GRAN COLOMBIA GOLD ANNOUNCES FINANCIAL RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 2010 AND OPERATIONAL UPDATE
November 29 2010 - 1:03PM
PR Newswire (Canada)
TORONTO, Nov. 29 /CNW/ -- TORONTO, Nov. 29 /CNW/ - Gran Colombia
Gold Corp. (TSX-V: GCM) announced today the release of its
unaudited consolidated financial results for the three and nine
month periods ended September 30, 2010, together with its
Management's Discussion and Analysis ("MD&A") for the
corresponding periods. These documents are posted on the Company's
website at www.grancolombiagold.com and on SEDAR at www.sedar.com.
All financial figures contained herein are expressed in U.S.
dollars unless otherwise noted. Maria Consuela Araujo, Chief
Executive Officer, commented: "This quarter our focus has been to
ramp up production and continuing with the modernization of the
operating facilities at the Gran Colombia mine, (formerly known as
"Frontino"). We have made important progress in mine development,
equipment upgrades, identification of work fronts and execution of
the exploration tunnel and the drill program. Our exploration and
early production projects are on schedule and we expect great
things from each of them. We have also made progress with social
initiatives, including a vision care program and community
infrastructure project instituted this quarter. These commitments
support our strategy of cultural change and long-term cost and
productivity improvement." The Company's financial performance this
quarter reflects the completion of the public listing through a
reverse takeover transaction ("RTO"), the acquisition of a 95%
interest in the Gran Colombia operating mines and immediate
commencement of operational improvements, and initiation of the
Company's commitments to social initiatives. The Company ended the
quarter with a positive cash balance of $43.3 million. Following
the August 19, 2010 acquisition of the Gran Colombia mines, there
was a two-week transition period during which employees were hired
by the Company, provided with training and given the opportunity to
benefit from a vision care program as part of the Company's social
initiatives. The Company incurred $1.2 million in mine transition
expenses during this period in which no mining operations were
conducted. The Company's production during the 25-day operating
period starting September 6, 2010 amounted to 1,987 ounces of gold
and 1,663 ounces of silver from 8,190 tonnes mined. Gold grades
averaged 8.6 grams per tonne and recoveries were 87.8% as
expected. During the three months ended September 30, 2010,
the Company generated $2.2 million in total revenues, principally
from the sale of 1,544 ounces of gold from the Gran Colombia mines
at prices averaging $1,272 per ounce. The Company is currently
unhedged to the rising gold price environment. For the three month
period ended September 30, 2010, the Company reported a net loss of
$12.1 million or $0.10 per share. The loss for the quarter largely
reflects the $9.8 million stock-compensation expense recorded in
connection with the initial grant of 10.3 million vested stock
options to directors, management, employees and consultants
following the RTO. The quarter's loss also reflects a $2.0 million
loss from mining operations at the Gran Colombia mine, from the
mine transition expenses noted above and from lower than normal
productivity as mining operations were re-started and operational
improvements were made. The net loss for the period from
incorporation on January 4, 2010 to September 30, 2010 amounted to
$12.7 million or $0.25 per share. During the third quarter, the
Company secured drilling contractors for the exploration program in
all of its projects this quarter and is moving ahead with a
budgeted and fully capitalized exploration program detailed below.
Production Portfolio Management is focused on realizing operational
and exploration milestones to bring its Gran Colombia mines and El
Zancudo project into full production. Drilling campaigns are
underway at the Gran Colombia mines and the Zancudo project. At the
Gran Colombia mines, an initial 30,000 metres of diamond drilling
has been contracted as a first phase, with a commitment to drill an
additional 30,000 metres. The initial drilling campaign is
focusing on several veins in the southern part of the Gran Colombia
property, along a strike of 4.5 kilometres and to a depth of 180
metres as well as the Cristales and San Nicolas veins in the
northern portion of the Gran Colombia property. The 6 kilometre
tunnel planned to go across the principal formations in the
property has been contracted to Mincivil S.A. for an investment of
approximately $9 million and construction has started on this
tunnel. A diagram of the tunnel can be viewed on the
Company's website at www.grancolombiagold.com. At the existing
operating mines (El Silencio, Providencia and Sandra K), the
drilling campaigns include the southern and northern portions of
the Sandra K mine, the southern portion of the El Silencio mine and
below level 11 of the Providencia mine. These areas are all
well-known mineralization and alteration zones with a long history
of production. To date, 810 metres and five drill holes have been
completed with depths from 153 to 402 metres. Samples from the
drill holes have been processed and are being assayed. Currently,
there are three drill rigs operating on the Gran Colombia property,
with three additional drill rigs to start operating in each of
January, February and March 2011, respectively. At the El Zancudo
project, a 17,000 metre diamond drilling program (including 5,000
metres of underground drilling) started at the end of October, with
170 metres already drilled (two holes, underground) and a third
hole is being drilled. Thus far, 97 samples have been sent for
assaying. The Independencia underground mine at El Zancudo received
a full 1,200 mere rehabilitation. Six fronts are being worked and
are now fully operational (four for mining and two for
development). Infrastructure Developments Progress at the Company's
milling facilities, known as "Maria Dama", is continuing. The
Company has invested approximately $0.6 million in refurbishment
initiatives including crushing facilities and two secondary
grinders as well as the rebuilding of the two largest thickeners
and two flotation cells, and the rewiring of electric cable in four
areas of the mill. This quarter the Company began purchasing ore
from its small scale mining contractors at the CIIGSA smelting
facility. This will increase production and ensure environmentally
compliant processing of such ore. The Company has capacity to
handle 7,500 kilograms ("kg") of gold and 20,000 to 25,000 kg of
silver. This smelter is fully permitted. The Company expects to
close the acquisition of a 60% equity stake in CIIGSA in early
2011. The hydroelectric plants on the property have been serviced
and repaired. The Company invested approximately $0.3 million and
the plants are working at approximately 85% capacity. The Company
continues to evaluate energy outsourcing opportunities. Exploration
At the Segovia property, 6,000 metres of diamond drilling were
conducted in October, of which 740 metres have been drilled in six
holes completed to date. A total of 142 samples have been
sent for assaying. In addition, access and geological mapping of 30
kilometres of IP ("Induced Polarization") lines have been prepared
and the actual geophysics work is scheduled to start in December
2010. In addition, at the Segovia Gran Colombia vein, the mine
portal has been rebuilt and 183 metres of tunnel have been
rehabilitated. At the Concepcion property, 1,000 hectares of
surface geological mapping has been completed, covering 80% of the
interest area and 180 metres of geological detailed sampling has
been performed. The location for twelve drill holes has been
prepared and a diamond drilling contract for 4,000 metres will be
signed before the end of the month, for drilling to start in
January 2011. At the Mazamorras property, a 30,000 metre drilling
campaign is to be contracted in the next few days, to start
drilling the second week of January; and all environmental permits
for drilling, including water concessions, are in place.
Substantial progress has been achieved in the delineation of the
drilling areas of the property and platform preparation for the
first 20 to 27 drilling sites. The contract for geophysics work (IP
and magnetometric survey) for the whole property is in for restart
in the fourth quarter. About Gran Colombia Gold Corp. Gran Colombia
Gold Corp. is a Canadian-based gold and silver exploration and
development company focused on acquiring, developing and operating
properties of merit in Colombia. The Company holds 95% of the
former Frontino gold and silver assets, including the largest
underground gold and silver mining operation in Colombia. It also
owns four more exploration projects in Colombia for total
exploration acreage of approximately 21,400 hectares. The Company
is committed to implementing its exploration and development
strategy with a comprehensive environment, safety and community
program, meeting international standards of best practice. 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. 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.
Forward-looking statements contained herein are made as of the date
of this press release and Gran Colombia disclaim, 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. Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release. %SEDAR: 00003116E pBelinda
Labattebr/ Investor Relationsbr/ (647) 436-2152/p
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