Gran Colombia GOLD Announces 2017 Outlook and Proposals to Improve Capital Structure
GRAN COLOMBIA GOLD CORP.
333 BAY STREET, SUITE 1100, TORONTO, ONTARIO M5H 2R2, CANADA
TEL: (416) 360-4653 FAX: (416) 360-7735
For Further Information, Please Contact:
Mike Davies
Chief Financial Officer
(416) 360-4653
NEWS RELEASE
GRAN COLOMBIA GOLD ANNOUNCES 2017 OUTLOOK AND PROPOSALS TO IMPROVE CAPITAL
STRUCTURE
TORONTO, CANADA, Monday, March 6 , 2017 – Gran Colombia Gold Corp. (TSX: GCM, OTC: TPRFF)
announced today its outlook for 2017 along with two proposals aimed at improving its capital structure
following the comprehensive debt restructuring completed last year.
2017 Outlook
As previously announced, Gran Colombia produced a total of 149,687 ounces of gold in 2016 driven by
growth at its Segovia Operations . The Company started off 2017 with a total of 24,585 ounces of gold
production in the first two months and expects to produce a total of 150,000 to 160 ,000 ounces of gold for
the full year.
The Company’s total cash cost and all-in sustaining cost (“AISC”) averaged $699 and $832 per ounce
sold, respe ctively, during the first nine months of 2016. Gran Colombia will be reporting its financial
results for its 2016 fiscal year at the end of March and expects that its full year 2016 total cash cost and
AISC will remain within guidance below $720 and about $850 per ounce sold , respectively. In 2017, the
Company expects that its total cash cost will remain below $720 per ounce sold. T he Company also
expects that with an increased level of explorat ion spending at Segovia and the continuation of capital
investment at its Segovia Operations, its AISC for the full year will remain below $900 per ounce.
In early February 2017, Gran Colombia completed the 10,000 meters drilling campaig n it commenced at
Segovia in May of last year. In the second hal f of 2016, the Company also completed a small
underground drilling program to explore the extension of the current mineralization in the upper level of
the existing Marmato mine. The Company expects to announce results of these drilling campaigns
shortly. In 2017, Gran Colombia plans to execute a 20,000 meters drilling campaign to further its efforts to
upgrade and extend its mineral resources at its Segovia Operations. Capital investment in 2017 at the
Segovia Operations will continue to focus on ongoing m ine development at its Providencia and El Silencio
mines along with additional investments in mine infrastructure upgrades, ventilation, health, safety and
environmental initiatives, mine equipment and expansion of tailings storage facilities.
In 2016, the Company repurchased and cancelled a total of $3.0 million aggregate principal amount of its
2018 and 2020 Debentures at a discount under the normal course issuer bids launched in July 2016.
These transactions were funded by excess cash flow generated in the first nine months of 2016 and
deposited into the sinking funds. The Company also used the increased cash flow generated by its
operations in 2016 to honor its supplier payment programs, successfully restoring the aging of its
accounts payable to norm al terms by the end of 2016, and fully settled its overdue equity and wealth
taxes which carried very high interest rates on the amounts in arrears. In 2017, provided gold prices
remain at least at the cur rent levels, the Company intends to generate excess cash flow equivalent to
approximately 10% of the aggregate principal amount of its 2018 and 2020 Debentures currently issued
and outstanding for deposit into the sinking funds in accordance with their respective indentures. Sinking
fund balances may be used to fund open market repurchases of debentures for cancellation, redemptions
at par or repayment at maturity.
GRAN COLOMBIA GOLD CORP.
333 BAY STREET, SUITE 1100, TORONTO, ONTARIO M5H 2R2, CANADA
TEL: (416) 360-4653 FAX: (416) 360-7735
Capital Structure Improvements
In September 2016, Gran Colombia announced it had engaged GMP Securities L.P. (“GMP”) as its
exclusive financial advisor to conduct a broad strategic review process to explore opportunities to
enhance stakeholder value. During the course of this process, it became evident that even though Gran
Colombia has strengthened operationally since the debt restructu ring was completed in early 2016, the
common shares have not performed at the same pace as its peers due to the extent of leverage within
the Company’s capital structure and the impact of the potential debt conversions on the total number of
common shares outstanding on a fully diluted basis. In addition, at prevailing gold prices, the Company’s
future growth may be stalled while trying to balance ongoing capital investment needs with the
requirement to set aside excess cash flow toward the repayment of the 2020 Debentures at maturity. As
such, after consultation by Gran Colombia and GMP with several of its large stakeholders, the Company
is announcing a proposal to extend the maturity, on a voluntary basis, of its 2020 Debentures and that it
will seek shareholder approval in connection with such maturity extension and to consolidate its common
shares in an effort to improve its future liquidity and capital structure to enhance shareholder value.
Extension of 2020 Debentures
Gran Colombia currently has an aggregate principal amount of US$101,160,085 of 2020 Debentures
issued and outstanding pursuant to an Amended and Restated Indenture dated as of January 20, 2016
(the “Indenture”). Maturing on January 2, 2020, these debentures receive interest, paid on a m onthly
basis, at an annual rate of 6%.
Gran Colombia believes that by extending the maturity of some or all of its 2020 Debentures, the
Company can strike a better balance in the next couple of years between capital investment and cash
generation for seni or debt retirement to enhance stakeholder value while at the same time using its
excess cash flow to systematically reduce the issued and outstanding senior secured debt. The Company
is seeking approval from holders of the 2020 Debentures to amend the Inde nture through a consent
solicitation process (the “Consent Solicitation”) to provide an option for holders to extend the maturity date
of the debentures to January 2, 2024 (the “Proposed Indenture Amendments”) . The extended 2020
Debentures will carry large ly the same terms and conditions as the other 2020 Debentures except that
the maturity date will be extended and interest will be paid monthly over the remaining term of the
extended 2020 Debentures at an annual rate of 8%.
The Company expects materials regarding the Consent Solicitation will be distributed to all holders of the
2020 Debentures on or about March 24 , 2017. Holders will be asked to provide their consent to amend
the Indenture through the Consent Solicitation process. The Company will also be seeking shareholder
approval of the Proposed Indenture A mendments pursuant to Multilateral Instrument 61 -101 – Protection
of Minority Security Holders i n Special Transactions (“MI 61-101”). In order for the Company to proceed
with the Proposed Indenture Amendments , the following are required: (i) consent from a simple majority
of the aggregate principal amount of the issued and outstanding 2020 Debentures and (ii) approval by a
simple majority of the votes validly cast by “minority” shareholders, present in person or by proxy at the
shareholder meeting, being the shareholders of the Company other than any “related parties” in respect
of the Proposed Indenture Amendments (as determined in accordance with MI 61-101) who hold 2020
Debentures and such other shareholders as are required to be excluded in determining such “minority”
approval pursuant to MI 61-101. The Consent Solicitation is expect ed to remain open until April 24, 2017,
following which the Company will announce the res ults. Holders of 2020 Debentures will also have the
opportunity during the Consent Solicitation process to elect to extend some or all of their 2020
Debentures, conditional upon the requisite consent from holders of 2020 Debentures, Shareholder
approval being obtained and the Proposed Inde nture Amendments being effected . The Consent
Solicitation and the Proposed Indenture Amendments are subject to certain conditions and approvals
including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals. Terms
outlined herein may be amended as required to receive such approvals.
GRAN COLOMBIA GOLD CORP.
333 BAY STREET, SUITE 1100, TORONTO, ONTARIO M5H 2R2, CANADA
TEL: (416) 360-4653 FAX: (416) 360-7735
Share Consolidation
Gran Colombia has an authorized capital consisting of an unlimited number of common shares without
par value and an unlimited num ber of Preferred Shares without par value, of which 306,755,502 common
shares are currently issued and outstanding. In addition, a further approximately 1.1 billion common
shares are issuable through the potential future exercise of the issued and outstanding convertible
debentures due 2018, 2020 Debentures, stock op tions and warrants. This potentially large number of
issued and outstanding common shares acts as a damper on the Company’s stock price and could
restrict the ability of the Company to raise equity in the future to fund its business activities. Accordingly ,
the Company is proposing to consolidate its issued and outstanding common shares on a ten -for-one
basis (10:1) (the “Consolidation”), subject to the approval of the TSX and approval of Shareholders by
way of special resolution. The Company believes that the benefits of the Consolidation include, among
other things, that the anticipated higher share price resulting from the Consolidation may meet investing
guidelines for certain institutional investors and investment funds that are prevented under such
guidelines from investing in the common shares at current price levels. Also, a smaller number of
common shares trading at a higher price makes the Company more attractive to potential investors, and
could further enhance the value of the common shares held by current shareholders.
Information related to the Special Meeting of Sha reholders expected to be held on April 2 4, 2017 will b e
available on or about March 24, 2017.
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 at its Segovia and Marmato
Operations. G ran Colombia is in the midst of an expansion and modernization project at its Segovia
Operations.
Additional information on Gran Colombia can be found on its website at www.grancolombiagold.com and
by reviewing its profile on SEDAR at www.sedar.com.
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 anticipated business pla ns or strategies, expectations regarding gold
production, cash cost, AISC and excess cash flow for 2017, the anticipated effects of the extension of the
maturity of the 2020 Debentures and the Consolidation and the anticipated timing in respect of the
Consent Solicitation and Special Meeting of Shareholders. 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", "anticipate s", 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
30, 2016, 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 whe ther 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 fut ure events could differ materially from those anticipated in such
GRAN COLOMBIA GOLD CORP.
333 BAY STREET, SUITE 1100, TORONTO, ONTARIO M5H 2R2, CANADA
TEL: (416) 360-4653 FAX: (416) 360-7735
statements. Accordingly, the reader is cautioned not to place undue reliance on forward -looking
statements.