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Gran Colombia Gold October 2019
- 2. TSX: GCM OTCQX: TPRFF October 2019 Forward‐Looking Statements DISCLAIMER This presentation 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, and, specifically, statements concerning anticipated growth in annual gold production, future cash costs and AISC, future G&A and capex, excess cash flow and future repayments of its gold‐linked notes. 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. 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 27, 2019 which is available for view on SEDAR at www.sedar.com. Forward‐looking statements contained herein are made as of the date of this presentation and Gran Colombia disclaims, 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. All amounts are denominated in U.S. dollars, unless indicated otherwise.
- 3. TSX: GCM OTCQX: TPRFF October 2019 2018 Gold Production 218,000 ozs EMERGING MID-TIER GOLD MINER Focus in Colombia 3 Marmato Project High‐grade underground mines 89% of production 2018: 193,000 ozs Head grades averaged 17.1 g/t in 2018 One of the Top 5 Highest Grade Underground Mines Underground mine expansion and spin out to new vehicle 11% of production 2018: 25,000 ozs Head grades averaged 2.7 g/t in 2018 One of the Top 20 Undeveloped Global Gold Deposits Segovia Operations On Track to Produce up to 240,000 ozs in 2019
- 4. TSX: GCM OTCQX: TPRFF October 2019 THE RIGHT TEAM 4 Directors Miguel de la Campa, Vice Chairman – Company co‐founder with 30+ years of experience in financing and developing mining and other resource projects Jaime Perez Branger – Executive with 30+ years of experience in finance and capital markets Robert Metcalfe – Lawyer and corporate director Hernan Martinez – Former Colombian Minister of Mines and Energy Monica De Greiff – Executive President of the Bogota Chamber of Commerce and former Colombian Minister of Justice De Lyle Bloomquist – Corporate director Management Serafino Iacono, Executive Chairman – Company co‐founder with 30+ years of experience in capital markets and public companies Lombardo Paredes, CEO ‐ 20+ years of corporate leadership and operations management experience in the resource sector in Latin America Mike Davies, CFO – CPA,CA with 20+ years of international and public company experience in resource and other sectors Alessandro Cecchi, VP Exploration – Exploration geologist with 20+ years of experience focused gold exploration and development in South America. Jose Ignacio Noguera, VP Corporate Affairs – Lawyer with 20+ years of experience in public and government affairs and sustainability in the resource sector in Colombia Angel Meza, General Manager, Segovia Operations – Mine engineer with 17+ years of experience in mining operations in South America and Africa Inivaldo Diaz, Technical Manager, Segovia Operations – Civil mine engineer with 24+ years of experience in the mining industry in South America Gabriel Gaviria, General Manager, Marmato Operations – Mine engineer with 39+ years of experience in mining operations in Colombia
- 5. TSX: GCM OTCQX: TPRFF October 2019 GRAN COLOMBIA 2.0 Gran Colombia’s high‐grade Segovia Operations are continuing to fuel production growth with ~230,000 ounces of gold production in TTM September 2019, up 6% over 2018. Market capitalization is benefitting from capital structure simplification in 2018 and execution of the turnaround strategy. ~98% appreciation in share price since one year ago. Share price is currently ~62% of analysts’ targets. Maintaining strength in the Company’s balance sheet in 2019. Gold Notes will be down 22% from one year ago to $68.8M as of October 31, 2019. $63M of cash as of September 30, 2019, up from $36M at the end of 2018. Future growth continues emphasis on high‐grade Segovia mines and the other 24 known veins we are not currently mining. Raised CA$20M through convertible debentures financing in April 2019 to fund accelerated drilling campaign over next two years. Upside potential with Marmato underground expansion through new listed vehicle and Zancudo, Sandspring and Venezuela in the pipeline. WHAT’S NEW? Gran Colombia Continuing to Deliver “Focused on what we can control……Cash, Costs and Execution.” 5 TTM = Trailing 12 months
- 7. TSX: GCM OTCQX: TPRFF October 2019 RESULTS Solid Turnaround 7 Annual Gold Production reaches 231,000 ozs Annual Adjusted EBITDA surpasses $100M AISC reflects focus on controlling costs $M Free Cash Flow is servicing debt and building cash kozs ‐ 40 80 120 160 200 240 2017 2018 TTM H1‐18 H1‐19 Segovia Marmato $M $‐ $250 $500 $750 $1,000 2017 2018 TTM H1‐18 H1‐19 AISC Total Cash Cost US$/oz $‐ $30 $60 $90 $120 2017 2018 TTM H1‐18 H1‐19 $‐ $20 $40 $60 $80 $100 2017 2018 TTM H1‐18 H1‐19 Operating Cash Flow Free Cash Flow TTM = Trailing 12‐months ended June 30, 2019.
- 8. TSX: GCM OTCQX: TPRFF October 2019 Cash & DebtRESULTS AISC (‐23%) $‐ $20 $40 $60 $80 $100 $120 $140 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Cash Debt (1) $M 2018 2019 Gran Colombia’s balance sheet is getting stronger each quarter: • Cash has increased to $63 million as of September 30, 2019, including $13.7 million from the CA$20.0 million of Convertible Debentures issued in April 2019. • The Gold Notes amortization schedule is steadily reducing debt by $4.9 million each quarter. • Net debt to Adjusted EBITDA has decreased to 0.35X at H1‐2019 from 0.5X at the end of 2018. (1) Aggregate principal amount outstanding of Gold Notes and Convertible Debentures. 8
- 9. TSX: GCM OTCQX: TPRFF October 2019 2019 OUTLOOK Priorities 1. CA$20M bought deal private placement of convertible debentures ‐ COMPLETED 2. Continuing implementation of optimized mine plan at Segovia: – Expanding infrastructure to access deep levels at El Silencio and Providencia. – Continuing ventilation improvements at El Silencio and commence Sandra K. – Continuing El Chocho tailings storage construction and filter press has been commissioned. 3. Expanding drilling program over next 18 months at Segovia with bought deal proceeds to accelerate step‐out and brownfield drilling to increase reserves for production growth and mine mine life extension. 4. Finalizing PEA document for underground expansion project at Marmato…proceeding to PFS. 5. Providing technical support to Sandspring; monitoring opportunity in Venezuela. 2019 Targets 2019 Guidance H1‐2019 TTM (1) Gold production 225,000 – 240,000 ozs 118,483 ozs 230,906 ozs Cash cost/oz sold < $680/oz $638/oz $657/oz AISC/oz sold < $925/ oz $855/ oz $883/ oz All‐In Cost/oz sold < $950/ oz $873/ oz $900/ oz Raised Production Guidance (1) Trailing 12‐months ended June 30, 2019 9
- 10. TSX: GCM OTCQX: TPRFF October 2019 PROPERTIES Marmato Project “Pursuing Underground Mine Expansion Opportunity” Ownership 100% Mineral Resources (1) ‐ M&I ‐ Inferred Gold: 3,844 kozs 2.9 g/t 4,194 kozs 2.5 g/t 2018 Gold Production 24,951 ozs 2018 Head Grade 2.7 g/t 2018 Cash Cost/oz US$1,132 Segovia Operations “Core Producer” Ownership 100% Mineral Resources (1) ‐ M&I ‐ Inferred Gold: 1,327 kozs 11.8 g/t 1,157 kozs 10.1 g/t Mineral Reserves (1,2) ‐ Proven ‐ Probable Gold: 30 kozs 11.7 g/t 658 kozs 11.0 g/t 2018 Gold Production 193,050 ozs 2018 Head Grade 17.1 g/t 2018 Cash Cost/oz US$623 (1) As of December 31, 2018 (2) Included in Mineral Resources Zancudo Project “Exploration Stage” Ownership 100% IAMGOLD entering 3rd year of a 6‐year earn‐in option agreement Historic Mining Districts 10 Equity investments: Sandspring Resources TSXV: SSP (Guyana/Colombia) Western Atlas TSXV: WA (Canada/Venezuela)
- 11. TSX: GCM OTCQX: TPRFF October 2019 SEGOVIA OPERATIONS Production Stage High‐grade mesothermal quartz‐sulfide veins in historic mining district….over 5 million ounces of gold produced through continuous mining over past 150+ years. Expected mine life runs through to 2026 (2017 PEA). Three active underground mines (27 known veins) and a substantial land package of ~9,000 hectares, including a unique RPP contract license over ~3,000 hectares which grants mining rights in perpetuity. 11 Main Mineralization ZonesLicense Boundaries for Segovia & Carla (100% Owned)
- 12. TSX: GCM OTCQX: TPRFF October 2019 SEGOVIA OPERATIONS El Silencio Mine 12 M&I 784 kozs 10.6 g/t Inferred 548 kozs 9.9 g.t Reserves 381 kozs 9.3 g/t 2018 Production of 85,000 ozs, up 5% from 2017 H1‐2019 Production of 43,000 ozs, up 6% from H1‐2018
- 13. TSX: GCM OTCQX: TPRFF October 2019 SEGOVIA OPERATIONS Providencia Mine 13 2018 Production of 88,000 ozs, up 70% from 2017 H1‐2019 production of 50,000 ozs, up 16% from H1‐2018 M&I 354 kozs 17.6 g/t Inferred 307 kozs 16.7 g.t Reserves 220 kozs 17.1 g/t
- 14. TSX: GCM OTCQX: TPRFF October 2019 SEGOVIA OPERATIONS Sandra K Mine 14 2018 Production of 9,000 ozs, up 100% from 2017 H1‐2019 production of 5,000 ozs, on par with H1‐2018 M&I 142 kozs 10.2 g/t Inferred 73 kozs 7.1 g.t Reserves 54 kozs 9.8 g/t
- 15. TSX: GCM OTCQX: TPRFF October 2019 Chicharron (Sandspring Resources) Blue Sky Potential Currently operating mines on only 3 of 27 known veins in the RPP-140 license. 15 Increase M&I resources and reserves Consolidate advance deposits Follow‐up brownfield exploration projects Areas of Immediate Interest SEGOVIA OPERATIONS
- 16. TSX: GCM OTCQX: TPRFF October 2019 SEGOVIA OPERATIONS Maria Dama Processing Plant Plant now has capacity to handle up to 1,500 tpd. Plant includes crushing, grinding, gravity concentration, gold flotation, cyanidation of the flotation concentrate, Merrill‐Crowe precipitation and refining of both the Merrill‐Crowe precipitate and gravity concentrate to produce a final doré. Onsite lab provides quick turnaround of development samples; exploration samples processed in SGS Medellin. New “El Chocho” tailings storage facility will receive material over the next six years and filter press has been commissioned in 2019; onsite water treatment facility is treating excess water to Colombian standards before being discharged. 16
- 17. TSX: GCM OTCQX: TPRFF October 2019 Third Party Miner Contracts Agreements with 30+ third party miner groups Mine designated areas with the Company’s mining title GCM pays for recovered gold at fixed price Contractors manage miners & fund own costs GCM processes ore and sells the gold & silver GCM provides health & safety training Benefits of Contract Mining Model Environmental benefits – GCM controls processing, reducing mercury use Employment – expanded workforce Improved health & safety Workers receive health & pension benefits Government receives tax & royalties SEGOVIA OPERATIONS Positive Agent for Change Improving Health & Safety in Our Mines Funding Community Programs 17
- 18. TSX: GCM OTCQX: TPRFF October 2019 MARMATO PROJECT Mountain of gold in historic mining district. Mineralization is hosted by sheeted pyrite vein system in dacite to andesite porphyry stocks. Deep Zone drilling shows that mineralization is continuous along strike for ~500 m and has a confirmed down dip extent that reaches up to 800 m with a thickness that varies between 35 m and 150 m. It remains open at depth and to the east. The 2018‐19 drilling campaigns have increased our confidence in the geological model contributing to inclusion of additional Deep Zone mineralization in the latest Mineral Resource update. Currently finalizing PEA document for underground mine expansion incorporating the Deep Zone mineralization. Commencing additional drilling and technical studies toward expected completion of a PFS by mid‐2020. Gran Colombia has announced its intention to spin out the Marmato mining assets to a new listed vehicle. Mine Expansion Opportunity 18 The Future of Marmato is Going Underground 11% 2018 Production Gran Colombia announced its intention on October 7, 2019 to spin out the Marmato mining assets in Zona Baja to a new listed vehicle in a transaction with Bluenose Gold Corp. (TSX‐V: BN.H) whereby: Bluenose will consolidate its shares on a 1‐for‐10 basis resulting in 10.6M shares I&O. Gran Colombia will vend‐in the Marmato mining assets (C$57.5M valuation) plus C$5M in cash for an initial ~75% position in Bluenose. Bluenose will complete a brokered private placement raising C$10M‐C$15M of C$2.00 Units (one share + one warrant at C$3.00 for 5 years), diluting Gran Colombia to between 56% and 67% depending on final deal size and exercise of warrants and options by third party investors. Expect to close RTO and equity financing mid‐December 2019.
- 19. TSX: GCM OTCQX: TPRFF October 2019 Mine Expansion OpportunityMARMATO PROJECT 19 Mining Upper Zone Mining Deeps Zone ZonaAlta/Echandia (Zona Alta) ZonaBaja Deeps Zone Summary of Marmato Breakdown for Reporting Areas
- 20. TSX: GCM OTCQX: TPRFF October 2019 Mineral Resource Estimate As of July 31, 2019 MARMATO PROJECT 20 Deposit Type Measured Indicated Measured & Indicated Inferred Tonnes (kt) Grade (g/t) Au Metal (koz) Tonnes (kt) Grade (g/t) Au Metal (koz) Tonnes (kt) Grade (g/t) Au Metal (koz) Tonnes (kt) Grade (g/t) Au Metal (koz) Zona Alta (3) Veins 0.6 5.6 109 3.6 4.6 542 4.2 4.8 650 5.3 4.1 688 Porphyry 2.1 3.1 210 2.1 3.1 210 2.7 4.5 386 Total 0.6 5.6 108 5.7 4.1 752 6.3 4.2 860 7.9 4.2 1,074 Zona Baja (4) Veins 2.1 4.9 325 7.2 4.5 1,037 9.2 4.6 1,362 3.3 4.4 466 Porphyry 1.6 2.7 140 1.6 2.7 140 0.3 3.1 34 Subtotal 2.1 4.9 325 8.8 4.2 1,177 10.8 4.3 1,502 3.6 4.2 500 Deep Zone 6.4 2.6 537 6.4 2.6 537 41.2 2.1 2,812 Total 2.1 4.9 325 15.2 3.5 1,714 17.3 3.7 2,039 44.9 2.3 3,312 Total 2.7 5.0 433 21.0 3.7 2,466 23.6 3.8 2,899 52.9 2.6 4,386 1) Mineral resources are not mineral reserves and do not have demonstrated economic viability. 2) All figures are rounded to reflect relative accuracy of the estimate. All composites have been capped where appropriate. 3) Zona Alta includes mineral resources from the Echandia license above 1,340 masl. 4) Zona Baja includes mineral resources from the Echandia license below 1,340 masl and above 1,025 masl and are accessible from the current mining operation. 5) Vein and Porphyry mineral resources are reported at a cut-off grade of 1.9 g/t. Cut-off grades have been based on a price of US$1,500 per ounce of gold, suitable benchmarked technical and economic parameters and gold recoveries of 95% for underground resources, without considering revenues from other metal. 6) Deep Zone mineral resources are reported at a cut-off grade of 1.3 g/t. Cut-off grades have been based on a price of US$1,500 per ounce of gold, suitable benchmarked technical and economic parameters and gold recoveries of 95% for underground resources, without considering revenues from other metal within a limiting pit shell. The Deep Zone includes mineral resources an elevation of 1,025 masl.
- 21. TSX: GCM OTCQX: TPRFF October 2019 Life‐of‐Mine Plan (“PEA”) ResultsMARMATO PROJECT 21 ‐ 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 Ounces Precious Metal Production Profile (ozs/year) Gold Silver Marmato mine in Zona Baja will comprise two distinct operations: Upper Zone and Deep Zone. Upper Zone: Immediate optimization of existing mining operation…5.5M tonnes processed over 16‐year life with average LoM head grade of 3.8 g/t resulting in 0.6M ounces of gold (27% of total). Annual production to increase from current ~25,000/yr to a range between 35,000 and 40,000 starting in 2020. LoM cash cost of US$803/oz (down ~25% from historical) and LoM AISC of US$872/oz. Deep Zone: US$269M initial capital in 2020 to 2022. Total of 20.8M tonnes processed over a 16‐year life starting in 2023 at an average LoM grade of 2.5 g/t resulting in 1.6M ounces of gold (73% of total). LoM cash cost of US$797/oz and LoM AISC of US$885/oz Combined: 2.2M ounces of gold with LoM cash cost of US$799 per ounce and LoM AISC of US$882/oz. At US$1,300 per ounce long‐term gold price, total undiscounted LoM after‐tax cash flow of US$448M (NPV 5% ‐ US$207M). Before financing, IRR = 20% and payback by 2026.