TORONTO, March 31, 2014 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM, OTC: 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, 2013.  All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.

2013 Highlights

• Total gold production of 102,792 ounces for the year, a 1.9% increase over last year. For the fourth quarter of 2013, the Company produced 22,106 ounces of gold, impacted by lower head grades being mined by the contract miners in the El Silencio mine at Segovia. 2014 production, influenced by the timing of higher grade areas becoming accessible for mining at Segovia, is expected to be between 102,000 to 122,000 ounces.
• Revenue of $148.5 million in 2013 reflected the impact of the decline in metals prices this year with the Company realizing an average of $1,416 per ounce of gold and $24 per ounce of silver, down 15% and 20%, respectively, from last year. To protect its cash flow, the Company responded with significant cost reduction initiatives to lower its all-in sustaining cost per ounce.
• The Company's aggressive cost savings program, which included an approximately 50% reduction in its workforce at Segovia this year, has resulted in a 12.5% decrease in 2013's total cash costs to $1,152 per ounce compared with $1,317 per ounce last year and a 21% decrease in all-in sustaining costs to $1,230 per ounce in the fourth quarter of 2013 compared with $1,558 per ounce in the first quarter of the year. The Company expects that the full year impact of its 2013 savings initiatives, coupled with additional workforce reductions at Segovia implemented in early 2014 and improving head grades at Segovia as 2014 progresses, will reduce its all-in sustaining cost to an average of $950 to $1,025 per ounce in 2014.
• G&A decreased by 32% to $11.2 million in 2013, equivalent to $108 per ounce sold, from $16.5 million or $168 per ounce last year. G&A in the fourth quarter of $2.3 million was approximately 50% lower than the fourth quarter last year and represented the fourth consecutive quarter that the cost savings program lowered the quarterly run rate. In 2014, G&A will benefit from the full year impact of the 2013 cost reductions and is expected to decrease to about $8 million, averaging between $65 and $80 per ounce.
• Development: The Company's Pampa Verde expansion project at the Segovia Operations continues to advance with excavations at the plant site nearing completion and construction set to begin early in the second quarter.  The new 2,500 tpd plant will be ready for testing in the first quarter of 2015 and commence full production by mid-2015. Mine development activities are progressing at all mines at Segovia. Dewatering at El Silencio is in process to open access to the higher grade levels at depth in the mine. Construction of the shaft at Providencia will commence early in the second quarter and be completed by the end of the third quarter, allowing the Company to implement mechanized mining in Providencia before the end of the year. Mini jumbos are being brought in during the second quarter of this year to facilitate development of higher grade stopes at Sandra K for production in the fourth quarter and a ramp will be constructed at the Carla mine to increase production rates from higher grade areas by the third quarter this year. The Pampa Verde Project remains within its $84 million capital budget.
• Exploration: In August 2013, following successful completion of a 20,000 meter drilling campaign to upgrade and extend its resources at its producing Segovia Operations, the Company announced a new mineral resource estimate with a 58% increase in the Measured and Indicated categories to 0.5 million ounces of gold with an average grade of 15.2 g/t and a 27% increase in the Inferred category to 1.4 million ounces of gold with an average grade of 11.0 g/t. In February 2014, the Company published a preliminary economic assessment ("PEA") of its mineral resource estimate at Segovia with a NPV10 at a long-term average gold price of $1,200 per ounce of $194 million from about one million contained ounces over an approximately seven-year mine life. The Company is confident that further exploration to be carried out over the next few years will upgrade and extend the mine life at Segovia.
• Liquidity: In March 2014, the Company completed a C$16.3 million equity offering, the net proceeds of which have been used to repay the $4 million bridge loan and the balance will be used to reduce accounts payable by up to $3.5 million and to bolster the Company's cash position with the remaining approximately $6 million to improve its liquidity as it completes the Pampa Verde expansion.

Serafino Iacono, Executive Co-Chairman of Gran Colombia, commenting on the Company's achievements in 2013, said, "We are pleased with our progress in 2013 in reducing our all-in sustaining costs and we are continuing to implement the actions required to achieve further reductions in our all-in sustaining costs and to grow our production, better positioning Gran Colombia to generate improved cash flow as work continues to bring our high-grade, lower cost Pampa Verde project on-line at the end of this year."

Financial and Operating Summary

A summary of the financial and operating results for the fourth quarter and full year 2013 is as follows:

Segovia Operations

At the Segovia Operations, gold production was up 1.3% to 80,226 ounces in 2013. Gold production at Segovia in the fourth quarter of 2013 was hampered by a reduction in head grades in material sourced from the contract miner at the El Silencio mine. The Company took immediate action to rectify the situation and head grades should return to normal levels in 2014. In 2013, the Company implemented a number of cost savings initiatives that resulted in a 32% reduction its cash costs to $1,089 per ounce in the fourth quarter of 2013, the lowest since the Company acquired the mines in 2010, from $1,604 per ounce in the fourth quarter last year. These initiatives included a workforce reduction carried out in several phases throughout the year that cut the workforce in about half at the Company-operated mines. In January 2014, the Company completed a further restructuring of its Segovia Operations to continue the expansion and modernization of mining activities and improve security in the mining and processing operations. Certain key functions are now directly employed by the Company and a local contractor has been engaged to carry out the mining activities in the Company-operated areas at Segovia. This new mine contractor is being remunerated for their services based on tonnes mined, thereby lowering mining costs per tonne and turning the former fixed operating cost structure at the Company-operated mines into a variable cost more closely aligned with production, revenues and cash flows.

Marmato Operations

At the Marmato Underground mine, the successful crusher upgrade completed in mid-August increased tonnes milled by 16.5% in the second half of 2013. Operations remained steady in 2013 resulting in gold production of 22,566 ounces, a 3.9% increase over the prior year. The impact on fixed costs of increased tonnages and gold production in the second half of 2013 helped to reduce the mine's cash cost to $1,047 per ounce in the fourth quarter of 2013 from $1,273 per ounce in the fourth quarter last year.

Impairment

In 2013, the Company has recorded impairment charges of $163.8 million or approximately $9.60 per share on an after-tax basis. The impairment charges include $105 million recorded in the second quarter of 2013 related to its exploration properties, primarily its Marmato Project, and $58 million in the fourth quarter of 2013 related to its Segovia Operations. These impairment charges were triggered by the significant declines in the Company's market capitalization and in gold and silver prices in 2013, together with the resultant impact on the gold industry in general.

The Marmato Project continues to be a world class gold and silver deposit. However, due to the lower metals prices, the in situ market value of this undeveloped property has likely decreased. Similarly, the current market environment is having an adverse impact on junior exploration budgets and financings, reducing the Company's potential ability to fully recover its investments in the El Zancudo and Mazamorras exploration properties through either joint venture or sale transactions.

In conjunction with finalizing its 2013 year end results, the Company completed a fair value assessment of its Segovia Operations using a $1,300 per ounce long-term gold price and the mining plan included in the February 2014 PEA. The reduction in both the long-term gold price and the mineable contained ounces in the 2014 PEA mining plan compared with the analyses completed in prior periods triggered a $58 million impairment charge recorded in the fourth quarter of 2013. If the long-term gold price had remained at $1,400 per ounce, no impairment would have been recorded against the carrying value of the Segovia Operations at December 31, 2013.

Outlook

In 2014, Gran Colombia remains focused on the controllable aspects of its cash generation, including execution of its mine plan, to ensure it meets all financial obligations while the Pampa Verde expansion project at the Segovia Operations is being constructed. Total gold production for 2014 for the Company will be influenced by the timing of when the higher grade areas will ultimately become accessible for mining at Segovia and is expected to total between 102,000 to 122,000 ounces, with 80,000 to 100,000 ounces at Segovia and 22,000 ounces at the Marmato Underground mine. Mine development at Segovia, including a shaft at Providencia, dewatering at El Silencio, a ramp at the Carla mine and additional development at Sandra K, will facilitate the Company's ability in the fourth quarter of 2014 to implement mechanized mining in certain of the Company-operated areas at Segovia to increase mining rates and reduce mining costs. In addition, mine development will open access to higher grade stopes that will also generate production growth and reductions in all-in sustaining costs on a per ounce basis as the year progresses.

The Company's all-in sustaining cost averaged $1,322 per ounce in 2013. As a result of actions taken in 2013 and so far in 2014 to reduce production costs and G&A, improvements in head grades as the year progresses and continuing to keep sustaining capital expenditures to a minimum while the Pampa Verde project is completed, the Company expects its all-in sustaining costs for the full year in 2014 will average between $950 and $1,025. This includes an average total cash cost for the year of $850 to $900 per ounce, well below the average of $1,152 per ounce achieved in 2013, and G&A expenses of $65 to $80 per ounce, down from $108 per ounce in 2013. Sustaining capital expenditures, including a limited amount of exploration and geology spending at Segovia to support execution of the mine plan, is expected to amount to approximately $3.4 million in 2014 and the all-in sustaining cost includes a provision of approximately $11 to $13 per ounce for environmental discharge fees at Segovia.

From an investment perspective, the primary focus in 2014 remains with the construction and development activities at the Pampa Verde expansion project at the Segovia Operations. The project remains on track and within its capital budget. Capital expenditures, exploration and mine development in support of the Pampa Verde expansion project are not included in all-in sustaining cost.

Webcast

As a reminder, the Company will host a conference call and webcast on Tuesday, April 1, 2014 at 9:30 a.m. Eastern (8:30 a.m. Bogota) time to discuss the 2013 year end 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 April 1^st, 2014 until April 27, 2014.

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 currently advancing a project to develop a modern, large-scale, gold and silver mine at its 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 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 31, 2014, 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.