Gran Colombia Gold Announces First Quarter 2017 Results

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:

  First Quarter
  2017   2016
           
Operating data:          
  Gold produced (ounces)   39,008     31,489
  Gold sold (ounces)   38,434     29,686
  Average realized gold price ($/oz sold) $ 1,174   $ 1,144
  Total cash costs ($/oz sold) (1)   748     685
  All–in sustaining costs ($/oz sold) (1)   941     790
           
Financial data ($000's, except per share amounts):          
  Revenue $ 45,717   $ 34,470
  Adjusted EBITDA (1)   13,591     11,586
  Net (loss) income   (784 )   10,826
  Basic and diluted (loss) income per share (2)   (0.04 )   2.23
  Adjusted net income (1)   3,084     251
  Basic and diluted adjusted income per share (1) (2)   0.16     0.05
  Excess cash flow (1)   2,276     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.
   
  March 31,
2017
December 31,
2016
         
Balance sheet ($000's):        
  Cash and cash equivalents $ 2,889 $ 2,783
  Cash in trust for Senior Debentures (3)   2,813   537
  Senior debt (4)   88,050   84,602
  Other debt, including current portion   1,325   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).

Segovia Operations

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.

Marmato Operations

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.

Outlook

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.

Webcast

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:

  Live Event link: http://edge.media–server.com/m/p/5m34rv2o
  Toronto & International: 1 (514) 841–2157
  North America Toll Free: 1 (866) 215–5508
  Colombia Toll Free: 01 800 9 156 924
  Conference ID: 44833416

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.

Additional information on Gran Colombia can be found on its website at www.grancolombiagold.com and by reviewing its profile on SEDAR at www.sedar.com.

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.

Condor Announces 2017 First Quarter Results

CALGARY, AB—(Marketwired – May 15, 2017) – Condor Petroleum Inc. (“Condor” or the “Company”) (TSX: CPI), a Canadian based oil and gas company focused on exploration and production activities in Turkey and Kazakhstan, is pleased to announce the release of its unaudited interim condensed consolidated financial statements for the three months ended March 31, 2017, together with the related management's discussion and analysis. These documents will be made available under Condor's profile on SEDAR at www.sedar.com and on the Condor website at www.condorpetroleum.com. All financial amounts in this news release are presented in Canadian dollars, unless otherwise stated.

Q1 2017 Highlights

  • Construction of the Poyraz Ridge gas processing facility continues on schedule and the project is expected to deliver 10 MMscf/day when production commences in mid–2017.
  • Drilling activities are underway on the Poyraz West 4 development well and the lateral section is being drilled. The Yakamoz 1 exploration prospect is scheduled to be drilled once Poyraz West 4 is completed.
  • For the three months ended March 31, 2017 the Company produced an average of 418 bopd in Kazakhstan. Oil production is currently 500 to 600 barrels per day.
  • On January 10, 2017, the Company established a USD 10.0 million ($13.1 million) secured non–revolving credit facility (the “Credit Facility”) and on February 1, 2017 received the loan proceeds (the “Loan Proceeds”) from the arm's length lender. The Credit Facility bears interest at 14% and matures three years from the date the Loan Proceeds are received. The Company also issued to the lender a warrant certificate exercisable into one million common shares of Condor at $2.35 per share on or before January 31, 2020.
  • The Ministry of Energy in Kazakhstan has successfully appealed the civil court ruling that could extend the Zharkamys exploration contract term by 630 days. The Company is in the process of referring the case to the Supreme Court of Kazakhstan. The ongoing court proceedings do not affect the Company's production rights for the Shoba and Taskuduk oilfields which are each governed by separate production contracts.
  • Working capital (defined as current assets minus current liabilities) as of March 31, 2017 was $20.9 million.
  • Capital expenditures for the three months ended March 31, 2017 amounted to $8.3 million (2016: $0.6 million) and relate mainly to Poyraz Ridge field development in Turkey.
  • The Company recorded net loss of $59.9 million for the three months ended March 31, 2017 (2016: $4.1 million), which includes exploration and evaluation expenses of $56.6 million related to the derecognition of exploration and evaluation assets in Kazakhstan under the Zharkamys contract.

Operations

For the three months ended March 31, 2017 the Company produced 37,648 barrels of oil or an average of 418 bopd (three months ended March 31, 2016: nil). Production was constrained due to temporary spring break up road bans that limited trucking and a pump failure on one well. Oil production is currently 500 to 600 barrels per day as the road bans have been lifted and the well workover has been completed.

For the three months ended March 31, 2017, the net loss amounted to $59.9 million (2016: $4.1 million) due primarily to the exploration an evaluation expense of $56.6 million. Cash used in operations amounted to $2.2 million for three months ended March 31, 2017 compared to $2.3 million in the first quarter of 2016.

Capital expenditures for the three months ended March 31, 2017 amounted to $8.3 million (2016: $0.6 million) and relates mainly to Poyraz Ridge field development in Turkey. Construction of the Poyraz Ridge gas processing facility continues on schedule and the project is expected to deliver 10 MMscf/day when production commences in mid–2017. All the major gas processing equipment has been installed and the remaining components are being assembled. Inter–field pipeline construction and hydro–testing has been completed and the facility has been connected to the regional power grid. Construction is also underway on the 6 inch sales gas pipeline.

A four well Poyraz Ridge appraisal and development drilling program was completed in January 2017 with each well encountering multiple stacked–pay intervals. Completion and testing operations commenced in late December 2016 and are expected to be completed in the second quarter of 2017. During the clean–up flow period on some of the target intervals, gas flow was restricted by paraffin (wax) build–up, limiting the well's ability to provide stabilized measurements. The paraffin was observed in the tubing string and in surface test equipment. A chemical inhibitor has been identified that prevents the paraffin from plugging the tubing string and surface facilities. Equipment has been purchased to enable continuous downhole chemical treatment and is being installed. Treating paraffin by injecting chemicals downhole is a common practice.

Drilling activities are underway on the Poyraz West 4 development well and the targeted Gazhanedere sandstone has been penetrated. The lateral section is currently being drilled which will then be completed and tested. The wellbore's placement, in conjunction with the inherently lower drawdown pressures associated with horizontal wells, is expected to mitigate any paraffin production while providing higher deliverability rates than the existing vertical wells for this Gazhanedere interval. No paraffin issues have been encountered on prior tests of this interval.

Once the Poyraz West 4 well is completed, the drilling rig is planning to move to the Yakamoz 1 exploration prospect, located 2 km north of the Poyraz Ridge field. Based on existing seismic data and well results from Poyraz Ridge, the Yakamoz prospect could be more highly fractured and gas rich than the reservoirs encountered at Poyraz Ridge.

The Company's Zharkamys exploration contract (“Zharkamys Contract”) with the Ministry of Energy of the Government of Kazakhstan (“Ministry”) was due to expire on December 14, 2016. Prior to this date, the Kazakhstan Chamber of International Commerce and subsequently the Kazakhstan Civil Court (“Civil Court”) confirmed that a force majeure event had occurred which, under Kazakhstan subsurface use law, can be the basis for the Zharkamys Contract validity period to be extended for a period of 630 days.

In December 2016, the Ministry filed an appeal to the Civil Court's decision. In February 2017, the Kazakhstan Court of Appeal (“Court of Appeal”) declined to consider the Ministry's submission due to its formal non–compliance with Kazakhstan civil law procedures. Subsequent to the release of the Company's 2016 year–end financial statements and related disclosures on March 22, 2017, the Company received notice that the Ministry had re–filed their appeal. The Court of Appeal has now ruled that the force majeure event is not recognized and have reversed the decision of the Civil Court. As a result of the Court of Appeal ruling, there is uncertainty regarding the Company's future legal rights to have the Zharkamys Contract extended.

The Company is in the process of referring the case to the Supreme Court of Kazakhstan (“Supreme Court”), the country's highest legal body. A positive ruling by the Supreme Court to uphold the Civil Court force majeure ruling would likely allow the Company to apply to the Ministry for the 630 day Zharkamys Contract extension. A negative ruling would likely result in the Zharkamys Contract reverting back to the Ministry.

The ongoing court proceedings do not affect the Company's production rights for the Shoba and Taskuduk oilfields which are each governed by separate production contracts.

FORWARD–LOOKING STATEMENTS

Certain statements in this news release constitute forward–looking statements under applicable securities legislation. Such statements are generally identifiable by the terminology used, such as “anticipate'', “appear”, “believe'', “intend”, “expect”, “plan”, “estimate”, “budget'', “outlook'', “scheduled”, “may”, “will”, “should”, “could”, “would”, “in the process of” or other similar wording. Forward–looking information in this news release includes, but is not limited to, information concerning: the timing and ability to develop the gas reserves, construct the required infrastructure and to commence producing and selling gas; the timing and ability to conduct drilling, work over, and completion and testing operations; the expectations, timing and costs of exploration, appraisal and development activities; the ability of the drilled wells to become future gas producing wells; uncertainty regarding the Company's future legal rights to have the Zharkamys Contract extended; the timing of and ability to maintain the Zharkamys Contract; the timing and ability to refer the case to the Supreme Court; the timing, results and impact of any Supreme Court ruling; and the impact, if any, on the Shoba and Taskuduk production contracts; historical production and testing rates may not be indicative of future production rates, capabilities or ultimate recovery; projections and timing with respect to crude oil and gas production; historical oil and gas prices may not be indicative of future oil and gas prices; the timing and ability to obtain various approvals for the Company's exploration and development activities; the timing and ability of horizontal well to achieve higher deliverability than vertical wells; the ability to integrate drilling results and seismic interpretation to allow mapping of key reservoirs and characterize exploration prospects including the potential for Yakamoz 1 well to be more highly fractured and gas rich than at Poyraz Ridge; the timing and ability to apply wax production treatment measures; the timing and ability to obtain future funding on favourable terms; the timing and ability to access oil and gas pipelines and oil and gas domestic and export sales markets.

Forward–looking statements involve the use of certain assumptions that may not materialize or that may not be accurate and are subject to known and unknown risks and uncertainties and other factors, which may cause actual results or events to differ materially from those expressed or implied by such information. Condor's operations are also subject to certain other risks and uncertainties inherent with oil and gas operations and additional information on these and other factors that could affect Condor's operations and financial results. These factors are discussed in greater detail under Risk Factors – Risks Relating to the Company in Condor's Annual Information Form, which may be accessed through the SEDAR website (www.sedar.com). The Company believes that the expectations reflected in these forward–looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward–looking statements should not be unduly relied upon. The Company does not undertake any obligation to update or to revise any of the forward–looking information, except as required by applicable law.

ABBREVIATIONS

The following is a summary of abbreviations used in this news release:

bopd Barrels of oil per day
MM Million
Q Quarter
scf Standard cubic feet
USD United States dollars
% Percent

The TSX does not accept responsibility for the adequacy or accuracy of this news release.