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    Corporate Presentation- September 2012 Corporate Presentation- September 2012 Presentation Transcript

    • THE LEADING COLOMBIAN GOLD PRODUCER Corporate PresentationSEPTEMBER 2012 TSX: GCM September 2012 1
    • DISCLAIMERFORWARD-LOOKING STATEMENTSThis 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 itssubsidiaries (“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 negativevariations) 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 unknownrisks, uncertainties and other factors which may cause the actual results, performance or achievements ofGran Colombia to be materially different from any future results, performance or achievements expressed orimplied by the forward-looking statements. Forward-looking statements contained herein are made as of thedate of this presentation based on current expectations and beliefs and Gran Colombia disclaims, other thanas required by law, any obligation to update any forward-looking statements whether as a result of newinformation, results, future events, circumstances, or if managements estimates or opinions should change,or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actualresults and future events could differ materially from those anticipated in such statements. Accordingly, thereader is cautioned not to place undue reliance on forward-looking statements.SEPTEMBER 2012 TSX: GCM 2
    • STRATEGY• Building the leading Colombia focused gold producer • Gold production of 91,419 oz in 2011 • Two world class projects: Segovia & Marmato • Triple Segovia production to an annual rate of 200,000 oz Au by 2014 • Marmato in PFS, target production of 340,000 oz Au annually• Be a positive agent of change for our communities • Corporate commitment to best in class practises • Foundations and outreach focused on communities, education, health and safety• Valuation growth by achieving milestones Market Cap (US$M) vs Peer Group • Double mill throughput at existing Segovia plant • Secure financing for new Segovia plant & mine • Complete PFS at Marmato Project SEPTEMBER 2012 TSX: GCM 3
    • THE RIGHT TEAMSerafino Iacono, Executive Co-Chairman Miguel de la Campa, Executive Co-ChairmanOver twenty-seven years of experience in capital markets and public companies Mr. de la Campa has been involved in the financing and development of mining,and has raised more than three billion dollars for numerous natural resource oil and other resource projects in the United States, Latin America, Europe andprojects internationally. He is currently the Executive Co-Chairman and a Africa for the last thirty years. Currently serves as the Executive Co-Chairmandirector of Pacific Rubiales Energy Corp. Mr. Iacono was also a co-founder of and a director of Pacific Rubiales Energy Corp. Previously, Mr. de la Campa wasBolivar Gold Corp and Pacific Stratus Energy, among others, and is involved in the President and co-founder of Bolivar Gold Corp., as director ofnumerous resource and business ventures in Latin America, Canada and United Petromagdalena Energy Corp., and a co-founder of Pacific Stratus Energy HeStates. holds a BSFS in International Economics and a Masters Degree in Political Economics from Georgetown University.Maria Consuelo Araujo, Chief Executive Officer Donald East, Chief Operating OfficerMs. Maria Consuelo Araujo has been Chief Executive Officer of Gran Colombia Mr. East has over 35 years of experience in managing major project studiesGold Corp. since August, 2010. Ms. Araujo has served as the Minister of Foreign around the world, including Yanacocha in Peru – one of Latin America’s mostAffairs in Colombia from August 2006 to February 2007, prior to which she important gold mines. Previously, he acted in various mining operations inserved as Minister of Culture in Colombia from August 2002 to February 2006. several capacities such as; Project Director at Gold Field’s Cerro Corona project,Ms. Araujo was also the Director of Postgraduate studies at the Universidad Chief Advisor-Project Studies for Rio Tinto’s La Granja project, DevelopmentExternado of Colombia. Ms Araujo is a Diplomat & Economist by trade with Manager for Anglo American’s Michiquillay project and Senior Project Managerpostgraduate studies in the University of Milano. of Hatch Associates.Mike Davies, Chief Financial Officer Alessandro Cecchi, Director of ExplorationMr. Davies is a Chartered Accountant (Ontario) over twenty years of extensive Mr. Cecchi is an exploration geologist with over eighteen years’ experience,international and public company experience in financial management, strategic predominantly in South America, with a focus on gold exploration andplanning and external reporting in resource and other sectors.. development. Formerly, he has worked with Bolivar Goldfields, Sardinia Gold Mining, Dotly Financial, Hecla Mining and Medoro Resources. SEPTEMBER 2012 TSX: GCM 4
    • BUILDING THE LEADING COLOMBIA FOCUSED GOLD PRODUCER - High Quality Asset Base Segovia Operations Marmato 0.3 million ounces of Gold (M&I) 11.8 million oz Gold & 80.3 million oz Silver (M&I) 1.1 million ounces of Gold (Inferred) 2.6 million oz Gold & 9.4 million oz Silver (Inferred) In Top 10 of Producing Mines by Grade* In Top 20 of Undeveloped Projects by Gold Resources* Produced 68,704 oz Au in 2011 Continue to produce ~23,000 oz/y Au near term Target production 200,000 oz Au by 2014 Prefeasibility Study – modern large scale mechanised mine to produce 340,000 oz Au by 2016*Source: NRH Research, Global Gold Mines & Deposits 2012 (publically traded companies with deposits > one million ounces in all resource categories) SEPTEMBER 2012 TSX: GCM 5
    • BUILDING THE LEADING COLOMBIAFOCUSED GOLD PRODUCER - Resource Growth Segovia Operations Marmato 16 1.6 1.43 14.4 14 1.4 0.1 1.7 0.2 12 1.2 9.8 1 10 Measured 1.1 Measured 0.8 8 Indicated Indicated 0.58 Inferred 0.6 Inferred 6 0.1 5.5 10.0 0.4 4 0.2 2 0.5 1.1 3.2 2.6 0 0 June 1 2010 April22012 April12012 June 2 2012  Strong resource growth  Exploration upside:  Marmato open at depth  Segovia – only 4 of 27 known structures modeled June 2010 NI 43-101 technical report by Scott Wilson & Stewart Redwood January 2011 NI 43-101 mineral resource update prepared by SRK April 2012 NI 43-101 resource update prepared by SRK June 2012 NI 43-101 technical report update prepared by SRKSEPTEMBER 2012 TSX: GCM 6
    • BUILDING THE LEADING COLOMBIA FOCUSED GOLD PRODUCER - Production Growth 600,000 500,000 Gold Ounces 400,000 Segovia 300,000 Marmato 200,000 100,000 - 2011 2012 2013 2014-2015 2016 +Segovia Operations Marmato Operations Produced 68,704 oz Au in 2011  Historically produced ~23,000 oz/y Au Expect to produce 90,000 to 100,000 oz Au in 2012  Expect to produce 23,000 oz Au in 2012 Target annual production 200,000 oz Au by 2014  Target annual production 340,000 oz Au by 2016 SEPTEMBER 2012 TSX: GCM 7
    • ACHIEVING MILESTONES2012 PlanCorporate Grow gold production to range of 113,000 to 123,000 oz gold (up 24 to 34% YoY) Close US$100M loan for Segovia expansion Achieve significant growth in cash flow from operations Positive agent of change in our communitiesSegovia Increasing mill throughput to 1,000 tpd Begin development of new mechanized mine & 2,500 tpd plant Continued exploration with start of a 51,000m drilling programMarmato Complete prefeasibility study (incorporate deep zone mineralization results)SEPTEMBER 2012 TSX: GCM 8
    • SEGOVIA High Grade, Producing Asset High-grade mesothermal gold vein system  Average grade 13.3 g/t Four operating underground mines  Two production streams; internal & 3rd party contractors Exploration Upside  4 of 27 known structures modelled  51,000m drilling program starting in Q3’12 ($15M) Expansion underway to target 200,000 oz Au per year  Produced 20,610 oz Au in Q2’12 (avg 590 tpd) Category (1) Gold Resource Grade  New mill tested at 1,000 tpd (June avg 737 tpd) Measured 136,000 oz 16.1 g/t  Plant upgrades to deliver 1,000 tpd in Q4’12 Indicated 156,000 oz 9.9 g/t  90-100,000 oz expected in FY’12 (up 31-46% YoY) Inferred 1,138,000 oz 13.6 g/t (1) GCM Resource update dated March 5, 2012 & April 15,2012 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) SEPTEMBER 2012 TSX: GCM 9
    • SEGOVIATwo Production Streams 2011 68,704 oz Au Company Operated Third Party Miner Contracts 58% 42%SEPTEMBER 2012 TSX: GCM 10
    • SEGOVIAExpansion Plan - Milestones 2011 2012 2013 2014 Phase I Phase II • Funded by CF from Ops • Funded by planned $100M project Maria Dama financing & CF from Operations Pampa Verde • New MillPlanned Projects 1,500 tpd • Crushing, Flotation & Circuit Reconfiguration • New “Chocho” Tailings • New Assay Lab • New Plant 2,500 tpd • New GCM Mechanized Mine at Las Verticales • PV TailingsCapacity ~500 tpd 1,000 tpd 1,500 tpd 2,500 tpdGold 68,704 oz 90 – 100,000 oz 120 – 140,000 oz Target 200,000 oz AnnuallySEPTEMBER 2012 TSX: GCM 11
    • MARMATO Mountain of Gold Development & exploitation potential of entire deposit  Average grade 0.91 g/t Producing 23,000 oz gold & 40,000 oz silver annually – underground operation Exploration – 2012 deep drilling results:  New deep zone of minimum 100M tonnes potential ore, open at depth and along strike, Category (1) Gold Resource Silver Resource indicating increasing mineralization with depth Measured 1,725,000 oz 8,011,000 oz Pre-feasibility Stage Indicated 10,064,000 oz 72,319,000 oz  Potential phased underground & open pit mine Inferred 2,588,000 oz 9,429,000 oz  Expect to complete PFS in Q4’12 (1) Marmato Technical Report, dated June 21, 20012, filed August 7, 2012 One of the Top 20 Undeveloped Gold Deposits in the World Source: NRH Research, Global Gold Mines & Deposits 2012 (publically traded companies) SEPTEMBER 2012 TSX: GCM 12
    • MARMATODeep Mineralize Body Further Explored Legend DRILL HOLES AU PPM Pending 0 0.1 0.1 0.3 0.3 1 1 2.5 > 2.5 BLOCKS AU PPM 0 0.1 0.1 0.3 0.3 1 1 2.5 > 2.5SEPTEMBER 2012 TSX: GCM 13
    • BUILDING THE FOUNDATIONFirst Half 2012 ResultsFinancial Production of 51,867 oz Au  Up 58% over 1H’11  Q2’12 approximately flat to Q1’12, while plant upgrades were being carried out Consolidated Cash Cost US$1,256/oz  Impacted by lower recovery rates in Q2’12  Target less than US$1,100/oz by end of 2012 Gross margin of US$11.6M  Four consecutive positive quarters  Poised to grow as production increases G&A of US$7.8M, down from US$10.3M in 2H 2011  Expected run rate around US$3.5M per quarterSEPTEMBER 2012 TSX: GCM 14
    • FINANCIAL RESULTSProduction Gold ounces YTD Actual FY 2012 Target Segovia Company Operated 13,826 Artisanal 27,420 Total Segovia 41,247 90,000 to 100,000 Marmato 10,620 23,000 Consolidated 51,867 113,000 to 123,000 Segovia production expected to ramp through 2012  Processed average 737 and 792 tpd in June and July  Acceleration of Maria Dama expansion plan underway Marmato worked through lower grade zones in Q2 of 2.7 g/t  Expecting 2.9 g/t in 2nd half 2012 Silver production of 59,351 YTDSEPTEMBER 2012 TSX: GCM 15
    • FINANCIAL RESULTSCash Cost per Ounce YTD 2012 Q4 2012 US$ Actual Target Average Gold Price $ 1,650 $ 1,575 Segovia Company Operated $ 1,439 $ 950 Artisanal $ 1,166 $ 1,130 Total Segovia $ 1,256 $ 1,050 Marmato $1,242 $1,100 Consolidated $ 1,256 $ 1,060  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  Target <$900 by 2014 driven by Segovia expansion plan  Marmato cash cost to improve with return to historical grades of 2.9 g/tSEPTEMBER 2012 TSX: GCM 16
    • FINANCIAL RESULTSCapex, Exploration US$ YTD 2012 Plan CAPEX Segovia - complete Maria Dama expansion $ 9M $ 15 - 20M Marmato - Pre-Feasibility, social programs, $ 15M $ 19M environmental studies & mining titles $ 24M $ 34M+ EXPLORATION Segovia $ 2M $ 5M Marmato $ 3M $ 3M Zancudo $ 1M $ 1M $ 6M $ 9M CapEx focus in 2nd half on Maria Dama (Segovia) expansion plan Segovia 51,000 metre drilling campaign to commence in Q3 2012SEPTEMBER 2012 TSX: GCM 17
    • VALUATION GROWTH Achieving Milestones GCM Valuation Upside GCM Peer Average [1] Lowest peer market capitalization C$122M C$1,073M Top tier resource profile 15.6M oz Gold 9.4M oz Gold Enterprise value to total resources US$15/oz Gold US$102/oz Price to net asset value 0.15x 0.56x Achieve Project Milestones to Build Value Milestones / Catalysts Double mill throughput at existing Segovia plant to 1,000 tpd Secure financing for new Segovia mine & 2,500 tpd plant Complete PFS at Marmato Project[1] Source: Company disclosures, FactSet, Bloomberg & available consensus estimates (as at August 10, 2012)Peer Group includes: Alamos Gold; Allied Nevada; Argonaut; Aurizon; Avocet Mining; Avion Gold; Banro Corp; B2Gold; Centamin Egypt; Dundee PM; Gran Colombia; Golden Star; Lake ShoreGold; OceanaGold; Perseus; Semafo. SEPTEMBER 2012 TSX: GCM 18
    • CAPITALIZATION TSX: GCM Market Capitalization* $120M Shares Outstanding “GCM” 382M Cash † $4M Debt (Silver Linked Notes) “GCM.NT.U” † $68M Insider Ownership 5.7%*Share price C$0.315, as of August 10, 2012† as at June 30, 2012 SEPTEMBER 2012 TSX: GCM 19
    • SILVER LINKED NOTESTSX: GCM.NT.UInnovative vehicle provides exposure to silver at deep discount 7 year notes issued August 2011 with 5% annual coupon & principal repaid in years 4 to 7 US$1,000 note face value represents financial equivalent of 66.7 oz Ag at US$15/oz Upon repayment, note holders will receive the financial equivalent of the underlying silver ounces based on silver prices realized by GCM, subject to US$15/oz minimum IRR Matrix of GCM 5% Silver Note Silver Note price at US$1,000 face value Insider ownership ~5% Price $700 $800 $900 $1,000 $45 37% 33% 30% 27% $40 34% 31% 27% 25% $35 31% 28% 24% 22% $30 28% 24% 21% 19% $25 24% 21% 18% 15% $20 20% 17% 14% 11% Please refer to Prospectus for complete detailsSEPTEMBER 2012 TSX: GCM 20
    • COLOMBIA – A GREAT MINING JURISDICTION  5th largest economy in Latin America  Steadiest GDP growth in Latin America 1970-2007  $8.8B in infrastructure investment through 2012  Stable democracy, 70% government approval rating (1)  Most secure Latin American country to do business (2)  Ranked 7th in Countries for Mining Investments (3)  2nd best investor protection in Latin America (Forbes) 1. Source: Canaccord Genuity: The Colombian Quarterly 2. World Bank, Doing Business 2010 and 2011 Reports 3. Behre Dolbear Group 2012SEPTEMBER 2012 TSX: GCM 21
    • POSITIVE AGENT OF CHANGE FOR COMMUNITIES  Paid Pension Liabilities to Frontino’s employees for US$203 million  Contributed ~US$2 million to fund Phase II construction of the El Llano Hospital, school and other community projects.  Follow Global Compact principles in Corporate Social Strategy  Follow IFC guidelines for Marmato Resettlement  Community attention offices opened  Legalized and granted land ownership to more than 800 families A member of CBSR Using consulting firms of high Canadian Business for reputation: BSD Consulting and Social Social Responsibility Capital GroupSEPTEMBER 2012 TSX: GCM 22
    • POSITIVE AGENT OF CHANGE FOR COMMUNITIESThird Party Miner Contracts Third Party Miner Contracts Outcomes Agreements with 20+ third party miner groups  Environmental benefits – GCM controls Mine narrow, high grade veins processing, reducing mercury use GCM pays for recovered Au at spot price  Employment – expanded workforce Contractors manage miners & fund own costs  Improved health & safety GCM processes ore and sells gold & silver  Workers receive health & pension benefits GCM provides health & safety training  Government receives tax & royaltiesSEPTEMBER 2012 TSX: GCM 23
    • GRAN COLOMBIA GOLDSummary• Building the leading Colombia focused gold producer • Gold production of 91,419 oz in 2011 • Two world class projects: Segovia & Marmato • Triple Segovia production to an annual rate of 200,000 oz by 2014 • Marmato in PFS, target production of 340,000 oz annually• Be a positive agent of change for our communities • Corporate commitment to best in class practises • Foundations and outreach focused on communities, education, health and safety• Valuation growth by achieving milestones Market Cap (US$M) vs Peer Group • Double mill throughput at existing Segovia plant • Secure financing for new Segovia plant & mine • Complete PFS at Marmato Project SEPTEMBER 2012 TSX: GCM 24
    • AppendicesSEPTEMBER 2012 TSX: GCM 25
    • VALUATION GROWTHUndervalued with Leading Mid-Tier Resource Profile Market Capitalization (US$M) – Undervalued on a Relative Basis $2,545 FDITM Market Capitalization $2,106 $1,448 $1,097 $1,163 $1,196 $988 $1,033 $871 $608 $704 $474 $293 $353 $116 GCM AVM GSC LSG OGC ARZ BAA AR SMF PRU CEY DPM BTO AGI ANV Leading Mid-Tier Resource Profile (M oz Au) 22.7 Total Resources 15.5 15.8 11.7 10.3 9.0 9.0 9.3 9.4 7.9 8.2 6.3 6.9 5.0 5.7 AVM BTO AR ARZ LSG PRU AGI SMF GSC DPM OGC BAA CEY GCM ANV Share Price as of August 10, 2012. AGI - Alamos Gold; ANV - Allied Nevada; AR - Argonaut; ARZ - Aurizon; AVM - Avocet Mining; AVR - Avion Gold; BAA - Banro Corp; BTO - B2Gold; CEY - Centamin Egypt; DPM - Dundee PM; GCM - Gran Colombia; GSC - Golden Star; LSG - Lake Shore Gold; OGC - OceanaGold; PRU - Perseus; SMF - SemafoSEPTEMBER 2012 TSX: GCM 26
    • VALUATION GROWTHAttractive Comparable Valuation Price / Net Asset Value (Ratio) 0.87x 0.81x 0.70x 0.72x 0.64x 0.65x 0.68x 0.63x 0.63x 0.64x 0.55x 0.56x 0.58x 0.48x 0.13x GCM LSG DPM BAA ANV PRU CEY SMF ARZ AVM OGC BTO GSC AR AGI Enterprise Value / Total Resources (US$/ oz Au) $225 $198 $136 $124 $102 $104 $95 $66 $72 $72 $74 $57 $43 $33 $12 GCM GSC AVM LSG CEY BAA ARZ OGC SMF DPM ANV PRU AR AGI BTO Share Price as of August 10, 2012. AGI - Alamos Gold; ANV - Allied Nevada; AR - Argonaut; ARZ - Aurizon; AVM - Avocet Mining; AVR - Avion Gold; BAA - Banro Corp; BTO - B2Gold; CEY - Centamin Egypt; DPM - Dundee PM; GCM - Gran Colombia; GSC - Golden Star; LSG - Lake Shore Gold; OGC - OceanaGold; PRU - Perseus; SMF - SemafoSEPTEMBER 2012 TSX: GCM 27
    • MARCH 2012SEPTEMBER 2012 TSX: GCM 21 28