TORONTO, May 13, 2014 /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 three months ended March 31, 2014.  All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.

First Quarter 2014 Highlights

• The Company is maintaining its 2014 gold production guidance of 102,000 to 122,000 ounces. Total gold production was 19,200 ounces in the first quarter of 2014, reflecting an expected short-term continuation of lower head grades at the Segovia Operations while mine development progressed to open access to higher grade mining areas for the second quarter. In April 2014, the Company's total gold production was 8,837 ounces, including a 54% increase in Segovia's daily gold production rate compared with the first quarter of 2014 due to improved head grades.
• Revenue of $25.7 million in the first quarter of 2014 reflected the impact of the lower production and metals prices compared with the first quarter a year ago. The Company's steady progress in lowering its all-in sustaining costs over the last year has made a significant contribution to protecting its cash flow in the lower gold price environment while it completes the Pampa Verde project at the Segovia Operations.
• The Company's aggressive cost savings program in 2013 and the first quarter of 2014, including a significant reduction in its workforce at Segovia, has resulted in an 18% decrease in total cash costs to $1,053 per ounce in the first quarter of 2014 compared with $1,281 per ounce in the first quarter last year and a 23% decrease in all-in sustaining costs to $1,197 per ounce (see the Company's MD&A for the computation of this non-IFRS measure) in the first quarter of 2014 compared with $1,558 per ounce in the first quarter last 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 for 2014.
• G&A expenses decreased as expected by 37% to $2.2 million, equivalent to $112 per ounce sold, in the first quarter of 2014 from $3.6 million, or $158 per ounce, in the first quarter last year. In 2014, G&A will benefit from the full year impact of the 2013 cost reductions and is expected to be approximately $8 million, averaging between $65 and $80 per ounce.
• Results: The Company reported an adjusted net loss (see the Company's MD&A for a reconciliation) of $4.5 million, or $0.27 per share, in the first quarter of 2014 compared with an adjusted net loss of $3.9 million, or $0.26 per share, in the first quarter last year. While lower gold prices adversely impacted the 2014 adjusted net loss, the Company's steady progress in reducing cash costs and G&A expenses was successful in mitigating a significant portion of this impact.
• 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 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. Development activities are progressing at all mines at Segovia. The Pampa Verde Project remains within its $84 million capital budget.
• Liquidity: In March 2014, the Company completed a CA$16.3 million equity offering, the net proceeds of which were used to repay the $4 million bridge loan and the balance is being 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 results for the first quarter of 2014, said, "All-in sustaining costs met our expectations this quarter which represented the fourth consecutive quarter we have successfully lowered our all-in sustaining costs. Work continues to further lower our costs and grow our gold production to meet our guidance for an annual average all-in sustaining cost of $950 to $1,025 per ounce for 2014."

Financial and Operating Summary

A summary of the financial and operating results for the first quarters of 2014 and 2013 is as follows:

(1)     Refer to Additional Financial Measures in the Company's MD&A.

Segovia Operations

At the Segovia Operations, gold production totaled 13,541 ounces in the first quarter of 2014, down from 19,052 ounces in the first quarter last year, due to more stringent application of cut-off grades at the Company-operated areas in this year's lower gold price environment, the impact on mining activities of the transition of the Company's workforce to contractor mining and temporarily lower head grades in certain areas operated by the contract miners.

The continuation of mine development activities at the Company-operated areas in the Providencia and Sandra K mines in the first quarter of 2014 resulted in an increase in head grades to 6.2 g/t, up more than 40% over the average head grades in the 2013 fiscal year production. The Company expects that its gold production from the Company-operated mining areas will increase over the course of 2014 as its mine development program continues to open up additional work areas, allowing for an increase in both tonnes mined and head grades.

Gold production from the contract miners at Segovia in the first quarter of 2014 continued to reflect the short-term impact of lower head grades in material sourced from the El Silencio mine as the new cooperative which took over operations at the El Silencio mine in December 2013 re-commenced dewatering activities. By March 2014, head grades from Segovia's contract miner operations started to show the expected improvement, averaging 13.5 g/t in the month, and further improvement was realized in April's mining operations.

In January 2014, the Company completed a restructuring of its operations at Segovia to continue the expansion and modernization of mining activities and improve security in the mining and processing operations. Segovia's reported total cash costs of $1,083 per ounce in the first quarter of 2014 included the impact of $1.25 million in costs to complete the workforce reduction. Excluding these costs, equivalent to approximately $89 per ounce, Segovia's total cash cost was below $1,000 per ounce for the first quarter of 2014, down more than 20% from the first quarter a year ago.

Marmato Operations

At the Marmato Underground mine, operations remained steady in the first quarter of 2014, processing an average of 807 tpd resulting in gold production of 5,659 ounces with total cash costs of $976 per ounce, a 17% reduction from the first quarter of 2013.

Webcast

As a reminder, the Company will host a conference call and webcast on Wednesday, May 14, 2014 at 09:30 a.m. Eastern Time (8:30 a.m. Bogota time) to discuss the first quarter 2014 results.

Webcast and call-in details are as follows:

A replay of the webcast will be available at www.grancolombiagold.com from May 14, 2014 until June 30, 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.