Gran Colombia Announces First Quarter Results And Corporate Update

June 15, 2011

TORONTO, June 15, 2011 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM, GCM.WT, GCM.WT.A) has filed today its interim condensed consolidated financial statements for the three months ended March 31, 2011.  The Company's consolidated financial statements, together with its Management's Discussion and Analysis of these results, are available for review on the Company's website at and under the Company's profile at

Completion of Merger with Medoro Resources Ltd.

On June 10, 2011 the Company completed the merger with Medoro Resources Ltd., creating the leading Colombian gold producer.  Serafino Iacono, Executive Co-Chairman of Gran Colombia said, "The merger of these companies has created a significant player in the Colombian gold space with operational synergies, and a very exciting growth profile.  The Company expects to grow its combined annual gold production from 120,000 ounces in 2011 to over 600,000 ounces in 2016, representing a compound annual growth rate of 42%. With the merger complete, the Company and its shareholders can now benefit from significant projects across all phases of the development pipeline, world-class gold resources and current production and cash flow."

First Quarter Financial Results

The Company reported revenues for its first fiscal quarter of 2011 of US$20.8 million, principally from the sale of 14,774 ounces of gold at an average realized price of US$1,363 per ounce.  For the quarter ending March 31, 2011, the Company reported a net loss of US$16.8 million, or US$0.08 per share, after reflecting an US$12.6 million one-time charge related to the 2011-2014 equity tax levied on companies in Colombia.

Operational Update

The Company currently has six wholly-owned operating underground mines, four in the vicinity of Segovia plus El Zancudo and Mineros Nacionales as well as two processing plants - Maria Dama in Segovia and Mineros Nacionales in Marmato.  In addition, the processing facilities at El Zancudo are also being readied for restart.

Segovia Operations

Production continues to ramp up at the Company's Segovia operations, with over 26,000 ounces of gold and over 25,000 ounces of silver produced in the first five months of 2011. Current plans indicate the ramp up to continue, and total production for this year is expected to be 90,000 ounces of gold and 90,000 ounces of silver, as compared to the September to December 2010 figures of 14,509 ounces of gold and 13,336 ounces of silver.

Planning for the plant expansion from 700 to 1,000 tonnes per day is well underway with construction of a new primary crusher and a second primary mill to be completed by the end of the year.

El Zancudo

The Company has commenced mining operations at El Zancudo with approximately 1,200 tonnes of ore with a gold grade of 12.0 grams per tonne (g/t) and a silver grade of 138 g/t stockpiled to date.  This material will be processed at the onsite facility which will be capable of processing 100 tonnes per day, and is expected to be restarted in the third quarter of this year. Estimated production from this operation for 2011 is 6,000 ounces of gold and 45,000 ounces of silver.

Mineros Nacionales

Production from the Mineros underground operation at Marmato is ongoing, with 8,900 ounces of gold and 13,700 ounces of silver produced through the end of May. The Company expects to produce 24,300 ounces of gold and 40,300 ounces of silver this year.

Exploration and Development Update

Marmato Project

The Company released the results of a Preliminary Economic Assessment for a large-scale open pit operation at Marmato on May 26, 2011.  The study, prepared by SRK Consulting (UK) Ltd., determined that the preferred mining method for the Marmato Project is open pit with contractor mining. This method was based on processing 283 million tonnes of ore at a rate of 40,000 tonnes per day utilizing a flowsheet similar to the one currently being used at the Company's Mineros Nacionales underground operation.

This method would produce, on average, 340,000 ounces of gold and 1.3 million ounces of silver per year over a 21-year mine life.  The cash operating cost is expected to be $524 per ounce of gold, net of silver credits. Assuming a life of mine capital cost of $550 million, total cost per ounce is estimated to be $643. Assuming gold and silver prices of $1,200 and $16 per ounce respectively, this would result in a net present value of $1.1 billion assuming a discount rate of 5%.  These estimates assume an average gold grade of 0.9 g/t, a stripping ratio of 3.3:1 and a metallurgical recovery of 88% for gold and 60% for silver - all of which the consultants, and the Company, believe can be improved upon with further drilling and metallurgical testwork.  The Company is now finalizing the bidding process for preparation of a Pre-feasibility Study, which is expected to be completed by the end of the first quarter next year.

Infill and definition drilling continues at the property, with results for a further 25 diamond drill holes (8,593 metres) presented herein. A total of 91,744 metres have been drilled to date, including 12 holes for which the Company is awaiting assay results and 11 holes currently being drilled.

Highlights include Hole #1386 which intersected 1.5 g/t gold over 278 metres, #1391 which encountered 1.5 g/t gold over 179 metres and #1384 which assayed 1.0 g/t gold over 302 metres.  These intercepts represent some of the best intersections seen to date, proving the continuity of economic mineralization at depth. In addition, the intersection from Hole #1391 fills a void in the current block model.

Significant intercepts (greater than 20 grams per tonne-metres) are summarized in the following table.

Surface or
S MT-1361 26.0  139.0 113.0 0.8 15.6
S MT-1368 141.0 225.0 84.0 0.7 6.9
S MT-1374 323.3 331.4 8.1 2.9 18.5
S MT-1377A 164.5 192.0 27.5 2.1 6
  and 483.7 643.1 159.4 1.1 4.2
U MT-1380A 158.4 174.0 15.6 1.6 7.3
S MT-1382 282.0 293.5 11.5 1.7 13.0
U MT-1384 2.0 304.0 302.0 1.0 3.9
S MT-1385A 103.4 192.7 89.3 0.7 7
  and 256.0 288.0 32.0 1.3 3.2
U MT-1386 143.0 421.4 278.4 1.5 2.3
S MT-1387 122.2 131.0 8.8 3.3 62.8
  and 165.5 193.0 27.5 3.3 18.0
  and 304.6 329.0 24.4 2.0 14.1
  and 386.0 422.8 69.8 0.5 4.3
U MT-1388 99.2 144.0 44.8 0.6 2.3
U MT-1389 181.0 207.2 26.2 0.9 4.4
U MT-1390 85.8 256.5 170.7 1.9 2.7
S MT-1391 159.4 180.5 21.1 1.1 9.4
  and 201.6 230.7 29.1 0.9 4.3
  and 237.0 275.0 38.0 1.0 3.9
  and 323.0 502.4 179.4 1.5 7.2
S MT-1392 159.0 188.0 29.0 1.1 10.2
  and 197.7 239.0 41.3 1.2 8.8
S MT-1395 6.1 34.9 28.8 1.1 6.7
  and 48.0 60.0 12.0 5.1 7.3
U MT-1396 78.0 191.4 113.4 0.5 2.3
S MT-1400 100.6 158.0 57.4 2.8 25.1
S MT-1401 342.0 399.0 57.0 0.6 3.7
S MT-1402 92.7 111.0 18.4 2.3 9.8
  and 178.0 190.1 12.1 1.8 3.9
U MT-1403 82.9 208.0 125.1 0.6 2.2

The surface drill holes are inclined at -35 to -70 degrees from horizontal while the underground drill holes are inclined at -70 to +45 degrees from horizontal and the intersection lengths do not represent true widths. Sample lengths are normally 2.0 metres but may be varied for geological and recovery factors. Intersections are based on a cut-off grade of 0.1 g/t gold and no more than 6.0 metres of internal dilution. Gold grades are capped at 20.0 g/t and silver grades are capped at 500 g/t.

The Company plans to complete a further 134 holes over the balance of the year, of which 18 will be drilled from the surface and 116 from underground.  In addition, to facilitate the Pre-feasibility Study, the Company intends to update its current National Instrument 43-101 compliant mineral resources effective June 30, 2011.  This information is expected to be available by the end of August 2011.


At Mazamorras, the initial reconnaissance drilling program, consisting of 18 diamond drill holes totalling 12,000 metres, is well advanced.  To date, over 7,000 metres have been completed, with assay results available for approximately 50% of the holes.  When all holes are completed, assayed and validated, the Company will provide a comprehensive update.  However, drilling to date and initial assay results are encouraging.  A significant number of the holes and interpretation of the core confirms the anomalies are copper porphyries with increasing gold values in the silicified zones and open at depth.

Other Properties

The Company holds a 100% interest in the Lo Increíble 4A and 4B concessions in Venezuela.  Initial mineral resources based on limited diamond drilling have identified 13.4 million tonnes grading 2.2 g/t, or 940,000 ounces of open pittable gold.  The Company is continuing its efforts to obtain an exploitation permit to allow for the development of these gold properties when circumstances in Venezuela are more favourable.

In Mali, the Company currently owns the rights to four gold exploration properties.  Three of the licenses are located in the gold-bearing Bougouni region in southern Mali, on the West African craton. The licenses are Sindo, Kangare and Samava, Naiouleni. The other license area, Bantanko, is located in the west of Mali, in the Keneiba window portion of the West African craton.  The Company has ceased funding exploration activities on the Mali properties, while it seeks possible joint venture partners to finance further exploration of these properties.

Qualified Person/Quality Assurance/Quality Control

Stewart D. Redwood, Senior Consulting Geologist to Gran Colombia, is a qualified person as defined by National Instrument 43-101 and prepared or reviewed the preparation of the scientific and technical information in this press release in respect of the drilling results from the Marmato Project. Dr. Redwood is a Fellow of the Institute of Materials, Minerals and Mining (Number 47017), a professional association and designation recognised by the Canadian regulatory authorities. Dr. Redwood verified the data for the Marmato Project disclosed in this press release, including the sampling, analytical and test data underlying the information contained in this release. Verification included a review of the quality assurance and quality control samples, and review of the applicable assay databases and assay certificates.

Sample Preparation, Assays, QA/QC

The drill core samples from Marmato were prepared by Acme Analytical Laboratories Ltd (ISO 9001:2008) at their sample preparation facility in Medellin, Colombia, and were assayed at their laboratory in Santiago, Chile. Gold was assayed by fire assay with atomic absorption spectrophotometer ("AAS") finish. Samples over 10 g/t were assayed by fire assay with gravimetric finish. Silver was assayed by aqua regia digestion and AAS finish. Silver samples above 100 g/t were assayed by fire assay with gravimetric finish. Blank, standard and duplicate samples were routinely inserted for quality assurance and quality control.

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.  The Company also has a highly-prospective land position in Colombia as well as an advanced stage property in Venezuela and earlier stage properties in Mali.

Additional information on Gran Colombia can be found on its website at grancolombiagold.comand by reviewing its profile on SEDAR at

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.

For further information:

Belinda Labatte
Investor Relations
(647) 436-2152


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