TORONTO, March 30, 2012 /PRNewswire/ - Gran Colombia Gold Corp. (TSX: GCM) announced today the release of its audited consolidated financial results for 2011 fiscal year. All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.

Fourth Quarter 2011 Highlights

• Gold production of 26,979 ounces, a 24% increase from 21,737 ounces in the third quarter of 2011.
• Revenues of $50.4 million, an increase of 30% over the third quarter of 2011.
• Cash margin increased to $574 per ounce of gold sold in the quarter.
• Gross margin of $13.2 million, reflecting the benefit of the first full quarter of cost savings at the Segovia Operations after its workforce reduction in September and reduction in its cash cost per ounce to $1,128.
• Net income of $1.7 million, the first quarterly profit in the Company's history.

Full Year 2011 Highlights

• Gold production of 91,419 ounces, meeting guidance.
• Revenue of $137.7 million from the sale of 83,809 ounces of gold at an average realized price of $1,596 per ounce.
• Gross margin of $11.5 million, a $14.4 million improvement over 2010.
• Net loss of $34.8 million, $0.11 per share, including $22.8 million of one-time charges related to the Colombian equity tax, Medoro acquisition costs and silver-notes issuance costs.
• Cash position of $20.3 million as at December 31, 2011.
• Gold resources (measured and indicated), for the Segovia Operations and Marmato Project increased by 76% and 51%, respectively in 2011.

Commenting on the Company's performance in 2011, Maria Consuelo Araujo, Chief Executive Officer of the Company, said: "2011 was a very important year for the Company. We ended the year as the largest gold producer in Colombia. Our efforts at our Segovia Operations have yielded significant cost savings and production growth. With our investment to increase our capacity at the Maria Dama plant in the second quarter of 2012, we expect to almost double our gold production in 2012."

Financial and Operating Summary

A summary of the financial and operating results for the fourth quarter and full year ended December 31, 2011 is as follows:

Resources

In September 2011, Gran Colombia announced a 51% increase in Measured and Indicated gold resources to 10.0 million ounces at its Marmato Project, with 1.9 million ounces of gold in the Measured category and 8.1 million ounces of gold in the Indicated category. In addition, there are an estimated 64 million ounces of silver in the Measured and Indicated categories, with 16 million ounces of silver in the Measured category and 48 million ounces of silver in the Indicated category. The Company filed a National Instrument 43-101 mineral resource estimate on October 19, 2011 for its Marmato Project.

In March 2012, Gran Colombia announced a new mineral resource estimate for its Segovia Operations representing a 76% increase in Measured and Indicated gold resources. The resource estimate includes 233,000 ounces of gold in the Measured and Indicated categories, with 136,000 ounces of Measured and 97,000 ounces of Indicated resources. This is also an additional 1.1 million ounces of gold in the Inferred category, at a cut-off grade of 3.0 g/t. The Company will file a National Instrument 43-101 report prepared by SRK Consulting (UK) Ltd. prior to April 12, 2012. This will be filed on the Company's website and at www.sedar.com.

Production

Total gold production for the fourth quarter of 2011 increased 115% compared to the fourth quarter of 2010 and 24% compared to the third quarter of 2011, largely as a result of production growth at the Segovia Operations, and the addition of production from the underground mine at Marmato following the Company's merger with Medoro Resources Ltd. in June 2011.

Cash Costs

In the fourth quarter of 2011, the Company's consolidated cash cost decreased to $1,113 per ounce of gold, a $227 per ounce improvement from the third quarter, in large part due to the steps taken in September 2011 to significantly reduce its workforce costs at the Segovia Operations. In 2011, the Company initiated an expansion project at the Segovia Operations to increase the mill capacity at the Maria Dama plant, initially to 1,000 tonnes per day by the end of the second quarter of 2012, and then to 1,500 tonnes per day by the end of 2012. This initiative, coupled with planned increases in the mining rates and a $15 million internally funded capital program at Segovia in 2012, will enable the Company to lower its cash cost per ounce at the Segovia Operations below $1,000 in 2012.

Net Income (Loss)

The Company reported its first quarterly net income attributed to shareholders of $1.7 million or $0.00 per share in the fourth quarter of 2011, driven by the increase in gross margin to $13.2 million resulting from increased gold sales and the cash cost improvements at the Segovia Operations.

For the full year 2011, the Company recorded a net loss attributed to shareholders of $34.8 million, or $0.11 per share, which included $22.8 million of one-time charges related to the Colombian equity tax, Medoro acquisition costs and silver notes issuance costs.

Segovia Operations

Gran Colombia is in the process of expanding capacity and increasing production at its Segovia Operations. The new ball mill is in the final stages of installation and after initial testing in April at a 600 tonnes per day ("tpd") rate, the daily mill rates will be steadily increased until it reaches a rate of 1,000 tpd in June. This will be almost double the average milling rate of 517 tpd in 2011. By late 2012, following improvements in other areas of the Maria Dama plant operation, the Company expects that it will further increase the mill's capacity to 1,500 tonnes per day.

Marmato Project

Gran Colombia is currently completing a pre-feasibility study at its Marmato Project to identify and evaluate its options for the development of mining operations in the future, including underground, open pit and combined underground/open pit scenarios. This study is nearing completion and the Company expects to have this available for decision making in the second quarter of 2012. Once the Company has decided which route it will take, it will then proceed to the feasibility study stage. In conjunction with these activities, the Company will begin evaluating its options for debt financing for the development of the Marmato Project.

Addressing the Marmato project, Maria Consuelo Araujo said, "In 2011, our focus at the Marmato project was on building the necessary foundations for our planned development. We completed a new resource estimate, increasing our Measured and Indicated gold resources by 51%, and worked with the community to better understand their needs to help us implement socially-based programs to improve the quality of life in our community. We remain very engaged with the Marmato community regarding the resettlement process, working in strict accordance with international standards. We look forward to providing an update on our progress as we complete our prefeasibility study in the second quarter."

Standard Bank Loan Facility

On December 20, 2011, the Company announced that it had signed an exclusive mandate letter with Standard Bank Plc. for the arrangement of a $100 million senior secured term loan facility to fund its plan to develop a new mechanized mining operation and to acquire a new 2,500 tpd mill at its Segovia Operations. The Company initially expected that the Standard Bank Loan Facility would close at the end of January 2012. However, the due diligence activities, some of which are being performed on behalf of Standard Bank by third party technical consultants, are taking longer than both the Bank and the Company initially expected. These due diligence activities include the completion of technical studies such as a preliminary economic assessment of the mineral resource estimate announced in March 2012, and environmental due diligence in conjunction with the filing of an environmental management plan with the local environmental authority in April 2012. The Company and Standard Bank continue to work together in anticipation of a successful closing of the loan facility as soon as the due diligence process is concluded. As the existing Maria Dama plant expansion is fully funded from existing cash balances and operating cash flow, any delay in closing the Standard Bank loan facility will not impact the Company's ability to increase gold production at the Segovia Operations in 2012 as planned.

Outlook

The Company expects 2012 gold production to be approximately 155,000 ounces as a result of the increased processing capacity at its Segovia Operations. Production at its Segovia Operations is expected to reach 130,000 ounces of gold in 2012 and production from the underground mine at Marmato is expected to total approximately 25,000 ounces of gold.

Capital expenditures for 2012, to be funded from cash balances and operating cash flow, include a $15 million capital program at the Segovia Operations to complete the mill expansion, add additional mining equipment for the existing underground mining operations, construct a laboratory on site to improve sampling procedures in the production process and to construct additional tailings facilities and a total of approximately $23 million in connection with the pre-feasibility study, social programs, environmental studies and mining titles at the Marmato Project.

The Company's exploration program for 2012, also to be internally funded from cash flow from operations, includes a $13 million 51,000 meter diamond drilling program that will get underway at the Segovia Operations in April, a $3 million drilling campaign at the Marmato Project that is nearing completion and a $1.5 million exploration program at the Company's Zancudo Project.

Webcast

As a reminder, the Company will host a conference call and webcast on March 30, 2012 at 9:00 a.m. Eastern Time (8:00 a.m.Bogota time) to discuss the results and provide an operational update.

Webcast and call-in details are as follows:

A replay of the webcast will be available at www.grancolombiagold.com from March 30, 2012 until April 30, 2012.

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. 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. 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, 2011 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.