Gran Colombia and Medoro Announce Merger to Become Leading Colombian Gold Company

TORONTO, ONTARIO -- (Marketwire) -- 04/13/11 -- Gran Colombia Gold Corp. (TSX: GCM) and Medoro Resources Ltd. (TSX: MRS) are pleased to announce that today they have entered into an arrangement agreement (the 'Arrangement Agreement') to merge the two companies and create a leading Colombian-focused gold production and exploration company. The combined company will benefit from the current production and expansion potential at the Gran Colombia gold mine (formerly known as the Frontino gold mine) together with the large-scale highly prospective Marmato gold development project, both located on the mid-Cauca gold belt in the vicinity of Medellin, Colombia.

Under the terms of the Arrangement Agreement, each Medoro shareholder will receive 1.20 common shares of Gran Colombia, plus 0.50 of a Gran Colombia common share purchase warrant (each whole warrant, a 'Warrant') for each Medoro share. Each Warrant will be issued under Gran Colombia's warrant indenture dated August 20, 2010 (the 'Warrant Indenture') and entitle the holder thereof to acquire one common share of Gran Colombia at an exercise price of CAD$2.60 per Gran Colombia common share and shall expire on August 24, 2015. Outstanding Warrants issued under the Warrant Indenture are listed on the Toronto Stock Exchange ('TSX') under the symbol 'GCM.WT'. Holders of Medoro options and Medoro warrants will have their securities converted into Gran Colombia securities and on exercise will obtain Grand Colombia shares and warrants on an equivalent basis. Upon completion of the merger, existing Gran Colombia and Medoro shareholders will each own approximately 50% of the combined company, respectively on a fully diluted basis.


Highlights of the Merger:

(All figures are in US$, unless otherwise indicated)

-- Significant and growing gold production profile: Gold production from the combined company is expected, based on analyst consensus production estimates for Gran Colombia and Medoro, as an operating mine, to grow from 109,000 gold ounces in 2011 to over 630,000 gold ounces in 2016 representing a compound annual growth rate of 42%.

-- Complementary gold mining operations: There exists current gold production and cash flow from the high grade Gran Colombia gold mine with sustained long term production growth from the development of the large world-class gold resource at the Marmato gold project, both located on the mid-Cauca gold belt in the vicinity of Medellin, Colombia.

-- Strong exploration and development pipeline: Significant prospective landholdings in multiple gold belts in Colombia covering a combined total of approximately 43,000 ha at varying stages of production, development and exploration.

-- Increased scale and regional presence: Strengthened position in an attractive emerging gold district with opportunities to combine regional human resources, realize synergies and cost savings and execute on further plans for consolidation.

-- Pro forma fully diluted market capitalization of over CAD$1 billion: Enhanced capital markets profile should promote liquidity and access to capital.

-- Complementary management teams, boards of directors and geologists: Both companies have management teams, directors and geologists with extensive experience and backgrounds operating in Colombia. The pro forma company will have the benefit of selecting a very strong team of operators and developers capable of creating value for shareholders.

-- Retained leverage to operational and development success: Each company's shareholders will retain meaningful equity interests in the pro forma company maintaining significant leverage to the company's future successes.


Maria Consuelo Araujo, Chief Executive Officer of Gran Colombia, stated 'This merger provides Gran Colombia and Medoro with truly combined resources and strengths not available to us independently: operational expertise and talent that can be used at both companies, a single human resource and community relations program, and production synergies where both companies' processing and production facilities can be utilized more efficiently than if we operated apart. I look forward to building the resources needed at both companies to develop the projects underway, and we foresee no delays to projects now being developed.'

Robert Metcalfe, Chairman of the board of directors of Medoro, stated 'This merger allows Gran Colombia and Medoro shareholders to participate in a meaningful way in the enormous gold development and production potential in Colombia, as the leading producer with secured access to processing facilities. The combined company will have exposure to two large production and development projects, at a time of record high gold prices. With Colombia open to investment in the sector this merger offers unparalleled synergies and opportunities in the market. The two projects bring significant economies of scale, production growth and exploration potential. I am very pleased to reach this phase in the Company's evolution and to the growth ahead.'


Management Team and Board of Directors:

Following completion of the proposed merger, the combined company's new board of directors will be comprised of all of the directors of Gran Colombia and Medoro.

The combined company's senior management team will be comprised of:

Serafino Iacono - Co-Chairman
Miguel de la Campa - Co-Chairman
Maria Consuelo Araujo - Chief Executive Officer
Donald East - Chief Operating Officer
Michael Davies - Chief Financial Officer
Jose Oro - Vice-President Production and Corporate Development
Vicente Mendoza - Vice-President, Exploration
Carlos Pinglo - Vice-President, Finance
Peter Volk - General Counsel and Secretary


Merger Details:

The proposed merger will be effected by way of a Plan of Arrangement completed under the Business Corporations Act (Yukon). Under the terms of the Plan of Arrangement, each Medoro shareholder will receive 1.20 common shares of Gran Colombia and 0.5 of a Warrant for each Medoro share held. Each whole Warrant is exercisable to acquire one common share of Gran Colombia at a price of CAD$2.60 per Gran Colombia share and will expire on August 24, 2015.

Completion of the merger is subject to certain conditions, including, without limitation, approval by at least two thirds of the votes cast in person or by proxy at a meeting of Medoro securityholders to approve the merger, approval by simple majority of the votes cast in person or by proxy at a meeting of Gran Colombia shareholders to approve the issuance of Gran Colombia shares (including the issuance of Gran Colombia shares issuable on the exercise of convertible securities) contemplated by the Arrangement Agreement, court approval, regulatory approval, stock exchange approval and obtaining any other applicable third party consents. It is anticipated that the respective securityholders' meetings will be held on or about June 14, 2011.

Upon completion of the merger, Gran Colombia shareholders and Medoro shareholders will hold approximately 50% each of the pro forma company on a fully diluted basis and on a fully diluted basis giving effect only to in-the-money options and warrants of each of Gran Colombia and Medoro of 56% and 44% respectively.

The Arrangement Agreement includes certain customary reciprocal deal protections. Each company has agreed not to solicit any alternative transactions and to pay the other a break fee of $12 million in certain circumstances. In addition, both companies have granted the other the right to match any competing offers if deemed superior to the proposed merger.

Both companies' boards of directors have determined that the proposed merger is in the best interests of their respective companies based on a number of factors, including fairness opinions received from their respective financial advisors. Each company's board of directors unanimously approved the terms of the proposed merger and recommends that their respective shareholders vote in favour of the proposed merger. In the case of Medoro, both Miguel de la Campa and Serafino Iacono, who are also directors of Gran Colombia, declared a conflict of interest and did not participate in any discussions regarding, or approval of, the proposed merger. In addition, each company's management and directors have executed or will execute support agreements to vote their shares in favour of the proposed merger subject to customary fiduciary waivers in the case of a superior offer.

Full details of the proposed merger will be included in the Arrangement Agreement and joint management information circular to be filed with the regulatory authorities and mailed to Gran Colombia and Medoro shareholders in accordance with applicable law.


Advisors and Counsel:

Gran Colombia's financial advisor is GMP Securities L.P. and is being advised on legal matters by MacLeod Dixon LLP. GMP Securities L.P. has provided an opinion to Gran Colombia's board of directors that, as of the date thereof and subject to the assumptions, limitations and qualifications set out therein, the proposed merger is fair, from a financial point of view, to the shareholders of Gran Colombia. GMP Securities L.P. is being advised on legal matters by Torys LLP.

Medoro's financial advisor is Fraser Mackenzie Limited and is being advised on legal matters by Blake, Cassels & Graydon LLP. Fraser Mackenzie Limited has provided an opinion to the Medoro special committee of the board of directors that, as of the date thereof and subject to the assumptions, limitations and qualifications set out therein, the proposed merger is fair, from a financial point of view, to the shareholders of Medoro. Fraser Mackenzie Limited is being advised on legal matters by Fasken Martineau DuMoulin LLP.


Conference Call and Webcast Information

Gran Colombia and Medoro will host a joint conference call and webcast tomorrow, April 14, 2011, at 9:00 am (EDT), for members of the investment community to discuss the merger. Details are as follows:

Dial-in numbers
Operator assisted toll-free dial-in number: (888) 231-8191
International dial-in number: (647) 427-7450
Conference ID: 60388781

Replay access
Replay toll free dial-in number: 1 (800) 642-1687
International dial-in number: (416) 849-0833
Password ID: 60388781

The Gran Colombia and Medoro merger presentation will be posted on the homepage of both companies' websites. The webcast will be available for replay on both companies' websites. For further information on Gran Colombia and Medoro, please see the respective company's websites at www.grancolombiagold.com and www.medororesources.com.


About Gran Colombia Gold Corp.:

The company is a Canadian-based gold and silver exploration and development company focused on acquiring, developing and operating properties of merit in Colombia. The company holds 95% of the former Frontino gold and silver assets, including the largest underground gold and silver mining operation in Colombia. It also owns four more exploration projects in Colombia for total exploration acreage of approximately 21,400 hectares. The company is committed to implementing its exploration and development strategy with a comprehensive environment, safety and community program, meeting international standards of best practice.

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


About Medoro Resources Ltd.

The company is a gold exploration, development and mining company with its primary focus being the development of a large-scale, open-pit mine at Marmato in Colombia. The company also has a 5% interest in the former Frontino Gold Mines Ltd. properties in Colombia with an option to increase its interest to 50%. The company also holds a 100% interest in the Lo Increible 4A and 4B concessions in Venezuela, as well as interests in gold exploration properties in Mali.

Additional information on Medoro can be found on the Company's website at www.medororesources.com and by reviewing the Company's 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 Medoro, Gran Colombia and their respective projects. 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 Medoro and Gran Colombia to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release based on current expectations and beliefs and Medoro and Gran Colombia disclaim, 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.



Contacts:

Gran Colombia Gold Corp.
Belinda Labatte
Investor Relations
(647) 436-2152

Medoro Resources Ltd.
Robert Doyle
Director
(416) 603-4653