q2 2012 results and operaional update
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August 15, 2012 TSX: GCM
Business Update - Maria Consuelo Araujo (CEO)
Q2 2012 Results - Mike Davies (CFO)
Operational Update - Don East (COO)
Q&A
Q2 2012 Results and Operational Update
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August 15, 2012 TSX: GCM
This presentation contains "forward-looking information", which may include, but is not limited to, statements with respect to the future financial or operating performance of Gran Colombia Gold Corp and its subsidiaries (“Gran Colombia” or “GCM”) and their respective 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 presentation based on current expectations and beliefs 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.
DISCLAIMER FORWARD-LOOKING STATEMENTS
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August 15, 2012 TSX: GCM
BUSINESS UPDATE Maria Consuelo Araujo, Chief Executive Officer
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August 15, 2012 TSX: GCM
Corporate
Grow gold production in FY 2012
Q2 Production of 25,607 ounces, +15% vs Q2’11
Now expecting 113,000 to 123,000 oz in FY 2012, increase of 24% to 35% compared to 2011
Close US$100M financing for Segovia expansion
Achieve significant cash flow from mining operations
$7.8M in Q2 & $19.8M YTD, +$14.9M vs 1H’11
Positive Agent of change in our communities
2012 Plan – Progress Q2 2012 BUSINESS UPDATE
Issues Addressed, Next Stage Growth Plans
Underway
DD Progressing, Exploring Options to Expedite
Continued Progress
Ongoing
Q2 PROGRESS
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August 15, 2012 TSX: GCM
Segovia
Increase capacity at Maria Dama to 1,500 tpd by 2013
Adding new underground mining equipment and capital development
Begin development of new mechanized mine
Continued exploration with 51,000 m drilling program (Q3 2013)
Marmato
Prefeasibility study
delayed completion to explore impact of deep zone mineralization on options for project development
2012 Plan – Progress Q2 2012 BUSINESS UPDATE
Ongoing
Q3 Start
Basic Eng. Completed, Start Post-Financing
Ongoing
Achieved 1,000 tpd, Addressing Next Phase
Q2 PROGRESS
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August 15, 2012 TSX: GCM
Q2 2012 RESULTS
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Mike Davies, Chief Financial Officer
August 15, 2012 TSX: GCM
Production 25,607 oz Au, a 15% increase YoY & 21% increase YTD
Revenue US$40.7M, 47% higher than Q2’11
Consolidated Cash Cost US$1,313 per ounce, up 10% QoQ, primarily due to lower recovery rates at Segovia … expecting $1,100 in Q4
Gross margin of US$3.7M - poised to grow as production increases
G&A of $4.2M, includes advisory fees of $0.3M, and $7.8 YTD, a 25% improvement over 2nd Half 2011
Net loss US$13.7M – included US$3.4M impairment charge against Mazamorras, $3.3M Fx loss and $2.9M mark-to-market loss on financial instruments
FINANCIAL RESULTS
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Q2 2012 Highlights
August 15, 2012 TSX: GCM
FINANCIAL RESULTS
Gold ounces
Q2 2012 Actual
Q1 2012 Actual
YTD Actual
FY 2012 Target
Segovia
Company Operated 6,804 7,022 13,826
Artisanal 13,805 13,615 27,420
Total Segovia 20,186 20,637 41,247 90-100,000
Marmato 4,997 5,623 10,620 23,000
Consolidated 25,607 26,260 51,867 113-123,000
Segovia production expected to ramp through 2012
Processed average 737 and 792 tonnes per day in June and July
Acceleration of phase 2 of Maria Dama expansion plan underway
Marmato worked through lower grade zones in Q2; expecting 2.9 g/t in 2nd half
Silver production of 28,202 ounces
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Production
August 15, 2012 TSX: GCM
FINANCIAL RESULTS
US$
Q2 2012 Actual
YTD 2012 Actual
Q4 2012 Target
FY 2012 Target
Average Gold Price $ 1,623 $ 1,650 $ 1,575 $ 1,600
Segovia
Company Operated $ 1,548 $ 1,439 $ 950 $ 1,200
Artisanal $ 1,212 $ 1,166 $ 1,130 $ 1,160
Total Segovia $ 1,320 $ 1,256 $ 1,050 $ 1,180
Marmato $ 1,288 $1,242 $1,100 $ 1,180
Consolidated $ 1,313 $ 1,256 $ 1,060 $ 1,180
Segovia cash cost per ounce at Company-operated mines will improve 80% growth in tonnes mined expected in 2nd half from Company-operated mines Recovery rate return to ~90% with infrastructure improvements at Maria Dama
Marmato cash cost to improve with return to historical grades of 2.9 g/t
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Cash Cost per Ounce
August 15, 2012 TSX: GCM
FINANCIAL RESULTS
US$ (millions) Q2 2012 1st Half 2012
Cash – Opening Balance $ 5.1 $ 20.3
Cash from Mining Operations
$ 7.8 $ 19.8
Other Operating Uses ($ 4.1) $ 3.7 ($ 18.6) $ 1.2
Net Cash from Bank Debt $ 0.9 $ 8.9
Capex and Exploration
Segovia ($ 4.6 ) ($ 9.6 )
Marmato ($ 1.3) ($17.3)
Other Exploration ($ 0.4) ($ 6.3) ($ 1.4) ($ 28.3)
Other Sources $ 0.6 $ 2.0
Cash – June 30, 2012 $ 4.1 $ 4.1
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Cash Flow
August 15, 2012 TSX: GCM
FINANCIAL RESULTS
US$ Q2 2012 Q1 2012 YTD 2012 Plan
CAPEX
Segovia - complete Maria Dama expansion, mining equipment, lab & tailings facilities
$ 5M $ 4M $ 9M $ 15 - 20M
Marmato – Pre-Feasibility, social programs, environmental studies & mining titles
$ 1M $ 14M $ 15M $ 19M
$ 6M $ 18M $ 24M $ 34+M
EXPLORATION
Segovia (51,000m drilling campaign) $ 1M $ 1M $ 2M $ 5M
Marmato $ 1M $ 2M $ 3M $ 3M
Zancudo $ 0M $ 1M $ 1M $ 1M
$ 3M $ 4M $ 6M $ 9M
Overall spending plan reduced by ~$13M to reflect lowered production guidance CapEx focus in 2nd half on Segovia Segovia drilling campaign to commence in Q3 2012
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Capex, Exploration
(1)
(2)
August 15, 2012 TSX: GCM
OPERATIONAL UPDATE
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Don East, Chief Operating Officer
August 15, 2012 TSX: GCM
Produced 20,610 oz in Q2 New mill tested at 1,000 tpd Q2 ore processing averaged 590 tpd June averaged 737 tpd
Cost per ounce $1,320, up 10% in Q2 Recovery rates down 10% in Q2
Advancing upgrades to plant in Q3 and increase production in 2nd half
Expect to grow to 90-100,000 oz in 2012, up 31% to 46% compared to 2011 Expect to average 1,000 tpd in Q4
SEGOVIA
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Q2 Summary
(1) GCM Resource update dated March 5, 2012 & April 15,2012
Category (1) Gold Resource Grade
Measured 136,000 oz 16.1 g/t
Indicated 156,000 oz 9.9 g/t
Inferred 1,138,000 oz 13.6 g/t
Total 1,430,000 oz 13.3 g/t
August 15, 2012 TSX: GCM 14
High Grade, Producing Asset
High-grade mesothermal gold vein system Historic mining site Good understanding of geology Large pool of highly skilled mining professionals
Four operating underground mines Two production streams: internal & 3rd party
miners
SEGOVIA
One of the Top 10 Producing Mines by Grade in the World Source: NRH Research, Global Gold Mines & Deposits 2012 (publically traded companies with deposits greater than one million ounces in all resource categories)
August 15, 2012 TSX: GCM 15
Maria Dama Expansion
Built in 1930s, upgrades in ‘70s & mid-2000s
Ball Mill with 1,500tpd capacity - completed
Current plant capacity estimated at 800-900tpd
Crushing capacity improvements, new Floatation cells & circuit reconfiguration underway
Assay Lab being completed in Q3
Tailings – new Chocho facility will reduce cost from $7 to $2 per tonne
SEGOVIA
Next Steps:
Improved instrumentation & automation
Explore opportunity to process more 3rd party ore (after Pampa Verde comes online)
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100
200
300
400
500
600
700
800
900
FY'11 Q1'12 April May June July August*
Actual Production
Ave
rage
tp
d
517 509 481
557
737 790 805
* First 2 weeks of August
August 15, 2012 TSX: GCM 16
Pampa Verde Project SEGOVIA
Preliminary capital cost estimates: Processing plant ~$65M Mechanized equipment ~$28M Tailings facility ~$8M Infrastructure ~$1M Mine development ~$12M (yr1-2)
Funded by cash flow from operation and project financing
New mechanized underground mine at Las Verticales vein systems Also provide access to Providencia & El Silencio mines
New Pampa Verde mill with production capacity of 2,500tpd Designed to process all company mined ore
Reduce overall cash cost to below $900 per ounce
Phase 1 basic engineering completed in July 2012
Project finance due diligence underway on $100M facility
EPCM phase to commence with completion of project financing
August 15, 2012 TSX: GCM
SEGOVIA Expansion Plan
2012 2013 2014 2015
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New Mill
Chocho Tailings
New PV Tailings
1,000 tpd 1,500 tpd
2,500 tpd
Mining Infrastructure
Crushing, Floatation& Circuit Reconfig
GCM Mechanized Mine at Las Verticales
Expansion of 3rd party mining model
Continue 3rd Party Contractors Grow 3rd Party Model
Assay Lab
New Mill
90 – 100,000 oz 120 – 140,000 oz
Pro
cess
M
ine
G
old
C
apac
ity
Cap
Ex
$50M $90M $40M $15M
Maria Dama
Pampa Verde
Target 200,000 oz Annually
August 15, 2012 TSX: GCM
32,000m drilling program completed in 2010-11 MRE resources grew by ~150% to 1.4M oz in all
categories
Only 4 of 20 known structures modelled
51,000m drilling program to expand and upgrade resources is underway in Q3
First phase to upgrade resources with 21,000m in-fill drilling program (Sep’12 to Mar’13) Target to upgrade ~200,000 ounces to Indicated
Second phase, exploration program with 30,000m drilling to extend known structures and investigate new ones (Mar’13 – Dec’13)
Total cost ~$15M
SEGOVIA
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Resource Growth
August 15, 2012 TSX: GCM 19
Summary
High grade, producing asset - Top 10 producing gold mine by grade
Maria Dama expansion plan underway to support 1,500 tpd
Pampa Verde project to grow total production to 200,000 ounces annually
Significant upside for resource expansion with $15M exploration program underway
SEGOVIA
August 15, 2012 TSX: GCM
Development potential of 14.4M oz gold deposit Q2 increase in M&I of gold by 18%
to 11.8M oz & silver by 26% to 80.3M oz
Producing 25,000oz gold & 40,000oz silver annually (underground) Produced 4,997oz gold & 8,016oz
silver in Q2 Pre-Feasibility Stage Delayed to explore impact of deep
zone mineralization on options for project development
MARMATO
(1) Marmato Technical Report, dated June 21, 20012, filed August 7, 2012
Category (1) Gold Resource Silver Resource
Measured 1,725,000 oz 8,011,000 oz
Indicated 10,064,000 oz 72,319,000 oz
Inferred 2,588,000 oz 9,429,000 oz
Total 14,377,000 oz 89,759,000 oz
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Q2 Summary
August 15, 2012 TSX: GCM TSX: GCM 21 MARCH 2012
Q&A
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