Gran Colombia Announces A New Mineral Resource Estimate Comprising 233,000 Ounces Of Gold In The Measured And Indicated Categories Plus More Than 1.0 Million Ounces Of Gold In The Inferred Category At Its Segovia Operations

March 05, 2012

TORONTO, March 5, 2012 /CNW/ - Gran Colombia Gold Corp. (TSX: GCM, GCM.WT, GCM.WT.A) is pleased to report a new mineral resource estimate, prepared by SRK Consulting (UK) Ltd., for its Segovia Operations located in Antioquia, Colombia containing 233,000 ounces of gold in the Measured and Indicated categories and an additional 1.08 million ounces of gold in the Inferred category at a cut-off grade of 3.0 g/t Au (see table below).  This mineral resource represents a 76% increase in measured and indicated gold ounces compared to the previous mineral resources dated June 9th, 2010(1), and includes an update of the resource of the Providencia, El Silencio and Sandra K mines as well as initial resource estimates for the Las Aves Vein System (named as Las Verticales in the table below), which make up the Company's Segovia Operations. The estimate has been reported according to Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards and will be supported by a National Instrument 43-101 independent report which will be published and filed on the Company's website and SEDAR profile within 45 days.

Commenting on these results, Maria Consuelo Araujo , Chief Executive Officer of Gran Colombia Gold, noted, "We are very pleased with the success of our on-going exploration efforts, which have significantly increased the total resources of our Segovia Operations. These results support the Company's plans to double the production at Segovia."

Area Measured Indicated Measured & Indicated Inferred
  Tonnes
(mm)
Grade
(g/t)
Oz Au
(mm)
Tonnes
(mm)
Grade
(g/t)
Oz Au
(mm)
Tonnes
(mm)
Grade
(g/t)
Oz Au
(mm)
Tonnes
(mm)
Grade
(g/t)
Oz Au
(mm)
Providencia LTR 263 16.1 136 245 12.3 97    508 14.3   233    243 14.1      110
Providencia Pillars                      435 19.9      278
Las Verticales                      480 19.4      299
Sandra K LTR                      443 15.3      218
Sandra K Pillars                        95 12.4        38
El Silencio LTR                      339   7.8        85
El Silencio Pillars                      223   7.9        56
Total 263 16.1 136 245 12.3 97    508 14.3   233 2,258 14.9   1,084

* The above estimate is based on 121 diamond drill holes totaling 39,586 metres and more than 50,000 underground channel samples.  The mineral resources are reported at an in situ cut-off grade of 3.0 g/t Au, which has been derived using a gold price of US$1400/oz, and suitable benchmarked technical and economic parameters for underground mining and conventional gold mineralised material processing. Each of the mining areas have been sub-divided into Pillar areas ("Pillars"), which represent the areas within the current mining development and Long-Term Mineral Resources ("LTR"), which lies along strike or down dip of the current mining development.  Mineral Resources are not Ore Reserves and do not have demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimate. All composites have been capped where appropriate. The Segovia Operation is wholly-owned by the Company and exploration is operated by the Company.

The Company is currently expanding its existing Maria Dama plant to a capacity of 1,000 tonnes per day by the end of Q1 2012 and to 1,500 tonnes by Q1 2013. The development of the new mine and plant at its Segovia Operations is expected to increase gold production from 68,000 ounces in 2011 to an estimated 200,000 ounces in 2014.

The resource estimation exercise was originally conceived to derive a mineral resource for the Providencia and Las Aves Vein System but was extended to include the entire Segovia Operations as part of the due diligence process for the previously announced Standard Bank US$100M loan arrangement (see press release dated December 20, 2011). The funds from this proposed facility will be used to develop a new mechanized mining operation and a new 2,500 tonnes per day process plant at its Segovia Operations.  The Company's Carla system was not included in the resource estimate; SRK has been retained to complete a resource estimate for Carla, which the Company expects will be completed by the end of March.

The estimate is based on a combination of diamond cores, which were fire assayed for gold by SGS Peru, and underground channel samples assayed at the Mine Laboratory, with check analysis completed at SGS. During the 2011 drilling program a comprehensive QAQC has demonstrated that sample preparation and laboratory performance for all drilling campaigns provided assays which are fit for the purpose of this estimate.

The grade estimation at Providencia, Las Verticales and Sandra K was undertaken into block models created from the three dimensional geological interpretation of veins integrated with a three dimensional structural model while grade estimation at El Silencio was undertaken using two dimensional methodology. The gold grades were then interpolated using appropriate parameters related to the geological and grade continuity and sample spacing, using an Ordinary Kriging routine at Providencia, Sandra K and El Silencio and Inverse Distance Weighting at Las Verticales. The search ellipses (55 x 100 m, 100 x 60m and 40 x 25m for Providencia, Sandra K and El Silencio respectively) follow the typical orientation of the mineralised structures, and where appropriate were aligned along higher grade plunging features within the mineralised veins.

SRK has considered sampling density and distance from samples in order to classify the Mineral Resource according to the terminology, definitions and guidelines given in the CIM Standards on Mineral Resources and Mineral Reserves (December 2005) as required by NI 43-101. SRK has assumed a grade of 3 g/t is required over a minimum mining width of 1.0 m, to filter out areas of lower grade material within thinner portions of the vein. SRK has compared these areas to the historic mined areas and this displayed a strong correlation.

The complete NI 43-101 Technical Report will be filed within 45 days and will be available on the Company's website and www.sedar.com. A webcast will be scheduled at that time to provide further details about this updated resource.

(1) In the previous Mineral Resource Estimate, prepared by Scott E. Wilson , C.P.G., the Measured and Indicated categories were calculated at a cut-off grade of 7.1 g/t Au.

Qualified Person

Ben Parsons , Senior Resource Geologist with SRK Consulting (UK) Ltd., prepared the Segovia mineral resource estimate. He is a Qualified Person as defined by NI 43-101.  For detailed information on the key assumptions, parameters and methods used to estimate the mineral resources, along with other information about Segovia, please refer to the Technical Report to be filed.

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. In addition, Gran Colombia is advancing a project to develop a large-scale, gold and silver mine at its Marmato operations, and has an advanced stage property in Venezuela.

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 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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