Gran Colombia Gold announces year end 2012 results and Segovia operations processing 1,000 tonnes per day in March 2013

TORONTO, March 26, 2013 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM) announced today the release of its audited consolidated financial statements, accompanying management's discussion and analysis (MD&A) and Annual Information Form for the 2012 fiscal year. All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.

2013 Highlights

• Gold production of 100,895 ounces in 2012 represented a 10 percent increase over 2011. Fourth quarter production of 22,116 ounces of gold was adversely impacted by power disruptions at Segovia. Gran Colombia has taken steps to mitigate the power issues and gold production in 2013 has shown improvement over the fourth quarter and no further power interruptions have been experienced in 2013.
• Revenues of $168.2 million in 2012 represented growth of 22 percent compared to 2011, primary resulting from production growth, an increase in realized gold prices to an average of $1,664 per ounce for the year and having a full year of operations in 2012 at the Marmato underground mine.
• Total cash costs averaged $1,317 per ounce of gold in 2012, up from $1,254 per ounce in the prior year. Segovia's cash cost, averaging $1,341 per ounce in 2012, reflected the impact on artisanal mining costs of higher gold prices in 2012, the numerous challenges encountered during a year of extensive activity to double the Maria Dama plant's milling capacity, power disruptions in the fourth quarter and temporary lower grades in the second half of the year.
• Gross Margin of $18.2 million in 2012, improved by $6.7 million, compared to $11.5 million last year.
• General and administrative expenses (G&A) of $16.5 million in 2012, up from $15.6 million in 2011 (although 2011 did not include Medoro Resources' G&A prior to the June 2011 merger).  In early 2013, the company has taken steps to cut G&A spending by $150,000 per month, a significant contributor in the expected reduction in G&A to a level of $14.5 million in 2013.
• Net loss attributed to shareholders of $36.2 million, or $0.09 per share, in 2012 included $7.7 million in transaction costs related to the gold-linked notes financing, $7.2 million loss on the market-to-market of financial instruments, $4.1 million impairment of assets, $3.8 million foreign exchange losses and $3.1 million of acquisition costs.
• Exploration highlights included the successful completion of exploration campaigns at Segovia and Marmato that increased total measured, indicated and inferred resources in early 2012 to 1.9 million ounces, 10.2 million ounces and 3.7 million ounces, respectively, and the discovery of a new deep zone mineralization at Marmato.  The company commenced a 20,000 meters drilling campaign in October 2012 to upgrade and expand its resources at Segovia. This program is expected to be completed in the second quarter of 2013.
• On October 30, 2012, the company closed a $100 million, senior secured 10 percent gold-linked notes financing to fund its Pampa Verde project to reduce costs and increase production at its Segovia Operations.
  
  

Commenting on the company's 2012 results, Serafino Iacono, Executive Co-Chairman of Gran Colombia commented, "In 2012, we undertook a major upgrade and expansion of our existing processing plant at Segovia, growing capacity from 500 to 1,300 tonnes per day.  Despite many challenges, we were able to increase the amount of ore produced at our plant by 38 percent."  Looking forward to 2013, Mr. Iacono added, "This year our focus is on delivering a profitable and steady production rate at Segovia to fund our near term cash needs while we deliver the Pampa Verde project, which will be the foundation of our future low cost, modern mining operations in Segovia. At Marmato our focus in the first half of the year is on publishing a prefeasibility study on the expansion of our current underground operations."

Financial and Operating Summary

A summary of the financial and operating results for the fourth quarter and full year of 2012 is as follows:

			Fourth Quarter								Year
			2012				2011				2012				2011
Operating data:
Gold produced (ounces)			22,116				26,979				100,895				81,480^(3)
Gold sold (ounces)			21,198				29,185				98,439				83,809
Average realized gold price ($/oz sold)		$	1,728			$	1,687			$	1,664			$	1,596
Total cash costs ($/oz sold) ^(1)			1,534				1,113				1,317				1,254
Financial data: ($000's, except per share amounts)
Total revenues		$	37,758			$	50,425			$	168,243			$	137,713
Gross margin ^(2)			472				13,157				18,201				11,453
Net (loss) income attributable to shareholders			(22,852)				2,402				(36,172)				(37,047)
Basic and diluted loss per share			(0.06)				0.01				(0.09)				(0.12)
Cash and cash equivalents			1,298				20,334				1,298				20,334
Cash in trust, current and non-current ^(4)			84,937				2,356				84,937				2,356
Total debt, including current portion			188,449				73,454				188,449				73,454

^(1)	"Total cash costs" are presented on a per ounce sold basis and represent consolidated averages for the company from both the Segovia Operations and Marmato Underground mine.  See "Additional Financial Measures in the MD&A".
^(2)	"Gross margin" represents total revenues, net of operating costs, production taxes and depreciation, depletion and amortization.
^(3)	91,410 ounces including production from Marmato Underground prior to the June 2011 merger with Medoro Resources Inc.
^(4)	2012 includes $83.7 million set aside to pay capital costs of the Segovia expansion and interest on the Gold Notes until October 2014.

Segovia Operations Update

At the Segovia Operations, the company executed a number of initiatives in 2012 to upgrade the Maria Dama plant, successfully increasing the plant's capacity to about 1,300 tpd at the present time. These initiatives included the installation of a new crusher-jig-sifter system at the beginning of the year, a new 1,500 tpd ball mill  that came on-line in mid-May and six (three dual) new flotation cells that were completed in the month of December. Six new cyanidation tanks are also now in operation. In September 2012, the company reached its objective of processing 1,000 tpd, double the historical processing rate at Maria Dama. Fourth quarter production at Segovia was primarily impacted by unexpected downtime caused by external power disruptions on almost a daily basis over a 25-day period, beginning in mid-November, that reduced throughput by about 40 percent during that period. The power supply situation in Segovia has since returned to normal and there have been no recurrences since that time. The company has taken steps to resolve the issue, including establishing suitable notice periods with the local power supplier and signing a contract with Colombia-based, Proelectrica & CIA S.C.A. ESP to provide backup diesel generating plants for the company's current Segovia Operations, which the company expects to be operational in the first half of 2013. During the first two months of 2013, an average of 858 tpd was processed at Maria Dama. In March 2013, the plant has been steadily processing ore at the rate of 1,000 tpd. Some minor capital investment (less than $1 million) is being undertaken in 2013 to improve mill uptime and to complete the Maria Dama plant expansion to a maximum capacity of 1,500 tpd.

Historically, grades at Segovia, one of the top ten producing mines by grade in the world⁽¹⁾, have averaged in the range of 12 to 14 grams per tonne (g/t). However, in the third and fourth quarters of 2012, grades averaged approximately 9 g/t due to the temporary depletion of higher grade zones in the levels currently being mined at Providencia and El Silencio and, to a lesser extent, the processing of some lower grade stockpiles. Through mid-March 2013, head grades continue to average approximately 9 g/t as mine development activities progress, it is expected that head grades will begin to show some improvement in the second quarter, increasing to an average of about 10 g/t in the second half of 2013.

(1)	Source: NRH Research, Global Gold Mines & Deposits 2012 (publicly traded companies with deposits greater than one million ounces in all resources categories)

Marmato Project

At Marmato Underground, operations remained steady in 2012, with 732 tpd milled at an average head grade of 2.9 g/t and a mill recovery of 88.3%, resulting in total gold production of 21,717 ounces for the year. Gold production is expected to be 20,000 ounces in 2013 due to a crusher upgrade to be completed in the second quarter of 2013.

The company's near-term focus at the Marmato Project is to complete and publish the prefeasibility study for the upgrade of its current underground operation, which the company expects to complete by June 2013.

Outlook

As previously disclosed in the March 1, 2013 press release, the company expects full year 2013 production of 110,000 ounces of gold.  The company expects its all-in sustaining cash cost (including cash costs (on a by-product credit basis), sustaining capital, corporate G&A expenses and exploration expense) to be approximately $1,380 per ounce of gold. This comprises cash cost of approximately $1,170 per ounce, G&A of $130 per ounce, sustaining capital of $40 per ounce and Marmato Project ongoing costs of $40 per ounce.  Sustaining capital expenditures for 2013 will total approximately $4.5 million and an additional $4.5 million is expected to be spent on social and other ongoing programs at the Marmato project site.  Capital expenditures and exploration in support of the Pampa Verde Project will be funded separately from the proceeds generated by the Gold Notes and are not included in all-in sustaining cash cost.

Webcast

As a reminder, the company will host a conference call and webcast on Wednesday, March 27^th at 9:30 a.m. Eastern Time (8:30 a.m. Bogota time) to discuss the results and provide an operational update.

Webcast and call-in details are as follows:

Live Event link:	http://www.media-server.com/m/p/w96h49pb
Toronto & International:	1 [phone]
North America Toll Free:	1 [phone]
Colombia Toll Free:	01 800 9 156 924
Conference ID:	34523853

A replay of the webcast will be available at www.grancolombiagold.com from March 27, 2013 until April 27, 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 28, 2012 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.

Roy MacDonald
Investor Relations
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