Gran Colombia Announces Proposed Sale of its Mazamorras Project in Colombia
TORONTO, July 25, 2012 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM) announced today that Gran Colombia Gold SA, a subsidiary of Gran Colombia, has entered into a share purchase agreement with Andean Minerals and Metals Corp., a privately held Panamanian company, in connection with the proposed disposition of its Mazamorras Project to Andean for consideration of US$5,500,000, as described below.
The Mazamorras Project is an early stage gold-copper exploration project located in the Department of Nariño, Colombia. The Project includes four concessions covering approximately 5,976 hectares and was purchased by Gran Colombia in 2010. The Company ceased exploration activities at the Mazamorras Project in October 2011 and has not allocated any exploration resources to the Project in 2012.
Pursuant to the Share Purchase Agreement, Andean will purchase 100% of the issued and outstanding share capital of "Mazamorras Gold SA", a subsidiary of Gran Colombia which holds the Mazamorras Project. As consideration, Gran Colombia will receive an aggregate cash payment of US$3,500,000 (US$1,000,000 to be paid on closing, and five installments of US$500,000 each to be paid on the dates that are three months, six months, twelve months, eighteen months and twenty four months from the date of closing); and common shares and warrants of Andean equal to 5% of the current issued and outstanding share capital of Andean. Andean will also pay the remaining US$2,000,000 of the purchase price to the original vendor of the Project and will assume all remaining obligations under the original purchase agreement of the Mazamorras Project. Such obligations include a remaining exploration commitment of US$2,000,000 and a 2.5% net smelter return royalty on any production from the Project payable to the original vendor of the Project. The transaction is expected to close on September 15, 2012.
José R. Oro, the former Vice President, Exploration and Corporate Development of Gran Colombia, who resigned from the Company effective June 30 2012, is the President of Andean Minerals and Metals Corp.
Maria Consuelo Araujo, Chief Executive Officer of Gran Colombia, commented: "This transaction is in line with Gran Colombia's strategy of focusing on our Segovia and Marmato projects and will strengthen our balance sheet. We are pleased that José Oro and Andean will be taking over this project. We thank José Oro for his invaluable contribution to Gran Colombia and wish him the best in his new project. We are confident that Andean has the exploration and development expertise and financial resources required to advance the Mazamorras Project and through our stake in Andean, we will be able to participate in any potential upside of the Mazamorras Project."
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. In addition, Gran Colombia is advancing a project to develop a large-scale, gold and silver mine at its Marmato operations.
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. 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. Forward-looking statements contained herein are made as of the date of this press release 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.
SOURCE: Gran Colombia Gold Corp.For further information:
VP, Investor Relations