TORONTO, Aug. 14, 2013 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM, OTC:TPRFF) announced today the release of its unaudited condensed consolidated financial statements and accompanying management's discussion and analysis (MD&A) for the second quarter of 2013.  All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.

Second Quarter 2013 Highlights

• Record gold production of 27,151 ounces for the second quarter of 2013, with a 12 percent increase from the first quarter of 2013, including a 15 percent increase at the Segovia Operations. The company reaffirms its production guidance for full year 2013 at 110,000 ounces of gold.
• Revenue of $42.4 million in the second quarter of 2013, reflecting the sale of 28,419 ounces of gold at an average realized price of $1,457 per ounce and 38,572 ounces of silver at an average realized price of $23 per ounce.
• Annualized cost savings of $21 million, resulting from a three-phased cost reduction program have been implemented at the company's Segovia Operations and in general and administrative (G&A) expenses.
• Cash costs decreased by almost 12 percent from the first quarter of 2013 to $1,133 per ounce of gold in the second quarter of 2013. Cash costs are expected to further improve by the fourth quarter of 2013 to below $1,100 per ounce as a result of Phase III of the cost reduction program implemented at the beginning of August.
• All-in sustaining costs⁽¹⁾ decreased by $267 per ounce in the second quarter of 2013 to $1,278 per ounce and are expected to trend down over the balance of the year to below $1,150 per ounce in the fourth quarter of 2013.  The company now expects a slight improvement from its previous guidance of $1,280 per ounce to an expected annual average all-in sustaining cost of around $1,275 per ounce for the full year of 2013.
• G&A decreased to $2.9 million, or $99 per ounce sold, in the second quarter of 2013. This represents a 20 percent improvement compared to the first quarter of 2013. As a result of the cost reductions implemented this year the company has lowered its G&A guidance for 2013 to $11.5 million, an improvement of $5.0 million or 30 percent compared to 2012.
• Like many of the company's peers in the gold industry, whose project valuations have been affected by the sharp decline in metals prices, and who have reported impairment charges in the second quarter of 2013, the company has also recorded an $87.9 million after-tax impairment charge related to the in situ valuation of its exploration properties in the second quarter of 2013.
• An adjusted net loss⁴ of $2.5 million ($0.17 per share) in the second quarter of 2013 compared with an adjusted net loss of $7.6 million ($0.50 per share) in the second quarter last year. The first half 2013 adjusted net loss was $6.5 million ($0.42 per share) compared with an adjusted net loss of $5.2 million ($0.34) in the first half last year.
• Development of the Pampa Verde expansion project at the company's high-grade Segovia Operations is proceeding on schedule and within its capital budget. At June 30, 2013, the company had $55.2 million of cash in trust to fund the project expenditures and the monthly interest on the Gold Notes through to October 2014.
• Exploration results from the completion of a 20,000 meter drilling campaign to upgrade and extend its high-grade resources at the Segovia Operations resulted in a new mineral resource estimate, including a 58 percent increase in the Measured and Indicated categories to 0.5 million ounces of gold (0.1 million ounces Measured and 0.4 million ounces Indicated) with an average grade of 15.2 grams per tonne (g/t) and a 27 percent increase in the Inferred category to 1.4 million ounces of gold with an average grade of 11.0 g/t (see August 1, 2013 press release).

Serafino Iacono, Executive Co-Chairman of Gran Colombia, commenting on the company's mid-year progress, said, "The market has been waiting for Gran Colombia to demonstrate consistent progress in achieving its operational objectives.  So far this year the company has delivered successive quarters of meeting or exceeding its targets; it has continued to implement significant cost savings while meeting production targets, and has continued the advancement of Colombia's first modern underground gold mine at its high-grade Segovia project."

Financial and Operating Summary

A summary of the financial and operating results for the second quarter and first half of 2013 is as follows:

Segovia Operations Update

The company recorded its highest production ever at its Segovia Operations with record production of 21,891 ounces of gold in the second quarter of 2013.  Gold production continued to benefit from the expansion at the Maria Dama plant and an improvement in recovery rate in the second quarter of 2013 to historical levels of 89.5 percent.  The Maria Dama plant ran steadily during the second quarter of 2013 and by the end of June, had completed four consecutive months of processing more than an average of 1,000 tpd.  Average head grades decreased slightly in the second quarter to 7.9 g/t, compared to 8.6 g/t in the first quarter of 2013.  Mine development work continued in the company-operated mines during the second quarter but at a slower pace than expected, limiting the company's ability to advance into higher grade areas in the Providencia and Sandra K mines.  Actions are underway in the third quarter to introduce more mechanization into the mine development program in order to accelerate progress and enable the company to start mining higher grade areas by October of 2013.

The Pampa Verde project will transform the company's high-grade Segovia asset into a modern, low-cost, underground mining operation.  Progress towards production in the third quarter of 2014 continues as planned and remains on-budget.  Recent progress against key deliverables includes:

• The company has received its construction permits and has begun earthworks activities.
• The recently reported exploration program has identified resources for the first five years of the Pampa Verde mine plan and it has been extended with four new holes being drilling to explore the extension of some very high-grade results from the Providencia vein system.
• Multiple metallurgical tests have been completed indicating that approximately 70 percent of the gold can be recovered by gravity due to the high level of free gold.
• Plant equipment is being shipped and is expected to arrive in Colombia in August and over 90 percent of the plant equipment has been ordered or purchased.

Marmato Project

Production remained steady at the company's Marmato Operations in the second quarter of 2013, with 720 tpd milled at an average head grade of 2.8 g/t and a mill recovery of 88.7 percent, resulting in gold production of 5,260 ounces. A crusher upgrade was successfully completed in mid-August and the Marmato Operations remain on track to meet production guidance of 20,000 ounces of gold for the full year of 2013.

The company's near-term focus at the Marmato Project is to complete and publish a Preliminary Feasibility Study for the modernization and expansion of its current underground operation.  Current market conditions have resulted in the company delaying some of the outstanding work required to complete the study.  As a result, the company now expects to complete the Preliminary Feasibility Study and supporting NI 43-101 in the second half of 2013.

Outlook

The company continues to expect production at its Segovia Operations to reach 90,000 ounces of gold in 2013 and production from the underground mine at Marmato is expected to total approximately 20,000 ounces of gold.

The company remains focused on the controllable aspects of its cash generation by reviewing all spending to become a leaner organization and to ensure it meets all financial obligations while the Pampa Verde expansion project at Segovia is being constructed. To-date, the company has successfully implemented significant cost reductions in its business model that have already  resulted in a substantial reduction in all-in sustaining cost to about the $1,200 per ounce level. These actions, coupled with the benefit of the mine development work in process at the company-operated mines at Segovia, is expected to lower the all-in sustaining cost to below $1,150 per ounce by the fourth quarter of 2013.  This includes a 20percent reduction (compared to the first quarter of 2013) in cash costs to below $1,050 per ounce and a 46 percent reduction in G&A to approximately $85 per ounce. Based on the first half results and an average gold price of around $1,300 per ounce for the balance of 2013, the company now expects a slight improvement in its expected average all-in sustaining cost for the full year to around $1,275 per ounce, compared to it previous expectation of $1,280 per ounce for the full year of 2013.

Webcast

As a reminder, the company will host a conference call and webcast on Thursday, August 15^th at 9:30 a.m. Eastern Time (8:30 a.m. Bogota time) to discuss second quarter results and provide an operational update.

Webcast and call-in details are as follows:

A replay of the webcast will be available at www.grancolombiagold.com from August 15, 2013 until September 30, 2013.

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.

Additional information on Gran Colombia Gold can be found on the company's website at www.grancolombiagold.com and by reviewing the company's page on SEDAR at www.sedar.com.

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 26, 2013 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.