TORONTO, Nov. 6, 2011 /PRNewswire/ -- Gran Colombia Gold Corp. (TSX: GCM) announced today that its total gold production for the third quarter of 2011 from its six producing mines in Colombia amounted to 21,990 ounces. This was the Company's first full quarter following the merger with Medoro Resources Ltd. that was completed on June 10, 2011. Total production for the first nine months of 2011, including production at Medoro's mining operations prior to the merger, amounted to 62,785 ounces. Total production for the month of October 2011 of 9,445 ounces reflected a 35% increase in gold production at the Company's Segovia operations compared with its monthly average production for the first nine months of the year. The Company continues to expect that its annual gold production for 2011 will reach 90,000 ounces.
The Company also reported that the cash costs in its Segovia operations had decreased by US$415 per ounce to US$1,118 per ounce of gold sold in October as a result of the cost reduction actions taken in September.
Maria Consuelo Araujo, Chief Executive Officer of the Company, commented: "Our results in October are the first signs that our initiatives to grow production and reduce costs in our Segovia operations are beginning to be realized. While we still have a significant amount of work ahead of us, we are focused on implementing the necessary mine and mill expansion initiatives in Segovia to reach our production target for 2012."
Gran Colombia is continuing to take action to ramp up production and reduce cash costs at its Segovia operations. For the third quarter of 2011, the Company produced 15,836 ounces of gold bringing the total production for the first nine months of 2011 to 47,774 ounces. Improvements in recovery at the Maria Dama mill to 90% and higher ore grades increased production for the month of October 2011 to 7,172 ounces of gold. In late September, a new crusher-jig-sifter system was placed into operation that will increase mill capacity to 700 tonnes per day. Gran Colombia has also acquired a new ball mill to replace four existing smaller ones. The new ball mill, being shipped from the United States, is scheduled to be onsite in the fourth quarter of this year and is expected to be fully operational in the first quarter of 2012, increasing mill capacity to 1,000 tonnes per day.
As previously announced, Gran Colombia took steps to significantly reduce its costs at the Segovia operations in September 2011. For the second quarter of 2011, the Company reported that its cash cost per ounce had averaged US$1,467 per ounce of gold sold. The strengthening of the Colombian peso relative to the U.S. dollar early in the third quarter pushed the Company's cash cost in July and August to an average of US$1,533 per ounce of gold sold. In early September, the Company reduced its workforce by 42% and renegotiated its contracts with the small miners to achieve total cost savings of more than US$2 million per month. These actions were expected to reduce cash costs by approximately US$400 per ounce. Although the Company realized these cost savings in September, the benefit on a per ounce basis was partially offset by production inefficiencies that occurred during the workforce reduction, and as such, September's cash cost per ounce only decreased to US$1,322 per ounce of gold sold. In October, as operations normalized, the Company began to see the full benefit of these initiatives with cash costs decreasing to an average of US$1,118 per ounce of gold sold, a reduction of US$415 per ounce compared with July and August prior to the implementation of the initiatives. Gran Colombia is continuing to review its operations for further opportunities to reduce costs and expects that the increase in production resulting from its mill expansion will also positively impact its cash cost per ounce.
Production from the Mineros underground operation at Marmato totalled 6,154 ounces of gold during the third quarter of 2011 at an average cash cost of US$1,119 per ounce. This brings the total gold production from this mine for the first nine months of 2011 to 15,011 ounces. Gold production for the month of October 2011 was 2,273 ounces.
The Company will be filing its interim financial statements and MD&A for the third quarter of 2011 on SEDAR on or about November 14, 2011.
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.
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.
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SOURCE Gran Colombia Gold Corp.