TORONTO, Sept. 21, 2011 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM) announced today that it has taken a number of actions this month to increase production and reduce costs at its operations in Segovia which are expected to reduce costs by more than US$2 million per month or approximately US$400 per ounce at the current level of gold production.

Workforce Reduction

On September 6, 2011, the Company reached the first anniversary of the re-start of operations at its Segovia operations. During this period, the Company honored its acquisition-related obligation to maintain employment of 1,428 workers during the first year of operations.  During this time the Company completed development and expansion projects at the mine, identified areas of opportunity to improve efficiencies and laid the groundwork for a reduction in the labor force predicated on finding suitable alternative employment for the displaced workers.  In early September, Gran Colombia successfully completed this initiative with a reduction of 603 workers, or 42%, bringing the number of employees in the Segovia operations down to approximately 825.

Maria Consuelo Araujo, Chief Executive Officer of Gran Colombia commented "this reduction in our workforce at Segovia was an important step forward for our Company, balancing our responsibility to take into consideration the impact of our actions on the community with the Company's need to improve its operating performance."

Small Miner Contract Revision

Additionally, the Company renegotiated contracts with small miners.  A portion of Gran Colombia's gold production from its Segovia mining operations is sourced from ore mined by small to medium mine contractors operating within its mining property and purchased by the Company pursuant to a formula based on estimated gold content and the market price for gold. In addition, the Company has entered into additional contracts with newly formed mine contractors that included certain of the displaced workers. As a result of the actions taken in September, the Company has secured arrangements to purchase ore at a lower cost, averaging approximately 55% of the market price for gold, down from the original 70% while continuing to ensure environmentally compliant processing is maintained for such production.

Mill Expansion

The Maria Dama mill in Segovia has been producing at an average rate of 535 tonnes per day in 2011. Earlier this week, a new crusher-jig-sifter system was placed into operation that will increase mill capacity to 700 tonnes per day. Gran Colombia has also acquired a new ball mill to replace four existing smaller ones.  The new ball mill, being shipped from the United States, is scheduled to be onsite in the fourth quarter of this year and is expected to be fully operational in the first quarter of 2012, increasing mill capacity to 1,000 tonnes per day.

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 six underground mines in operation.  In addition, Gran Colombia is also developing a large-scale, open-pit gold and silver mine at Marmato.  The Company also has a highly-prospective land position in Colombia as well as an advanced stage property in Venezuela and earlier stage properties in Mali.

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. 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.