TORONTO, ON—(Marketwired – May 15, 2017) – Gran Colombia Gold Corp. (TSX: GCM) announced today the release of its unaudited interim consolidated financial statements and accompanying management's discussion and analysis (MD&A) for the three months ended March 31, 2017. All financial figures contained herein are expressed in U.S. dollars (“USD”) unless otherwise noted.
Lombardo Paredes Arenas, Chief Executive Officer of Gran Colombia, commenting on the Company's results for the first quarter of 2017, said, “We have kicked off 2017 with a number of positive corporate and operational developments, including the recent news that 2020 Debenture holders have given us their consent to extend the maturity of $47.0 million of senior secured debt to 2024. Execution of our operating plan at Segovia is continuing to yield solid results with improvements in production, adjusted EBITDA, adjusted net income, excess cash flow and mineral resources at Segovia reported this quarter. We remain on track to meet our guidance for this year.”
First Quarter 2017 Highlights
- Gran Colombia successfully completed the two proposals that had been announced on March 6, 2017 aimed at improving its capital structure following the comprehensive debt restructuring completed in 2016. On April 24, 2017, shareholders approved a one–for–fifteen consolidation of the Company's issued and outstanding common shares and on May 12, 2017, the Company announced that it has received consent to extend the maturity date for $47.0 million of its 2020 Debentures to 2024, expected to be made effective May 31, 2017.
- Gran Colombia's adjusted EBITDA of $13.6 million in the first quarter of 2017 represented a 17% increase over the first quarter last year. This brings the trailing 12–months adjusted EBITDA to $68.0 million, up 3% from the end of 2016. See the Company's MD&A for the computation of this non–IFRS measure.
- The Company generated a total of $2.3 million of excess cash flow (see the Company's MD&A for the computation) in the first quarter of 2017 that has been deposited into the sinking funds for the 2020 Debentures and the 2018 Debentures (collectively, the “Senior Debentures”). The Company expects that its excess cash flow and sinking fund deposits in respect of 2017 will total approximately 10% of its total Senior Debentures currently issued and outstanding.
- In April 2017, the Company used $0.6 million of the cash available in the 2020 Debentures' sinking fund to complete two block purchases under its Normal Course Issuer Bid (“NCIB”) reducing the aggregate principal amount of the 2020 Debentures issued and outstanding by $0.7 million to $100.5 million. With the extension noted above, as of the end of May 2017, the 2020 Debentures will be reduced to $53.5 million. The Company intends to continue using the sinking fund balance to repurchase 2020 Debentures in the open market under the NCIB.
- Gold production in the first quarter of 2017 totalled 39,008 ounces, up 24% from the first quarter last year led by continuing strong performance at its Segovia Operations. With the trailing 12 months' total gold production as of the end of March 2017 increasing 5% over 2016's annual production to 157,227 ounces and a further 14,332 ounces produced in April 2017, the Company remains on track with its production guidance for the 2017 calendar year of a total of 150,000 to 160,000 ounces of gold.
- Revenue of $45.7 million in the first quarter of 2017 was 33% better than the first quarter last year largely reflecting the increased gold production this year that contributed to a 29% increase in gold ounces sold over the first quarter last year.
- Gran Colombia's total cash costs and all–in sustaining costs (“AISC”) were in line with the Company's expectations, averaging $748 per ounce and $941 per ounce, respectively, in the first quarter of 2017. Appreciation of the Colombian peso (“COP”) against the USD had an adverse impact of approximately $40 per ounce on the Company's total cash cost and AISC per ounce in the first quarter of 2017 compared with the first quarter last year. In addition, AISC in the first quarter of 2017 included an $88 per ounce increase in sustaining capital expenditures compared with the first quarter of 2016 as the Company continues its planned exploration, development and modernization programs at its Segovia Operations. The Company continues to expect that its total cash cost and AISC averages for the full year will remain below $720 and $900 per ounce sold according to its guidance for 2017. See pages the Company's MD&A for the computation of these non–IFRS measures.
- The net loss for the first quarter of 2017 was $0.8 million, or $0.04 per share, compared with net income of $10.8 million, or $2.23 per share, in the first quarter last year. The prior first quarter 2016 net income included $14.5 million of non–recurring after–tax gains related to the Company's Gold and Silver Notes.
- Adjusted net income for the first quarter of 2017 was $3.1 million, or $0.16 per share, compared with $0.3 million, or $0.05 per share, in the first quarter last year. See the reconciliation in the Company's MD&A for the computation of this non–IFRS measure. The increase in adjusted EBITDA combined with reductions in finance costs and wealth tax, net of an increase in adjusted income taxes, in 2017 were the primary drivers behind the improvement in adjusted net income in the first quarter of 2017.
- On April 19, 2017, the Company announced that its Measured and Indicated Resources at its Segovia Operations increased to 2.9 million tonnes at a grade of 12.0 g/t totalling 1.1 million ounces of gold, up 174% compared to the Mineral Resource estimate as of December 31, 2016. The Company also added 398,000 ounces of gold to the Inferred category at Segovia bringing total Inferred Mineral Resources to 3.1 million tonnes at an average grade of 9.9 g/t representing 978,000 ounces of gold. The Company is currently preparing an updated mineral resource estimate for Marmato Underground, expected to be completed mid–2017, incorporating the 2016 drill results announced on March 13, 2017.
- The Company announced on March 16, 2017 that it has signed an option agreement with IAMGOLD Corp. for the exploration and potential purchase of an interest in the Company's Zancudo Project.
Financial and Operating Summary
A summary of the financial and operating results for the first quarter of 2017 and 2016 follows:
|Â||Gold produced (ounces)||Â||39,008||Â||Â||31,489|
|Â||Gold sold (ounces)||Â||38,434||Â||Â||29,686|
|Â||Average realized gold price ($/oz sold)||$||1,174||Â||$||1,144|
|Â||Total cash costs ($/oz sold) (1)||Â||748||Â||Â||685|
|Â||All–in sustaining costs ($/oz sold) (1)||Â||941||Â||Â||790|
|FinancialÂ data ($000's, except per share amounts):||Â||Â||Â||Â||Â|
|Â||Adjusted EBITDA (1)||Â||13,591||Â||Â||11,586|
|Â||Net (loss) income||Â||(784||)||Â||10,826|
|Â||Basic and diluted (loss) income per share (2)||Â||(0.04||)||Â||2.23|
|Â||Adjusted net income (1)||Â||3,084||Â||Â||251|
|Â||Basic and diluted adjusted income per share (1) (2)||Â||0.16||Â||Â||0.05|
|Â||Excess cash flow (1)||Â||2,276||Â||Â||23|
|(1)||Refer to “Additional Financial Measures” in the Company's MD&A.|
|(2)||Per share information has been adjusted to reflect the 1:15 consolidation completed on April 25, 2017.|
|Balance sheet ($000's):||Â||Â||Â||Â|
|Â||Cash and cash equivalents||$||2,889||$||2,783|
|Â||Cash in trust for Senior Debentures (3)||Â||2,813||Â||537|
|Â||Senior debt (4)||Â||88,050||Â||84,602|
|Â||Other debt, including current portion||Â||1,325||Â||1,652|
|(3)||Represents amounts deposited into sinking funds for the Senior Debentures, net of cash used for the NCIBs.|
|(4)||Represents carrying amounts, which are at a discount to principal amounts, for the Senior Debentures. At March 31, 2017, the aggregate principal amounts of the 2018 Debentures and 2020 Debentures issued and outstanding were $46.0 million and $101.2 million, respectively (December 31, 2016 – $49.7 million and 101.2 million, respectively).|
At the Segovia Operations, gold production in the first quarter of 2017 totalled 32,768 ounces, up 26% from the first quarter of 2016. The Company continued to benefit from strong performance in the high–grade contract mining areas at its El Silencio and Providencia mines while it continues its development and modernization activities in the Company–operated areas within these mines. The Company processed an average of 881 tonnes per day (“tpd”) with head grades averaging 12.62 g/t at Segovia in the first quarter of 2017, an improvement from 730 tpd at an average head grade of 12.87 g/t in the first quarter of 2016. With the trailing 12 months' total gold production as of the end of March 2017 at Segovia increasing 5% over its 2016 annual production to 133,030 ounces and 12,323 ounces produced in April 2017, the Company continues to expect that Segovia's gold production will fall within its production guidance range for the 2017 calendar year of 126,000 to 134,000 ounces.
Segovia's total cash costs were $690 per ounce in the first quarter of 2017, up from $659 per ounce in the first quarter of 2017. Appreciation of the COP against the USD over the USD over the last year contributed to $29 per ounce of the increase in total cash costs at Segovia compared with the first quarter of 2016.
The Company's AISC for the first quarter of 2017 included $5.4 million of sustaining capital expenditures, equivalent to $143 per ounce sold and $88 per ounce higher than the first quarter of 2016. Of this total, sustaining capital expenditures in the first quarter of 2017 of $5.0 million at the Segovia Operations, equivalent to $131 per ounce sold, included (i) $2.0 million for exploration and mine development, (ii) $1.3 million for the mines including completion of a ventilation shaft at the Providencia mine, commencement of ventilation improvements at the El Silencio mine, installation of mine refuge stations, mine equipment and other infrastructure upgrades, (iii) $1.0 million for further upgrades of equipment in the Maria Dama plant and initiation of the project to expand the tailings storage facility, and (iv) $0.6 million to commence installation of a water treatment plant at the Maria Dama plant site to reduce the environmental discharge fees being incurred by the Company.
At the Marmato Operations, tonnes processed averaged 997 tpd in the first quarter of 2017, up 22% compared with the first quarter of 2016, benefitting from a mill expansion completed last year. Although head grades are running slightly below last year, mill recovery has shown the expected improvement to 87.2% in the first quarter this year. As a result of these factors, Marmato's gold production of 6,240 ounces in the first quarter of 2017 was up 14% compared with the first quarter last year. This brings Marmato's trailing 12 months' gold production at the end of March 2017 to 24,197 ounces, up 3% over its 2016 annual production and within its 2017 calendar year production guidance range of 24,000 to 26,000 ounces.
Total cash costs at the Marmato Operations in the first quarter of 2017 were $1,061 per ounce, up from $847 per ounce in the first quarter of 2016. The COP appreciation referred to above contributed approximately $100 per ounce of the year–over–year total cash cost increase and the balance of the increase was attributable to the impact on total cash costs on a per ounce basis of the impact on gold production in the first quarter of 2017 of the lower head grades compared with the first quarter last year.
The Company has started off 2017 with a total of 53,340 ounces of gold production in the first four months and continues to expect to produce a total of 150,000 to 160,000 ounces of gold for the full year compared with the 149,708 ounces produced in 2016.
The Company's total cash cost and AISC averaged $748 and $941 per ounce sold, respectively, in the first quarter of 2017. These results were in line with the Company's expectations and the Company continues to expect that its total cash cost and AISC averages for the full year 2017 will remain below $720 and $900 per ounce sold, respectively.
The Company recently deposited a total of $2.3 million representing its Excess Cash Flow for the first quarter of 2017 into the sinking funds for the Senior Debentures. In 2017, provided gold prices remain at least at the current levels, the Company intends to generate excess cash flow for the full year equivalent to approximately 10% of the aggregate principal amount of its Senior Debentures currently issued and outstanding and, to the extent possible, will use the cash in the 2020 Debentures' sinking fund to make open market repurchases of the 2020 Debentures for cancellation.
As a reminder, the Company will host a conference call and webcast on Tuesday, May 16, 2017 at 9:30 a.m. Eastern Time to discuss the results.
Webcast and call–in details are as follows:
|Â||Live Event link:||http://edge.media–server.com/m/p/5m34rv2o|
|Â||Toronto & International:||1 (514) 841–2157|
|Â||North America Toll Free:||1 (866) 215–5508|
|Â||Colombia Toll Free:||01 800 9 156 924|
A replay of the webcast will be available at www.grancolombiagold.com from Tuesday, May 16, 2017 until Thursday, June 15, 2017.
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 continuing its expansion and modernization activities at its high–grade 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 anticipated business plans or strategies. 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 30, 2017, 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.