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Caete Kills the Quarter

Not a great update released today by Jaguar .

I guess that my fears about Caete proved to be true. In fact Caete performed quite a  bit worse than I would have expected.  Turmalina still appears to be turned around, but Caete struggled in the quarter due to a mill issue.  Cash costs ($799/oz) were about $70 higher than Q1.  Given that the company said that both “Turmalina and Paciencia, performed at or above targets in terms of gold production, grade and recoveries”, the costs at Caete must have been quite bad.

On the bright side of the report, by June it looks like they had fixed the issues at Caete as production was up at an annual rate of 185,000oz, which would be 46,500oz per quarter.

46,500oz would have met their guidance for the quarter.  Unfortunately, what they produced, 40,257oz, did not.  Its a miss on production and poor costs to boot.

So what am I going to do tomorrow?  Likely sell some.  I have learned that when a story isn’t working out the way you had hoped it is better to sell.  The good news here is the stock is up almost 20% over my purchase price.  So I’ll get some profit.

How much will I sell?  That is tough to say.  I would want to see how the market reacts first.  The market could look positively at the Turmalina turnaround and the June production numbers.  And Jaguar has been such a dog for so long that expectations are sure to be low.  On the other hand, the shorts can pounce here and they might take the opportunity to.  Either way I expect to end tomorrow with a reduced position in the stock.

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