Gran Colombia Gold announces first quarter 2015 results; Reports further reduction in AISC to $938 per ounce

TORONTO, May 14, 2015 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM, OTC: TPRFF) announced today the release of its unaudited condensed consolidated financial statements and accompanying management's discussion and analysis (MD&A) for the three months ended March 31, 2015. All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.

First Quarter 2015 Highlights

• The Company commenced implementation of an optimized mine plan at its Segovia Operations in March that is expected to increase Segovia's annual gold production for 2015 to a range of 90,000 to 110,000 ounces and total Company production to a range of 114,000 to 134,000 ounces. Total gold production in the first quarter of 2015 amounted to 23,973 ounces, a 25% increase over the first quarter of 2014 driven by higher grades at the Segovia Operations.
• Revenue of $30.7 million in the first quarter of 2015 was 19% better than the first quarter last year reflecting the increased gold production, offset partially by 6% lower realized gold prices.
• Negotiation of a contract amendment with the primary contract miner at the Segovia Operations, coupled with the impact of further devaluation of the Colombian peso and improved production on fixed costs per ounce, resulted in a decrease in total cash costs to $824 per ounce in the first quarter of 2015 compared with $1,053 in the first quarter last year, bringing all-in sustaining costs ("AISC") down to $938 per ounce in the first quarter of 2015 compared with $1,197 in the first quarter last year. See the Company's MD&A for the computation of these non-IFRS measures.
• The Company continued to control its general and administrative ("G&A") expenses, which amounted to $1.5 million, as expected, in the first quarter of 2015, 34% lower than the same period a year ago.
• The Company reported adjusted net income attributable to shareholders of $1.4 million, or $0.06 per share, in the first quarter of 2015 compared with an adjusted net loss of $4.8 million, or $0.29 per share, in the first quarter last year. The increase in 2015's gold production and sales coupled with the reduction in total cash cost per ounce sold contributed to the year-over-year improvement in the adjusted net income attributable to shareholders. See the Company's MD&A for the computation of these non-IFRS measures.
• The Company resumed monthly interest payments on February 28, 2015 on its Senior Secured Gold-Linked Notes due October 2017 (the "Gold Notes") and also commenced paying interest at the end of February on its Senior Unsecured Silver-Linked Notes due August 2018 (the "Silver Notes) on a monthly basis, instead of the current semi-annual coupon payments.

Lombardo Paredes Arenas, Chief Executive Officer of Gran Colombia, commenting on the Company's results for the first quarter of 2015, said, "The steps we took in January to reduce operating costs at Segovia materialized as expected into a further reduction in AISC to $938 per ounce in the first quarter. We are continuing to implement the optimized mine plan at our Segovia Operations to improve production and cash flow. The Company's board has recently given its approval to GMP Securities to commence preliminary discussions with the note holders to enable us to resolve the defaults."

Financial and Operating Summary

A summary of the financial and operating results for the first quarter of 2015 and 2014 is as follows:

Segovia Operations

The Segovia Operations produced 18,528 ounces in the first quarter of 2015, a 37% increase over the first quarter of 2014, fuelled by the impact of improved head grades in material mined by the contract mining cooperatives, which averaged 24.0 g/t in the first quarter of 2015. At the end of February 2015, SRK completed the design of the mine plan update for the Segovia Operations that will initially focus development activity over the next couple of quarters in the Company-operated areas at the Providencia and El Silencio mines, providing access to higher grade stopes and improving efficiency through the construction of internal ramps to mechanize material handling, introducing scoops and jumbos into the mining process.

On January 21, 2015, the Company announced that it had negotiated a contract amendment, with immediate effect, with the primary contract miner at the Segovia Operations that is expected to generate additional monthly cost savings of approximately $0.7 million to $0.9 million based on current production volumes and gold prices. This cost savings, coupled with the impact on costs of further devaluation of the Colombian peso, contributed to the decrease in total cash costs at the Segovia Operations to $795 per ounce in the first quarter of 2015.

Marmato Operations

At Marmato Underground, head grades dipped slightly in the first quarter of 2015 resulting in a 4% decrease, compared with the first quarter last year, in quarterly gold production to 5,445 ounces. Total cash cost was $914 per ounce in the first quarter of 2015, down from $976 per ounce in the first quarter last year.

Outlook

The Company is continuing to focus in 2015 on the reorganization of its debt. The Company is in the process of implementing the updated mine plan at Segovia and, after completing an evaluation of various remedies with GMP and its legal advisors, GMP is commencing preliminary discussions on the Company's behalf with Gold and Silver Notes holders in the second quarter of 2015.

The Company expects to see an increase in total annual gold production in 2015 to approximately 114,000 to 136,000 ounces. This includes production at the Segovia Operations of 90,000 to 110,000 ounces in 2015, influenced by the higher head grades in material mined by the contract mining cooperatives, which are expected to account for about 70% of 2015's annual production at Segovia, and the rate of advance of mine development activities outlined in the optimized mine plan permitting access to higher grade stopes within the Company-operated areas of the Segovia mines. The Company also expects a total of 24,000 to 26,000 ounces at the Marmato underground mine in 2015.

Webcast

As a reminder, the Company will host a conference call and webcast on Friday, May 15, 2015 at 10:00 a.m. Eastern Time to discuss the results.

Webcast and call-in details are as follows:

A replay of the webcast will be available at www.grancolombiagold.com from Friday, May 15, 2015 until Sunday, June 14, 2015. 

About Gran Colombia Gold Corp.

Gran Colombia is a Canadian-based gold and silver exploration, development and production company with its primary focus in Colombia. Gran Colombia is currently the largest underground gold and silver producer in Colombia with several underground mines in operation at its Segovia and Marmato Operations. Gran Colombia is currently advancing a project to develop a modern, large-scale, gold and silver mine at its Segovia operations.

Additional information on Gran Colombia can be found on its website at www.grancolombiagold.com and by reviewing its profile on SEDAR at www.sedar.com.

Cautionary Statement on Forward-Looking Information:
This news release contains "forward-looking information", which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company and its projects and, specifically, statements concerning anticipated growth in annual gold production and reduction of cash costs. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Gran Colombia to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those anticipated in these forward-looking statements are described under the caption "Risk Factors" in the Company's Annual Information Form dated as of March 31, 2015, which is available for view on SEDAR at www.sedar.com. Forward-looking statements contained herein are made as of the date of this press release and Gran Colombia disclaims, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.

SOURCE Gran Colombia Gold Corp.