Jaguar Mining Inc. - Interim / Quarterly Report 2021

==> picture [246 x 66] intentionally omitted <==

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE QUARTER ENDED JUNE 30, 2021

OUR BUSINESS ................................................................................................................................................................. 3 Q2 2021 FINANCIAL & OPERATING SUMMARY ........................................................................................................... 3 REVIEW OF OPERATING AND FINANCIAL RESULTS ................................................................................................. 6 CONSOLIDATED FINANCIAL RESULTS ...................................................................................................................... 11 REVIEW OF FINANCIAL CONDITION .......................................................................................................................... 16 CAPITAL STRUCTURE ................................................................................................................................................... 19 OFF-BALANCE SHEET ITEMS ....................................................................................................................................... 19 RELATED PARTY TRANSACTIONS .............................................................................................................................. 19 DEVELOPMENT AND EXPLORATION PROJECTS ...................................................................................................... 19 QUALIFIED PERSON ...................................................................................................................................................... 21 OUTSTANDING SHARE DATA ...................................................................................................................................... 21 NON-GAAP PERFORMANCE MEASURES .................................................................................................................... 22 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS ...................................................................... 24 RISKS AND UNCERTAINTIES ....................................................................................................................................... 24 CRITICAL ACCOUNTING ESTIMATES ......................................................................................................................... 31 DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING .. 32 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS ............................................................... 33

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 1

MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE SECOND QUARTER ENDED JUNE 30, 2021

This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with the unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2021, and the annual audited consolidated financial statements and MD&A for the year ended December 31, 2020, and related notes thereto which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). For further information on Jaguar Mining Inc., reference should be made to its public filings (including its most recently filed annual information form (“AIF”) which is available on SEDAR at www.sedar.com). Information on risks associated with investing in the Company’s securities and technical and scientific information under National Instrument 43-101 concerning the Company’s material properties, including information about mineral resources and reserves, are contained in the Company’s most recently filed AIF and technical reports.

All amounts included in this MD&A are in United States dollars (“$”), unless otherwise specified. References to C$ are to Canadian dollars and R$ are to Brazilian Reais. This report is dated as at August 9, 2021.

The Company included certain Non-GAAP financial measures, which the Company believes that, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP financial measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Non-GAAP financial measures in this MD&A include:

Cash operating costs (per ounce sold);
Cash operating cost (per tonne of ore processed);
All-in sustaining costs (per ounce sold);
Average realized gold price (per ounce sold);
Cash operating margin (per ounce sold);
All-in sustaining margin (per ounce sold);
Adjusted operating cash flow;
Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and Adjusted EBITDA;
Free cash flow (per ounce sold);
Working Capital;
Sustaining capital expenditures; and
• Non-sustaining capital expenditures.

Definitions and reconciliations associated with the above metrics can be found in the Non-GAAP Performance Measures section of this MD&A.

Where we say “we,” “us,” “our,” the “Company” or “Jaguar,” we mean Jaguar Mining Inc. or Jaguar Mining Inc. and/or one or more or all of its subsidiaries, as it may apply. The following abbreviations are used to describe the periods under review throughout this MD&A:

Abbreviation	Period	Abbreviation	Period
YTD 2021	January1,2021 – June 30,2021	YTD 2020	January1,2020 – June 30,2020
Q1 2021	January1,2021 – March 31,2021	Q1 2020	January1,2020 – March 31,2020
Q2 2021	April 1,2021 – June 30,2021	Q2 2020	April 1,2020 – June 30,2020

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 2

OUR BUSINESS

Jaguar Mining Inc. (“Jaguar” or the “Company”) is a Canadian-listed junior gold mining, development and exploration company operating in Brazil with three gold mining complexes, and a large land package with significant upside exploration potential. The Company’s principal operating assets are located in the state of Minas Gerais and include the Turmalina Gold Mine Complex (Turmalina Gold Mine and plant) and Caeté Gold Mine Complex (Pilar Gold Mine, Roça Grande Gold Mine and Caeté plant). The Company also owns the Paciência Gold Mine Complex (“Paciência”), which has been on care and maintenance since 2012. Jaguar’s Brazilian assets and operations are held by Jaguar’s wholly owned subsidiary Mineração Serras dos Oeste EIRELI (“MSOL”).

Q2 2021 FINANCIAL & OPERATING SUMMARY

	Three months ended	Three months ended	Three months ended	Six months ended	Six months ended
($thousands,except where indicated)	June	30,		June	30,
	2021		2020	2021	2020
Financial Data
Revenue	$ 36,330	$	42,536	$ 68,015	73,337
Operating costs	17,365		14,638	32,126	28,935
Depreciation	5,636		4,023	10,396	7,648
Gross profit	13,329		23,875	25,493	36,754
Net income (loss)	2,980		19,178	9,088	31,453
Per share ("EPS")1	0.04		0.03	0.13	0.04
EBITDA2	11,468		27,176	24,544	45,574
Adjusted EBITDA2,3	15,089		27,223	27,040	41,264
Adjusted EBITDAper share1,2	0.21		0.04	0.37	0.06
Cash operating costs (per ounce sold)2	858		586	847	634
All-in sustaining costs (per ounce sold)2	1,281		882	1,288	982
Average realizedgoldprice(per ounce)2	1,795		1,703	1,794	1,608
Cash generated from operating activities	12,634		27,505	19,100	36,139
Free cash flow2	5,761		21,433	5,956	23,516
Free cash flow (per ounce sold)2	285		858	157	516
Sustaining capital expenditures 2	6,873		6,072	13,144	12,623
Non-sustaining capital expenditures 2	3,654		710	6,461	1,567
Total capital expenditures	10,527		6,782	19,605	14,190

1 On August 27, 2020, the Company completed a share consolidation of its outstanding common shares on the basis of one (1) post-consolidation share for every ten (10) pre-consolidation shares.

2 Average realized gold price, sustaining and non-sustaining capital expenditures, cash operating costs and all-in sustaining costs, adjusted operating cash flow, free cash flow, EBITDA and adjusted EBITDA, and adjusted EBITDA per share are non-IFRS financial performance measures with no standard definition under IFRS. Refer to the Non-IFRS Financial Performance Measures section of the MD&A.

3 Adjusted EBITDA excludes non-cash items such as impairment and write downs. For more details refer to the Non-IFRS Performance Measures section of the MD&A.

	Three months ended	Three months ended	Six months ended	Six months ended
	June	30,	June	30,
	2021	2020	2021	2020
Operating Data
Gold produced (ounces)	20,212	23,483	38,372	44,491
Gold sold (ounces)	20,235	24,970	37,912	45,610
Primary development (metres)	1,112	1,707	1,990	3,146
Secondary development (metres)	1,166	738	2,304	1,340
Definition,infill,and exploration drilling (metres)	22,298	14,278	41,492	28,822

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 3

Financial and Operational Summary

COVID-19 Update, Revenue, Gold Ounces Sold, Diamond Drilling, Operating Costs, Inflation impact, Net Income and Adjusted EBITDA[1]

The quarter started out with Brazil, and therefore Jaguar, in the midst of the peak impacts of the COVID-19 pandemic. By mid-May, Brazil was experiencing a notable reduction in pandemic infection rates and its impact to Jaguar’s operations also decreased significantly. Although the company continues to be impacted by COVID-19, protocols are beginning to be reduced, and the team continues to work with adjusted operating practices. By the end of the year Jaguar expects to see the return to normal operating practices.
Revenue for Q2 2021 decreased 15% to $36.3 million, compared with $42.5 million in Q2 2020, mainly due to a reduction in gold sales by 19% to the comparison period, this was partially offset by 5% increase in the average realized gold price of $1,795/oz. in Q2 2021 as compared to $1,703/oz. for Q2 2020. As of June 30, 2021, the Company has no outstanding gold or currency hedges.
Gold ounces sold for Q2 2021 decreased to 20,235 ounces, compared with 24,970 ounces in Q2 2020. The decrease of gold sold in Q2 2021 is reflective of cumulative effects of COVID-19 related absenteeism of skilled operators and mechanics which impacted productivity. In May absenteeism rates began to decline, and operations are returning to standard operating conditions.
The quarter included year on year increases in Diamond Drilling of 156%, increases in growth capital of 400%, and total underground development at 93% of the prior year. Despite difficulties, Jaguar increased investment in future gold resources and the capacity to exploit them.
Operating production costs of $17.4 million in Q2 2021 compared to $14.6M in Q2 2020. The increase in operating production cost is due to inflation and operational adjustments for the pandemic. The adjustments were based on the COVID-19 protocols put in place for the pandemic, as well as efforts to increase capacity as the mines worked to ramp production up to sustainable levels.
During the first half of the year 2021, the Company has seen significant inflation in labour costs, mining materials, plant consumables, diesel, reagents, and explosives. These items have increased on average around 20% as compared to the same period last year. Labour demand has put pressure on wages which have increased 10% in 2021 compared to last year. The Company believes it is reasonable to assume that some of these increases in costs will remain in place for the foreseeable future.
Net income for Q2 2021 decreased to $2.9 million, compared with $19.2 million in Q2 2020. Major differences were a $6.2 million decline in revenue, higher depreciation $1.6 million, increase in exploration expenditures $1.2 million, and a foreign exchange loss of $3.3 million. The average exchange rate during Q2 2021 was R$5.29 per US dollar compared to R$5.39 per US dollar in Q2 2020.
Adjusted EBITDA, which excludes the results of the impact of changes in other provision and VAT taxes, foreign exchange (gain), stock-based compensation and financial instruments loss, was $15.1 million for Q2 2021 compared to $27.2 million for Q2 2020.

Cash Operating Costs¹, All-In-Sustaining Costs (“AISC”)¹, Non-sustaining capital expenditures, Operating Cash Flow and Free Cash Flow¹

Cash operating costs increased 46% to $858 per ounce sold with the reduced ounces and increased costs, while All-in Sustaining Costs increased to $1,281 per ounce per ounce of sold for Q2 2021, compared to $586 and $882 respectively per ounce of gold sold for the same period in 2020.,
Operating cash flow was $12.6 million for Q2 2021, compared to $27.5 million in Q2 2020. The change is due to both a 19% decrease of gold ounces sold Q2 2021 as compared to Q2 2020, higher expenditures for both operations and capital investment. Cash flow was helped by a 5% increase in the average realized gold price of $1,795/oz. in Q2 2021 as compared to $1,703/oz. for Q2 2020.

1 This is a Non-GAAP financial performance measure with no standard definition under IFRS. For more details, refer to the Non-GAAP Performance Measures section of the MD&A.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 4

Non-sustaining capital expenditures increased 415% from $0.7 million in Q2 2020 to $ 3.7 million in Q2 2021. The increase in non-sustaining capital expenditures including the construction of capital projects such as the tailings filtering system on Pilar plant, as well as definition, infill, and exploration drilling investments.
Free cash flow was $5.8 million for Q2 2021 based on operating cash flow minus capital expenditures, compared to $21.4 million in Q2 2020. Free cash flow was $285 per ounce sold in Q2 2021 compared to $858 per ounce sold in Q2 2020.

Cash Position and Working Capital

As of June 30, 2021, the Company had a cash position of $34.4 million, compared to $38.9 million on December 31, 2020. The June 30, 2021, cash balance excludes $0.3 million (December 31, 2020 – $0.3 million) in a restricted-cash deposit associated with the Company’s Brazilian bank indebtedness.
As of June 30, 2021, working capital was $29.9 million, compared to $29.2 million on December 31, 2020, which includes $3 million (December 31, 2020 – $3.1 million) in loans from Brazilian banks, which mature every six months and are expected to be rolled forward.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 5

Tonnes Processed and Average Grade, Gold Production

Total processing was 214,000 tonnes in Q2 2021 (Q2 2020 – 208,000 tonnes) at an average head grade of 3.35 g/t (Q2 2020 – 4 g/t).
In Q2 2021, Turmalina Gold Mine (“Turmalina”) processed 100,000 tonnes (Q2 2020 – 104,000 tonnes) at an average head grade of 3.01 g/t (Q2 2020 – 3.41 g/t).
Pilar Gold Mine (“Pilar”) processed 114,000 tonnes in Q2 2021 (Q2 2020 – 104,000 tonnes) at an average head grade of 3.65 g/t (Q2 2020 – 4.59 g/t).
Consolidated gold production decreased to 20,212 ounces in Q2 2021, compared to 23,483 ounces in Q2 2020, reflecting the reduction of 16% on the average head grade of 3.35 g/t in Q2 2021, compared to 4 g/t in Q2 2020, partially offset by a 3% increase in tonnes of ore processed from 208,000 in Q2 2020 to 214,000 in Q2 2021.

Q2 2021 Quarterly Dividend

The Company is also pleased to announce that its Board of Directors has declared a cash dividend of C$0.04 per common share of the Company, to be paid on August 30, 2021 to shareholders of record as of the close of business on August 23, 2021. The dividend qualifies as an eligible dividend for Canadian income tax purposes.
The Board of Directors intends to review, among other things, the Company’s budget, cash flow forecast and existing market conditions on a quarterly basis in order to determine whether any additional dividends will be declared on Shares for subsequent quarters.
Given the impact on the business due to Covid-19, the board has determined that a reduction in the dividend in favor of additional investment in our primary development and growth and exploration pipeline is the most optimal use of Jaguar's cashflow.

REVIEW OF OPERATING AND FINANCIAL RESULTS

Turmalina Gold Mine Complex

Turmalina Quarterly Production

($thousands,except where indicated)	Q2 2021	Q1 2021	Q4 2020Q3 2020	Q2 2020Q1 2020Q4 2019Q3 2019
Tonnes of ore processed	100,000	105,000	111,000 81,000	104,000 75,000 99,000 94,000
Average head grade (g/t)1	3.01	2.84	3.27 4.40	3.41 4.37 3.44 3.05
Average recovery rate (%)	88%	89%	87% 90%	88% 90% 89% 90%
Gold (oz.)
Produced	8,581	8,517	10,180 10,370	10,031 9,487 9,773 8,280
Sold	8,846	8,427	10,060 10,462	10,836 8,853 10,063 7,399
Cash operatingcost(per oz. sold)²	$ 944	$880	$693$617	$653$684$754$826
All-in sustainingcost(per oz. sold)2	$ 1,388	$1,167	$1,277$1,035	$956$1,191$1,282$1,454
Cash operatingcost (R$per tonne)2	$ 458	$ 387	$ 338 $ 429	$ 366 $ 361 $ 316 $ 258

1 The 'average head grade' represents the recalculated head-grade milled.

2 Cash operating costs, average realized cost and All-in sustaining costs are non-IFRS financial performance measures with no standard definition under IFRS. Refer to the Non-IFRS Financial Performance Measures section of the MD&A.

During the second quarter of 2021, Turmalina produced 8,581 ounces of gold compared to 10,031 in Q2 of 2020. The decrease of 1450 ounces was the result of a 12% decline in the average head grade from 3.41 g/t in Q2 2020 to 3.01 g/t in Q2 2021, and a 4% decrease in tonnes of ore processed from 104,000 in Q2 2020 to 100,000 in Q2 2021. Both grade and tonnes were impacted by adjustments to and impacts of COVID-19. The cash operating cost per ounce sold for the second quarter of 2021 increased by 45%, or $291 per ounce, as compared to Q2 2020, due to the 18% decrease in gold sales combined with the higher consumption of materials and inflationary pressure on consumables and labour compared to Q2 2020 period.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 6

Turmalina Capital Expenditures

==> picture [504 x 124] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
($ thousands) June 30, June 30,
2021 2020 2021 2020
Sustaining capital¹
Primary development $ 2,722 $ 2,862 $ 4,511 $ 6,585
Brownfield exploration 153 119 298 178
Mine-site sustaining 1,051 306 1,531 1,006
Total sustaining capital1 3,926 3,287 6,340 7,769
Total non-sustaining capital1 912 268 1,267 611
Total capital expenditures $ 4,838 $ 3,555 $ 7,607 $ 8,380
----- End of picture text -----

1 Sustaining and non-sustaining capital are non-IFRS financial measures with no standard definition under IFRS. Refer to the Non-IFRS Financial Performance Measures section of the MD&A. Capital expenditures are included in the calculation of all-in sustaining costs and all-in costs.

	Three months ended	Three months ended	Six months ended	Six months ended
(metres)	June	30,	June 30,
	2021	2020	2021	2020
Primary development	742	1,086	1,295	2,159
Secondarydevelopment	649	415	1,224	694
Total development	1,391	1,501	2,519	2,853
Definition drilling	683	1,843	1,616	3,990
Infill drilling	4,169	2,868	7,123	4,218
Exploration drilling	6,155	3,559	11,137	8,138
Total definition, infill, and exploration drilling	11,007	8,270	19,876	16,346

Mining

Located 1.5 hours west of Belo Horizonte, Turmalina is an underground mine that predominantly utilizes sub-level stoping as a mining method. Backfilling is completed using loose rockfill or cemented paste depending upon the situation. Turmalina is adapting its production profile to utilize the C orebodies on a much larger scale than in prior years. While the team is learning the needed practices to produce at significant rates from the C orebody, the mine is gaining flexibility and capacity as mining areas increase.

Turmalina produced 8,577 ounces in Q2 2021, consistent with Q1. While tonnage has been reasonable, it has depended on a large component of those tonnes coming from shallower areas of the mine. As those areas are of lower grade, the mine’s ROM grades have been lower than the reserve. Dilution has also impacted grades as limited availability of skilled operators during the pandemic cut short the drilling capacity available for cablebolting.

Currently, development is being completed by both Jaguar crews and the mining contractor Toniolo Busnello (“TBSA”). Workforces that were reduced onsite, due to the restrictions imposed by the government to reduce people circulating during the peak of the pandemic, fully returned to operations by the end of Q2. TBSA, the most impacted, also returned to its regular activities in the mine. Development rates picked up by 24% in Q2 from Q1 (from 1,128 m to 1,403 m). Development of the ramp in the A-zone had reached the A14.1 sublevel. Jaguar focused development in C-zone, returning to adequate rates during Q2 that will allow the mine to operate the mining areas that will provide adequate stoping options.

Mining challenges of the past several years were driven by a lack of access to an adequate mining sequence of stoping blocks. The mining sequence at Turmalina had improved in 2020, when A-zone Panel 12 and C-zone Panels 4 and 5 were available to provide a systematic stope sequence allowing the operation to achieve mine head grades closer to the historical realized grades. While limited by the overall pandemic response, during Q1 2021 an adjusted mining method for the upper portions of C-zone was implemented to increase mine recovery and reduce mining cost in that area of the mine. The new system of mining will improve the waste/ore ratio, develop in the mineralized structure, and reduce footwall development. These

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 7

changes are targeted at increasing the ounce production from the C orebodies. Improvement in production is expected in the second half of this year.

Despite the pandemic, the teams continued investing in exploration and reserve definition throughout the quarter. In-mine diamond drilling continues to be stepped up to identify several potential opportunities to grow Turmalina’s resources, as well as ensuring sustainable resource addition and reserve conversion. Two sets of smart diamond drill rigs, acquired to improve drilling productivity underground, were successfully commissioned onsite and are showing good performance and operational results. A comprehensive drilling campaign has been conducted since middle of June 2021 targeting resources at the bottom of the mine below Level 14.

While the first half of the year has been disappointing in terms of production, it has also provided us with opportunities in the form of data and perspective for starting key projects within or near the mines in the second half of the year. At Turmalina, the team is working on a project to develop the northwest trend of the CNW ore body at shallow levels beginning on Level 1. The team is also evaluating a narrow vein project at Turmalina that allows us to take advantage of narrow, good grade zones left as remnants located higher up in the mine. As well, after analysing exploration results, the engineering team is initiating a pre-feasibility study on the Faina resource to add mining capacity at Turmalina.

Processing

The processing plant at Turmalina is onsite and the C-zone portal is within 200 metres of the crusher. The plant begins with primary and secondary crushing which feeds a crushed ore bin. The ore bin can feed any of three ball mill circuits. The total milling capacity exceeds 3,000 tonnes per day. The plant currently operates only Mill #3, supplemented by Mill #1 when needed, which can easily handle current and expected mined tonnage rates. The ball mills provide ground ore to the carbonin-pulp (“CIP”) circuit. Recoveries have historically been at approximately 90%. The plant is making ongoing improvements to ensure operational stabilization as well as minimizing costs at the optimal possible rate. Tails are sent to a filtration system from which they can be provided to the paste plant for backfill, or to a dry stack area. During Q2, Turmalina started to implement the closure of the Turmalina tailings dam, expected to be concluded in Q4 2021.

Turmalina Surface Exploration

Jaguar continues to invest in its exploration team and well-situated properties. This investment has built up over the last year, and the Company is beginning to see the true potential for growth. During the height of the pandemic, in the first half of the second quarter, the Company put its exploration/third party drillers on stand-by to reduce the number of people stationed in local communities (done at the request of community leadership). By June 2021, full crews were back drilling on both surface properties and in underground mines. The first holes targeted at the Faina resource confirmed the existing estimates. Faina is a resource under an old open pit located 1 kilometre from Turmalina and represents an opportunity for growing production in the near future. Results of metallurgical testing from these drill holes became available during Q1 2021, confirming expected information. A pre-feasibility study will be implemented to define mining methods, treatment routes, and changes required on the plant circuit to receive Faina’s ore. The Faina deposit currently shows a total resource of over 400,000 ounces of measured, indicated, and inferred gold at a grade of 7 grams (AIF December 31, 2020). A project to develop from Turmalina to Faina along the structural trend of Turmalina´s current orebodies is planned to begin this quarter. This project is expected to open up additional resources along trend as well as provide access to the Faina deposit directly from the Turmalina mine. Among several programs on properties adjacent to the mine, a significant reverse circulation drilling program has been planned in the second half of the year for the Zona Basal area, a substantial target near Turmalina.

Caeté Gold Mine Complex

Caeté Complex Quarterly Production

The Caeté Mining Complex (“Caeté”) includes the Pilar Gold Mine, the Caeté Processing Plant and the Roça Grande Gold Mine (“Roça Grande”). On March 22, 2018, Roça Grande was placed on care and maintenance. Ore from Pilar is trucked a total distance of approximately 40 kilometres by road to the Caeté plant, which has a capacity of 2,200 tonnes per day and includes gravity, flotation and CIP processing.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 8

Pilar Quarterly Production

==> picture [504 x 135] intentionally omitted <==

----- Start of picture text -----

($ thousands, except where indicated) Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019
Tonnes of ore processed (t) 114,000 102,000 117,000 111,000 104,000 101,000 115,000 114,000
Average head grade (g/t)1 3.65 3.37 3.73 4.39 4.59 3.98 3.21 3.50
Average recovery rate (%) 87% 87% 88% 88% 87% 89% 87% 86%
Gold (oz.)
Produced 11,631 9,643 12,353 13,724 13,452 11,521 10,256 11,044
Sold 11,389 9,250 13,248 12,473 14,134 11,787 10,997 10,018
Cash operating cost (per oz. sold)2 $ 791 $ 790 $ 714 $ 612 $ 535 $ 699 $ 804 $ 777
All-in sustaining cost (per oz. sold)2 $ 1,043 $ 1,193 $ 1,013 $ 822 $ 732 $ 875 $ 1,092 $ 1,099
Cash operating cost (R$ per tonne)2 $ 433 $ 393 $ 370 $ 370 $ 392 $ 364 $ 317 $ 271
----- End of picture text -----

1 The 'average head grade' represents the recalculated head-grade milled.

During the second quarter of 2021, Pilar produced 11,631 ounces of gold compared to 13,452 ounces in Q2 2020, a decrease of 14%, mainly due to the decrease of 20% in average head grade from 4.59 g/t in Q2 2020 to 3.65 g/t in Q2 2021, partially offset by a 10% increase in tonnes of ore processed from 104,000 in Q2 2020 to 114,000 in Q2 2021. The grade was impacted by adjustments to and impacts of COVID-19, but was near reserve grade. The cash operating cost per ounce sold for Q2 2021 increased 48% as compared to Q2 2020, primarily due to a 19% decrease in gold sales from the comparison period, combined with higher consumption of materials and an inflationary pressure on consumables and labour.

Pilar Capital Expenditures

==> picture [504 x 125] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
($ thousands, except where indicated) June 30, June 30,
2021 2020 2021 2020
Sustaining capital1
Primary development $ 1,443 $ 1,539 $ 2,871 $ 2,915
Brownfield exploration 90 - 226 7
Mine-site sustaining 1,334 1,246 3,499 1,932
Total sustaining capital1 2,867 2,785 6,596 4,854
Total non-sustaining capital1 1,713 359 3,212 798
Total capital expenditures $ 4,580 $ 3,144 $ 9,808 $ 5,652
----- End of picture text -----

1Sustaining and non-sustaining capital are Non-GAAP financial measures with no standard definition under IFRS. Refer to the Non-IFRS Financial Performance Measures section of the MD&A. Capital expenditures are included in the calculation of all-in sustaining costs and all-in costs.

==> picture [504 x 134] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
(metres) June 30, June 30,
2021 2020 2021 2020
Primary development 370 621 695 987
Secondary development 517 323 1,080 646
Total development 887 944 1,775 1,633
Definition drilling 245 1,169 561 2,208
Infill drilling 1,320 - 2,967 9
Exploration drilling 6,093 4,839 10,964 10,259
Total definition, infill, and exploration drilling 7,658 6,008 14,492 12,476
----- End of picture text -----

Mining

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 9

Located two hours east of Belo Horizonte, Pilar is an underground mine that predominantly utilizes sub-level stoping as a mining method. Backfilling is completed using loose rockfill, which is utilized exclusively at this mine. Pilar has increased ounce production for the last two years and, despite the challenges of the first half of 2021, is on track to produce at its sustainable rate in the second half of 2021. The Pilar team has shown great initiative in working to continually improve the performance of the mine. The mine has positioned itself for sustainable performance at about 4,000 ounces per month. Strong ground conditions have allowed for fairly large stoping blocks to be removed, providing large productive mining cycles.

The performance at Pilar during Q2 improved significantly in comparison to the results obtained during Q1 2021. The mining team increased production to 4,000 ounces a month by the end of the quarter. Quarterly production for Q2 was up 21% from Q1 (from 9,643 ounces to 11,627 ounces) at the mine, along with an increase of 12% in development metres from Q1 to Q2 (from 888 to 997, which includes exploration meters not shown in table above). Pilar processed good tonnage, averaging 38,000 tonnes per month and the grade was close to reserve levels. Pilar expects to perform at sustainable levels for the remainder of the year. To ensure adequate work conditions and improve productivity underground, a new exhaust system is being constructed at Pilar. Its completion, also impacted by restrictions of the pandemic, is rescheduled for Q3 2021.

The development rate in Q2 2021 was adequate to maintain several sublevels of development in front of the planned mining sequence of 2021. This provides flexibility to adapt to mining issues, and the ability to continue meeting and exceeding ounce production targets in a sustainable manner. Pilar utilizes an external contractor in the lowest portion of the mine for development, extending the main ramp and developing new sub-levels. Jaguar crews develop metres in the areas of active mining. The mine is planning to initiate a new development project to increase access to and to grow the SW (southwest) ore system. The SW reserves and resources currently total over 170,000 ounces of measured, indicated and inferred resources at approximately 4 grams per tonne (AIF December 31, 2020). Mining on 9 level this year has indicated potential continuity from the second level through the eight level. The project will access these levels and can potentially double the SW resource, providing the mine with growth potential from higher in the mine.

Processing

Ore is processed at Jaguar’s Caeté processing plant, which is located approximately 40 kilometres from Pilar. The plant utilizes gravity recovery which recovers about 50% of the gold, followed by a flotation circuit and leaching of the flotation concentrate in a CIP circuit. Historic recoveries have commonly ranged from 85 to 90%. The plant has capacity for approximately 2,200 tonnes per day, and a significant opportunity is available for additional feed. The non-sulfide tails (flotation tails) are drystacked, and leach tails are sent to the Moita Dam. At the Caeté plant, the restrictions relating to the pandemic impacted the implementation of several projects, including the construction of the leach flotation filtration plant after which leach tailings will also be dry stacked. In the later part of Q2, the Caeté plant experienced a notable reduction in pandemic infection rates, allowing the full resumption of the construction of capital projects such as the tailings filtering system. This important capital project, which was scheduled to be concluded in Q1 2021, was rescheduled to the end of Q3 2021. This delay will not impact the production capacity of the plant Pilar/Caeté Surface Exploration.

The properties surrounding Pilar and the Caeté plant have significant exploration potential. Exploration is currently active on the Córrego Brandão prospect. Results of drill holes on the Córrego Brandão structure conducted in Q1 2021 confirmed the presence of oxide ore previously identified in an auger drilling campaign conducted on this site. During Q2, diamond drilling of the overall prospect continued to identify the potential of ore at depth, and the exploration team was following up on some excellent results. As well, Jaguar’s evaluation team is reviewing the Roça Grande properties to determine if they should be brought back into production and to look at several historic resources (non-compliant with NI 43-101), which will be assessed for the potential of upgrading to reserve status to provide additional plant feed at Caeté.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 10

CONSOLIDATED FINANCIAL RESULTS

Quarterly Financial Review[1 ]

==> picture [504 x 164] intentionally omitted <==

----- Start of picture text -----

($ thousands except where indicated) Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019
Revenue $ 36,330 $ 31,686 $ 43,417 $ 43,494 $ 42,536 $ 30,801 $ 28,895 $ 22,999
Cost of sales (excluding depreciation)2 (17,365) (14,761) (16,424) (14,089) (14,638) (14,297) (16,433) (13,906)
Gross profit (excluding depreciation)2 18,965 16,925 26,993 29,405 27,898 16,504 12,462 9,093
Net income (loss) 2,980 6,109 24,294 16,534 19,178 12,275 2,687 1,141
Cash flows from operating activities 12,634 6,466 20,606 21,919 27,505 8,634 9,664 4,676
Total assets 249,122 246,875 249,766 228,450 212,678 199,198 200,915 194,638
Total liabilities 58,554 54,660 60,066 58,331 53,088 58,120 72,335 68,613
Income Taxes 4,448 1,894 3,213 5,343 3,932 2,046 871 182
Working Capital 29,859 34,121 29,190 30,733 25,843 12,548 9,436 5,504
Total Debt 3,037 3,017 3,058 3,219 4,276 5,959 5,592 5,383
Average realized gold price (per oz.)2 $ 1,795 $ 1,793 $ 1,863 $ 1,896 $ 1,703 $ 1,492 $ 1,372 $ 1,320
Cash operating cost (per oz. sold)2 $ 858 $ 835 $ 705 $ 614 $ 586 $ 693 $ 780 $ 798
----- End of picture text -----

1 Sum of all the quarters may not add up to the annual total due to rounding.

2 Average realized gold price, cost of sales (excluding depreciation), gross profit (excluding depreciation) and cash operating costs are all non-IFRS financial performance measures with no standard definition under IFRS. For further information, refer to the Non-IFRS Financial Performance Measures section of the MD&A.

Current assets as of June 30, 2021, decreased $1.8 million as of June 30, 2021, compared to December 31, 2020, mainly due to the decrease in cash and cash equivalents from $38.9 million as of December 31, 2020, to $34.4 million, on June 30, 2021. This is partially offset by the inventory increase to $15.7 million as of June 30, 2021, compared to $12.5 million on December 31, 2020. Current liabilities decreased $2.5 million as of June 30, 2021, compared to December 31, 2020, mainly due to the decrease in accounts payables and current tax liability from $18.9 million and $3.2 million, respectively, as of December 31, 2020, to $17.2 million and $2.6 million, respectively, on June 30, 2021.

Non-current assets increased $1.2 million as of June 30, 2021, compared to December 31, 2020, mainly due to the increase of $19.6 million in property, plant and equipment as of June 30, 2021, compared to December 31, 2020. The increase on noncurrent assets was partial offset by the write-off of $8.5 million in royalty interest, due to the CentroGold royalty interest sales.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 11

Revenue

==> picture [504 x 70] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
($ thousands, except where indicated) June 30, June 30,
2021 2020 Change 2021 2020 Change
Revenue $ 36,330 $ 42,536 (15%) $ 68,015 $ 73,337 (7%)
Ounces sold 20,235 24,970 (19%) 37,912 45,610 (17%)
Average realized gold price1 $ 1,795 $ 1,703 5% $ 1,794 $ 1,608 12%
----- End of picture text -----

1 Average realized gold price is a non-IFRS financial performance measure with no standard definition under IFRS. For further information, refer to the Non-IFRS Financial Performance Measures section of the MD&A.

Revenue for the second quarter of 2021 decreased 15% compared to the same period in 2020, primarily as a result of a 19% decrease in ounces sold, from 24,970 ounces in Q2 2020 to 20,235 ounces in the same period of 2021, and partially offset by a 5% increase in average realized gold price from $1,703 in Q2 2020 to $1,795 in Q2 2021. During the three months ended June 30, 2021, the market price of gold (London PM Fix) traded in a range of $1,726–$1,903, averaged $1,816 per ounce, and closed at $1,763 per ounce on June 30, 2021. The average realized price of $1,795 for the three months ended on June 30, 2021, is in line with the average market price.

Production

In Q2 2021, a total of 214,000 tonnes were processed (Q2 2020 – 208,000 tonnes) at an average head grade of 3.35 g/t (Q2 2020 – 4 g/t), with a 14% decrease in gold produced from 23,483 ounces in Q2 2020 to 20,212 in Q2 2021.

Consolidated Production Costs

==> picture [504 x 138] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
($ thousands, except where indicated) June 30, June 30,
2021 2020 Change 2021 2020 Change
Direct mining and processing cost $ 16,314 $ 13,310 23% $ 30,309 $ 26,426 15%
Mining 10,474 8,545 23% 19,306 16,604 16%
Processing 5,840 4,765 23% 11,003 9,822 12%
Royalties, production taxes and others 1,051 1,328 (21%) 1,817 2,509 (28%)
Royalty expense and CFEM taxes 1,099 1,243 (12%) 2,060 2,460 (16%)
NRV adjustment and others (48) 85 (156%) (243) 49 (596%)
Total operating expenses $ 17,365 $ 14,638 19% $ 32,126 $ 28,935 11%
Depreciation 5,636 4,023 40% 10,396 7,648 36%
Total cost of sales $ 23,001 $ 18,661 23% $ 42,522 $ 36,583 16%
----- End of picture text -----

1 Cash operating costs is a non-IFRS financial performance measure with no standard definition under IFRS. Refer to the Non-IFRS Financial Performance Measures section of the MD&A.

Total operating expenses increased 19% from $14.6 million in the three months ended June 30, 2020, compared to $17.4 million in 2021, primarily as a result of higher consumption of materials combined with an inflationary pressure on consumables and labour. The cash operating cost (per ounce sold) increased 46% from $586 in Q2 2020 to $858 in the same period of 2021, because of the factors mentioned before, combined with a 16% decrease in the average head grade from 4 g/t in Q2 2020 to 3.35 g/t in Q2 2021 and a 3% increase in the tonnes processed. The depreciation cost increased 40% from $4 million in Q2 2020 to $5.6 million, as a reflection of a $14 million impairment reversal on December 31, 2020.

Care and Maintenance Costs

Paciência Gold Mine Complex

The Paciência Gold Mine Complex remains on care and maintenance. No gold has been produced since the third quarter of 2012. No underground development or drilling work was carried out by the Company at Paciência during Q2 2021. The complex has been secured and the facilities are preserved and patrolled. A limited maintenance staff turns on the mills and equipment on a monthly basis to maintain the plant in working order. Paciência’s carrying amount was written down to nil.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 12

Roça Grande Gold Mine

Due to high operating costs, the Roça Grande Mine was placed on care and maintenance in March 2018. No underground development or drilling work was carried out by the Company at Roça Grande during Q2 2021. Teams are being put together to evaluate the Roça Grande properties to determine if they should be brought back into production, and to look at several historic resources. Roça Grande’s carrying amount was written down to nil.

General and Administration Expenses

The general and administration (“G&A”) expenses exclude mine-site administrative costs that are charged directly to operations and include legal, accounting, costs to maintain offices and personnel in Belo Horizonte, Brazil and Toronto, Canada, and other corporate costs associated with being a publicly traded company.

==> picture [504 x 91] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
($ thousands) June 30, June 30,
2021 2020 Change 2021 2020 Change
Directors' fees $ 77 $ 61 26% $ 165 $ 136 21%
Audit related and insurance 299 233 28% 653 563 16%
Corporate office (Toronto) 437 276 58% 858 731 17%
Belo Horizonte office 742 661 12% 1,283 1,467 (13%)
Total G&A expenses $ 1,555 $ 1,231 26% $ 2,959 $ 2,897 2%
----- End of picture text -----

For the six months ended in 2021, the total G&A expenses increased 2% compared to the same period in 2020. Costs associated with the Belo Horizonte office were 13% lower due to general cost cutting measures adopted by management. Costs for the corporate office in Toronto for the same period increased 17% compared to the prior period, due to valuation of the Canadian dollar versus the US dollar, with the average exchange rate during Q2 2021 being C$1.25 per US dollar compared to C$1.36 per US dollar in Q2 2020.

Legal Provisions and Value-Added Tax (“VAT”)

==> picture [504 x 82] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
($ thousands) June 30, June 30,
2021 2020 Change 2021 2020 Change
Legal and other provisions expense $ 40 $ 24 67% $ 423 $ 344 23%
Provision (Reversals) against recoverability of VAT and other
taxes 185 342 (46%) 503 449 12%
Total legal, recoverable tax and other provisions expenses $ 225 $ 366 (39%) $ 926 $ 793 17%
----- End of picture text -----

Legal Provisions

As aof June 30, 2021, there were 277 employee-initiated active lawsuits (June 30, 2020 – 317) against the Company, largely related to disputed overtime, break/interval, and time at disposal. Based on Management’s assessment of the likelihood of loss related to 208 lawsuits (June 30, 2020 – 241), the Company has recorded approximately $5.4 million as labour legal provisions, with $2.8 million classified as a current liability as of June 30, 2021 (June 30, 2020 – $5.5 million and $2.9 million, respectively).

During Q2 2021, 7 new lawsuits were initiated. The Company paid approximately $99,700 in appeal deposits and escrow payments, $148,900 in settlement installments and $11,800 for other costs such as social security, income tax, legal fees and expert fees. The total amount spent in Q2 2021 was $260,400 compared to $292,000 in Q2 2020.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 13

Recoverable Taxes Provision

As of June 30, 2021, gross recoverable taxes that are primarily denominated in Brazilian Reais when converted amounted to $13.9 million (December 31, 2020 – $12.3 million). As at June 30, 2021, the provision for recoverable taxes was approximately $3.3 million (December 31, 2020 – $2.6 million). Consequently, the net book value of recoverable taxes as oft June 30, 2021, was $10.6 million (December 31, 2020 – $9.7 million).

In the six months ended June 30, 2021, the Company applied R$10.5 million ($2 million) in federal value added taxes and other tax credits to pay INSS tax obligations and R$6.7 million ($1.2 million) to pay goods and service withholding tax obligation. Comparatively, in the six months ended June 30, 2020, the Company applied R$15.7 million ($3.1 million) in federal value added taxes and other tax credits to pay INSS tax obligations, R$6.3 million ($1.3 million) to pay goods and service withholding tax obligations, and R$13.2 million ($2.6 million) to pay income tax and social contribution tax obligations.

The Company has recorded a provision against its recoverable taxes in Brazil given the limited methods available to recover such taxes and the length of time it will take to recover such taxes. The provision reduces the net carrying amount of value added taxes and other taxes to their estimated recoverable value. In quarter ended June 30, 2021, the Company applied a 5% provision for VAT and other taxes (December 31, 2020 – 5%).

Imposto sobre circulação de mercadorias e prestação de serviços (“ICMS”) is a type of value added tax that can either be sold to other companies, usually at a discount rate of 15–30%, be used to satisfy ICMS tax settlement installments due, or be used to purchase specified machinery and equipment, as subject to approval by government authority. The ICMS credits can only be realized in the state where they were generated so, in the case of Jaguar, in the State of Minas Gerais, Brazil.

As of June 30, 2021, the Company held R$7.7 million (approximately $1.4 million) in ICMS export tax credits authorized and available for sale but not yet sold (December 31, 2020 – R$5.2 million, approximately $1 million).

Non-Operating Expenses (Recoveries)

==> picture [504 x 91] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
($ thousands) June 30, June 30,
2021 2020 Change 2021 2020 Change
Foreign Exchange (Gain) loss $ 3,281 $ (236) (1490%) $ 988 $ (5,863) (117%)
Financial instruments (Gain) loss - (144) (100%) - 476 (100%)
Finance costs 285 14 1936% 579 439 32%
Other non-operating (recoveries) expenses 538 (245) (320%) 2,273 (231) (1084%)
Non-operating expenses (recoveries) $ 4,104 $ (611) (772%) $ 3,840 $ (5,179) (174%)
----- End of picture text -----

The balance of $2.3 million in other non-operating expenses in the six months endingJune 30, 2021, is mainly due to CentroGold royalty interest sales, where the Company garnered a $7 million transaction price from the sale of the NSR, whereas uncertainties exist surrounding the probability of collection for Milestone 1 and Milestone 2, which are contingent on the completion of future milestones by an unrelated third party. As a result of the sale, the Company (i) derecognized the $8.5 million CentroGold project royalty interest asset, (ii) received and recorded $7 million in Cash, and (iii) recorded $0.2 million in legal and consulting costs associated with the transaction.

Taxes

Brazilian Taxes

Brazilian tax regulation involves three jurisdictions and tax collection levels: Federal, State and Municipal. The main taxes levied are: corporate income tax with companies generally subject to income tax at a rate of 25%, social contribution tax on the net profit at a current rate of 9%, value-added taxes at a rate of 9.25% for PIS/COFINS and 12–18% for ICMS.

PIS and COFINS are Federal taxes imposed monthly on gross revenue earned by legal entities. The calculation method is, in the Company’s case, non-cumulative, under which PIS and COFINS are levied on gross revenue at 1.65% and 7.6%,

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 14

respectively, with deductions of input tax credits for expenses strictly connected to the Company’s business and prescribed by the regulating laws. The export of goods and services are exempt provided funds effectively enter the country. PIS and COFINS are due on importations of goods and services from abroad (PIS-Import and COFINS-Import).

In June 2018, the Company decided to enter into an Administrative Agreement with the Minas Gerais State Tax Authority in order to pay a historical debt dating back from 2008 to 2014 of R$8.3 million (approximately $2.2 million) in ICMS taxes. The agreement was ratified by the parties in July 2018.

This debt has its origin in ICMS levied on electricity (“Demanda Contratada”) in which the Superior Courts have ruled in the taxpayer’s favour. The Company filed an appeal against the levy of the ICMS and the likelihood of the Company losing the appeal has been assessed as remote. Although the Company would likely win the judicial lawsuit, the Company took the decision to pay the mentioned debt in instalments, using its tax credits (non-cash), in order to facilitate and accelerate its ICMS tax credit recovery as cash.

In September 2018, the Company received a social security tax INSS assessment from Brazil’s Federal Tax Authority with respect to fiscal years 2014 and 2015, challenging the social security tax rate basis applied by the Company, which as per Brazilian tax legislation is variable based on the Company’s historical work accident rate. The tax assessment claimed entitlement to a total additional R$1.9 million (approximately $0.5 million) due from the Company. Upon review, the Company and its legal counsel assessed its probability of loss as more likely than not and entered a settlement agreement with the Federal Tax Authority to reduce its exposure to fines and interest and extend its cash flow impact, agreeing to pay a total of R$1.5 million (approximately $0.4 million), in cash, over 60 equal monthly installments starting in October 2018.

In April 2020, the Company received an INSS assessment from Brazil’s Federal Tax Authority with respect to fiscal year 2019, challenging the basis of Federal value added tax credits used in payment of INSS obligations. The credits used in payment questioned were those recapitalized upon receiving the November 2019 tax injunction. Following discussions with the tax authority and with legal counsel, the tax authority agreed to cancel the R$14.6 million (approximately $3.3 million) IRPJ and CSLL tax installment settlement agreement made in March 2020, and the Company agreed to pay a total of R$12 million (approximately $2.2 million) in INSS taxes in 60 equal monthly cash installments starting in April 2020.

As of June 30, 2021, the Company’s $8.2 million withholding tax provision remained outstanding (December 31, 2020 – $8.2 million).

Government and Beneficiaries Royalty

In July 2017, an executive decree was published increasing the Brazilian royalty that is levied on gold sales, Compensação Financeira pela Exploração de Recursos Minerais (“CFEM”), from 1% to 1.5% effective November 1, 2017. The legislation also outlines a change in the methodology for calculating the royalty from being calculated on gross revenue, less refining charges and insurance, as well as any applicable sales taxes, to being calculated on gross revenue only.

Income Tax Expenses

==> picture [504 x 60] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
($ thousands) June 30, June 30,
2021 2020 Change 2021 2020 Change
Current income tax expense $ 2,552 $ 3,932 -35.1% $ 4,448 $ 5,978 -25.6%
Income tax expense $ 2,552 $ 3,932 -35.1% $ 4,448 $ 5,978 -25.6%
----- End of picture text -----

The current income tax expenses relate to taxable income in Brazil. At the beginning of the year, the Brazil entity had significant accumulated tax loss carryforwards; however, under Brazil tax rules, only 30% of taxable income can be applied against tax loss carryforwards 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

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 15

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.

For the three months ended June 30, 2021, the Company has paid in cash $1.8 million in income tax expenses (three months ended June 30, 2020 - $nil), and has a current tax liability of $2.6 million as at June 30, 2021 (June 30, 2020 - $3.9 million).

REVIEW OF FINANCIAL CONDITION

Outstanding Debt, Liquidity and Cash Flow

As of June 30, 2021, the Company had a working capital of $30 million ($29.2 million as of December 31, 2020). Working capital as of June 30, 2021, includes $3 million in loans from Brazilian banks ($3.1 million as of December 31, 2020), which mature every six months and are expected to continue to be rolled forward.

==> picture [501 x 252] intentionally omitted <==

----- Start of picture text -----

June 30, December 31,
2021 2020
Cash and cash equivalents $ 34,393 $ 38,908
Non-cash working capital
Other current assets:
Restricted cash 1,088 1,091
Inventory 15,696 12,529
Recoverable taxes 4,783 4,944
Other accounts receivable 113 61
Prepaid expenses and advances 2,527 2,912
Current liabilities:
Accounts payable and accrued liabilities (17,215) (18,851)
Notes payable (3,037) (3,058)
Lease liabilities (1,004) (1,530)
Current tax liability (2,592) (3,213)
Other taxes payable (1,264) (1,153)
Reclamation provisions (591) (623)
Legal and other provisions (3,038) (2,827)
Working capital¹ $ 29,859 $ 29,190
----- End of picture text -----

1 This is a non-GAAP financial performance measure with no standard definition under IFRS.

Working capital is a common measure of near-term liquidity and is calculated by deducting current liabilities from current assets. Working capital is reconciled to the amounts in the consolidated statement of financial position in the Liquidity and Capital Resources section of this MD&A.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 16

The use of funds during the three and six months ended June 30, 2021, is outlined as follows:

==> picture [505 x 312] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
($ thousands) June 30, June 30,
2021 2020 2021 2020
Cash generated from operating activities $ 12,634 $ 27,505 $ 19,100 $ 36,139
Investing activities
Investment in mineral exploration projects - - (442) -
Purchase of property, plant and equipment (9,679) (6,937) (19,084) (14,532)
Proceeds from disposition of royalty interests - - 6,950 -
Proceeds from disposition of property, plant and equipment 4 4 6
Cash used in investing activities $ (9,675) $ (6,937) $ (12,572) $ (14,526)
Financing activities
Cash received upon issuance of debt - 1,939 2,975 3,481
Cash received upon issuance of shares via stock options
exercised 1 21 556 21
Cash received upon redemption of restricted cash margin
deposits (37) - (11) -
Repayment of debt (1,114) (4,119) (4,816) (5,920)
Cash paid for purchase and cancellation of shares - (739) - (739)
Interest paid (9) (157) (92) (194)
Restricted cash margin deposits paid - 263 - 111
Cash dividends paid (4,742) - (9,358) -
Cash (used in) provided by financing activities $ (5,901) $ (2,792) $ (10,746) $ (3,240)
Effect of exchange rate changes on cash balances (267) $ 318 $ (297) $ 922
Net (decrease) increase in cash and equivalents $ (3,209) $ 18,094 $ (4,515) $ 19,295
----- End of picture text -----

Cash generated by operations decreased in Q2 2021 to $12.6 million, compared to $27.5 million in Q2 2020, due to a 19% decrease in ounces sold in Q2 2021 to 20,235 ounces compared to 24,970 ounces in Q2 2020, partially offset by a 5% increase in average realized gold price to $1,795 per ounce in Q2 2021, compared to $1,703 per ounce in Q2 2020. The increase in cash operating costs from $586 per ounce in Q2 2020 to $858 in Q2 2021 contributed to a 54% decrease in cash generated by operating activities. The increase in cash operating occurred primarily due to a 16% decrease in average head grade, from 4 g/t in Q2 2020 to 3.35 g/t in Q2 2021, and also by the valuation of the Brazilian Real versus the US dollar, with the average exchange rate during Q2 2021 being R$5.29 per US dollar compared to R$5.39 per US dollar in Q2 2020.

Net cash flows used in investing activities increased to $9.7 million for the three months ended June 30, 2021, compared to $6.9 million in the same period of 2020. The increase in cash used in investing activities occurred primarily due to increase of investment in non-sustaining capital, and exploration.

Cash used in financing activities of $6 million for Q2 2021 correlates to the dividend payment of $4.9 million, and also the repayment of loans from Brazilian banks, which has decreased from $3.5 million in Q2 2020 to $3 million in Q2 2021. These loans renew every six months and are expected to be rolled forward.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 17

Contractual Obligations and Commitments

The Company’s contractual obligations as at June 30, 2021, are summarized as follows:

==> picture [504 x 263] intentionally omitted <==

----- Start of picture text -----

($ thousands, except where indicated) Less than More than
1 year 1 - 3 years 3 - 5 years 5 years Total
Financial Liabilities
- - -
Accounts payable and accrued liabilities 1 $ 17,215 $ $ $ $ 17,215
Other Taxes Payable
ICMS Settlement Due 546 245 - - 791
INSS 538 1,074 401 - 2,013
IRPJ & CSLL Settlement Due 182 363 214 - 759
Notes payable
Principal
2 - - -
Bank indebtedness 3,037 3,037
Interest 58 56 - - 114
Lease liabilities 823 1,905 1,405 - 4,133
Reclamation provision3 591 2,073 6,587 6,721 15,972
Current tax liability 2,592 - - - 2,592
Total financial liabilities $ 25,582 $ 5,716 $ 8,607 $ 6,721 $ 46,626
Other Commitments
Suppliers' agreements 4 145 - - - 145
Suppliers' agreements 4 $ 145 $ - $ - $ - $ 145
Total other commitments $ 25,727 $ 5,716 $ 8,607 $ 6,721 $ 46,771
----- End of picture text -----

1 Amounts payable as at June 30, 2021.

2 Bank indebtedness represents the principal on Brazilian bank loans that are renewed every six months.

3 Reclamation provisions - amounts presented in the table represent the undiscounted uninflated future payments for the expected cost of 4 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.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 18

CAPITAL STRUCTURE

The capital structure of the Company as of June 30, 2021, is as follows:

All amounts in$thousands,except number of common shares		As at June 30, 2021
Cash and cash equivalents	$	34,393
Less: Bank indebtedness	$	3,037
Less: Leasing Liabilities		2,977
Less: Total debt	$	6,014
Total net cash and cash equivalents balance1	$	28,379
Number of common shares outstanding		72 million

1 Net cash and cash equivalents balance is a Non-IFRS Performance Measure and is defined as total indebtedness excluding unamortized transaction costs and premiums or discounts associated with debt, less cash and cash equivalents. The Company reduces cash and cash equivalents balance by gross indebtedness on the basis to identify the net cash and cash equivalents balance .

OFF-BALANCE SHEET ITEMS

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

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 consolidated statements of operations and comprehensive income (loss). Legal fees paid to ASA were $7,000 and $25,000 for the three and six months ended June 30, 2021 ($3,000 and $6,000, for the three and six months ended June 30, 2020).

DEVELOPMENT AND EXPLORATION PROJECTS

CentroGold Project (also referred to as the Gurupi Project)

Oz Minerals – CentroGold Project Earn-In Agreement

On October 4, 2016, the Company announced that it entered into an earn-in agreement with Oz Minerals, pursuant to which Oz Minerals may earn up to a 100% interest in the CentroGold Project (also referred to as the Gurupi Project). On September 17, 2017, Jaguar and Oz Minerals agreed to a revised, accelerated earn-in agreement, pursuant to which Oz Minerals will earn up to a 100% ownership interest in the CentroGold Project after meeting certain milestones and making a series of payments to Jaguar.

Main Terms of the Revised Accelerated Earn-in Agreement

Upon the satisfactory completion of certain closing conditions, the agreement provides Oz Minerals with the right to acquire 100% of Jaguar’s interest in the CentroGold Project by paying to Jaguar an aggregate cash payment of $4 million in two installments of $2 million each ($2 million due immediately upon signature and $2 million due immediately upon transfer of ownership) and committing to a Net Smelter Return (“NSR”) royalty due to Jaguar. Jaguar received an initial aggregate cash payment of $4 million, in two installments of $2 million each in September and October 2017. The Company expects to collect the additional $5 million from Oz Minerals in a series of 10 instalments of $500,000 starting during fiscal year 2022, beginning in the month in which Oz Minerals receives clear title and access to the project.

In July 2019, Oz Minerals published an Australian Joint Ore Reserve Committee (JORC) code compliant pre-feasibility study technical report for the CentroGold Project, announcing mineral reserves of 1,100,000 ounces of gold, which fulfilled in a timely manner its contractual obligation to do so in under 24 months as from the acquisition date.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 19

Definitive Agreement with Metalla for the sale of the Company’s Net Smelter Return Royalty

On March 15, 2021, Jaguar executed a Definitive Agreement with Metalla Royalty & Streaming Ltd. (MTA) (“Metalla”) for the sale of the Company’s 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 Metalla NSR was sold for an aggregate consideration valued at up to $18 million receivable as follows:

Immediate: $7 million in cash upon executing the Definitive Agreement (received);
Milestone 1: $7 million in Metalla common shares upon grant of all project licenses, the lifting or extinguishment of the injunction imposed on the CentroGold Project with no pending appeals and, if necessary, the completion of any and all community relocations; and
Milestone 2: $4 million payment to Jaguar in cash upon the CentroGold Project achieving commercial production.

The Company received a $7 million transaction price from the sale of the NSR, whereas a constraint on variable consideration for Milestone 1 and Milestone 2 was applied in light of the uncertainties surrounding their probability of occurrence, 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 interest asset, (ii) received and recorded $7 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 non-operating expenses in its condensed interim consolidated statement of operations and comprehensive income.

Greenfield Exploration

Jaguar currently holds approximately 64,000 hectares of mineral rights in Brazil. In late 2020, the Company announced it was increasing its investment in growth exploration initiatives with in-mine exploration supplemented by renewed focus on its prospective property portfolio close to its active mining and plant facilities. Any discoveries derived from this exploration investment would immediately leverage the excess plant capacity currently available. In addition, the Company entered into a Joint Venture in late 2020 with IAMGOLD Corporation (“IAMGOLD”) to explore a large package of tenements contiguous with Jaguar’s permitted CPA plant and related mine infrastructure which has been under care and maintenance since 2012.

Pedra Branca Project

In early 2020, the Company commenced divestment of its non-core Pedra Branca asset in the state of Ceará to South Atlantic Gold (TSX-V SAO).

The Pedra Branca Project is located in the State of Ceará in northeastern Brazil and is currently comprised of 24 exploration licences, totalling 38,926 hectares covering a 38-kilometre section of a regional shear zone. Final exploration reports and a Preliminary Economic Analysis (“PEA”) have been delivered to the Mining National Agency (“ANM”) for three of these licences. The concessions are located in and around municipal areas with good infrastructure. The mineralized structures are open along strike with potential for significant gold mineralization.

The Pedra Branca Project is 100% owned by Jaguar. Based on the acquisition agreement of the project entered into with Glencore Xstrata plc. (“Glencore”), Glencore holds rights to an NSR of 1% on future gold production, as well as rights of first refusal on any Base Metal Dominant Deposit (as defined in the amendment) discovered which, if exercised, would allow Glencore to hold 70% of equity in a newly formed legal entity to hold such rights upon payment of 300% of the Company’s exploration expenditures incurred exclusively on the relevant Base Metal Dominant Area of the property.

On July 29, 2020, the Company entered into a definitive option agreement (the “Option Agreement”) with Jiulian Resources Inc. (“Jiulian”) to sell up to a 100% interest in the Pedra Branca project. According to the agreement:

Jiulian can acquire a 75% interest by incurring $1 million in earn-in exploration expenditures and can increase its interest to 100% by (i) delivering a technical report compliant with National Instrument 43-101 – Standards of

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 20

Disclosure for Mineral Projects (“NI 43-101”) and (ii) granting a 0.5% NSR royalty to Jaguar. Jiulian can purchase half of the NSR for $1 million.

Jaguar shall retain a back-in-right to buy back a 24% interest in the project (the “Back-In-Right”) wherein upon completion of the earn-in exploration expenditures by Jiulian (the “Earn-In Vesting Date”) Jaguar shall have 45 days from the Earn-In Vesting Date to exercise its Back-In-Right by paying Jiulian 2.5 times the earn-in expenditures incurred by Jiulian. In the event Jaguar exercises its Back-in-Right, Jiulian foregoes its right to increase ownership to 100% upon delivery of a technical report compliant with NI 43-101 and the parties shall form a joint venture (the “JV”) owned 49% by Jaguar and 51% by Jiulian. In the event any party dilutes their interest below 10%, such interest shall revert to a 0.5% NSR (the “JV NSR”) of which 0.25% of the JV NSR may be purchased for $1 million by the nondiluting party.
The Pedra Branca project remains subject to underlying royalties to the original vendors as follows:
(i) Base Metal – 1% on gross revenues over any production.
(ii) Gold Deposit – In the case of Measured and Indicated Resources of up to 200,000 gold ounces, the original vendors will be entitled to a 0.5% royalty on gross revenues and a $500,000 payment due within 3 months after commercial production. In the case of Measured and Indicated Resources in excess of 200,000 gold ounces, the original vendors will be entitled to a 1% royalty on gross revenues and in this scenario 0.5% of the royalty may be purchased for $750,000.

In early 2021, the Company concluded divestment of its non-core Pedra Branca asset in the state of Ceará to South Atlantic Gold (TSX-V SAO).

Iron Quadrangle Option Agreement with IAMGOLD Corporation

On August 26, 2020, the Company entered into an earn-in option agreement (the “Iron Quadrangle Agreement”) with IAMGOLD on a package of 28 exploration tenements (the “Package”) covering an area of some 27,141.75 hectares in the prolific Iron Quadrangle, located in Minas Gerais, Brazil. Pursuant to the Iron Quadrangle Agreement, the Company has the option to earn an initial 60% interest in the Package by spending $6 million in exploration expenditures over four years commencing in the fourth quarter of 2020. Jaguar will be the project operator and will be subject to oversight by a technical committee with representatives from both companies. According to the Agreement:

The earn-in period will require a minimum expenditure of $500,000 per annum, and the exploration program must include the completion of a minimum of 5,000 metres of diamond drilling over the option agreement time frame.
Upon Jaguar vesting an initial 60% interest, IAMGOLD may elect to participate and fund its pro-rata share of ongoing expenditures under a conventional 60:40 JV that will be formed for this purpose and will be agreed-upon by both companies. Should such an election be made, both parties will be required to fund their pro-rata share for ongoing expenditures or be subject to dilution. Should either party dilute to <10% interest, their interest will revert to a 1.5% NSR.

QUALIFIED PERSON

Scientific and technical information contained in this MD&A have been reviewed and approved by Jonathan Victor Hill, BSc (Hons) (Economic Geology - UCT), Senior Expert Advisor Geology and Exploration to the Jaguar Mining Management Committee, who is also an employee of Jaguar Mining Inc., and is a “qualified person” as defined by National Instrument 43101 - Standards of Disclosure for Mineral Projects .

OUTSTANDING SHARE DATA

The following are the issued and outstanding common shares and numbers of shares issuable under share-based compensation and warrants:

compensation and warrants:
	As at August 9, 2021
Issued and outstanding common shares	72,414,866
Stock options	982,084
Deferred share units	501,952
Total	73,898,902

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 21

NON-GAAP PERFORMANCE MEASURES

The Company has included the following Non-GAAP performance measures in this document: cash operating costs per tonne of ore processed, cash operating costs per ounce of gold sold, all-in sustaining costs per ounce of gold sold, cash operating margin per ounce of gold sold, all-in sustaining margin per ounce of gold sold, average realized gold price (per ounce of gold sold), sustaining capital expenditures, non-sustaining capital expenditures, adjusted operating cash flow, free cash flow, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA and working capital. These NonGAAP performance measures do not have any standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies.

The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s performance. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. More specifically, Management believes that these figures are a useful indicator to investors and management of a mine’s performance as they provide: (i) a measure of the mine’s cash margin per ounce, by comparison of the cash operating costs per 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 of these performance measures and reconciliation of the NonGAAP measures to reported IFRS measures are outlined below.

Reconciliation of Cash Operating Costs, All-In Sustaining Costs and All-In Costs per Ounce Sold

==> picture [504 x 288] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
($ thousands, except where indicated) June 30, June 30,
2021 2020 2021 2020
Operating costs $ 17,365 $ 14,638 $ 32,126 $ 28,935
General & administration expenses 1,555 1,231 2,959 2,897
Corporate stock-based compensation 115 61 582 284
Sustaining capital expenditures 6,873 6,072 13,144 12,623
All-in sustaining cash costs 25,908 22,002 48,811 44,739
Reclamation - accretion (operating sites) 7 16 15 36
All-in sustaining costs $ 25,915 $ 22,018 $ 48,826 $ 44,775
Non-sustaining capital expenditures 3,654 710 6,461 1,567
Exploration and evaluation costs (greenfield) 1,309 87 2,546 310
Reclamation - accretion (non-operating sites) 21 28 38 55
Care and maintenance (non-operating sites) 283 121 614 296
All-in costs $ 31,182 $ 22,964 $ 58,485 $ 47,003
Ounces of gold sold 20,235 24,970 37,912 45,610
Cash operating costs per ounce sold $ 858 $ 586 $ 847 $ 634
All-in sustaining costs per ounce sold $ 1,281 $ 882 $ 1,288 $ 982
All-in costs per ounce sold $ 1,541 $ 920 $ 1,543 $ 1,031
Average realized gold price $ 1,795 $ 1,703 $ 1,794 $ 1,608
Cash operating margin per ounce sold $ 937 $ 1,117 $ 947 $ 974
All-in sustaining margin per ounce sold $ 514 $ 821 $ 506 $ 626
----- End of picture text -----

1 Cash operating costs, all-in sustaining costs and all-in costs are all non-gaap financial performance measures with no standard definition under IFRS. Result may not calculate due to rounding.

2 Capital expenditures are included in our calculation of all-in sustaining costs and all-in costs.

Cash operating costs per ounce sold is calculated by dividing operating costs per the consolidated statement of comprehensive income (loss) by the gold ounces sold during the applicable period. Operating expenses include mine site operating costs such as mining, processing and administration as well as royalties, but excludes depreciation.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 22

All-in sustaining cost performance reflects all of the expenditures that are required to produce an ounce of gold from current operations. While there is no standardized meaning of the measure across the industry, the Company’s definition conforms to the all-in sustaining cost definition as set out by the World Gold Council in its guidance dated June 27, 2013. The World Gold Council is a non-regulatory, non-profit organization established in 1987 whose members include global senior mining companies. The Company believes that this measure will be useful to external users in assessing operating performance and the ability to generate free cash flow from current operations.

The Company defines all-in sustaining costs as the sum of operating cash costs (per above), sustaining capital (capital required to maintain current operations at existing levels), corporate administration costs and sustaining exploration. All-in sustaining costs excludes capital expenditures for significant improvements at existing operations deemed to be expansionary in nature, exploration and evaluation related to growth projects, financing costs, debt repayments and taxes.

In the gold mining industry, average realized gold price per ounce sold is a common performance measure that does not have any standardized meaning. The most directly comparable measure prepared in accordance with IFRS is gold revenue. The measure is intended to assist readers in evaluating the revenue received in a period from each ounce of gold sold.

Reconciliation of Cash Operating Costs, All-In Sustaining Costs per Ounce Sold by Mine Complex/Site

==> picture [504 x 227] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
($ thousands, except where indicated) June 30, June 30,
2021 2020 2021 2020
Turmalina Complex
Operating costs $ 8,350 $ 7,074 $ 15,769 $ 13,132
Sustaining capital expenditures 3,926 3,287 6,340 7,769
All-in sustaining costs1 $ 12,276 $ 10,361 $ 22,109 $ 20,901
Ounces of gold sold 8,846 10,836 17,273 19,689
Cash operating costs per ounce sold1 $ 944 $ 653 $ 913 $ 667
All-in sustaining cost per ounce sold1,2 $ 1,388 $ 956 $ 1,280 $ 1,062
Pilar Mine
Operating costs $ 9,014 $ 7,564 $ 16,322 $ 15,804
Sustaining capital expenditures 2,867 2,785 6,596 4,854
All-in sustaining costs1 $ 11,881 $ 10,349 $ 22,918 $ 20,658
Ounces of gold sold 11,389 14,134 20,639 25,921
Cash operating costs per ounce sold1 $ 791 $ 535 $ 791 $ 610
All-in sustaining cost per ounce sold1,2 $ 1,043 $ 732 $ 1,110 $ 797
----- End of picture text -----

1 Cash operating costs and all-in sustaining costs are all non-GAAP financial performance measures with no standard definition under IFRS. Results of individual mines may not add up to the consolidated numbers due to rounding.

2 The calculation by mine site does not include allocation of the Corporate G&A - Toronto and Belo offices.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 23

Reconciliation of Free Cash Flow[1]

	Three months ended Six months ended	Three months ended Six months ended	Three months ended Six months ended	Three months ended Six months ended	Three months ended Six months ended
($thousands,except where indicated)	June 30,		June 30,
	2021		2020 2021		2020
Cash generated from operating activities	$ 12,634	$	27,505$ 19,100	$	36,139
Sustainingcapital expenditures	(6,873)		(6,072) (13,144)		(12,623)
Free cash flow	$ 5,761	$	21,433 $ 5,956	$	23,516
Ounces ofgold sold	20,235		24,970 37,912		45,610
Free cash flowper ounce sold	$ 285	$	858$ 157	$	516

1 This is a non-GAAP financial performance measure with no standard definition under IFRS.

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA[1]

==> picture [498 x 171] intentionally omitted <==

----- Start of picture text -----

Three months ended Six months ended
($ thousands, except where indicated) June 30, June 30,
2021 2020 2021 2020
Net Income (loss) $ 2,980 $ 19,178 $ 9,088 $ (3,976)
Income tax expense 2,552 3,932 4,448 67
Finance costs 285 14 579 1,966
Depreciation and amortization 5,651 4,052 10,429 7,177
EBITDA $ 11,468 $ 27,176 $ 24,544 $ 5,234
Changes in other provisions and VAT taxes 225 366 926 1,983
Foreign exchange loss (gain) 3,281 (236) 988 303
Stock-based compensation 115 61 582 344
Financial instruments (gain) loss - (144) - 2,042
Adjusted EBITDA $ 15,089 $ 27,223 $ 27,040 $ 9,906
----- End of picture text -----

1 This is a non-GAAP financial performance measure with no standard definition under IFRS.

EBITDA is earnings before finance expense, current and deferred income tax expense and depletion and depreciation. Adjusted EBITDA excludes from EBITDA results the impact of changes in other provision and VAT taxes, Foreign exchange (gain), Stock-based compensation and financial instruments loss.

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 Financial Statements 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

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 24

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.

c) 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 gains and losses are recorded in earnings as fair value changes occur as a component of revenue.

In the three and six months ended June 30, 2021, the Company did not engage in any price hedge derivative instruments ($nil and $1.9 million realized losses, respectively, for the three and six months ended June 30, 2020) and held no open price hedge derivative positions outstanding at June 30, 2021 (June 30, 2020 – $nil price hedge derivative positions outstanding).

d) 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 and six months ended June 30, 2021, the Company did not engage in any foreign exchange derivative instruments (for the three and six months ended June 30, 2020, the Company recorded realized losses of $1 million and $1.5 million, respectively, and a $1.1 million gain and $0.1 million loss, respectively, on changes in unrealized foreign exchange derivatives) and held no open foreign exchange derivative position as at June 30, 2021 (June 30, 2020 – no foreign exchange derivative positions outstanding).

e) 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.

f) 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 June 30, 2021
Notes payable 3,058 $ 2,975 $ (2,962) $ (83) $	49 $ - $ - $ - $ 3,037 $
Lease liabilities 2,723 - (1,854) -	- 1,923 114 71 2,977
5,781 $ 2,975 $ (4,816) $ (83) $	49 $ 1,923 $ 114 $ 71 $ $ 6,014

RISKS AND UNCERTAINTIES

The Company is subject to various business, financial and operational risks which could adversely affect the Company’s future business, operations and financial condition, and could cause such future business, operations and financial condition to differ materially from the forward-looking statements and information contained in this MD&A and as described in the Cautionary Statement on Forward-Looking Information found in this document. The Company is subject to various risks, known and unknown, arising from factors within or outside of its control. This section describes certain risks and uncertainties that may have an adverse effect on the Company’s business, operations and financial results.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 25

The business of the Company involves significant risk due to the nature of mining, exploration and development activities. Certain risk factors, including but not limited to those listed below, are related to the mining industry in general while others are specific to Jaguar. For a comprehensive discussion of the risks and uncertainties that may have an adverse effect on the Company’s business, operations and financial results, refer to the Company’s latest AIF, filed with Canadian securities regulatory authorities at www.sedar.com.

I. Risks Relating to the Gold Industry

Gold prices are volatile and there can be no assurance that a profitable market for gold will exist.

Gold prices are volatile and subject to 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, stock levels maintained by producers and others, currency exchange fluctuations, inflation rates, interest rates, hedging activities and increased production due to improved mining and production methods. While the price of gold has recently been strong, 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. Some credible industry experts are predicting that gold will continue to increase in price during 2021 and the next several years. However, other credible industry experts expect that the price of gold has generally peaked during the recent pandemic and resulting economic crisis, and that as economies slowly recover over the next few years, the price of gold will decrease and be worth much less per ounce than it is today.

Mining is inherently risky and subject to conditions and events beyond Jaguar’s control.

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;
labour disruptions;
industrial accidents;
metallurgical and other processing problems; and/or
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 or death, 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 affordable premiums or at all. 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 materially 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 Reserves and Mineral Resources and metal recovery is only an estimate, and there can be no assurance about the quantity and grade of minerals until mineral resources are actually mined.

The calculation of mineral reserves, mineral 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 mineral reserves or mineral resources are actually mined and processed, the quantity of mineral reserves or mineral resources and grades must be considered as estimates only. Any material changes in mineral reserves, mineral resources, grade or stripping ratio at Jaguar’s properties 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.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 26

II. Risks Relating to Jaguar’s Business

Jaguar’s operations involve exploration and development and there is no guarantee that any such activity will result in commercial production of mineral deposits.

The proposed programs on the exploration properties in which Jaguar holds an interest are exploratory in nature and such properties do not host known bodies of commercial ore. Development of these mineral properties is contingent upon, among other things, obtaining satisfactory exploration results. Mineral exploration and development involve substantial expenses related to locating and establishing mineral reserves, developing metallurgical processes and constructing mining and processing facilities at a particular site. It also involves a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to adequately mitigate. Few properties that are explored are ultimately developed into producing mines, and 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, proximity to infrastructure, current metal prices, and government regulations, including regulations relating to required permits, royalties, allowable production, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but any one of these factors, or the combination of any of these factors, may prevent Jaguar from receiving an adequate return on invested capital. 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. Some ore reserves may become unprofitable to develop if there are unfavourable long-term market price fluctuations in gold, or if there are significant increases in operating or capital costs. Most of the above factors are beyond Jaguar’s control, and it is difficult to ensure that the exploration or development programs proposed by Jaguar will result in a profitable commercial mining operation.

Jaguar may be negatively affected by an outbreak of infectious disease or pandemic.

An outbreak of infectious disease, pandemic or a similar public health threat, such as the COVID-19 outbreak, and the response thereto, could adversely impact the Company, both operationally and financially. The global response to the COVID19 outbreak has resulted in, among other things, border closures, severe travel restrictions and extreme fluctuations in financial and commodity markets. Additional measures may be implemented by one or more governments around the world in jurisdictions where the Company operates. Labour shortages due to illness, Company or government-imposed isolation programs, restrictions on the movement of personnel or possible supply chain disruptions could result in a reduction or interruption of the Company’s operations, including mine shutdowns or suspensions. The inability to transport and/or refine and process the Company’s products could have a materially adverse effect on the Company’s future cash flows, earnings, results of operations and financial condition. As efforts are undertaken to slow the spread of the COVID-19 virus, the operation and development of mining projects may be impacted. To date, a number of mining projects have been suspended as cases of COVID-19 had increased, for precautionary purposes or as governments have declared a state of emergency or taken other actions. If the operation or development of one or more of the properties of Jaguar, or in which Jaguar holds a royalty, stream or other interest, is suspended or the development is delayed for precautionary purposes or as governments declare states of emergency or other actions are taken in an effort to combat the spread of COVID-19, it may have a materially adverse impact on Jaguar’s profitability, results of operations, financial condition and the trading price of Jaguar’s securities.

The adverse effects described above could be rapid and unexpected. These disruptions may severely impact the Company’s ability to carry out its business plans for 2021 and beyond. The first and second quarters of 2021 were particularly challenging for both the people of Brazil and for the Company. In June 2021, new infections reached a record number for COVID-19 cases recorded in a single day in Brazil. As at the end of the second quarter, 447 of the Company’s approximately 1,570 employees and contractors had either contracted the coronavirus, been in quarantine or otherwise been sidelined for health-related risk factors relating to COVID-19 for varying amounts of time, since the onset of the pandemic. Our operating divisions have been the hardest hit where the loss of skilled drillers and mechanics materially impacted productivity. The temporary reduction of expertise and staff, combined with the continuous reconfiguration of our operating teams and inability for movement of technical resources between mines, have significantly impacted the Company’s performance in 2021. The actual and

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 27

threatened spread of COVID-19 globally could adversely affect global economies and financial markets, resulting in a prolonged economic downturn and a decline in the value of Jaguar’s stock price.

A mass vaccination program to inoculate Brazilians against COVID-19 remains ongoing. However, this program has encountered significant challenges amidst an ongoing shortage of vaccines and distribution problems. The country’s vaccination program has repeatedly missed targets due to a shortage of doses resulting from delivery delays of active ingredients from China and India. Furthermore, the program has been put at risk by people failing to arrive for their second vaccination shot, with the Brazilian Ministry of Health reporting in late April 2021 that 1.5 million people in the country had missed appointments for the follow-up dose needed to maximize protection. According to researchers, as of July 4, 2021, approximately 3.1 million Brazilians had not yet received their second dose despite being eligible for it. Health experts have opined that this is especially concerning in light of a recent real-world study from Chile stating that the Sinovac Biotech (SVA.O) COVID-19 vaccine, which has accounted for some 80% of Brazil’s vaccination program, is only 16% effective after one dose. It is currently estimated that only 40% of Brazilians have received at least one dose of the vaccine.

The first case of COVID-19 in Brazil was reported in February 2020. According to data from the Brazilian Ministry of Health, as of July 19, 2021, the country has confirmed 19,391,845 cases and 542,877 deaths as a result of COVID-19. Currently, Brazil has the world’s second highest death toll relating to COVID-19 behind the United States. While the United States and some other countries have seen cases largely decrease with more of their populations vaccinated against COVID-19, according to the Brazilian Health Ministry, just 15% of Brazil’s citizens are currently fully vaccinated.

The growing emergence of COVID-19 variants of concern that are more transmissible and carry increased health risks threaten another surge in cases and hospitalizations, which would likely lead to the adoption of new emergency measures. Disruptions caused by the imposition of these emergency measures may negatively impact the Company’s operations. At the same time, the continued spread of COVID-19 may negatively impact, among other things: the health and well-being of our personnel, local communities, social unrest and the Company’s ability to raise capital (which, in turn, could materially impact its business strategy) and to declare and pay dividends. Additionally, currency exchange rates have been volatile over the past year and the outlook for currencies remains difficult to anticipate given varying economic responses to the COVID-19 pandemic.

The uncertainty caused by the COVID-19 pandemic has tested many businesses’ risk frameworks. In response to the pandemic, Jaguar has: increased communication internally and externally; closely monitored the actual and potential impacts of COVID-19 on the Company’s operations; regularly engaged with the Board to monitor the ever-changing risk landscape in light of the pandemic; and implemented precautionary measures at its corporate offices, including limiting visits to essential personnel and ensuring proper protocols around sanitation and social distancing.

Jaguar’s Management will continue to monitor the situation regarding COVID-19 and may take actions that alter Jaguar’s business operations as may be required by federal, provincial or local authorities, or that management determines are in the best interests of Jaguar’s employees, customers, suppliers, shareholders and other stakeholders. Such alterations or modifications could cause substantial interruption to Jaguar’s business, any of which could have a materially adverse effect on, among other things, Jaguar’s operations or financial results. The extent to which COVID-19 and any other pandemic or public health crisis impacts Jaguar’s business, affairs, operations, financial condition (including Jaguar’s ability to raise funds), liquidity, availability of credit and results of operations will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the effectiveness, acceptance and availability of vaccines, as well as the duration of associated immunity and efficacy of the vaccines against emerging variants of COVID-19, which may prolong the impacts of COVID-19 on the US, Canadian and Brazilian economies, the mining industry and Jaguar (including its workforce).

Even after the COVID-19 pandemic has subsided, Jaguar may continue to experience adverse impacts to its business as a result of the pandemic’s global economic impact, including any related recession, as well as lingering impacts on Jaguar’s workforce, suppliers and third-party service providers.

Fluctuations in currency exchange rates may adversely affect Jaguar’s financial position and results of operations.

Fluctuations in currency exchange rates, particularly operating costs denominated in currencies other than US dollars, may significantly impact Jaguar’s financial position and results of operations. Jaguar generally sells its gold based on a US dollar

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 28

price, but a major portion of Jaguar’s operating expenses is incurred in non-US currencies. In addition, the appreciation of the Brazilian Real against the US dollar could further increase the dollar costs of gold production at Jaguar’s 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.

The gold mining industry is intensely competitive. Significant and increasing competition exists for gold and other 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 this competition, Jaguar may be unable to acquire rights to additional attractive mining properties on terms it considers acceptable. Increased competition could adversely affect Jaguar’s ability to attract necessary capital funding or acquire an interest in additional operations that would yield mineral reserves or result in commercial mining operations.

Jaguar is exposed to risks of changing political stability and government regulation in the country in which it operates.

Jaguar holds mineral 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 to Brazil. Any changes in regulations or shifts in political conditions are beyond Jaguar’s control 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 adversely 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 additional business and financial risks inherent in doing business in Brazil.

The Company’s principal operations and mineral properties are located in Brazil. There are additional business and financial risks inherent in doing business in Brazil as compared to the United States or Canada. Since 1996, Transparency International has published the Corruption Perceptions Index (“CPI”), which annually ranks countries by their perceived levels of corruption, as determined by expert assessments and opinion surveys. The CPI ranks countries on a scale from 100 (very clean) to 0 (highly corrupt). In 2020, out of 180 countries in the world, Canada was ranked 11th with a CPI score of 77, the United States was ranked 25th with a CPI score of 67, and Brazil was ranked 94th with a CPI score of 38. The average score on the 2020 Corruption Perceptions Index was 43 out of 100. Anything below a score of 50 indicates governments are failing to tackle corruption and represents a challenge in those countries requiring extra attention by those who conduct business there.

Corruption does not only occur with the misuse of public, government or regulatory powers, it also can occur in a business’s supplies, inputs and procurement functions (such as illicit rebates, kickbacks and dubious vendor relationships), as well as the inventory and product sales functions (such as inventory shrinkage or skimming). Employees, as well as external parties (such as suppliers, distributors and contractors), have opportunities to commit procurement fraud, theft, embezzlement and other wrongs against the Company. While corruption, bribery and fraud risks can never be fully eliminated, the Company reviews and implements controls to reduce the likelihood of these irregularities occurring. The Company utilizes an internal auditor, third-party security services and closed-circuit video surveillance at its operations in Brazil.

The ability to pay dividends will be dependent on the financial condition of Jaguar.

Payment of dividends on Jaguar’s common shares is within the discretion of Jaguar’s Board of Directors and will depend upon Jaguar’s future earnings, cash flows, acquisition capital requirements and financial condition, and other relevant factors. Although Jaguar has paid a regular dividend for the two most recently completed quarters, there can be no assurance that it will be in a position to declare any future dividends due to the occurrence of one or more of the risks described herein.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 29

Jaguar is subject to significant governmental regulations.

Jaguar’s mining and exploration activities are subject to extensive local laws and regulations. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities, who 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 materially 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 the development of new mining properties.

Jaguar is subject to substantial environmental laws and regulations that may increase its costs and restrict its operations.

All phases of Jaguar’s operations are subject to environmental regulations in the jurisdictions in which it operates. These laws address emissions into the air, discharges into water, management of waste and hazardous substances, protection of natural resources and reclamation of lands disturbed by mining operations. 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. This is especially true following the high-profile Brumadinho dam disaster that occurred on January 25, 2019, when Dam I—a tailings dam at Vale’s Córrego do Feijão iron ore mine, 9 kilometres east of Brumadinho, Minas Gerais, Brazil—suffered a catastrophic failure. Compliance with environmental laws and regulations may require significant capital outlays and may cause material changes or delays in, or the cancellation of, Jaguar’s intended activities. There can be no assurance that future changes in environmental regulation, if any, will not be materially averse to Jaguar’s operations. Specifically, new laws and regulations, amendments to existing laws and regulations, or more stringent enforcement of existing laws and regulations could have a materially adverse impact on the Company, increase costs, cause a reduction in levels of production and/or delay or prevent the development of new mining properties.

The properties in which Jaguar holds interests may contain environmental hazards, which are presently unknown to it, and which have been caused by previous or existing owners or operators of the properties. If Jaguar’s properties do contain such hazards, this could lead to Jaguar being unable to use the properties or may cause Jaguar to incur costs to remediate such hazards. In addition, Jaguar could become subject to litigation should such hazards result in injury to any persons. Jaguar currently has four downstream dams, with one downstream dam having a section permitted to be used as upstream; however, that section of the upstream was never utilized by the Company. There is a risk that the regulatory authorities may impose either operating restrictions or additional expenditures to all of the Company’s dams, particularly in relation to the upstream section of the downstream dam.

Internal controls provide no absolute assurances as to the reliability of financial reporting and financial statement preparation, and ongoing evaluation may identify areas in need of improvement.

The Company has invested resources to document and assess its system of internal control over financial reporting and undertakes an evaluation process of such internal controls. Internal control over financial reporting are procedures designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, safeguards with respect to the reliability of financial reporting and financial statement preparation.

The Company currently believes that no material weakness exists in regard to its internal controls for financial reporting that result in a reasonable possibility that a material misstatement of the Company’s financial statements will not be prevented or detected on a timely basis. However, if the Company fails to maintain the adequacy of its internal control over financial reporting, as either the Company’s or the applicable regulatory standards are modified, supplemented, or amended from time to time, then the Company may not be able to ensure that it can conclude on an ongoing basis that it has effective

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 30

internal controls over financial reporting. If in the future the Company is required to disclose a material weakness in its internal controls over financial reporting, then this could result in the loss of investor confidence in the reliability of the Company’s financial statements, which in turn could harm the Company’s business and negatively impact the trading price of its common shares. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm the Company’s operating results or cause it to fail to meet its reporting obligations.

Jaguar may need additional capital to accomplish its exploration and development plans or to cover its expenses and maintain adequate working capital, and there can be no assurance that financing will be available on terms acceptable to Jaguar, or at all.

Depending on gold prices and Jaguar’s ability to achieve its plans and generate sufficient operating cash flow from its existing operations, the Company may require substantial additional financing to accomplish its exploration and development plans, maintain adequate working capital, or fund any non-operating expenses that may arise or become due such as interest, tax (in Canada or Brazil) or other expenses. 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, or an inability to pay any of Jaguar’s non-operating expenses which could also lead to late fees or penalties, depending on the nature of the expense. The only source of funds now available to Jaguar is through production at Turmalina and Caeté, 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. If funding is available, the terms of such financing might not be favourable 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 could have a materially adverse effect on Jaguar’s business, financial condition and results of operations.

Jaguar may be subject to litigation.

All industries, including the mining industry, are subject to legal claims, with and without merit. The Company may become involved in legal disputes in the future. Defense and settlement costs can be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, there can be no assurance that the resolution of any particular legal proceeding will not have a materially adverse effect on the Company’s financial position or results of operations.

Generally, the labour claims are due to disputed overtime, danger pay, wage parity, etc. Brazilian labour law is a complex system of statutes and regulations, which in general, has a favourable approach to employees of the Company. As such, corporate labour compliance is a key success factor in Brazilian-based operations to minimize the impact of labour claims. The Company has historically not been in full compliance of labour regulations, nor did it have the proper procedures in place to support labour claims defenses, which led to the bulk of the litigation provisions recorded.

CRITICAL ACCOUNTING ESTIMATES

The preparation of the condensed interim consolidated financial statements in conformity with IFRS requires Management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Certain estimates, such as those related to the assessment of recoverability of the carrying amount of property, plant, equipment and mineral exploration projects, royalty receivable, valuation of recoverable taxes, deferred tax assets and liabilities, reclamation provisions, derivatives, liabilities associated with certain long-term incentive plans, measurement of inventory, provisions for legal actions and contingencies, and disclosure of contingent assets and liabilities depend on subjective or complex judgments about matters that may be uncertain. Changes in these estimates could materially impact the Company’s condensed interim consolidated financial statements.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 31

The critical accounting estimates, judgments, and assumptions applied in the preparation of the Company’s condensed interim consolidated financial statements for the three months ended June 30, 2021, are consistent with those applied and disclosed in the audited annual consolidated financial statements for the year ended December 31, 2020. For details of these estimates, judgments, and assumptions, please refer to the Company’s audited annual consolidated financial statements for the year ended December 31, 2020, which are available on the Company’s website and on SEDAR.

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that material information is gathered and reported to senior management, including the President and Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), as appropriate to permit timely decisions regarding public disclosure.

The Company’s Management, including the CEO and CFO, has as at June 30, 2021, designed Disclosure Controls and Procedures (as defined in National Instrument 52-109 of the Canadian Securities Administrators), or caused them to be designed under their supervision, to provide reasonable assurance that material information relating to the issuer is made known to them by others, particularly during the period in which the interim filings are being prepared; and information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation.

Internal Control over Financial Reporting

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of consolidated financial statements in compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”). The Company’s internal control over financial reporting includes policies and procedures that:

pertain to the maintenance of records that accurately and fairly reflect the transactions of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with IFRS as issued by the IASB;
ensure the Company’s receipts and expenditures are made only in accordance with authorization of management and the Company’s directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized transactions that could have a material effect on the consolidated financial statements.

There have been no changes in the Company’s internal control over financial reporting during the three months ending June 30, 2021, that have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.

Limitations of Controls and Procedures

The Company’s Management, including the CEO and CFO, believe that disclosure controls and procedures and internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 32

the controls. The design of any control system is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this MD&A constitute “forward-looking information” within the meaning of applicable Canadian securities legislation. This forward-looking information includes, but is not limited to, statements concerning the Company’s future objectives, Measured and Indicated Mineral Resources, Proven and Probable Mineral Reserves, their average grade, the commencement period of production, cash operating costs per ounce and completion dates of feasibility studies, gold production and sales targets, capital expenditure costs, future profitability and growth in mineral reserves. Forward-looking information can be identified by the use of words such as “are expected,” “is forecast,” “is targeted,” “approximately,” “plans,” “anticipates,” “projects,” “continue,” “estimate,” “believe” or variations of such words and phrases or statements that certain actions, events or results “may,” “could,” “would,” “might,” or “will” be taken, occur or be achieved. Forwardlooking information involves 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 information. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other geological data, fluctuating gold prices and monetary exchange rates, the possibility of project delays and cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, uncertainties related to production rates, timing of production and the cash and total costs of production, changes in applicable laws including laws related to mining development, environmental protection, and the protection of the health and safety of mine workers, the availability of labour and equipment, the possibility of civil insurrection, labour strikes and work stoppages, changes in general economic conditions and the declaration, timing, amount and payment of potential future dividends. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those contained in forward-looking information, there may be other factors that could cause actions, events or results to differ from those anticipated, estimated or intended.

This forward-looking information represents the Company’s views as of the date of this MD&A. The Company anticipates that subsequent events and developments may cause the Company’s views to change. The Company does not undertake to update any forward-looking information, either written or oral, that may be made from time to time by, or on behalf of the Company, subsequent to the date of this discussion, other than as required by law. For a discussion of important factors affecting the Company, including fluctuations in the price of gold and exchange rates, uncertainty in the calculation of mineral resources, competition, uncertainty concerning geological conditions and governmental regulations and assumptions underlying the Company’s forward-looking information, see “CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS” and “RISK FACTORS” in the Company’s Annual Information Form for the year ended December 31, 2020, that can be accessed under the profile of Jaguar Mining Inc. on SEDAR at www.sedar.com. Further information about the Company is available on its corporate website at www.jaguarmining.com.

MD&A – Quarter Ended June 30, 2021

Jaguar Mining Inc. 33

AI assistant

Jaguar Mining Inc. — Interim / Quarterly Report 2021

45338_rns_2021-08-10_4eafad19-d66c-413a-b876-3003f6e2f9f7.pdf

MANAGEMENT’S DISCUSSION AND ANALYSIS

TABLE OF CONTENTS

MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE SECOND QUARTER ENDED JUNE 30, 2021

OUR BUSINESS

Q2 2021 FINANCIAL & OPERATING SUMMARY

Financial and Operational Summary

COVID-19 Update, Revenue, Gold Ounces Sold, Diamond Drilling, Operating Costs, Inflation impact, Net Income and Adjusted EBITDA[1]

Cash Operating Costs¹, All-In-Sustaining Costs (“AISC”)¹, Non-sustaining capital expenditures, Operating Cash Flow and Free Cash Flow¹

Cash Position and Working Capital

Tonnes Processed and Average Grade, Gold Production

Q2 2021 Quarterly Dividend

REVIEW OF OPERATING AND FINANCIAL RESULTS

Turmalina Gold Mine Complex

Turmalina Quarterly Production

Turmalina Capital Expenditures

Mining

Processing

Turmalina Surface Exploration

Caeté Gold Mine Complex

Caeté Complex Quarterly Production

Pilar Quarterly Production

Pilar Capital Expenditures

Mining

Processing

CONSOLIDATED FINANCIAL RESULTS

Quarterly Financial Review[1 ]

Revenue

Production

Consolidated Production Costs

Care and Maintenance Costs

Paciência Gold Mine Complex

Roça Grande Gold Mine

General and Administration Expenses

Legal Provisions and Value-Added Tax (“VAT”)

Legal Provisions

Recoverable Taxes Provision

Non-Operating Expenses (Recoveries)

Taxes

Brazilian Taxes

Government and Beneficiaries Royalty

Income Tax Expenses

REVIEW OF FINANCIAL CONDITION

Outstanding Debt, Liquidity and Cash Flow

Contractual Obligations and Commitments

CAPITAL STRUCTURE

OFF-BALANCE SHEET ITEMS

RELATED PARTY TRANSACTIONS

DEVELOPMENT AND EXPLORATION PROJECTS

CentroGold Project (also referred to as the Gurupi Project)

Definitive Agreement with Metalla for the sale of the Company’s Net Smelter Return Royalty

Greenfield Exploration

Pedra Branca Project

Iron Quadrangle Option Agreement with IAMGOLD Corporation

QUALIFIED PERSON

OUTSTANDING SHARE DATA

NON-GAAP PERFORMANCE MEASURES

Reconciliation of Cash Operating Costs, All-In Sustaining Costs and All-In Costs per Ounce Sold

Reconciliation of Cash Operating Costs, All-In Sustaining Costs per Ounce Sold by Mine Complex/Site

Reconciliation of Free Cash Flow[1]

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA[1]

FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

a) Liquidity risk

b) Derivative financial instruments

c) Price risk

d) Currency risk

e) Interest rate risk

f) Changes in liabilities arising from financing activities

RISKS AND UNCERTAINTIES

I. Risks Relating to the Gold Industry

Gold prices are volatile and there can be no assurance that a profitable market for gold will exist.

Mining is inherently risky and subject to conditions and events beyond Jaguar’s control.

Calculation of Mineral Reserves and Mineral Resources and metal recovery is only an estimate, and there can be no assurance about the quantity and grade of minerals until mineral resources are actually mined.

II. Risks Relating to Jaguar’s Business

Jaguar’s operations involve exploration and development and there is no guarantee that any such activity will result in commercial production of mineral deposits.

Jaguar may be negatively affected by an outbreak of infectious disease or pandemic.

Fluctuations in currency exchange rates may adversely affect Jaguar’s financial position and results of operations.

Competition for new mining properties may prevent Jaguar from acquiring interests in additional properties or mining operations.

Jaguar Mining Inc. Interim / Quarterly Report 2021