Jaguar Mining Inc. — Interim / Quarterly Report 2021

May 10, 2021

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CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(UNAUDITED)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited and expressed in thousands of US dollars)

			March 31,		December 31,
			2021		2020
ASSETS
Current assets
Cash and cash equivalents		$	37,602	$	38,908
Restricted cash	Note 4		936		1,091
Inventory	Note 5		14,607		12,529
Recoverable taxes	Note 6		4,333		4,944
Other accounts receivable			133		61
Prepaid expenses and advances			3,280		2,912
Total current assets			60,891		60,445
Non-current assets
Royalty interests	Note 7		-		8,476
Property, plant and equipment	Note 8		152,465		147,641
Mineral exploration projects			23,279		22,837
Recoverable taxes	Note 6		4,640		4,718
Other accounts receivable			5,000		5,000
Restricted cash			600		649
Total assets		$	246,875	$	249,766
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	Note 9	$	16,417	$	18,851
Notes payable	Note 10		3,017		3,058
Lease liabilities	Note 11		1,378		1,530
Current tax liability	Note 12		1,822		3,213
Other taxes payable			1,125		1,153
Reclamation provisions			545		623
Legal and otherprovisions	Note 13		2,466		2,827
Total current liabilities			26,770		31,255
Non-current liabilities
Lease liabilities	Note 11		2,001		1,193
Other taxes payable			10,392		10,922
Reclamation provision			10,593		11,539
Legal and otherprovisions	Note 13		4,904		5,157
Total liabilities		$	54,660	$	60,066
SHAREHOLDERS' EQUITY
Common shares	Note 14	$	566,958	$	565,734
Stock options	Note 14		1,099		1,374
Deferred share units	Note 14		1,526		1,453
Contributed surplus			23,528		23,528
Deficit			(400,896)		(402,389)
Total shareholders' equity		$	192,215	$	189,700
Total liabilities and shareholders' equity		$	246,875	$	249,766
Subsequent events	Note 25

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

For the three months ended March 31, 2021 and 2020

(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,
			2021			2020
Revenue		$	31,686		$	30,801
Operating costs	Note 16		14,761			14,297
Depreciation				4,759		3,625
Grossprofit			12,166			12,879
Exploration and evaluation costs				1,237		223
Care and maintenance costs (Paciência and Roça Grande mines)				331		174
Stock-based compensation	Note 14(b)(c)			467		223
General and administrative expenses				1,404		1,666
Amortization				16		29
Legal, recoverable tax and other provisions expenses				700		427
Other operatingexpenses				270		385
Operating income				7,741		9,752
Foreign exchange (gain)				(2,292)		(5,629)
Financial instruments loss	Note 17			-		620
Finance costs				295		426
Other non-operatingexpenses	Note 18			1,735		14
Income before income taxes				8,003		14,321
Income tax expense	Note 12			1,894		2,046
Net income		$		6,109	$	12,275
Total comprehensive income		$		6,109	$	12,275
Earnings per share	Note 15
Earnings per share
Basic		$		0.08	$	0.17
Diluted		$		0.08	$	0.17
Weighted average shares outstanding
Basic			72,287,730			72,412,784
Diluted			73,501,972			73,169,818

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, 2021 and 2020

(Unaudited and expressed in thousands of US dollars)

			Three Months Ended	Three Months Ended	Three Months Ended
			March 31,
			2021		2020
OPERATING ACTIVITIES
Net income (loss) for the period		$	6,109	$	12,275
Adjustments and non-cash items
Depreciation and amortization			4,775		3,654
Accretion interest expense			106		187
Interest expense			88		240
Unrealized foreign exchange (gain)			(2,262)		(6,233)
Current income tax expense	Note 12		1,894		2,046
Change in unrealized derivatives			-		103
Legal and other provisions expense			411		320
Other operating activities expense	Note 19		2,471		338
Changes in operating working capital	Note 20		(3,841)		(4,296)
Income taxespaid			(3,285)		-
Net cash provided by operating activities			6,466		8,634
INVESTING ACTIVITIES
Investment in mineral exploration projects			(442)		-
Purchase of property, plant and equipment			(9,405)		(7,595)
Proceeds from disposition of royalty interests	Note 7		6,950		-
Proceeds from disposition ofproperty, plant and equipment			-		6
Net cash (used in) investing activities			(2,897)		(7,589)
FINANCING ACTIVITIES
Cash received upon issuance of debt			2,975		1,542
Cash received upon issuance of shares via stock options exercised			555		-
Cash received upon redemption of restricted cash margin deposits			26		-
Repayment of debt			(3,702)		(1,801)
Interest paid			(83)		(37)
Restricted cash margin deposits paid			-		(152)
Cash dividendspaid			(4,616)		-
Net cash (used in) provided by financing activities			(4,845)		(448)
Effect of exchange rate changes on cash and cash equivalents			(30)		604
Net increase in cash and cash equivalents			(1,306)		1,201
Cash and cash equivalents at the beginning of theperiod			38,908		10,924
Cash and cash equivalents at the end of theperiod		$	37,602	$	12,125

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, 2021 and 2020

(Unaudited and expressed in thousands of US dollars)

	Stock Options Common Shares Deferred Share Units	Contributed Surplus Deficit	Total Equity
	Shares Amount Options Amount Units Amount
Balance as at January 1, 2020 Stock options granted Deferred share units forfeited Deferred share units redeemed Net loss	72,393,354 570,911 $ 583,148 961 $ 667,347 1,542 $ - - 277,000 212 - - - - - - - 11 19,430 30 - - (19,430) (30) - - - - - -	20,955 $ (465,789) $ - - - - - - - 12,275	$ 128,580 212 11 - 12,275
Balance as at March 31,2020	72,412,784 570,941 $ 860,148 1,173 $ 647,917 1,523 $	20,955 $ (453,514) $	141,078 $
Balance as at January 1, 2021	72,118,620 565,734 $ 1,075,876 1,374 $ 534,048 1,453 $	23,528 $ (402,389) $	$ 189,700
Stock options granted Stock options exercised Deferred share units granted Deferred share units redeemed Dividends Net income	- - 58,056 74 - - 134,077 904 (151,848) (349) - - - - - - 131,059 393 162,171 320 - - (162,171) (320) - - - - - - - - - - - -	- - - - - - - - - (4,616) - 6,109	74 555 393 - (4,616) 6,109
Balance as at March 31, 2021	72,414,868 566,958 $ 982,084 1,099 $ 502,936 1,526 $	23,528 $ (400,896) $	$ 192,215

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, 2021 and 2020 (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, 2021 and 2020, 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, 2020 audited annual consolidated financial statements.

The condensed interim consolidated financial statements were authorized for issuance by the Board of Directors on May 7, 2021.

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, 2020, complemented by the following estimates and judgements applied:

• Variable consideration

The Company recognizes revenue or income on a given sales transaction when it has fulfilled its performance obligations to a given sales agreement. When sales transactions give rise to potential variable consideration, the variable consideration is recognized to the extent it can be estimated reliably and it is highly probable that a significant reversal of the amount will not occur in the future.

The Company computes the transaction price to a given sales transaction using one of the following methods:

• i. the expected value method: identifies a range of possible consideration amounts, weights the possible consideration amounts by their respective probabilities, and then sums probabilityweighted amounts to generate the expected value of consideration to be received from the customer.

• ii. the most likely value method: the amount determined most likely to be received.

Significant judgments are exercised in assessing the probability of occurrence and these judgments exercised are subject to risks and uncertainties.

Jaguar Mining Inc. 5

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

3. Share Consolidation

On August 27, 2020, the Company completed a share consolidation (the "Share Consolidation") of its outstanding common shares (the "Shares") on the basis of one (1) post-Consolidation Share for every ten (10) preConsolidation Shares. As a result of the Share Consolidation, the 723,502,108 common shares issued and outstanding as at that date were consolidated to 72,350,197 common shares on a non-diluted basis. The Share Consolidation was previously approved by shareholders at a meeting held on June 5, 2017. All information in these condensed interim consolidated financial statements with respect to prior periods has been restated to be presented on a post-Share Consolidation basis

4. Restricted cash

		March 31,		December 31,
		2021		2020
Restricted cash - current portion
Margin deposits(a)	$	263	$	289
Escrow judicial deposits(b)		673		802
		936		1,091
Restricted cash - non-current portion
Escrow judicial deposits(b)		600		649
		600		649
Total restricted cash	$	1,536	$	1,740

• a) Margin deposits paid in accordance with the Company’s notes payable (Note 10).

• b) Escrow judicial deposits paid in relation to Other liabilities recognized in association with the Company’s ongoing labour, civil and tax litigations (Note 13).

5. Inventory

Inventory is comprised of the following:

	March 31, December 31, 2021 2020 $ 9,420$ 8,763 723426 1,1221,103 3,3422,237 $ 14,607 $12,529 2021 2020 4,759 $ 3,625 $ Three Months Ended March 31,
Raw material and mine operating supplies Ore in stockpiles Gold in process Unrefinedgold doré
Total inventory
Depreciation included in cost of sales

The inventory amount recognized in direct mining and processing costs for the three months ended March 31, 2021 was $14.0 million ($13.1 million for the three months ended March 31, 2020). During the three months

Jaguar Mining Inc. 6

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

ended March 31, 2021, there were no inventory write downs to net realizable value ($nil, during the three months ended March 31, 2020).

6. Recoverable taxes

	December 31,	December 31,		Additions/		Write-		Sales of		Applied to taxes		Foreign		March 31,
		2020		reversals		offs		credits		payable		exchange		2021
Value added taxes and other(a)	$	6,237	$	1,558	$	-	$	-	$	(1,738)	$	(492)	$	5,565
Provision for VAT and other		(847)		-		-		-		-		74		(773)
Net VAT and other taxes	$	5,390	$	1,558	$	-	$	-	$	(1,738)	$	(418)	$	4,792
ICMS(b)	$	6,057	$	653	$	-	$	-	$	(34)	$	(554)	$	6,122
Provision for ICMS		(1,785)		(318)		-		-		-		162		(1,941)
Net ICMS	$	4,272	$	335	$	-	$	-	$	(34)	$	(392)	$	4,181
Total recoverable taxes	$	9,662	$	1,893	$	-	$	-	$	(1,772)	$	(810)	$	8,973
Less: currentportion		4,944												4,333
Non-currentportion	$	4,718											$	4,640

• a) In the three months ended March 31, 2021, the Company applied R$5.8 million ($1.1 million) in federal value added taxes and other tax credits to pay INSS tax obligations and R$3.7 million ($0.6 million) to pay goods and service withholding tax obligations. In the three months ended March 31, 2020, the Company applied 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.

• b) As at March 31, 2021, the Company held R$5.2 million (approximately $1.0 million) in ICMS export tax credits authorized and available for sale but not yet sold (December 31, 2020 – R$5.2 million, approximately $1.0 million).

7. Royalty interests

	March 31,	December 31,
	2021	2020
Oz Minerals Ltd. - CentroGold Project royaltyinterest(a)	$ -	$8,476
Total royalty interests	$ -	$8,476

• a) On March 15, 2021, Jaguar Mining Inc. ("Jaguar" or the "Company") executed a Definitive Agreement with Metalla Royalty & Streaming Ltd. (MTA) ("Metalla") for the sale of the Company's Net Smelter Return ("NSR") royalty from gold production at the CentroGold Project (also referred to as the Gurupi Project) located in Maranhão State, Brazil and 100% owned by Oz Minerals Ltd. The NSR is comprised of a 1% net smelter return on the first 500,000 ounces of gold sold, a 2% net smelter return from 500,001 to 1,500,000 ounces of gold, and a 1% net smelter return on gold sales exceeding 1,500,000 ounces of gold.

The NSR was sold for an aggregate consideration valued at up to US$18,000,000 receivable as follows:

• Immediate: $7.0 million in cash upon executing the Definitive Agreement (received);

• Milestone 1: $7.0 million in Metalla common shares upon grant of all project licenses, the lifting or extinguishment of the injunction imposed on the CentoGold Project with no pending appeals and, if necessary, the completion of any and all community relocations; and

• Milestone 2: $4.0 million payment to Jaguar in cash upon the CentroGold Project achieving commercial production.

Jaguar Mining Inc. 7

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

The Company recognized $7.0 million as consideration received from the sale of the NSR. The amounts noted above relating to Milestone 1 and Milestone 2 were not recognized, given that the completion of these milestones is dependent on the performance of an unrelated third party. As a result of the sale, the Company (i) transferred its NSR title to Metalla and derecognized the $8.5 million CentroGold project royalty, (ii) received and recorded $7.0 million in Cash, (iii) recorded $0.2 million in legal and consulting costs associated with the transaction, and (iv) recognized a $1.7 million loss on sale of the CentroGold royalty interest to Other nonoperating expenses in its condensed interim consolidated statement of operations and comprehensive income (Note 18).

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

		Plant		**Vehicles **	**Equipment1 **	**Equipment1 **	Leasehold2	Leasehold2		**CIP3 **	**Mining **	properties		Total
Cost
Balance as at January 1, 2021	$	13,587	$	4,989	$	200,087	$	4,418	$	9,223	$	479,976	$	712,280
Additions		-		80		974		-		4,015		5,269		10,338
Reclassifywithin PP&E		156		-		188		-		(344)		-		-
Balance as at March 31, 2021	$	13,743	$	5,069	$	201,249	$	4,418	$	12,894	$	485,245	$	722,618
Balance as at January 1, 2020	$	13,578	$	6,197	$	199,121	$	3,412	$	3,415	$	454,786	$	680,509
Additions		9		-		1,880		1,006		7,439		25,570		35,904
Disposals		-		(1,370)		(2,383)		-		-		(380)		(4,133)
Reclassifywithin PP&E		-		162		1,469		-		(1,631)		-		-
Balance as at December 31,2020	$	13,587	$	4,989	$	200,087	$	4,418	$	9,223	$	479,976	$	712,280
Accumulated depreciation and impairment
Balance as at January 1, 2021	$	13,428	$	1,663	$	174,150	$	3,397	$	566	$	371,435	$	564,639
Depreciation for theperiod		525		30		1,864		270		-		2,825		5,514
Balance as at March 31, 2021	$	13,953	$	1,693	$	176,014	$	3,667	$	566	$	374,260	$	570,153
Balance as at January 1, 2020	$	12,514	$	2,395	$	174,270	$	2,407	$	685	$	370,208	$	562,479
Depreciation for the period		940		205		6,046		996		-		7,020		15,207
Impairment (reversal)		(26)		(21)		(4,616)		(6)		(119)		(5,793)		(10,581)
Disposals		-		(916)		(1,550)		-		-		-		(2,466)
Balance as at December 31,2020	$	13,428	$	1,663	$	174,150	$	3,397	$	566	$	371,435	$	564,639
Carrying amounts
As at March 31, 2021	$	(210)	$	3,376	$	25,235	$	751	$	12,328	$	110,985	$	152,465
As at December 31,2020	$	159	$	3,326	$	25,937	$	1,021	$	8,657	$	108,542	$	147,641

1 As at March 31, 2021, the Company had equipment under right-of-use leases at a cost and net book value of $11.8 million and $8.0 million, respectively (December 31, 2020 - $10.1 million and $6.7 million, respectively).

2 Refers to leasehold improvements in corporate office in Brazil.

3 Refers to construction in progress.

9. Accounts payable and accrued liabilities

		March 31,		December 31,
		2021		2020
Accounts payable	$	11,948	$	11,639
Accrued payroll		4,432		7,138
Other		37		74
Total accountspayable and accrued liabilities	$	16,417	$	18,851

Jaguar Mining Inc. 8

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

10. Notes payable

		March 31,		December 31,
		2021		2020
Notes payable - current portion
Bank indebtedness(a)	$	3,017	$	3,058
		3,017		3,058
Total notespayable	$	3,017	$	3,058

a) Bank indebtedness

As at March 31, 2021, bank indebtedness consists of $3.0 million in unsecured promissory notes, with maturities in September 2021 and bearing interest rates of 4.9% per annum. As at December 31, 2020, bank indebtedness included $3.1 million in unsecured promissory notes, holding maturities through March 2021 and bearing interest rates ranging from 4.9% to 6.2%.

11. Lease liabilities

The Company has acquired certain equipment through the assumption of lease obligations. These obligations are secured by promissory notes. When measuring the value of the lease liabilities, the Company discounted lease payments using its 8.03% weighted average incremental borrowing rate at March 31, 2021 (December 31, 2020 – 8.75%). The following table outlines the total minimum loan payments due for lease obligations over their remaining terms as at March 31, 2021 and December 31, 2020:

	March 31, 2021 December 31, 2020
Less than 1 year 1 - 3 years 3 - 5years	1,272 1,561 1,565 1,201 1,037 311
Total minimum loanpayments	3,874 3,073
Less: Future finance charges	(495) (350)
Present value of minimum loanpayments	3,379 $ 2,723 $
	1,378 1,530
Less: currentportion
Non-currentportion	2,001 $ 1,193 $

For the three months ended March 31, 2021, the Company recognized $36,000 in accretion expense and $47,000 in foreign exchange gains in the condensed interim consolidated statement of operations and comprehensive income, and the Company presented $0.7 million in lease liability debt repayments in its statement of cash flows, as further detailed in Note 24(d) ($28,000 in accretion expense, $511,000 in foreign exchange gains, and $0.6 million in lease repayments for the three months ended March 31, 2020).

Jaguar Mining Inc. 9

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

12. Income taxes

	Three Months Ended	Three Months Ended	Three Months Ended
	March 31,
	2021		2020
Current income tax expense	1,894		2,046
Total income tax expense	$ 1,894	$	2,046

The current income tax relates to taxable income in Brazil. At the beginning of the year, the Brazil entity had significant tax loss carry-forwards, however, under Brazil tax rules, only 30% of taxable income can be applied against tax loss carry-forwards in a given year.

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

13. Legal and other provisions

As at March 31, 2021, the Company has recognized a provision of $7.4 million (December 31, 2020 - $8.0 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, 2020 Additions Reversals/ Transfers Payments Foreign exchange March 31, 2021
Labour litigation	6,652 $ 416 $ (207) $ (327) $ (584) $ 5,950 $ 981 142 - - - 1,123 51 50 - - (87) 14 300 10 - - (27) 283
Civil litigation Tax litigation
Otherprovisions
Total legal and otherprovisions	7,984 $ 618 $ (207) $ (327) $ (698) $ 7,370 $
	2,827 2,466 $ 5,157 $ 4,904
Less: current portion Non-current portion

Jaguar Mining Inc. 10

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

14. 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, 2021 and 2020 are as follows:

		Number of
		shares		Amount
Balance as at December 31, 2020		72,118,620	$	565,734
Shares issued upon exercise of stock options	Note 14(b)	134,077		904
Shares issued upon redemption of deferred share units	Note 14(c)	162,171		320
Balance as at March 31, 2021		72,414,868	$	566,958
Balance as at December 31, 2019		72,393,355	$	570,911
Shares issued upon redemption of deferred share units	Note 14(c)	19,430		30
Balance as at March 31, 2020		72,412,785	$	570,941

b) 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 three months ended March 31, 2021 and 2020:

	Number of	Weighted average
	options	exercise price (C$)
Balance as at December 31, 2020	1,075,876	$ 2.84
Options granted1	58,056	8.25
Options exercised2	(151,848)	4.57
Balance as at March 31, 2021	982,084	$ 2.90
Balance as at December 31, 2019	583,148	$ 2.86
Optionsgranted3	277,000	2.50
Balance as at March 31, 2020	860,148	$ 2.74

1) On January 19, 2021, the Company granted 58,056 stock options to executives of the Company. The options are exercisable at a price of C$8.25 and expire on January 19, 2029. 54,770 options vest on a quarterly basis, in twelve equal instalments, starting on April 1, 2021 and are exercisable upon vesting. 3,285 options vest if and when the 20 day VWAP of the Company’s shares is C$10.00 per share and are also exercisable upon vesting.

2) In the three months ended March 31, 2021, officers and directors of the Company exercised a total 151,848 options with exercise prices ranging between C$1.00 and C$7.60. The exercises were paid for with $555,000 in

Jaguar Mining Inc. 11

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

cash proceeds to the Company and $85,000 via a cashless exercise using 17,771 fully vested stock options.. As a result of the options exercised, the Company issued 134,077 common shares.

3) On January 15, 2020, 175,000 stock options were granted to executives of the Company. The options are exercisable at a price of C$2.50 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$1.77 per option, measured using the Black-Scholes option pricing formula with inputs as follows: an exercise price of C$2.50, a risk free rate of 1.69%, a volatility factor of 100%, and an expected life of 8.0 years.

On January 15, 2020, 102,000 stock options were granted to directors of the Company and are exercisable at a price of C$2.50 with expiry on January 15, 2028. These options vested immediately upon grant and had a grant date fair value of C$1.77 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.

The table below shows the outstanding stock options as at March 31, 2021 and 2020:

			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
$	13.50	May 12, 2014	15,790	15,790	$	3.81	May 12, 2022
	13.50	October 8, 2014	7,500	7,500		1.92	October 8, 2019
	7.40	August 8, 2016	36	36		3.43	August 8, 2021
	7.60	November 7, 2016	1	1		3.74	November 7, 2021
	3.30	September 21, 2017	20,000	20,000		2.20	September 21, 2022
	3.70	January 23, 2018	15,000	15,000		1.99	January 23, 2026
	2.10	August 31, 2018	4,374	1,458		1.10	August 31, 2026
	1.00	May 31, 2019	61,663	20,000		0.33	May 31, 2027
	2.20	August 5, 2019	600,000	450,000		0.99	August 5, 2027
	1.90	October 4, 2019	22,500	22,500		1.13	October 4, 2027
	2.50	January 15 ,2020	168,664	52,004		1.36	January 15, 2028
	8.70	August 19, 2020	8,500	8,500		5.11	August 19, 2028
	8.25	January19,2021	58,056	-		3.87	January19,2029
$	2.90		982,084	612,789	$	1.32

For the three months ended March 31, 2021, the Company recognized $74,000 in stock-based compensation expense for stock options in the condensed interim consolidated statements of operations and comprehensive income ($212,000 in the three months ended March 31, 2020).

c) 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 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.

Jaguar Mining Inc. 12

For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The following table shows the movement of DSUs for the years ended March 31, 2021 and 2020:

	Number	Weighted average	Weighted average
	of units		grant date
			fair value (US$)
Balance as at December 31, 2020	534,048	$	2.63
Units granted1	131,059		6.30
Units redeemed2	(162,171)		1.97
Balance as at March 31, 2021	502,936	$	3.80
Balance as at December 31, 2019	667,347	$	2.16
Units redeemed3	(19,430)		2.50
Balance as at March 31, 2020	647,917	$	2.15

1) On January 19, 2021 the Company granted a total of 124,650 DSUs to directors and executives of the Company in two forms, holding a total grant date fair value of $794,000, measured at US$6.37/share, as follows:

• i. 18,252 time-vested DSUs to executives of the Company, that vest on a quarterly basis, in twelve equal instalments, starting on April 1, 2021. These DSUs granted are redeemable upon vesting.

• ii. 18,252 performance-vested DSUs to executives of the Company, that shall vest if the Company’s stock price reaches C$10.00 measured on a 20-day VWAP basis, and is maintained at that level for at least 20 consecutive trading days. These DSUs granted are redeemable upon vesting.

• iii. 44,073 immediately-vested DSUs were granted to the Company’s non-executive directors, all of which vested immediately upon resolution approval on January 19, 2021. These DSUs are redeemable upon retirement and up to one year following the retirement of such directors.

• iv. 44,073 time-vested DSUs to non-executive directors, that shall vest on the earlier of the date of the 2021 Annual General Meeting or June 30, 2021. These DSUs are redeemable upon retirement and up to one year following the retirement of such directors.

On March 30, 2021, the Company granted a total of 6,409 DSUs to officers and directors of the Company as a result of the dividend paid to shareholders, holding a total grant date fair value of $31,000, measured at US$4.91/share. These DSUs granted to officers are redeemable upon vesting, and the DSUs granted to directors are redeemable upon retirement and up to three months following retirement.

2) In the three months ended March 31, 2021, officers and directors redeemed a total of 162,171 DSUs. The DSUs were settled via issuance of 162, 171 shares.

3) In March 2020, officers and directors redeemed a total of 19,430 DSUs. The DSUs were settled via issuance of 19,430 shares.

For the three months ended March 31, 2021, the Company recognized $393,000 in stock-based compensation expense for DSUs in the condensed interim consolidated statements of operations and comprehensive income ($11,000, for the three months ended March 31, 2020).

Jaguar Mining Inc. 13

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

15. Basic and diluted earnings per share

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

	2021 2020 Three Months Ended March 31,
Numerator Net income for thepurpose of diluted incomeper share	$ 6,109 $12,275
Denominator Weighted average number of common shares outstanding- basic	72,287,73072,412,784
Stock Options Deferred share units	650,842109,118 563,400647,917
Weighted average number of common shares outstanding- diluted	73,501,97273,169,818
Basic incomeper share	$ 0.08 $0.17
Diluted incomeper share	$ 0.08 $0.17

The determination of the weighted average number of common shares outstanding for the calculation of diluted earnings (loss) per share does not include the following effect of options and deferred shares units which were anti-dilutive to earnings (loss) per share in the period:

	2021 2020 Three Months Ended March 31,
Stock options	361,150751,031
Anti-dilutive instruments	361,150751,031

16. Operating costs

	Three Months Ended	Three Months Ended	Three Months Ended
	March	31,
	2021		2020
Direct mining and processing costs	Note 5$ 13,995	$	13,116
Royalty expense and CFEM taxes 1	961		1,217
Other(recoveries)	(195)		(36)
Operating costs	$ 14,761	$	14,297

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

Jaguar Mining Inc. 14

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

17. Financial instruments loss

	2021 2020 Three Months Ended March 31,
Changes in unrealized loss on derivatives Realized loss on derivatives	$ -$ 103 -517
Total financial instruments loss	$ -$ 620

18. Other non-operating expenses

	2021 2020 Three Months Ended March 31,
Interest income Loss on disposition of property Loss on disposition of royalty interests (a) Other non-operatingexpenses	$ (16) $ (38) -8 1,686- 6544
Total other non-operating expenses	$ 1,735$ 14

(a) Refers to the loss on sale of the CentroGold Project royalty interest to Metalla as further described in Note 7.

19. Cash flow – other operating activities expense

		Three Months Ended	Three Months Ended	Three Months Ended	Three Months Ended
			March 31,
		2021			2020
Stock-based compensation		$	467	$	223
Loss on disposition of PP&E			-		8
Loss on disposition of royalty interests	Note 7	1,686			-
Additions to provision against recoverability of VAT	Note 6		318		107
and other taxes
Other operating activities expense		$ 2,471		$	338

Jaguar Mining Inc. 15

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

20. Cash flow – changes in operating working capital

	Three Months Ended	Three Months Ended	Three Months Ended
	March 31,
	2021		2020
Restricted cash	$ 47	$	(460)
Inventory	(1,339)		258
Recoverable taxes	(439)		1,118
Other accounts receivable	(72)		(3,061)
Prepaid expenses and other assets	(368)		(208)
Accounts payable and accrued liabilities	(1,086)		7
Other taxes payable	(233)		(664)
Reclamation provisions	(24)		(46)
Legal and other provisions	Note 13 (327)		(492)
Other liabilities	-		(748)
Changes in operating working capital	$(3,841)	$	(4,296)

21. 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, 2021		Less than 1		1 - 3 years		3 - 5 years		More than	5		Total
		year						years
Financial Liabilities
Accounts payable and accrued liabilities	$	16,507	$	-	$	-	$	-		$	16,507
Other Taxes Payable
ICMS Settlement Due		467		306		3			-		776
INSS		468		937		465			-		1,870
IRPJ & CSLL Settlement Due		158		317		226			-		701
Notes payable
Principal
Bank indebtedness(a)		3,017		-		-			-		3,017
Interest		21		70		-			-		91
Lease liabilities		1,272		1,565		1,037			-		3,874
Reclamation provisions(b)		545		2,070		6,560		6,676			15,851
Current tax liability		1,822		-		-			-		1,822
Total financial liabilities	$	24,277	$	5,265	$	8,291	$	6,676		$	44,509
Other Commitments
Suppliers' agreements(c)		152		-		-			-		152
Total other commitments	$	152	$	-	$	-	$	-		$	152
Total	$	24,429	$	5,265	$	8,291	$	6,676		$	44,661

(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.

Jaguar Mining Inc. 16

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

22. 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, 2021, the Company’s capital structure is comprised of $3.0 million in notes payable and $192.2 million in shareholders’ equity (December 31, 2020: $3.1 million and $189.7 million, respectively).

As at March 31, 2021, the Company is not subject to externally imposed capital requirements other than those stipulated by Brazil bank indebtedness (Note 4).

23. 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

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 13).

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. On an ongoing basis, the Company evaluates its price risk and currency risk and, when envisioned to be beneficial, engages in derivative financial instruments to manage these risks, 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 evaluates price risk and, when envisioned to be beneficial, 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.

In the three months ended March 31, 2021, the Company did not engage in any price hedge derivative instruments ($1.9 million realized loss for the three months ended March 31, 2020) and held no open price hedge derivative positions outstanding at March 31, 2021 (March 31, 2020 – Nil price hedge derivative positions outstanding).

Jaguar Mining Inc. 17

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2021 and 2020 (Tabular dollar amounts expressed in thousands of US dollars, except per share amounts and number of shares)

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.

In the three months ended March 31, 2021, the Company did not engage in any foreign exchange derivative instruments (realized loss of $517,000 and a loss on changes in unrealized foreign exchange derivatives of $1.2 million, for the three months ended March 31, 2020) and held no open foreign exchange derivative position as at March 31, 2021 (March 31, 2020 – $1.1 million derivative liability).

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 4.9% per annum.

d) Changes in liabilities arising from financing activities

Balance as at December 31, 2020 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, 2021
Notes payable 3,058 $ 2,975 $ (2,962) $ (83) $	42 $ - $ (13) $ - $ 3,017 $
Lease liabilities 2,723 - (740) -	- 1,407 (47) 36 3,379
5,781 $ 2,975 $ (3,702) $ (83) $	42 $ 1,407 $ (60) $ 36 $ $ 6,396

24. 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. Legal fees paid to ASA were $17,000 for the three months ended March 31, 2021 ($3,000 for three months ended March 31, 2020).

25. Subsequent events

On May 7, 2021, the Board of Directors of Jaguar Mining approved a cash dividend of C$0.08 per common share of the Company, to be paid on May 31, 2021 to shareholders of record as of the close of business on May 24, 2021. The dividend qualifies as an eligible dividend for Canadian income tax purposes.

Jaguar Mining Inc. 18