TORONTO, Jan. 13 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM) is pleased to provide an operational and exploration update and announce drill success at two new veins. The Company owns five production and exploration gold projects located in the central and southern parts of Colombia - Gran Colombia (formerly known as the Frontino Gold Mines), Segovia, Zancudo, Providencia and Mazamorras. 

Maria Consuelo Araujo, Chief Executive Officer of the Company, commented:  "Gran Colombia Gold is focused on ramping up production at the Gran Colombia mine and growing the Company's ore resources and reserves.  We have made significant progress at all the properties we own and we are on target to reach our production goals while confirming further exploration targets across the portfolio. We are also extremely pleased to have made two new discoveries at veins never before explored, with the Marmajito vein grading 43.7g/t gold in a 0.4 m intercept and a second vein grading 34.4 g/t in a 0.6 metre intercept at the Providencia Mine."

With the objective of identifying new ore blocks that may have the potential to be exploited in the short to medium term, the Company has initiated surface exploration work and diamond drilling at each property with the objective of working toward a NI 43-101 compliant technical report.  Currently, three drill rigs are operating at the Gran Colombia properties and two at the adjacent Segovia. During January, four more drill rigs will be added at these properties. Additionally, two rigs have commenced drilling at the Mazamorras property and two rigs will commence drilling next week at the Providencia property.  In total, the Company expects to have at least 15 drill rigs operating within the next four months. Management believes the current drilling program may identify other attractive targets, including potential open pit production to further increase near-term production. 

Gran Colombia Operations and Exploration

Operations - The Company achieved its near-term production goal since taking over operations in August, 2010, producing over 4,100 ounces of gold in November and 4,900 ounces in December. The average grade of gold produced at the mine since inception is 9.26 grams per tonne.  The Company is currently on target for its annualized level of 100,000 ounces of gold by the end of the third quarter, 2011. The Company has achieved an 88.96% recovery rate as this has been the rate used since the inception of the Gran Colombia mine and has been the average since September 2010.  The Company has also assumed a gold price of USD$1,385.20, a silver price of USD$29.52 and a gold/silver ratio of 46.92. The Company is unhedged to the rising gold and silver price environment.

A number of capital investments aimed at increasing capacity are currently underway and include development in infrastructure and the tailings pond. Construction of the tunnel commenced December 13, 2010 with all licences and permits in place.  The construction of a 6-kilometer tunnel to intercept the 23 known veins at the Gran Colombia mines is a key project for the Company - and numerous alteration areas are not yet studied in the same location of this tunnel. The tailings pond is being improved to ensure increased capacity, and at the hydroelectrical plant Proelectrica, refurbishment is being completed at no additional cost to the Company.

To improve mining operations, the Company has acquired critical new equipment and implemented improvements at the Maria Dama processing plant to increase throughput to 1,000 tonnes per day ("tpd"), which was achieved within nine months.  The current mill capacity has already increased from an initial 450 tpd when the Company restarted operations in September, 2010 to 600 tpd in December, 2010. 

Exploration - A drilling program commenced in October 2010 with 30,000 meters of diamond drilling planned to confirm the continuity at depth of previously known and currently exploited high grade veins being mined at the Providencia, Sandra K, and El Silencio mines and to potentially discover new veins and mineralised areas in these significantly under-explored mining areas. 

Over 2,400 metres have already been completed in 10 holes varying in depth from 153 metres to 540 metres.  The first hole, DD01, intercepted two highly mineralized veins (see figure 1 here: http://files.newswire.ca/920/GranColombiaFig1.pdf).

One of the intersections, located 115 meters from surface confirms the extension of the Marmajito Vein at depth with an intercept of 0.4 metres grading 43.7 grams per tonne gold ("g/t") in an area where the mineralized structure had not been previously identified. The second intersection, at a depth of 343 meters from surface, 50 metres below the current production level at the Providencia Mine, encountered 0.6 metres with a gold grade of 38.4 g/t. Intercepting these two very important veins below current production levels will allow mining development through planning and design of new working faces in short and medium terms.

Drilling at all of the projects was completed by Perforaciones Tecnicas S.A.S with the exception of the Mazamorras Project, where the work was completed by Kluane Drilling Ltd.

Segovia Project

At the Segovia project, over 1,370 meters of a planned 7,500 metres have been drilled in eight holes designed to test at depth a rich outcropping vein to the west. Intersected values vary from 2 g/t to 71.6g/t Au. The best intercept to date is 0.3 metres at a grade of 71.6 g/t gold at a depth of 121 metres.

El Zancudo Project

Initial trial mining has commenced at La Independencia mine with two mining fronts and two development fronts. The El Zancudo mill was tested with ore at the end of December, 2010, and will now start to process the ore mined from La Independencia, going from 25 tpd in January to a planned 120 tpd in the second quarter. Intensive exploration is planned for El Castaño mine area with the intention of increasing gold production from this area. Exploration is also focusing on alteration zones south of the mine.

Underground drilling continues, with 200 metres already completed and surface drilling scheduled to commence later this month. Underground drilling is taking place initially below La Independencia mine in order to confirm reserves and zones of mineralization.

Highlights of initial underground grade control sampling results at El Zancudo are summarized below.

Table 2. Gran Colombia vein samples results at El Zancudo Project.

Providencia Project

Geological studies have been very efficient, identifying a group of 12 mineralized veins with gold values varying from 1 g/t to 37 g/t Au, with the best result to date of 37 g/t in a punctual sampling. Drill site preparation has been completed and drilling with two rigs is expected to start next week, as part of the 6,000 metre program. Geophysical work will also commence next week.

Mazamorras Project

This project is located in Nariño Department, in southern Colombia. Drilling of this copper-gold porphyry target has commenced, with three drilling rigs should commence by April, 2011. The three areas where drilling will start are San Felipe, Zona Norte and El Pedregal.

San Felipe is a zone located to the South of the "A" porphyry copper anomaly (with individual rock samples grading above the 1,000 parts per million ("ppm") of copper).  At the "A" porphyry copper, gold in rock samples ranks within the 100-200 parts per billion ("ppb") range; at the San Felipe zone, the gold values in rock samples ranks within the 100 ppb to 7,500 ppb range with individual values as high as 76,300 ppb.  Silver values in the same zone reach values up to 140 ppm.  We are currently exploring the oxidation part of the San Felipe deposit. Lowell Mineral Exploration ("LME") undertook the first systematic rock sampling in this area; collecting 21 samples, with a simple average of 58.3 metres at a gold grade of 2.35 g/t and 16.7 g/t silver. The highest gold value was 76.3 g/t (which was excluded from the above average). Re-sampling of this area, based on 38 samples, produced an average of 58.3 metres at a gold grade of 2.3 g/t and 16.3 g/t silver, almost identical to the LME values excluding the one anomalous intercept. The Company believes that San Felipe represents one of the most interesting gold-silver anomalies surrounding the porphyry copper systems of the Mazamorras project.  Sampling highlights follow.

Qualified Person

The technical information contained in this press release has been reviewed and approved by Ricardo A. Valls, M.Sc., P.Geo (registered geoscientist in Ontario and Quebec), a qualified person under National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

About Gran Colombia Gold Corp.:

Gran Colombia Gold 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.

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

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.