Gran Colombia Announces Signing of Mandate Letter for US$100 Million Gold Participating Term Loan with Standard Bank

TORONTO, Dec. 20, 2011 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM) announced today that, further to its announcement on December 12, 2011 that GMP Securities L.P. had been retained to assist the Company in the evaluation of several debt financing alternatives, it has signed an exclusive mandate letter with Standard Bank Plc, in conjunction with Pareto Commodities LLC, for the arrangement of a US$100 million senior secured term loan facility (the "Facility") to fund the Company's plan to increase production at its Segovia Operations through the development of a new mechanized mining operation and the acquisition of a new 2,500 tonnes per day mill in addition to its expanded Maria Dama mill.

Maria Consuelo Araujo, Chief Executive Officer of the Company, commented: "We are very pleased to be working with Standard Bank. Its Facility will provide Gran Colombia with the funding required to accelerate the growth at our Segovia Operations at a prudent cost of capital (approximately 12-13%), third party validation of our Segovia assets and a clear path to the next stage of the Company's evolution. Standard Bank has an unparalled reputation in executing debt financings in the resource sector."

The Facility, expected to close at the end of January 2012, will incorporate gold price participation on a total of 150,000 ounces of gold production from the Segovia Operations over the five-year term of the Facility. This represents only 17% of the Company's total estimated gold production from the Segovia Operations over the same five-year period. The fully-funded expansion of the existing Maria Dama mill, already in process and scheduled to be completed in the first quarter of 2012, is expected to almost double gold production from the Segovia Operations in 2012 to approximately 130,000 ounces. The expansion of mining and milling capabilities with the proceeds of this Facility will enable the Company to increase total gold production at Segovia to approximately 200,000 ounces annually by 2014 and to reduce long-term cash costs below US$900 per ounce.

Under the Facility, Standard Bank will purchase 2,500 ounces of gold per month ("Minimum Production") from the Company at market prices, subject to an agreed upon hedging program. From the monthly proceeds derived from the sale of the Minimum Production, Standard Bank will deduct interest on the Facility at LIBOR plus 6.5%, any net premiums related to the hedging program, principal repayments and its gold price participation, which is only 25% to 35% of the gold price realized above US$1,300 per ounce.

The Company will pay interest only on the Facility during the first 12 months, allowing the Company to use its operating cash flow in 2012 to fund its planned US$20 million 80,000 meter drilling program to expand and upgrade its resource at its Segovia Operations. Principal repayments of US$25 million per annum will commence at the beginning of the second year of Facility and will be made on a monthly basis. The Facility may be prepaid at any time after six months.

The Facility will be secured by a pledge of the shares of certain of the Company's subsidiaries holding title to the Segovia Operations, an assignment of the specific assets of the Segovia Operations, an undertaking from the Company regarding the Minimum Production obligation and certain limitations on the incurrence of additional debt, excluding project financing for the development of the Marmato Project.

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 the Company's website at www.grancolombiagold.com and by reviewing the Company's 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.