Gran Colombia Gold Announces Second Quarter and First Half 2015 Results; Reports Production Improvement and Further Reduction in AISC to $904 per Ounce

TORONTO, Aug. 13, 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 and six months ended June 30, 2015. All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.

Second Quarter and First Half 2015 Highlights

• In the second quarter of 2015, the Company continued the implementation of the optimized mine plan developed earlier this year for its Segovia Operations 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 136,000 ounces. Total gold production in the second quarter of 2015 increased by 19% over the first quarter this year to 28,495 ounces, bringing the first half 2015 total gold production to 52,468 ounces. Total gold production in July 2015 amounted to 11,417 ounces, including 9,362 ounces from the Segovia Operations.
• Revenue of $31.3 million in the second quarter of 2015 brought the first half total to $61.9 million, up 6% from the first half last year reflecting the increased gold production, offset partially by the impact on realized gold prices, averaging $1,177 per ounce, of 7% lower spot gold prices in 2015.
• Total cash costs decreased 29% to $779 per ounce in the second quarter of 2015 compared with $1,103 in the second quarter last year, bringing all-in sustaining costs ("AISC") down 25% to $904 per ounce in the second quarter of 2015 compared with $1,203 in the second quarter last year. See the Company's MD&A for the computation of these non-IFRS measures. The second quarter 2015 cost reductions were fuelled by the impact of further devaluation of the Colombian peso, improved production reducing fixed costs on a per ounce basis and cost savings achieved through a contract amendment with the primary contract miner at the Segovia Operations in the first quarter of 2015.
• The Company continued to control its general and administrative ("G&A") expenses, which are running below the expected $1.5 million quarterly run rate in the first half of 2015.
• The Company reported adjusted net income attributable to shareholders of $1.8 million, or $0.08 per share, in the second quarter of 2015 compared with an adjusted net loss of $6.1 million, or $0.26 per share, in the second quarter last year. For the first half of 2015, the adjusted net income attributable to shareholders was $3.1 million, or $0.13 per share, compared with an adjusted net loss of $10.9 million, or $0.54 per share, in the first half last year. The increase in 2015's gold production, coupled with the reductions in total cash cost per ounce sold and G&A expenses, contributed to the year-over-year improvement in adjusted net income attributable to shareholders despite the decrease in realized gold prices. See the Company's MD&A for the computation of these non-IFRS measures.
• The Company continued with the monthly interest payments in the second quarter of 2015 on its Senior Secured Gold-Linked Notes due October 2017 and Senior Unsecured Silver-Linked Notes due August 2018 while it works with GMP Securities L.P. ("GMP") and its legal advisors to remedy the defaults under each of the Notes.

Lombardo Paredes Arenas, Chief Executive Officer of Gran Colombia, commenting on the Company's results for the second quarter of 2015, said, "We are continuing to see step by step improvement in our operating results as we implement the optimized mine plan at our Segovia Operations to further improve production and cash flow. After receiving a mandate from the Board, GMP commenced preliminary discussions with note holders in the second quarter regarding the potential restructuring options and we hope to soon have further news in this regard."

Financial and Operating Summary

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

Segovia Operations

Gold production at the Segovia Operations increased in the second quarter of 2015 to 22,550 ounces, up 22% over the first quarter this year, fuelled by a 7% increase in tonnes sourced from the contract mining cooperatives which averaged 25.6 g/t in the second quarter. This brought total gold production for the first half of 2015 to 41,078 ounces, up from 33,600 ounces in the first half last year. In the second quarter of 2015, the Company continued the implementation of the optimized mine plan for the Segovia Operations that was prepared with SRK earlier this year. The new mine plan focuses development activity over the balance of 2015 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.

Total cash costs at the Segovia Operations decreased in the second quarter of 2015 to $742 per ounce, down 7% from the first quarter of 2015 and 34% lower than reported for the second quarter last year. Further devaluation of the Colombian peso in the second quarter of 2015 helped to reduce Segovia's total cash costs per ounce which also benefitted from improved production that reduced fixed costs on a per ounce basis and from cost savings achieved through a contract amendment with the primary contract miner at the Segovia Operations in the first quarter of 2015. The Colombian peso has continued to devalue since the end of June 2015. This should translate into a further reduction in U.S. dollar equivalent total cash costs per ounce in the third quarter of 2015. Additional reductions in total cash costs per ounce are also expected as the implementation of the optimized mine plan progresses in the second half of 2015 at the Segovia Operations.

Marmato Operations

At Marmato Underground, head grades increased to 2.9 g/t in the second quarter of 2015 resulting in quarterly gold production of 5,945 ounces. Total production for the first half of 2015 was 11,390 ounces of gold, on par with the first half last year. Total cash cost was $941 per ounce in the second quarter of 2015, a slight increase over the first quarter of 2015 but 11% lower than the second quarter last year.

Outlook

The Company is continuing to focus in 2015 on the reorganization of its debt. After completing an evaluation of options to remedy the defaults under our Gold and Silver Notes, GMP commenced preliminary discussions on the Company's behalf regarding potential restructuring options with Gold and Silver Notes holders in the second quarter of 2015.

With first half 2015 gold production of 52,468 ounces, the Company continues to expect 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 volume of higher head grade material mined by the contract mining cooperatives and the rate of advance of mine development activities in 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, August 14, 2015 at 9:30 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, August 14, 2015 until Sunday, September 13, 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 in the midst of an expansion and modernization project 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.