Gran Colombia Gold announces management restructuring, further cost reductions to deliver an all-in sustaining cost of $950 per ounce in 2014 and receipt of a $4 million bridge loan
TORONTO, Feb. 3, 2014 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM) (OTC: TPRFF) announced today that it has implemented actions to strengthen its management team, improve its cost structure and has secured bridge financing in advance of its prospectus financing (see the company's press release dated November 19, 2013).
The Board of Directors has appointed Mr. Lombardo Paredes Arenas as Chief Executive Officer (CEO) of Gran Colombia Gold. Ms. Maria Consuelo Araujo will be appointed in a new role, as President of the company and focus her efforts on governmental relations and corporate responsibility.
Commenting on today's announcements, Serafino Iacono, Executive Co-Chairman of Gran Colombia Gold, stated, "We are excited to have Mr. Paredes join our team as we prepare for the implementation of our new, modern mining operation at Segovia and focus on improving the efficiency of our existing operations." Looking forward to 2014, Mr. Iacono added, "We are currently completing our 2014 operating plan which is designed to deliver a cost structure that positions the company to generate the cash flow needed to meet our 2014 financial obligations."
Mr. Paredes assumed the role of CEO effective February 1, 2014 and brings to his position over 20 years of corporate leadership and operations management experience in the resource sector in Latin America. Before becoming an independent consultant on energy and environment project development, Mr. Paredes, within Petroleos de Venezuela (PDVSA), held several roles with responsibility for regional planning of investments and social development for Eastern Venezuela, and was Managing Director and a Board Member of Maraven S.A. (an affiliate of PDVSA), with responsibility for the construction and commissioning of the Cardon Refinery Conversion Project in Venezuela, a US$2.6 billion project, and was General Manager of its Production Operations Division, with 5,000 employees and oil production of 800 KBbls per day. Mr. Paredes holds a Bachelor of Science in Mechanical Engineering and Master of Economic Analysis and Financial Economics.
In January 2014, Gran Colombia completed a restructuring of its operations at Segovia to continue the expansion and modernization of mining activities and improve security in the mining and processing operations. Certain key functions will be directly employed by Gran Colombia and a local contractor has been engaged to carry on the mining activities in the company-operated areas at Segovia. This new mine contractor will be remunerated for their services based on tonnes mined, thereby lowering mining costs per tonne and turning the former fixed operating cost structure into a variable cost more closely aligned with production, revenues and cash flows.
As a result of this operating cost restructuring and focusing the 2014 mine plan on higher grade areas at Segovia, supported by the company's continuing investment in mine development, the company expects that its all-in sustaining cost ("AISC") will decrease in 2014 to an annual average of about $950 per ounce, down from our preliminary annual average of about $1,300 per ounce in 2013. The AISC per ounce estimate for 2014 is based on current gold price levels and will increase or decrease to some extent as a result of the company's natural hedge in its cost structure to gold price fluctuation related to its artisanal mining contracts that remunerate the cooperatives for their mining services under a formula tied to recovered gold and the spot price of gold. The company will also require approximately $200 per ounce to service its debt and other financial obligations in 2014, including its Gold and Silver-linked notes.
On November 19, 2013, Gran Colombia announced the filing of a preliminary short form prospectus in all of the provinces of Canada, except Quebec, in connection with a "best efforts" offering of a minimum of US$7 million up to a maximum of US$15 million of units of Gran Colombia at a price per unit to be determined in the context of the market. The company also announced that certain current shareholders and principals of the company have indicated that they intend to purchase a minimum of US$5 million of units of the offering. In advance of this proposed offering, Gran Colombia has received a US$4 million, interest free bridge loan from the aforementioned shareholders and insiders, which shall be redeemed and accounted for as a subscription for shares in the proposed offering. The proceeds of the bridge loan are being used to finance the operational restructuring referred to above and for working capital.
The aforementioned securities offering have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any U.S. State securities laws and may not be offered or sold, directly or indirectly, within the United States or its territories or possessions or to or for the account of any U.S. person (as defined in Regulation S under the U.S. Securities Act) other than pursuant to an available exemption from the registration requirements of the U.S. Securities Act. This news release does not constitute an offer to sell or a solicitation of an offer to buy any such securities within the United States, or its territories or possessions, or to or for the account of any U.S. person.
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.
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 26, 2013 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.For further information:
VP, Investor Relations