Gran Colombia Gold announces second quarter 2014 results; Reports 34% improvement in gold production over first quarter and continuation of positive trend in all-in sustaining costs

TORONTO, Aug. 13, 2014 /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, 2014. All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.

Second Quarter 2014 Highlights

• The Company is maintaining its 2014 gold production guidance of 102,000 to 122,000 ounces. Total gold production in the second quarter of 2014 improved by 34% over the first quarter to 25,713 ounces reflecting the expected improvement in head grades at its Segovia Operations as development activities provided access to higher grade mining areas. In the second half of 2014, the continuation of mine development at the Segovia Operations through the Pampa Verde expansion project is expected to facilitate expansion of production through increased tonnages and further head grade improvement as the year progresses.
• Revenue of $32.8 million in the second quarter of 2014, up approximately 28% from the first quarter, benefitted from the production improvement but was still 22% below the second quarter a year ago when realized gold prices were $186 per ounce higher. The Company's continued focus on lowering its all-in sustaining costs over the last year has made a significant contribution to protecting its cash flow in the lower gold price environment while it completes the Pampa Verde project at the Segovia Operations.
• The Company's focus on reducing its costs over the last year and a half, including a significant reduction in its workforce at Segovia in the first quarter this year, combined with improving head grades, has resulted in a decrease in total cash costs to $1,103 per ounce in the second quarter of 2014. All-in sustaining costs continued to show improvement compared to last year, decreasing to $1,203 per ounce (see the Company's MD&A for the computation of this non-IFRS measure) in the second quarter of 2014. Excluding a $1.9 million provision for settlement of a long-term supplier contract at Segovia, total cash costs and all-in sustaining costs in the second quarter of 2014 would have reached all-time lows of $1,028 per ounce and $1,128 per ounce, respectively.
• The Company continued to control its G&A expenses, which amounted to $1.8 million, equivalent to $71 per ounce sold, in the second quarter of 2014, bringing the first half total to $4.0 million or 50% of its expected G&A expenses for the full year.
• Foreign exchange losses were the primary contributor to the increase in the Company's adjusted net loss (see the Company's MD&A for a reconciliation) to $5.8 million, or $0.25 per share, in the second quarter of 2014 compared with an adjusted net loss of $2.5 million, or $0.17 per share, in the second quarter last year. Cost reductions were successful in mitigating a significant portion of the impact on earnings of the lower gold prices compared with the prior year period.
• Development: The Company's Pampa Verde expansion project at the Segovia Operations continues to advance with construction in process at the plant site, excavation underway in August on the ramps at the Providencia and Sandra K mines, and excavation of the 400-metre deep shaft at Providencia to be completed before the end of August. Development activities are expected to begin positively impacting gold production by the end of the third quarter of 2014. A ramp at the Carla mine will get underway later in 2014 that will be ready for 2015.

Serafino Iacono, Executive Co-Chairman of Gran Colombia, commenting on the Company's results for the second quarter of 2014, said, "We are continuing to focus on what we can control. The second quarter saw our production at Segovia rebound after the first quarter's operational restructuring and our commitment to reducing costs delivered further improvement in our all-in sustaining costs. The Pampa Verde expansion project at Segovia is progressing well and we expect to see its positive impact on production and costs by the end of the third quarter."

Financial and Operating Summary

A summary of the financial and operating results for the second quarter and first half of 2014 and 2013 is as follows:

Segovia Operations

At the Segovia Operations, gold production totaled 20,059 ounces in the second quarter of 2014, a 48% improvement from the first quarter of this year, reflecting the expected improvement in head grades as development activities provided access to higher grade mining areas.

In the second quarter of 2014, the Company re-commenced mining of high grade pillar areas within the El Silencio mine using its own contract labor resources to carry out the work. With head grades averaging about 30 g/t in these areas, overall head grades in the Company-operated mines increased by approximately 40% over the first quarter of 2014 to 8.65 g/t. The Company expects that its gold production from the Company-operated mining areas will increase over the remaining course of 2014 as its mine development program, including construction of new ramps and a shaft, continues to open up additional work areas in Providencia and Sandra K, allowing for an increase in both tonnes mined and head grades. Gold production from the contract mining cooperatives at Segovia in the second quarter of 2014 reflected improvement in head grades to historical levels experienced in the first three quarters of 2013 prior to the operational issues in the contract mining cooperative at El Silencio. The Company is working with the contract mining cooperatives to increase their daily tonnages, with similar head grades, by up to 25% over the second quarter of 2014 run rate to increase their gold production in the second half of 2014. The Company is maintaining its total gold production guidance for the Segovia Operations for 2014 of 80,000 to 100,000 ounces. The successful execution of the mine development activities at the Pampa Verde Project is essential to the Company's ability to increase its second half gold production to meet its 2014 gold production guidance.

Marmato Operations

At the Marmato underground mine, operations remained steady in the second quarter of 2014, processing an average of 794 tpd resulting in gold production of 5,654 ounces. Expected annual gold production remains at 22,000 ounces for 2014.

Webcast

As a reminder, the Company will host a conference call and webcast on on Thursday, August 14, 2014 at 9:30 a.m. Eastern Time (8:30 a.m. Bogota 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 Thursday, August 14, 2014 until Sunday, September 14, 2014.

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, 2014, 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.