Gran Colombia Gold Posts US$18.6 Million Net Loss for 2Q 2020; Second-Half 2020 Outlook Improves

Toronto-based Gran Colombia Gold (GCC) – owner/operator of Antioquia’s biggest gold mine – on August 13 posted a US$18.6 million net loss for second quarter (2Q) 2020, down from a US$768,000 net profit in 2Q 2019.

As for first half (1H) 2020, net income stands at US$5.67 million, down from US$8.67 million in 1H 2019, according to the company.

“Non-cash fair value changes in financial instruments totaling US$35.4 million in the second quarter of 2020 — largely driven by the company’s 70% share price improvement — contributed to the net loss,” according to GCC.

“First- half 2020 net income was net of a US$16.7 million charge related to the Caldas Gold RTO transaction,” the company added.

“Caldas Gold is making progress in its action plans to build Colombia’s next major gold mine. On July 6, 2020, Caldas Gold announced the results of a preliminary feasibility study for its Marmato Project.

“On July 29, 2020, Caldas Gold completed a CA$50 million [US$38 million] private placement of special warrants, of which Gran Colombia acquired CA$20 million [US$15 million] to maintain its equity ownership above 50%,” the company added.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for 2Q 2020 rose 13% year-on-year, to US$37.6 million. For 1H 2020, adjusted EBITDA rose 29% year-on-year, to US$88 million, according to GCC.

“Our production level at Segovia has steadied the last three months and with the stronger gold prices so far in the third quarter [2020], our earnings and free cash flow in the second half of 2020 are shaping up nicely,” added GCC executive chairman Serafino Iacono.

Mining operations at Segovia (Antioquia) and Marmato (Caldas department) continued during 2Q 2020 “despite the challenges associated with the Covid-19 national quarantine,” according to the company.

Total gold production in 2Q 2020 fell to 48,228 ounces, from 57,882 ounces in 2Q 2019, “reflecting the initial adverse impact of the Covid-19 quarantine on Segovia’s workforce in the first half of April. Protocols implemented by the company facilitated increased availability of workers thereafter and production at Segovia returned to about 95% of normal,” according to GCC.

Gold production at Marmato in 2Q 2020 likewise was down 38% year-on-year “as the quarantine had a greater impact on worker availability throughout the quarter,” according to GCC.

For full-year 2020, GCC now estimates gold production in Colombia in a range between 218,000 and 226,000 ounces.

At US$77 million, 2Q 2020 gross revenues were “almost on par” with 2Q 2019 “as the 31% year-over-year improvement in spot gold prices increased the company’s realized gold price to an average of US$1,696 per ounce sold,” which compensated for the 24% drop in gold sales volumes.

For the first half of 2020, gross revenues on gold sales rose 15% year-on-year, to US$178 million, the company noted.

“Total cash costs per ounce averaged US$713 per ounce in 2Q 2020 compared with $655 per ounce in 2Q 2019, reflecting the Covid-19 impact on production, which increased fixed production costs on a per-ounce basis,” according to GCC.