Jaguar Mining Inc. — Interim / Quarterly Report 2020

May 13, 2020

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CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(UNAUDITED)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited and expressed in thousands of US dollars)

			March 31,		December 31,
			2020		2019
ASSETS
Current assets
Cash and cash equivalents		$	12,125	$	10,924
Restricted cash	Note 3		1,529		1,418
Inventory	Note 4		12,386		12,701
Recoverable taxes	Note 5		8,352		12,658
Other accounts receivable	Note 6		3,651		590
Prepaid expenses and advances			1,810		1,602
Derivative assets	Note 18		-		71
Total current assets			39,853		39,964
Non-current assets
Royalty interests	Note 6		8,476		8,476
Property, plant and equipment	Note 7		134,174		130,693
Mineral exploration projects			6,687		6,687
Recoverable taxes	Note 5		4,192		5,411
Other accounts receivable	Note 6		5,000		5,000
Restricted cash	Note 3		816		4,684
Total assets		$	199,198	$	200,915
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	Note 8	$	12,917	$	16,141
Notes payable	Note 9		5,959		5,592
Lease liabilities			1,259		2,020
Current tax liability			2,046		599
Other taxes payable			1,122		642
Reclamation provisions			261		390
Legal and other provisions	Note 10		2,606		4,041
Derivative liabilities	Note 18		1,135		1,103
Total current liabilities			27,305		30,528
Non-current liabilities
Lease liabilities			671		969
Other taxes payable			11,248		9,665
Reclamation provision			12,059		15,385
Legal and other provisions	Note 10		6,618		11,543
Other liabilities			219		4,245
Total liabilities		$	58,120	$	72,335
SHAREHOLDERS' EQUITY
Common shares	Note 11	$	570,941	$	570,911
Stock options	Note 11		1,173		961
Deferred share units	Note 11		1,523		1,542
Contributed surplus			20,955		20,955
Deficit			(453,514)		(465,789)
Total shareholders' equity		$	141,078	$	128,580
Total liabilities and shareholders' equity		$	199,198	$	200,915
Subsequent events	Note 6
On behalf of the Board:
(signed) “Jeffrey Kennedy” (signed) “Vernon Baker”

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Jaguar Mining Inc. 1

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the three months ended March 31, 2020 and 2019

(Unaudited and expressed in thousands of US dollars, except per share amounts and number of shares)

			Three Months Ended	Three Months Ended	Three Months Ended	Three Months Ended
				March	31,
			2020			2019
Revenue		$	30,801		$	21,416
Operating costs	Note 13		14,297			14,630
Depreciation				3,625		3,610
Grossprofit			12,879			3,176
Exploration and evaluation costs				223		41
Care and maintenance costs (Paciência and Roça Grande mines)				174		302
Stock-based compensation	Note 11(b)(c)			223		130
General and administrative expenses				1,666		2,168
Amortization				29		34
Legal, recoverable tax and other provisions expenses				427		882
Other operatingexpenses				385		786
Operating income(loss)				9,752		(1,167)
Foreign exchange (gain)	Note 14			(5,629)		(133)
Financial instruments loss				620		45
Finance costs				426		848
Other non-operatingexpenses(recoveries)				14		(88)
Income(loss)before income taxes			14,321			(1,839)
Current income tax expense				2,046		-
Net income(loss)		$	12,275		$	(1,839)
Total comprehensive(loss)		$	12,275		$	(1,839)
Earnings (loss) per share	Note 12
Earnings (loss) per share
Basic		$		0.02	$	(0.01)
Diluted		$		0.02	$	(0.01)
Weighted average shares outstanding
Basic			724,127,839			328,505,674
Diluted			731,698,182			328,505,674

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Jaguar Mining Inc. 2

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2020 and 2019

(Unaudited and expressed in thousands of US dollars)

			Three Months Ended	Three Months Ended	Three Months Ended
			March	31,
			2020		2019
OPERATING ACTIVITIES
Net income (loss) for the period		$	12,275	$	(1,839)
Adjustments and non-cash items
Depreciation and amortization			3,654		3,644
Accretion interest expense			187		327
Interest expense			240		521
Unrealized foreign exchange (gain)			(6,233)		(208)
Current income tax expense			2,046		-
Other tax expense			-		24
Change in unrealized derivatives			103		(35)
Legal and other provisions expense			320		1,024
Other operating activities (recoveries) expense			338		12
Changes in operatingworkingcapital	Note 15		(4,296)		(947)
Net cash provided by operating activities			8,634		2,523
INVESTING ACTIVITIES
Purchase of property, plant and equipment			(7,595)		(6,873)
Proceeds from disposition ofproperty, plant and equipment			6		4
Net cash (used in) investing activities			(7,589)		(6,869)
FINANCING ACTIVITIES
Cash received upon issuance of debt			1,542		7,340
Repayment of debt			(1,801)		(1,257)
Interest paid			(37)		(220)
Restricted cash margin depositspaid			(152)		-
Net cash (used in) provided by financing activities			(448)		5,863
Effect of exchange rate changes on cash and cash equivalents			604		75
Net increase in cash and cash equivalents			1,201		1,592
Cash and cash equivalents at the beginning of theperiod			10,924		6,275
Cash and cash equivalents at the end of theperiod		$	12,125	$	7,867

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Jaguar Mining Inc. 3

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the three months ended March 31, 2020 and 2019

(Unaudited and expressed in thousands of US dollars)

	Stock Options Common Shares Deferred Share Units Warrants	Contributed Surplus Deficit	Total Equity
	Shares Amount Units Amount Options Amount Units Amount
Balance as at January 1, 2019 Stock options granted Stock options forfeited Deferred share units granted Net loss	328,505,675 546,254 $ - - $ 2,817,148 726 $ 5,670,768 1,577 $ - - - - - 49 - - - - - - (10,667) (1) - - - - - - - - - 81 - - - - - - - -	20,940 $ (465,641) $ - - - - - - - (1,839)	$ 103,856 49 (1) 81 (1,839)
Balance as at March 31,2019	328,505,675 546,254 $ - - $ 2,806,481 774 $ 5,670,768 1,658 $	20,940 $ (467,480) $	102,146 $
Balance as at January 1, 2020	723,933,540 570,911 $ - - $ 5,831,481 961 $ 6,673,467 1,542 $	20,955 $ (465,789) $	$ 128,580
Stock options granted Deferred share units granted Deferred share units redeemed Net loss	- - - - 2,770,000 212 - - - - - - - - - 11 194,300 30 - - - - (194,300) (30) - - - - - - - -	- - - - - - - 12,275	212 11 - 12,275
Balance as at March 31, 2020	724,127,840 570,941 $ - - $ 8,601,481 1,173 $ 6,479,167 1,523 $	20,955 $ (453,514) $	$ 141,078

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Jaguar Mining Inc. 4

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2020 and 2019 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

1. Nature of business

Jaguar Mining Inc. (the “Company” or “Jaguar”) is a corporation continued under the Business Corporations Act (Ontario) engaged in the acquisition, exploration, development, and operation of gold producing properties in Brazil. The address of the Company’s registered and principal executive office is 100 King Street West, Suite 5600, Toronto, Ontario, Canada, M5X 1C9.

These condensed interim consolidated financial statements of the Company as at and for the three months ended March 31, 2020 and 2019, include the accounts of the Company and its wholly-owned subsidiary Mineração Serras do Oeste Ltda. (“MSOL”). MSOL is the operating subsidiary for the Turmalina complex comprising the Turmalina mine and the Caeté complex comprising the Pilar mine. All significant intercompany accounts and transactions have been eliminated on consolidation.

The Company’s condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”). These condensed interim consolidated financial statements do not include all annual disclosures as required by International Financial Reporting Standards (“IFRS”), and should be read in connection with the Company’s December 31, 2019 audited annual consolidated financial statements.

The condensed interim consolidated financial statements were authorized for issuance by the Board of Directors on May 12, 2020.

These condensed interim consolidated financial statements have been prepared on a going concern basis which assumes that the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business as they become due.

2. Significant accounting policies and estimates

The accounting policies and estimates applied in these condensed interim consolidated financial statements are consistent with those used in the Company’s audited annual consolidated financial statements for the year ended December 31, 2019.

3. Restricted cash

		March 31,		December 31,
		2020		2019
Restricted cash - current portion
Margin deposits(a)	$	537	$	372
Escrow judicial deposits(b)		992		1,046
		1,529		1,418
Restricted cash - non-current portion
Escrow judicial deposits(b)		816		4,684
		816		4,684
Total restricted cash	$	2,345	$	6,102

• a) Margin deposits paid in accordance with the Company’s notes payable (Note 9).

• b) Escrow judicial deposits paid in relation to Other liabilities recognized in association with the Company’s ongoing labour, civil and tax litigations (Note 10). In March 2020, the Company signed an agreement with the

Jaguar Mining Inc. 5

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three months ended March 31, 2020 and 2019 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

Turmalina mining right royalty beneficiaries, whereas (i) the parties agreed to discontinue all outstanding royalty entitlement legal claims against each other, (ii) the parties agreed to a reduced royalty charge of 2.5% of net revenue for the two year period from April 2020 to March 2022, and (iii) as a result of the termination of the ongoing lawsuits, the beneficiaries were able to withdraw the total amount that was in an escrow judicial account for royalties paid between May 2017 and January 2020. Upon execution of this agreement, the Company recognized a $3.3 million decrease to Restricted cash, a $3.3 million decrease to Other liabilities, and a $nil impact to the condensed interim consolidated statements of operations and comprehensive loss.

4. Inventory

Inventory is comprised of the following:

	March 31, December 31, 2020 2019
Raw material and Mine operating supplies Ore in stockpiles Gold in process Unrefinedgold doré	$ 8,469$ 8,223 414247 5821,076 2,9213,155
Total inventory	$ 12,386 $12,701
	2020 2019 Three Months Ended March 31,
Depreciation included in cost of sales	3,625 $ 3,610 $

The inventory amount recognized in direct mining and processing costs for the three months ended March 31, 2020 was $13.1 million ($13.7 million for the three months ended March 31, 2019). During the three months ended March 31, 2020, there were no inventory write downs to net realizable value ($nil, during the three months ended March 31, 2019).

5. Recoverable taxes

	December 31,	December 31,		Additions/		Write-		Sales of		Applied to taxes		Foreign		March 31,
		2019		reversals		offs		credits		payable		exchange		2020
Value added taxes and other	$	13,133	$	1,214	$	-	$	-	$	(3,397)	$	(2,527)	$	8,423
Provisions for VAT and other		(1,092)		-		-		-		-		245		(847)
Net VAT and other taxes	$	12,041	$	1,214	$	-	$	-	$	(3,397)	$	(2,282)	$	7,576
ICMS	$	7,536	$	594	$	-	$	-	$	(128)	$	(1,768)	$	6,234
Provision for ICMS		(1,508)		(107)		-		-		-		349		(1,266)
Net ICMS	$	6,028	$	487	$	-	$	-	$	(128)	$	(1,419)	$	4,968
Total recoverable taxes	$	18,069	$	1,701	$	-	$	-	$	(3,525)	$	(3,701)	$	12,544
Less: currentportion		12,658												8,352
Non-currentportion	$	5,411											$	4,192

In the three months ended March 31, 2020, the Company applied federal value added taxes and other tax credits to pay R$7.2 million ($1.6 million) in INSS tax obligations, R$5.8 million ($1.3 million) in goods and service withholding tax obligations, and R$2.3 million ($0.5 million) in other tax obligations (R$5.3 million ($1.4 million), R$2.2 million ($0.6 million), and R$nil ($nil), respectively, for the three months ended March 31, 2019).

Jaguar Mining Inc. 6

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2020 and 2019

(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

6. Other accounts receivable and Royalty interests

	March 31, December 31, 2020 2019
Due from Oz Minerals Ltd. - Gurupi Sale Trade receivables(a) Other accounts receivable	5,0005,000 3,245 - 406590
Total other accounts receivable	$ 8,651 $5,590
Less: current portion Non-current portion	3,651590
	$ 5,000 $5,000

a) At March 31, 2020, the Company held $3.2 million in gold sales accounts receivable (December 31, 2019 - $nil) with 2,019 gold ounces sold on March 31, 2020 at $1,607 per ounce. The Company collected this balance in April 2020.

As at March 31, 2020, the Company also held the following assets related to the Gurupi project sale: (i) a $5 million amount due from Oz Minerals classified as Other accounts receivable (December 31, 2019 – $5 million) and (ii) a $8.5 million net smelter royalty receivable from Oz Minerals classified as Royalty interests (December 31, 2019 – $8.5 million).

	March 31,	December 31,
	2020	2019
Oz Minerals Ltd. - Gurupi	$ 8,476	$8,476
Total royalty interests	$ 8,476	$8,476

Jaguar Mining Inc. 7

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2020 and 2019 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

7. Property, plant and equipment (“PP&E”)

												Mining
		Plant		**Vehicles **	**Equipment1 **		Leasehold2			CIP3	properties			Total
Cost
Balance as at January 1, 2020	$	13,578	$	11,197	$	246,121	$	3,412	$	3,415	$	454,786	$	732,509
Additions		-		-		380		-		732		5,980		7,092
Disposals		-		(180)		(3)		-		-		-		(183)
Reclassifywithin PP&E		-		-		428		-		(428)		-		-
Balance as at March 31, 2020	$	13,578	$	11,017	$	246,926	$	3,412	$	3,719	$	460,766	$	739,418
Balance as at January 1, 2019	$	13,578	$	11,363	$	241,662	$	2,380	$	2,678	$	431,412	$	703,073
Additions		-		-		3,946		1,032		4,126		25,927		35,031
Disposals		-		(166)		(2,876)		-		-		(2,553)		(5,595)
Reclassifywithin PP&E		-		-		3,389		-		(3,389)		-		-
Balance as at December 31,2019	$	13,578	$	11,197	$	246,121	$	3,412	$	3,415	$	454,786	$	732,509
Accumulated depreciation and impairment
Balance as at January 1, 2020	$	12,514	$	7,395	$	221,270	$	2,407	$	685	$	357,545	$	601,816
Depreciation for the period		84		61		1,726		233		-		1,493		3,597
Disposals		-		(167)		(2)		-		-		-		(169)
Balance as at March 31, 2020	$	12,598	$	7,289	$	222,994	$	2,640	$	685	$	359,038	$	605,244
Balance as at January 1, 2019	$	12,196	$	8,105	$	214,913	$	2,227	$	685	$	354,491	$	592,617
Depreciation for the period		318		237		7,400		180		-		6,126		14,261
Disposals		-		(947)		(1,043)		-		-		(3,072)		(5,062)
Balance as at December 31,2019	$	12,514	$	7,395	$	221,270	$	2,407	$	685	$	357,545	$	601,816
Carrying amounts
As at March 31, 2020	$	980	$	3,728	$	23,932	$	772	$	3,034	101,728 $		$	134,174
As at December 31,2019	$	1,064	$	3,802	$	24,851	$	1,005	$	2,730	$	97,241	$	130,693

1 As at March 31, 2020, the Company had equipment under right-of-use leases at a cost and net book value of $8.7 million and $6.6 million, respectively (December 31, 2019 - $8.3 million and $6.6 million, respectively).

2 Refers to leasehold improvements in corporate office in Brazil.

3 Refers to construction in progress.

The Turmalina project terms 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 $10.0 million and 3% thereafter. Pursuant to the agreement made in March 2020 as further detailed in Note 3, Turmalina´s royalty charge is temporarily reduced to 2.5% of net revenue for the two-year period from April 2020 to March 2022.

8. Accounts payable and accrued liabilities

		March 31,		December 31,
		2020		2019
Accounts payable	$	8,571	$	10,369
Accrued payroll		4,342		5,693
Other		4		79
Total accountspayable and accrued liabilities	$	12,917	$	16,141

Jaguar Mining Inc. 8

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2020 and 2019 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

9. Notes payable

		March 31,		December 31,
		2020		2019
Notes payable - current portion
Bank indebtedness(a)	$	4,839	$	4,477
Vale note		1,120		1,115
		5,959		5,592
Total notespayable	$	5,959	$	5,592

a) Bank indebtedness

As at March 31, 2020, bank indebtedness consists of $4.8 million in unsecured promissory notes, holding maturities from April 2020 through September 2020 and bearing interest rates ranging from 6.0% to 7.4%. As at December 31, 2019, bank indebtedness included $4.5 million in unsecured promissory notes, holding maturities from March 2020 through May 2020 and bearing interest rates ranging from 6.0% to 7.4%.

10. Legal and other provisions

Various legal, environmental, tax and regulatory matters are outstanding from time to time due to the nature of the Company’s operations. For its matters outstanding, Management, in conjunction with its internal and external legal counsel, assesses the estimated value at risk and the Company’s probability of loss. A provision is recorded for cases in which the Company has determined the probability of loss as more likely than not and the amount can be reasonably estimated. In the event that management’s estimate of the future resolution of these matters changes, the Company will recognize the effects of the changes in its condensed interim consolidated financial statements on the date such changes occur.

As at March 31, 2020, the Company has recognized a provision of $9.2 million (December 31, 2019 - $15.6 million) representing management’s best estimate of expenditures required to settle present obligations, as noted in the table below. The ultimate outcome or actual cost of settlement may vary materially from management estimates due to the inherent uncertainty regarding the outcome of the resolution of these matters.

	December 31, 2019 Additions Reversals/ Transfers Payments Foreign exchange March 31, 2020
Labour litigation Civil litigation	10,274 $ 438 $ (174) $ (467) $ (2,253) $ 7,818 $ 1,587 74 (18) (25) (488) 1,130 3,383 - (3,183) - (200) - 340 17 - - (80) 276
Tax litigation(a)
Otherprovisions
Total legal and otherprovisions	15,584 $ 529 $ (3,376) $ (492) $ (3,022) $ 9,224 $
	4,041 2,606 $ 11,543 $ 6,618
Less: current portion Non-current portion

a) In November 2019, the Company received an injunction from Brazil’s tax authority stipulating R$14.3 million (approximately $3.6 million) due, alleging improper federal tax credits applied as payments of quarterly tax installment estimates during the year ended December 31, 2018.

In 2018, the Company applied R$13.6 million (approximately $3.4 million) in federal tax credits to pay quarterly tax installment estimates supported by a 2018 court order received allowing it to do so. However, as the

Jaguar Mining Inc. 9

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three months ended March 31, 2020 and 2019 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

Company’s 2018 annual income return had no taxes payable, the credits used were not ultimately needed, and the excess R$13.6 million (approximately $3.4 million) paid was claimed by the Company as a federal tax prepayment available for use in the future and recognized within Recoverable taxes.

As the injunction overrode the 2018 court order received, the Company appealed the injunction first to a district court in December 2019 and second to a superior court in February 2020, both of which were denied. As a result of the lost appeals, in March 2020, the Company entered into a settlement with the tax authority to pay the R$14.3 million (approximately $3.3 million) with 10% due up front and the remainder in equal monthly cash installments over a period of 60 (sixty) months.

Upon receiving the injunction in November 2019, the Company (i) re-capitalized R$13.6 million (approximately $3.4 million) in federal value add tax credits to Recoverable taxes and (ii) recognized a R$14.3 million (approximately $3.6 million) tax litigation provision in Legal and other provisions. Upon settlement in March 2020, the R$14.3 million ($3.3 million balance) was reclassified from Legal and other provisions to Other taxes payable.

11. Capital stock

a) Common shares

The Company is authorized to issue an unlimited number of common shares. All issued shares are fully paid and have no par value. Changes in common shares for the three months ended March 31, 2020 and 2019 are as follows:

		Number of
		shares		Amount
Balance as at December 31, 2019		723,933,540	$	570,911
Shares issued upon redemption of deferred share units	Note 13(c)	194,300		30
Balance as at March 31, 2020		724,127,840	$	570,941
Balance as at December 31,2018		328,505,675	$	546,254
Balance as at March 31, 2019		328,505,675	$	546,254

a) Stock options

The Stock Option Plan (“SOP”) provides for the issuance of options to employees, directors, or officers of the Company, its subsidiary, or any of its affiliates, consultants, and management employees.

The aggregate number of shares available at all times for issuance under the SOP shall not exceed 10% of the total issued and outstanding common shares of the Company (calculated on a non-diluted basis). Any option, which has been exercised, cancelled or forfeited, will again be available for grant under the SOP. The Board of Directors has the power to determine terms of any options and units granted under the Company’s incentive plans, including setting exercise prices, vesting terms and expiry dates.

The following table shows the movement of stock options for the years ended March 31, 2020 and 2019:

Jaguar Mining Inc. 10

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2020 and 2019

(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

	Number of	Weighted average
	options	exercise price (C$)
Balance as at December 31, 2019	5,831,481	$ 0.29
Optionsgranted1	2,770,000	0.25
Balance as at March 31, 2020	8,601,481	$ 0.28
Balance as at December 31, 2018	2,817,148	$ 0.51
Options forfeited2	(10,667)	0.18
Balance as at March 31, 2019	2,806,481	$ 0.51

1) On January 15, 2020, 1,750,000 stock options were granted to executives of the Company. The options are exercisable at a price of C$0.25 and expire on January 15, 2028. The options vest on a quarterly basis, in twelve equal instalments, starting on January 31, 2020 and are exercisable upon vesting. These options had a grant date fair value of C$0.18 per option, measured using the Black-Scholes option pricing formula with inputs as follows: an exercise price of C$0.25, a risk free rate of 1.69%, a volatility factor of 100%, and an expected life of 8.0 years.

On January 15, 2020, 1,020,000 stock options were granted to directors of the Company and are exercisable at a price of C$0.25 with expiry on January 15, 2028. These options vested immediately upon grant and had a grant date fair value of C$0.18 per option, measured using the Black-Scholes option pricing formula with inputs as follows: an exercise price of C$0.25, a risk free rate of 1.69%, a volatility factor of 100%, and an expected life of 8.0 years.

The expected volatility was estimated using the Company’s historical data from the date of grant and for a period corresponding to the expected life of the options.

2) Relates to the forfeiture of the options upon resignation of former executives and directors.

The table below shows the outstanding stock options as at March 31, 2020 and 2019:

			Number of	Number of	Estimated fair value	Estimated fair value
Weighted	average		options	options	at	grant date (US$
exerciseprice(C$)		Grant date	outstanding	exercisable		per option)	Expiry date
$	1.35	May 12, 2014	236,841	236,841	$	0.38	May 12, 2022
	0.74	August 8, 2016	177,363	177,363		0.34	August 8, 2021
	0.76	November 7, 2016	322,637	322,637		0.37	November 7, 2021
	0.70	January 27, 2017	209,640	197,993		0.36	January 27, 2025
	0.33	September 21, 2017	200,000	155,556		0.22	September 21, 2022
	0.37	January 23, 2018	570,000	348,333		0.20	January 23, 2026
	0.21	August 31, 2018	1,015,000	760,917		0.11	August 31, 2026
	0.19	October 04, 2019	450,000	450,000		0.11	October 04, 2027
	0.25	January 15 ,2020	2,770,000	1,068,611		0.14	January 15, 2028
	0.10	May31,2019	2,650,000	1,747,222		0.03	May31,2027
$	0.28		8,601,481	5,465,473	$	0.13

For the three months ended March 31, 2020, the Company recognized $212,000 in stock-based compensation expense for stock options in the condensed interim consolidated statements of operations and comprehensive loss ($49,000 in the three months ended March 31, 2019).

b) Deferred share units – “DSUs”

The deferred share unit plan (“DSU Plan”) provides awards to employees, directors, or officers of the Company. DSU means a right to receive, on a deferred basis, previously unissued shares in accordance with the terms of the

Jaguar Mining Inc. 11

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three months ended March 31, 2020 and 2019 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

DSU Plan. Vested DSUs shall be redeemed in whole or in part for shares issued from treasury or, subject to the approval of the Company, cash. The Company accounts for these awards as equity awards. The maximum number of shares reserved for issuance under the DSU Plan, at any time, shall be 11,111,111.

The following table shows the movement of DSUs for the years ended March 31, 2020 and 2019:

	Number	Weighted average	Weighted average
	of units		grant date
			fair value (US$)
Balance as at December 31, 2019	6,673,467	$	0.22
Units redeemed1	(194,300)		0.16
Balance as at March 31, 2020	6,479,167	$	0.22
Balance as at December 31,2018	5,670,768	$	0.28
Balance as at March 31, 2019	5,670,768	$	0.28

1) In March 2020, officers and directors redeemed a total of 194,300 DSUs. The DSUs were settled via issuance of 194,300 shares, representing a total grant date fair value of $30,000.

For the three months ended March 31, 2020, the Company recognized $11,000 in stock-based compensation expense for DSUs in the condensed interim consolidated statements of operations and comprehensive income (loss) ($81,000, for the three months ended March 31, 2019).

12. Basic and diluted earnings per share

Dollar amounts and share amounts in thousands, except per share amounts.

	2020 2019 Three Months Ended March 31,
Numerator Net income(loss)for thepurpose of diluted income(loss) per share	$ 12,275 $ (1,839)
Denominator Weighted average number of common shares outstanding- basic	724,127,839328,505,674
Stock Options Deferred share units	1,091,176 - 6,479,167 -
Weighted average number of common shares outstanding- diluted	731,698,182328,505,674
Basic income(loss) per share	$ 0.02 $ (0.01)
Diluted income(loss) per share	$ 0.02 $ (0.01)

The determination of the weighted average number of common shares outstanding for the calculation of diluted earnings per share does not include the following effect of options, deferred shares units since they are antidilutive to loss per share:

	2020 2019 Three Months Ended March 31,
Stock options	7,510,3052,817,148 -5,670,768
Deferred share units
Anti-dilutive instruments	7,510,3058,487,916

Jaguar Mining Inc. 12

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2020 and 2019

(Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

13. Operating costs

	Three Months Ended	Three Months Ended	Three Months Ended
	March	31,
	2020		2019
Direct mining and processing costs	Note 4$ 13,116	$	13,685
Royalty expense and CFEM taxes 1	1,217		938
Other costs(recoveries)	(36)		7
Operating costs	$ 14,297	$	14,630

1 CFEM - Compensação Financeira pela Exploração Mineral taxes are Brazil mining royalty fees levied by the Federal government as financial compensation for mineral exploitation.

14. Foreign exchange (gain) loss

	Three Months Ended	Three Months Ended	Three Months Ended
	March 31,
	2020		2019
Loss on recoverable taxes	Note 5$ 3,701	$	62
(Gain) on reclamation provision	(3,555)		(73)
(Gain) on legal and other provisions	Note 10(3,022)		(103)
(Gain)on other foreign exchange	(2,753)		(19)
Total foreign exchange (gain)	$(5,629)	$	(133)

15. Cash flow – changes in operating working capital

	Three Months Ended	Three Months Ended	Three Months Ended
	March 31,
	2020		2019
Restricted cash	$ (460)	$	(214)
Inventory	258		811
Recoverable taxes	1,118		1,088
Other accounts receivable	(3,061)		(33)
Prepaid expenses and other assets	(208)		(123)
Accounts payable and accrued liabilities	7		(2,291)
Other taxes payable	(664)		(22)
Reclamation provisions	(46)		(23)
Legal and other provisions	Note 10 (492)		(625)
Other liabilities	(748)		485
Changes in operating working capital	$(4,296)	$	(947)

Jaguar Mining Inc. 13

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2020 and 2019 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

16. Financial liabilities and other commitments

In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following table summarizes the remaining undiscounted contractual maturities of the Company’s financial liabilities and other commitments:

As at March 31, 2020		Less than 1		1 - 3 years		3 - 5 years		More than 5		Total
		year						years
Financial Liabilities
Accounts payable and accrued liabilities	$	12,917	$	-	$	-	$	-	$	12,917
Other Taxes Payable
ICMS Settlement Due		506		801		38		-		1,345
INSS		52		104		95		-		251
IRPJ & CSLL Settlement Due		564		1,040		998		-		2,602
Notes payable
Principal
Bank indebtedness (a)		4,839		-		-		-		4,839
Vale note		1,125		-		-		-		1,125
Interest		30		9		-		-		39
Lease liabilities		1,377		742		85		-		2,204
Reclamation provisions (b)		260		5,987		7,173		7,577		20,997
Current tax liability		2,046		-		-		-		2,046
Derivative liabilities		1,135		-		-		-		1,135
Other liabilities		-		219		-		-		219
Total financial liabilities	$	24,851	$	8,902	$	8,389	$	7,577	$	49,719
Other Commitments
Suppliers' agreements (c)		111		-		-		-		111
Total other commitments	$	111	$	-	$	-	$	-	$	111
Total	$	24,962	$	8,902	$	8,389	$	7,577	$	49,830

(a) Bank indebtedness represents the principal on Brazilian short-term bank loans which are renewed in 180 day periods.

(b) Reclamation provisions - amounts presented in the table represent the undiscounted uninflated future payments for the expected cost of reclamation.

(c) Purchase obligations for supplies and consumables - includes commitments related to new purchase obligations to secure a supply of cyanide, reagents, mill balls and other spares. The Company has the contractual right to cancel the mine operation contracts with 30 days advance notice. The amount included in the commitments table represents the contractual amount due within 30 days.

17. Capital disclosures

The Company manages its capital structure in order to support the acquisition, exploration and development of mineral properties, and to maximize return to stakeholders through a flexible capital structure which optimizes the costs of capital and the debt and equity balance. The Company sets the amount of capital in proportion to risk by managing the capital structure and making adjustments in light of changes in economic conditions and the risk characteristics of the underlying assets. To adjust or maintain its capital structure, the Company may adjust the amount of long-term debt, enter into new credit facilities, issue new equity, or enter into new customer advance arrangements.

As at March 31, 2020, the Company’s capital structure is comprised of $6.0 million in notes payable and $141.1 million in shareholders’ equity (December 31, 2019: $5.6 million and $103.9 million, respectively).

At March 31, 2020, the Company is not subject to externally imposed capital requirements other than those stipulated by Brazil bank indebtedness (Note 3).

Jaguar Mining Inc. 14

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three months ended March 31, 2020 and 2019 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

18. Financial risk management and financial instruments

The Company’s activities expose it to a variety of financial instrument risks, including but not limited to: credit risk, liquidity risk, currency risk, interest rate risk, and price risk.

a) Liquidity risk

The Company earned net income of $12.3 million for the three months ended March 31, 2020 ($1.8 million net loss for the three months ended March 31, 2019). As at December 31, 2019, the Company has a positive working capital of $12.5 million (December 31, 2019 – positive working capital of $9.4 million) and an accumulated deficit of $453.5 million (December 31, 2019 – $465.8 million). The Company’s financial liabilities and other commitments are listed in Note 16.

To manage its liquidity risk, the Company undergoes an in-depth budgeting process each year which is supplemented by a continuous detailed cash forecasting process. Future financing requirements, if any, will depend on a number of factors that are difficult to predict and are often beyond the control of the Company. The main factors are the realized price of gold received for gold produced from the Company’s operating mines and the operating and capital costs of those mines. Other key factors include the Company’s ability to continue to renew its Brazilian loan facilities and manage the payment process relating to its Brazilian labour provisions (refer to Note 10).

b) Derivative financial instruments

The Company assesses its financial instruments and non-financial contracts on a regular basis to determine the existence of any embedded derivatives which would be required to be accounted for separately at fair value and to ensure that any embedded derivatives are accounted for in accordance with the Company’s policy. The Company engages in derivative financial instruments to manage its price risk and currency risk, including gold forward contracts, gold price collar contracts, gold call option contracts, and foreign exchange call and put option contracts.

1) Price risk

The Company is exposed to price risk with respect to gold prices on gold sales. The Company periodically enters into hedge contracts to manage this risk and to secure future sales terms with customers. The Company does not use hedge accounting for these instruments and gain and losses are recorded in earnings as fair value changes occur as a component of revenue.

Included in the revenue line of the condensed interim consolidated statement of statements of operations and comprehensive income (loss) for the three months ended March 31, 2020 is a realized loss of $1.9 million ($0.5 million loss for the three months ended March 31, 2019) related to the Company’s gold price hedge contracts executed.

i. Gold forward contracts

The Company periodically enters into gold forward contracts to economically hedge against the risk of declining gold prices for a portion of its forecasted gold sales and recognized the income and losses of such in the statements of operations and comprehensive income (loss). The contracts generally have expiry dates ranging from 30 to 90 days and orders unfulfilled prior to expiry are renewed automatically for a period equal to that contracted. The changes in the fair value of these contracts are recognized in the condensed interim consolidated statement of operations and comprehensive income (loss). The Company does not apply hedge accounting for these hedge instruments.

Jaguar Mining Inc. 15

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three months ended March 31, 2020 and 2019 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

As at March 31, 2020, the Company held no gold forward contracts outstanding (December 31, 2019 – 1,700 ounces hedged at a weighted average price of US$1,400/oz) and no open gold forward contract derivative asset or liability position (December 31, 2019 – $209,000 open derivative liability loss position).

ii. Gold call options

The Company entered into written gold call option contracts in connection with its terms of financing and gold sales agreements and recognized the income and losses of such in the condensed interim consolidated statements of operations and comprehensive income (loss).

During the three months ended March 31, 2020, 5,000 ounces in call options were exercised by Auramet at a weighted average strike price of US$1,350 (nil exercised during the three months ended March 31, 2019). As at March 31, 2020, the Company held no gold call options outstanding and no open gold call option derivative asset or liability position (December 31, 2019 – 5,000 ounces in options outstanding and a $894,000 derivative liability).

2) Currency risk

The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. Financial instruments that impact the Company’s net earnings due to currency fluctuations include: Brazilian reais and Canadian dollar denominated cash and cash equivalents, recoverable taxes, accounts payable and accrued liabilities, income taxes payable, reclamation and other provisions, deferred compensation liabilities, Euro denominated capital lease obligations, and foreign exchange call and put option contracts.

i. Foreign exchange call and put options

The Company entered into European style foreign exchange call and put option contracts with third party exchange service providers, holding expiration periods between 30 days and 180 days, to economically hedge against the risk of the US dollar depreciating against the Brazilian real. The changes in the fair value of these contracts are recognized in the condensed interim consolidated statement of operations and comprehensive income (loss). The Company does not apply hedge accounting for these hedge instruments.

As at March 31, 2020, the Company´s outstanding foreign exchange call and put option hedge contracts were as follows:

		Range Minimum	Range Maximum
Type	Volume Outstanding	Strike Price	Strike Price	Range Expiration
Call options	$ 6,500,000	R$ 4.1800 / USD	R$ 4.4000 / USD	April 2020 to June 2020
Put options	6,500,000	R$3.8500/USD	R$4.0000/USD	April 2020 to June 2020
Total options	$ 13,000,000	-	-	-

Included in the condensed interim consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2020 is a realized loss of $517,000 and a loss on changes in unrealized foreign exchange derivatives of $1.2 million (realized loss of $80,000 and a loss on changes in unrealized foreign exchange derivatives of $131,000, for the three months ended March 31, 2019). As at March 31, 2020, the Company held a $1.1 million derivative liability open loss position due to its third-party foreign exchange service providers (December 31, 2019 – $71,000 derivative asset).

c) Interest rate risk

The Company is potentially exposed to interest rate risk on its outstanding borrowings and short-term investments. The Company managed its risk by entering into agreements with fixed interest rates on all of its debt with interest rates ranging from 0% to 9.64% per annum.

Jaguar Mining Inc. 16

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2020 and 2019 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

d) Changes in liabilities arising from financing activities

Balance as at December 31, 2019 Proceeds from debt issuance Debt repayments Interest paid Changes from financingcash flows	Other changes
	Interest expense Right-of-use lease obligations Foreign exchange (gain) loss Other non- cash changes Balance as at March 31, 2020
Notes payable 5,592 $ 1,542 $ (1,225) $ (37) $	74 $ - $ - $ 13 $ 5,959 $
Lease liabilities 2,989 - (576) -	- - (511) 28 1,930
8,581 $ 1,542 $ (1,801) $ (37) $	74 $ - $ (511) $ 41 $ $ 7,889

19. Related party transactions

The Company incurred legal fees from Azevedo Sette Advogados (“ASA”), a law firm where Luis Miraglia, a director of Jaguar is a partner. Fees paid to ASA are recorded at the exchange amount, representing the amount agreed to by the parties and included in general and administrative expenses in the condensed interim consolidated statements of operations and comprehensive income (loss). Legal fees paid to ASA were $3,000 for the three months ended March 31, 2020 ($19,000 for the three months ended March 31, 2019).

Jaguar Mining Inc. 17