Serafino Iacono reports
GRAN COLOMBIA GOLD REPORTS FIRST QUARTER 2019 RESULTS; RECORD QUARTERLY GOLD PRODUCTION LEADS TO NEW HIGHS FOR REVENUE AND ADJUSTED EBITDA
Gran Colombia Gold Corp. has released its unaudited interim condensed consolidated financial statements and accompanying management's discussion and analysis for the three months ended March 31, 2019. All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.
Serafino Iacono, executive chairman of Gran Colombia, commenting on the company's latest results, said: "Our previously reported record quarterly production has translated into some solid first quarter financial results, which have started us off well in 2019. New quarterly highs were achieved in revenue and adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] while Segovia's quarterly cash costs reached a historical low of $570 per ounce sold. Our cash position at the end of March, 2019, was $40.2-million, up $4.6-million since the end of 2018, and we continued to pay down our gold notes, which currently have $78.5-million aggregate principal amount outstanding. Our 2019 drilling campaign at Segovia is moving along well and will be given the intended boost in the second half of this year with the net proceeds of the private placement of convertible debentures completed in April. Our technical studies at the Marmato project are gaining momentum, and we remain on track to complete a preliminary economic assessment later this year. With another 20,472 ounces of gold produced in April, our second quarter is picking up right where we left off in March."
First quarter 2019 highlights:
The company set a new record in the first quarter of 2019 with total gold production of 60,601 ounces, up 15 per cent over the first quarter of 2018.
Buoyed by head grades improving to an average of 18.8 grams per tonne and a 19-per-cent year-over-year improvement in tonnes processed, gold production from the Segovia operations increased to 54,386 ounces in the first quarter of 2019, up 17 per cent over the first quarter last year. With another 20,472 ounces produced in April, the company's trailing 12-month gold production at the end of April, 2019, now stands at 230,283 ounces, above the top end of the company's total gold production guidance range for 2019 of 210,000 to 225,000 ounces.
reached $77.5-million in the first quarter of 2019, up 20 per cent over the first quarter last year, largely driven by the production growth and a modest improvement in realized gold prices to an average of $1,298 per ounce in the first quarter this year despite a 2-per-cent year-over-year decline in spot gold prices. Revenue benefited in the first quarter of 2019 from lower charges in a new refining contract that the company entered into in January, 2019, with an international refinery, saving $20 per ounce sold compared with its previous arrangement. The company is also being paid faster under the new refining contract, a benefit to operating cash flow and reducing its credit exposure on trade receivables.
Production growth and the increase in head grades were key factors, reducing Segovia's
total cash costs (1)
to a historical low of $570 per ounce, bringing the company's total cash costs per ounce down to $621 per ounce in the first quarter of 2019 from $670 per ounce in the first quarter last year.
All-in sustaining costs
all-in costs (1)
in the first quarter of 2019 were $832 per ounce and $843 per ounce, respectively, both down from $920 per ounce in the first quarter last year. For 2019, the company continues to expect that its total cash costs and AISC averages for the full year will remain below $720 per ounce and $950 per ounce, respectively.
The company reported
adjusted EBITDA (1)
of $35.3-million for the first quarter of 2019, up 29 per cent over the first quarter last year, bringing the trailing 12-month adjusted EBITDA at the end of March, 2019, to a total of $110.2-million, up 8 per cent over 2018, driven by production growth and the reduction in total cash costs per ounce sold.
Net cash provided by operating activities
in the first quarter of 2019 of $19.8-million, up 56 per cent over the first quarter last year, improved the company's
free cash flow (1)
in the first quarter of 2019 to $11.3-million compared with $4.5-million in the first quarter last year.
benefited from the first quarter of 2019's operating and financial performance, increasing its cash and cash equivalents to $40.2-million at March 31, 2019, from $35.6-million at the end of 2018. As of May 15, 2019, the aggregate principal amount of gold notes issued and outstanding has been reduced through two quarterly repayments in 2019 to $78.5-million, down from $88.3-million at the end of 2018.
On April 4, 2019, the company closed its
bought deal private placement
of $20.0-million (Canadian) of convertible debentures due 2024, adding approximately $13.6-million (after costs and expenses) to its cash position and $14.9-million to its long-term debt. The net proceeds will be used to finance an acceleration of the drilling program at the Segovia operations over the next two years focused on mineral reserve and resource additions for further production growth and mine life extension.
As of May 15, 2019, the total
issued and outstanding common shares
of the company is 48.3 million, and after inclusion of the 2024 warrants, the convertible debentures and stock options, the company's fully diluted common shares would total approximately 68.0 million.
The company reported
for the first quarter of 2019 of $7.9-million, or 16 cents per share, compared with $5.4-million, or 25 cents per share, in the first quarter last year.
Adjusted net income (1)
for the first quarter of 2019 was $12.9-million, or 27 cents per share, up from $9.8-million, or 46 cents per share, in the first quarter last year. Improved earnings in the first quarter of 2019 compared with the first quarter last year reflected the significant contribution of Segovia's operating performance in 2019 on revenues, total cash costs per ounce, adjusted EBITDA and income from operations.
In April, 2019, the company filed an updated National Instrument 43-101 technical report for its Segovia operations, which includes an updated mineral resource estimate as of Dec. 31, 2018, with 3.5 million tonnes at a grade of 11.8 grams per tonne totalling 1.3 million ounces of gold in measured and indicated resources, up 7 per cent from the previous year. Inferred resources increased to 3.6 million tonnes at a grade of 10.1 g/t totalling 1.2 million ounces of gold, up 4 per cent compared with the previous year. The technical report also includes an updated mineral reserve for Segovia with a total of 1.9 million tonnes at an average grade of 11.0 g/t, representing 688,000 proven and probable ounces of gold as of Dec. 31, 2018, up 4 per cent compared with the previous year and replacing what the company mined in 2018.
The company announced in April, 2019, that it had completed its 2018 drilling program at its
in mid-March, 2019, comprising 24 drill holes totalling approximately 9,460 metres. The 2018 drilling campaign has increased the company's confidence in the geological model, extending the Deeps zone to over 700 metres along strike, with an average width of approximately 165 metres and remaining open at depth and to the east. The 2019 infill drilling campaign, totalling 8,000 metres, started in March, 2019, and has been designed to further delineate and extend down plunge the higher-grade zone outlined by the 2018 drilling campaign. It also aims to convert the remaining inferred resources within the higher-grade block drilled in the 2018 drilling campaign to indicated resources. The results from both the 2018 and 2019 drilling campaigns will be used to refine the current deposit model in conjunction with an updated mineral resource estimate to be included in a preliminary economic assessment (PEA) technical study to be completed later this year.
In February, 2019, the company increased its equity
investment in Sandspring Resources Ltd.
to approximately 18 per cent and continues to assist Sandspring as it moves toward a feasibility study for its Toroparu project in the western Guyana gold district and prepares for the eventual commencement of mining operations at the Chicharron project, located within the company's mining title at Segovia, which it acquired in 2018.
In February, 2019, the company also announced it is ready to restart its mining project in
as soon as circumstances allow and is currently readying a separate-listed special-purpose vehicle it intends to use for the purposes of holding, developing and financing its Venezuelan assets and carrying out its Venezuelan investment strategy when the time comes.
SELECTED FINANCIAL INFORMATION
Gold produced (ounces) 60,601 52,672
Gold sold (ounces) 59,045 49,610
Average realized gold price ($/oz sold) $1,298 $1,293
Total cash costs ($/oz sold) (1) 621 670
All-in sustaining costs ($/oz sold) (1) 832 920
All-in costs ($/oz sold) (1) 843 920
Financial data ($000s, except per-share amounts)
Revenue $77,455 $64,786
Adjusted EBITDA (1) 35,275 27,443
Net income (loss) 7,903 5,352
Per share -- basic 0.16 0.25
Per share -- diluted 0.16 0.12
Adjusted net income (1) 12,933 9,846
Per share -- basic 0.27 0.46
Per share -- diluted 0.24 0.12
Net cash provided by operating activities 19,818 12,727
Free cash flow (1) 11,277 4,530
(1) Refer to "Non-IFRS Measures" in the company's management's discussion and analysis.
Through the first four months of 2019, the company produced a total of 81,073 ounces of gold, and its trailing 12-month total gold production at the end of April, 2019, stands at 230,283 ounces, above the top end of its guidance range for 2019 of 210,000 to 225,000 ounces of gold for the full year. The company will continue to monitor its operating performance over the next several months to assess whether a change in 2019's production guidance is warranted.
The company has already commenced a 20,000-metre drilling campaign in 2019 at its Segovia operations, focused on stepout drilling at Providencia and Sandra K, Deep zone drilling to extend El Silencio another 200 metres below its currently delineated mineral resource, and brownfield drilling on the Cogote vein system. Using the net proceeds from the private placement, the company will accelerate its continuing exploration programs at Segovia, including technical and other studies, to be carried out over the next approximately six months to identify and prioritize drilling targets, followed by a drilling campaign, over and above what is already planned by the company in 2019 and 2020. The objective of the drilling program is to increase mineral reserves for future production growth and to extend the mine life of the Segovia operations.
The company's total cash cost in the first quarter of 2019 of $621 per ounce sold was better than expected, benefiting from the record gold production at the Segovia operations. For the full year, the company is maintaining its initial guidance that total cash costs will average less than $720 per ounce sold for the full year. The company also expects that with its planned capital investment program in 2019, including the continuing exploration activities at Segovia, its AISC for the full year will remain below $950 per ounce. Similar to production, the company will monitor cost performance over the next several months to assess whether a change in 2019's guidance is warranted.
First quarter 2019 results webcast
As a reminder, Gran Colombia will host a conference call and webcast on May 16, 2019, at 9:30 a.m. Eastern Time, to discuss the results. Call-in details are as follows.
North America toll-free: 1-866-215-5508
Colombia toll-free: 01-800-9-156-924
Conference ID: 48466603
A replay of the webcast will be available at
the Gran Colombia website
from May 16, 2019, until June 14, 2019.
About Gran Colombia Gold Corp.
Gran Colombia is a Canadian-based mid-tier gold producer with its primary focus in Colombia, where it is currently the largest underground gold and silver producer with several mines in operation at its Segovia and Marmato operations. Gran Colombia is continuing to focus on exploration, expansion and modernization activities at its high-grade Segovia operations.
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