Gran Colombia Gold announces third quarter 2012 results with
production of 26,912 ounces of gold
TORONTO, Nov. 12, 2012 /PRNewswire/ - Gran Colombia Gold
Corp. (TSX: GCM) announced today the release of its unaudited
interim condensed consolidated financial statements for the third
quarter ended September 30, 2012 and
accompanying management's discussion and analysis. All financial
figures contained herein are expressed in U.S. dollars unless
otherwise noted.
Third Quarter 2012 Highlights
- Gold production of 26,912 ounces in the third quarter of 2012
represented a 24% improvement over the same quarter last year
bringing total gold production for the first nine months of 2012 to
78,779 ounces, up 22% over the first nine months of last year. The
Company continued to make progress at its Segovia Operations,
increasing mill throughput at Maria Dama to an average of 891
tonnes per day ("tpd") in the third quarter of 2012, a 61% increase
compared with the first half of 2012. In September, the Company
reached its objective as mill throughput averaged 1,066 tpd,
including several days when it was stress tested with throughput
greater than 1,300 tpd. Four new flotation cells have also been
installed as part of the plant upgrade and the final two new
flotation cells will be completed shortly. Capital development
activities continued at the Providencia and Sandra K mines and the
mine contractor continues de-watering to open up access to lower
levels at the El Silencio mine. Segovia's gold production in the
third quarter of 21,114 ounces was impacted by lower than normal
grades due to the temporary depletion of higher grade zones in the
levels being mined and the processing of lower grade stockpiles in
the ramp up of the new mill. Grades are expected to return to
historical levels at Segovia as the new mining areas are opened up
in the fourth quarter. At Marmato Underground, grades improved in
the third quarter as expected, resulting in gold production of
5,798 ounces for the quarter.
- Revenues for the third quarter of 2012 of $47.1 million, 21% higher than the third quarter
last year, brought total revenues for the first nine months of 2012
to $130.5 million. The Company sold
77,241 ounces of gold at an average realized price of $1,647 per ounce in the first nine months of
2012.
- Cash costs showed improvement at both Segovia and Marmato
Underground in the third quarter of 2012 compared to the second
quarter this year. At Segovia, cash costs decreased by $32 per ounce to $1,288 in the third quarter, and would have been
below $1,200 per ounce if not for the
lower head grades encountered in the third quarter. At Marmato
Underground, the improvement in grades reduced cash costs by
$114 per ounce to $1,174 per ounce in the third quarter. Overall,
with an average realized gold price of $1,642 per ounce and a combined cash cost of
$1,261 per ounce, the Company
generated cash flow of $381 per ounce
or $10.8 million from its production
in the third quarter of 2012.
- General and administrative expenses of $4.1 million for the third quarter of 2012
included additional expenses incurred to expedite the collection of
overdue VAT claims in Colombia, an
increased level of initiatives being undertaken in the quarter and
care and maintenance costs and legal fees associated with the
Mazamorras and Mali properties,
both of which are in the process of being wound down.
- Net loss attributable to shareholders of $0.7 million, or $0.00 per share, in the third quarter of 2012,
compared to a net loss of $5.9
million, or $0.02 per share,
in the third quarter of 2011.
- Cash balance at September 30,
2012 was $1.6 million.
During the third quarter of 2012, the Company used $2.5 million of its cash on hand, together with
$0.6 million generated from operating
activities and $4.9 million of net
proceeds from additional Colombian bank debt facilities to fund
$7.9 million of investing activities
during the quarter.
- Expansion of the Company's Segovia Operations gained momentum
on October 30, 2012, when the Company
closed a $100 million, senior secured
10% gold-linked notes financing.
- Exploration highlights included the announcement, on
October 10, 2012, of the best results
the Company has seen thus far in the deep zone mineralization at
the Marmato Project, including 1.6 grams per tonne of gold over 618
meters of drilling, with 16.9 meters with 35.2 grams per tonne of
gold and a 1.8 meter section containing 159 grams per tonne of
gold. This indication of a second zone of mineralization,
well below the current estimated lower limit of the open pit
option, forming a deep body that could be suitable for underground
mining. The Company expects to complete the prefeasibility study
for the Marmato Project by the end of this year. Also in
October, the Company commenced a 51,000 meter exploration program
to upgrade and expand the Company's resources at its Segovia
Operations.
- The company has commenced a process to identify other potential
acquirers or joint venture partners for the Mazamorras Project as
the previously announced agreement was not completed by the
acquiring company as agreed.
Effective November 1,
2012, the Company is pleased to announce the appointment of
Gabriel Gaviria as Vice President of
Mining for Gran Colombia Gold. In his previous position, Mr.
Gaviria managed all aspects of the Company's underground mining
operations at Marmato. In his new capacity, Mr. Gaviria will
bring his considerable experience in cost control, mine planning
and operations management to focus on the Segovia Operations,
including the expansion project which is now getting underway.
Commenting on the Company's progress in the
third quarter of 2012, Serafino
Iacono, Executive Co-Chairman of Gran Colombia commented
said "We are pleased to have received the financial support of our
existing and new shareholders to fund the expansion and
modernization of our Segovia Operations. With the financing
in place, we must now focus on completing the new Segovia expansion
project on time and on budget. Combined with the new
management focus that Mr. Gaviria's appointment brings to our
existing Segovia Operations, we must ensure that we redouble our
efforts to deliver on our commitments to our shareholders."
Financial and Operating Summary
A summary of the financial and operating results
for the third quarter of 2012 is as follows:
|
Q3 2012 |
|
Q3 2011 |
|
YTD 2012 |
|
YTD 2011 |
Operating data: |
|
|
|
|
|
|
|
Gold produced (ounces) |
26,912 |
|
21,727 |
|
78,779 |
|
54,501 |
Gold sold (ounces) |
28,009 |
|
22,317 |
|
77,241 |
|
54,624 |
Average realized gold price ($/oz sold) |
$ 1,642 |
|
$ 1,684 |
|
$ 1,647 |
|
$ 1,547 |
Total cash costs ($/oz sold) (1) |
$ 1,261 |
|
$ 1,340 |
|
$ 1,258 |
|
$ 1,352 |
Financial data: ($000's, except per
share amounts) |
|
|
|
|
|
|
|
Total revenues |
$ 47,070 |
|
$ 38,779 |
|
$ 130,485 |
|
$ 87,288 |
Gross margin (2) |
$ 6,101 |
|
$ 1,862 |
|
$17,729 |
|
($ 1,704) |
Net loss attributable to shareholders |
($ 724) |
|
($ 5,910) |
|
($ 13,320) |
|
($ 36,486) |
Basic and diluted loss per share |
$0.00 |
|
($0.02) |
|
($0.03) |
|
($0.13) |
Cash and cash equivalents |
$ 1,604 |
|
$ 58,608 |
|
$ 1,604 |
|
$ 58,608 |
Total debt, including current portion |
$ 88,185 |
|
$ 78,557 |
|
$ 88,185 |
|
$ 78,557 |
|
(1) |
"Total cash costs" are presented
on a per ounce sold basis and represent consolidated
averages for the Company from both the Segovia Operations and
Marmato Underground
mine. See "Additional Financial Measures". |
|
(2) |
"Gross margin" represents total
revenues, net of operating costs, production taxes and
depreciation, depletion and amortization. |
Segovia Operations Update
In the third quarter of 2012, production at the
Segovia Operations totalled 21,114 ounces of gold with an average
daily processing rate of 891 tpd, compared to 20,610 ounces of gold
with an average daily processing rate of 591 tpd in the second
quarter of 2012.
The Company is in the final stages of upgrading
the Maria Dama plant to achieve a maximum capacity of 1,500 tpd by
early 2013. In September 2012,
the Company reached its objective of processing 1,000 tpd, double
the historical processing rate at Maria Dama. The new ball mill
came on-line in mid-May and the second phase of the plant upgrade
got underway in the third quarter with the installation of six new
flotation cells, the first four of which are now in operation and
the remaining two should be completed in the fourth quarter. Four
new cyanidation tanks are also now in operation. While these new
flotation cells were being installed, the Company limited mill
throughput to approximately 800 to 900 tpd to maintain mill
recovery rates between 80% and 85% and then in September, utilizing
approximately 2,600 tonnes of material from low-grade stockpiles,
increased throughput to an average of 1,066 tpd for the month,
including several days where the plant was stress tested with
throughput in excess of 1,300 tpd. Processing rates have been
maintained at 1,000 tpd in October.
Historically, grades at Segovia, one of the top
ten producing mines by grade in the world(1), have averaged in the
range of 12 to 14 g/t. However, in the third quarter of 2012,
grades averaged approximately 9.5 g/t due to the temporary
depletion of higher grade zones in the levels currently being mined
at Providencia and El Silencio and, to a lesser extent, the
processing of some lower grade stockpiles. At Providencia, where
mining activity is being conducted on Level 11, capital development
is in process to open up access to higher grade areas on Level 12
that will commence mining in the fourth quarter. Similarly, at El
Silencio, the mine contractor is currently working between Levels
18 and 24, where the extra high grade sections (ie greater than 50
g/t) are now depleted and material ranges between 10 and 40 g/t.
De-watering activity by the mine contractor, currently down to
Level 27, continues but the pumping process is being slowed by
depth, taking approximately 45 days to pump each level. As the mine
contractor is able to start accessing Levels 24 to 29 over the next
few months, grades from El Silencio's gold production will also
improve through the inclusion of the extra high grade material.
(1) |
Source: NRH Research, Global Gold Mines & Deposits 2012
(publicly traded companies with deposits greater than one million
ounces in all resources categories) |
Marmato Project Update
In the third quarter of 2012, production at
Marmato Underground totalled 5,798 ounces of gold and 9,684 ounces
of silver, with an average daily processing rate of 765 tpd,
compared to 4,997 ounces of gold and 8,016 ounces of silver, with
an average daily processing rate of 740 tpd in the second quarter
of 2012. As expected, head grades improved to approximately
2.9 g/t in the third quarter.
Outlook
With the Maria Dama plant now operating at 1,000
tpd, grades will be the determining factor in the final production
result for the Segovia Operations for 2012, which is likely to be
85,000 to 90,000 ounces of gold. The Company continues to expect
production from the underground mine at Marmato to total
approximately 23,000 ounces of gold, resulting in expected total
production for the Company of between 108,000 and 113,000 ounces of
gold for the full year of 2012, an increase of between 18% and 24%
over 2011.
The Company's longer term plan remains on track
to reach a production rate of 200,000 ounces of gold annually at
its Segovia Operations by 2014.
Webcast
As a reminder, the Company will host a
conference call and webcast on Tuesday,
November 13, 2012 at 9:00 a.m.
Eastern Time (9:00 a.m.
Bogota time) to discuss the
results and provide an operational update.
Webcast and call-in details are as follows:
Live Event link: |
http:/www.media-server.com/m/p/5utqtq6x |
Toronto & International: |
1 (847) 585-4405 |
North America Toll Free: |
1 (888) 771-4371 |
Colombia Toll Free: |
01 800 9 156 924 |
Conference ID: |
33575587 |
A replay of the webcast will be available at
www.grancolombiagold.com from Tuesday,
November 13, 2012 until Thursday,
December 13, 2012.
About Gran Colombia Gold
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. In addition, Gran
Colombia is advancing a project to develop a large-scale, gold and
silver mine at its Marmato operations.
Additional information on Gran Colombia Gold
can be found on the Company's website at www.grancolombiagold.com
and by reviewing the Company's page on SEDAR at
www.sedar.com.
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 28, 2012 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.