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Gran Colombia Gold Corp (4)
Symbol GCM
Shares Issued 61,815,029
Close 2020-08-13 C$ 6.61
Recent Sedar Documents

Gran Colombia has $18.57M (U.S.) Q2 loss, not profit

2020-08-13 22:30 ET - News Release

Mr. Serafino Iacono reports

CORRECTION - GRAN COLOMBIA GOLD REPORTS SECOND QUARTER AND FIRST HALF 2020 RESULTS; ANNOUNCES QUARTERLY DIVIDEND PROGRAM

Gran Colombia Gold Corp. has released its unaudited interim condensed consolidated financial statements and accompanying management's discussion and analysis for the three and six months ended June 30, 2020. All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.

Gran Colombia also announced today that its board of directors has approved the initiation of the company's quarterly dividend program. The first quarterly dividend of 1.5 cents per common share will be paid on Oct. 15, 2020, to shareholders of record as of the close of business on Sept. 30, 2020.

Serafino Iacono, executive chairman of Gran Colombia, commenting on the company's latest results, said: "Our management team has done a very commendable job, implementing the protocols required to keep our workers safe during the COVID-19 crisis and to keep our mines in operation during a very challenging situation. We are also pleased to announce the new quarterly dividend program, something we started contemplating when we retired 30 per cent of the gold notes ahead of schedule at the end of March. With our free cash flow strength, we saw an opportunity to use a portion of the savings in debt service costs to begin paying a dividend to our shareholders. However, with the onset of the global pandemic, we waited to see the impact on our operations before making the final decision. Our production level at Segovia has steadied the last three months, and with the stronger gold prices so far in the third quarter, our earnings and free cash flow in the second half of 2020 are shaping up nicely, and we are comfortable to proceed with the dividend program."

Second quarter and first half 2020 highlights:

  • Mining operations continued at both Segovia and Marmato during the second quarter of 2020 despite the challenges associated with the COVID-19 national quarantine in Colombia. Gran Colombia also supported its local communities in Antioquia and Caldas, providing medical equipment, supplies and sanitation kits to the local hospitals and groceries to families who have been economically affected by the COVID-19 crisis.
  • Gran Colombia's gold production in the second quarter of 2020 of 48,228 ounces, down from 57,882 ounces in the second quarter last year, reflected the initial adverse impact of the COVID-19 quarantine on Segovia's work force in the first half of April. Protocols implemented by the company facilitated increased availability of workers thereafter, and production at Segovia returned to about 95 per cent of normal. Gold production at Marmato in the second quarter of 2020 was only 62 per cent of the second quarter last year as the quarantine had a greater impact on worker availability throughout the quarter. With a total of 104,475 ounces of gold produced in the first half of 2020, down from 118,483 ounces in the first half of last year, and another 18,111 ounces in July, the company has updated its 2020 annual production guidance to a range between 218,000 and 226,000 ounces of gold.
  • Revenue amounted to $77.1-million in the second quarter of 2020, almost on par with the second quarter last year, as the 31-per-cent year-over-year improvement in spot gold prices increased the company's realized gold price to an average of $1,696 per ounce sold and compensated for the 24-per-cent-lower gold sales volumes attributable to the COVID-19 impact on production. For the first half of 2020, revenue of $178.1-million was up 15 per cent over the first half last year.
  • Total cash costs (1) per ounce averaged $713 per ounce in the second quarter of 2020 compared with $655 per ounce in the second quarter last year, reflecting the COVID-19 impact on production, which increased fixed production costs on a per-ounce basis. Higher spot gold prices increased production taxes by approximately $19 per ounce in the second quarter of 2020 compared with the same period last year, and the company incurred additional costs to implement the COVID-19 protocols required to protect the health and safety of its workers. For the first half of 2020, total cash costs averaged $686 per ounce compared with $638 per ounce in the first half last year.
  • All-in sustaining costs (AISC) (1) and all-in costs (1) were $1,045 per ounce and $1,114 per ounce, respectively, in the second quarter of 2020 compared with $878 per ounce and $903 per ounce, respectively, in the second quarter last year. The year-over-year increase in these metrics can largely be attributed to new spending on general and administrative and social contributions in Caldas Gold Corp., and an increased level of non-sustaining capital expenditures for the Marmato project. Similar to total cash costs per ounce, the lower production in the second quarter of 2020 also contributed to an increase in these per-ounce metrics. For the first half of 2020, AISC and all-in costs averaged $954 and $1,034 per ounce, respectively, compared with $855 and 873 per ounce, respectively, in the first half last year.
  • The company reported adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) of $37.6-million for the second quarter of 2020, up 13 per cent over the second quarter last year. For the first half of 2020, adjusted EBITDA totalled $88.0-million, up 29 per cent over the first half last year. The company's trailing 12-month adjusted EBITDA at the end of June, 2020, was $166.2-million, up 13 per cent over 2019.
  • Net cash provided by operating activities in the second quarter of 2020 of $6.4-million, down from $18.2-million in the second quarter last year, reflected income tax payments in Colombia totalling $35.3-million compared with only $14.1-million in the second quarter last year. For the first half of 2020, net cash provided by operating activities was $38.2-million, up from $38.0-million in the first half last year.
  • Free cash flow (1) in the second quarter of 2020 was also impacted by the increased level of income tax payments compared with the second quarter last year. For the first half of 2020, free cash flow amounted to $13.5-million, about $5.6-million lower than the first half last year due to an increased level of non-sustaining capital and exploration expenditures.
  • The company's balance sheet remained solid with total cash of $87.7-million at the end of June, 2020, and further reduction in the aggregate principal amount of gold notes outstanding to $41.3-million.
  • Non-cash fair value changes in financial instruments totalling $35.4-million in the second quarter of 2020, largely driven by the company's 70-per-cent share price improvement, contributed to a net loss of $18.9-million (27 cents per share) compared with net income of $800,000 (two cents per share) in the second quarter last year. For the first half of 2020, the company reported net income of $5.7-million (13 cents per share) compared with $8.7-million (18 cents per share) in the first half last year. The first half 2020 net income was net of a $16.7-million charge related to the Caldas Gold reverse takeover transaction.
  • Adjusted net income (1) for the second quarter of 2020 was $17.5-million (29 cents per share), up from $14.2-million (29 cents per share) in the second quarter last year. For the first half of 2020, adjusted net income improved to $38.7-million (66 cents per share) compared with $27.2-million (56 cents per share) in the first half last year. The year-over-year improvement in adjusted net income for the second quarter and first half of 2020 largely reflects the positive impact of higher gold prices in 2020, partially offset by the COVID-19 impact on gold sales volumes in the second quarter of 2020.
  • In July, 2020, the company announced high-grade intercepts from the latest 72 diamond drill holes totalling 10,523 metres (approximately 33 per cent) of the 2020 in-mine and near-mine drilling programs at its Segovia operations. At Carla, the company's fourth mine, which is coming into production later this year, drilling intercepted high-grade mineralization downdip below the existing underground mine development, confirming a high-grade intercept from a prior drilling program. Results at Sandra K and El Silencio continue to increase the company's confidence in the potential to expand mineral resources at Segovia and add to the mine life for this project.
  • Caldas Gold is making progress in its action plans to build Colombia's next major gold mine. On July 6, 2020, Caldas Gold announced the results of a preliminary feasibility study for its Marmato project. On July 29, 2020, Caldas Gold completed a $50-million (Canadian) bought deal private placement of special warrants, of which Gran Colombia acquired $20-million (Canadian) to maintain its equity ownership above 50 per cent. Caldas Gold is also finalizing a private placement offering of senior secured gold-linked notes expected to raise between $80-million and $90-million and completing a $110-million stream financing with Wheaton Precious Metals International Ltd., all of which will finance the planned expansion of mining operations into the Marmato Deep zone (MDZ) commencing in the second half of this year.

                                      SELECTED FINANCIAL INFORMATION 
  
                                                                 Second quarter                    First half      
                                                              2020            2019            2020            2019
Operating data
Gold produced (ounces)                                      48,228          57,882         104,475         118,483
Gold sold (ounces)                                          45,078          59,368         108,779         118,413
Average realized gold price ($/oz sold)                     $1,696          $1,293          $1,622          $1,296
Total cash costs ($/oz sold) (1)                               713             655             686             638
AISC ($/oz sold) (1)                                         1,045             878             954             855
All-in costs ($/oz sold) (1)                                 1,114             903           1,034             873

Financial data ($000s, except per-share amounts)
Revenue                                                    $77,134         $77,610        $178,110        $155,065
Adjusted EBITDA (1)                                         37,563          33,198          88,000          68,473
Net (loss) income                                          (18,578)            768           5,677           8,671
Per share -- basic                                           (0.27)           0.02            0.13            0.18
Per share -- diluted                                         (0.27)           0.02            0.13            0.18
Adjusted net income (1)                                     17,504          14,164          38,736          27,179
Per share -- basic                                            0.29            0.29            0.66            0.56
Per share -- diluted                                          0.24            0.25            0.56            0.49
Net cash provided by operating activities (2)                6,431          18,217          38,242          38,035
Free cash flow (1) (2)                                      (4,375)          7,751          13,456          19,028

(1) Refer to "Non-IFRS Measures" in the company's management's discussion and analysis.
(2) Net of income taxes paid of $35.3-million in the second quarter of 2020 ($14.1-million in the second quarter 
of 2019) and $42.6-million in the first half of 2020 ($30.4-million in the first half of 2019).

Second quarter and first half 2020 results webcast

As a reminder, Gran Colombia will host a conference call and webcast on Aug. 14, 2020, at 10 a.m. Eastern Time, to discuss the results.

Webcast and call-in details are as follows.

International:  1-514-841-2157

North America toll-free:  1-866-215-5508

Colombia toll-free:  01-800-9-156-924

Conference ID:  49825338

A replay of the webcast will be available at the Gran Colombia website from Aug. 14, 2020, until Sept. 18, 2020.

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 high-grade Segovia operations. Gran Colombia owns approximately 57.5 per cent of Caldas Gold, a Canadian mining company currently advancing a prefeasibility study for a major expansion and modernization of its underground mining operations at its Marmato project in Colombia. Gran Colombia's project pipeline includes its Zancudo project in Colombia, together with an approximately 20-per-cent equity interest in Gold X Mining Corp. (Guyana: Toroparu) and an approximately 26-per-cent equity interest in Western Atlas Resources Inc. (Nunavut: Meadowbank).

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