Gran Colombia Gold Announces Second Quarter and First Half 2016 Results; Doubles Adjusted EBITDA and Increases 2016 Production Guidance

TORONTO, ON--(Marketwired - August 11, 2016) - Gran Colombia Gold Corp. (TSX: GCM) (OTC PINK: 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, 2016. All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.

Second Quarter and First Half 2016 Highlights

• Gran Colombia's adjusted EBITDA increased to $18.3 million in the second quarter of 2016 on the strength of improved gold production and reduction in total cash costs per ounce. This brings the total adjusted EBITDA for the first half of 2016 to $29.9 million, double the adjusted EBITDA for the first half of last year. See the Company's MD&A for the computation of this non-IFRS measure. The increased adjusted EBITDA in the second quarter of 2016 led to improved operating cash flow which in turn enabled the Company to continue to reduce overdue local payables and to generate $2.3 million of Excess Cash Flow that has been deposited into the sinking funds for the 2018 and 2020 Debentures.
• Gold production in the second quarter of 2016 totalled 38,229 ounces, up 34% from the second quarter of 2015, bringing the total for the first half of 2016 to 69,718 ounces, a 33% improvement over the first half of last year led by strong performance at its Segovia Operations. Following a record monthly total of 13,583 ounces produced in July, the Company is increasing its production guidance for 2016 to a total of 135,000 to 145,000 ounces of gold for the year.
• Gran Colombia successfully completed the comprehensive restructuring of its senior commodity-linked notes into senior convertible debentures on January 20, 2016 (the "Exchange Date"). Including holders' elections on the Exchange Date, to date a total of $28.9 million of 2018 Debentures and $0.9 million of 2020 Debentures have been converted by holders into common shares of the Company, reducing the aggregate principal amount of the Company's 2018 and 2020 Debentures by 16%. The Company launched Normal Course Issuer Bids ("NCIBs") on July 21, 2016 to use cash accumulated in the sinking funds for the 2018 and 2020 Debentures to repurchase the debt on the open market for cancellation. In the four trading days available prior to the second quarter earnings blackout period, Gran Colombia purchased a total of $0.2 million aggregate principal amount of its debentures for cancellation. At August 11, 2016, the Company has 252.9 million common shares issued and outstanding and the aggregate principal amount of the 2018 and 2020 Debentures was $53.7 million and $103.1 million, respectively.
• Revenue of $48.0 million in the second quarter of 2016, up 54% over the second quarter last year, reflects the increased gold production this year that contributed to a 47% increase in gold ounces sold, and the strengthening of spot gold prices in the second quarter of 2016. This brings total revenue for the first half of 2016 to $82.5 million, up 33% over the first half last year.
• Gran Colombia's total cash costs in the second quarter of 2016 decreased 13% from the second quarter a year ago to $680 per ounce helping to bring all-in sustaining costs ("AISC") down by 10% to $811 per ounce for the second quarter this year. See the Company's MD&A for the computation of these non-IFRS measures.
• The net income attributable to shareholders was $0.01 million, or $0.00 per share, for the second quarter of 2016 compared with $3.0 million, or $0.13 per share, in the second quarter of 2015. For the first half of 2016, net income attributable to shareholders amounted to $10.9 million, or $0.09 per share, compared with a net loss attributable to shareholders of $0.3 million, or $0.01 per share, in the first half of last year.
• The adjusted net income attributable to shareholders was $3.9 million, or $0.03 per share, in the second quarter of 2016 compared with $1.7 million, or $0.07 per share, in the second quarter last year. For the first half of 2016, adjusted net income attributable to shareholders was $4.1 million, or $0.04 per share, compared with an adjusted net loss of $0.2 million, or $0.01 per share, in the first half of last year. See the reconciliation in the Company's MD&A for the computation of this non-IFRS measure. The increase in adjusted EBITDA, net of an increase in income taxes, in 2016 was the primary driver behind the improved adjusted net income results this year.

Lombardo Paredes Arenas, Chief Executive Officer of Gran Colombia, commenting on the Company's results for the first half of 2016, said, "We are very pleased to see the improvement in our adjusted EBITDA in the first half of this year, made possible through our production growth at Segovia and further reduction in our costs. The increased level of operating cash flow we are generating is being dedicated toward improving our balance sheet through reductions in our payables and to buy back our senior debt through the recently announced NCIBs. We also feel confident enough at this point in the level of monthly production we are seeing at Segovia to raise our gold production guidance for the year to a total of 135,000 to 145,000 ounces."

Financial and Operating Summary

A summary of the financial and operating results for the second quarter and first half of 2016 and 2015 follows:

Segovia Operations

Second quarter 2016 gold production totalled 31,884 ounces, up 23% from the first quarter of 2016 and up 41% from the second quarter a year ago. Gran Colombia processed an average of 771 tonnes per day ("tpd") with head grades averaging 13.8 g/t at Segovia in the second quarter of 2016, an improvement from 730 tpd at an average head grade of 12.9 g/t in the first quarter of 2016 and 534 tpd at head grades averaging 15.5 g/t in the second quarter a year ago. Improved recovery of gold from the mill circuit related to the Company-operated areas was also a factor in the increased gold production in the second quarter of 2016. For the first half of 2016, gold production at the Segovia Operations totalled 57,883 ounces, up 41% from the first half of last year. With another 11,731 ounces produced in July, the Company now expects its gold production at Segovia to total from 111,000 to 119,000 ounces for the full year 2016, up from a total of 92,894 ounces produced in 2015.

Segovia's total cash costs, which decreased to $627 per ounce in the second quarter of 2016, were positively impacted by the increased gold production from the Company-operated mining areas which helped to lower fixed costs on a per ounce basis. For the first half of 2016, Segovia's total cash costs averaged $641 per ounce, down 16% from the first half of 2015.

Marmato Operations

At the Marmato Underground mine, tonnes processed increased by 20% in the second quarter of 2016, compared with the first quarter this year, to 987 tpd with head grades averaging 2.6 g/t. This resulted in gold production of 6,345 ounces in the second quarter of 2016, up 16% from the first quarter of 2016 and up 7% from the second quarter a year ago. For the first half of 2016, gold production at the Marmato Operations totalled 11,835 ounces, up 4% from the first half last year. With another 1,852 ounces produced in July, the Company expects to produce a total of 24,000 to 26,000 ounces at its Marmato Operations for the full year 2016.

Additional operating costs associated with repairs and maintenance activities, the adverse impact of a lower mill recovery rate on the Marmato Underground mine's gold production and an increase in production taxes as a result of the increase in spot gold prices were the primary contributors to the increase in Marmato's total cash costs to $933 per ounce in the second quarter of 2016. For the first half of 2016, Marmato's total cash costs averaged $900 per ounce, down 3% from the first half of 2015.

Outlook

With a total of 83,301 ounces of gold produced through the first seven months of 2016 and an expectation that the trend in monthly production from the Segovia Operations will continue for the balance of the year, the Company is increasing its annual gold production guidance for 2016 to a range of 135,000 to 145,000 ounces.

The results for total cash costs and AISC per ounce for the first half of 2016 were better than expected due to the improved production performance at the Segovia Operations. However, for the full year 2016, the Company is maintaining its guidance for total cash costs which are expected to average between $700 and $750 per ounce, influenced by the exchange rate of the Colombian peso relative to the U.S. dollar and by production volumes during the balance of the year. Gran Colombia also anticipates that its average AISC for the full year will be between $850 and $950 per ounce, reflecting an expected increase in the level of capital investment in its Segovia Operations in the second half of 2016. The Company commenced a 10,000 meters drilling program at Segovia in May 2016 that is expected to be completed by the end of the year. The Company is currently conducting a further review of mine design options to improve mine access, material handling and ventilation at the Providencia mine at Segovia and expects to make a final decision in the second half of 2016 regarding its path forward. The ultimate decision and timing to commence the capital program associated with this initiative will have an impact on whether spending reaches the top end of the guidance range for sustaining capital expenditures for the full year.

Webcast

As a reminder, the Company will host a conference call and webcast on Friday, August 12, 2016 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 12, 2016 until Sunday, September 11, 2016.

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 anticipated business plans or strategies. 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 30, 2016, 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.

Contact

For Further Information, Please Contact:

Mike Davies
Chief Financial Officer
(416) 360-4653
investorrelations@grancolombiagold.com