Gran Colombia Gold Corp. (TSX: GCM; OTCQX: TPRFF) announced today
the release of its audited consolidated financial statements and
accompanying management’s discussion and analysis (MD&A) for
the year ended December 31, 2020. All financial figures contained
herein are expressed in U.S. dollars (“USD”) unless otherwise
noted.
Lombardo Paredes, Chief Executive Officer of
Gran Colombia, commenting on the 2020 results, said, “The
challenges we all faced in 2020 dealing with the pandemic are well
documented. In Gran Colombia, we are thankful that our people rose
to the occasion, taking the actions required to keep our workers
healthy and safe and to support our local communities while moving
our company forward. Despite the impact of the pandemic on
production, operating costs and the execution of our capital and
exploration programs, we had a solid year in many aspects and we
look forward to continuing to advance the exploration and
development of our high-grade Segovia Operations in 2021. Today we
have also announced an update on our mineral resources and reserves
at Segovia and we are pleased to report that we have not only
replaced the mineral resources we mined last year, but we have
identified many high priority in-mine, near-mine and brownfield
targets for our 2021 drilling program. In 2020, we successfully
created value for our shareholders through the spin out of our
Marmato Mining Assets which are now in good hands with the Aris
Gold management team. We are also excited at the prospect of adding
the Toroparu Gold Project to our growth strategy through completion
of the recently announced Gold X takeover bid currently in process.
As we move toward publishing our first sustainability report this
year, we are proud of the many accomplishments of our team over the
years to incorporate ESG principles in our projects focused on
education, health, environment and community. On behalf of the
Board and management, I would like to thank all of our people for
making 2020 a successful year in such unusual working
conditions.”
Fourth Quarter and Full Year 2020
Highlights
- Gran Colombia achieved its
annual production guidance for the fifth consecutive year
in 2020. For the full year, gold production of 220,194 ounces in
2020 was within the expected range of 218,000 to 226,000 ounces,
compared with 239,991 ounces of gold in 2019. Gold production in
the fourth quarter of 2020, which reflected the expected reduction
in head grades at Segovia in 2020, totaled 57,265 ounces compared
with 65,237 ounces in the fourth quarter of 2019.
- Gran Colombia successfully brought
its spin out of the Marmato Mining Assets to a successful
conclusion in early 2021, one in which the Company has a continuing
equity ownership of 44.3% in the new, fully financed, Aris Gold
Corporation (“Aris”). In March 2021, the Company set its sights on
the creation of a new, Latin American-focused growth platform with
its bid to acquire all the shares of Gold X Mining Corp. (“Gold X”)
it does not already own in a friendly share-for-share exchange,
with the multi-million ounce Toroparu Project in Guyana joining
Segovia to become the Company’s second cornerstone asset. Subject
to shareholder and regulatory approval, the companies are working
towards closing the transaction in late May/ early June
2021.
- The Company’s ongoing drilling
program in Segovia continues to provide encouraging results,
reaffirming confidence in the high-grade nature of the Segovia gold
deposits and replacing Mineral Resources mined in 2020. The
updated Mineral Resource estimate as of December
31, 2020 reflects an upgrade of Mineral Resources with 4.0 million
tonnes at a grade of 11.2 g/t totalling 1.43 million ounces of gold
in Measured and Indicated Resources and 3.7 million tonnes at a
grade of 10.3 g/t totalling 1.21 million ounces of gold in Inferred
Resources. The Company also reported an updated Mineral Reserve for
Segovia with a total of 2.2 million tonnes at an average grade of
9.0 g/t representing approximately 633,000 proven and probable
ounces of gold as of December 31, 2020. The Company expects to
carry out approximately 60,000 meters of drilling in 2021, of which
approximately 40,000 meters will continue to focus on step-out and
infill drilling in proximity to the Company’s four mining
operations and approximately 20,000 meters will be dedicated to
exploration on the high priority brownfield targets in the Segovia
mining title.
- Gran Colombia, long known for its
attention to ESG matters at the local level in its Colombian
operations, added an ESG sub-committee of the Board in early 2020
to support its ongoing commitment to ESG initiatives. In 2020, the
Company’s ESG programs continued to focus on education, health,
environment and community programs, including support to the local
communities surrounding the Segovia Operations and Marmato Project
affected by the COVID-19 crisis.
- Revenue amounted
to $99.7 million in the fourth quarter of 2020, up 13% from the
fourth quarter of 2019, reflecting an increase in the Company’s
realized gold price to an average of $1,875 per ounce sold from
$1,480 in the fourth quarter of 2019, partially offset by lower
gold sales volume this year. For the full year, revenue reached a
new record of $390.9 million in 2020, up 20% over 2019.
- At the Segovia Operations,
total cash costs (1) averaged
$830 per ounce in the fourth quarter of 2020, up from $637 per
ounce in the fourth quarter of 2019, reflecting (i) an increase in
contractor and artisanal mining payment rates (which had not
changed since 2017) implemented in the third quarter of 2020 in
response to the current gold market conditions, (ii) higher spot
gold prices which increased production taxes on a per ounce basis,
(iii) additional costs to maintain the necessary COVID-19 protocols
required to protect the health and safety of Segovia’s workers and
the local communities, and (iv) the impact of the lower production
in 2020 on fixed operating costs per ounce. Total cash costs,
including Marmato, averaged $904 per ounce in the fourth quarter of
2020 compared with $685 per ounce in the fourth quarter of 2019.
For the full year, Segovia’s total cash costs averaged $699 per
ounce, up from $607 per ounce in 2019, with similar causal factors
as those noted in the fourth quarter. Total cash costs, including
Marmato, averaged $768 per ounce in 2020 compared with $661 per
ounce in 2019.
- All-in sustaining
costs (“AISC”) (1) for the Segovia
Operations were $1,266 per ounce in the fourth quarter of 2020, up
from $967 per ounce in the fourth quarter of 2019, reflecting (i)
the increased total cash costs, (ii) an uptick in capital
expenditures on programs that had been delayed from earlier in 2020
due to COVID-19 restrictions, and (iii) the impact of lower gold
sales volume of AISC on a per pounce basis. Including Marmato,
consolidated AISC in the fourth quarter of 2020 was $1,382 per
ounce compared with $1,003 per ounce in the fourth quarter last
year. For the full year, Segovia’s AISC averaged $1,015 per ounce,
up from $878 per ounce in 2019, reflecting (i) the increase in its
total cash costs, (ii) an increase in sustaining capital
expenditures, and (iii) the impact of lower gold sales volume on
its AISC on a per ounce basis. For the full year, consolidated AISC
averaged $1,101 per ounce in 2020, up from $916 per ounce in 2019.
- Adjusted
EBITDA (1) amounted to $43.1 million for the fourth
quarter of 2020, up 6% over the fourth quarter last year. For the
full year, adjusted EBITDA reached a new annual record of $187.8
million, up 28% over 2019.
- Net cash provided by
operating activities in the fourth quarter of 2020 was
$30.4 million compared with $35.7 million in the fourth quarter
last year and reflected a delay in receiving $7.9 million of VAT
refunds in Colombia due to the impact of COVID-19 on the
government’s processing of claims. For the full year, net
cash provided by operating activities reached a new high of $136.4
million, up 31% over 2019.
- Free Cash Flow (1)
in the fourth quarter of 2020 amounted to $6.8 million compared
with $23.0 million in the fourth quarter of 2019, reflecting the
impact of the delayed VAT refunds noted above and an increase in
capital expenditures at both Segovia and Marmato to a total of
$23.7 million in the fourth quarter of 2020 from $12.7 million in
the fourth quarter of 2019. For the full year, Free Cash Flow
amounted to $73.6 million, up 19% over 2019. Total capital
expenditures in 2020 increased to $62.8 million from $42.7 million
in 2019.
- The Company’s balance
sheet remained solid with total cash of $122.5 million at
the end of 2020, including $33.0 million in Aris, and a 48%
reduction in 2020 in the aggregate principal amount of Gold Notes
outstanding to $35.5 million at the end of the year. In October,
Fitch Ratings upgraded the Company to B+ Stable Outlook. The
Company has announced it will complete early partial redemptions in
2021 of 10% of the Convertible Debentures in April and 33.6% of the
Gold Notes in May.
- The Company returned a total of
$5.4 million to shareholders in 2020 with the repurchase of 890,100
shares at a cost of $4.0 million and payment of its first two
dividends totaling $1.4 million. The Company has continued to pay
its monthly dividend of CA$0.015 per share in 2021 and in the first
quarter of 2021 has repurchased an additional 702,000 shares at an
average price of CA$5.69 per share.
- The Company reported a net
loss of $51.3 million ($0.59 per share) in the fourth
quarter of 2020 compared with a net loss of $148.8 million ($2.86
per share) in the fourth quarter of 2019. For the full year, the
Company reported a net loss of $27.6 million ($0.08 per share)
compared with a net loss of $131.2 million ($2.65 per share) in
2019. The net loss in 2020 included $72.9 million of non-cash fair
value losses on derivative financial instruments, Aris financing
fees and expenses of $13.9 million, a $16.7 million charge related
to the Bluenose RTO Transaction and an $8.9 million provision for
withholding taxes on accumulated earnings to be repatriated from
Colombia. The net loss in 2019 includes the after-tax impairment
charge for the Marmato Project of $153.6 million.
- Adjusted net income
(1) for the fourth quarter of 2020 was $7.7 million ($0.15
per share) compared with $17.1 million ($0.33 per share) in the
fourth quarter last year. For the full year, adjusted net income
improved to $75.9 million ($1.28 per share) compared with $60.5
million ($1.22 per share) in 2019. The year-over-year improvement
in adjusted net income in 2020 largely reflects the positive impact
of higher gold prices in 2020, partially offset by the COVID-19
impact on gold production and operating costs, increased G&A
expenses, share-based compensation and social contributions in
Aris, increased interest expense and gold premiums, and increased
income tax expense.
Selected Financial
Information
|
Fourth Quarter |
Year |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
2018 |
|
Operating
data |
|
|
|
|
|
Gold produced (ounces) |
|
57,265 |
|
|
65,237 |
|
|
220,194 |
|
|
239,991 |
|
|
218,001 |
|
Gold sold (ounces) |
|
52,478 |
|
|
59,169 |
|
|
220,890 |
|
|
233,866 |
|
|
214,622 |
|
Average realized gold price ($/oz sold) |
$ |
1,875 |
|
$ |
1,480 |
|
$ |
1,751 |
|
$ |
1,381 |
|
$ |
1,239 |
|
Total cash costs ($/oz sold) (1) |
|
904 |
|
|
685 |
|
|
768 |
|
|
661 |
|
|
680 |
|
AISC ($/oz sold) (1) |
|
1,382 |
|
|
1,003 |
|
|
1,101 |
|
|
916 |
|
|
919 |
|
|
|
|
|
|
Financial
data ($000’s, except per share amounts) |
|
|
|
|
Revenue |
$ |
99,673 |
|
$ |
88,463 |
|
$ |
390,921 |
|
$ |
326,480 |
|
$ |
268,525 |
|
Adjusted EBITDA (1) |
|
43,076 |
|
|
40,607 |
|
|
187,764 |
|
|
146,675 |
|
|
102,386 |
|
Impairment charge |
|
- |
|
|
(175,989 |
) |
|
- |
|
|
(175,989 |
) |
|
- |
|
Net (loss) income |
|
(51,275 |
) |
|
(148,849 |
) |
|
(27,571 |
) |
|
(131,164 |
) |
|
(3,379 |
) |
Per share - basic |
|
(0.59 |
) |
|
(2.86 |
) |
|
(0.08 |
) |
|
(2.65 |
) |
|
(0.10 |
) |
Per share - diluted |
|
(0.59 |
) |
|
(2.86 |
) |
|
(0.08 |
) |
|
(2.65 |
) |
|
(0.11 |
) |
Adjusted net income (1) |
|
7,703 |
|
|
17,113 |
|
|
75,942 |
|
|
60,460 |
|
|
42,498 |
|
Per share - basic |
|
0.15 |
|
|
0.33 |
|
|
1.28 |
|
|
1.22 |
|
|
1.23 |
|
Per share - diluted |
|
0.13 |
|
|
0.27 |
|
|
1.09 |
|
|
1.04 |
|
|
0.59 |
|
Net cash provided by operating activities |
|
30,424 |
|
|
35,699 |
|
|
136,378 |
|
|
104,340 |
|
|
80,504 |
|
Free cash flow (1) |
|
6,758 |
|
|
23,017 |
|
|
73,579 |
|
|
61,675 |
|
|
44,901 |
|
|
|
|
|
December 31, |
|
|
2020 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
Balance
sheet ($000’s): |
|
|
|
Cash and cash equivalents |
$ |
122,508 |
|
$ |
84,239 |
|
$ |
35,645 |
|
Gold Notes, including current portion – principal amount
outstanding (2) |
|
35,525 |
|
|
68,750 |
|
|
88,250 |
|
Convertible Debentures – principal amount outstanding (3) |
|
CA20,000 |
|
|
|
CA20,000 |
|
|
- |
|
Aris Gold Notes, including current portion – principal amount
outstanding (4) |
|
73,066 |
|
|
- |
|
|
- |
|
(1) |
Refer to “Non-IFRS Measures” in the Company’s MD&A. |
(2) |
The Gold Notes were issued in 2018 and are recorded in the
Financial Statements at fair value. At December 31, 2020, 2019 and
2018, the carrying amounts of the Gold Notes outstanding were $38.5
million, $69.0 million and $74.1 million, respectively. |
(3) |
The Convertible Debentures were issued in 2019 and are recorded in
the Financial Statements at fair value. At December 31, 2020 and
2019, the carrying amounts of the Convertible Debentures
outstanding were $28.4 million and $21.1 million,
respectively. |
(4) |
The Aris Gold Notes were issued in 2020 and are recorded in the
Financial Statements at fair value. At December 31, 2020, the
carrying amount of the Aris Gold Notes outstanding was $73.2
million. |
|
|
Outlook
With the closing of the Aris Transaction with
Caldas Gold at the beginning of February 2021, Gran Colombia has
successfully brought its spin out of the Marmato Mining Assets to a
successful conclusion, one in which Gran Colombia continues to hold
an equity ownership of 44.3% in the new, fully financed, Aris.
Starting in 2021, Gran Colombia will equity account for its
investment in Aris and will no longer include the Marmato mine in
its production reporting.
Gran Colombia’s focus in 2021 will center on the
exploration and continuing development of its high-grade Segovia
Operations, the epicentre of its Free Cash Flow generation. In
February, the Company provided its annual production guidance for
the coming year and expects to produce between 200,000 and 220,000
ounces of gold at Segovia. Over the last 10 years, the Company has
produced a total of approximately 1.3 million ounces of gold from
its Segovia Operations at an average head grade of 13.8 g/t. In
2021, the Company expects that head grades will continue to average
between 13 to 15 g/t over the course of the year. The next phase of
plant expansion at Segovia to 2,000 tpd is proceeding well and
should be completed in the second half of this year. In February,
the Company paid $7.0 million related to the construction of a new
recovery plant at Segovia that will come on stream later this year
and allow it to recover commercial quantities of zinc, lead, gold
and silver into concentrate from its tailings. This not only
represents an additional source of cash flow from mining
operations, it further improves the environmental impact of the
Segovia Operations by eliminating these minerals from the tailings
going into the El Chocho storage facility.
The Company plans to drill a total of
approximately 60,000 meters at its Segovia Operations in 2021 at a
total cost of approximately $14 million to carry out its ongoing
in-mine and near-mine drill program at its four operating mines and
ramping up its exploration program aimed at testing its highest
priority brownfield targets. The 2021 in-mine and near-mine drill
program, which is already underway, will total approximately 40,000
meters of step-out and in-fill diamond drilling at a cost of
approximately $10 million from purpose-built underground and
surface drilling stations at the Company’s four operating mines,
focused on replacing the 2021 mining production and organic growth
through resource and reserve expansion. The 2021 brownfield
exploration program comprises a multi-phase fieldwork program for
each of the high-priority exploration targets, namely: Vera
(ongoing), Cristales, Marmajito and San Nicolas. Planned
exploration work includes Unmanned Aerial System magnetic and
radiometric surveys, underground and surface mapping, and possibly
induced polarization surveying. A total of approximately 20,000
meters of exploration and step-out drilling has been planned at a
total cost of approximately $4 million. Fieldwork, including
drilling, will be spread throughout the year with Cristales
expected to begin in the second quarter of 2021 and Marmajito and
San Nicolas to follow in the second half of the year.
The Company currently holds an 18.15% equity
interest in Gold X, a Canadian junior mining company which owns the
Toroparu Project in the western Guyana gold district. On March 15,
2021, the Company announced that it has entered into a definitive
arrangement agreement pursuant to which it proposes to acquire all
of the issued and outstanding common shares of Gold X it does not
already own by way of a statutory plan of arrangement, subject to
the approval of the shareholders of both companies and regulatory
approval. Pursuant to the definitive agreement, the Company would
acquire the shares of Gold X on the basis of 0.6948 of a Gran
Colombia share for each Gold X share (the “Exchange Ratio”). The
Exchange Ratio implies consideration of CA$4.10 per Gold X share
based on the 20-day volume weighted average price of the Gran
Colombia shares on the Toronto Stock Exchange (“TSX”) as of the
market close on March 12, 2021 for total consideration of
approximately CA$315 million on a 100% and fully diluted
in-the-money basis. Through the creation of a new, Latin
American-focused growth platform, Gran Colombia believes that the
combined company will consist of a complementary asset portfolio
including the world-class, Free Cash Flow generating Segovia
Operations located in Colombia, as well as the large, high-growth
and substantially de-risked Toroparu Project in Guyana that boasts
4.5 million ounces of LOM gold production over a 24-year mine life.
The companies are working towards closing the transaction in late
May/ early June 2021.
The Company intends to continue to take steps in
2021 to strengthen its balance sheet, including the recently
announced early partial redemptions of 10% of the Convertible
Debentures in April and 33.6% of the Gold Notes in May, bringing
the aggregate principal amounts of the Convertible Debentures and
Gold Notes down to CA$18.0 million and $19.75 million,
respectively, after the redemptions. The payment date for the early
redemption of the Gold Notes has been revised to May 10, 2021 to
accommodate the procedures and requirements of CDS Clearing and
Depository Services Inc. and the Toronto Stock Exchange.
Through the first quarter of 2021, the Company
has continued to return cash to its shareholders, repurchasing a
total of 702,000 common shares under its NCIB at a cost of
approximately CA$4.0 million and payment of dividends of
approximately CA$0.9 million each month. The Company is committed
to its dividend program at the current monthly rate of CA$0.015 per
share and expects to continue to repurchase common shares, within
certain price ranges, for cancellation under its NCIB to support
continued value creation for its shareholders.
Segovia Operations – Mineral Resource
and Reserve Update
Gran Colombia also announced today that it has
completed updated Mineral Resource and Mineral Reserve estimates
for its Segovia Operations prepared in accordance with the Canadian
Institute of Mining Metallurgy and Petroleum (“CIM”) Definition
Standards incorporated by reference in National Instrument 43-101
(“NI 43-101”) with an effective date of December 31, 2020.
Highlights of the December 31, 2020 MRE update
include:
- Total Measured & Indicated
Resources increased to 4.0 million tonnes at a grade of 11.2 g/t
totalling 1.43 million ounces of gold, up 5% from last year.
- Total Inferred Resources decreased
to 3.7 million tonnes at a grade of 10.3 g/t totalling 1.21 million
ounces of gold, down 4% compared to last year.
- The Company replaced Mineral
Resources mined in 2020 and upgraded approximately 69,000 ounces
from Inferred to Measured & Indicated resources.
- The updated MRE continues to
reaffirm confidence in the high-grade nature of the Segovia gold
deposits.
- The commencement of the brownfield
exploration program was delayed by COVID-19 until the fourth
quarter of 2020. As such, the updated MRE does not include any
results from the 2020 brownfield exploration program. In addition,
the MRE for Las Verticales has not been updated as no new
information is currently available and the previous estimate for
this project remains valid.
The following table summarizes the MRE for the
Segovia Operations as of December 31, 2020 and changes by category
in tonnes, grade and ounces of gold compared with the previous
total MRE as of December 31, 2019:
Project |
Deposit |
Type |
Measured |
Indicated |
Measured & Indicated |
Inferred |
Tonnes(kt) |
|
Grade(g/t) |
|
Au Metal(koz) |
|
Tonnes(kt) |
|
Grade(g/t) |
|
Au Metal(koz) |
|
Tonnes(kt) |
|
Grade(g/t) |
|
Au Metal(koz) |
|
Tonnes(kt) |
|
Grade(g/t) |
|
Au Metal(koz) |
|
Segovia |
Providencia |
LTR |
218 |
|
18.5 |
|
130 |
|
237 |
|
14.9 |
|
114 |
|
455 |
|
16.6 |
|
243 |
|
171 |
|
9.9 |
|
55 |
|
Pillars |
109 |
|
22.3 |
|
78 |
|
99 |
|
10.2 |
|
32 |
|
208 |
|
16.5 |
|
110 |
|
384 |
|
19.8 |
|
245 |
|
Sandra K |
LTR |
|
|
|
413 |
|
10.0 |
|
132 |
|
413 |
|
10.0 |
|
132 |
|
384 |
|
9.9 |
|
122 |
|
Pillars |
|
|
|
156 |
|
11.1 |
|
56 |
|
156 |
|
11.1 |
|
56 |
|
17 |
|
27.5 |
|
15 |
|
El Silencio |
LTR |
|
|
|
1,277 |
|
9.8 |
|
404 |
|
1,277 |
|
9.8 |
|
404 |
|
1,279 |
|
9.0 |
|
371 |
|
Pillars |
|
|
|
1,326 |
|
10.6 |
|
454 |
|
1,326 |
|
10.6 |
|
454 |
|
395 |
|
11.4 |
|
145 |
|
Verticales |
LTR |
|
|
|
|
|
|
|
|
|
771 |
|
7.1 |
|
176 |
|
Subtotal Segovia Project |
LTR |
218 |
|
18.5 |
|
130 |
|
1,927 |
|
10.5 |
|
650 |
|
2,145 |
|
11.3 |
|
780 |
|
2,605 |
|
8.6 |
|
724 |
|
Pillars |
109 |
|
22.3 |
|
78 |
|
1,581 |
|
10.7 |
|
542 |
|
1,690 |
|
11.4 |
|
620 |
|
796 |
|
15.8 |
|
405 |
|
Carla |
Subtotal Carla Project |
LTR |
|
|
|
132 |
|
6.0 |
|
25 |
|
132 |
|
6.0 |
|
25 |
|
260 |
|
9.7 |
|
81 |
|
December 31, 2020 (1) |
|
327 |
|
19.8 |
|
208 |
|
3,639 |
|
10.4 |
|
1,217 |
|
3,967 |
|
11.2 |
|
1,425 |
|
3,661 |
|
10.3 |
|
1,209 |
|
December 31, 2019 (2) |
|
226 |
|
20.8 |
|
151 |
|
3,385 |
|
11.1 |
|
1,205 |
|
3,611 |
|
11.7 |
|
1,356 |
|
4,098 |
|
9.6 |
|
1,265 |
|
% Change vs previous |
|
45 |
% |
-5 |
% |
38 |
% |
8 |
% |
-6 |
% |
1 |
% |
10 |
% |
-4 |
% |
5 |
% |
-11 |
% |
7 |
% |
-4 |
% |
(1) |
The Mineral Resources are reported at an in situ cut-off grade of
2.9 g/t Au over a 1.0 m mining width, which has been
derived using a gold price of US$1,700 per ounce and suitable
benchmarked technical and economic parameters for the existing
underground mining (mining = US$85.0/t, processing = US$24.0/t,
G&A = US$24.0/t, Royalties = US$11.1/t) and conventional gold
mineralized material processing (90.5%). Each of the mining areas
have been sub-divided into Pillar areas (“Pillars”), which
represent the areas within the current mining development, and
long-term resources (“LTR”), which lie along strike or down dip of
the current mining development. Mineral Resources are reported
inclusive of the Mineral Reserve. Mineral Resources are not Mineral
Reserves and do not have demonstrated economic viability. All
figures are rounded to reflect the relative accuracy of the
estimate. All composites have been capped where appropriate. |
(2) |
Sourced from the NI 43-101 Technical Report, Prefeasibility Study
Update, Segovia Project, Colombia dated May 14, 2020 and effective
as of December 31, 2019, prepared by SRK Consulting (US) Inc.
(“SRK”). Some production at Segovia is sourced from mining areas
that are not currently included in the Company’s MRE. |
|
|
During 2020, Gran Colombia continued its in-mine
and near-mine drilling campaign designed to increase the Company’s
confidence in the potential to add new mineral reserves and extend
mine life. The results of the 2020 drilling program were included
in press releases issued by the Company on July 20, 2020 and
December 21, 2020, including (i) the discovery of a third
high-grade vein at depth in the El Silencio mine, (ii) the
discovery of a new orebody at Level 14 in the Providencia mine
which is being developed and remains open at depth, (iii) drilling
at the northernmost end of the Sandra K mine showed that the
mineralization is still open along strike and at depth and (iv)
drilling at the Carla mine has intercepted additional high-grade
mineralization well below the existing underground mine
development. The results of the 2020 drilling have identified
potential targets to increase the Mineral Resources at Segovia, all
of which will be followed up in the 2021 drilling program.
The updated MRE for the Segovia Operations
incorporates assay results from an additional 467 diamond
drillholes totalling 64,030 meters of sampling information in the
databases compared to the previous model, inclusive of the 2019
drilling program and the ongoing validation exercises of historical
information being completed by the Company’s geologists. All
diamond core has been logged and sent for preparation at the SGS
laboratories in Medellin, with associated Quality Control Programs.
In addition to the drilling, a total of 9,806 channel samples
totalling some 7,815 meters in length were completed in 2020.
The MRE was prepared using a block model
constrained with 3D wireframes of the principal veins, which have
been sub-domained using high-grade mineralisation wireframes to
constrain the influence of higher grade material. Assays are capped
prior to compositing. Values were interpolated using ordinary
kriging for well informed areas and inverse distance squared
methodology for smaller veins with limited data. All models have
been depleted using projections of the mining faces through the
entire width of the veins. Classification has been applied based on
a combination of data quality, confidence in the spatial location,
and confidence in the mining depletion shapes. Only material
reporting above a cut-off of 2.9 g/t over a minimum stope width of
1.0 m has been included in the MRE. The MRE for Las Verticales has
not been updated as no new information is currently available and
the previous estimate for this project remain valid.
Ben Parsons, Principal Consultant (Resource
Geology) with SRK, prepared the Segovia MRE according to CIM
Definition Standards and will be supported by a NI 43-101
independent report which will be published and filed on the
Company’s website and SEDAR profile within 45 days. Mr. Parsons is
a Qualified Person as defined by NI 43-101. The NI 43-101
independent report will include detailed information on the key
assumptions, parameters and methods used to estimate the mineral
resources.
Segovia’s Life-of-Mine (“LOM”) Mineable Gold
Reserves Total Approximately 633,000 Contained Ounces Effective
December 31, 2020
SRK has also completed preliminary results of an
updated Preliminary Feasibility Study (“Segovia PFS”) for the
Segovia Operations effective December 31, 2020 and is currently
finalizing the technical report. At December 31, 2020, Segovia’s
reported Mineral Reserve totaled approximately 633,000 proven and
probable ounces of gold, based on 2.2 million tonnes of material at
an average head grade of 9.0 g/t, compared with 670,000 ounces at
the end of 2019 based on 2.0 million tonnes of material at an
average head grade of 10.5 g/t.
For the Segovia PFS, SRK included the geological
and resource modelling of the various deposits and mining areas
that comprise the operating mine site of the Segovia Operations. A
mining study and schedule was prepared by both SRK’s and the
Company’s technical professionals to create a LOM production
schedule, including both Company-operated areas and
contractor-operated areas within the Company’s Providencia, El
Silencio, Sandra K and Carla mines. The Segovia PFS production
schedule includes only Proven and Probable Reserves, and as such,
the annualized level of production over the seven-year projected
mine life in the Segovia PFS may be lower than the Company’s
current expectations. This is largely due to the exclusion of
Inferred Resources in the LOM production schedule in the Segovia
PFS which the Company currently mines and intends to continue
mining in the future. In addition, the material processed under
operating contracts at the Company’s Maria Dama plant from the
small artisanal mines located in the Company’s mining title is not
included in the LOM production schedule in the Segovia PFS as it
falls outside the Company’s mines and is therefore not included in
the Company’s MRE or Mineral Reserves.
The following table shows a breakdown of the
Mineral Reserve as of December 31, 2020 by area and category
compared with the total Mineral Reserve as of December 31,
2019:
Area |
Category |
Tonnes(kt) |
Grade(g/t) |
Au Metal(koz) |
Providencia |
Proven |
187 |
13.9 |
83 |
Providencia |
Probable |
176 |
10.4 |
59 |
Sandra K |
Probable |
273 |
9.1 |
79 |
El Silencio |
Probable |
1,472 |
8.3 |
394 |
Carla |
Probable |
88 |
6.3 |
18 |
December 31, 2020 (1) |
Total |
2,196 |
9.0 |
633 |
December 31, 2019 (2) |
Total |
1,985 |
10.5 |
670 |
% Change vs previous |
|
11% |
-14% |
-6% |
(1) |
Ore reserves are reported using a gold cutoff grade ranging from
3.11 to 3.86 g/t depending on mining area and mining method. The
cutoff grade calculations assume a $1,600/oz Au price, 90.5%
metallurgical recovery, $6/oz smelting and refining charges, $24/t
G&A, $24/t processing cost, and projected LOM mining costs
ranging from $85/t to $110/t. The reserves are valid as of December
31, 2020. Mining dilution is applied to a minimum mining height and
estimated overbreak (values differ by area/mining method) using a
zero grade. Reserves are inclusive of Mineral Resources. All
figures are rounded to reflect the relative accuracy of the
estimates. Totals may not sum due to rounding. Mineral Reserves
have been stated on the basis of a mine design, mine plan, and
economic model. There are potential survey unknowns in some of the
mining areas and lower extractions have been used to account for
these unknowns. The Mineral Reserves were estimated by Fernando
Rodrigues, BS Mining, MBA, MMSAQP #01405, MAusIMM #304726 of SRK, a
Qualified Person. |
(2) |
Sourced from the NI 43-101 Technical Report, Prefeasibility Study
Update, Segovia Project, Colombia dated May 14, 2020 and effective
as of December 31, 2019, prepared by SRK. |
|
|
A summary of the key LoM operating and financial
parameters of the current Segovia PFS dated as of December 31, 2020
compared with the previous Segovia PFS prepared as of December 31,
2019 is as follows:
|
December 31, 2020 |
December 31, 2019 (1) |
|
|
|
Operating data: |
|
|
Ore milled (tonnes) |
2,196,000 |
1,985,000 |
Gold produced (ozs) |
573,000 |
607,000 |
|
|
|
Financial data (U.S. dollars): |
|
|
Expected long-term gold price |
$1,600/oz |
$1,350/oz |
LOM gold revenue |
$916 million |
$819 million |
Total cash cost, including refining |
$796/oz |
$711/oz |
LOM sustaining capex, including exploration |
$134 million |
$150 million |
Mine-level AISC |
$1,030/oz |
$958/oz |
Undiscounted after-tax free cash flow |
$226 million |
$151 million |
NPV after-tax free cash flow @ 5% |
$209 million |
$139 million |
(1) |
Sourced from the NI 43-101 Technical Report, Prefeasibility Study
Update, Segovia Project, Colombia dated May 14, 2020 and effective
as of December 31, 2019, prepared by SRK. |
Fernando Rodrigues, BS Mining, MBA, MAusIMM,
MMSAQP Practice Leader/Principal Consultant (Mining Engineer) with
SRK, prepared the Segovia Mineable Reserve according to CIM
Definition Standards and will be supported by a NI 43-101
independent report which will be published and filed on the
Company’s website and SEDAR profile within 45 days. Mr. Rodrigues
is a Qualified Person as defined by NI 43-101. The NI 43-101
independent report will include detailed information on the key
assumptions, parameters and methods used to estimate the mineable
reserve.
2020 Fourth Quarter and Year End
Results
As a reminder, Gran Colombia is hosting a
conference call and webcast on Thursday, April 1, 2021 at 9:00 a.m.
Eastern Time to discuss the results.
Webcast and call-in details are as follows:
Live Event link: |
https://edge.media-server.com/mmc/p/axzwox37 |
Canada Toll / International: |
1 (514) 841-2157 |
North America Toll Free: |
1 (866) 215-5508 |
Colombia Toll Free: |
01 800 9 156 924 |
Conference ID: |
50124774 |
A replay of the webcast will be available at
www.grancolombiagold.com from Thursday, April 1, 2021 until Friday,
April 30, 2021.
About Gran Colombia Gold
Corp.
Gran Colombia is a Canadian-based mid-tier gold
producer with its primary focus in Colombia where it is currently
the largest underground gold and silver producer with several mines
in operation at its high-grade Segovia Operations. Gran Colombia’s
portfolio includes equity positions in several listed companies
advancing gold and silver projects including a 44.3% equity
interest in Aris Gold Corporation (TSX: ARIS) (Colombia – Marmato;
Canada – Juby), an 18.2% equity interest in Gold X Mining Corp.
(TSX-V: GLDX) (Guyana – Toroparu), a 27.3% equity interest in
Denarius Silver Corp. (TSX-V: DSLV) (Colombia – Guia Antigua and
Zancudo) and a 25.8% equity interest in Western Atlas Resources
Inc. (TSX-V: WA) (Nunavut – Meadowbank).
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 the continuation of operations during the COVID-19
situation, production guidance, early redemptions of debt,
acquisition bid for Gold X Mining, payment of dividends and other
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 31, 2021 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.
For Further Information,
Contact:Mike DaviesChief Financial Officer(416)
360-4653investorrelations@grancolombiagold.com
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