and development work, which was
in progress.
 
 The
Turmalina Plant is scheduled to ramp up to full production of 30,000 tonnes per
month by mid-2007.  Jaguar reports construction progress to
date:
  •
                Access
                100%
      complete•
                Site
      Preparation
                100%
      complete•
                Buildings
                98%
      complete•
                Civil
      works (mainly concrete)
                56%
      complete•
                Structural
      steel
                16%
      complete•
                Tanks,
      platework
                17%
      complete•
                Electrical
      (incl. 5 km power line)
                0%
      complete•
                Piping
                0%
      complete•
                Instrumentation
                0%
      complete•
                Paste
      fill plant
                0%
      complete
 
  48
  Total
pre-production and ongoing capital costs have been estimated by MSOL and
TechnoMine and are summarized in the following table.  The costs
include a contingency of 10%.
 
 TABLE
1-5 CAPITAL COSTS
 Jaguar
Mining Inc. - Turmalina Project
 US$ ‘000’sOpen Pit
    Mining
                  
                  
                  374Underground Mine
      Development
                  
                  
                  3,341Underground Mine
      Equipment
                  
                  
                  3,963Plant
    Equipment
                  
                  
                  5,260Plant
      Construction
                  
                  
                  7,984Infrastructure
      Construction
                  
                  
                  1,897Land
      Acquisition
                  
                  
                  2,118EPCM
                  
                  
                  4,020Commissioning
                  
                  
                  45Environment
                  
                  
                  1,543Tailings
Dam
                  
                  
                  1,000Total
                  
                  $
                  31,545
  Pre-production
costs included above total US$28.7 million, with US$15.8 million incurred or
committed as of June 30, 2006. Jaguar estimates that the cost to complete
pre­production construction and development is US$12.9 million. US$2.8
million in ongoing capital costs include the final land acquisition payment
(US$350,000), environmental testing (US$80,000), tailings pond construction
(US$1 million), and closure costs (US$1.4 million). Capital costs do not include
working capital or salvage credits upon closure.
 
 Operating
costs have been estimated from first principles and are following
table:
 
 TABLE
1-6 OPERATING COSTS
 Jaguar
Mining Inc. - Turmalina Project
 US$/tonne
      milledUnderground
      Mining
                  
                  
                  16.60Processing
                  
                  
                  13.93G&A
                  
                  
                  2.58Environment
                  
                  
                  0.12Total
                  
                  $
                  33.23
 Conclusions
and Recommendations
 
 The
work completed by Jaguar to date has shown that the Turmalina Project is robust
at current gold prices and shows a positive operating margin at the Base Case
gold price of US$450 per ounce.  Scott Wilson RPA offered the
following conclusions in the Scott Wilson RPA Turmalina Technical
Report:
 
 •
                The
      diamond drilling techniques and technical controls were performed to
      industry standards and produced samples of adequate quality to develop a
      database for resource estimation.
 
 •
                The
      sampling method and approach, as well as the sample preparation and
      analysis, were adequate for resource
estimation.
  49
  
 •
                The
      data verification program conforms to industry standards, but
      non­compliance issues should be addressed on a timely
      basis.
 
 •
                The
      resource grade may be biased 5% to 10% low due to possible problems in the
      SGS do Brasil Ltda. (SGS)
laboratory.
 
 •
                The
      assumptions, parameters, and methodology used for resource estimation are
      appropriate for the style of
mineralization.
 
 •
                Mineral
      resources and reserves have been estimated according to the requirements
      of CIM definitions and, in Scott Wilson RPA’s opinion, are compliant with
      NI 43-101.
 
 •
                Stope
      extraction does not include an allowance for ore loss, however, the
      overall extraction of 89% should be
adequate.
 
 •
                Dilution
      rates of 15% are reasonable, however, previous testing indicates that
      dilution rates up to 20% may occur.
 
 •
                There
      is some risk related to the size of the underground openings to be
      backfilled.
 
 •
                The
      use of the open pit for tailings deposition is nominally an expedient
      alternative, however, a tailings pond facility will be required once the
      open pit is filled.
 
 •
                Scott
      Wilson RPA presented the following recommendations in the Scott Wilson RPA
      Turmalina Technical Report:
 
 •
                Assess
      the potential for lateral and downward extension of mineralization and
      extend diamond drilling programs as
necessary.
 
 •
                Investigate
      possible low bias in the SGS analytical
  laboratory.
 
 •
                Establish
      a QAIQC program to monitor laboratory results on a “per batch”
      basis.  Request copies of the laboratory in-house QA/QC
      reports.
 
 •
                Establish
      a standard operating procedure whereby, during the resource estimation
      process, outlier assays are capped prior to
  compositing.
 
 •
                Consideration
      should be given to backfilling smaller openings on a more frequent
      basis.
 
 •
                Investigate
      the following items before placing tailings in the open
    pit:
 
 •
                Crown
      pillar stability to prevent inrush into the mine
  workings.
 •
                Proper
      sealing of the vent raise connection from the bottom of the open pit to
      the mine.
 •
                The
      effect of water on the tailings during the rainy season and the prevention
      of liquefaction.
 
 •
                Proceed
      with detailed design and cost estimation for the proposed tailings pond
      facility.
 
 For
additional details regarding the information set forth in this section regarding
the Turmalina Gold Project, please refer to the Scott Wilson RPA Turmalina
Technical Report, which is filed on SEDAR.
  50
  
 Satinoco Technical
Report
 
 Introduction
 
 MTL
is a fully-owned Brazilian subsidiary of Jaguar and purchased the Satinoco
Target from AngloGold Ashanti (AngloGold) in September 2004. The Satinoco Target
is part of Jaguar’s Turmalina complex, which is currently producing gold at the
rate of 60,000 oz per year.  The geology of the Turmalina
complex  is related to the Rio das Velhas and Minas Supergroups. It
lies on an extension of the prolific Iron Quadrangle Greenstone
Belt.  The Satinoco Target neighbors the Iron Quadrangle in its west
portion, being in the municipality of Conceição do Pará, about 120 km from Belo
Horizonte, capital of the state of Minas Gerais, Brazil.
 
 Jaguar
initially completed a two-phase diamond drilling program at the Satinoco Target
and commissioned TechnoMine to prepare a resource estimate technical
report.  A technical report was issued on October 22, 2007, based on
exploration data achieved until July 2007. Jaguar completed an additional
exploration campaign (Phase III) in December 2007. The results generated during
Phase III program were integrated to the previous exploration database and gave
rise to a resource base re-evaluation for the Satinoco Target. The revised
Satinoco Technical Report states the updated resource base.
 
 AngloGold
Ashanti explored Turmalina’s area extensively between 1979 and 1988 using
geochemistry, trenching, drilling and 3.9 km of underground
development.  AngloGold Ashanti’s exploration program led to the
discovery of the following mineralized bodies: Turmalina, Faina, Pontal and
Satinoco. During 1992 and 1993, approximately 373,000 t of oxide ore were mined
out (open pit), totaling approximately 35,500 ounces  of gold (“oz
Au”), produced in a local Heap Leach CIC - ADR Plant.
 
 Two
open pits (Principal and SE targets) were mined out at the Satinoco Target, in
the oxide zone only.
 
 After
acquiring the property, Jaguar started an exploration program that covered all
the known targets, which culminated with the development of Turmalina’s Mine and
CIP Plant, currently in operation.  The feasibility study was prepared
by TechnoMine, under the coordination of the author of the Satinoco Technical
Report.
 
 Geology
 
 The
Satinoco Target is hosted by rocks of the Archean Rio das Velhas greenstone belt
in the Iron Quadrangle region, one of the major gold provinces in the world.
Rocks of the Archean and Proterozoic ages occur in the region. Archean units
include a granitic basement, overlain by the Pitangui Group, a sequence of
ultramafic to intermediate volcanic flows and pyroclastics, and associated
sediments. The predominant rock types in the deposit are metamorphosed
amphibolites, pelites and tuffs.
 
 Gold
mineralization in the target area is mainly associated with higher levels of
sericite, biotite and quartz related to hydrothermal alteration in shear zones,
with low concentration of sulfides, mainly, arsenopyrite, pyrrotite and pyrite.
A fraction of the gold mineralization at the Satinoco Target may be primarily
due to exhalative deposition associated with the BIF, however, the deposit can
be broadly classified as epigenetic, related to a mesothermal system related to
auriferous silicification in local structural features within a wider shear
zone.
 
 The
Satinoco Target comprises three zones: the NW, Central, and SE Zones. All of
them strike azimuth 700 and dip
at 500 -
650.
The zones are 150 to 300 m long and range in horizontal width from 2 to 8 m,
averaging approximately 4 m. The mineralized body seems to extend to 350 m below
the surface at least.
 
 Mineral
Resources
 
 The
following data was used to estimate the mineral resources at the Satinoco
Target:
 
 •
                AngloGold
      Ashanti’s exploration program from 1979 to 1988, which included 9 holes
      totaling 1,524 m and about 250 m of
trenches.
 •
                Jaguar’s
      three-phase surface drilling program from 2004 to 2007, as summarized
      below:
 •
                Phase I: 5,501 m drilled
      in 35 new diamond drill holes. This program tested the continuity of the
      mineralized body between the weathered zone and up to 200 m below the
      surface.
 •
                Phase II: 3,338 m
      drilled in 24 complementary holes to create a 25 x 60 m grid between the
      surface and 100 m below and to test the continuity of the mineralized body
      up to the 350 m-elevation above sea
level.
  51
  
 •
                Phase III: in 2007 an
      additional drill hole campaign was carried out, which consisted of 12,568
      meters drilled in 46 drill holes. The results of this campaign were not
      taken into account for the resource base evaluation stated in the original
      technical report dated October 22, 2007 and being herein
      amended.
 The
exploration services carried out so far led to a total estimated amount of
measured and indicated resources of about 208,560 oz Au and inferred resources
of approximately 64,750 oz Au.
 The
resource estimate was made by MCB, a local consulting company that specializes
in resource estimates, located in Belo Horizonte in the state of Minas Gerais,
Brazil.  The estimate was carried out by Rogério Moreno (principal
geologist), under the supervision of Jaime Duchini (Jaguar’s Chief Geologist)
and the author of the Satinoco Technical Report.  See Appendix 01 of
the Satinoco Technical Report for the MCB report.
 
 Satinoco
      Target Resource Estimate*TotalTonnes
      (t)
                
                
                Au
      (g/t)
                
                
                oz
      AuMeasured
                
                
                467,000
                
                
                
                3.76
                
                
                
                56,460Indicated
                
                
                1,274,000
                
                
                
                3.71
                
                
                
                152,100Meas
      + Ind
                
                
                1,741,000
                
                
                
                3.72
                
                
                
                208,560Inferred
                
                
                523,000
                
                
                
                3.85
                
                
                
                64,750
 *3D
Block Model Cut-Off Grade = 1.00 g/t
 Resource
Model Cut-Off Grade = 1.50 g/t
 
 Conclusions
and Recommendations
 
 TechnoMine
recommended that Jaguar conduct a NI 43-101 compliant feasibility study aiming
to increase the Turmalina complex proven and probable reserves base. The
augmented proven and probable reserve base would be utilized to expand
Turmalina’s operation.
 
 The
feasibility study would focus on a review of the current Turmalina complex LOMP,
based on a future Satinoco Mine and on the required adaptations to the existing
metallurgical CIP plant vis-à-vis the increased ROM production.
 
 The
existing infrastructure and plant will most likely enhance the chances that a
Turmalina complex expansion based on the development of the Satinoco Target will
be an economically attractive undertaking.
  52
  
 RISK
FACTORS
 
 Gold
prices are volatile and there can be no assurance that a profitable market for
gold will exist.
 
 The
gold mining industry is intensely competitive, and there is no assurance that,
even if Jaguar discovers commercial quantities of gold mineral resources, a
profitable market will exist for the sale of those resources.  There
can be no assurance that gold prices will remain at such levels or be such that
Jaguar's properties can be mined at a profit.  Factors beyond Jaguar's
control may affect the marketability of any minerals discovered.  Gold
prices are subject to volatile changes resulting from a variety of factors
including international economic and political trends, expectations of
inflation, global and regional supply and demand and consumption patterns, metal
stock levels maintained by producers and others, the availability and cost of
metal substitutes, currency exchange fluctuations, inflation rates, interest
rates, speculative activities and increased production due to improved mining
and production methods.
 
 Uncertainty
involved in mining.
 
 Mining
involves various types of risks and hazards, including environmental hazards,
unusual or unexpected geological operating conditions such as rock bursts,
structural cave-ins or slides, flooding, earthquakes and fires, labor
disruptions, industrial accidents, metallurgical and other processing problems,
metal losses and periodic interruptions due to inclement or hazardous weather
conditions.  These risks could result in damage to, or destruction of,
mineral properties, production facilities or other properties, personal injury,
environmental damage, delays in mining, increased production costs, monetary
losses and possible legal liability.
 
 Jaguar
may not be able to obtain insurance to cover these risks at economically
feasible premiums.  Insurance against certain environmental risks,
including potential liability for pollution or other hazards as a result of the
disposal of waste products occurring from production, is not generally available
to Jaguar or to other companies within the mining industry.  Jaguar
may suffer a material adverse effect on its business if it incurs losses related
to any significant events that are not covered by its insurance
policies.
 
 Calculation
of mineral resources and metal recovery is only an estimate, and there can be no
assurance about the quantity and grade of minerals until resources are actually
mined.
  The
calculation of reserves, resources and corresponding grades being mined or
dedicated to future production are imprecise and depend on geological
interpretation and statistical inferences or assumptions drawn from drilling and
sampling analysis, which might prove to be unpredictable.  Mineral
resources that are not mineral reserves do not have demonstrated economic
viability.  Until reserves or resources are actually mined and
processed, the quantity of reserves or resources and grades must be considered
as estimates only.  Any material change in the quantity of reserves,
resources, grade or stripping ratio may affect the economic viability of
Jaguar's properties.  In addition, there can be no assurance that
metal recoveries in small-scale laboratory tests will be duplicated in larger
scale tests under on-site conditions or during production.
 
 Several
of Jaguar's operations involve exploration and development and there is no
guarantee that any such activity will result in commercial production of mineral
deposits.
  None
of the exploration properties in which Jaguar holds an interest host a known
body of commercial ore and proposed programs on such properties are exploratory
in nature.  Development of these mineral properties is contingent upon
obtaining satisfactory exploration results.  Mineral exploration and
development involve substantial expenses and a high degree of risk, which even a
combination of experience, knowledge and careful evaluation may not be able to
adequately mitigate.  There is no assurance that commercial quantities
of ore will be discovered on any of Jaguar's exploration
properties.  There is also no assurance that, even if commercial
quantities of ore are discovered, a mineral property will be brought into
commercial production, or if brought into production, that it will be
profitable.  The discovery of mineral deposits is dependent upon a
number of factors including the technical skill of the exploration personnel
involved. The commercial viability of a mineral deposit is also dependent upon,
among a number of other factors, its size, grade and proximity to
infrastructure, current metal prices, and government regulations, including
regulations relating to royalties, allowable production, importing and exporting
of minerals, and environmental protection.  In addition, depending on
the type of mining operation involved, several years can elapse from the initial
phase of drilling until commercial operations are commenced. Most of the above
factors are beyond Jaguar's control.
 
  53
  Fluctuations
in currency exchange rates may adversely affect Jaguar's financial position and
results.
  Fluctuations
in currency exchange rates, particularly operating costs denominated in
currencies other than U.S. dollars, may significantly impact Jaguar's financial
position and results.  Gold is sold throughout the world based
principally on a U.S. dollar price, but a portion of Jaguar's operating expenses
are incurred in non-U.S. dollar currencies.  In addition, the
appreciation of non-U.S. dollar currencies in Brazil against the U.S. dollar
would increase the costs of gold production at mining operations in Brazil,
which could materially and adversely affect Jaguar's earnings and financial
condition.
 
 Competition
for new mining properties may prevent Jaguar from acquiring interests in
additional properties or mining operations.
  Significant
and increasing competition exists for mineral acquisition opportunities
throughout the world.  Some of the competitors are large, more
established mining companies with substantial capabilities and greater financial
resources, operational experience and technical capabilities than
Jaguar.  As a result of the competition, Jaguar may be unable to
acquire rights to exploit additional attractive mining properties on terms it
considers acceptable.  Increased competition could adversely affect
Jaguar's ability to attract necessary capital funding or acquire any interest in
additional operations that would yield reserves or result in commercial mining
operations.
 
 Recent
high metal prices have encouraged increased mining exploration, development and
construction activity, which has increased demand for, and cost of, exploration,
development and construction services and equipment.
  Recent
increases in gold prices have led to increases in mining exploration,
development and construction activities, which have resulted in higher demand
for, and costs of, exploration, development and construction services and
equipment.  Increased demand for services and equipment could cause
project costs to increase materially, resulting in delays if services or
equipment cannot be obtained in a timely manner due to inadequate availability,
and increase potential scheduling difficulties and cost increases due to the
need to coordinate the availability of services or equipment, any of which could
materially increase project exploration, development and construction costs
and/or result in project delays.
  Actual
capital costs, operating costs, production and economic returns may differ
significantly from those Jaguar has anticipated and there can be no assurance
that any future development activities will result in profitable mining
operations.
  Capital
and operating costs, production and economic returns, and other estimates
contained in the feasibility studies for Jaguar's projects may differ
significantly from those anticipated by Jaguar's current studies and estimates,
and there can be no assurance that Jaguar's actual capital and operating costs
will not be higher than currently anticipated.  In addition, delays to
construction schedules may negatively impact the net present value and internal
rates of return of Jaguar's mineral properties as set forth in the applicable
feasibility studies.
 
 There
can be no assurance that the interests held by Jaguar in its properties are free
from defects.
  Jaguar
has investigated its rights to explore and exploit its various properties, and,
to the best of its knowledge, those rights are in good standing.  No
guarantee can be given that such rights will not be revoked or significantly
altered to the detriment of Jaguar.  There can also be no guarantee
that Jaguar's rights will not be challenged or impugned by third
parties.
  Jaguar's
properties may be subject to prior recorded and unrecorded agreements, transfers
or claims, and title may be affected by, among other things, undetected
defects.  Jaguar has not conducted surveys of all of the claims in
which it holds direct or indirect interests.  A successful challenge
to the precise area and location of these claims could result in Jaguar being
unable to operate on its properties as permitted or being unable to enforce its
rights with respect to its properties.
  54
  
 Jaguar
is exposed to risks of changing political stability and government regulation in
the country in which it operates.
  Jaguar
holdsmineral
interests in Brazil that may be affected in varying degrees by political
instability, government regulations relating to the mining industry and foreign
investment therein, and the policies of other nations in respect of
Brazil.  Any changes in regulations or shifts in political conditions
are beyond the control of Jaguar and may adversely affect its
business.  Jaguar's operations may be affected in varying degrees by
government regulations, including those with respect to restrictions on
production, price controls, export controls, income taxes, expropriation of
property, employment, land use, water use, environmental legislation and mine
safety.  The regulatory environment is in a state of continuing
change, and new laws, regulations and requirements may be retroactive in their
effect and implementation.  Jaguar's operations may also be affected
in varying degrees by political and economic instability, economic or other
sanctions imposed by other nations, terrorism, military repression, crime,
extreme fluctuations in currency exchange rates and high inflation.
 
 Jaguar
is subject to substantial environmental and other regulatory requirements and
such regulations are becoming more stringent. Non-compliance with such
regulations, either through current or future operations or a pre-existing
condition could materially adversely affect Jaguar.
  All
phases of Jaguar's operations are subject to environmental regulations in the
jurisdiction in which it operates.  Environmental legislation is
evolving in a manner that will require stricter standards and enforcement,
increased fines and penalties for non-compliance, more stringent environmental
assessments of proposed projects and a heightened degree of responsibility for
companies and their officers, directors and employees.  There can be
no assurance that future changes in environmental regulation, if any, will not
be materially adverse to Jaguar's operations.
 
 The
properties in which Jaguar holds interests may contain environmental hazards,
which are presently unknown to Jaguar and which have been caused by previous or
existing owners or operators of the properties.  If Jaguar properties
do contain such hazards, this could lead to Jaguar being unable to use the
properties or may cause Jaguar to incur costs to clean up such
hazards.  In addition, Jaguar could find itself subject to litigation
should such hazards result in injury to any persons.
 
 Government
approvals and permits are sometimes required in connection with Jaguar's
operations.  Although Jaguar believes it has all of the material
approvals and permits to carry on its operations, Jaguar may require additional
approvals or permits or may be required to renew existing approvals or permits
from time to time.  Obtaining or renewing approvals or permits can be
a complex and time-consuming process.  There can be no assurance that
Jaguar will be able to obtain or renew the necessary approvals and permits on
acceptable terms, in a timely manner, or at all.  To the extent such
approvals are required and not obtained, Jaguar may be delayed or prohibited
from proceeding with planned exploration, development or mining of mineral
properties.
 
 Failure
to comply with applicable laws, regulations and permitting requirements may
result in enforcement actions thereunder, including orders issued by regulatory
or judicial authorities, which may require operations to cease or be curtailed,
or corrective measures requiring capital expenditures, installation of
additional equipment, or remedial actions.  Parties engaged in mining
operations may be required to compensate those suffering loss or damage by
reason of the mining activities and may have civil or criminal fines or
penalties imposed for violations of applicable laws or regulations.
 
 Amendments
to current laws, regulations and permits governing operations and activities of
mining companies, or more stringent implementation of such requirements could
have a material adverse impact on Jaguar and cause increases in capital
expenditures or production costs or reductions in levels of production at
producing properties or require abandonment or delays in development of new
mining properties.
 
 History
of losses.
 
 Jaguar
has experienced net operating losses since its first full year of operations in
2003.  These losses amounted to US$3,802,490 for the year ended
December 31, 2004, US$12,838,000 for the year ended December 31, 2005,
US$12,746,000 for the year ended December 31, 2006, and US$27,080,000 for the
fiscal year ended December 31, 2007.  There can be no assurance that
Jaguar will be able to achieve or sustain profitability in the
future.
  55
  
 Jaguar
may need additional capital to accomplish its exploration and development plans,
and there can be no assurance that financing will be available on terms
acceptable to Jaguar, or at all.
 
 The
exploration and development of Jaguar’s properties, including the continued
exploration and development of projects and the construction of mining
facilities and operations may require substantial additional
financing.  Failure to obtain sufficient financing, or financing on
terms acceptable to Jaguar, may result in a delay or indefinite postponement of
exploration, development or production on any or all of Jaguar’s properties or
even a loss of an interest in a property.  The only source of funds
now available to Jaguar is through production at Sabará and Turmalina, the sale
of debt or equity capital, properties, royalty interests or the entering into of
joint ventures or other strategic alliances in which the funding sources could
become entitled to an interest in Jaguar's properties or
projects.  Additional financing may not be available when needed or if
available, the terms of such financing might not be favorable to Jaguar and
might involve substantial dilution to existing shareholders.  If
financing involves the issuance of debt, the terms of the agreement governing
such debt could impose restrictions on Jaguar’s operation of its
business.  Failure to raise capital when needed would have a material
adverse effect on Jaguar’s business, financial condition and results of
operations.
 
 Jaguar
has no record of paying dividends.
 
 Jaguar
has no dividend record.  Jaguar has paid no dividends on the common
shares since incorporation and does not anticipate doing so in the foreseeable
future.  Payment of any future dividends will be at the discretion of
Jaguar's board of directors after taking into account many factors, including
operating results, financial condition, capital requirements, business
opportunities and restrictions contained in any financing
agreements.
 
 Jaguar
relies on its management and key personnel, and there is no assurance that such
persons will remain at Jaguar, or that Jaguar will be able to recruit skilled
individuals.
 
 Jaguar
relies heavily on its existing management. Jaguar does not maintain "key man"
insurance. Recruiting and retaining qualified personnel is critical to Jaguar's
success.  The number of persons skilled in the acquisition,
exploration and development of mining properties is limited and competition for
the services of such persons is intense.  Jaguar believes that it has
been successful in recruiting excellent personnel to meet its corporate
objectives.  However, as Jaguar's business activity grows, it may
require additional key financial, administrative, technical and mining
personnel.  Although Jaguar believes that it will be successful in
attracting and retaining qualified personnel, there can be no assurance of such
success.  The failure to attract such personnel to manage growth
effectively could have a material adverse effect on Jaguar's business,
prospects, financial conditions and results of operations.
 
 Certain
directors of Jaguar are directors or officers of, or have shareholdings in,
other mineral resource companies and there is the potential that such directors
will encounter conflicts of interest with Jaguar.
 
 Certain
of the directors of Jaguar are directors or officers of, or have significant
shareholdings in, other mineral resource companies, and, to the extent that such
other companies may participate in ventures in which Jaguar may participate, the
directors of Jaguar may have a conflict of interest in negotiating and
concluding terms respecting the extent of such participation.  Such
other companies may also compete with Jaguar for the acquisition of mineral
property rights.  If any such conflict of interest arises, a director
who has such a conflict will disclose the conflict at a meeting of the directors
of Jaguar, will not attend any part of a meeting of directors of Jaguar at which
the terms and extent of such participation are discussed, and will abstain from
voting for or against the approval of such participation or such terms. In
accordance with applicable laws, the directors of Jaguar are required to act
honestly, in good faith and in the best interests of Jaguar.  In
determining whether or not Jaguar will participate in a particular program and
the interest therein to be acquired by it, the directors of Jaguar will
consider, among other issues, the potential benefits to Jaguar, the degree of
risk to which Jaguar may be exposed and its financial position at that
time.
  56
  
 Jaguar
is exposed to risks of changing labor and employment regulations.
 
 Although
Jaguar has good relations with its employees, production at its mining
operations is dependant upon the efforts of Jaguar's employees.  In
addition, relations between Jaguar and its employees may be affected by changes
in the scheme of labor relations that may be introduced by the relevant
governmental authorities in whose jurisdictions Jaguar carries on
business.  Changes in such legislation or in the relationship between
Jaguar and its employees may have a material adverse effect on Jaguar's
business, results of operations and financial condition.
 
 Substantially
all of Jaguar's assets are held by foreign subsidiaries that are subject to the
laws of the Republic of Brazil.
 
 Jaguar
conducts operations through its wholly-owned foreign subsidiaries, MSOL and MTL,
and substantially all of its assets are held through such
entities.  Accordingly, any governmental limitation on the transfer of
cash or other assets between Jaguar, MSOL and MTL could restrict Jaguar's
ability to fund its operations efficiently.  Any such limitations or
the perception that such limitations may exist now or in the future could have
an adverse impact on Jaguar's prospects, financial condition and results of
operations.
 
 Residency
of directors, officers and others.
 
 Jaguar
is incorporated under the laws of Ontario, but does not have an office or other
permanent establishment in Canada. Three of Jaguar's
directors and all of Jaguar's officers reside outside of
Canada.  Substantially all of the assets of these persons and of
Jaguar are located outside of Canada.  Although Jaguar has a
registered office in Canada and has appointed Davies Ward Phillips &
Vineberg LLP as its agent for service of process, it may not be possible for
investors to effect services of process within Canada upon officers and
directors and certain named experts who reside outside its
borders.  It may also not be possible to enforce judgments obtained in
Canadian courts predicated upon the civil liability provisions of applicable
securities laws in Canada against Jaguar, certain officers and directors and
certain experts named herein.
 
 The
trading price for Jaguar’s common shares is volatile.
 
 Securities
of micro- and small-cap companies have experienced substantial volatility in the
past, often based on factors unrelated to the financial performance or prospects
of the companies involved. These factors include macroeconomic developments in
North America and globally and market perceptions of the attractiveness of
particular industries. Jaguar's share price is also likely to be significantly
affected by short-term changes in gold prices or in its financial condition or
results of operations as reflected in its quarterly earnings reports. Other
factors unrelated to Jaguar's performance that may have an effect on the price
of its common shares include the following: the extent of analytical coverage
available to investors concerning Jaguar's business may be limited if investment
banks with research capabilities do not continue to follow Jaguar's securities;
the lessening in trading volume and general market interest in Jaguar's
securities may affect an investor's ability to trade significant numbers of
common shares; the size of Jaguar's public float may limit the ability of some
institutions to invest in Jaguar's securities; and a substantial decline in the
price of its common shares that persists for a significant period of time could
cause Jaguar's securities to be delisted from the TSX, further reducing market
liquidity.  As a result of any of these factors, the market price of
Jaguar’s common shares at any given point in time may not accurately reflect
Jaguar's long-term value. Securities class action litigation often has been
brought against companies following periods of volatility in the market price of
their securities. Jaguar may in the future be the target of similar litigation.
Securities litigation could result in substantial costs and damages and divert
management's attention and resources.
 
 The
value of common shares may be diluted due to the conversion of stock
options.
 
 As
at January 31, 2008, there were 7,783,158 common shares issuable upon the
exercise of outstanding stock options at prices ranging from US$1.00 to C$9.54
per share.  During the life of the options, the holders of such
securities are given an opportunity to profit from a rise in the market price of
common shares with a resulting dilution in the interest of the other
shareholders.  Jaguar's ability to obtain additional financing during
the period in which such rights are outstanding may be adversely affected and
the existence of the rights may have an adverse effect on the market price of
its common shares.  The holders of stock options may exercise such
securities at a time when Jaguar would be able to obtain needed capital by a new
offering of securities on terms more favorable than those provided by the
outstanding rights.  The increase in the number of Jaguar’s common
shares in the market resulting from the exercise of such rights and the
possibility of sales of such shares may have a depressive effect on the price of
Jaguar’s common shares.  In addition, as a result of such additional
common shares, the voting power of Jaguar's existing shareholders will be
substantially diluted.
 
  57
  Jaguar
may, in the future, grant to some or all of its directors, key employees and
consultants additional options to purchase its common shares at exercise prices
equal to market prices at times when the public market is depressed. To the
extent that significant numbers of such options are granted and exercised, the
interests of then existing shareholders of Jaguar will be subject to additional
dilution.
 
 Jaguar
may experience problems integrating new acquisitions into existing operations,
which could have a material adverse effect on Jaguar.
 
 Jaguar
has a history of growing through acquisitions and expects to continue to pursue
acquisitions of companies or properties that have the potential to produce gold
or other base metals.
 
 Jaguar's
success at completing any acquisitions will depend on a number of factors,
including, but not limited to, identifying acquisitions which fit Jaguar's
strategy, negotiating acceptable terms with the seller of the business or
property to be acquired; and obtaining approval from regulatory authorities in
the jurisdictions of the business or property to be acquired.
 
 If
Jaguar does make further acquisitions, any positive effect on Jaguar's results
will depend on a variety of factors, including, but not limited to: assimilating
the operations of an acquired business or property in a timely and efficient
manner; maintaining Jaguar's financial and strategic focus while integrating the
acquired business or property; implementing uniform standards, controls,
procedures and policies at the acquired business, as appropriate; and to the
extent that Jaguar makes an acquisition outside of markets in which it has
previously operated or of a property other than a gold property, conducting and
managing operations in a new operating environment.
 
 Acquiring
additional businesses or properties could place increased pressure on Jaguar's
cash flow if such acquisitions involve cash consideration or the assumption of
obligations requiring cash payments. The integration of Jaguar's existing
operations with any acquired business will require significant expenditures of
time, attention and funds. Achievement of the benefits expected from
consolidation would require Jaguar to incur significant costs in connection
with, among other things, implementing financial and planning systems. Jaguar
may not be able to integrate the operations of a recently acquired business or
restructure Jaguar's previously existing business operations without
encountering difficulties and delays. In addition, this integration may require
significant attention from Jaguar's management team, which may detract attention
from Jaguar's day-to-day operations. Over the short-term, difficulties
associated with integration could have a material adverse effect on Jaguar's
business, operating results, financial condition and the price of its common
shares. In addition, the acquisition of mineral properties may subject Jaguar to
unforeseen liabilities, including environmental liabilities.
  58
  
 DIVIDENDS
 
 Jaguar
has not paid any dividends and does not intend to pay dividends in the
foreseeable future.  Any future payment of dividends will be dependent
upon the financial requirements of Jaguar to fund future projects, the financial
condition of Jaguar and other factors that the Board, in its discretion, may
consider appropriate under the circumstances.
  DESCRIPTION OF CAPITAL
STRUCTURE
 
 Jaguar
is authorized to issue an unlimited number of common shares of which there were
55,734,400 issued and outstanding as of December 31, 2007.  Holders of
Jaguar’s common shares are entitled to receive notice of any meetings of
shareholders, to attend and to cast one vote per Common Share at all such
meetings.  Holders of Jaguar’s common shares do not have cumulative
voting rights with respect to the election of directors, and holders of a
majority of Jaguar’s common shares entitled to vote in any election of directors
may therefore elect all directors standing for election. Holders of Jaguar’s
common shares are entitled to receive on a pro-rata basis such dividends, if
any, as and when declared by the Board at its discretion from funds legally
available therefore and upon the liquidation, dissolution or winding up of
Jaguar are entitled to receive on a pro-rata basis the net assets of Jaguar
after payment of debts and other liabilities, in each case subject to the
rights, privileges, restrictions and conditions attaching to any other series or
class of shares ranking senior in priority to or on a pro-rata basis with the
holders of common shares with respect to dividends or
liquidation.  Jaguar’s common shares do not carry any pre-emptive,
subscription, redemption or conversion rights, nor do they contain any sinking
or purchase fund provisions.  As of January 31, 2007, the Board
adopted the Shareholder Rights Plan, which was ratified at the 2007 annual
meeting of shareholders and approved by the TSX.  A copy of the
Shareholder Rights Plan may be found on SEDAR at http://www.sedar.com.
 
 On
February 21, 2008, Jaguar issued 8,250,000 common shares at a price of
Cdn.$13.40 per share for proceeds of Cdn.$110,550,000. The offering price was
determined by negotiation between Jaguar and a syndicate led by RBC and included
TD Securities, BCI, BMO, and Raymond James Ltd.  Jaguar granted the
underwriters an over-allotment option, exercisable in whole or in part up to 30
days following the closing of the transaction, to purchase up to an additional
1,237,500 common shares at a price of Cdn.$13.40 per share, which would increase
the aggregate proceeds of the offering to Cdn.$127,132,500 if the over-allotment
option is fully exercised.  The underwriters chose not to exercise the
over-allotment option.
  59
  
 MARKET FOR
SECURITIES
 
 Jaguar’s
common shares are listed and posted for trading on the TSX and on the NYSE Arca,
in each case under the symbol “JAG”.  The warrants had an exercise
price of Cdn.$4.50 and an expiry of December 31, 2007 listed and traded on the
TSX under the symbol “JAG.WT”.  Due to the expiration of the Warrants,
they are no longer traded on the TSX.  The notes issued pursuant to
the March 22, 2007 private placement were listed on the TSX on July 26, 2007,
under the symbol “JAG.NT”.
 
 With
respect to each of TSX and NYSE Arca, the following tables set forth information
relating to the trading of Jaguar’s common shares and notes for the periods
indicated.
 
 Toronto
Stock Exchange
 Common
Shares
 
 Month
                High
      (Cdn.$)
                Low
      (Cdn.$)
                Close
      (Cdn.$)
                Share
      VolumeJanuary
      2007
                6.90
                5.00
                6.70
                1,772,900February
      2007
                6.89
                6.09
                6.75
                2,462,100March
      2007
                6.80
                5.35
                6.17
                2,293,000April
      2007
                8.30
                6.08
                8.05
                3,505,700May
      2007
                8.31
                7.18
                7.70
                3,202,600June
      2007
                7.80
                6.80
                7.37
                3,035,400July
      2007
                8.19
                6.75
                7.47
                4,103,200August
      2007
                7.73
                5.36
                6.40
                4,553,600September
      2007
                9.31
                6.35
                8.86
                3,732,900October
      2007
                12.20
                8.08
                12.00
                5,426,900November
      2007
                12.00
                9.00
                9.35
                4,579,900December
      2007
                12.09
                8.80
                12.09
                2,217,600
 
 Notes
 
 Month
                High
      (Cdn.$)
                Low
      (Cdn.$)
                Close
      (Cdn.$)
                Note
      VolumeJuly
      2007(1)
                98.00
                92.00
                98.00
                34,150August
      2007
                100.00
                90.00
                90.00
                44,050September
      2007
                94.87
                90.00
                94.87
                1,670October
      2007
                97.50
                94.87
                97.50
                10,330November
      2007
                99.50
                96.50
                99.50
                16,810December
      2007
                99.00
                99.00
                99.00
                150
 (1)   Trading
of notes commenced July 26, 2007.
 
 NYSE
Arca
 Common
Shares
 
 Month
                High
      (US$)
                Low
      (US$)
                Close
      (US$)
                Share
      VolumeJuly
      2007(1)
                7.88
                6.32
                6.95
                231,600August
      2007
                7.31
                4.95
                6.09
                702,700September
      2007
                6.18
                8.90
                8.81
                854,700October
      2007
                12.70
                8.35
                12.69
                1,670,800November
      2007
                13.30
                9.02
                9.30
                1,584,400December
      2007
                12.17
                8.77
                11.95
                1,124,500
 (1)   Trading on the NYSE Arca commenced July 23,
2007.
  60
  
 DIRECTORS AND EXECUTIVE
OFFICERS
 
 The
following is a list of the directors and executive officers of Jaguar, and
information regarding each individual including municipality of home address,
position with Jaguar, date of appointment to the position with Jaguar and the
principal occupation during the past five years.  All directors hold
office until the next annual meeting of shareholders or until their successors
are elected or until their earlier death, resignation or removal.
 
 Name
      and Municipality of home address
                Position
      and Date of appointment
                Principal
      occupation during past five yearsGary
      E. German
                  Toronto,
      Ontario, Canada
                Director
      and Chairman
                  September
      26, 2003
                President
      of Falcon Strategy and Management Co.; formerly Managing Director,
      Kingsdale Capital Partners Inc., October 2002 to September
      2003.Daniel
      R. Titcomb(1)
                  Henniker,
      New Hampshire, USA
                Director,
      President and CEO
                  June
      6, 2003
                President
      and CEO of Jaguar has been Mr. Titcomb’s principal occupation since June
      2003; prior to such time, Mr. Titcomb’s principal occupation was President
      and CEO of Brazilian.(2)Juvenil
      T. Felix
                  Nova
      Lima, Minas Gerais, Brazil
                Director  and
      Chief Operating Officer
                  June
      6, 2003
                Chief
      Operating Officer of Jaguar since 2003; President and Chief Executive
      Officer of IMS from 2002 through the present.Anthony
      F. Griffiths
                  Toronto,
      Ontario, Canada
                Director
                  May
      20, 2004
                Independent
      business consultant.William
      E. Dow(1)
                  Manchester,
      Connecticut, USA
                Director
                  June
      4, 2004
                Retired,
      formerly an actuary with Aetna Life & Casualty.Andrew
      C. Burns
                  Toronto,
      Ontario, Canada
                Director
                  August
      6, 2004
                Independent
      business consultant.Gil
      Clausen
                  Denver,
      Colorado, USA
                Director
                  May
      12, 2005
                Chief
      Executive Officer of Augusta Resource Corporation, a Canadian corporation,
      since 2005; Executive Vice President, Mining, Washington Group
      International, Inc., from October 2001 to March 2005.James
      M. Roller
                  Manchester,
      New Hampshire, USA
                Chief
      Financial Officer
                  March
      1, 2005
                  
                  Treasurer
                  May
      11, 2006
                Mr.
      Roller served as a consultant to Jaguar from November 1, 2004 through
      February 28, 2005.  Mr. Roller replaced Mr. Kirchhoff as CFO on
      March 1, 2005 and as Treasurer on May 11, 2006.  Prior to
      working for Jaguar, Mr. Roller served as Director of Finance and
      Administration, DSM Thermoplastic Elastomers (March 2001-November
      2004).Robert
      J. Lloyd(3)
                  Concord,
      New Hampshire, USA
                Secretary
                  March
      1, 2002
                President,
      CEO and Secretary of Brazilian.  Partner, Hinckley, Allen &
      Snyder LLP, February 2002-April
2006.
  (1)
                Mr.
      Titcomb and Mr. Dow serve on the board of directors of both Jaguar and
      Brazilian.
 (2)
                Mr.
      Titcomb remained the President and Chief Executive Officer of Brazilian
      until April 2006.
 (3)
                Mr.
      Lloyd serves as secretary to both Jaguar and Brazilian, and is a director
      and the President and Chief Executive Officer of
  Brazilian.
 
 As
of March 24, 2008, the directors and executive officers of Jaguar, as a group,
beneficially own, directly or indirectly, or exercise control or discretion over
an aggregate of 5,000,526 common shares of Jaguar, representing 7.8 percent of
the outstanding shares.
 
 Jaguar’s
compensation committee considers employment, consulting or other compensation
arrangements between Jaguar and its employees.  The current members of
the compensation committee are Messrs. German and Griffiths, with Mr. Griffiths
as chairman.
 
 Jaguar’s
corporate governance committee reviews and advises the Board with respect to
corporate governance and compliance issues.  The current members of
the corporate governance committee are Messrs. Griffiths, Dow and Clausen, with
Mr. Dow as chairman.
 
  61
  Jaguar’s
health, safety and environmental committee reviews and advises the Board with
respect to responsibilities relating to various human resources and
environmental issues of Jaguar.  The current members of the human
resources and environmental committee are Messrs. German and Clausen, with Mr.
Clausen as chairman.
 
 For
information on Jaguar’s audit committee, see the section entitled “Audit Committee” under “DIRECTORS AND EXECUTIVE
OFFICERS”.
 
 The
following is a description of the professional qualifications, designations and
memberships in business-related associations, experience and technical expertise
pertinent to Jaguar’s business and other background information relating to the
officers and directors of Jaguar.
 
 Gary
E. German, Chairman
 
 Mr.
German, President of Falcon Strategy and Management Co., is a professional
engineer with over 35 years of senior management experience in the development
of operations and financing of global resource projects and
companies.  He was most recently Managing Director of a resource
corporate finance group following his Senior Advisor role to the President-CEO
of Ma'aden, the Kingdom of Saudi Arabia's mineral resource development
corporation.  Previously, as Senior Vice President, Chief Operating
Officer and Director of TVX Gold Inc., he was responsible for worldwide
operations.  These positions followed 28 years in the Noranda Group,
culminating in the position of Senior Vice President, where he was responsible
for major projects in Chile, industrial and mine developments in Brazil and
executive strategic activities in some 20 countries.  Mr. German is
fluent in Portuguese and Spanish.  He is a director of a number of
public companies and also 'not-for-profit' organizations.  Mr. German
holds an engineering degree from the University of Toronto.
 
 Daniel
R. Titcomb, CEO, President and Director
 
 Mr.
Titcomb is one of the founders of Brazilian with thirteen continuous years of
experience to date operating in the country of Brazil (and remains a director of
Brazilian).  Previously, Mr. Titcomb was engaged in the management of
construction and real estate development, and has board of director experience
at private companies.  Mr. Titcomb graduated from Keene State College,
Keene, New Hampshire with Bachelor of Science degrees in Industrial Engineering
and Business Management.
 
 Juvenil
T. Felix, Chief Operating Officer and Director
 
 Mr.
Felix is the Chief Operating Officer of Jaguar.  Mr. Felix is also
President and Chief Executive Officer of IMS.  Mr. Felix is a former
chief executive officer of AngloGold Ashanti’s gold division in Brazil (from
1979 to 1997) and has over 40 years experience in the Brazilian mining
sector.  In the past he served as Adjunct Secretary of Mining and
Energy for the State of Minas Gerais.  He holds degrees in Mining,
Metallurgical and Civil Engineering from the School of Mines of the Federal
University of Ouro Preto, Brazil.
 
 Anthony
F. Griffiths, Director
 
 From
1993 to the present Mr. Griffiths has been associated with various companies
acting as an independent consultant.  At present, Mr. Griffiths is
Director and Chairman of Russel Metals Inc. and Novadaq Technologies
Inc.  He is also a Director of Crum & Forster Holdings Corp.,
Fairfax Financial Holdings Limited, PreMD Inc., Northbridge Financial
Corporation, Odyssey Re Holdings Corp., and Vitran Corporation.  Mr.
Griffiths was educated at McGill University in Canada (BA 1954) and at the
Harvard Graduate School of Business Administration (MBA 1956).
 
 William
E. Dow, Director
 
 Mr.
Dow is formerly an actuary with Aetna Life Casualty Company in Connecticut and
is currently retired.  During his career, he was an Executive Officer,
a Fellow of the Society of Actuaries and a Member of the American Academy of
Actuaries.  Mr. Dow holds a BA degree in Mathematics from Middlebury
College.  Mr. Dow also serves as a Director and Chairman of
Brazilian.
 
  62
  Andrew
C. Burns, Director
 
 Mr.
Burns is an independent director and consultant.  In 2003, he retired
as a Senior Partner of Deloitte & Touche with almost 40 years of experience
in international auditing, consulting and practice management in North and South
America, Europe and Asia. He holds an M.B.A. degree from The Richard Ivey School
of the University of Western Ontario and is a Member of the Canadian Institute
of Chartered Accountants and the Institute of Management Consultants of Ontario.
He also serves on other Boards as an independent director and audit committee
chair.
 
 Gil
Clausen, Director
 
 Since
2005, Mr. Clausen has been employed as the Chief Executive Officer of Augusta
Resource Corporation, a Canadian corporation.  Prior to this position,
he was the Executive Vice President, Mining, of Washington Group International,
Inc., from 2001 to 2005.  He was President and Chief Executive Officer
of EngineeringMatrix Corp., which provided project/commercial management
software for mining and power companies, from 1999 to 2001.  Mr.
Clausen has 22 years experience in executive, operational, business development,
project and engineering management in the mining industry.  He has
held senior positions with Stillwater Mining Company, Placer Dome Inc.,
Falconbridge, Fording Coal Limited and Cleveland Cliffs Inc.  Mr.
Clausen holds a mining engineering degree from Queen’s University.
 
 James
M. Roller, Chief Financial Officer and Treasurer
 
 Mr.
Roller graduated from the University of Notre Dame with a BBA in Accounting and
Finance.  He is a CPA, having spent 12 years with Arthur Andersen, 8
years of which he concentrated on the mining industry in South
Africa.  Mr. Roller has also served as a project manager for the
Financial Accounting Standards Board (FASB).  For the past 15 years he
has held senior finance and operating positions for a variety of public and
private international companies, in the high-tech and manufacturing
industries.
 
 Robert
J. Lloyd, Secretary
 
 Mr.
Lloyd received a Bachelor of Science degree from the University of New Hampshire
in 1970, served as an officer in the United States Army from 1970 to 1974,
received his Juris Doctor in 1977 and LLM (Taxation) from Boston University in
1980.  Mr. Lloyd practiced law with the New Hampshire firm of
Cleveland, Waters & Bass, P.A. as an attorney (1977), partner (1981) and
managing partner (1991-1995).  Mr. Lloyd was an adjunct professor of
corporate taxation at Franklin Pierce Law Center (1980-1985).  Mr.
Lloyd’s representation of clients primarily involves providing advice to active
boards of directors regarding how to properly perform their duties and corporate
business and taxation planning.  Mr. Lloyd was a partner with the firm
of Hinckley, Allen & Snyder LLP from February 2002 until April
2006.  Hinckley, Allen & Snyder LLP has offices in Boston,
Massachusetts, Providence, Rhode Island and Concord, New
Hampshire.  Since 2006 Mr. Lloyd has been the President and Chief
Executive Officer and a director of Brazilian.  Mr. Lloyd serves as
the corporate secretary for Brazilian (since 1990) and for Jaguar.
 
 Corporate
Cease Trade Orders or Bankruptcies
 
 Except
as stated below, no director or executive officer of Jaguar, or shareholder
holding a sufficient number of securities of Jaguar to affect materially the
control of Jaguar, is, as at the date of this Annual Information Form, or has
been within ten (10) years before the date of this Annual Information Form, a
director or executive officer of any company that, while that person was acting
in that capacity:
 
 (i)
                was
      the subject of a cease trade or similar order or an order that denied the
      relevant company access to any exemption under securities legislation, for
      a period of more than thirty (30) consecutive days except as set forth in
      the second and third to last paragraphs of this
  section;
 
 (ii)
                was
      subject to an event that resulted, after the director or executive officer
      ceased to be a director or executive officer, in the company being the
      subject of a cease trade or similar order or an order that denied the
      relevant company access to any exemption under securities legislation, for
      a period of more than thirty (30) consecutive days;
  or
  63
  
 (iii)
                within
      a year of that person ceasing to act in that capacity, became bankrupt,
      made a proposal under any legislation relating to bankruptcy or
      insolvency, or was subject to or instituted any proceedings, arrangement
      or compromise with creditors or had a receiver, receiver manager or
      trustee appointed to hold its
assets.
 
 Further,
except as noted below, no director, executive officer, promoter or other member
of management of Jaguar has within the ten years before the date of this Annual
Information Form, become bankrupt, made a proposal under any legislation
relating to bankruptcy or insolvency, or become subject to or instituted any
proceedings, arrangement or compromise with creditors, or had a receiver,
receiver manager or trustee appointed to hold the assets of the
Nominee.
 
 Messrs.
Dow, Lloyd and Titcomb are directors of Brazilian and Mr. Griffiths was a
director of Brazilian until June 29, 2005.  Mr. Lloyd is President and
Chief Executive Officer and a director of Brazilian.  The Ontario
Securities Commission, the British Columbia Securities Commission and the
Alberta Securities Commission issued cease trading orders against Brazilian on
May 3, May 9 and August 24, 2007, respectively, because of its late filing of
annual financial statements and management discussion and analysis for the year
ended December 31, 2006.  Brazilian filed such financial statements
and management discussion and analysis on October 17, 2007, and the Ontario
Securities Commission, the British Columbia Securities Commission and the
Alberta Securities Commission lifted the cease trading orders in December
2007.  The Ontario Securities Commission issued a temporary cease
trading order against Brazilian on May 10, 2006 because of its late filing of
annual financial statements and management discussion and analysis for the year
ended December 31, 2005.  Brazilian filed such financial statements
and management discussion and analysis on May 19, 2006 and the Ontario
Securities Commission lifted the temporary cease trade order on May 24,
2006.  The Ontario Securities Commission issued a cease trade order
against Brazilian on December 6, 2005 because of its failure to file interim
financial statements and management discussion and analysis for the quarter
ended September 30, 2005.  Brazilian filed such financial statements
and management discussion and analysis on January 5, 2006, and the Ontario
Securities Commission lifted the cease trade order on January 17,
2006.  A temporary cease trading order was also issued by the Ontario
Securities Commission against the management and insiders of Brazilian on June
10, 2001.  This order was rescinded on July 30, 2001.  The
TSX Venture Exchange suspended trading in Brazilian as a result of a cease trade
order issued by the British Columbia Securities Commission on June 30, 2003 due
to the late filing of financial statements.  The financial statements
were subsequently filed with the appropriate regulatory authorities. Such cease
trade order was lifted by the British Columbia Securities Commission on July 8,
2003, and by the Ontario Securities Commission on July 29, 2003.
 
 Mr.
Griffiths was formerly a director of Consumers Packaging Inc. while it operated
under the protection of the Companies’ Creditors Arrangement Act (Canada)
(“CCAA”).  During the protection period, cease trade orders were
issued against management and insiders due to the failure to file financial
statements.  Mr. Griffiths was also a director of Confederation Life
Insurance Company at the time it was placed into liquidation in 1994 and
Consumers Packaging Inc. at the time it was placed in liquidation under the
protection of the CCAA in 2001.  Mr. Griffiths was a director of
Slater Steel Inc., which operated under the protection of the CCAA in an orderly
wind-down and orderly realization in 2004.  PriceWaterhouseCoopers has
been appointed receiver without security of all of its property, assets and
undertakings in 2004.
 
 Mr.
Roller was formerly Vice President of Finance for Century Electronics
Manufacturing Inc. (“Century”), a private U.S. company, which filed for
bankruptcy under Chapter 11 of the U.S. Bankruptcy Code during January
2001.  Mr. Roller had no stock or any other interest in the
company.  After Century operated in Chapter 11 for a period of time,
the Bankruptcy Court approved the sale of Century to another
company.
 
  64
  Conflicts
of Interest
 
 Certain
directors and officers of Jaguar and its subsidiary are associated with other
reporting issuers or other corporations, and such relationships may give rise to
conflicts of interest.  Specifically, Daniel R. Titcomb and William E.
Dow are directors of both Jaguar and Brazilian; Mr. Titcomb is also President
and Chief Executive Officer of Jaguar; Mr. Lloyd is a director, President and
Chief Executive Officer Brazilian and Secretary of Brazilian and Jaguar; and Mr.
Kirchhoff is a director, Chief Financial Officer and Treasurer of Brazilian and
was the Treasurer of Jaguar until May 11, 2006.  As of March 24, 2008,
Brazilian held 5.6 percent of the currently outstanding common
shares.  Juvenil T. Felix is Chief Executive Officer and a director of
IMS.  As of March 24, 2008, IMS held 7.0 percent of the currently
outstanding common shares of Jaguar.  Further, Jaguar is a party to a
management agreement with IMS pursuant to which IMS receives certain monthly
fees and a lease agreement with Brazilian, which includes an occupancy and
administrative services arrangement, pursuant to which Brazilian receives
certain monthly fees.  Jaguar was the lender of secured and unsecured
loans to Brazilian, which loans were repaid in full in 2006.
 
 In
accordance with the Business
Corporations Act(Ontario),a director who has a
material interest in or is a party to a material contract or a proposed material
contract with Jaguar is required, subject to certain exceptions, to disclose
that interest and generally abstain from voting on any resolution to approve the
contract. In addition, directors are required to act honestly and in good faith
with a view to the best interests of Jaguar.  Certain directors of
Jaguar have either other employment or other business or time restrictions
placed on them and these directors of Jaguar are therefore not likely to be able
to devote all of their time to the affairs of Jaguar.
 
 Audit
Committee
 
 As
of March 24, 2008, the members of the Audit Committee are Messrs. Burns, German
and Griffiths.  Mr. Burns is the Chair of the
Committee.  Messrs. Burns, German and Griffiths are independent within
the meaning of National Instrument 52-110.  All three members are
financially literate within the meaning of National Instrument
52-110.
 
 For
a description of the biographies of the Audit Committee members, see “Directors and Executive
Officers”.
 
 The
Charter of the Audit Committee is set forth in Appendix A to this Annual
Information Statement.
 
 Audit
Fees
 
 During
the fiscal years ended December 31, 2006 and December 31, 2007, KPMG LLP,
Chartered Accountants (“KPMG”), charged Jaguar a total of Cdn.$171,604 and
Cdn.$311,860, respectively, for audit services.
 
 Audit-Related
Fees
 
 During
the fiscal years ended December 31, 2006 and December 31, 2007, KPMG charged
Cdn.$237,636 and Cdn.$205,463, respectively, for assurance and related services
that are reasonably related to the performance of the auditor review of Jaguar’s
financial statements but are not reported above in “Audit Fees”.  Such
services related to professional services in connection with a prospectus and
financial statement reviews.
 
 Tax
Fees
 
 In
each of the fiscal years ended December 31, 2006 and December 31, 2007, KPMG
billed Cdn.$0 and Cdn.$0, respectively, for tax compliance, tax advice and tax
planning services.
 
 All
Other Fees
 
 In
each of the fiscal years ended December 31, 2006 and December 31, 2007, KPMG
billed Jaguar no amounts for services other than those reported under “Audit Fees”, “Audit-Related Fees”, and
“Tax
Fees”.
 
 
  65
  INTEREST OF MANAGEMENT AND
OTHERS IN MATERIAL TRANSACTIONS
 
 To
the knowledge of the management of Jaguar, none of the directors, executive
officers or principal shareholders of Jaguar and no associate or affiliate of
the foregoing persons has or has had any material interest, direct or indirect,
in any transaction within the past three years or in any proposed transaction
that has materially affected or will materially affect Jaguar or any of its
subsidiaries, except for (i) two management agreements pursuant to which (A)
Brazilian received US$20,000 per month in management fees from Jaguar (which
agreement terminated on March 31, 2005), and (B) (x) for the year ended December
31, 2005, Jaguar incurred fees of US$954,000 to IMS in fees for management
services rendered to MSOL, (y) for the year ended December 31, 2006, Jaguar
incurred fees of US$739,000 to IMS Engenharia Mineral Ltda. for management
services provided to MSOL, and (z) for the year ended December 31, 2007, Jaguar
incurred fees of US$747,000 to IMS Engenharia Mineral Ltda. for management
services provided to MSOL; (iii) (x) Jaguar incurred occupancy fees to Brazilian
of US$120,000 in 2006 and consulting fees and administrative service charges of
US$314,000 to Brazilian in 2006 and (y) Jaguar incurred occupancy fees to
Brazilian of US$15,000 in 2007 and consulting fees and administrative service
charges of US$444,207 to Brazilian in 2007; (iv) two loan agreements between
Jaguar and Brazilian pursuant to which (A) Jaguar made a loan to Brazilian the
amounts of US$800,000, which bears interest at the rate of five percent, which
loan was repaid in full in December 2006, and US$268,433, which was repaid with
interest totaling US$293,070 in the third quarter of 2005, and (B) Jaguar made
non-interest bearing advances to Brazilian amounting to US$251,370, which
advances were repaid in full during the third quarter of 2005; (v) a loan
agreement between MSOL and Prometálica pursuant to which Prometálica, a company
in which Brazilian and IMS are significant shareholders, had borrowed an
aggregate of US$5,488,000 from MSOL, US$327,000 of the remaining balance was
paid with a transfer of equipment to MSOL (based on an appraisal prepared by an
independent engineering firm) as of March 15, 2006 and the remaining balance of
accrued interest converted to a net smelting royalty of 1.5 percent on
Prometálica’s Monte Cristo zinc project; and (vi) a loan by Jaguar to a trust
which is controlled by an officer and director of Jaguar in the amount of
US$130,000, bearing interest at the U.S. prime rate plus 1 percent, which was
paid in full in 2005.
 
 Juvenil
Felix, the Chief Operating Officer and a director of Jaguar, owns or controls 30
percent of the stock of IMS.
 
 TRANSFER AGENTS AND
REGISTRAR
 
 The
transfer agent and registrar for Jaguar’s common shares is Computershare
Investor Services Inc., Toronto, Ontario.
 
 MATERIAL
CONTRACTS
 
 Other
than contracts entered into the ordinary course of business, the only material
contracts that Jaguar has entered are as follows:
 
 2007 Shareholder Rights
Plan
 
 See
“DESCRIPTION OF CAPITAL
STRUCTURE” for a description of the Shareholder Rights Plan adopted by
the Board on January 31, 2007.  The Shareholder Rights Plan is
attached as Schedule B to the Material Change Report that was filed February 1,
2007 on www.sedar.com.
 
 2007 Financial Advisory
Agreement
 
 On
February 27, 2007, Jaguar entered into a Financial Advisory Agreement with BCI
pursuant to which BCI would act as Jaguar’s financial advisor with respect to
the short form prospectus filed on February 28, 2007.  As compensation
for BCI’s financial advisory services, Jaguar is obligated to pay BCI advisory
fees equal to 3 percent of the exercise price for each Warrant that is submitted
for exercise pursuant to the early exercise program.
 
 2007 Underwriting
Agreement
 
 On
March 9, 2007, Jaguar entered into an underwriting agreement with TD Securities,
BCI, BMO Capital Markets and RBC Capital Markets pursuant to which it offered
86,250 units for gross proceeds of Cdn. 86,250,000 on a private placement basis
in Canada, the United States and other jurisdictions agreed to by Jaguar and the
underwriters.  Pursuant to the agreement, the underwriters received a
commission of 4% of the aggregate proceeds.  See "GENERAL DEVELOPMENT OF THE
BUSINESS" for a description of the unit offering.
  66
  
 2007 Note
Indenture
 
 On
March 22, 2007, Jaguar entered into a note indenture with Computershare Trust
Company of Canada pursuant to which Jaguar issued Cdn.$86,250,000 aggregate
principal amount of 10.5% senior secured notes due March 23,
2012.  The notes were issued as part of the offering of units
described above under "2007
Underwriting Agreement".  The note indenture required Jaguar to
pledge its interest in the quotas of MSOL as security for its performance
thereunder.  See "GENERAL DEVELOPMENT OF THE
BUSINESS" for a description of the unit offering.
 
 2008 Underwriting
Agreement
 
 On
February 6, 2008, Jaguar entered into an underwriting agreement with RBC, TD
Securities, BCI, BMO and Raymond James Ltd pursuant to which it offered
8,250,000 common shares at a price of C$13.40 per share for proceeds of
C$110,550,000.  Jaguar granted the underwriters an over-allotment
option, exercisable in whole or in part up to 30 days following the closing of
the transaction, to purchase up to an additional 1,237,500 common shares at a
price of Cdn.$13.40 per share, which option was not exercised prior to
expiration.  Pursuant to the underwriting agreement, the underwriters
received a commission of 4.5 percent of the aggregate proceeds of the
offering.  See “GENERAL DEVELOPMENT OF THE
BUSINESS” for a description of the common share offering.
 
 INTERESTS OF
EXPERTS
 
 Certain
disclosure with respect to Jaguar’s properties contained herein or in documents
incorporated herein by reference is derived from reports prepared by TechnoMine
and Scott Wilson RPA.  Neither TechnoMine nor its principal, Ivan C.
Machado, owns, directly or indirectly, any securities of Jaguar or has any
direct or indirect interest in any property of Jaguar or of any associate or
affiliate of Jaguar.  Neither Scott Wilson RPA nor its principal,
Graham G. Clow, owns, directly or indirectly, any securities of Jaguar or has
any direct or indirect interest in any property of Jaguar or any associate or
affiliate of Jaguar.
 
 ADDITIONAL
INFORMATION
 
 Additional
information relating to Jaguar may be found on SEDAR at
http://www.sedar.com.
 
 Additional
information, including directors’ and officers’ remuneration and indebtedness,
principal holders of Jaguar’s securities, and securities authorized for issuance
under equity compensation plans is contained in Jaguar’s information circular
for its most recent annual meeting of shareholders.  Additional
financial information is provided in Jaguar’s audited consolidated financial
statements and management’s discussion and analysis for its financial year ended
December 31, 2007.  The Corporation expects tofile its comparative
financial statements and Management’s Discussion and Analysis for the financial
year ended December 31, 2007 by March 24, 2008, which upon filing, will be
available on www.sedar.com.
  67
  APPENDIX
A
 
 Charter of the Audit
Committee of the Board of Directors
 
 I.            PURPOSE
 
 The
Audit Committee (the “Committee”) is appointed by the Board of Directors (the
Board) of Jaguar Mining Inc. (the “Company”) to assist the Board in fulfilling
its oversight responsibilities relating to financial accounting and reporting
process and internal controls for the Company.  The Committee’s
primary duties and responsibilities are to serve as an independent and objective
party and to:
 
 •
                conduct
      such reviews and discussions with management and the independent auditors
      relating to the audit and financial reporting as are deemed appropriate by
      the Committee;
 
 •
                assess
      the integrity of internal controls and financial reporting procedures of
      the Company and ensure implementation of such controls and
      procedures;
 
 •
                review
      the quarterly and annual financial statements and management’s discussion
      and analysis of the Company’s financial position and operating results and
      report thereon to the Board for approval of
  same;
 
 •
                select
      and monitor the independence and performance of the Company’s outside
      auditors (the “Independent Auditors”), including attending at private
      meetings with the Independent Auditors and reviewing and approving all
      renewals or dismissals of the Independent Auditors and their
      remuneration;
 
 •
                monitor
      the quality and integrity of the Company’s financial statements and other
      financial information; and
 
 •
                provide
      oversight to related party transactions entered into by the
      Company.
 
 II.            GENERAL
AUTHORITY
 
 The
Committee has the authority to conduct any investigation appropriate to its
responsibilities, and it may request the Independent Auditors as well as any
officer of the Company, or outside counsel for the Company, to attend a meeting
of the Committee or to meet with any members of, or advisors to, the
Committee.
 
 The
Committee shall have unrestricted access to the books and records of the Company
and has the authority to communicate directly with internal and Independent
Auditors.
 
 The
Committee shall have the authority to engage independent counsel and other
advisors and experts as it determines necessary to carry out its duties and to
set and pay the compensation for any advisors employed by the
Committee.  The Committee may fulfill additional duties and adopt
additional policies and procedures as may be appropriate in light of changing
business, legislative, regulatory or other conditions.
 
 The
Committee shall review and assess the adequacy of this Charter annually and
submit any proposed revisions to the Board for approval.
 
 In
fulfilling its responsibilities, the Committee will carry out the specific
duties set out in Part III of this Charter.
 
 III.           COMPOSITION AND
MEETINGS
 
 1.
                The
      Committee and its membership shall meet all applicable legal and listing
      requirements, including, without limitation, those of the Toronto Stock
      Exchange (“TSX”), the Business Corporations
      Act (Ontario) and all applicable securities regulatory authorities,
      including the Canadian Securities Administrators (the
      “CSA”).  Each member of the Committee shall be financially
      literate.
  68
  
 2.
                The
      Committee shall be composed of three or more directors as shall be
      designated by the Board from time to time.  The members of the
      Committee shall appoint from among themselves a member who shall serve as
      Chair.
 
 3.
                Each
      member of the Committee shall be “independent” (as defined under the
      Multilateral Instrument 52-110 of the CSA).  Each member of the
      Committee shall be financially literate (as defined in Multilateral
      Instrument 52-110).
 
 4.
                The
      Committee shall meet at least once quarterly, at the discretion of the
      Chair or a majority of its members, as circumstances dictate or as may be
      required by applicable legal or listing requirements.  A minimum
      of two and at least 50% of the members of the Committee present either in
      person or by telephone shall constitute a
  quorum.
 
 5.
                If
      within one hour of the time appointed for a meeting of the Committee, a
      quorum is not present, the meeting shall stand adjourned to the same hour
      on the second business day following the date of such meeting at the same
      place.  If at the adjourned meeting a quorum as hereinbefore
      specified is not present within one hour of the time appointed for such
      adjourned meeting, such meeting shall stand adjourned to the same hour on
      the second business day following the date of such meeting at the same
      place.  If at the second adjourned meeting a quorum as
      hereinbefore specified is not present, the quorum for the adjourned
      meeting shall consist of the members then
  present.
 
 6.
                If
      and whenever a vacancy shall exist, the remaining members of the Committee
      may exercise all of its powers and responsibilities so long as a quorum
      remains in office.
 
 7.
                The
      time and place at which meetings of the Committee shall be held, and
      procedures at such meetings, shall be determined from time to time by, the
      Committee.  A meeting of the Committee may be called by letter,
      telephone, facsimile, email or other communication equipment, by giving at
      least 48 hours notice, provided that no notice of a meeting shall be
      necessary if all of the members are present either in person or by means
      of conference telephone or if those absent have waived notice or otherwise
      signified their consent to the holding of such
  meeting.
 
 8.
                Any
      member of the Committee may participate in the meeting of the Committee by
      means of conference telephone or other communication equipment, and the
      member participating in a meeting pursuant to this paragraph shall be
      deemed, for purposes hereof, to be present in person at the
      meeting.
 
 9.
                The
      Committee shall keep minutes of its meetings which shall be submitted to
      the Board.  The Committee may, from time to time, appoint any
      person who need not be a member, to act as a secretary at any
      meeting.
 
 10.
                The
      Committee may invite such officers, directors and employees of the Company
      and its subsidiaries as it may see fit, from time to time, to attend at
      meetings of the Committee.
 
 11.
                The
      Board may at any time amend or rescind any of the provisions hereof, or
      cancel them entirely, with or without
  substitution.
 
 12.
                Any
      matters to be determined by the Committee shall be decided by a majority
      of votes cast at a meeting of the Committee called for such
      purpose.  Actions of the Committee may be taken by an instrument
      or instruments in writing signed by all of the members of the Committee,
      and such actions shall be effective as though they had been decided by a
      majority of votes cast at a meeting of the Committee called for such
      purpose.  All decisions or recommendations of the Audit
      Committee shall require the approval of the Board prior to
      implementation.
 
  69
  IV.           RESPONSIBILITIES
 
 A.
                Financial
      Accounting and Reporting Process and Internal
  Controls
 
 1.
                The
      Committee shall review the Company’s annual audited financial statements
      to satisfy itself that they are presented in accordance with generally
      accepted accounting principles (“GAAP”) and report thereon to the Board
      and recommend to the Board whether or not same should be approved prior to
      their being filed with the appropriate regulatory
      authorities.  The Committee shall also review the Company’s
      interim financial statements and report thereon to the Board and recommend
      to the Board whether or not same should be approved prior to their being
      filed with the appropriate regulatory authorities.  With respect
      to the annual audited financial statements, the Committee shall discuss
      significant issues regarding accounting principles, practices, and
      judgments of management with management and the Independent Auditors as
      and when the Committee deems it appropriate to do so.  The
      Committee shall satisfy itself that the information contained in the
      annual audited and interim financial statements is not significantly
      erroneous, misleading or incomplete and that in respect of the annual
      audited financial statements the audit function has been effectively
      carried out.
 
 2.
                The
      Committee shall review management’s internal control report and the
      evaluation of such report by the Independent Auditors, together with
      management’s response.
 
 3.
                The
      Committee shall review management’s discussion and analysis relating to
      annual and interim financial statements and any other public disclosure
      documents that are required to be reviewed by the Committee under any
      applicable laws prior to their being filed with the appropriate regulatory
      authorities including, without limitation, any press releases announcing
      annual or interim earnings.
 
 4.
                The
      Committee shall meet no less frequently than annually with the Independent
      Auditors and the Chief Financial Officer or, in the absence of a Chief
      Financial Officer, with the officer of the Company in charge of financial
      matters, to review accounting practices, internal controls and such other
      matters as the Committee, Chief Financial Officer or, in the absence of a
      Chief Financial Officer, with the officer of the Company in charge of
      financial matters, deems
appropriate.
 
 5.
                The
      Committee shall inquire of management and the Independent Auditors about
      significant risks or exposures, both internal and external, to which the
      Company may be subject, and assess the steps management has taken to
      minimize such risks.
 
 6.
                The
      Committee shall review the post-audit or management letter containing the
      recommendations of the Independent Auditors and management’s response and
      subsequent follow-up to any identified
  weaknesses.
 
 7.
                The
      Committee shall establish procedures for the receipt, retention and
      treatment of complaints, including confidential or anonymous employee
      complaints, with respect to accounting, internal accounting controls and
      auditing matters.
 
 8.
                The
      Committee shall provide oversight to related party transactions entered
      into by the Company.
 
 9.
                The
      Committee shall satisfy itself that adequate procedures are in place for
      the review of the Company’s public disclosure of financial information
      derived or extracted from the Company’s financial statements and
      periodically assess the adequacy of those
  procedures.
 
 B.           Independent
Auditors
 
 1.
                The
      Committee shall be directly responsible for the selection, appointment,
      compensation and oversight of the Independent Auditors and the Independent
      Auditors shall report directly to the
Committee.
 
 2.
                The
      Committee shall pre-approve all audit and non-audit services not
      prohibited by law to be provided by the Independent Auditors to the
      Company or its subsidiaries.
 
 3.
                The
      Committee shall monitor and assess the relationship between management and
      the Independent Auditors and monitor, confirm, support and assure the
      independence and objectivity of the Independent Auditors.  The
      Committee shall establish procedures to receive and respond to complaints
      with respect to accounting, internal accounting controls and auditing
      matters.
  70
  
 4.
                The
      Committee shall review the Independent Auditor’s audit plan, including
      scope, procedures and timing of the
audit.
 
 5.
                The
      Committee shall review the results of the annual audit with the
      Independent Auditors, including matters related to the conduct of the
      audit.
 
 6.
                The
      Committee shall obtain timely reports from the Independent Auditors
      describing critical accounting policies and practices, alternative
      treatments of information within GAAP that were discussed with management,
      their ramifications, and the Independent Auditors’ preferred treatment and
      material written communications between the Company and the Independent
      Auditors.
 
 7.
                The
      Committee shall review fees paid by the Company to the Independent
      Auditors and other professionals in respect of audit and non-audit
      services on an annual basis.
 
 C.           Other
Responsibilities
 
 The
Committee shall perform any other activities consistent with this Charter and
governing law, as the Committee or the Board deems necessary or
appropriate.
   71















DOCUMENT
2
  JAGUAR
MINING INC.
 
 
 Consolidated
Financial Statements
 
 December
31, 2007 and 2006
 
 
 
  
  
  
  
  
  
  AUDITORS'
REPORT TO THE SHAREHOLDERS OF JAGUAR MINING INC.
  We have
audited the consolidated balance sheets of Jaguar Mining Inc. as at
December 31, 2007 and 2006 and the consolidated statements of operations
and comprehensive loss and deficit and cash flows for each of the years in the
three year period ended December 31, 2007.  These financial statements
are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.
  We
conducted our audits in accordance with Canadian generally accepted auditing
standards.  Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
  In our
opinion, these consolidated financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 2007 and
2006 and the results of its operations and its cash flows for each of the years
in the three-year period ended December 31, 2007 in accordance with Canadian
generally accepted accounting principles.
 
 
 
 Chartered
Accountants, Licensed Public Accountants
 Toronto,
Canada
 March
24, 2008
 
 
 MANAGEMENT’S
RESPONSIBILITY FOR FINANCIAL REPORTING
  The
accompanying consolidated financial statements of Jaguar Mining Inc. and all the
information contained in this annual report are the responsibility of management
and have been approved by the Board of Directors.  These financial
statements and all other information have been prepared by management in
accordance with accounting principles generally accepted in
Canada.  Some amounts included in the financial statements are based
on management’s best estimates and have been derived with careful
judgment.  In fulfilling its responsibilities, management has
developed and maintains a system of internal controls.  These controls
ensure that transactions are authorized, assets are safeguarded from loss or
unauthorized use, and financial records are reliable for the purpose of
preparing financial statements.  The Board of Directors carries out
its responsibilities for the financial statements through the Audit
Committee.  The Audit Committee periodically reviews and discusses
financial reporting matters with the Company’s auditors, KPMG LLP, as well as
with management.  These financial statements have been audited by KPMG
LLP, Chartered Accountants, on behalf of the shareholders.
  
 graphic
                
                graphicDaniel
      R. Titcomb
                
                James
      M. RollerPresident
      and CEO
                
                Chief
      Financial Officer
 
 March
24, 2008
  1
  JAGUAR
MINING INC.
  Consolidated
Balance Sheet
 (Expressed
in thousands of U.S. dollars)
 
 December
      31,
                
                
                December
      31,2007
                
                
                2006AssetsCurrent
      assets:Cash
      and cash equivalents (Note 16)
                
                $
                45,711
                
                
                $
                14,759Cash in
      trust (Note 13(b))
                
                
                837
                
                
                
                -Accounts
      receivable
                
                
                -
                
                
                
                1,742Inventory (Note
      3)
                
                
                10,724
                
                
                
                5,297Prepaid
      expenses and sundry assets (Note 4)
                
                
                11,897
                
                
                
                4,812Unrealized
      foreign exchange gains (Note 5(b))
                
                
                1,680
                
                
                
                -Forward
      purchases derivative asset (Note 5(a))
                
                
                924
                
                
                
                -71,773
                
                
                
                26,610Prepaid
      expenses and sundry assets (Note 4)
                
                
                13,913
                
                
                
                9,657Unrealized
      foreign exchange gains (Note 5(b))
                
                
                -
                
                
                
                709Net
      smelter royalty (Note 6)
                
                
                1,225
                
                
                
                1,535Restricted cash
      (Note 7)
                
                
                3,102
                
                
                
                6,027Property, plant
      and equipment (Note 8)
                
                
                82,945
                
                
                
                39,162Mineral
      exploration projects (Note 9)
                
                
                61,273
                
                
                
                40,430$
                234,231
                
                
                $
                124,130Liabilities
      and Shareholders' EquityCurrent
      liabilities:Accounts
      payable and accrued liabilities
                
                $
                14,426
                
                
                $
                6,034Notes
      payable (Note 10)
                
                
                11,699
                
                
                
                5,274Current
      taxes payable
                
                
                2,086
                
                
                
                591Asset
      retirement obligations (Note 11)
                
                
                269
                
                
                
                289Forward
      sales derivative liability (Note 5(a))
                
                
                9,844
                
                
                
                3,38838,324
                
                
                
                15,576Forward
      sales derivative liability (Note 5(a))
                
                
                5,580
                
                
                
                6,828Notes
      payable (Note 10)
                
                
                83,920
                
                
                
                10,550Future
      income taxes (Note 12)
                
                
                2,182
                
                
                
                421Asset
      retirement obligations (Note 11)
                
                
                2,706
                
                
                
                1,380Total
      liabilities
                
                
                132,712
                
                
                
                34,755Shareholders'
      equityCommon
      shares (Note 13(a))
                
                
                141,316
                
                
                
                106,834Warrants (Note
      13(b))
                
                
                245
                
                
                
                4,072Stock
      options (Note 13(c))
                
                
                19,218
                
                
                
                8,745Contributed
      surplus (Note 13(d))
                
                
                1,153
                
                
                
                1,149Deficit
                
                
                (60,413
                )
                
                
                (31,425
                )101,519
                
                
                
                89,375Commitments
      (Notes 5,8, 9, and 17)Subsequent
      events (Note 18)$
                234,231
                
                
                $
                124,130
 
 See
accompanying notes to consolidated financial statements.
 
 On
behalf of the Board:
 
 Gary
      E. German
                
                DirectorDaniel
      R. Titcomb
                
                Director
 
  2
  JAGUAR
MINING INC.
  Consolidated
Statements of Operations and Comprehensive Loss and Deficit
 (Expressed
in thousands of U.S. dollars, except per share amounts)
 Year
      Ended
                
                
                Year
      Ended
                
                
                Year
      EndedDecember
      31,
                
                
                December
      31,
                
                
                December
      31,2007
                
                
                2006
                
                
                2005Gold
      sales
                
                $
                47,834
                
                
                $
                21,179
                
                
                $
                8,510Production
      costs
                
                
                (25,172
                )
                
                
                (13,195
                )
                
                
                (6,932
                )Other
      cost of goods sold
                
                
                (3,141
                )
                
                
                (447
                )
                
                
                (4,521
                )Depletion
      and amortization
                
                
                (5,232
                )
                
                
                (2,376
                )
                
                
                (1,773
                )14,289
                
                
                
                5,161
                
                
                
                (4,716
                )Operating
      expenses:Exploration
                
                
                2,365
                
                
                
                183
                
                
                
                85Stock-based
      compensation (Note 13(c))
                
                
                10,750
                
                
                
                5,990
                
                
                
                1,791Administration
                
                
                10,273
                
                
                
                7,375
                
                
                
                4,474Management fees
      (Note 15(a))
                
                
                747
                
                
                
                739
                
                
                
                1,014Accretion
      expense (Note 11)
                
                
                138
                
                
                
                27
                
                
                
                7Other
                
                
                2,126
                
                
                
                486
                
                
                
                356Total
      operating expenses
                
                
                26,399
                
                
                
                14,800
                
                
                
                7,727Loss
      before the following
                
                
                (12,110
                )
                
                
                (9,639
                )
                
                
                (12,443
                )Unrealized
      loss on forward derivatives (Note 5(a))
                
                
                4,284
                
                
                
                6,823
                
                
                
                3,393Realized
      loss on forward derivatives (Note 5(a))
                
                
                5,624
                
                
                
                -
                
                
                
                150Unrealized
      gain on forward foreign exchange derivatives (Note 5(b))
                
                
                (972
                )
                
                
                (709
                )
                
                
                -Realized
      gain on forward foreign exchange derivatives (Note 5(b))
                
                
                (2,718
                )
                
                
                (846
                )
                
                
                -Foreign
      exchange gain
                
                
                (2,280
                )
                
                
                (1,871
                )
                
                
                (1,093
                )Amortization
      of deferred financing expense
                
                
                -
                
                
                
                698
                
                
                
                -Interest
      expense
                
                
                11,170
                
                
                
                270
                
                
                
                184Interest
      income
                
                
                (4,601
                )
                
                
                (1,582
                )
                
                
                (1,631
                )Gain
      on disposition of property (Note 9(i))
                
                
                (381
                )
                
                
                -
                
                
                
                -Other
      non-operating expenses
                
                
                1,663
                
                
                
                -
                
                
                
                -Total
      other expenses
                
                
                11,789
                
                
                
                2,783
                
                
                
                1,003Loss
      before income taxes
                
                
                (23,899
                )
                
                
                (12,422
                )
                
                
                (13,446
                )Income
      taxes (Note 12)Current
      income taxes
                
                
                2,086
                
                
                
                591
                
                
                
                185Future
      income taxes (recovered)
                
                
                1,675
                
                
                
                (267
                )
                
                
                (793
                )Total
      income taxes
                
                
                3,761
                
                
                
                324
                
                
                
                (608
                )Net
      loss and comprehensive loss for the year
                
                
                (27,660
                )
                
                
                (12,746
                )
                
                
                (12,838
                )Deficit,
      beginning of year as reported
                
                
                (31,425
                )
                
                
                (18,711
                )
                
                
                (5,913
                )Adjustment
      to opening deficit (Note 2)
                
                
                165
                
                
                
                -Deficit
      as restated
                
                
                (31,260
                )
                
                
                (18,711
                )
                
                
                (5,913
                )Shares
      aquired for cancellation (Note 13(a)(ii))
                
                
                (1,493
                )
                
                
                (2
                )
                
                
                -Interest
      income - share purchase loans (Note 13(a)(iii))
                
                
                -
                
                
                
                34
                
                
                
                40Deficit,
      end of year
                
                $
                (60,413
                )
                
                $
                (31,425
                )
                
                $
                (18,711
                )Basic
      and diluted net loss per share (Note 14)
                
                $
                (0.52
                )
                
                $
                (0.30
                )
                
                $
                (0.41
                )Weighted
      average common shares outstanding (Note14)
                
                
                53,613,175
                
                
                
                43,114,563
                
                
                
                31,266,914
 
 See
accompanying notes to consolidated financial statements.
 
  3
  JAGUAR
MINING INC.
  Consolidated
Statements of Cash Flows
 (Expressed
in thousands of U.S. dollars)
 
 Year
      Ended
                
                
                Year
      Ended
                
                
                Year
      EndedDecember
      31,
                
                
                December
      31,
                
                
                December
      31,2007
                
                
                2006
                
                
                2005Cash
      provided by (used in):Operating
      activities:Net
      loss and comprehensive income for the year
                
                $
                (27,660
                )
                
                $
                (12,746
                )
                
                $
                (12,838
                )Items
      not involving cash:Unrealized
      foreign exchange (gain) loss
                
                
                7,907
                
                
                
                (97
                )
                
                
                172Stock-based
      compensation
                
                
                10,750
                
                
                
                5,990
                
                
                
                1,791Amortization of
      deferred financing costs
                
                
                -
                
                
                
                698
                
                
                
                -Non-cash
      interest expense
                
                
                2,953
                
                
                
                -
                
                
                
                -Accretion
      expense
                
                
                138
                
                
                
                27
                
                
                
                7Future
      income taxes (recovered)
                
                
                1,675
                
                
                
                (267
                )
                
                
                (793
                )Depletion and
      amortization
                
                
                5,232
                
                
                
                2,376
                
                
                
                1,773Amortization of
      net smelter royalty
                
                
                310
                
                
                
                -
                
                
                
                -Interest on
      loans receivable
                
                
                -
                
                
                
                (102
                )
                
                
                (1,051
                )Unrealized loss
      on forward sales derivatives
                
                
                4,284
                
                
                
                6,823
                
                
                
                3,393Unrealized gain
      on foreign exchange contracts
                
                
                (972
                )
                
                
                (709
                )
                
                
                -Gain on
      disposition of property
                
                
                (381
                )
                
                
                -
                
                
                
                -Reclamation
      expenditure
                
                
                (157
                )
                
                
                (105
                )
                
                
                -Change
      in non-cash operating working capitalAccounts
      receivable
                
                
                1,742
                
                
                
                (1,161
                )
                
                
                (581
                )Inventory
                
                
                (2,624
                )
                
                
                (2,193
                )
                
                
                1,916Prepaid
      expenses and sundry assets
                
                
                (11,659
                )
                
                
                (8,041
                )
                
                
                (4,046
                )Accounts
      payable and accrued liabilities
                
                
                8,424
                
                
                
                1,269
                
                
                
                2,551Current
      taxes payable
                
                
                1,495
                
                
                
                591
                
                
                
                -1,457
                
                
                
                (7,647
                )
                
                
                (7,706
                )Financing
      activities:Repayment of
      loans receivable
                
                
                -
                
                
                
                -
                
                
                
                649Issuance of
      common shares, specialwarrants and warrants, net
                
                
                30,138
                
                
                
                56,102
                
                
                
                5,125Shares
      purchased for cancellation
                
                
                (2,089
                )
                
                
                (4
                )
                
                
                -Repayment of
      debt
                
                
                (6,086
                )
                
                
                (2,078
                )
                
                
                (1,406
                )Increase in
      debt
                
                
                64,604
                
                
                
                14,965
                
                
                
                -86,567
                
                
                
                68,985
                
                
                
                4,368Investing
      activitiesMineral
      exploration projects
                
                
                (27,233
                )
                
                
                (24,663
                )
                
                
                (9,947
                )Decrease
      (increase) in restricted cash
                
                
                2,925
                
                
                
                (6,027
                )
                
                
                -Advances to
      Prometálica Mineração Ltda
                
                
                -
                
                
                
                -
                
                
                
                (1,622
                )Repayment from
      Prometálica Mineração Ltda
                
                
                -
                
                
                
                -
                
                
                
                4,509Purchase of
      property, plant and equipment
                
                
                (35,859
                )
                
                
                (25,422
                )
                
                
                (9,560
                )(60,167
                )
                
                
                (56,112
                )
                
                
                (16,620
                )Effect
      of foreign exchange on non-U.S. dollar denominated cash and cash
      equivalents
                
                
                3,095
                
                
                
                -
                
                
                
                -Increase
      (decrease) in cash and cash equivalents
                
                
                30,952
                
                
                
                5,226
                
                
                
                (19,958
                )Cash
      and cash equivalents, beginning of year
                
                
                14,759
                
                
                
                9,533
                
                
                
                29,491Cash
      and cash equivalents, end of year
                
                $
                45,711
                
                
                $
                14,759
                
                
                $
                9,533
 Supplemental
cash flow information (Note 16)
 See
accompanying notes to consolidated financial statements.
  4
  JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  1.
                Nature
      of Business:
  The
activities of Jaguar Mining Inc. (the "Company") are directed towards developing
and operating mineral projects in Brazil.
  2.
                Significant
      Accounting Policies:
  Existing
      Accounting Policies:
  (a)
                Consolidation:
  These
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries; Mineração Serras do Oeste Ltda. (“MSOL”) and
Mineração Turmalina Ltda. (“MTL”).  All significant intercompany
accounts and transactions have been eliminated on consolidation.
  (b)
                Cash
      and cash equivalents:
  The
Company considers deposits in banks, certificates of deposit and short-term
investments with remaining maturities of three months or less at the time of
acquisition to be cash and cash equivalents (Note 16).  Cash held on
deposit as security is classified as restricted cash (Note 7).
  (c)
                Inventory:
  Gold in
process and ore in stockpiles are stated at the lower of average production cost
or net realizable value.  Production costs include direct labour,
benefits, direct material and other direct product costs including depletion and
amortization.  Raw materials and mine operating supplies are stated at
the lower of cost, on a first-in first-out basis, or replacement
cost.
  The
nature of the leaching process inherently limits the ability to precisely
monitor inventory levels.  As a result, the metallurgical balancing
process is constantly monitored and the engineering estimates are refined based
on actual results over time.  The ultimate recovery of gold from a
leach pad will not be known until the leaching process is
concluded.
  (d)
                Net
      smelter royalty:
  The
Company records its net smelter royalty at cost.  Amortization of the
net smelter royalty is calculated on a units of production
basis.  Royalty revenue is recognized when the Company has reasonable
assurance with respect to measurement and collectability.
  (e)
                Property,
      plant and equipment:
  The
Company’s plant and equipment are recorded at cost and are amortized over the
useful life of the asset as follows:
  
 Processing
      plants
                -
                10
      years, straight lineVehicles
                -
                5
      years, straight lineEquipment
                -
                5-10
      years, straight lineLeasehold
      improvements
                -
                over
      term of lease, straight lineMining
      properties
                -
                unit
      of production methodbased
      upon the mine’sestimated
      economicallyproven
      and probable reserves
 
 (f)   Impairment:
  The
carrying value of all categories of plant and equipment and net smelter royalty
are reviewed for impairment whenever events or circumstances indicate the
recoverable value may be less than the carrying amount.  The net
recoverable amount is based on estimates of undiscounted future net cash flows
expected to be recovered from specific assets or groups of assets through use or
future disposition.
  Impairment
charges are recorded in the reporting period in which determination of
impairment is made by management.
  5
  JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
 
 2.
                Significant
      Accounting Policies (continued):
  Existing
Accounting Policies (continued):
  (g)  Mineral
exploration projects:
  The
Company considers its exploration costs to have the characteristics of property,
plant and equipment.  As such, the Company defers all exploration
costs, including acquisition costs, field exploration and field supervisory
costs relating to specific properties until those properties are brought into
production, at which time, they will be amortized on a unit-of-production basis
based on their estimated economic life or until the properties are abandoned,
sold, or considered to be impaired in value, at which time an appropriate charge
will be made.  After a mine property has been brought into commercial
production the related costs will be transferred to property, plant and
equipment.
  The
recoverability of the amounts shown for mining interests is dependent on the
existence of economically recoverable reserves, the ability to obtain financing
to complete the development of such reserves and meet its obligations under
various agreements, and the success of future operations or
dispositions.
  (h)   Income
taxes:
  The
Company accounts for income taxes under the asset and liability
method.  Under this method of tax allocation, future income and mining
tax assets and liabilities are determined based on differences between the
financial statement carrying values and their respective income tax bases
(temporary differences).  Future income tax assets and liabilities are
measured using the rates expected to be in effect when the temporary differences
are likely to reverse.  The effect on future income tax assets and
liabilities of a change in tax rates is included in income in the period in
which the change is substantively enacted.  The amount of future
income tax assets recognized is limited to the amount that is more likely than
not to be realized.
  The tax
basis of the Company's Brazilian assets converted at period-end exchange rates
results in temporary differences.
  (i)
                Reclamation
      costs:
  The
Company recognizes the liability arising from legal obligations associated with
the retirement of long-lived assets that result from the acquisition,
construction, development and/or normal operation of a long-lived
asset.  The fair value of a liability for an asset retirement
obligation is recorded in the period in which it is incurred.  When
the liability is initially recorded, the cost is capitalized by increasing the
carrying amount of the related long-lived asset.  The Company
amortizes the amount added to the asset using the depreciation method
established for the related asset.  The amortization expense is
included in the statement of operations and accounted for in accumulated
amortization.  An accretion expense in relation with the discounted
liability over the remaining life of the mining properties is accounted for in
the statement of operations and added to the asset retirement
obligation.  The liability is adjusted at the end of each period to
reflect the passage of time and changes in the estimated future cash flows
underlying the obligation.  Upon settlement of the liability, a gain
or loss is recorded.
  (j)
                Foreign
      currency translation:
  The
U.S. dollar is considered to be the functional currency of the Company and of
its subsidiaries.  Monetary assets and liabilities of the Company's
Brazilian operations, including future income taxes, are translated into U.S.
dollars at the rate of exchange in effect at the balance sheet date, and
non-monetary assets and liabilities are translated at the historical rate of
exchange.  Transactions in foreign currencies are translated at the
actual rates of exchange.  Foreign currency gains and losses are
recognized in income.
  
  6
  JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
 2.
                Significant
      Accounting Policies (continued):
  Existing
Accounting Policies (continued):
  (k)
                Revenue
      recognition:
  The Company produces gold doré which is
further refined by a third party and sold to international
banks.  Revenue is recognized when title is transferred, delivery is
effected to the international banks, and when the Company has reasonable
assurance with respect to measurement and collectability.
  (l)
                Stock-based
      compensation:
  The
Company has a stock-based compensation plan, which is described in Note
13(c).  The Company accounts for all stock-based payments using the
fair value based method.  Under the fair value based method,
compensation cost attributable to options granted is measured at fair value at
the grant date and amortized on a straight line basis over the vesting
period.  No compensation cost is recognized for options that employees
forfeit if they fail to satisfy the service requirement for
vesting.
  (m)
                Net
      loss per share:
  Basic
loss per share is computed by dividing loss available to common shareholders by
the weighted average number of common shares outstanding during the
period.  The treasury stock method is used to calculate diluted income
per share.  Diluted income per share is similar to basic income per
share, except that the denominator is increased to include the number of
additional common shares that would have been outstanding assuming that options
and warrants with an average market price for the period greater than their
exercise price are exercised and the proceeds are used to repurchase common
shares.
  (n)
                Use
      of estimates:
  The
preparation of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
particularly mineral properties, inventories and disclosure of contingent assets
and liabilities, at the date of the financial statements and the reported
amounts of revenue and expenses during the periods.  Actual results
could differ from those estimates.
  (o)
                Derivative
      financial instruments:
  The
Company uses certain derivative financial instruments, principally forward sales
contracts, to manage commodity price exposure on gold
sales.  Derivative financial instruments are used for risk management
purposes and not for generating trading profits.  Derivative financial
instruments are not accounted for as hedges.  Unrealized gains and
losses on the derivative financial instruments are recognized in the statement
of operations and are primarily a result of the difference between the forward
spot price of the gold and the forward sales contract price.
  (p)
                Stripping
      Costs:
  Costs
associated with the removal of overburden and other mine waste materials that
are incurred in the production phase of mining operations are included in the
cost of the inventory produced in the period in which they are incurred, except
when the charges represent a betterment to the mineral
property.  Charges represent a betterment to the mineral property when
the stripping activity provides access to reserves that will be produced in
future periods that would not have been accessible without the stripping
activity.  The Company capitalizes costs related to a betterment of
the mineral property.  The charges are amortized over the reserve
accessed by the stripping activity usingthe unit-of-production
method.
  7
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  2.      Significant
Accounting Policies (continued:)
  New
Accounting Policies:
  Effective
January 1, 2007 the Company adopted the new CICA Handbook Standards relating to
financial instruments.  These new standards have been adopted on a
prospective basis with no restatement of prior period financial
statements.
  (q)
                Accounting
      Principles Issued and Implemented:
  (i)
                Section
      3855, “Financial Instruments - Recognition and Measurement” provides
      guidance on the recognition and measurement of financial assets, financial
      liabilities and derivative financial instruments.  This new
      standard requires that all financial assets and liabilities be classified
      as either: held-to-maturity, held-for-trading, loans and receivables,
      available-for-sale, or other financial liabilities.  The initial
      and subsequent recognition depends on their initial
      classification.
  •
                Held-to-maturity
      financial assets are initially recognized at their fair values and
      subsequently measured at amortized cost using the effective interest
      method. Impairment losses are charged to net earnings in the period in
      which they arise.
  •
                Held-for-trading
      financial instruments are carried at fair value with changes in fair value
      charged or credited to the statement of operations in the period in which
      they arise.
  •
                Loans
      and receivables are initially recognized at their fair values, with any
      resulting premium or discount from the face value being amortized to
      income or expense using the effective interest
      method.  Impairment losses are charged to net earnings in the
      period in which they arise.
  •
                Available-for-sale
      financial instruments are carried at fair value with changes in the fair
      value charged or credited to other comprehensive
      income.  Impairment losses relating to an other than temporary
      impairment are charged to net earnings in the period in which they
      arise.
  •
                Other
      financial liabilities are initially measured at cost or at amortized cost
      depending upon the nature of the instrument with any resulting premium or
      discount from the face value being amortized to income or expense using
      the effective interest method.
  •
                All
      derivative financial instruments meeting certain recognition criteria are
      carried at fair value with changes in fair value charged or credited to
      income or expense in the period in which they
  arise.
  The
standard requires the Company to make certain elections, upon initial adoption
of the new rules, regarding the accounting model to be used to account for each
financial instrument.  This new section also requires that transaction
costs incurred in connection with the issuance of financial instruments either
be capitalized and presented as a reduction of the carrying value of the related
financial instrument or expensed as incurred.  If capitalized,
transaction costs must be amortized to income using the effective interest
method.  This section does not permit the restatement of financial
statements of prior periods.
  Following
is a summary of the accounting model the Company has elected to apply to each of
its significant categories of financial instruments outstanding as at January 1,
2007:
 
 Cash
      and cash equivalents
                Held-for-tradingRestricted
      cash
                Held-for-tradingAccounts
      receivable
                Loans
      and receivablesForward
      foreign exchange derivative asset
                Held-for-tradingForward
      purchase derivative asset
                Held-for-tradingAccounts
      payable and accrued liabilities
                Other
      liabilitiesForward
      sales derivative liability
                Held-for-tradingNotes
      payable
                Other
      liabilities
 
  8
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  2.      Significant
Accounting Policies (continued):
  New
Accounting Policies (continued):
  (q) 
Accounting Principles Issued and Implemented (continued):
  In
      addition, the Company has elected to account for transaction costs related
      to the issuance of financial instruments as a reduction of the carrying
      value of the related financial
instruments.
  The
adoption of this new section resulted in an adjustment to the carrying value of
the Company’s previously recognized financial liabilities and a reduction of
$165,000 to the opening deficit, a reduction of $2.1 million to deferred
financing fees, and a reduction to notes payable of $2.3 million as at January
1, 2007.
  (ii)
                Section
      1530, “Comprehensive Income”, along with Section 3251, “Equity” which
      amends Section 3250, “Surplus”, require enterprises to separately disclose
      comprehensive income and its components as well as net income in their
      financial statements.  Further, they require enterprises to
      separately present changes in equity during the period as well as
      components of equity at the end of the period, including comprehensive
      income.  Since the Company does not have any elements of
      comprehensive income, the adoption of these sections did not have any
      impact on the Company’s financial
statements.
  (iii)
                Section
      3865, “Hedges” allows optional treatment providing that hedges be
      designated as either fair value hedges, cash flow hedges or hedges of a
      self-sustaining foreign operation.  Since the Company does not
      currently have hedging programs in place which qualify for hedge
      accounting, the adoption of this section did not have any impact on the
      Company’s financial statements.
  (r)  
Recently issued accounting pronouncements:
  (i) 
 Financial Instruments Disclosure and Presentation:
  In
December 2006, the CICA published Section 3862 Financial Instruments-
Disclosures and Section 3863, Financial Instruments-
Presentation.  These standards introduce disclosure and presentation
requirements that will enable financial statements’ users to evaluate, and
enhance their understanding of, the significance of financial instruments for
the entity’s financial position, performance and cash flows, and the nature and
extent of risks arising from financial instruments to which the entity is
exposed, and how those risks are managed.
  (ii)  Capital
Disclosures:
  In
December 2006, the CICA published section 1535 of the Handbook, Capital
disclosures, which requires disclosure of (i) an entity’s objectives, policies
and processes for managing capital; (ii) quantitative data about what the entity
regards as capital; (iii) whether the entity has complied with any capital
requirements; (iv) if it has not complied, the consequences of such
non-compliance.  This information will enable financial statements’
users to evaluate the entity’s objectives, policies and processes for managing
capital.
  (iii)
Inventories:
  In
January 2007, the CICA published section 3031 of the Handbook, Inventories,
which prescribes the accounting treatment for inventories.  Section
3031 provides guidance on determination of costs and its subsequent recognition
as an expense, and provides guidance on the cost formulas used to assign costs
to inventories.
  The
Company is currently assessing the impact of these new recommendations on its
financial statements.  These standards must be adopted by the Company
for the fiscal year beginning on January 1, 2008.
  
    9
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 3.     
Inventory:
  Inventory
is comprised of the following:
 December
      31,
                  2007
                
                
                December
      31,
                  2006Raw
      materials
                
                $
                1,013
                
                
                $
                793Mine
      operating supplies
                
                
                2,646
                
                
                
                -Ore
      stockpiles
                
                
                1,967
                
                
                
                977Gold
      in process
                
                
                5,098
                
                
                
                3,527$
                10,724
                
                
                $
                5,297
  4.
                Prepaid
      Expenses and Sundry Assets:
  December
      31,
                  2007
                
                
                December
      31,
                  2006Balance
      is made up of:Advances
      to suppliers
                
                $
                506
                
                
                $
                331Recoverable
      taxes (a)
                
                
                24,593
                
                
                
                11,510Deferred
      financing fees (Note 2(q)(i))
                
                
                -
                
                
                
                2,140Sundry
      receivables from related parties (b)
                
                
                185
                
                
                
                149Other
                
                
                526
                
                
                
                33925,810
                
                
                
                14,469Less:Long term
      recoverable taxes
                
                
                13,893
                
                
                
                7,517Long term
      other prepaid expenses
                
                
                20
                
                
                
                47Long term
      deferred finance fees
                
                
                -
                
                
                
                2,09313,913
                
                
                
                9,657Current
      portion of prepaid expenses and sundry assets
                
                $
                11,897
                
                
                $
                4,812
  (a)
                The
      Company is required to pay certain taxes in Brazil, based on
      consumption.  These taxes are recoverable from the Brazilian tax
      authorities through various methods.  The recoverable taxes are
      denominated in Brazilian reais (R$) amounting to R$43.3 million (2006 -
      R$24.6 million).
  (b)
                Sundry
      receivables are due from Prometálica Centro Oeste Mineração Ltda (“PCO”)
      and Prometálica Mineração Ltda (“PML“) related parties (Note
      15(c)).  PCO is controlled by IMS Empreendimentos Ltda (”IMS”),
      a founding shareholder of the
Company.
  5.
                Risk
      Management Policies:
  Derivative
Financial Instruments
  The
company has entered into the following contracts:
  (a)
                Forward
      sales and purchase contracts:
  In
connection with the Turmalina loan facility (Note 10(f)), the Company has
entered into forward sales contracts to manage commodity price exposure on gold
sales.  The contracts were matched to a percentage of the anticipated
future production of gold by the Turmalina and Sabará mining operations from the
first quarter of 2007 to the second quarter of 2009 amounting to a total of
77,002 ounces of gold.  The forward sales contracts are to be settled
at US$527.10 per ounce at the end of each quarter over the term of the contract
against the London PM fix without the requirement for the delivery of the gold
produced.  As at December 31, 2007 forward sales contracts amounting
to 48,556 ounces of gold were outstanding.
  10
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  5.
                Risk
      Management Policies (continued):
  (a)
                Forward
      sales and purchase contracts
(continued):
  In
September 2007 the Company received an amendment to the Turmalina loan facility
(Note 10(f)) from the lender, which allows the Company to close the forward
sales contracts, subject to the requirement to reinstate forward sales contracts
in similar amounts if the price of gold drops to or below $520 per ounce of
gold.
  As at
December 31, 2007, current liabilities include $9.8 million (2006 - $3.4
million) of unrealized losses related to the forward sales
contracts.  As at December 31, 2007, long term liabilities include
$5.6 million (2006 - $6.8 million) of unrealized losses related to the forward
sales contracts.  In an effort to mitigate these losses, in the fourth
quarter of 2007, the Company purchased forward purchase contracts totalling
55,654 ounces at an average gold price of $822.43 per ounce.  The
Company settled 7,098 ounces of the hedges (both forward sales and forward
purchases) at the end of the fourth quarter of 2007.  The outstanding
forward purchase contracts for 48,556 ounces had a positive mark-to-market value
of $0.9 million as at December 31, 2007 which is included in current assets
(December 31, 2006 - $nil).  The outstanding forward sales and
purchase contracts had a combined negative mark-to-market value of $14.5 million
as at December 31, 2007 (December 31, 2006 - $10.2 million).
  Included
in the statement of operations for the year ended December 31, 2007, is a net
unrealized loss on forward gold derivatives of $4.3 million (2006 - unrealized
loss of $6.8 million, 2005 - unrealized loss of $3.4 million) and a realized
loss on forward gold derivatives of $5.6 million (2006 - $nil, 2005 -
$150,000).  The unrealized gains relating to the forward purchase
contracts have been classified as an offsetting amount to the unrealized losses
relating to the forward sales contracts.  See subsequent events
(Note18 (c)).
  (b)
                Forward
      foreign exchange contracts:
  As at
December 31, 2007, the Company has forward foreign exchange contracts to
purchase Brazilian Reais at a weighted average rate of 2.1037 as
follows:
 Settlement
      Date
                
                Amount
                
                
                Settlement
      amount
                  in
      thousands of
                  $Reais31-Jan-08
                
                
                1,000
                
                
                $
                1,98631-Jan-08
                
                
                1,000
                
                
                
                2,00729-Feb-08
                
                
                1,000
                
                
                
                1,97429-Feb-08
                
                
                1,000
                
                
                
                1,99831-Mar-08
                
                
                1,000
                
                
                
                2,55830-Apr-08
                
                
                2,000
                
                
                
                4,16230-May-08
                
                
                1,000
                
                
                
                2,05729-Aug-08
                
                
                1,000
                
                
                
                2,07628-Nov-08
                
                
                1,000
                
                
                
                2,20130-Dec-08
                
                
                1,000
                
                
                
                2,12211,000
                
                
                $
                23,141
  The
terms of the contract require a percentage of the funds to be held on deposit as
collateral to cover the contracts.  As at December 31, 2007, $3.0
million of cash was restricted for this purpose.  (Note
7).
  
 
 
 
  11
  JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 5.
                Risk
      Management Policies (continued):
  (b)
                Forward
      foreign exchange contracts
(continued):
  At
December 31, 2007, current assets include $1.7 million and long term assets
include $nil (December 31, 2006 long term assets include $709,000) of unrealized
foreign exchange gains.  Included in the statement of operations for
the year ended December 31, 2007, is an unrealized gain on forward foreign
exchange derivatives of $972,000 (2006 - gain of $709,000, 2005 - $nil) and a
realized gain on forward foreign exchange derivatives of $2.7 million (2006 -
gain of $846,000, 2005 - $nil).
  The
Company is exposed to credit-related losses in the event of non-performance by
counterparties to derivative financial instruments, but does not expect any
counterparties to fail to meet their obligations.  The Company deals
with only highly rated counterparties, normally major financial
institutions.  The Company is exposed to credit risk when there is a
positive fair value of derivative financial instruments at a reporting
date.
   6.
                Net
      Smelter Royalty:
  2007
                
                
                2006Prometálica
      Mineração Ltda. (“PML”)
                
                $
                1,535
                
                
                $
                1,535Less
      accumulated amortization
                
                
                (310
                )
                
                
                -Net
                
                $
                1,225
                
                
                $
                1,535
  On
March 20, 2006, the Company entered into an agreement with PML whereby it
exchanged a loan receivable from PML for a 1.5% Net Smelter Royalty ("NSR") on
its Monte Cristo project for a term of 4.5 years, which is the expected life of
the project.   The NSR was recorded on the Company's books at the amount of
the receivable, plus accrued interest through March 20, 2006.   In
connection with the agreement, PML had the right to buy out the NSR for $1.63
million which was not exercised.
  During
2007 the Company received royalty income of approximately $0.3 million (Note
15(c). The royalty income and the related amortization are netted in other
operating expenses in the statement of operations.  PML’s controlling
shareholders are Brazilian Resources, Inc. (“BZI”) and IMS, the founding
shareholders of the Company.
  7.
                Restricted
      Cash:
  At
December 31, 2007 $3.0 million was restricted as collateral for the foreign
exchange contracts (December 31, 2006 - $3,000,000) (Note 5(b)) and $nil was
restricted as collateral for equipment loans (December 31, 2006 - $0.3 million
(Note 10(b)(i)).  In addition $102,000 was held in a Certificate of
Deposit as collateral for an expense credit line (December 31, 2006 -
$nil).  At December 31, 2006 an additional $2.7 million was restricted
due to loan covenants for the Turmalina loan facility (Note 10(f)).
 
 8.
                Property,
      Plant and Equipment:
  December
      31, 2007Cost
                
                
                Accumulated
                  Amortization
                
                
                NetProcessing
      plant
                
                $
                9,037
                
                
                $
                (1,761
                )
                
                $
                7,276Vehicles
                
                
                3,418
                
                
                
                (1,014
                )
                
                
                2,404Equipment
                
                
                35,704
                
                
                
                (4,750
                )
                
                
                30,954Assets
      under construction
                
                
                22,128
                
                
                
                -
                
                
                
                22,128Mining
      properties (a)
                
                
                26,706
                
                
                
                (6,523
                )
                
                
                20,183$
                96,993
                
                
                $
                (14,048
                )
                
                $
                82,945
 
  12
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
 
 8.
                Property,
      Plant and Equipment (continued):
 
 December
      31, 2006Cost
                
                
                Accumulated
                  Amortization
                
                
                NetProcessing
      plant
                
                $
                5,792
                
                
                $
                (536
                )
                
                $
                5,256Vehicles
                
                
                2,215
                
                
                
                (460
                )
                
                
                1,755Equipment
                
                
                15,372
                
                
                
                (1,338
                )
                
                
                14,034Assets
      under construction
                
                
                16,451
                
                
                
                -
                
                
                
                16,451Mining
      properties (a)
                
                
                6,908
                
                
                
                (5,242
                )
                
                
                1,666$
                46,738
                
                
                $
                (7,576
                )
                
                $
                39,162
  (a)
                During
      2007 the Company determined that mining properties in production should be
      classified in Property, Plant and Equipment (“PPE”).  In
      previous periods all mining properties including those in production were
      grouped with Mineral Exploration Projects.  Effective December
      31, 2006 the Sabará property, which has been in production since 2004, was
      reclassified to PPE.  Effective January 1, 2007 the Turmalina
      property, which commenced production in 2007, was reclassified to
      PPE.  See Note 9 for a breakdown of costs
      reclassified.
  Mining
properties include the following two properties which are in production, Sabará
and Turmalina:
  (i) Sabará
  The Sabará property is subject to a 1% Net Smelter Royalty
(“NSR”).  Production beganin the SabaráRegion in December
2003.
  (ii)    
Turmalina:
  In
September 2004, the Company entered into an agreement whereby the Company
acquired 100% of the quota shares of MTL, which holds certain mineral
rights.  The purchase price was $1,350,000 of which $600,000 was paid
in September 2004
and                 $400,000
in January 2006.  The note payable was due on demand and non-interest
bearing (Note 10(a)).  The balance of $350,000 was satisfied during
the year from the transfer of Sabará Zone C property (“Zone C”) to AngloGold
Ashanti Brasil Mineração Ltda. (“AngloGold”) (Note 9).
  The
terms of the acquisition of MTL include a royalty payable by the Company to an
unrelated third party.  The royalty is a net revenue interest of 5% of
annual net revenue up to $10 million and 3% thereafter.
  13
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  9.
                Mineral
      Exploration Projects:
  Balance December 31,
      2005
                  
                  
                  Additions
                  
                  
                  Balance December 31,
      2006
                  
                  
                  Additions
                  
                  
                  Write-off fully amortized
      property
                  
                  
                  Reclassify to Different
      Project
                  
                  
                  Reclassify to Plant and
      Equipment
                  
                  
                  Balance December 31,
      2007Sabará:Acquisition of
      property
                  
                  $
                  3,195
                  
                  
                  $
                  -
                  
                  
                  $
                  3,195
                  
                  
                  $
                  39
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  (3,234
                  )
                  
                  $
                  -Mine development expenditures,
      exploration and carrying costs
                  
                  
                  3,318
                  
                  
                  
                  590
                  
                  
                  
                  3,908
                  
                  
                  
                  3,970
                  
                  
                  
                  (1,570
                  )
                  
                  
                  (4,123
                  )
                  
                  
                  (2,185
                  )
                  
                  
                  -Asset retirement
      obligations
                  
                  
                  127
                  
                  
                  
                  325
                  
                  
                  
                  452
                  
                  
                  
                  5
                  
                  
                  
                  (66
                  )
                  
                  
                  (72
                  )
                  
                  
                  (320
                  )
                  
                  
                  -Accumulated
      amortization
                  
                  
                  (3,434
                  )
                  
                  
                  (1,805
                  )
                  
                  
                  (5,239
                  )
                  
                  
                  (256
                  )
                  
                  
                  1,636
                  
                  
                  
                  20
                  
                  
                  
                  3,839
                  
                  
                  
                  -3,206
                  
                  
                  
                  (890
                  )
                  
                  
                  2,316
                  
                  
                  
                  3,758
                  
                  
                  
                  -
                  
                  
                  
                  (4,175
                  )
                  
                  
                  (1,900
                  )
                  
                  
                  -Paciência Project (Rio De
      Peixe):Acquisition of mineral rights to
      the property
                  
                  
                  1,266
                  
                  
                  
                  -
                  
                  
                  
                  1,266
                  
                  
                  
                  63
                  
                  
                  
                  -
                  
                  
                  
                  (1,329
                  )
                  
                  
                  -
                  
                  
                  
                  -Exploration expenditures and
      carrying costs
                  
                  
                  8
                  
                  
                  
                  8
                  
                  
                  
                  16
                  
                  
                  
                  58
                  
                  
                  
                  -
                  
                  
                  
                  (74
                  )
                  
                  
                  -
                  
                  
                  
                  -1,274
                  
                  
                  
                  8
                  
                  
                  
                  1,282
                  
                  
                  
                  121
                  
                  
                  
                  -
                  
                  
                  
                  (1,403
                  )
                  
                  
                  -
                  
                  
                  
                  -Caeté Project
      (Pilar):Acquisition of
      property
                  
                  
                  1,114
                  
                  
                  
                  -
                  
                  
                  
                  1,114
                  
                  
                  
                  (64
                  )
                  
                  
                  -
                  
                  
                  
                  (1,050
                  )
                  
                  
                  -
                  
                  
                  
                  -Mine development expenditures,
      exploration and carrying costs
                  
                  
                  2,337
                  
                  
                  
                  6,132
                  
                  
                  
                  8,469
                  
                  
                  
                  2,736
                  
                  
                  
                  (472
                  )
                  
                  
                  (10,733
                  )
                  
                  
                  -
                  
                  
                  
                  -Asset retirement
      obligations
                  
                  
                  -
                  
                  
                  
                  247
                  
                  
                  
                  247
                  
                  
                  
                  -
                  
                  
                  
                  (107
                  )
                  
                  
                  (140
                  )
                  
                  
                  -
                  
                  
                  
                  -Accumulated  amortization
                  
                  
                  (95
                  )
                  
                  
                  (484
                  )
                  
                  
                  (579
                  )
                  
                  
                  -
                  
                  
                  
                  579
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -3,356
                  
                  
                  
                  5,895
                  
                  
                  
                  9,251
                  
                  
                  
                  2,672
                  
                  
                  
                  -
                  
                  
                  
                  (11,923
                  )
                  
                  
                  -
                  
                  
                  
                  -Paciência project
      (i):Acquisition of
      properties
                  
                  
                  818
                  
                  
                  
                  -
                  
                  
                  
                  818
                  
                  
                  
                  264
                  
                  
                  
                  -
                  
                  
                  
                  1,706
                  
                  
                  
                  -
                  
                  
                  
                  2,788Mine development expenditures,
      exploration and carrying costs
                  
                  
                  4,980
                  
                  
                  
                  9,005
                  
                  
                  
                  13,985
                  
                  
                  
                  10,486
                  
                  
                  
                  (113
                  )
                  
                  
                  (6,999
                  )
                  
                  
                  -
                  
                  
                  
                  17,359Accumulated
      amortization
                  
                  
                  (118
                  )
                  
                  
                  (69
                  )
                  
                  
                  (187
                  )
                  
                  
                  -
                  
                  
                  
                  113
                  
                  
                  
                  74
                  
                  
                  
                  -
                  
                  
                  
                  -5,680
                  
                  
                  
                  8,936
                  
                  
                  
                  14,616
                  
                  
                  
                  10,750
                  
                  
                  
                  -
                  
                  
                  
                  (5,219
                  )
                  
                  
                  -
                  
                  
                  
                  20,147Turmalina
    (ii):Acquisition of
      properties
                  
                  
                  1,883
                  
                  
                  
                  -
                  
                  
                  
                  1,883
                  
                  
                  
                  7
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,890
                  )
                  
                  
                  -Mine development expenditures,
      exploration and carrying costs
                  
                  
                  2,981
                  
                  
                  
                  8,944
                  
                  
                  
                  11,925
                  
                  
                  
                  4,899
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (14,504
                  )
                  
                  
                  2,320Asset retirement
      obligations
                  
                  
                  -
                  
                  
                  
                  964
                  
                  
                  
                  964
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (964
                  )
                  
                  
                  -Accumulated  amortization
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (394
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  394
                  
                  
                  
                  -Reclassification to plant and
      equipment
                  
                  
                  (141
                  )
                  
                  
                  -
                  
                  
                  
                  (141
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  141
                  
                  
                  
                  -4,723
                  
                  
                  
                  9,908
                  
                  
                  
                  14,631
                  
                  
                  
                  4,512
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (16,823
                  )
                  
                  
                  2,320Caeté Expansion Project
      (iii):Acquisition of
      property
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  8,522
                  
                  
                  
                  -
                  
                  
                  
                  1,175
                  
                  
                  
                  -
                  
                  
                  
                  9,696Mine development expenditures,
      exploration and carrying costs
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  7,544
                  
                  
                  
                  -
                  
                  
                  
                  21,427
                  
                  
                  
                  -
                  
                  
                  
                  28,971Asset retirement
      obligations
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  212
                  
                  
                  
                  -
                  
                  
                  
                  212Accumulated  amortization
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (94
                  )
                  
                  
                  -
                  
                  
                  
                  (94
                  )-
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  16,066
                  
                  
                  
                  -
                  
                  
                  
                  22,720
                  
                  
                  
                  -
                  
                  
                  
                  38,785Faina and
      PontalMine development expenditures,
      exploration and carrying costs
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  21
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  21-
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  21
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  21Balance December 31 as
      reported
                  
                  
                  18,239
                  
                  
                  
                  23,857
                  
                  
                  
                  42,096
                  
                  
                  
                  37,900
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (18,723
                  )
                  
                  
                  61,273Less: Sabará property reclassified
      to PPE
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (1,666
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Total Mineral Exploration
      Projects
                  
                  $
                  18,239
                  
                  
                  $
                  23,857
                  
                  
                  $
                  40,430
                  
                  
                  $
                  37,900
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  (18,723
                  )
                  
                  $
                  61,273
  14
   JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 9.
                Mineral
      Exploration Projects and Mining Properties
  (continued):
  (i)
                Paciência
      project
  The
Paciência project includes the following properties, Santa Isabel, Morro do
Adao, Rio de Peixe, Palmital, Ouro Fino, Marzagao, Bahu, Monges and
Ajuda.
  In
November 2003 the Company closed on a property acquisition agreement dated April
17, 2003 whereby the Company acquired certain mineral rights from AngloGold for
$818,000.  The mineral rights acquired relate to the following
properties in the Paciência project, Santa Isabel, Morro do Adão, Bahu and
Marzagao and the following properties in the Caeté expansion project, Catita and
Camará, The Company will also pay a sliding scale NSR, from 1.5% to 4.5% of
gross revenue, on gold and other precious metals produced from the properties,
based on precious metal prices at the time of production.
  If the
Company discovers, on a concession basis, in excess of 750,000 ounces of gold
over the measured and indicated resources used in the agreement, AngloGold has
the right to buy-in up to 70% of that concession for a predetermined
price.  If the above event were to occur, the Company would retain a
30% interest and would receive the same sliding scale NSR payment from AngloGold
as the one mentioned above.
  On
November 21, 2007 the Company reached an agreement with AngloGold whereby it
transferred Zone C to AngloGold for an agreed upon value of $8.1 million. 
Part of the purchase price was satisfied by the settlement of $0.4 million in
existing liabilities payable by MSOL to AngloGold.  The remaining balance
will be paid through a reduction of future royalty payments on the sliding scale
NSR for the properties purchased from AngloGold in 2003.  MSOL will not be
required to make royalty payments on the equivalent of approximately 280,000
ounces of gold.  The Company recorded a gain of $381,000 based on the
difference between the carrying value of Zone C and the amount of the
liabilities settled in the transaction.  Since the future royalty payments
are contingent on the production and sale of gold at the related properties, the
Company will recognize that portion of the gain as reduced royalty expense over
the life of the mine.
  (ii)   Turmalina
  The
costs relate to the Satinoco property.  The property is subject to a
royalty payable to a third party (Note 8).
  (iii)  
Caeté Expansion Project
  The
project includes the following properties, Pilar-sulphide, Catita-sulphide,
Camara, Roça  Grande and Serra Paraiso.
  Pilar
  Pursuant
to a property acquisition agreement dated November 19, 2003, the Company
acquired the Santa Bárbara (Pilar) gold property from Companhia Vale do Rio Docê
(“CVRD”).  The purchase price was $1.1 million for the actual known
measured and indicated gold resources at that time.
  For any
additional resources determined to be measured or indicated by the Company’s
exploration program on the property prior to November 2005, CVRD was to be paid
$7.48 per ounce of additional gold resource identified.  In September
2007 it was determined that the Company owed CVRD an additional $1.3 million
which was paid in December 2007.
  Roça
Grande
  In 2005
the Company acquired an option from CVRD for the Roça Grande
Properties.  During 2007 the Company and CVRD determined the value of
the Roça Grande properties at approximately $7.8 million (Note
10(i)).
   15
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  10.
                Notes
      Payable:
 
 December
      31,
                  2007
                
                
                December
      31, 2006(a)    
      Due to AngloGold
                
                $
                -
                
                
                $
                350(b)(i) 
      Due to ABN AMRO
                
                
                135
                
                
                
                390(b)(ii) Due
      to ABN AMRO
                
                
                600
                
                
                
                -(c)    
      Due to Banco Volkswagen
                
                
                349
                
                
                
                444(d)(i) 
      Due to Banco Itaú S.A.,formerly Bank Boston
                
                
                14
                
                
                
                39(d)(ii) Due
      to Banco Itaú S.A.
                
                
                179
                
                
                
                296(e)    
      Due to Banco Itaú S.A.
                
                
                1,200
                
                
                
                -(f)     
      Due to RMB International
                
                
                8,762
                
                
                
                14,000(g)(i) 
      Due to Banco Bradesco
                
                
                217
                
                
                
                305(g)(ii) Due
      to Banco Bradesco
                
                
                1,000
                
                
                
                -(h)    
      Private placement notes
                
                
                74,707
                
                
                
                -(i)     
      Due to CVRD
                
                
                6,956
                
                
                
                -(j)     
      Due to Banco Santander
                
                
                1,500
                
                
                
                -95,619
                
                
                
                15,824Less:  Current
      portion
                
                
                11,699
                
                
                
                5,274$
                83,920
                
                
                $
                10,550
 
 Payments
      over the next 5 years:2008
                
                $
                12,4932009
                
                
                10,2582010
                
                
                -2011
                
                
                -2012
                
                
                87,289Total
                
                
                110,040Less
      unamortized discounts
                
                
                (14,421
                )Net
                
                $
                95,619
  (a)
                Due
      to AngloGold
  Relates
to purchase of quota shares of MTL.  The demand note payable was
repaid in 2007.
  (b)
                Due
      to ABN AMRO
  (i)
                Relates
      to a secured credit facility of R$990,000 (approximately $559,000) for the
      purpose of purchasing equipment.  As at December 31, 2007
      R$239,000 ($135,000) was outstanding.  The loan bears interest
      at TJLP (Brazilian government rate) plus 4% (10.25% at December 31, 2007
      and 10.85% at December 31, 2006) and is repayable over 36
      months.  The loan is secured by the equipment
      purchased.
  (ii)
                Relates
      to secured notes payable of $600,000 for general working
      capital.  The advance on export contracts bear interest at 6.5%
      per annum and is repayable on June 14, 2008.  The note is
      secured by future gold sales.
  (c)
                Due
      to Banco Volkswagen
  Relates
to a secured note payable of R$619,000 ($349,000) at December 31, 2007 for the
purpose of purchasing trucks.  The loan bears interest at TJLP
(Brazilian government rate) plus 2.99% (9.24% at December 31, 2007 and 9.84% at
December 31, 2006) and is repayable over 48 months.  The loan is
secured by the trucks purchased.
  16
  JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 10.
                Notes
      Payable (continued):
  (d)
                Due
      to Banco Itaú S.A. formerly Bank
Boston
  (i)
                Relates
      to a secured credit facility of R$2.5 million (approximately $1.4 million)
      for the purpose of purchasing equipment.  As at December 31,
      2007 R$24,000 ($14,000) was outstanding.  The loan bears
      interest at TJLP (Brazilian government rate) plus 3% (9.25% at December
      31, 2007 and 9.85% at December 31, 2006) and is repayable over 36
      months.  The loan is secured by the equipment
      purchased.
  (ii)
                Relates
      to a part of the secured credit facility of R$2.5 million (Note 10
      (d)(i))  for the purpose of purchasing equipment of which
      R$317,000 ($179,000) is outstanding.  The loan bears interest at
      TJLP (Brazilian government rate) plus 2.7% per annum (8.95% at December
      31, 2007 and 9.55% at December 31, 2006) and is repayable over 36
      months.  The loan is secured by the equipment
      purchased.
  (e)
                Due
      to Banco Itaú S.A.
  Relates
to secured notes payable of $1.2 million for general working
capital.  The loan bears interest at 11% per annum and was repaid on
January 21, 2008.  The note was secured by personal guarantees of
certain officers of MSOL.
  (f)
                Due
      to RMB International
  Relates
to a loan facility agreement with an original principal amount of $14
million.  Effective January 1, 2007 the loan was recorded at the
carrying value of $11.7 million (principal outstanding less the unamortized
financing fees) in accordance with CICA Handbook Section 3855 (Note 2(q)(i)).
 The loan bears interest at U.S. LIBOR plus 4% per annum (8.7% at December
31, 2007 and 9.36% at December 31, 2006).  The loan also has a
commitment fee of 1.25% per annum on undrawn funds, which is payable
quarterly.   The loan is repayable in quarterly installments of
$1.4 million which commenced June 30, 2007 and continue to September 30,
2009.  At December 31, 2007 $4.2 million had been repaid and $9.8
million remained outstanding.  The terms of the loan required hedging
strategies for gold price and currency protection.  In September
2007 the Company received an amendment to the Turmalina loan facility from the
lender, which allows the Company to close the forward sales contracts, subject
to certain conditions (Note 5).  The loan is secured by all of the
assets of MTL, including an escrow agreement regarding the cash sweep accounts
(through which all Turmalina and Sabará related cash transactions must flow), a
pledge by MSOL of its quota shares in MTL, the assets of Sabará, a limited
recourse guarantee by MSOL, a guarantee by Jaguar, and a negative pledge by
Jaguar against disposing or encumbering their quota shares in
MSOL.   The arrangement fee included a cash fee of $280,000,
issuance of 350,000 listed Jaguar warrants and 1,093,835 unlisted
warrants.   300,000 unlisted warrants were also issued to
consultants involved in the financing.  These warrants, valued at $1.7
million, were issued in association with the credit facility.  The
cost of warrants and arrangement fees are included in the carrying value of the
loan and are being amortized over the life of the loan using the effective
interest method.  The terms of the loan require that financial
covenants (primarily in relation to anticipated future cash flows and additional
financial indebtedness) be maintained.  At December 31, 2007 the
Company is in compliance with these financial covenants.  The terms of
the loan also required that a minimum of $2.5 million plus accrued interest
($2.7 million as at December 31, 2006) be deposited to a cost overrun account
(Note 7).  The restrictions on these funds were lifted during
2007.  See subsequent events (Note 18(b)).
  17
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  10.
                Notes
      Payable (continued):
  (g)
                Due
      to Banco Bradesco
  (i)
                Relates
      to a secured credit facility of R$1.5 million ($847,000) for the purpose
      of purchasing equipment of which R$384,000 ($217,000) is
      outstanding.  The equipment loans bear interest at TJLP
      (Brazilian government rate) plus 2.7% (8.95% at December 31, 2007 and
      9.55% at December 31, 2006) and are repayable over 36
      months.  The loans are secured by the equipment
      purchased.
  (ii)
                Relates
      to secured notes payable of $1.0 million for general working
      capital.  The advance on export contracts bears interest at 6.4%
      per annum and is repayable July 29, 2008.  The note is secured
      by future gold sales.
  (h)
                Private
      placement notes
  Relates
to notes payable issued in a private placement of 86,250 units on March 22, 2007
for gross proceeds of Cdn.$86.3 million ($74.5 million).  Each unit is
comprised of a secured note in the principal amount of Cdn.$1,000, bearing a
coupon of 10.5%, payable semi-annually in arrears, and 25 common shares of
Jaguar (Note 13(a)).  The notes are secured by shares of MSOL, which
holds all of the operating assets of the Company, and are repayable on March 23,
2012. At the option of the Company, the notes may be redeemed in whole or in
part after March 22, 2010 at 102% of the principal amount, and at 101% of the
principal amount after March 22, 2011.  In addition, the notes may be
redeemed in whole prior to March 23, 2010 at 102% of the principal amount should
a change of control occur.
  The
Company allocated a portion of the private placement proceeds to common shares
based on the share price of the common shares on March 8, 2007.  The
following is a summary of the allocation of the proceeds from private placement
notes and reconciliation to the carrying value outstanding as at December 31,
2007:
 
 Notes
      PayableGross
      proceeds
                
                $
                74,508Allocation
      to common shares
                
                
                (11,362
                )Allocation
      to call option
                
                
                74Finance
      fees
                
                
                (2,842
                )Net
                
                
                60,378Amortization
      of finance fees
                
                
                1,720Period
      end foreign exchange adjustment
                
                
                12,609Net
      carrying value of private placement notes
                
                $
                74,707
  (i)   Due
to CVRD
  Relates
to purchase of mineral rights for the Roça Grande property.  The
demand note payable is non-interest bearing and is expected to be repaid by
2009.
  The
Company acquired an option to obtain mineral rights at the Roça Grande gold
property from CVRD under an agreement dated November 28, 2005 for 3.5% of the
market value of CVRD’s estimated resources plus 2.5% of any additional resources
determined by Jaguar less expenses associated with the
transfer.  During 2007 Jaguar completed its audit of CVRD’s resource
estimate and exercised its option to purchase the mineral rights for
approximately $7.8 million. The Company will execute the final transfer
agreement in the second quarter of 2008. The Company expects to pay $2.0 million
of the purchase price in 2008 and the remaining balance of $5.8 million in
2009.  CVRD retains certain iron ore exploration rights on the
properties and retains a 70% back-in right if the Company has more than five
million ounces of gold reserves on the properties by November
2010.  The contract grants corresponding rights for CVRD to explore a
property owned by the Company for iron and to acquire iron mineral rights on the
property until November 2008.
  
  
  18
   JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 10.
                Notes
      Payable (continued):
  (i)   
Due to CVRD (continued):
  According
to CICA Handbook Section 3855 the note payable was recognized at its fair value
and the discount is being amortized to expense using the effective interest
method.
  (j)   
Due to Banco Santander
  Relates
to secured notes payable of $1.5 million for general working
capital.  The advance on export contracts bears interest at 6.8% per
annum and is repayable June 27, 2008.  The note is secured by future
gold sales.
 
  11.    Asset
Retirement Obligations:
  2007
                
                
                
                
                
                2006Balance,
      beginning of year
                
                
                $
                1,669
                
                
                
                
                
                $
                211Increase
      in reclamation obligationsSabará
      Plant and Zone A
                
                $
                433
                
                
                
                
                
                
                $
                325Pilar
                
                
                -
                
                
                
                
                
                
                
                247Turmalina
                
                
                892
                
                
                
                1,325
                
                
                
                964
                
                
                
                1,536Reclamation
      expenditures
                
                
                
                
                
                
                (157
                )
                
                
                
                
                
                
                (105
                )Accretion
      expense
                
                
                
                
                
                
                138
                
                
                
                
                
                
                
                27Balance,
      end of year
                
                
                
                
                
                
                2,975
                
                
                
                
                
                
                
                1,669Less:  current
      portion
                
                
                
                
                
                
                269
                
                
                
                
                
                
                
                289$
                2,706
                
                
                
                
                
                
                $
                1,380
  The
asset retirement obligations relate to the following:
  (a)      Sabará
Zone B:
  The
      Company expects to spend approximately $140,000 in 2008 to reclaim the
      land that has been disturbed as a result of the mining
      activity.
  (b)
                Caeté
      Plant:
  The Company expects to spend approximately $110,000 in 2013 relating to plant
closure costs.
  (c)
                Sabará
      Plant and Zone A:
  The
      Company expects to spend approximately $833,000 between 2009 and 2015 to
      reclaim land that has been disturbed as a result of mining
      activity.
  (d)
                Pilar
      Mine Development:
  The Company expects to spend approximately $129,000 in 2008 to reclaim land that
has been disturbed as a result of mining activity.
  (e)
                Turmalina
      Plant and Mine:
  The company expects to spend approximately $3.1 million between 2014 and 2019 to
reclaim land that has been disturbed as a result of the mining
activity.
  The
      estimated future cash flows have been discounted at a credit adjusted risk
      free rate of 10%.
   19
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  12.    Income
taxes:
  The
Company is subject to income taxes in both Canada and Brazil.
  The
recovery of income taxes varies from the amounts that would be computed by
applying the combined Canadian federal and provincial statutory rate of
approximately 36.12% (2006 - 36.12%, 2005 - 36.12%) to loss before income taxes
as follows:
 2007
                
                
                2006
                
                
                2005Expected
      income tax recovery (expense) using statutory income tax rate
      36.12%
                
                $
                8,632
                
                
                $
                4,395
                
                
                $
                4,857Increase
      (decrease) in tax recovery resulting from:Unrealized
      foreign exchange gain
                
                
                824
                
                
                
                262
                
                
                
                395Stock
      based compensation
                
                
                (3,883
                )
                
                
                (2,164
                )
                
                
                (647
                )Loss
      on forward sales derivatives
                
                
                (3,910
                )
                
                
                (2,464
                )
                
                
                (1,225
                )Non-deductible
      interest expense
                
                
                (497
                )
                
                
                -
                
                
                
                -Interest
      income-share purchase loans
                
                
                -
                
                
                
                (12
                )
                
                
                (14
                )Capital
      gains tax on expired warrants
                
                
                (1
                )
                
                
                (183
                )
                
                
                -Impact
      of future changes in enacted tax rates
                
                
                (2,403
                )
                
                
                -
                
                
                
                -Valuation
      allowance
                
                
                (2,523
                )
                
                
                (158
                )
                
                
                (2,758
                )Income
      tax (expense) recovery
                
                $
                (3,761
                )
                
                $
                (324
                )
                
                $
                608
  The tax
effects of temporary differences that give rise to significant portions of
future tax assets and liabilities as at December 31 are as follows:
  2007
                
                
                2006Future
      Tax AssetsCanadaNon-Capital
      losses (a)
                
                $
                5,831
                
                
                $
                4,491Stock
      issuance costs
                
                
                1,510
                
                
                
                1,641Cumulative
      eligible capital
                
                
                174
                
                
                
                184Unrealized
      gain on forward foreign  exchange contracts
                
                
                -
                
                
                
                (256
                )Unrealized
      gain on forward sales derivatives
                
                
                (268
                )
                
                
                -Unrealized loss on foreign exchange
                
                
                4,050
                
                
                
                -BrazilNon-Capital
      losses (b)
                
                
                1,403
                
                
                
                1,569Amounts
      not deductible until paid (realized)
                
                
                1,240
                
                
                
                26313,940
                
                
                
                7,892Valuation
      Allowance
                
                
                (11,301
                )
                
                
                (7,029
                )2,639
                
                
                
                863Future
      Tax LiabilitiesBrazilAcquisition
      of mineral propertySabará
                
                
                (70
                )
                
                
                (97
                )Rio
      de Peixe
                
                
                (599
                )
                
                
                (498
                )Acquisition
      of Caeté Plant
                
                
                (37
                )
                
                
                (51
                )Capitalized
      pre-stripping cost
                
                
                (1,476
                )
                
                
                (482
                )Engineering costs capitalized
                
                
                (145
                )
                
                
                (156
                )Unrealized foreign exchange gain
                
                
                (2,494
                )
                
                
                -(4,821
                )
                
                
                (1,284
                )Net
      Future Tax Liabilities
                
                $
                (2,182
                )
                
                $
                (421
                )
 
   20
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  12.    Income
taxes (continued):
  Canada
  (a)
                The
      Company has non-capital losses carried forward of approximately $20.1
      million that are available for tax purposes.  The losses expire
      as follows:
 
 Year
                
                Amount
      in thousands of U.S.$2009
                
                $
                5222010
                
                $
                2,2772011
                
                $
                3,7992015
                
                $
                5,8092026
                
                $
                1,6432027
                
                $
                6,054
  None of
the Canadian non-capital loss carry-forwards have been included in future tax
assets.
  Brazil
  (b)
                The
      Company has non-capital loss carry-forwards of approximately $4.1 million
      which can be carried forward indefinitely, however, only 30% of the
      taxable income in one year can be applied against the loss carry-forward
      balance.  All of the Brazilian non-capital loss carry-forwards
      have been recognized in future tax
assets.
  13.     Capital
Stock:
  (a)
                Common
      shares:
  Authorized
      and issued:
  The
Company is authorized to issue an unlimited number of common
shares.  The Company has issued the following common
shares.
 
 Number
                
                
                AmountBalance,
      December 31, 2004
                
                
                30,283,389
                
                
                $
                42,843Exercise
      of purchase and compensation warrants (Note 13(b))
                
                
                2,432,175
                
                
                
                3,736Issuance
      of over allotment options
                
                
                550,000
                
                
                
                1,470Exercise
      of stock options exercised - cash method (Note 13(c))
                
                
                25,000
                
                
                
                20Exercise
      of stock options exercised - cashless method (Note 13(c))
                
                
                55,773
                
                
                
                18Other
      stock issuance costs
                
                
                -
                
                
                
                (74
                )Balance
      December 31, 2005
                
                
                33,346,337
                
                
                $
                48,013Exercise
      of purchase and compensation warrants (Note 13(b))
                
                
                1,965,335
                
                
                
                9,303Exercise
      of stock options exercised - cash method (Note 13(c))
                
                
                42,333
                
                
                
                124Exercise
      of stock options exercised - cashless method (Note 13(c))
                
                
                1,128,903
                
                
                
                1,233Public
      offering (i)
                
                
                11,435,000
                
                
                
                51,368Other
      stock issuance costs
                
                
                -
                
                
                
                (4,005
                )Shares
      acquired under normal course issuer bid, shares to be cancelled
      (ii)
                
                
                (1,000
                )
                
                
                (2
                )Repayment
      of share loan (iii)
                
                
                -
                
                
                
                800Balance
      December 31, 2006
                
                
                47,916,908
                
                
                $
                106,834Early
      warrant exercises (Note 13(b))
                
                
                5,189,639
                
                
                
                22,020Stock
      issuance costs related to early warrant exercise  (Note
      13(b))
                
                
                -
                
                
                
                (1,483
                )Exercise
      of purchase and compensation warrants (Note 13(b))
                
                
                547,869
                
                
                
                3,213Exercise
      of stock options exercised - cash method (Note 13(c))
                
                
                52,842
                
                
                
                268Exercise
      of stock options exercised - cashless method (Note 13(c))
                
                
                107,292
                
                
                
                209Private
      placement notes (Note 10(h))
                
                
                2,156,250
                
                
                
                11,375Stock
      issuance costs related to private placement notes (Note
    10(h))
                
                
                -
                
                
                
                (524
                )Shares
      acquired under normal course issuer bid and cancelled (ii)
                
                
                (236,400
                )
                
                
                (596
                )Balance,
      December 31, 2007
                
                
                55,734,400
                
                
                $
                141,316
 
  21
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  13.    Capital
Stock (continued):
  (a)
                Common shares
      (continued):
  (i)
                On
      March 27, 2006 the Company completed a public offering of 11,435,000
      common shares at a price of Cdn.$5.25 per share for gross proceeds of
      $51.4 million (Cdn.$60.0 million).  Net proceeds received were
      $47.4 million (Cdn.$55.4 million) after underwriters fees and legal costs,
      closing costs and allocation of broker warrants were
      deducted.  The Company issued 343,050 broker warrants to the
      agent of the public offering.  The broker warrants are included
      in the warrants schedule (Note 13(b)).  Each broker warrant is
      convertible into one common share at a price of Cdn.$5.25 expiring March
      27, 2008.  A value of $584,000 (Cdn.$683,000) was allocated to
      the broker warrants and recorded as share issue
  cost.
  (ii)
                In
      August 2006, Jaguar received approval from the TSX for a normal course
      issuer bid to purchase up to the lesser of 2,291,655 common shares, being
      5% of the issued and outstanding common shares of Jaguar at that time, or
      the number of common shares equal to a maximum aggregate purchase price of
      $1 million.  The normal course issuer bid commenced on August
      25, 2006 and terminated on August 24, 2007.  During 2006, Jaguar
      purchased 1,000 common shares at an average price of Cdn.$4.65 per common
      share.  During 2007 the Company purchased an additional 62,400
      shares at an average price of Cdn.$5.80 per common share.  These
      shares have been cancelled.
  In
August 2007, Jaguar received approval from the TSX for a second normal course
issuer bid to purchase up to the lesser of 2,760,224 common shares, being 5% of
the issued and outstanding common shares of Jaguar at that time, or the number
of common shares equal to a maximum aggregate purchase price of Cdn.$5.25
million.  The normal course issuer bid commenced on August 30, 2007
and will terminate on August 29, 2008.  At December 31, 2007 the
Company had purchased 174,000 of its common shares at an average price of
Cdn.$9.92 under the second normal course issuer bid.  Of these shares
purchased 53,800 shares were cancelled as at December 31, 2007 and the remaining
120,200 shares purchased were cancelled subsequent to December 31,
2007.  Future shares purchased under the normal course issuer bid will
be scheduled for cancellation.
  In
accordance with CICA handbook section 3240 the share purchases were recorded as
a reduction in the common share balance equivalent to the average cost basis of
the shares purchased, and an adjustment to shareholders’
equity.  During 2007 common stock was reduced by $596,000 (2006 -
$2,000), and the excess paid over the average cost basis in the amount of $1.5
million (2006 - $2,000, 2005 - $nil) was charged to deficit.
  (iii)
                Deducted
      from the common share balance at December 31, 2005 was an $800,000 loan to
      BZI made October 2, 2003.  In return for the loan, the Company
      received a first option to purchase BZI’s interest in a certain mining
      project.  BZI used the proceeds of the loan to purchase 500,000
      common shares of the Company from a third party.  The loan was
      fully repaid in 2006.  Under CICA Emerging Issues Committee 132
      - Share Purchase Financing, the loan was classified as a reduction to
      shareholders’ equity and the repayment as an increase to shareholders’
      equity.  Included in the statement of deficit is interest income
      of $nil (2006 - $34,000, 2005 - $40,000) relating to this
      loan.
  Shareholder
Rights Plan
  On
January 31, 2007 the Company adopted a Shareholder Rights Plan (“Rights Plan”)
to ensure the fair treatment of shareholders in connection with any take-over
bid for common shares of Jaguar.  Rights issued under the Rights Plan
will become exercisable upon the announcement of an intention to acquire
beneficial ownership of 20% or more of the outstanding shares of the Company
without complying with the Permitted Bid provisions in the Rights Plan or
without approval of the Board.  These rights will entitle shareholders
to purchase additional common shares at a substantial discount to the market
price at that time.  The Rights Plan has beenapproved by the Toronto
Stock Exchange and was ratified by the shareholders on May 10,
2007.
   22
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  13.    Capital
Stock (continued):
  (b)
                Warrants:
  Number
                
                
                AmountBalance,
      December 31, 2004
                
                
                
                
                
                9,850,721
                
                
                $
                4,965Over-allotment
      warrants issued
                
                
                
                
                
                275,000
                
                
                
                181Compensation
      warrants issued with the over-allotment options issued in January
      2005
                
                
                33,000Underlying
      warrants associated with the compensation warrants issued in January
      2005
                
                
                16,500
                
                
                
                49,500
                
                
                
                39Exercise
      of purchase and compensation warrants
                
                
                
                
                
                
                (2,432,175
                )
                
                
                (243
                )Issuance
      of warrants associated with the credit facility (Note 10
    (f))
                
                
                
                
                
                
                1,743,835
                
                
                
                1,729Warrants
      expired - transferred to contributed surplus (Note 13 (d))
                
                
                
                
                
                
                (227,496
                )
                
                
                (117
                )Balance,
      December 31, 2005
                
                
                
                
                
                
                9,259,385
                
                
                $
                6,554Exercise
      of purchase and compensation warrants
                
                
                
                
                
                
                (1,965,335
                )
                
                
                (2,053
                )Compensation
      warrants issued on public offering March 2006 (Note
    13(a)(i))
                
                
                
                
                
                
                343,050
                
                
                
                584Warrants
      expired - transferred to contributed surplus (Note 13(d))
                
                
                
                
                
                
                (1,895,800
                )
                
                
                (1,013
                )Balance,
      December 31, 2006
                
                
                
                
                
                
                5,741,300
                
                
                $
                4,072Exercise
      of purchase and compensation warrants
                
                
                
                
                
                
                (5,366,721
                )
                
                
                (3,671
                )Warrants
      forced out
                
                
                
                
                
                
                (225,403
                )
                
                
                (152
                )Warrants
      expired
                
                
                
                
                
                
                (5,095
                )
                
                
                (4
                )Balance,
      December 31, 2007
                
                
                
                
                
                
                144,081
                
                
                $
                245
  The
following is a summary of the warrants date of issue, exercise price and expiry
date outstanding at December 31, 2007:
 Number
                  Outstanding
                
                Date
      of Issue
                Exercise
      Price
                Expiry
      Date144,081
                
                March
      27, 2006
                Cdn.$5.25
                March
      27, 2008
 
 On
February 27, 2007, the Company filed a final short form prospectus to issue up
to 340,090 common shares to the holders of 5,398,250 common share purchase
warrants, upon early exercise of its listed warrants.  Each warrant
entitled the holder to acquire one common share of the Company at a price of
Cdn.$4.50 on or before December 31, 2007.  Under the early exercise
program the holder could acquire an additional 0.063 of one common share in the
event that such holder exercised the warrants during the 30-day early exercise
period that commenced on February 28, 2007 and ended on March 30,
2007.
  As of
March 30, 2007, 4,818,852 warrants were exercised for gross proceeds of $18.8
million in exchange for 5,122,428 shares.  This represented 89.3% of
the listed warrants outstanding on February 28, 2007 thereby forcing each
remaining listed warrant (579,398) to be exchanged for 0.2982 common shares of
the Company by April 30, 2007 (except those warrants held by U.S. warrant
holders who are not accredited investors or who are accredited investors but who
did not deliver a subscription form and representation letter pursuant to the
program).  At December 31, 2007, 225,403 of the remaining listed
warrants were exchanged for 67,211 common shares.
  At
December 31, 2007, $0.8 million of cash was held in trust relating primarily to
warrant exercises (2006 - $nil).
  23
  JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 13.
                Capital
      Stock (continued):
  (c)
                Stock
      options:
  During
2003 the Company established The Jaguar Stock Option Plan (the
“Plan”).  Under the Plan the Company may grant options to directors,
officers, employees, and consultants of the Company, and its
subsidiaries.  The maximum number of Company shares that have been
reserved under this plan is 10,500,000.  Options granted after
February 17, 2004 do not have any specific vesting provisions.
  Effective
October 22, 2004 the Plan was amended to allow a cashless exercise of the
options.  Under this amendment, an option holder can elect to have the
Company withhold a number of shares of stock issued as payment of the exercise
prices, based on the price of the shares at the close of trading on the day
preceding the day of exercise of the options, with the net shares issued to the
optionee in connection with the exercised options.  During the year
ended December 31, 2007, 164,000 options were exercised using the cashless
method (2006 -1,796,967, 2005 - 80,000).
 Number
                
                
                AmountBalance,
      December 31, 2004
                
                
                3,282,619
                
                
                $
                2,257Stock
      based compensation
                
                
                n/a
                
                
                
                1,791Issued
      during the year
                
                
                1,275,000
                
                
                
                -Options
      exercised - conventionally
                
                
                (25,000
                )
                
                
                (4
                )Options
      exercised - cashless method
                
                
                (80,000
                )
                
                
                (18
                )Unvested
      options expired upon termination
                
                
                (17,500
                )
                
                
                -Options
      expired
                
                
                (9,819
                )
                
                
                -Balance,
      December 31, 2005
                
                
                4,425,300
                
                
                $
                4,026Stock
      based compensation
                
                
                -
                
                
                
                5,990Issued
      during the year
                
                
                3,045,000
                
                
                
                -Options
      exercised - conventionally
                
                
                (42,333
                )
                
                
                (19
                )Options
      exercised - cashless method
                
                
                (1,796,967
                )
                
                
                (1,233
                )Vested
      options expired upon termination, transferred to contributed surplus (Note
      13(d))
                
                
                (13,000
                )
                
                
                (19
                )Unvested
      options expired upon termination
                
                
                (149,000
                )
                
                
                -Options
      expired
                
                
                (200,000
                )
                
                
                -Balance,
      December 31, 2006
                
                
                5,269,000
                
                
                $
                8,745Stock
      based compensation
                
                
                -
                
                
                
                10,750Issued
      during the year
                
                
                2,808,500
                
                
                
                -Options
      exercised - conventionally
                
                
                (52,842
                )
                
                
                (68
                )Options
      exercised - cashless method
                
                
                (164,000
                )
                
                
                (209
                )Unvested
      options expired upon termination
                
                
                (55,000
                )
                
                
                -Balance,
      December 31, 2007
                
                
                7,805,658
                
                
                $
                19,218
  24
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  13.    Capital
Stock (continued):
  (c)
                Stock
      options (continued):
 
 Common
      share options
                
                Number
                
                
                Weighted
      Average
                  Exercise
                  Price
      U.S.
                
                
                Weighted
                  Average
      Exercise
                  Price
      Cdn.Balance,
      December 31, 2004
                
                
                3,282,619
                
                
                $
                0.79
                
                
                $
                4.01Issued
      during the year
                
                
                1,275,000
                
                
                
                -
                
                
                
                3.51Options
      exercised:-exercisable
      in US$
                
                
                (105,000
                )
                
                
                0.75
                
                
                
                -Options
      expired
                
                
                (27,319
                )
                
                
                -
                
                
                
                4.74Balance,
      December 31, 2005
                
                
                4,425,300
                
                
                $
                0.79
                
                
                $
                3.80Issued
      during the year
                
                
                3,045,000
                
                
                
                -
                
                
                
                5.56Options
      exercised:-exercisable
      in US$
                
                
                (1,150,997
                )
                
                
                0.76
                
                
                
                --exercisable
      in Cdn.$
                
                
                (688,303
                )
                
                
                -
                
                
                
                4.06Options
      expired
                
                
                (362,000
                )
                
                
                -
                
                
                
                3.95Balance,
      December 31, 2006
                
                
                5,269,000
                
                
                $
                1.03
                
                
                $
                4.80Issued
      during the year
                
                
                2,808,500
                
                
                
                -
                
                
                
                7.59Options
      exercised:-exercisable
      in US$
                
                
                (24,000
                )
                
                
                1.17
                
                
                
                --exercisable
      in Cdn.$
                
                
                (192,842
                )
                
                
                -
                
                
                
                3.74Options
      expired
                
                
                (55,000
                )
                
                
                -
                
                
                
                4.51Balance,
      December 31, 2007
                
                
                7,805,658
                
                
                $
                1.00
                
                
                $
                5.85
 
 Exercise
                  price
                
                Outstanding
                  December
      31,
                  2007
                
                Weighted
      Average
                  Remaining
      Life in Years
                Number
      Exercisable$   1.00
                
                135,000
                
                .68
                135,000$   3.75
                Cdn.
                156,158
                
                .85
                156,158$   4.05
                Cdn.
                685,000
                
                1.38
                685,000$   4.25
                Cdn.
                96,000
                
                1.46
                96,000$   4.00
                Cdn.
                157,500
                
                1.81
                157,500$   3.47
                Cdn.
                647,500
                
                2.13
                587,500$   3.65
                Cdn.
                212,000
                
                2.19
                -$   3.29
                Cdn.
                40,000
                
                2.94
                40,000$   5.47
                Cdn.
                1,010,000
                
                3.36
                1,010,000$   4.41
                Cdn.
                418,000
                
                3.50
                -$   6.40
                Cdn.
                1,010,000
                
                3.92
                1,010,000$   4.72
                Cdn.
                40,000
                
                .84
                40,000$   5.25
                Cdn.
                50,000
                
                1.33
                50,000$   6.00
                Cdn.
                50,000
                
                1.84
                50,000$   5.25
                Cdn.
                200,000
                
                1.73
                200,000$   4.60
                Cdn.
                100,000
                
                1.73
                100,000$   5.94
                Cdn.
                1,135,000
                
                4.22
                1,051,666$   4.62
                Cdn.
                36,000
                
                3.67
                36,000$   6.48
                Cdn.
                387,500
                
                4.69
                82,500$   9.54
                Cdn.
                1,240,000
                
                4.93
                1,200,0007,805,658
                
                
                6,687,324
 
  25
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  13.    Capital
Stock (continued):
  (c)
                Stock
      options (continued):
  The
weighted average fair value at the date of grant for the options granted during
the year ended December 31, 2007 was $4.07 (2006 - $2.31, 2005
-$1.40).
  The
fair value of each option granted was estimated on the date of the grant using
the Black-Scholes option-pricing model with the following
assumptions:
 2007
                2006
                2005Risk-free
      interest rate
                3.9%
      - 4.3%
                3.8%
      - 4.5%
                4.0
      - 4.5%Expected
      dividend yield
                0.0%
                0.0%
                0.0%Expected
      share price volatility
                55.0%
      - 60.0%
                50.0%
      - 55.0%
                50.0%Expected
      life of the options
                2.8
      - 4.0 years
                1.5
      - 5 years
                5
      years
  (d)
                Contributed
      Surplus
 
 Balance
      December 31, 2004
                
                $
                -Warrants
      expired
                
                
                117Balance
      December 31, 2005
                
                $
                117Warrants
      expired (Note 13(b))
                
                
                1,013Vested
      options expired upon termination (Note 13(c))
                
                
                19Balance
      December 31, 2006
                
                $
                1,149Warrants
      expired (Note 13(b))
                
                
                4Balance
      December 31, 2007
                
                $
                1,153
 
 
 14.
                Basic
      and Diluted Net Loss per Share:
  Dollaramounts and share
amounts in thousands, except per share amounts.
 2007
                
                
                2006
                
                
                2005NumeratorNet
      loss for the year
                
                $
                (27,660
                )
                
                $
                (12,746
                )
                
                $
                (12,838
                )DenominatorWeighted
      average number of common shares outstanding
                
                
                53,613,175
                
                
                
                43,114,563
                
                
                
                31,766,914Common
      shares-share purchase loan (Note 13 (a)(iii))
                
                
                -
                
                
                
                -
                
                
                
                (500,000
                )Weighted
      average number of common shares outstanding
                
                
                53,613,175
                
                
                
                43,114,563
                
                
                
                31,266,914Basic
      and diluted net loss per share
                
                $
                (0.52
                )
                
                $
                (0.30
                )
                
                $
                (0.41
                )
  The
determination of the weighted average number of shares outstanding for the
calculation of diluted net loss per share does not include the effect of
outstanding warrants and options since they are anti-dilutive.
  26
  JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 15.
                
                Related
      Party Transactions:
  (a)
                The
      Company incurred fees of $747,000 for the year ended December 31, 2007
      (2006 - $739,000, 2005 - $nil) from IMS Engenharia Mineral Ltda ("IMSE"),
      a company held by several officers of the Company, which provides
      operating services to the Company's Brazilian subsidiaries.  For
      the year ended December 31, 2005 the Company incurred fees of $954,000
      from IMS which provided operating services to the Company’s Brazilian
      subsidiaries.  The fees are included in management fees in the
      statement of operations.
  (b)
                The
      Company incurred occupancy fees of $120,000 for the year ended December
      31, 2007 (2006 - $120,000, 2005 - $110,000) to BZI, a corporate
      shareholder, for use of administrative offices.  The Company
      moved to new administrative office space in December 2007.  The
      term will be three years beginning on the date of
      occupancy.  The Company also incurred consulting fees and
      administrative service charges of $450,000 from BZI for the year ended
      December 31, 2007 (2006 - $314,000, 2005 - $27,000).  The
      occupancy costs, consulting fees and administrative service fees are
      included in the statement of operations.  As at December 31,
      2007 prepaid expenses and sundry assets includes a receivable of $101,000
      from BZI.  As at December 31, 2006 accounts payable and accrued
      liabilities includes $14,000 due to
BZI.
  (c)
                The
      Company recognized rental income of $192,000 from PML and $126,000 from
      PCO for the year ended December 31, 2007 (2006 - $nil from PML and $90,000
      from PCO, 2005 - $nil) for temporarily idle equipment and the use of
      administrative offices.  PCO is controlled by IMS, a founding
      shareholder of the Company.  As at December 31, 2007 prepaid
      expenses and sundry assets includes $149,000 receivable from PML, and
      $36,000 from PCO (as at December 31, 2006 - $112,000 from PML and $37,000
      from PCO) (Note 4(b)).  During 2007 the Company also received
      approximately $0.3 million (2006 - $nil, 2005 - $nil) of royalty income
      relating to the NSR (Note 6).
  (d)
                The
      Company incurred management fees for the period ended March 31, 2005 of
      $60,000 from BZI which provided administrative services.  The
      management fees are included in the statement of operations.  On
      March 31, 2005 the agreement with BZI to provide management and
      administrative services for a fee of $20,000 per month
    ceased.
  (e)
                For
      the three months ended March 31, 2006, the Company incurred legal expenses
      of $270,000 (three months ended March 31, 2005 - $39,000) from a legal
      firm of which the Secretary of the Company was a Senior
      Partner.  The Secretary of the Company ceased to be a partner of
      this firm March 31, 2006.  As at March 31, 2006, $140,000
      ($140,000 as at December 31, 2005) was included in prepaid and sundry
      assets and $141,000 ($nil as at December 31, 2005) was included in share
      issuance costs on the balance sheet.  At March 31, 2006,
      accounts payable and accrued liabilities includes $496,000 (December 31,
      2005 - $226,000) due to this legal firm.  This balance has
      subsequently been paid.
  The
above related party transactions are in the normal course of operations and have
been measured at the exchange amount between the related parties.
   27
 JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  16.
                Supplemental
      Cash Flow Information:
  December
      31, 2007
                
                
                December
      31, 2006
                
                
                December
      31, 2005Equipment
      purchased on issuing note payable (Note 10(b)(c)(d))
                
                $
                -
                
                
                $
                649
                
                
                $
                1,179Equipment
      purchased on eliminating loan receivable
                
                $
                -
                
                
                $
                327
                
                
                $
                -Warrants
      issued in conjunction with the offering (Note 13(a)(i))
                
                $
                -
                
                
                $
                584
                
                
                $
                -Warrants
      issued in conjunction with the Turmalina loan facility (Note
      10(f))
                
                $
                -
                
                
                $
                -
                
                
                $
                1,729Conversion
      of loan receivable into NSR (Note 6)
                
                $
                -
                
                
                $
                1,535
                
                
                $
                -Transfer
      of Zone C in return for forgiveness of note payable (Note
      10(a))
                
                $
                350
                
                
                $
                -
                
                
                $
                -Mineral
      rights purchased on issuing note payable to CVRD (Note
    10(i))
                
                $
                8,208
                
                
                $
                -
                
                
                $
                -
 
 December
      31, 2007
                
                
                December
      31, 2006
                
                
                December
      31, 2005Interest
      paid
                
                $
                8,217
                
                
                $
                270
                
                
                $
                184Income
      taxes paid
                
                $
                -
                
                
                $
                591
                
                
                $
                -
  Cash
and cash equivalents included R$38.0 million ($21.4 million) in bank
certificates of deposit (2006 - R$4.3 million ($2.0 million)).
  17.
                Commitments:
  (a)
                The
      Company entered into a management agreement with IMSE (Note 15(a)),
      whereby IMSE will provide certain agreed services to MSOL and will be paid
      $62,000 per month until December 31,
2008.
  (b)
                On
      February 28, 2007, the Company entered into a Joint Venture agreement with
      Xstrata Brasil Exploração Mineral Ltda. (“Xstrata”) to explore the Pedra
      Branca Gold Project in Northern Brazil.  The Company will pay an
      aggregate fee of $150,000 over the next two years (of which $50,000 was
      paid during the first quarter of 2007 and $100,000 was paid in March
      2008).  The Company will have the option to hold a 51% ownership
      interest in the new enterprise by investing an aggregate of $3.85 million
      in exploration expenditures within the next four years.  The
      Company must meet annual exploration expenditure targets for each year in
      which it maintains the option.
  The
Company has committed to spend the following for exploration:
 Exploration
      Expenditures
                Due
      Date$300
                February
      28, 2008$650
                February
      28, 2009$1,400
                February
      28, 2010$1,500
                February
      28, 2011
  As at
December 31, 2007 the Company has expended $887,000 on
exploration.  The Company has the opportunity to increase its
ownership interest in certain gold deposits to 60% through further investing
$3.0 million by the fifth anniversary of the agreement, subject to the rights of
Xstrata to return to their 49% interest through additional contributions to the
joint venture for certain properties which have gold deposits of two million
ounces or more.
  28
  JAGUAR
MINING INC.
 
 Notes
to Consolidated Financial Statements
 (tabular
dollar amounts in thousands of U.S. dollars, except per share
amounts)
 
 Years
ended December 31, 2007 and 2006
 
  18.
                Subsequent
      events:
  (a)
                On
      February 21, 2008 the Company completed an equity financing underwritten
      by a syndicate of underwriters and issued 8,250,000 common shares of
      Jaguar at Cdn$13.40 per share for gross proceeds of Cdn.$110.6 million
      ($109.6 million). Pursuant to the underwriting agreement, the underwriters
      were paid an underwriters fee equal to four and one-half percent (4.5%) of
      the gross proceeds of the offering.
  (b)
                On
      March 13, 2008 the Company paid RMB International (“RMB”) $9.8 million
      plus $181,000 accrued interest to repay the loan facility
      agreement.  The loan was used primarily to finance the
      development, construction and start-up of the Turmalina
      project.  The original principal amount was $14 million and $4.2
      million had been repaid as of December 31, 2007 (Note
    10(f)).
  (c)
                On
      March 14, 2008, the Company paid RMB $22.1 million to close the forward
      sales contracts.  At December 31, 2007, forward sales contracts
      for 48,556 ounces were outstanding which were to be settled at $527.10 per
      ounce at the end of each quarter over the term of the contracts (Note
      5(a)).
  On
March 12, 2008, the Company closed the forward purchase contracts realizing a
gain of $7.4 million, effectively reducing the net loss on the forward contracts
to $14.8 million, of which $14.5 million was accrued as of December 31, 2007. At
December 31, 2007 forward purchase contracts for 48,556 ounces were outstanding
at an average cost of $823.81 per ounce.  No additional charges will
be realized during 2008 for the forward sales contracts. With this transaction
the Company has no forward gold production hedged (Note 5(a)).
  19.
                Comparative
      Figures:
  Certain
      comparative figures have been reclassified to conform to the current
      year’s presentation.
   29



















DOCUMENT
3
 
 
 
 
 
 
 
 
 
 
 
 
 
 JAGUAR
MINING INC.
  Management's
Discussion and Analysis
 of
Financial Condition and Results of Operations
 in
respect of the 12 months ended December 31, 2007 and 2006
       Dated
March 24, 2008
 
  
       
 
  All
amounts are expressed in U.S.$ unless otherwise indicated.
  INTRODUCTION
 The
following discussion of the operating results and financial position of Jaguar
Mining Inc. (“the Company”) should be read in conjunction with the annual
audited consolidated financial statements and the notes thereto of the Company
for the years ended December 31, 2007 and 2006.  The financial
statements have been prepared by management in accordance with accounting
principles generally accepted in Canada and has been reconciled to U.S.
generally accepted accounting principles.  Further information about
the Company is available on SEDAR at www.sedar.com and on its corporate
website www.jaguarmining.com.
  The
average rates of exchange for the Canadian dollar (Cdn.$) per U.S.$1.00 for 2007
and 2006 were 1.07 and 1.13 respectively.  The average rates of
exchange for the Brazilian real (R$) per U.S.$1.00 for 2007 and 2006 were 1.95
and 2.17 respectively.
   FORWARD-LOOKING
STATEMENTS
 Certain
statements in this Management’s Discussion and Analysis (“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, among
others, statements concerning the Company's future objectives, the measured
and indicated resources, their average grade, the commencement period of
production, cash operating costs 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 state 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 ecological data, fluctuating gold prices and monetary exchange
rates, the possibility of project cost delays and 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 labour and equipment, the possibility of labour 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
Forward-Looking Statements, there may be other factors that cause actions,
events or results to differ from those anticipated, estimated or
intended.
  These
Forward-Looking Statements represent our views as of the date of
discussion.  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.  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" as
filed in the Company’s Annual Information Form for the year ended December 31,
2007 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, 2007, filed with the U.S. Securities and Exchange Commission, which are
available at www.sec.govon
EDGAR.
  Cautionary
Note to U.S. Investors Concerning Estimates of Inferred and Measured and
Indicated Resources
 This
document includes the term "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 great
uncertainty as to their 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 a feasibility or other
economic study.  U.S. investors are cautioned not to assume that any
part or all of an inferred resource exists or is economically or legally
mineable.
  1
  SUMMARY
DESCRIPTION OF JAGUAR’S BUSINESS
 The
Company, a corporation existing under the laws of Ontario, is engaged in gold
production and in the acquisition, exploration, development and operation of
gold producing properties in the Iron Quadrangle region of Brazil (the
significant properties are Turmalina, Sabará, Paciência and Caeté), a greenstone
belt located east of the city of Belo Horizonte in the state of Minas Gerais. In
addition, the Company may consider the acquisition and subsequent exploration,
development and operation of non-gold mineral properties in Brazil. Through a
joint venture with Xstrata plc (“Xstrata”), the Company is also engaged in gold
exploration at a greenfield site in the Northeast of Brazil covering 159,000
acres. The Company believes it is one of the fastest growing gold producers in
the world. The Company’s strategy is to become a mid-sized gold producer and to
increase gold output nearly ten-fold from the 70,000 ounces produced in 2007 to
nearly 700,000 ounces by 2014. Coupled with existing cash on hand and based on
the Company’s assumptions concerning production costs, foreign currency exchange
rates and forward gold prices, the Company believes it has a fully funded plan.
A sensitivity analysis, which addresses deviations from certain base assumptions
for feed grade, costs, etc., used in the development of various technical
reports the Company has previously filed, is provided in the Company’s Annual
Information Form for the year ended December 31, 2007 dated March 24, 2008 and
available at www.sedar.com.  The Company believes the development
initiatives it has carried out to date, which includes nearly 18 km of
underground development at its properties in Minas Gerais, gives the management
team a reasonable basis to show confidence that sufficient mineral resources
exist and additional resources will be identified to reach and sustain its
production targets for the foreseeable future. All of the Company’s properties
remain open at depth and along strike together with the experience and history
of other gold operations in the same district. Management believes the
identification of additional gold resources to meet the Company’s production
targets is not a constraining issue.
  The
Company is currently producing gold at its Sabará and Turmalina operations and
expects to begin the commissioning of the Paciência operation in early April
2008.  The Company is also finalizing feasibility studies for its
Caeté Project and the Phase II expansion of the Turmalina operation, which the
Company plans to announce in Q2 2008. Over the next six to seven years, the
Company believes it will have a cost structure that will place it in the lower
third of all primary gold producers. Comparatively, requires significantly lower
capital costs per installed ounce of capacity given the shallow nature of its
underground operations.
   RESULTS
OF OPERATIONS
 Summary
of Quarterly Results
 (unaudited)
(in thousands of $, except per share amounts)
 Quarter
      ended
              
              31-Dec
              
              
              30-Sep
              
              
              30-Jun
              
              
              31-Mar
              
              
              31-Dec
              
              
              30-Sep
              
              
              30-Jun
              
              
              31-MarYear
              
              2007
              
              
              2007
              
              
              2007
              
              
              2007
              
              
              2006
              
              
              2006
              
              
              2006
              
              
              2006Net
      sales
              
              $
              14,915
              
              
              $
              14,962
              
              
              $
              11,415
              
              
              $
              6,542
              
              
              $
              6,304
              
              
              $
              7,279
              
              
              $
              5,471
              
              
              $
              2,125Net
      income (loss)
              
              $
              (14,825
              )
              
              $
              (8,654
              )
              
              $
              (3,685
              )
              
              $
              (496
              )
              
              $
              (6,181
              )
              
              $
              2,441
              
              
              $
              (2,841
              )
              
              $
              (6,164
              )- per
      share basic and diluted
              
              $
              (0.28
              )
              
              $
              (0.16
              )
              
              $
              (0.07
              )
              
              $
              (0.01
              )
              
              $
              (0.13
              )
              
              $
              0.05
              
              
              $
              (0.06
              )
              
              $
              (0.18
              )
 
 Net
sales during the periods increased due to both an increase in ounces of gold
sold and an increase in the average realized gold price.
   Summary
of Key Operating Results
 Q4
      2007
              
              
              Year
      Ended December 31, 2007
              
              
              
              Q4
      2006
              
              
              Year
      Ended December 31, 2006
              
              
              Year
      Ended December 31, 2005Sales
      ($000)
              
              $
              14,915
              
              
              $
              47,834
              
              
              $
              6,304
              
              
              $
              21,179
              
              
              $
              8,510Ounces
      sold
              
              
              18,742
              
              
              
              67,350
              
              
              
              10,373
              
              
              
              34,880
              
              
              
              19,246Average
      realized price $ / ounce
              
              $
              796
              
              
              $
              710
              
              
              $
              608
              
              
              $
              607
              
              
              $
              442Gross
      profit ($000)
              
              $
              4,007
              
              
              $
              14,289
              
              
              $
              1,694
              
              
              $
              5,161
              
              
              $
              (4,716
              )Net
      loss  ($000)
              
              $
              (14,825
              )
              
              $
              (27,660
              )
              
              $
              (6,181
              )
              
              $
              (12,746
              )
              
              $
              (12,838
              )- per
      share basic
              
              $
              (0.28
              )
              
              $
              (0.52
              )
              
              $
              (0.13
              )
              
              $
              (0.30
              )
              
              $
              (0.41
              )- per share
      diluted
              
              $
              (0.28
              )
              
              $
              (0.52
              )
              
              $
              (0.13
              )
              
              $
              (0.30
              )
              
              $
              (0.41
              )Weighted
      avg. # of shares  and diluted # of shares
      outstanding
              
              
              55,494,155
              
              
              
              53,613,175
              
              
              
              46,397,867
              
              
              
              43,114,563
              
              
              
              31,266,914
 
 Q4
2007 Compared to Q4 2006 and YTD 2007 compared to YTD 2006
 Revenue
in Q4 2007 and YTD 2007 increased from the corresponding periods in 2006 due to
both an increase in ounces of gold sold and an increase in the average realized
gold price.  These increases resulted in increases in gross
profit.
  2
  Review
of Certain Operating Expenses and Other Income and Expenses
 (in
thousands of $)
 Q4
      2007
              
              
              Year
      Ended December 31, 2007
              
              
              
              Q4
      2006
              
              
              Year
      Ended December 31, 2006Stock
      based compensation
              
              $
              5,899
              
              
              $
              10,750
              
              
              $
              3,064
              
              
              $
              5,990Administration
              
              $
              3,468
              
              
              $
              10,273
              
              
              $
              2,260
              
              
              $
              7,375Unrealized
      forward derivative loss
              
              $
              1,529
              
              
              $
              4,284
              
              
              $
              2,439
              
              
              $
              6,822Realized
      forward derivative loss
              
              $
              2,291
              
              
              $
              5,624
              
              
              $
              -
              
              
              $
              -Unrealized
      forward fx derivative loss (gain)
              
              $
              472
              
              
              $
              (972
              )
              
              $
              (73
              )
              
              $
              (709
              )Realized
      forward fx derivative (gain)
              
              $
              (1,438
              )
              
              $
              (2,718
              )
              
              $
              (440
              )
              
              $
              (846
              )Foreign
      exchange loss (gain)
              
              $
              (130
              )
              
              $
              (2,280
              )
              
              $
              246
              
              
              $
              (1,871
              )Amortization
      of deferred financing expenses
              
              $
              -
              
              
              $
              -
              
              
              $
              190
              
              
              $
              698Interest
      expense
              
              $
              3,523
              
              
              $
              11,170
              
              
              $
              52
              
              
              $
              270Interest
      income
              
              $
              (1,373
              )
              
              $
              (4,601
              )
              
              $
              (298
              )
              
              $
              (1,582
              )
  •
              Stock
      based compensation expense varies depending upon when stock options
      vest.
  •
              Administration
      costs increased from $745,000 in Q4 2005 to $2.3 million in Q4 2006 to
      $3.5 million in Q4 2007 (and increased from $4.5 million for the 12 months
      ended December 31, 2005 to $7.4 million, 2006 to $10.3 million for the
      same period in 2007). The increases were mainly due to legal and other
      costs related to certain strategic initiatives conducted during the
      quarter, and increased staffing needs related to the management of the
      engineering, procurement and construction (EPC) department as a result of
      the Company’s expansion of operations in Brazil.  In addition,
      costs increased due to the strengthening of the R$ against the U.S.$,
      consulting fees related to the assessment of internal controls and
      procedures, and management incentive
payments.
  •
              During
      Q4 2007, the Company recognized an unrealized loss of $1.5 million on
      forward contracts, as required by the Turmalina loan facility, to manage
      the commodity price exposure on gold sales versus a loss of $2.4 million
      in Q4 2006 ($3.4 million in Q4 2005).  During the 12 months
      ended December 31, 2007 the Company recognized an unrealized loss of $4.3
      million versus an unrealized loss of $6.8 million for the same period in
      2006 and $3.4 million for the same period in 2005.  During Q4
      2007, the Company recognized a realized loss of $2.3 million on forward
      sales contracts versus nil for Q4 2006 and a realized loss $150,000 for Q4
      2005. The Company recognized a realized loss of $5.6 million for the 12
      months ended December 31, 2007 versus nil for the 12 months ended December
      31, 2006 and $150,000 realized loss for the 12 months ended December 31,
      2005. (See Risk Management Policies -
Hedging)
  •
              The
      Company recognized an unrealized loss of $472,000 for Q4 2007, an
      unrealized gain of $72,000 for Q4 2006 and nil for Q4 2005 on forward
      foreign exchange contracts used to manage currency exposure on the R$ (and
      unrealized gains of $972,000 for the 12 months ended December 31, 2007,
      $709,000 for the 12 months ended December 31, 2006 and nil for the 12
      months ended December 31, 2005).  The Company also recognized
      realized gains of $1.4 million for Q4 2007, $440,000 for Q4 2006 and nil
      for Q4 2005 on forward foreign exchange contracts. For the 12 months ended
      December 31, 2007, the Company recognized $2.7 million gains versus
      $846,000 gains for the 12 months ended December 31, 2006 and nil for the
      12 months ended December 31, 2005. (See Risk Management Policies -
      Hedging)
  •
              Foreign
      exchange gains of $130,000 were recognized in Q4 2007 ($2.3 million
      exchange gain for the 12 months ended December 31, 2007), $247,000 loss in
      Q4 2006 ($1.9 million exchange gain for the 12 months ended December 31,
      2006) and $175,000 loss in Q4 2005 ($1.1 million exchange gain for the 12
      months ended December 31, 2005) primarily due to volatility of the R$ and
      Cdn.$. During Q4 2007 and the 12 months ended December 31, 2007 foreign
      exchange gains were incurred on cash balances held in Brazil and Canada
      due to the strengthening of the R$ and Cdn.$ over the
    U.S.$.
   •
              Commencing
      in Q1 2006, deferred finance fees relating to the Turmalina loan facility
      were amortized over the life of the loan.  Deferred finance fees
      of $191,000 were expensed in Q4 2006 ($698,000 for the 12 months ended
      December 31, 2006).  Commencing in Q1 2007, the Company adopted
      Section 3855 of the CICA handbook (See Footnote 2(a)(i) to our financial
      statements) and deferred finance fees were included in the carrying value
      of the loan and amortized as interest
expense.
  •
              Interest
      expense increased from $53,000 in Q4 2006 ($28,000 in Q4 2005) to $3.5
      million in Q4 2007 (Q4 2005 - $28,000). The Company incurred interest
      expense of $11.2 million for the 12 months ended December 31, 2007
      ($270,000 for the same period in 2006 and $184,000 in
      2005).  The increases were due to an increase in debt and
      requirements under new accounting standards which require the costs
      associated with the issuance of the related debt be amortized as interest
      expense.  A total of $879,000 of debt issuance and non-cash
      costs were recognized as interest expense during Q4 2007 ($3.0 million YTD
      2007).
  •
              Interest
      income increased from $297,000 in Q4 2006 ($92,000 in Q4 2005) to $1.4
      million in Q4 2007 ($4.6 million for the 12 months ended December 31, 2007
      versus $1.6 million for the 12 months ended December 31, 2006 and 2005)
      due to interest earned on higher bank deposits.  Interest income
      was earned from deposits held in banks in Canada, the U.S. and
      Brazil.
  3
  Production
and Operating Performance
 Q4
      2007 Operating DataOre
                Processed
                (t000)
              Feed
                grade
      (g/t)
              Recovery
                grade
      (g/t)
              Production
                (ounces)
              Cash
                Operating
                cost/t
              Cash
                Operating
                cost/ounceSabará
              140
              1.76
              1.21
              6,444
              $21.90
              $534Turmalina
              96
              5.51
              4.64
              14,019
              $55.70
              $346Total
              236
              3.28
              2.60
              20,463
              $35.60
              $405
 
 Q4
      2006 Operating DataOre
                Processed
                (t000)
              Feed
                grade
      (g/t)
              Recovery
                grade
      (g/t)
              Production
                (ounces)
              Cash
                Operating
                cost/t
              Cash
                Operating
                cost/ounceCaeté
              11
              2.06
              0.53
              1,290
              $24.72
              $749Queiroz
              1
              3.28
              2.92
              241
              $60.99
              $1,092Sabará
              108
              3.51
              2.53
              7,772
              $23.16
              $290Total
              120
              3.24
              2.07
              9,303
              $24.55
              $372
 
 2007
      Operating DataOre
                Processed
                (t000)
              Feed
                grade
      (g/t)
              Recovery
                grade
      (g/t)
              Production
                (ounces)
              Cash
                Operating
                cost/t
              Cash
                Operating
                cost/ounceSabará
              504
              2.07
              1.40
              24,586
              $22.70
              $462Turmalina
              347
              5.10
              4.37
              45,527
              $42.80
              $283Total
              851
              3.31
              2.61
              70,113
              $30.90
              $346
 
 2006
      Operating DataOre
                Processed
                (t000)
              Feed
                grade
      (g/t)
              Recovery
                grade
      (g/t)
              Production
                (ounces)
              Cash
                Operating
                cost/t
              Cash
                Operating
                cost/ounceCaeté
              124
              2.21
              1.56
              6,167
              $35.28
              $628Queiroz
              69
              3.75
              3.35
              7,387
              $40.94
              $381Sabará
              425
              2.86
              2.11
              24,322
              $20.38
              $301Total
              618
              2.83
              2.12
              37,876
              $25.67
              $370
  PROJECT
DEVELOPMENT REVIEW - OPERATIONS AND EXPLORATION
 2007
Production
 For
the quarter ending December 31, 2007, the Company produced 20,463 ounces of gold
at an average cash operating cost of $405 per ounce for its Sabará and Turmalina
operations with 69% of the production from Turmalina at a cash operating cost of
$346 per ounce. Mechanical issues at Turmalina (see below under Turmalina - Operations),
combined with lower ore grades throughout the final nine months of 2007 at
Sabará, which were expected and previously announced, were primarily responsible
for the reduced output and higher costs during Q4 2007.
  Gold
production for 2007 was 70,113 ounces at an average cash operating cost of $346
per ounce for its Sabará and Turmalina operations with 65% of the production
from Turmalina at a cash operating cost of $283 per ounce.
  A
review of operations, project development and exploration during Q4 2007 for the
Company is described below.
  Turmalina
 Operations
 During
Q4 2007, Turmalina produced 14,019 ounces of gold representing 69% of the total
production at a cash operating cost of $346 per ounce.  During
December 2007, isolated mechanical issues in key components required extended
periods to repair, which impacted production of both ore and doré at
Turmalina.  Management estimates the impact of the mechanical problems
during December 2007 caused a shortfall of approximately 1,500 ounces and
increased average cash operating costs to $396 per ounce for the month,
approximately $100 per ounce above normalized values considering the average
feed grade processed during the month.  The repairs were completed
during Q1 2008 and operations and costs have returned to normal at
Turmalina.
  Assuming
no further development, management estimates that Turmalina will produce
approximately 88,000 ounces of gold in 2008 at a total cash operating cost of
production for the year in a range between $275 and $285 per ounce based on an
average exchange rate of R$1.85 per U.S.$1.00. As at March 20, 2008, the
exchange rate is R$1.74 per $1.00. If the exchange rate relationship remains at
this level during the remainder of 2008, would result in approximately six
percent higher costs in equivalent U.S. currency than previously
estimated.
  4
  Turmalina
is an underground mine utilizing the “sublevel stoping with paste fill” and “cut
and fill” mining methods.  From the beginning of Q4 2007, Turmalina
has been processing 1,200 t/day of ore in the CIP (carbon-in-pulp) plant, which
is the design operating level.
  Exploration
- Brown Field
 Continued
exploration work at the Turmalina Mine confirms the geology of the ore bodies
currently being mined is consistent with major gold mines elsewhere in the Iron
Quadrangle.  The Mine’s Main and Northeast ore bodies remain open at
depth and the Company has launched a ‘go-deep’ exploration program to a depth of
1,000 m to confirm the continuity of the mineralization to this depth.
Additional exploration efforts in the surrounding area have led to the discovery
of a third mineralized zone, referred to as the Satinoco Target, where three new
areas of mineralization have been identified. The Satinoco Target is located
approximately 300 m from the Main ore body at the Turmalina Mine.
  During
2007, the Company completed a two-phase diamond drilling program at the Satinoco
Target and commissioned TechnoMine Services, LLC (“TechnoMine”) to prepare a
resource estimate technical report. A technical report was issued in October
2007, based on exploration data achieved until July 2007.  The Company
completed an additional, Phase III exploration campaign in December 2007. The
results generated during Phase III program were integrated to the previous
exploration database and gave rise to a re-evaluation of the Satinoco Target
resource base.  In February 2008, the Company filed a NI 43-101
technical report in connection with the upgrade of inferred to measured and
indicated resources at the Satinoco Target, the technical report can be viewed
at http://www.sedar.com.
  During
Q4 2007, The Company completed the underground cross cut to access the Satinoco
Target through the existing ramp developed by the Company to mine Turmalina’s
Main and Northeast ore bodies.  The cross cut will be utilized to
transport ore from the Satinoco Target out the Turmalina Mine
entrance.  During the excavation process of the cross cut to the
Satinoco Target, economic grades of gold were discovered in channel
samples.  The Company is concluding a complementary 12,000 m in-fill
diamond drill program as part of the feasibility work in an effort to convert
resources to reserves to expand Turmalina’s operation.  Preliminary
engineering to expand the processing circuits above ground at Turmalina is
underway with a projected start-up date of Q1 2009. The feasibility study for
the expansion of Turmalina is expected to be completed during Q2
2008.
  Sabará
 Operations
 During
Q4 2007, Sabará produced 6,444 ounces of gold at an average cash operating cost
of $534 per ounce. Sabará’s costs were higher during the quarter compared to the
prior year primarily due to lower ore grades, which were
expected.  The Company is currently evaluating a new oxide zone near
the Sabará Mine to possibly bring into the mine plan during 2008, which could
significantly reduce cash operating costs for this operation.
  Management
estimates Sabará will produce 23,000 ounces of gold in 2008 at an average cash
operating cost ranging between $495 and $505 per ounce.  This estimate
is based on an average exchange rate in 2008 of R$1.85 per $1.00. As at March
24, 2008 the exchange rate is R$1.74 per $1.00. If the exchange rate
relationship remains at this level during the remainder of 2008, would result in
approximately six percent higher costs in equivalent U.S. currency than
previously estimated.
  Sabará
is an above ground oxide mine from which ore is processed at a 1,500 t/day CIC
(carbon-in-column) plant.
  Exploration
- Green Field
  In
order to add oxide resources to feed the Sabará Plant and therefore increase its
mine life, the Company developed an exploration program at Sabará and Caeté in a
15,000 hectare area.  The primary target is called Serra Paraíso.
During 2007, the Company concluded drilling activities at the Serra Paraíso
Target, which included 60 drill holes totaling 4,590 meters. Metallurgical
recovery tests have commenced and the Company plans to complete its analysis of
the drill program and report estimates of resources at the Serra Paraíso Target
during Q2 2008. The Company intends to begin mining activities at the Serra
Paraíso Target after the completion of such tests and analysis.
  In
addition, the Company is conducting channel sampling, soil geochemistry and
trenching at three different targets near the Sabará
operations.  Preliminary results are encouraging and have given rise
to a defined drill program, which will be executed in the months
ahead.
  Paciência
Project
 Development
 During
2007, the Company commissioned TechnoMine to complete a feasibility study for
the Santa Isabel Mine, which is part of its Paciência Project.  In
August 2007, the Company completed a NI 43-101 compliant feasibility study on
the Santa Isabel Mine, which can be viewed at http://www.sedar.com.
  Construction
at the Paciência Project is in the final stages with commissioning and start of
production expected by the Company in early April 2008.  All permits
required to commence operations have been received. Management estimates
Paciência will produce 49,000 ounces of gold in 2008 at an average cash
operating cost ranging between $335 and $340 per ounce.  This estimate
is based on an average exchange rate in 2008 of R$1.85 per $1.00. As at March
24, 2008 the exchange rate is R$1.74 per $1.00. If the exchange rate
relationship remains at this level during the remainder of 2008, would result in
approximately six percent higher costs in equivalent U.S. currency than
previously estimated.
 
 5
  Through
January 31, 2008, the Company has invested approximately $39.3 million in
exploration, infrastructure and mine development at the Paciência
Project.  To date, the Company has committed approximately $50.9
million to the overall Project.
  The
Company intends to use a cut and fill mining method at Paciência’s Santa Isabel
Mine, which contemplates a treated tailings backfill system. Ore produced at the
Santa Isabel Mine will be transported to the carbon-in-pulp (“CIP”) processing
plant currently under construction. The processing facilities will include
crushing and grinding circuits followed by a gravity separation circuit, which
is expected to recover approximately 40 percent of the available (“free”) gold,
along with a leaching and carbon-in-pulp adsorption/desorption/recovery
(CIP-ADR) plant to process the downstream gravity-removed ore pulp. The
metallurgical circuit is expected to raise the overall recovery to an estimated
93 percent.
  During
late 2007, the Company opened a second mine entrance approximately 2 kilometers
to the north of the Santa Isabel Mine.  Approximately 522 meters of
excavation has been completed to date, with approximately 2 kilometers of
excavation expected to take place to connect to the ramp system to the second
level.
  Exploration
- Brown Field
 During
2007, the Company successfully concluded a land swap agreement with another gold
producer whereby the Company expanded the concession package at the Paciência
Project to a contiguous 20 km area adjacent to the São Vicente lineament. The
Company reached an agreement whereby it transferred the “Zone C” for an agreed
upon value of $8.1 million.  The Company received consideration for the
property a forgiveness of $381,000 in existing liabilities payable by
MSOL.  The remaining balance will be paid through a reduction of future
royalty payments on the sliding scale NSR for the properties.  (See
Footnote 9(i) to our annual financial statements)
  This
land area was first mined in the 17th century
by the Portuguese and the old works are highly visible, even from satellite
photography. The Company’s exploration efforts today are along this same strike
at depths deeper than the Portuguese could access without modern mining
equipment.
  The
Company is conducting extensive exploration, in the NW01 Target and the
Conglomerates including drifts for mine development, to add additional tonnes
vertically and horizontally and further increase the resource base for the
Paciência Project.
  NW01
Target (Marzagão) - Through mid-October, a total of 24 holes have been drilled
to depths of 200 m in the NW01 target, which is located just north of the new
mine entrance. Drill results revealed gold intersections ranging from 2.5 g/t to
15.6 g/t. The intervals for these holes ranged from 0.8 to 4.4 m. The
characteristics of this new mineralized zone are similar to the grades and
widths observed at the Santa Isabel Mine. During 2008, the Company plans to
drill an additional 12,000 m at this target in an effort to delineate a resource
to meet NI 43-101 standards.
  Conglomerates
- A second zone of mineralization at the Paciência Project, not related to the
São Vicente lineament where the Company has a resource and reserve base, is
referred to as the Conglomerates. The zone entails several concessions, which
are located approximately 5 km to the East of the Santa Isabel Mine main
entrance. In 1989 and 1990, two previous concession owners conducted exploration
drilling consisting of 75 underground and surface drill holes and underground
development. These efforts gave rise to a third-party-estimated resource of over
200,000 ounces based on an average grade of 5.72 g/t. These resources are not
included in the Company’s latest mineral inventory of gold resources as these
efforts pre-dated the NI 43-101 standards. In order to estimate the resources
held in the conglomerates consistent with NI 43-101 standards, the Company is
conducting a 9,000 m in-fill drilling program inside this target
zone.  The Company currently has three drill rigs operating in the
area and has recently completed 18 drill holes totaling 4,275 m.  The
drilling program will be concluded during Q2 2008.
  Caeté
Project
 Development
 During
Q4 2007, the Company continued to advance the Caeté Project feasibility study,
which has been extended to early Q2 2008.  The Company previously
expected to complete the feasibility study during Q4 2007.  New
discoveries of deeper mineralized zones at the Roça Grande and Pilar targets,
coupled with a revised timing of availability of sufficient power resources
required for the new processing plant, extended the time period to develop the
feasibility study.  Given the additional capital costs to construct an
internal power supply, the Company elected to shift the project timetable back
by six months rather than maintain the previously announced schedule. The power
contract and mine/plant implementation licenses (LI) have been secured for a
2009 start-up. The Company targets initial annual gold production of 39,000
ounces commencing in 2009, with the goal of expanding to 160,000 ounces per year
in 2012.
  Exploration
- Brownfield
 During
2007, the Company completed the geological modeling of the exploration campaigns
at the Roça Grande and Pilar Targets, which gave rise to the following NI 43-101
compliant resources: measured and indicated resources of 3,690,400 t with an
average grade of 5.57 g/t containing 661,200 ounces of gold and 726,600 t of
inferred resources with an average grade of 5.11 g/t containing 119,450 ounces
of gold.  In November 2007, the Company filed a NI 43-101 technical
report in connection with these resources, which technical report can be found
at http://www.sedar.com.
  6
  As
part of the Company’s effort to identify and add to the estimated gold resources
detailed above, 75,000 m of additional drilling are planned over the next five
years in the mineral properties identified to supply the Caeté
plant.  During Q4 2007, the Company started a 22,000-m drill program
at the Roça Grande and Pilar Targets.  Most of that effort will be
conducted at the Roça Grande target, where seven drill rigs are currently in
operation. At the Pilar Target, where one drill rig is currently operating, the
Company will also conduct drilling to a depth of 800 m to define the continuity
of the structure.
  The
Company is in the process of completing a feasibility study for the Caeté
Project. Management is targeting an initial resource base of approximately one
million ounces of gold as part of the feasibility study. This target is based on
a total tonnage of 6.0 to 7.0 million tonnes at an average grade of
approximately 5.0 g/t. The potential quantity and grade from the exploration
data for the Roça Grande and Pilar Targets is conceptual in nature.  There
has been insufficient exploration to define a mineral resource and it is
uncertain if further exploration will result in these targets being delineated
as a mineral resource.
  Pedra
Branca Project
 Exploration
- Green Field
 The
Company and Xstrata entered into a joint venture agreement for the Company to
explore the Pedra Branca Gold Project in the State of Ceará in the Northeast of
Brazil. The joint venture has mineral rights to 37 concessions totaling
approximately 159,000 acres in a 65-km shear zone.  The concessions
are located in and around municipal areas with good
infrastructure.  The area is characterized by relatively dry weather,
facilitating year-round operations.
  Xstrata
carried out a preliminary exploration program that covered only 25 km of the
shear zone.  The program identified 10 km of soil anomalies, including
two large anomalies referred to as Coelho and Mirador.  The relatively
shallow work to-date on the Coelho and Mirador targets has provided some
promising results with respect to gold mineralization averaging between 2.3-2.5
g/t observed in trenches taken by Xstrata.  The mineralized formations
uncovered by Xstrata’s preliminary efforts are open along the extremity and lead
both companies’ geologists to believe the area has significant potential for
gold mineralization, which could include the presence of both oxide and sulfide
formations in large structures.
  The
Company is currently conducting a comprehensive exploration program at the Pedra
Branca Project.  The Company’s work to date, which included soil
geochemistry, trenching and channel and rock sampling, confirmed the trend and
the main anomalies reported by Xstrata.  New anomalies have been
identified by the Company, confirming the Company’s belief in the gold potential
of this area. During Q4 2007, the Company continued to carry out the drill
program that began during Q3 2007 to test the continuity of the mineralization
at depth.  To date, 44 drill holes totaling 3,775 m have been
completed.
  FINANCIAL
CONDITION, CASH FLOW, LIQUIDITY AND CAPITAL RESOURCES
 Cash
Flow Highlights
 (in
thousands of $)
 Q4
      2007
              
              
              Year
      Ended December 31, 2007
              
              
              
              Q4
      2006
              
              
              Year
      Ended December 31, 2006Operating
      activities
              
              $
              3,913
              
              
              $
              620
              
              
              $
              (3,117
              )
              
              $
              (7,647
              )Financing
      activities
              
              $
              61
              
              
              $
              90,329
              
              
              $
              7,073
              
              
              $
              62,958Investing
      activities
              
              $
              (23,134
              )
              
              $
              (63,092
              )
              
              $
              (17,623
              )
              
              $
              (50,085
              )Effect
      of foreign exchange on non-U.S. dollar denominated cash and cash
      equivalents
              
              $
              (2,175
              )
              
              $
              3,095
              
              
              $
              -
              
              
              $
              -Increase
      (decrease)  in cash for the period
              
              $
              (21,335
              )
              
              $
              30,952
              
              
              $
              (13,667
              )
              
              $
              5,226Beginning
      cash balance
              
              $
              67,046
              
              
              $
              14,759
              
              
              $
              28,426
              
              
              $
              9,533Ending
      cash balance
              
              $
              45,711
              
              
              $
              45,711
              
              
              $
              14,759
              
              
              $
              14,759
  Cash
flow from operating activities generated $620,000 of cash during
2007.
  Financing
activities generated $90.3 million of cash in 2007 primarily through the receipt
of cash from issuance of private placement notes ($86.6 million), and the early
exercise of warrants ($21.9 million), offset by debt repayment ($6.1 million).
(See Subsequent Events - Financing regarding the Company’s equity financing
which closed on February 21, 2008)
  Investing
activities consumed $63.1 million of cash during 2007.  The funds were
used for mineral exploration, projects under development and the purchase of
property, plant and equipment.
  Effect
of foreign exchange on non-U.S. dollar denominated cash and cash equivalents was
a $3.1 million gain during 2007. This reflects the strengthening of the R$ and
Cdn.$ versus the U.S. dollar.
  7
  Balance
      Sheet Highlights
 (in
thousands of $)
 As
      at December 31, 2007
              
              
              As
      at December 31, 2006
              
              
              As
      at December 31, 2005Total
      assets
              
              $
              234,231
              
              
              $
              124,130
              
              
              $
              51,235Total
      long term liabilities
              
              $
              94,388
              
              
              $
              19,179
              
              
              $
              4,895
  •
              During
      2007 the primary reasons for the increase in total assets and long term
      liabilities were the Company issued private placement notes for
      approximately $74.5 million and purchased mineral rights for approximately
      $8.2 million which was financed through a note
  payable.
  Capital
Spending Program
 Capital
Spending in thousands of $
 Year
      Ended December 31, 2006
              Year
      Ended December 31, 2007
              Budget
      2008Sabará
              8,000
              699
              -Caeté
      Project 1
              6,100
              26,330
              32,563Turmalina
              27,500
              13,679
              16,589Paciência
      Project
              9,100
              27,035
              33,937Other
      spending 2
              400
              3,466
              6,904Total
      capital spending
              51,100
              71,209
              89,993
 1
              During
      2007, Santa Barbara/Pilar Project was incorporated into the Caeté
      Project.
 2
              Includes
      construction of the central spare parts room, purchase of maintenance
      equipment, other improvements, replacements and head offices spending.
  The
Company intends to use cash held in accounts and cash flow generated by
operations, which is expected to rise significantly as the operations under
development are completed and brought on-line to help finance the expansion of
existing operations and the construction of new projects.  These
projects may also be funded by project debt, equipment financing or other
corporate initiatives. (See Subsequent Events - Financing)
  Total
Capital Spending during the Period in thousands of $
 Q4
      2007
              
              
              Year
      Ended December 31, 2007Capital
      spending - excluding exploration
              
              $
              13,267
              
              
              $
              41,490Capital
      spending - exploration
              
              
              9,866
              
              
              
              29,810Total
      capital spending
              
              
              23,133
              
              
              
              71,300Amount
      paid in cash
              
              $
              23,133
              
              
              
              63,092Amount
      financed
              
              
              -
              
              
              
              8,208Total
      capital spending
              
              $
              23,133
              
              
              $
              71,300
  The
Company has identified three primary uses of capital over the 2008-2009
period.  These include:
 (a)
              new
      mine development and processing
capacity
 (b)
              expansion
      of existing operations
 (c)
              exploration
      at Brownfield and Greenfield locations in the Iron
    Quadrangle
 (d)
              sustaining
      capital to maintain existing
operations
  8
  Contractual
Obligations
 The
Company’s contractual obligations as at December 31, 2007 are summarized as
follows:
 
 (In
      thousands of $)Contractual
      Obligations
              
              2008
              
              
              2009
              
              
              2010
              
              
              2011
              
              
              
              2012
              +
              
              TotalFinancingPrincipal
              
              
              12,493
              
              
              
              10,258
              
              
              
              0
              
              
              
              0
              
              
              
              87,289
              
              
              
              110,040Interest
              
              
              10,137
              
              
              
              9,387
              
              
              
              9,165
              
              
              
              9,165
              
              
              
              2,084
              
              
              
              39,938Management
      Agreements1Operations
              
              
              744
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              744Suppliers
      AgreementsMine
      Operations2
              
              
              636
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              636Drilling3
              
              
              740
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              740Asset
      Retirement Obligations
              
              
              269
              
              
              
              287
              
              
              
              -
              
              
              
              2,730
              
              
              
              -
              
              
              
              3,286Joint
      Venture Agreement4
              
              
              100
              
              
              
              63
              
              
              
              1,400
              
              
              
              1,500
              
              
              
              -
              
              
              
              3,063Total
              
              
              25,119
              
              
              
              19,995
              
              
              
              10,565
              
              
              
              13,395
              
              
              
              89,373
              
              
              
              158,447
  1The management agreement
is renegotiated on an annual basis.  (See Footnote 17(a) to our annual
financial statements) 2 The Company has the right
to cancel the mine operations contract with 90 days advance
notice.  The amount included in the contractual obligations table
represents the amount due within 90 days. 3The Company has the right
to cancel the drilling contract with 30 days advance notice.  The
amount included in the contractual obligations table represents the amount due
within 30 days. 4 The Company entered into
a formal agreement with Xstrata for the Company to explore the Pedra Branca Gold
Project in Ceará, Brazil.  (See Footnote 17(b) to our annual financial
statements)
 
    Risk
Management Policies - Hedging
 Forward
Gold Sales Contracts - Derivative Financial Instruments
 In
2005, Mineração Turmalina Ltda. (“MTL”), a wholly-owned subsidiary of the
Company, entered into a $14 million credit facility with a lender. The credit
facility provided that the Company would put in place forward sales contracts to
limit the risk against falling gold prices. In Q4 2005, the Company entered into
a forward sales contract agreement with the lender to implement a risk
management strategy to manage commodity price exposure on gold sales. A portion
of the projected gold produced by the Sabará and Turmalina mining operations was
economically hedged with a forward sales contract for each quarter from Q1 2007
to Q2 2009 for a total of 77,002 ounces.  As at December 31, 2007,
forward sales contracts for 48,556 ounces were outstanding.
  As
at December 31, 2007, current liabilities include $9.8 million (December 31,
2006- $3.4 million) of unrealized losses related to the forward sales
contracts.  As at December 31, 2007, long term liabilities include
$5.6 million (December 31, 2006 - $6.8 million) of unrealized losses related to
the forward sales contracts.  In an effort to mitigate these losses,
in the fourth quarter of 2007, the Company purchased forward purchase contracts
totaling 55,654 ounces at an average gold price of $822.43 per
ounce.  The Company settled 7,098 ounces of the hedges (both forward
sales and forward purchases) at the end of the fourth quarter of
2007.  The outstanding forward purchase contracts for 48,556 ounces
had a positive mark-to-market value of $0.9 million as at December 31, 2007
which is included in current assets (December 31, 2006 - nil). The outstanding
forward sales and purchase contracts had a combined negative mark-to-market
value of $14.5 million as at December 31, 2007 (December 31, 2006 - $10.2
million).
  Included
in the statement of operations for the year ended December 31, 2007, is a net
unrealized loss on forward gold derivatives of $4.3 million (year ended December
31, 2006 - unrealized loss of $6.8 million and year ended December 31, 2005 -
unrealized loss of  $3.4 million) and a realized loss on forward gold
derivatives of $5.6 million (year ended December 31, 2006 - nil and 2005 -
$150,000). The unrealized gains relating to the forward purchase contracts are
included as an offsetting amount to the unrealized losses relating to the
forward sales contracts. In March 2008, the Company closed the forward
contracts. (See “Subsequent Events Project Financing Term Debt Repayment and
Close Forward Contracts”)
  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.
  As
at December 31, 2007, the Company had forward foreign exchange contracts to
purchase R$23.1 million for $11.0 million with various settlement dates between
January 31, 2008 and December 30, 2008 at a weighted average rate of 2.1037. The
terms of the contract require a percentage of the funds to be held on deposit as
collateral to cover the contracts.  As at December 31, 2007, $3.0
million of cash was restricted for this purpose.  (See Footnote 5(b)
to our annual financial statements)
  9
  The
forward exchange contracts are considered derivative financial instruments and
are used for risk management purposes and not for generating trading
profits.
  The
Company is exposed to credit-related losses in the event of non-performance by
the major international financial institution handling the derivative financial
instruments, but does not expect this highly rated counterparty to fail to meet
its obligations.
  This
derivative financial instrument is not accounted for as a hedge. The unrealized
gains and losses will be recognized in the operating income of the Company and
are a result of the difference between the spot price of the R$ and the forward
currency contract price as at the balance sheet date.
  As
at December 31, 2007, current assets include $1.7 million and long term assets
include nil (December 31, 2006 long term assets include $709,000) of unrealized
foreign exchange gains. Included in the statement of operations for the year
ended December 31, 2007, is an unrealized gain on forward foreign exchange
derivatives of $972,000 (year ended December 31, 2006 - gain of $709,000; 2005 -
nil) and a realized gain on forward foreign exchange derivatives of $2.7 million
(year ended December 31, 2006 - $846,000; 2005 - nil).
  RELATED
PARTY TRANSACTIONS
 The
Company incurred fees of $747,000 for the 12 months ended December 31, 2007
($739,000 for 12 months ended December 31, 2006 and 2005 - nil) from IMS
Engenharia Mineral Ltda. ("IMSE"), a company held by several officers of the
Company, which provides operating management services to the Company's Brazilian
subsidiaries. For the year ended December 31, 2005 the Company incurred fees of
$954,000 from IMSE which provided operating services. The fees are included in
management fees in the statement of operations.  Accounts payable and
accrued liabilities as at December 31, 2007 includes nil owing to IMSE (as at
December 31, 2006 -nil).
  The
Company incurred occupancy fees of $120,000 for the 12 months ended December 31,
2007 (12 months ended December 31, 2006 - $120,000 and 2005 - $110,000) to
Brazilian Resources, Inc. (“BZI”), a corporate shareholder, for use of
administrative offices. The Company moved to the new administrative office space
in December 2007. The term will be three years beginning on the date of
occupancy.  The Company also incurred consulting fees and
administrative service charges of $450,000 from BZI for the 12 months ended
December 31, 2007 ($314,000 for the 12 months ended December 31, 2006 and 2005 -
$27,000).  The occupancy costs, consulting fees and administrative
service fees are included in the statement of operations.  As at
December 31, 2007, prepaids and sundry assets includes a receivable of $101,000
from BZI.  As at December 31, 2006 accounts payable and accrued
liabilities include $14,000 due to BZI.
  On
March 20, 2006, the Company entered into an agreement with Prometálica Mineração
Ltda.  (“PML”) whereby it exchanged the loan receivable from PML for a
1.5% Net Smelter Royalty ("NSR") on its Monte Cristo project for a term of 4.5
years, which is the expected life of the project.   The NSR was recorded on
the Company's books at the amount of the receivable, plus accrued interest
through March 20, 2006.   In connection with the agreement, PML had the
right to buy out the NSR on or before December 31, 2006, subsequently extended
to September 30, 2007, for $1.63 million.  This right was not
exercised by PML.
  During
2007 the Company received royalty income of approximately $300,000. The royalty
income and the related amortization are netted in other operating expenses in
the statement of operations. PML’s controlling shareholders are BZI and IMS, the
founding shareholders of the Company.
  The
Company realized rental income of $192,000 from PML and $126,000 from
Prometálica Centro Oeste Ltda. (“PCO”) for the 12 months ended December 31, 2007
(12 months ended December 31, 2006 - nil from PML and $90,000 from PCO and 2005
- nil for both PML and PCO) for temporarily idle equipment and the use of
administrative offices.  PCO is controlled by IMS, a founding
shareholder of the Company.  As at December 31, 2007 prepaid expenses
and sundry assets includes $149,000 receivable from PML, and $36,000 from PCO
(as at December 31, 2006 - $112,000 from PML and $37,000 from PCO). During 2007
the Company also received approximately $0.3 million (2006 - nil, 2005 - nil) of
royalty income relating to the NSR.
  The
Company incurred management fees for the period ended March 31, 2005 of $60,000
from BZI for administrative services.  The management fees are
included in the statement of operations.  On March 31, 2005 the
agreement with BZI to provide management and administrative services for a fee
of $20,000 per month ceased.
  For
the three months ended March 31, 2006, the Company incurred legal expenses of
$270,000 (three months ended March 31, 2005 - $39,000) from a legal firm of
which the Secretary of the Company was a Senior Partner.  The
Secretary of the Company ceased to be a partner of this firm March 31,
2006.  As at March 31, 2006, $140,000 ($140,000 as at December 31,
2005) was included in prepaid and sundry assets and $141,000 ($nil as at
December 31, 2005) was included in share issuance costs on the balance
sheet.  At March 31, 2006, accounts payable and accrued liabilities
includes $496,000 (December 31, 2005 - $226,000) due to this legal
firm.  This balance has subsequently been paid.
  10
  CHANGES
IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION
 Effective
January 1, 2007 the Company adopted the new CICA Handbook Standards relating to
financial instruments.  These new standards have been adopted on a
prospective basis with no restatement of prior period financial
statements.
   (a)
              Section
      3855, “Financial Instruments - Recognition and Measurement” provides
      guidance on the recognition and measurement of financial assets, financial
      liabilities and derivative financial instruments.  This new
      standard requires that all financial assets and liabilities be classified
      as either: held-to-maturity, held-for-trading, loans and receivables,
      available-for-sale, or other financial liabilities.  The initial
      and subsequent recognition depends on their initial
      classification.
  •
              Held-to-maturity
      financial assets are initially recognized at their fair values and
      subsequently measured at amortized cost using the effective interest
      method. Impairment losses are charged to net earnings in the period in
      which they arise.
  •
              Held-for-trading
      financial instruments are carried at fair value with changes in the fair
      value charged or credited to the Statement of Operations in the period in
      which they arise.
  •
              Loans
      and receivables are initially recognized at their fair values, with any
      resulting premium or discount from the face value being amortized to
      income or expense using the effective interest
      method.  Impairment losses relating to other than temporary
      impairment are charged to net earnings in the period in which they
      arise.
  •
              Available-for-sale
      financial instruments are carried at fair value with changes in the fair
      value charged or credited to other comprehensive
      income.  Impairment losses are charged to net earnings in the
      period in which they arise.
  •
              Other
      financial liabilities are initially measured at cost or at amortized cost
      depending upon the nature of the instrument with any resulting premium or
      discount from the face value being amortized to income or expense using
      the effective interest method.
  •
              All
      derivative financial instruments meeting certain recognition criteria are
      carried at fair value with changes in fair value charged or credited to
      income or expense in the period in which they
  arise.
  The
standard requires the Company to make certain elections, upon initial adoption
of the new rules, regarding the accounting model to be used to account for each
financial instrument.  This new section also requires that transaction
costs incurred in connection with the issuance of financial instruments either
be capitalized and presented as a reduction of the carrying value of the related
financial instrument or expensed as incurred.  If capitalized,
transaction costs must be amortized to income using the effective interest
method.  This section does not permit the restatement of financial
statements of prior periods.
  Following
is a summary of the accounting model the Company has elected to apply to each of
its significant categories of financial instruments outstanding as of January 1,
2007:
 
 Cash
      and cash equivalents
              Held-for-tradingRestricted
      cash
              Held-for-tradingAccounts
      receivable
              Loans
      and receivablesForward
      foreign exchange derivative asset
              Held-for-tradingForward
      purchase derivative asset
              Held-for-tradingAccounts
      payable and accrued liabilities
              Other
      liabilitiesForward
      sales derivative liability
              Held-for-tradingNotes
      payable
              Other
      liabilities
  In
addition, the Company has elected to account for transaction costs related to
the issuance of financial instruments as a reduction of the carrying value of
the related financial instruments.
  The
adoption of this new section resulted in an adjustment to the carrying value of
the Company’s previously recognized financial liabilities and a reduction in the
amount of $165,000 to the opening deficit, a reduction of $2.1 million to
deferred financing fees, and a reduction to notes payable of $2.3 million as at
January 1, 2007.
  (b)
              Section
      1530, “Comprehensive Income”, along with Section 3251, “Equity” which
      amends Section 3250, “Surplus”, require enterprises to separately disclose
      comprehensive income and its components as well as net income in their
      financial statements.  Further, they require enterprises to
      separately present changes in equity during the period as well as
      components of equity at the end of the period, including comprehensive
      income.  Since the Company does not have any elements of
      comprehensive income, the adoption of these sections did not have any
      impact on the Company’s financial
statements.
  (c)
              Section
      3865, “Hedges” allows optional treatment providing that hedges be
      designated as either fair value hedges, cash flow hedges or hedges of a
      self-sustaining foreign operation.  Since the Company does not
      currently have hedging programs in place which qualify for hedge
      accounting, the adoption of this section did not have any impact on the
      Company’s financial statements.
  11
  RECENTLY
ISSUED ACCOUNTING ANNOUNCEMENTS
  (a)
              Financial
      Instruments- Disclosure and
Presentation
  In
      December 2006, the CICA published the following two sections of the CICA
      Handbook Section 3862 Financial Instruments- Disclosures and Section 3863,
      Financial Instruments-Presentation. These standards introduce disclosure
      and presentation requirements that will enable financial statement users
      to evaluate, and enhance their understanding of, the significance of
      financial instruments for the entity’s financial position, performance and
      cash flows, and the nature and extent of risks arising from financial
      instruments to which the entity is exposed, and how those risks are
      managed.
  (b)
              Capital
      Disclosures
  In
      December 2006, the CICA published section 1535 of the Handbook, Capital
      disclosures, which requires disclosure of (i) an entity’s objectives,
      policies and processes for managing capital; (ii) quantitative data about
      what the entity regards as capital; (iii) whether the entity has complied
      with any capital requirements; (iv) if it has not complied, the
      consequences of such non-compliance. This information will enable
      financial statements’ users to evaluate the entity’s objectives, policies
      and processes for managing capital.
  (c)
              Inventories
  In
      January 2007, the CICA published section 3031 of the Handbook,
      Inventories, which prescribes the accounting treatment for inventories.
      Section 3031 provides guidance on determination of costs and its
      subsequent recognition as an expense, and provides guidance on the cost
      formulas used to assign costs to
inventories.
  The
Company is currently assessing the disclosure requirements of (a) and (b) and
the impact of (c) on its financial statements.  These standards must
be adopted by the Company for the fiscal year beginning on January 1,
2008.
  FINANCING
 Early
Exercise of Warrants
 On
February 27, 2007, the Company filed a final short form prospectus to issue up
to 340,090 common shares to the holders of 5,398,250 common share purchase
warrants, upon early exercise of its listed warrants.  Each warrant
entitled the holder to acquire one common share of the Company at a price of
Cdn.$4.50 on or before December 31, 2007.  Under the early exercise
program, the holder could acquire an additional 0.063 of one common share in the
event that such holder exercised the warrants during the 30-day early exercise
period that commenced on February 28, 2007 and ended on March 30,
2007.
   As
at March 30, 2007, 4,818,852 warrants were exercised for gross proceeds of $18.8
million in exchange for 5,122,428 shares.   This represented
89.3% of the listed warrants outstanding on February 28, 2007 thereby forcing
the remaining listed warrants (579,398) to be exchanged for 0.2982 common shares
of the Company by April 30, 2007 (except those warrants held by U.S. warrant
holders who are not accredited investors or who are accredited investors but who
did not deliver a subscription form and representation letter pursuant to the
program).  As at December 31, 2007, 225,403 of the remaining listed
warrants were exchanged for 67,211 shares.
  At
December 31, 2007, 144,081 warrants were outstanding and 82,332 warrants were
exercised during the period January 1, 2008 through March 24, 2008. The
remaining 61,749 warrants may be exercised or will expire on March 27,
2008.
  Private
Placement
 On
March 22, 2007, the Company closed a private placement of 86,250 units for gross
proceeds of approximately Cdn.$86.3 million ($74.5 million). Each unit is
comprised of a secured note in the principal amount of Cdn.$1,000, bearing a
coupon of 10.5%, payable semi-annually in arrears, and 25 common shares of the
Company. The units were sold by a syndicate led by TD Securities Inc. and
included Blackmont Capital Inc., BMO Capital Markets and RBC Capital Markets.
The quota shares of the wholly owned Brazilian subsidiary of the Company, which
holds all of the operating assets of the Company, serve as security for the
notes.  A total of 2,156,250 new shares were issued relating to the
private placement. The notes were listed on the Toronto Stock Exchange (“TSX”)
on July 26, 2007 under the symbol JAG.NT.  See Note 10 (h) to our
financial statements.
  NORMAL
COURSE ISSUER BID
 In
August 2006, the Company received approval from the TSX for its proposed normal
course issuer bid to purchase up to the lesser of 2,291,655 common shares, being
5% of the issued and outstanding common shares of the Company, or the number of
common shares equal to a maximum aggregate purchase price of $1
million.  The normal course issuer bid commenced on August 25, 2006
and terminated on August 24, 2007.  During the fourth quarter of 2006,
the Company purchased 1,000 common shares at an average price of Cdn.$4.65 per
common share. During August 2007 the Company purchased an additional 62,400
shares at an average price of Cdn.$5.80 per common share. These shares have been
cancelled. This was the first normal course issuer bid undertaken by the
Company, and the Company had not previously purchased securities of its own
issue.
  In
August 2007, the Company received approval from the TSX for a second normal
course issuer bid to purchase up to the lesser of 2,760,224 common shares, being
5% of the issued and outstanding common shares of the Company at that time, or
the number of common shares equal to a maximum aggregate purchase price of
Cdn.$5.25 million. The normal course issuer bid commenced on August 30, 2007 and
will terminate on August 29, 2008.  As at December 31, 2007, the
Company had purchased 174,000 of its common shares at an average price of
Cdn.$9.92 under the second normal course issuer bid. Of these shares purchased
53,800 shares were cancelled as at December 31, 2007 and the remaining 120,200
shares purchased were cancelled subsequent to December 31,
2007.  Future shares purchased under the normal course issuer bid will
be scheduled for cancellation.
  12
  The
Company decided to engage in a normal course issuer bid because it believes
that, from time to time, the market price of its common shares may not reflect
fully the underlying value of its business and future business
prospects.  In such circumstances, the Company believes the
outstanding common shares represent an attractive investment, since a portion of
the Company’s excess cash can be invested for an attractive risk adjusted return
on capital through its bid.
  SHAREHOLDER
RIGHTS PLAN
 On
January 31, 2007, the Directors of the Company adopted the Rights Plan which is
intended to ensure the fair treatment of shareholders in connection with any
take-over bid for common shares. The Rights Plan was not being adopted in
response to any proposal to acquire control of the Company.  The
Rights Plan seeks to provide shareholders with adequate time to properly assess
a take-over bid without undue pressure.  It also is intended to
provide the Directors with more time to fully consider an unsolicited take-over
bid and, if considered appropriate, to identify, develop and negotiate other
alternatives to maximize shareholder value.
  The
rights issued under the Rights Plan will become exercisable only when a person,
including its affiliates and associates and persons acting jointly or in concert
with it, acquires or announces its intention to acquire beneficial ownership of
common shares which when aggregated with its current holdings total 20% or more
of the outstanding common shares (determined in the manner set out in the Rights
Plan) without complying with the Permitted Bid provisions of the Rights Plan or
without approval of the Board.  Under the Rights Plan, those bids that
meet certain requirements intended to protect the interests of all shareholders
are deemed to be Permitted Bids.  Permitted Bids must be made by way
of a take-over bid circular prepared in compliance with applicable securities
laws and, among other conditions, must remain open for at least 60
days.  In the event a take-over bid does not meet the Permitted Bid
requirements of the Rights Plan, the rights will entitle shareholders, other
than the person making the take-over bid and its affiliates and associates and
persons acting jointly or in concert with it, to purchase additional common
shares at a substantial discount to the market price of the common shares at
that time.
  The
TSX accepted notice of the Rights Plan, which was ratified by the shareholders
on May 10, 2007.
   NON-GAAP
PERFORMANCE MEASURES
 The
Company has included the non-GAAP performance measures listed below in this
document.  These non-GAAP performance measures do not have any standardized
meaning prescribed by GAAP 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 GAAP, 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 with GAAP.  The Company has included Cash Operating
Cost per tonne processed and Cash Operating Cost per ounce processed
 because 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-GAAP measures to reported GAAP measures are as
follows:
  Summary
of All Plants Cash Operating Cost per tonne processed
 Q4
      2007
              
              
              
              Y/E
      2007Production
      cost per statement of operations
              
              $
              7,722,000
              
              
              $
              25,172,000Change
      in inventory1
              
              $
              676,000
              
              
              $
              1,127,000Production
      cost of tonnes processed2
              
              $
              8,398,000
              
              
              $
              26,299,000divided
      byTonnes
      processed
              
              
              235,900
              
              
              
              851,100equalsCost
      per tonne processed
              
              $
              35.60
              
              
              $
              30.90
   13
 
 Sabará
Plant Cash Operating Cost per tonne processed
 Q4
      2007
              
              
              YTD
      2007Production
      cost per statement of operations
              
              $
              3,420,000
              
              
              $
              11,568,000Change
      in inventory1
              
              $
              (337,000
              )
              
              $
              (126,000
              )Production
      cost of tonnes processed2
              
              $
              3,080,000
              
              
              $
              11,441,000divided
      byTonnes
      processed
              
              
              140,500
              
              
              
              504,000equalsCost
      per tonne processed
              
              $
              21.90
              
              
              $
              22.70
  Turmalina
Plant Cash Operating Cost per tonne processed
 Q4
      2007
              
              
              YTD
      2007Production
      cost per statement of operations
              
              $
              4,302,000
              
              
              $
              13,604,000Change
      in inventory1
              
              $
              1,020,000
              
              
              $
              1,253,000Production
      cost of tonnes processed2
              
              $
              5,318,000
              
              
              $
              14,856,000divided
      byTonnes
      processed
              
              
              95,400
              
              
              
              347,100equalsCost
      per tonne processed
              
              $
              55.70
              
              
              $
              42.80
  Summary
of All Plants Cash Operating Cost per ounce processed
 Q4
      2007
              
              
              YTD
      2007Production
      cost per statement of operations
              
              $
              7,722,000
              
              
              $
              25,172,000Change
      in inventory1
              
              $
              565,000
              
              
              $
              (
      913,000
              )Production
      cost of gold produced2
              
              $
              8,287,000
              
              
              $
              24,259,000divided
      byGold
      produced (ounces)
              
              
              20,462
              
              
              
              70,113equalsCost
      per ounce processed
              
              $
              405
              
              
              $
              346
  Sabará
Plant Cash Operating Cost per ounce processed
 Q4
      2007
              
              
              YTD
      2007Production
      cost per statement of operations
              
              $
              3,420,000
              
              
              $
              11,568,000Change
      in inventory1
              
              $
              21,000
              
              
              $
              (195,000
              )Production
      cost of gold produced2
              
              $
              3,441,000
              
              
              $
              11,366,000divided
      byGold
      produced (ounces)
              
              
              6,444
              
              
              
              24,586equalsCost
      per ounce processed
              
              $
              534
              
              
              $
              462
  Turmalina
Plant Cash Operating Cost per ounce processed
 Q4
      2007
              
              
              YTD
      2007Production
      cost per statement of operations
              
              $
              4,302,000
              
              
              $
              13,604,000Change
      in inventory1
              
              $
              540,000
              
              
              $
              (702,000
              )Production
      cost of gold produced2
              
              $
              4,846,000
              
              
              $
              12,893,000divided
      byGold
      produced (ounces)
              
              
              14,018
              
              
              
              45,527equalsCost
      per ounce processed
              
              $
              346
              
              
              $
              283
 1Under 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.
 2The basis for calculating
cost per ounce produced includes the change to gold in process inventory,
whereas the cost per tonne processed does not.
    14
  DESIGN OF INTERNAL CONTROLS OVER
FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES
 The
Company’s disclosure controls and procedures were designed to provide reasonable
assurance that material information relating to the Company is made known to the
Company's CEO and CFO in a timely manner so that information required to be
disclosed by the Company under securities legislation is recorded, processed,
summarized and reported within the time periods specified in applicable
securities legislation. The Company’s CEO and CFO have evaluated the
effectiveness of the Company’s disclosure controls and procedures as at December
31, 2007, and have concluded that such disclosure controls and procedures are
effective.
  The
Company’s management, under the direction and supervision of the CEO and CFO,
are also responsible for establishing and maintaining internal controls over
financial reporting. These controls have been designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with Canadian
Generally Accepted Accounting Principles. There have been no changes in the
Company’s internal control over financial reporting during the quarter ended
December 31, 2007 that have materially affected, or are reasonably likely to
materially affect, its internal control over financial reporting.
  CRITICAL
ACCOUNTING ESTIMATES
 The
preparation of its consolidated financial statements requires the Company to use
estimates and assumptions that affect the reported amounts of assets and
liabilities as well as revenues and expenses.  The Company’s
accounting policies are described in Note 2 to its consolidated annual financial
statements.  The Company’s accounting policies relating to
work-in-progress inventory valuation and amortization of property, plant and
equipment, mineral exploration projects, and site reclamation and closure
accruals are critical accounting estimates that are subject to assumptions
regarding reserves, recoveries, future gold prices and future mining
activities.
  Gold
in process and ore in stockpiles are stated at the lower of average production
cost and net realizable value.  Production costs include direct labor,
benefits, direct material and other direct product costs.  These costs
are charged to earnings and included in cost of sales.  The
assumptions used in the impairment assessment of gold in process inventories
include estimates of gold contained in the ore stacked, assumptions of the
amount of gold stacked that is expected to be recovered and an assumption of the
gold price expected to be realized when the gold is recovered.  If
these estimates or assumptions prove to be inaccurate, the Company could be
required to write-down the recorded value of its work-in-progress inventories,
which would reduce the Company’s earnings and working capital.
  In
addition, Canadian Generally Accepted Accounting Principles (“GAAP”) requires
the Company to consider, at the end of each accounting period, whether or not
there has been an impairment of the capitalized mineral exploration projects,
property, plant and equipment. For producing properties, this assessment is
based on expected future cash flows to be generated from the
location.  For non-producing properties, this assessment is based on
whether factors that may indicate the need for a write-down are
present.  If the Company determines there has been an impairment
because its prior estimates of future cash flows have proven to be inaccurate,
due to reductions in the price of gold, increases in the costs of production,
reductions in the amount of reserves expected to be recovered or otherwise, or
because the Company has determined that the deferred costs of non-producing
properties may not be recovered based on current economics or permitting
considerations, the Company would be required to write-down the recorded value
of its mineral exploration projects, property, plant and equipment, which would
reduce the Company’s earnings and net assets.
  The
Company’s mining and exploration activities are subject to various laws and
regulations governing the protection of the environment.  In general,
these laws and regulations are continually changing and, over time, becoming
more restrictive which impacts the cost of retiring assets at the end of their
useful life.  The Company recognizes management’s estimate of the fair
value of liabilities for asset retirement obligations in the period in which
they are incurred. A corresponding increase to the carrying amount of the
related asset (where one is identifiable) is recorded and depreciated over the
life of the asset. Where a related asset is not easily identifiable with a
liability, the change in fair value over the course of the year is expensed.
Over time, the liability will be increased each period to reflect the interest
element (accretion) reflected in its initial measurement at fair value, and will
also be adjusted for changes in the estimate of the amount, timing and cost of
the work to be carried out.  Additionally, future changes to
environmental laws and regulations could increase the extent of reclamation and
remediation work required to be performed by the Company.
  The
Company’s mineral exploration projects and mining properties are depleted and
depreciated on a units-of-production basis, which bases its calculations on the
expected amount of recoverable reserves. If these estimates of reserves prove to
be inaccurate, or if the Company revises its mine plan due to reductions in the
price of gold or unexpected production cost increases, and as a result the
amount of reserves expected to be recovered are reduced, then the Company would
be required to write-down the recorded value of its mineral exploration projects
and mining properties and to increase the amount of future depletion and
amortization expense, both of which would reduce the Company’s earnings and net
assets.
  15
  SUBSEQUENT
EVENTS
 Financing
 On
February 21, 2008 (“Closing Date”) the Company completed an equity financing
underwritten by a syndicate of underwriters and issued 8,250,000 common shares
at Cdn$13.40 per share for gross proceeds of Cdn$110,550,000 ($109.6
million).  Pursuant to the underwriting agreement, the underwriters
were paid a fee equal to four and one-half percent (4.5%) of the gross proceeds
of the offering.  Proceeds of the offering will be used to primarily
fund capital expenditures for exploration and expansions at its three largest
projects in Brazil, to close forward sales contracts (See Footnote 5(a) to our
financial statements) and project financing term debt (See Footnote 10(f) to our
annual financial statements) and for general corporate purposes.
  Project
Financing Term Debt Repayment; Close Forward Sales Contracts and Forward
Purchase Contracts
 On
March 13, 2008 the Company paid RMB International (“RMB”) $9.8 million plus
$181,000 accrued interest to repay the loan facility agreement.  The
loan was used primarily to finance the development, construction and start-up of
Turmalina. The original principal amount was $14 million and $4.2 million had
been repaid as of December 31, 2007 (See Footnote 10(f) to our annual financial
statements)
  On
March 14, 2008, the Company paid RMB $22.1 million to close the forward sales
contracts.  At December 31, 2007 forward sales contracts for 48,556
ounces were outstanding which were to be settled at $527.10 per ounce at the end
of each quarter over the term of the contracts (See Footnote 5(a) to our annual
financial statements).
  On
March 12, 2008, the Company closed the forward purchase contracts realizing a
gain of $7.4 million, effectively reducing the net loss on the forward contracts
to $14.8 million, of which $14.5 million was accrued as of December 31, 2007. At
December 31, 2007 forward purchase contracts for 48,556 ounces were outstanding
at an average cost of $823.81 per ounce.  No additional charges will
be realized during 2008 for the forward contracts. With this transaction the
Company has no forward gold production hedged (See Footnote 5(a) to our annual
financial statements)
  Mineral
Resources and Reserves
 The
tables below reflect the estimated mineral resource and reserve information
available to the Company as of January 1, 2008, except as noted
below.  Ivan C. Machado, M.Sc., P.E., P.Eng. revised the Company’s
resources and reserves.  Mr. Machado is a Qualified Person as such
term is defined in NI 43-101.
  Table
1 - Summary of Estimated Mineral Resources*
 RESOURCES
                
                
                
                RESOURCES(tonnage
      and grades
      in grams/tonne)
                
                
                
                (ounces
      Au)Measured

                      (t)
                g/t
                Indicated

                      (t)
                g/t
                Measured+
      Indicated
      (t)
                g/t
                Inferred(t)
                g/t
                Measured
      + Indicated
                InferredSabaráSabará
                198,230
                2.11
                541,380
                1.96
                739,610
                2.00
                329,450
                2.01
                47,560
                21,290Other(1)
                518,900
                5.56
                704,300
                5.40
                1,223,200
                5.47
                830,000
                3.91
                215,020
                104,100Paciência
      ProjectSanta
      Isabel(2)
                871,170
                5.59
                1,702,230
                5.00
                2,573,400
                5.20
                420,700
                5.44
                430,260
                73,580Other(1)
                1,642,000
                3.68
                1,567,000
                3.97
                3,209,000
                3.82
                500,000
                5.00
                394,040
                80,380Caeté
      ProjectPilar(3)
                713,800
                5.99
                978,400
                5.91
                1,692,200
                5.94
                168,600
                7.41
                323,400
                40,150Roça
      Grande(3)
                727,700
                5.38
                1,270,500
                5.19
                1,998,200
                5.26
                558,000
                4.42
                337,800
                79,300TurmalinaFaina
      and Pontal(4)
                339,600
                5.64
                1,191,000
                5.70
                1,531,600
                5.69
                120,000
                5.70
                280,000
                22,000Principal
      and NE
                276,000
                6.10
                2,577,000
                7.10
                2,854,000
                7.00
                1,027,000
                6.40
                644,000
                211,000Satinoco(5)
                467,000
                3.76
                1,274,000
                3.71
                1,741,000
                3.72
                523,000
                3.85
                208,560
                64,750TOTAL
      IN SITU RESOURCES
                
                
                
                17,562,210
                5.10
                4,476,750
                4.84
                2,880,640**
                696,550
   Table
2 - Summary of Estimated Mineral Reserves*
 Proven
                (t)
              g/t
              Probable
      (t)
              g/t
              Proven
      + Probable (t)
              g/t
              Ounces
                AuSabaráSabará
              156,730
              1.86
              351,880
              1.65
              508,610
              1.71
              27,970TurmalinaPrincipal
      and NE
              234,000
              5.50
              2,682,000
              6.30
              2,916,000
              6.30
              587,000Paciência ProjectSanta
      Isabel(2)
              987,900
              4.52
              1,726,000
              4.52
              2,713,900
              4.52
              394,450TOTAL
              1,378,630
              4.38
              4,759,880
              5.31
              6,138,510
              5.11
              1,009,420**
 
 16
 
 
 *
                Mineral
      resources listed in Table 1 include mineral reserves listed in Table
      2.  Some columns and rows may not total due to
      rounding.
 **
                Estimated
      resources and reserves as at January 1, 2008 are lower than indicated in
      Tables 1 and 2, as such figures do not take into account 2007 production
      or the amount of gold rejected to the tailings at the Turmalina
      operations.  2007 Turmalina production was 347,000 tonnes at
      5.10 grams per tonne containing 45,527 ounces of gold.  In
      addition, figures do not reflect test mining production at Paciência
      during 2006 of 21,742 tonnes at 3.23 grams per tonne containing 2,260
      ounces of gold.
 (1)
                TechnoMine
      Services, LLC (“TechnoMine”) NI 43-101 Technical Report on the
      Quadrilátero Gold Project filed on SEDAR on December 20,
    2004.
 (2)
                TechnoMine
      NI 43-101 Feasibility Study Report on the Paciência Gold Project Santa
      Isabel Mine filed on SEDAR on August 9,
2007.
 (3)
                TechnoMine
      NI 43-101 Technical Report on the Caeté Gold Project filed on SEDAR on
      November 23, 2007.
 (4)
                TechnoMine
      NI 43-101 Technical Report on the Turmalina Gold Project filed on SEDAR on
      December 20, 2004.
 (5)
                TechnoMine
      NI 43-101 Technical Report on the Satinoco Target filed on SEDAR on
      February 5, 2008.
 The
Qualified Person, as such term is defined in NI 43-101, who prepared the
Quadrilátero Gold Project Technical Report, the Turmalina Gold Project Technical
Report, the Satinoco Target Technical Report, the Paciência Gold Project Santa
Isabel Mine Feasibility Study Report and the Caeté Gold Project Technical Report
is Ivan C. Machado, M.Sc., P.E., P.Eng. Mr. Machado is a principal of TechnoMine
and is independent for the purposes of NI 43-101.
 Scott
Wilson, Roscoe Postle Associates Inc. (“Scott Wilson RPA”) prepared NI 43-101
Technical Reports for Sabará and Turmalina, dated February 17, 2006 and July 31,
2006, respectively, and filed on SEDAR on March 2, 2006 and August 1, 2006,
respectively.  These reports have not been updated to reflect any new
information since the dates of the reports, including, but not limited to,
resources and reserves, mine and plant production, metallurgy, operating and
capital costs and environmental data.  The Qualified Persons who
prepared the reports were Graham G. Clow, P.Eng., and Wayne W. Valliant, P.Geo.
Mr. Clow and Mr. Valliant are employees of Scott Wilson RPA and are independent
for the purposes of NI 43-101.
 
 17
  OUTSTANDING
SHARE DATA
  Common
shares and convertible securities outstanding as at March 24, 2008
are:
 
 Security
                ExpiryDate
                ExercisePrice
                SecuritiesOutstanding
                CommonShares onExerciseCommon
      Shares
                
                
                64,105,719
                64,105,719Agents
      Options
                27-Mar-08
                CAD
    5.25
                61,749
                61,749Options
                4-Sep-08
                USD
    1.00
                135,000
                135,000Options
                5-Nov-08
                CAD
    3.75
                156,158
                156,158Options
                19-May-09
                CAD
    4.05
                685,000
                685,000Options
                15-Jun-09
                CAD
    4.25
                96,000
                96,000Options
                21-Oct-09
                CAD
    4.00
                157,500
                157,500Options
                17-Feb-10
                CAD
    3.47
                635,000
                635,000Options
                10-Mar-10
                CAD
    3.65
                212,000
                212,000Options
                8-Dec-10
                CAD
    3.29
                40,000
                40,000Options
                10-May-ll
                CAD
    5.47
                1,010,000
                1,010,000Options
                30-Jun-ll
                CAD
    4.41
                418,000
                418,000Options
                30-Nov-ll
                CAD
    6.40
                1,010,000
                1,010,000Options
                21-Sep-09
                CAD
    5.25
                200,000
                200,000Options
                21-Sep-09
                CAD
    4.60
                100,000
                100,000Options
                31-Oct-08
                CAD
    4.72
                13,513
                13,513Options
                30-Apr-09
                CAD
    5.25
                50,000
                50,000Options
                31-Oct-09
                CAD
    6.00
                50,000
                50,000Options
                19-Mar-12
                CAD
    5.94
                1,135,000
                1,135,000Options
                1-Sep-ll
                CAD
    4.62
                36,000
                36,000Options
                7-Sep-12
                CAD
    6.48
                377,500
                377,500Options
                4-Dec-12
                CAD
    9.54
                1,240,000
                1,240,000Fully diluted common
      shares
                
                
                
                71,924,139
  March
24, 2008
 
 
  graphic
              
              graphicDaniel R.
      TitcombPresident and CEO
              
              James M.
      Roller  Chief Financial
Officer
   
 
 18
 
 GLOSSARY
OF MINING TERMS
  Carbon-in-leach
 A
gold recovery process in which a slurry of gold-bearing ore, carbon and cyanide
are mixed together.  The cyanide dissolves the gold, which is
subsequently absorbed by and separated from the carbon.
  Carbon-in-pulp
 Similar
to carbon-in-leach process, but initially the slurry is subjected to cyanide
leaching in separate tanks followed by carbon-in-pulp. Carbon-in-leach is a
simultaneous process.
  Conversion
factors
 Weights
and measures on this site represent units commonly used in the gold
industry.  Conversion factors are provided below:
  To
      Convert
                Imperial Measurement Units
              
              To
      Metric
                Measurement Units
              
              Multiply
      ByAcres
              
              Hectares
              
              0.404686Feet
              
              Metres
              
              0.30480Miles
              
              Kilometres
              
              1.609344Ounces
      (troy)
              
              Grams
              
              31.1035Pounds
              
              Kilograms
              
              0.454Short
      tons
              
              Tonnes
              
              0.907185Troy
      ounces per ton
              
              Grams
      per tonne
              
              34.2857
  Cut-off
grade
 The
minimum metal grade at which a tonne of rock can be processed on an economic
basis.
  Deposit
 A
mineralized body which has been physically delineated by sufficient drilling,
trenching and/or underground work and found to contain a sufficient average
grade of metal or metals to warrant further exploration and/or development
expenditures; such a deposit does not qualify as a commercially mineable ore
body or as containing mineral reserves until final legal, technical and economic
factors have been resolved.
  Development or mine
development
 Driving
openings to access the mineral reserve in an underground mine.
  Diamond or core
drill
 A
type of rotary drill in which the cutting is done by abrasion rather than
percussion.  The cutting bit is set with diamonds and is attached to
the end of long hollow rods through which water is pumped to the cutting
face.  The drill cuts a core of rock, which is recovered in long
cylindrical sections, an inch or more in diameter.
  Dilution
 The
effect of waste or low-grade ore being included unavoidably in the mined ore,
lowering the recovered grade.
  Doré
 The
precious metals product of the smelter, containing mainly gold and silver, that
requires additional refining to high purity gold.
  Drifting
 Driving
of tunnels through rock usually on a horizontal basis.
  Feasibility
study
 A
detailed report showing the feasibility of placing a prospective ore body or
deposit of minerals within a mineral property into production.  This
report typically includes, inter alia, the specific portion or portions of the
property that should be included in a development block, conclusions and
recommendations regarding any adjustments that should be made to the boundaries
of a development block, a description of the work to be performed in order to
develop the mineral resources within the development block and to construct a
mine or mines and related facilities on the development block, the estimated
capital and operating costs thereof, a proposed schedule for the timing of
development and mine construction, and an assessment of the impact of the
operation and the information obtained and evaluations made in respect
thereof.
  Grade
 The
amount of gold in each tonne of ore, usually expressed in grams per
tonne.
  Heap
leaching
 A
process whereby gold is extracted by “heaping” broken ore on sloping impermeable
pads and repeatedly spraying the heaps with a weak cyanide solution which
dissolves the gold content. The gold-laden solution is collected for gold
recovery.
  19
  Indicated mineral
resource
 An
indicated mineral resource is that part of a mineral resource for which
quantity, grade or quality, density, shape, and physical characteristics can be
estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit.  The estimate is
based on detailed and reliable exploration and testing information gathered
through appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough for geological and grade
continuity to be reasonably assumed.
  Inferred
 That
part of a mineral resource for which quantity and grade or quality can be
estimated on the basis of geological evidence, limited sampling, and reasonably
assumed, but not verified, geological and grade continuity.  The
estimate is based on limited information and sampling gathered through
appropriate techniques from locations such as outcrops, trenches, pits, and
workings.
  Inferred mineral
resource
 An
inferred mineral resource is that part of a mineral resource for which quantity
and grade or quality can be estimated on the basis of geological evidence and
limited sampling and reasonably assumed but not verified, geological and grade
continuity. The estimate is based on limited information and sampling gathered
through appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes.
  Measured mineral
resource
 A
measured mineral resource is that part of a mineral resource for which quantity,
grade or quality, density, shape and physical characteristics are so well
established that they can be estimated with confidence sufficient to allow the
appropriate application of technical and economic parameters, to support
production planning and evaluation of the economic viability of the
deposit.  The estimate is based on detailed and reliable exploration,
sampling and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough to confirm both geological and grade
continuity.
  Mineralization
 Mineral-bearing
rock; the minerals may have been either a part of the original rock unit or
injected at a later time.
  Mineral
reserve
 A
mineral reserve is the economically mineable part of a measured or indicated
mineral resource demonstrated by at least a preliminary feasibility
study.  This study must include adequate information on mining,
processing, metallurgical, economic and other relevant factors that demonstrate,
at the time of reporting, that economic extraction can be
justified.  A mineral reserve includes diluting materials and
allowances for losses that may occur when the material is mined.
  Mineral
resource
 A
mineral resource is a concentration or occurrence of natural, solid, inorganic
or fossilized organic material in or on the earth's crust in such form or
quantity and of such a grade or quality that  has reasonable prospects
for economic extraction. The location, quantity, grade, geological
characteristics and continuity of a mineral resource are known, estimated or
interpreted from specific geological evidence and knowledge.
  NI
43-101
 Canadian
National Instrument 43-101, Standards of Disclosure for Mineral Projects of the
Canadian Securities Regulators.
  Ore
 Rock,
generally containing metallic and non-metallic minerals that can be mined and
processed at a profit.
  Ounce
(troy)
 All
ounces referenced herein are troy ounces.  Despite the world's gradual
conversion to the metric system, the troy ounce remains a fixture of the gold
industry and the most important basis for expressing quotations of most gold
markets.  One troy ounce equals approximately 31.1 grams in
weight.  There are 32.15 troy ounces in a kilogram.
  Probable mineral
reserve
 A
probable mineral reserve is the economically mineable part of an indicated, and
in some circumstances a measured mineral resource, demonstrated by at least a
preliminary feasibility study.  This study must include adequate
information on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting, that economic extraction can
be justified.
  Proven mineral
reserve
 A
proven mineral reserve is the economically mineable part of a measured mineral
resource demonstrated by at least a preliminary feasibility
study.  This study must include adequate information on mining,
processing, metallurgical, economic and other relevant factors that demonstrate,
at the time of reporting, that economic extraction is justified.
  20
  Qualified Person or
QP
 An
individual who, in accordance with NI 43-101: (a) is an engineer or geoscientist
with at least five years of experience in mineral exploration, mine development
or operation mineral project assessment, or any combination of these; (b) has
experience relevant to the subject matter of the mineral project and the
technical report; and (c) is a member in good standing of a recognized
professional association.
  Ramp
 An
inclined underground tunnel that provides access to an ore body for exploration,
ventilation and/or mining purposes in an underground mine.
  Reclamation
 The
process by which lands disturbed as a result of mining activity are reclaimed
back to a beneficial land use.  Reclamation activity includes the
removal of buildings, equipment, machinery and other physical remnants of
mining, closure of tailings impoundments, leach pads and other mine features,
and contouring, covering and revegetation of waste rock piles and other
disturbed areas.
  Recoverable
Reserves
 Recoverable
reserves represent the quantity of gold that can be recovered (i.e. mined) from
existing gold resources.
  Recovery
 A
term used in process metallurgy to indicate the proportion of valuable material
obtained in the processing of an ore.  It is generally stated as a
percentage of valuable metal in the ore that is recovered compared to the total
valuable metal present in the ore.
  Recovery
Grade
 The
actual grade of ore realized after the mining and treatment
process.
  Refractory
Ore
 Mineralized
rock in which much of the gold is encapsulated in sulphides or other minerals
and is not readily amenable to dissolution by cyanide solutions (unlike oxidized
ore) even with fine grinding.
  Reserves and
Resources
 The
Company’s classification of mineral reserves and resources and the subcategories
of each conforms with definitions adopted by the Canadian Institute of Mining,
Metallurgy and Petroleum Council on August 20, 2000, which are in accordance
with Canadian Securities Administrators' National Instrument 43-101 dated
November 17, 2000.
  Stockpile
 Broken
ore heaped on surface or prepared areas underground, pending treatment or
shipment.
  Stope
 Working
place in an underground mine where ore is extracted.
  Tailings
 The
material that remains after all economically recoverable metals or minerals of
economic interest has been removed from the ore through milling and
processing.
  Ton
 A
ton or short ton is a British imperial measure of weight equivalent to 2,000
pounds.
  Tonne
 A
tonne or metric tonne is about 10% greater in weight than a short ton and
equivalent in weight to 1000 kilograms or 2,205 pounds.
  Waste
 Barren
rock in a mine, or mineralized material that is too low in grade to be mined and
milled at a profit.
  21
 
 CORPORATE
DIRECTORY
 
 Jaguar
      Mining Inc. is a Canadian company incorporated under the laws of
      Ontario.
                
                DIRECTORS
                
                Andrew C. Burns1
                Gil Clausen3,
      4
                William E. Dow3
                Juvenil
      T. Felix
                Gary E. German1,2,4
                Chairman
                Anthony F.
      Griffiths1,
      2, 3
                Daniel
      R. Titcomb
                
                1     Audit
      Committee
                2    Compensation
      Committee
                3    Corporate
      Governance Committee
                4    Health,
      Safety and Environmental Committee
                
                OFFICERS
                
                Daniel
      R. Titcomb
                President
      & CEO
                
                Juvenil
      T. Felix
                Chief
      Operating Officer
                
                James
      M. Roller
                Chief
      Financial Officer & Treasurer
                
                Lúcio
      Cardoso
                VP
      Operations
                
                Adriano
      L. Nascimento
                VP
      Exploration & Engineering
                
                Robert
      J. Lloyd
                Secretary
                
                ADMINISTRATIVE  OFFICE
                
                125
      North State Street
                Concord,
      NH  03301 - USA
                Phone:
      (603) 224-4800
                Fax:     (603)
      228-8045
                E-mail:
      ir@jaguarmining.com
                Website:
      www.jaguarmining.com
              REGISTERED
      OFFICE
                
                100
      King Street West, Suite 4400
                1
      First Canadian Place
                Toronto,
      Ontario M5X 1B1 - Canada
                
                OPERATING
      OFFICE
                
                Rua
      Fernandes Tourinho 487, 7th Floor
                CEP
      30.112-000 - Belo Horizonte - MG
                Brazil
                
                AUDITORS
                
                KPMG
      LLP
                Toronto,
      Ontario
                Belo
      Horizonte, Brazil
                
                LEGAL
      COUNSEL
                
                Davies,
      Ward, Phillips &Vineberg LLP
                Toronto,
      Ontario
                New
      York, NewYork
                
                Hinckley,
      Allen & Snyder LLP
                Concord,
      New Hampshire
                
                BANKS
                
                Bank
      of America
                Boston,
      Massachusetts
                
                Royal
      Bank of Canada
                Toronto,
      Ontario
                
                STOCK
      TRANSFER AGENT
                
                Computershare
      Investor Services Inc.
                100
      University Avenue, 9th
      floor
                Toronto,
      ON  M5J 2Y1
                Phone:
      1-800-564-6253
                Fax:
      1-866-249-7775
                Email:
      service@computershare.com
                
                EXCHANGE
      LISTING
                
                Toronto
      Stock Exchange: “JAG”, “JAG.NT”
                NYSE
      Arca: “JAG”




A.
              Disclosure
      Controls and Procedures
 
 Based
on their evaluation as of the end of the period covered by this report, the
Registrant's Chief Executive Officer and Chief Financial Officer have concluded
that the Registrant's disclosure controls and procedures as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act are effective to ensure that
information required to be disclosed by the Registrant in reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.
  B.
              Management's
      Annual Report on Internal Control over Financial Reporting and Attestation
      Report of Registrant's Public Accounting
Firm
 
 This
annual report does not include a report of management's assessment regarding
internal control over financial reporting or an attestation report of the
company's registered public accounting firm due to a transition period
established by rules of the Securities and Exchange Commission for newly public
companies.
  C.
              Changes
      in Internal Control Over Financial
Reporting
 
 As
of the end of the period covered by this report, there were no changes in the
Registrant's internal control over financial reporting that occurred during the
period covered by this report that have materially affected or are reasonably
likely to materially affect the Registrant's internal control over financial
reporting.
  D.
              Notice
      of Pension Fund Blackout Period Pursuant To Regulation
  BTR
 
 The
Registrant was not required by Rule 104 of Regulation BTR to send any notice for
any of its directors or executive officers during the fiscal year ended December
31, 2007.
  E.
              Audit
      Committee Financial Expert
 
 The
Board of Directors of the Registrant has determined that each of Gary German,
Anthony Griffiths and Andrew Burns, individuals serving on the Audit Committee
of the Registrant’s Board of Directors, is an audit committee financial expert,
within the meaning of General Instruction B(8)(a) of Form 40-F. Each of Mssrs.
German, Griffiths and Burns is independent, as that term is defined in the rules
of the NYSE Arca Exchange.
  The
Commission has indicated that the designation of a person as an audit committee
financial expert does not make such person an “expert” for any purpose, impose
any duties, obligations or liability on such person that are greater than those
imposed on members of the Audit Committee and the Board of Directors who do not
carry this designation or affect the duties, obligations or liability of any
other member of the Audit Committee or Board of Directors.
  F.
              Code
      Of Ethics
 
 The
Registrant has adopted a code of ethics (as that term is defined in Form 40-F)
that applies to all of its directors, officers and employees. The code of ethics
has been posted to the Registrant's website at
www.jaguarmining.com.
  G.
              Principal
      Accountant Fees And Services
 
 The
Registrant has paid KPMG LLP ("KPMG"), its external auditors, the following fees
in each of the last two fiscal periods.
  Audit
Fees
  The
aggregate fees billed by KPMG for the fiscal years ended December 31, 2007 and
December 31, 2006, respectively, for professional services rendered by KPMG for
the audit of the Registrant’s annual financial statements or services that are
normally provided by KPMG in connection with statutory and regulatory filings or
engagements for such fiscal years were US$310,000 and US$148,800,
respectively.
   
  Audit-Related
Fees
  The
aggregate fees billed by KPMG for the fiscal years ended December 31, 2007 and
December 31, 2006, respectively, for assurance and related services rendered by
KPMG that are reasonably related to the performance of the audit or review of
the Registrant’s financial statements and are not reported above as audit fees
were $182,600 and $209,300, respectively. Professional services provided
included accounting research and internal control review
procedures.
  Tax
Fees
  There
were no fees billed by KPMG for the fiscal years ended December 31, 2007 and
December 31, 2006, for professional services rendered by KPMG for tax
compliance, tax advice, tax planning and other services.
  All
Other Fees
  There
were no fees billed by KPMG for the fiscal years ended December 31, 2007 and
December 31, 2006, except as described above.
  Audit
Committee Approval
  The
Registrant’s audit committee pre-approves every significant engagement by KPMG
to render audit or non-audit services. All of the services described above were
approved by the audit committee.
  H.
              Off-Balance
      Sheet Arrangements
 
 The
Registrant is not a party to any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on its financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors.
 
 I.
              Tabular
      Disclosure Of Contractual
Obligations
 
 The
Registrant's contractual obligations as at December 31, 2007 are summarized
in its Management’s Discussion and
Analysis of Financial Condition and Results of Operations for the fiscal year
ended December 31, 2007, included as Document 3 herein, under the heading
“Financial Condition, Cash Flow, Liquidity and Capital Resources -
Contractual Obligations".
 
 J.
              Identification
      of Audit Committee
 
 The Registrant has an audit committee
comprised of the following three individuals, all of who are independent as that
term is defined by the rules of the NYSE Arca: Mssrs Gary German, Anthony
Griffiths and Andrew Burns.
 
 K.
              Critical
      Accounting Policies
 
 A discussion of the Registrant’s
critical accounting policies can be found in its Management’s Discussion and
Analysis of Financial Condition and Results of Operations for the fiscal year
ended December 31, 2007, included as Document 3 herein, under the heading
“Critical Accounting Policies”.
 
 L.
              Disclosure
      Required Pursuant to the NYSE Arca
 
 The Registrant is classified as a
foreign private issuer under US securities law and its common shares are listed
on the NYSE Arca. Pursuant to the rules of the NYSE Arca, a foreign private
issuer is permitted, subject to a few exceptions, to follow home country
practice in lieu of the corporate governance rules of the NYSE Arca. The only
corporate governance practice of the Registrant that differs from those required
by the NYSE Arca rules to be followed by U.S. domestic issuers is the quorum
found in Section 5.3(c) of the NYSE Arca rules which rule provides that a quorum
for any meeting of shareholders may not consist of less than 33.33% of the
common shares issued and outstanding. The Registrant's by-laws require that a
quorum for any meeting of shareholders may not consist of less than 15% of the
common shares issued and outstanding. This policy is consistent with
requirements of the Toronto Stock Exchange and applicable corporate laws in
Ontario.
 
  
  UNDERTAKING
AND CONSENT TO SERVICE OF PROCESS
 
 A.
              Undertaking
 
 The Registrant undertakes to make
available, in person or by telephone, representatives to respond to inquiries
made by the Commission staff, and to furnish promptly, when requested to do so
by the Commission staff, information relating to the securities in relation to
which the obligation to file an annual report on Form 40-F arises.
 
 B.
              Consent
      to Service of Process
 
 The Registrant has previously filed
with the Commission a Form F-X in connection with its Common
Shares.
 
 
 
  
  SIGNATURE
 
 Pursuant to the requirements of the
Exchange Act, the Registrant certifies that it meets all of the requirements for
filing on Form 40-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereto duly authorized.
 
 
 
 
 JAGUAR
      MINING INC.March
      28, 2008
              By:
              /s/ DANIEL R. TITCOMBName:  Daniel
      R. TitcombTitle:    President
      and Chief Executive Officer
 
 
  
  
 EXHIBIT
INDEX
 
 Exhibit No.
              
              Title23.1
              
              Consent
      of TechnoMine Services, LLC.23.2
              
              Consent
      of Graham G. Clow Scott Wilson Roscoe Postle Associates
    Inc.23.3
              
              Consent
      of KPMG LLP.31
              
              Certification
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      Section 302 of the Sarbanes-Oxley Act of 200232
              
              Certification
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      Section 906 of the Sarbanes-Oxley Act of 200299.1
              
              Audited
      schedule of reconciliation of Canadian generally accepted accounting
      principles, to principles generally accepted in the United States for the
      years ended December 31, 2007 and 2006 together with the auditor's report
      thereon and the notes thereto, reconciled to U.S. GAAP in accordance with
      Item 17 of Form 20-F.