Gran Colombia Gold 2017 Profits Rise, Red Eagle Mining Expands

Canada-based multinationals Gran Colombia Gold (GCC) and Red Eagle Mining (REM) in late March both reported progress in their gold mining operations here in Antioquia during 2017.

For GCC, adjusted net income for fourth quarter (4Q) 2017 nearly tripled, to US$9.1 million, from US$3.4 million in 4Q 2016. Similarly, for full-year 2017, GCC’s adjusted net income rose to US$23 million, up from US$15.6 million in 2016.

“The improvement in 2017’s annual adjusted net income compared with last year reflects the positive impact on income from operations of the higher gold production this year, lower financing costs due to debt reductions, and a decrease in Colombian wealth tax compared with the prior year,” according to GCC.

As for Red Eagle, full-year 2017 net loss worsened year-on-year, to US$15.7 million, compared to a net loss of US$6.9 million in 2016.

“The [2017] net loss increased compared to the 2016 period primarily due to increased mine site expenses, as less costs were capitalized during 2017, mineral property exploration costs [rose] at Santa Rosa as regional targets were drilled for the first time, and interest expense [rose]. Total assets and shareholders’ equity increased primarily due to increased mine development,” REM added. 

“The focus for the second half of 2017 was to complete enough underground development to support sustainable production and give access to underground drill pads.

“With most of the new equipment having arrived at site through February and March [2018] and the final scoops due for delivery in April, the mine is planned to ramp up to 750 tonnes per day in second-quarter 2018.

“The additional underground development and infill drilling will allow consistent production resulting in an estimated 45,000 ounces of gold produced during 2018. The mine now has sufficient underground development to support sustainable production,” REM added. 

GCC Highlights

Commenting on recent progress, GCC executive co-chairman Serafino Iacono added that “our 2017 results demonstrate that we are firing on all cylinders [as] 2017’s gold production was up 16% from 2016.

“Adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] increased by 14% over last year and is almost double the amount reported for 2015. Excess cash flow came in as expected at US$16.4 million.

“At Segovia [Antioquia], we added more ounces to our mineral resource estimate through exploration than we mined in 2017 and we reported our first ever mineral reserve for the project today.

“We continued to invest in the infrastructure at Segovia, not just in mine development and mining equipment but in areas that raise the bar in health and safety, environmental management and through our foundation, social projects that benefit the community,” he added.

Gran Colombia exceeded its guidance for 2017 with total gold production reaching 173,821 ounces, up 16% over 2016, according to the company.

“Fueled by continued growth in the company’s high-grade Segovia operations, total gold production increased to 51,699 ounces in the fourth quarter of 2017, up 26% over the fourth quarter last year.

“Gran Colombia expects its Segovia operations will produce 158,000 to 167,000 ounces in 2018, raising 2018’s total gold production guidance to a range of 182,000 to 193,000 ounces,” the company added.