Segovia Operations Gold Production Up 30% From Prior Year

TORONTO, ON - Serafino Iacono, Executive Chairman of Gran Colombia, said, “2018 was the watershed year for us, the one where everything we had being doing to turn things around in the two prior years all came together. 2018’s gold production surpassed 200,000 ounces for the first time, up 25% from 2017 as our high-grade Segovia Operations delivered another solid year with grades over 17 g/t. Adjusted EBITDA increased by 36% over last year, surpassing the $100 million mark for the first time, and being a key catalyst in the 58% increase in our operating cash flow to almost $80 million and the 72% increase in our free cash flow to $44 million. Our debt refinancing earlier in 2018 did exactly what we hoped for, lifting the dilution overhang off of our stock and we strengthened our balance sheet, increasing our cash and cash equivalents to $35.6 million, and reducing our debt by 37% to $88.3 million, by the end of 2018. We made further progress in our strategy to enhance the value of our assets with additional positive results from our ongoing exploration programs at Segovia and Marmato. This brings us to 2019, where we plan to deliver another solid year and we will gain momentum with our pipeline of projects aimed to take us to the next level. With the proceeds from the bought deal private placement we will be closing, we can dramatically accelerate our exploration programs at Segovia. We expect to complete the technical studies later this year at Marmato and then be in a position to determine how we will take the underground mine expansion forward. We are working closely with Sandspring’s management team on both their Toroparu and Chicharron projects and we see potential in the changes evolving in Venezuela that may open a door for us to get back into our gold projects there.”

At the Segovia Operations, gold production in the fourth quarter of 2018 amounted to 48,809 ounces, bringing the total for 2018 to 193,050 ounces, up 30% over 2017 fueled by continuing growth in the Company’s three operating mines. The Company processed an average of 1,015 tonnes per day (“tpd”) in the 2018, up 33% from last year, with an overall average head grade of 17.1 g/t, benefitting from the 70% growth in production from its high-grade Providencia mine in 2018. With a total of 35,416 ounces of gold already produced in the first two months of 2019, the Company expects that the Segovia Operations’ will produce between 186,000 and 199,000 ounces of gold for the full year.

Better head grades helped the Company’s Marmato mine increase its production in the second half of 2018. For the fourth quarter of 2018, Marmato produced 6,451 ounces of gold bringing the total for 2018 to 24,951 ounces, almost on par with 2017.  Since coming into the Company in 2011, the Marmato mine has been a very steady producer and the Company expects that 2019’s annual gold production from Marmato will range between 24,000 and 26,000 ounces.

The Company started off 2019 with a total of 39,276 ounces of gold production in the first two months and expects to produce a total of 210,000 to 225,000 ounces of gold for the full year compared with the 218,001 ounces produced in 2018. The Company has already commenced a 20,000 meters drilling campaign in 2019 at its Segovia Operations focused on step-out drilling at Providencia and Sandra K, deep zone drilling to extend El Silencio another 200 meters below its currently delineated mineral resource, and brownfield drilling on the Cogote vein system. Using the net proceeds from the recently announced CA$20 million bought deal private placement which is expected to close soon. The Company will accelerate its ongoing exploration programs at Segovia, including technical and other studies to be carried out over the next approximately six months to identify and prioritize drilling targets followed by a drilling campaign, over and above what is already planned by the Company in 2019 and 2020. The objective of the drilling program is to increase mineral reserves for future production growth and to extend the mine life of the Segovia Operations.

Capital investment in 2019 at the Segovia Operations, expected to total approximately $25-$30 million (excluding exploration) in 2019, will continue to focus on ongoing mine development at its Providencia, El Silencio and Sandra K mines, along with ongoing investments in mine infrastructure upgrades, ventilation, health, safety and environmental initiatives, mine equipment and further expansion of the El Chocho tailings storage facility, including commissioning of a filter press. Sustaining capital expenditures at the Marmato mine and processing plant in 2019 are expected to be about $1.5 million. As the Company advances its evaluation of the underground mine expansion opportunity at Marmato toward the completion of a NI 43-101 compliant technical report before the end of the year, it expects to spend approximately $2 million in 2019, including another 8,000 meters of drilling to extend the Deeps Zone further along strike and to test the high-grade core of the Deeps Zone up to 600m as.

The company’s address is 401 Bay Street, Suite 2400, Toronto, ON M5H 2Y4, (416) 360-4653, www.grancolombiagold.com.