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Message: Interest on debt renegotiated
Gran Colombia Gold to Resume Paying Interest on Senior Debt in Feb 2015
TORONTO, Jan. 21, 2015 /PRNewswire/ - Gran Colombia Gold Corp. (TSX: GCM, OTC: TPRFF) announced today that it has negotiated a favourable contract amendment with the primary contract miner at its Segovia Operations and the Company will resume monthly interest payments on February 28, 2015 on its Senior Secured Gold-Linked Notes due 2017. The Company also intends to commence paying interest at the end of February on its Senior Unsecured Silver-Linked Notes due 2018 on a monthly basis, instead of the current semi-annual coupon payments. Total combined monthly interest payments on the senior debt will amount to approximately US$1.16 million. The weaker Colombian peso has provided the opportunity and the flexibility for the Company to pay a fair and reasonable price to its contract workers, continue to service payment plans to its local suppliers and to resume payment of interest on its senior debt.
The Company has continued to take the necessary steps to improve operating cash flow from its Segovia Operations. Gold production at the Segovia Operations in the fourth quarter of 2014 was 22,427 ounces, up 21% from the third quarter of 2014, driven by an increase in production sourced from the contract miners which accounted for 86% of the fourth quarter production. As this will be a key source of material for the Company as it continues with mine development and mechanization of operations in the Company-operated mining areas at the Segovia Operations in 2015, the Company has negotiated a contract amendment with the primary contract miner that is expected to generate cost savings, based on current production and gold prices, of approximately US$700,000 to US$900,000 per month commencing today. The Company is continuing to work with SRK Consulting (U.S.) Inc. ("SRK") to optimize its mine plan at the Segovia Operations to improve future cash flow.
The Company will continue to work closely with its financial advisor, GMP Securities L.P., as well as Gold and Silver Noteholders to meet all its commitments and matters related to the capital structure of the Company, its future debt service abilities, including the associated principal repayments, put options of the Gold-Linked Notes and interest currently in arrears on both Gold-Linked and Silver-Linked Notes. The Company expects that upon receipt of the optimized mine plan at Segovia from SRK, it will bring forward a comprehensive restructuring plan to all stakeholders to include associated consent solicitations required for changes to material terms of the note trust indentures.
The Company also announced today that its total gold production for the fourth quarter of 2014 was 29,043 ounces, up almost 18% over the third quarter of 2014. Annual gold production for 2014 amounted to 98,622 ounces compared with 102,792 in the prior year. Segovia's annual gold production in 2014 was 74,506 ounces, down from 80,226 ounces in 2013, which the Company is addressing through its mechanization and mine development program in 2015. Annual gold production at the Marmato underground mine increased to 24,116 ounces in 2014 from 22,566 ounces in 2013. Total silver production from both mines in 2014 was 125,716 ounces compared with 153,649 ounces in 2013.
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