/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
TORONTO, Oct. 22, 2012 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM) is pleased to announce that it has priced the previously announced offering (see Company press release dated September 20, 2012) of US$100 million aggregate principle amount of units (the "Offering"). Each unit of the Offering will consist of one US$1,000 face amount secured, 10% gold-linked note (the "Notes") and 250 common share purchase warrants. Collectively, holders of the Notes will have a notional call on the U.S. dollar financial equivalent of approximately 71,429 ounces of gold (the "Implied Gold Ounces") at a notional price of US$1,400 per ounce.
Serafino Iacono, Executive Co-Chairman of Gran Colombia commented, "The successful pricing of this Offering is a very important step in our Company's transformation. The Pampa Verde Project, with a new plant and modern, mechanized underground mine, will allow us to grow our annual production to 200,000 ounces of gold and to reduce the cash costs at our Segovia Operations. We were very pleased by the response to this transaction; the support of current and new investors conveys the high degree of confidence in our continued growth and strategic long-term plan."
The Notes will bear interest at a rate of 10% per year, accruing and payable monthly in arrears on the last business day of every month. The first interest payment date is November 30, 2012 and will consist of interest accrued from and including the closing date. The Notes will mature on the first business day that is five years after the closing date (the "Maturity Date") and will entitle the holder thereof to receive the greater of: (i) the U.S. dollar financial equivalent of approximately 0.7143 ounces of gold per Note (which is based on a notional price of US$1,400 per gold ounce) plus any accrued interest in cash, and (ii) the U.S. dollar face amount of the Note plus any accrued interest in cash.
The Noteholders shall have the option to require the Company to purchase up to US$6.25 million aggregate face amount of the Notes at the end of each three-month period beginning on the 25th month through the 57th month after the issue date, with principal being repaid in the greater of (i) up to US$6.25 million aggregate face amount of the Notes, and (ii) the U.S. dollar financial equivalent of up to 6.25% of the Implied Gold Ounces underlying the Notes. At maturity, the Company will be required to pay the greater of (i) the balance of the face amount of the Notes and (ii) the U.S. dollar financial equivalent of the Implied Gold Ounces underlying the balance of the Notes which have not been put to the Company. The Company will place aside in a segregated gold account approximately 8.3% of the Implied Gold Ounces for the benefit of the Noteholders throughout the term of the Notes on or before the last day of each three-month period beginning on the 25th month after the closing date until the Maturity Date.
Each warrant will entitle the holder to purchase one of the Company's common shares at a price of C$0.75 and will expire on the first business day that is five years from the closing date.
The net proceeds of the Offering will be used as project financing for the Pampa Verde Project at the Company's Segovia Operations, which includes the construction of a 2,500 tpd mill, the development of a new mechanized underground mine to access new vein deposits as well as improve access to the existing mines, additional capital expenditures relating to the Pampa Verde Project and interest payments on the Notes. The Company also intends to arrange lease financing for a portion of the equipment required for the Pampa Verde Project.
The Offering is expected to close on or about October 30, 2012. The Offering is being conducted by a syndicate of agents led by GMP Securities L.P., as sole lead agent and sole book-runner, and including Stifel Nicolaus Canada Inc.
The Units, the Notes, the Warrants and the Warrant Shares have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and, unless so registered, may not be offered or sold in the United States or to U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws, nor has the Company filed, and the Company will not file, a prospectus in any jurisdiction in Canada. The Units, the Notes, the Warrants and the Warrant Shares will be offered only to (i) qualified institutional buyers and (ii) a limited number of "accredited investors" within the meaning of Rule 501(a) under the U.S. Securities Act, pursuant to the exemption from the registration requirements under the U.S. Securities Act provided by Rule 144A and Rule 506 of Regulation D thereunder, respectively, and outside the United States to non-U.S. persons under Regulation S. The Units, the Notes and the Warrants are being offered and sold in Canada on a basis which is exempt from the prospectus requirements of applicable Canadian securities laws.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy any Units, Notes, Warrants or Warrant Shares, nor shall there be any offer or sale of any Units, Notes, Warrants or Warrant Shares in any jurisdiction in which such offer, solicitation or sale would be unlawful.
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.
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.
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