TORONTO, Jan. 9, 2015 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM, OTC: TPRFF) announced today that it has missed the interest payment due December 31, 2014 on its Senior Unsecured Silver-Linked Notes due 2018 (governing the Silver-Linked Notes, the "Silver Note Indenture"). Due to this missed payment, as of January 10, 2015 the Company will default under the terms of the Silver Note Indenture. The default will arise from the Company's failure to make the interest payment due on December 31, 2014 within the 10 day cure period provided in the Silver Note Indenture. The Company has provided the Trustee, Equity Financial Trust Company, with notice of the default.
In addition, the Company has not made the interest payment due December 31, 2014 for the Company's Senior Secured Gold-Linked Notes due 2017 (governing the Gold-Linked Notes, the "Gold Note Indenture"), nor does the Company currently intend to make this payment within the 30 business day cure period afforded to the Company under the terms of the Gold Note Indenture. As such, the Gold-Linked Notes will fall into default at that time and the Company will provide the Trustee with a notice of default when applicable.
As the Company previously advised shareholders in its financial statements and MD&A for the quarter ended September 30, 2014, it has significant liquidity concerns in meeting the debt service requirements associated with the exercise of the put options under the Gold Notes and the interest payments associated with both the Gold and Silver Notes. The Company has engaged GMP Securities L.P. to assist in the evaluation of its various options to resolve the current situation and is in the process of developing a plan to move forward. The Company has also engaged SRK Consulting (U.S.), Inc. ("SRK") to conduct mine plan optimization with site personnel of the latest resource model to improve future cash flow. As part of this work, SRK will also review capital and operating costs associated with the life of mine plan. The Company will continue to work closely with these advisors as well as Gold and Silver Noteholders to resolve the current situation and will announce its strategy concerning the debt service in due course.
Changes to Executive Compensation
In a continued effort to reduce G&A costs, the Company has eliminated the deferred portion of executive salaries effective January 1, 2015. In addition, the Company has also cancelled the full amount of deferred salaries of the Company's executives accumulated through December 31, 2014 amounting to approximately US$612,000, 80% of which pertained to the Executive Co-chairmen. By eliminating accumulated deferred payments, the Executive Co-chairmen effectively reduced their combined 2014 annual salaries by 58% to a total of US$300,000. Effective January 1, 2015, the combined salaries of the Executive Co-chairmen will be further reduced by 40% to a total of $180,000.
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 31, 2014, 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: Mike Davies, Chief Financial Officer, (416) 360-4653, [email protected]