Corporate Presentation

Transcription

1 The leading high grade gold producer in Colombia Corporate Presentation 1

2 DISCLAIMER Forward Looking Statements 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, reduction of cash costs and AISC, future G&A, capex and excess cash flow, interest payments on the senior debt and future purchases and/or redemptions of the senior debt. 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 lookingstatementsinvolveknownand 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 30, 2016 which is available for view on SEDAR at Forwardlooking 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. 2

3 Gran Colombia Gold Leading Colombian high-grade underground gold producer. undervalued versus peers! Canadian-listed () producer with offices in Toronto/Medellin. Annual gold production increased 28% to 149,687 ounces in AISC (full year average) expected to be US$825 to US$850/oz for 2016 compared with US$863/oz in Upside in resource expansion and exploration assets. Currently the largest underground gold and silver producer in Colombia. Advancing a project to expand and mechanize its high-grade gold and silver mines at its Segovia Operations (~84% of total production). The Marmato Project, one of the Top-20 largest undeveloped global gold deposits, provides significant optionality to gold and silver prices with current resources in excess of 14M ozs of gold and almost 90M ozs of silver. Deep mineralization holds potential to add resources. The Zancudo Project, a former high grade producer, provides additional exploration upside. Reduced senior debt by $36M (19%) in 2016 through debt conversions and NCIB repurchases following January 2016 debt restructuring. 3

4 SEGOVIA OPERATIONS Category Gold Resource (1) (ozs) Grade (g/t) Measured 77, Indicated 351, Inferred 1,298, High-grade quartz-sulfide veins in historic mining district. Over 5 million ounces of gold produced through continuous mining over past 150 years. Production increased ~36% to 126,237 ounces of gold in Cash cost (2) averaged US$652/oz in 9M Three active underground mines (31 historic mines) and a substantial land package of ~9,000 hectares. Unique RPP contract license grants mining rights in perpetuity. Currently advancing a project to develop, expand and mechanize underground mining operations. Executing a 10,000 meters drill program that commenced in May 2016 to upgrade and expand resources. Local contract cooperative mining model is successfully leveraging artisanal mining capabilities in high-grade secondary pillar recovery operations and improving environmental management in the area. Maria Dama plant has been expanded to handle up to 1,500 tpd. (1) Based on September 2013 NI and updated for production to December 31, (2) By product credit basis. Refer to Company s MD&A for computation. 4

5 SEGOVIA OPERATIONS 5

6 MARMATO PROJECT Mineralization is hosted by sheeted pyrite vein system in dacite to andesite porphyry stocks. Mountain of gold in historic mining district. Existing underground mining operation with production of 23,450 ozs of gold in Cash cost (2) averaged US$962/oz in 9M Ranked in Top-20 of undeveloped global gold deposits by size. Deep zone drilling in 2012 shows that mineralization at Marmato extends at least 800m below the limit of the current underground mining operation and is still open at depth. Merits further exploration. Category Gold Resource (1) (ozs) Gold Grade (g/t) Silver Resource (1) (ozs) Silver Grade (g/t) Measured 1,689, ,832, Indicated 9,912, ,517, Inferred 2,583, ,419, (1) Based on August 2012 NI43 101; updated for production to and reduction due to 2015 lapse of certain licenses in open pit area. (2) By product credit basis. Refer to Company s MD&A for computation. 6

7 MARMATO PROJECT Legend DRILL HOLES AU PPM Pending > 2.5 BLOCKS AU PPM > 2.5 7

8 CAPITAL STRUCTURE TSX Symbol Exercise Price Exchange Date Fully Diluted Shares Common shares GCM 23.7M 113.6M 277.7M 277.7M 2018 Debentures * GCM.DB.U US$0.13 N/A ** $71.2M $49.7M 382.6M 2020 Debentures * GCM.DB.V US$0.13 N/A *** $104.0M $101.2M 778.1M 1,438.4M Warrants GCM.WT.A Unlisted CA$3.25 CA$ M 1.0M 4.2M 1.0M 4.2M 1.0M Options CA$0.17 CA$ M 0.7M Gran Colombia launched Normal Course Issuer Bids on July 21, 2016 to use the sinking funds to repurchase the 2018 and 2020 Debentures on the open market for cancellation. To date, Gran Colombia has repurchased and cancelled a total of US$2.9M principal amount of debentures, reducing its fully diluted shares by 22.4M. * Amounts shown above for the Senior Convertible Debentures are at Face Value. ** Replaced the US$78.6M Silver Notes due *** Replaced the US$100M Gold Notes due

9 SENIOR DEBT 2020 Debentures (.DB.V) Maturity January 2, 2020 Coupon 6% cash, paid monthly Convertible holder option US$0.13/ share Redeemable/ open market repurchases permitted At Maturity settle in cash Senior secured 2018 Debentures (.DB.U) Maturity August 31, 2018 Coupon 1% cash, paid monthly Convertible holder option US$0.13/ share Redeemable/ open market repurchases permitted At Maturity Company option to settle in shares or in shares/cash if price < US$0.13/share Senior unsecured Sinking Funds 100% of Excess Free Cash Flow 75% for 2020 Debentures, 25% for 2018 Debentures To fund redemptions, repurchases, maturity 9

10 BOARD & MANAGEMENT Board of Directors Serafino Iacono Miguel de La Campa Robert Metcalfe * Mark Ashcroft * Jaime Perez Branger * Ed Couch * Rodney Lamond * Ian Mann * Hernan Martinez * Mark Wellings * Key Management Lombardo Paredes Michael Davies Alessandro Cecchi Hector Melendez Gabriel Gaviria Executive Co Chairman Executive Co Chairman Lead Independent Director; Lawyer Mining executive; Professional Engineer Managing Director, Blue Pacific Investor Mining executive; Professional Mining Engineer Resource sector fund manager Former Colombian Minister of Mines and Energy Mining executive; Professional Engineer Chief Executive Officer Chief Financial Officer Vice President, Exploration Mine General Manager, Segovia Operations Mine General Manager, Mineros Nacionales * Independent 10

11 2016 OUTLOOK Priorities 1. Monthly interest payments on 2018 and 2020 Debentures. 2. Continue implementation of optimized mine plan at Segovia: Primary focus on development and mechanization at Providencia; Secondary focus on development and mechanization at El Silencio; and, 10,000m drilling program at Segovia to be completed by end of year. 3. Improve balance sheet by reducing the working capital deficit. 4. Excess free cash flow sinking funds for 2018/2020 Debentures NCIBs Annual Targets Latest Guidance Actual Trailing 12 Months as of Q Gold production (ozs) 144, ,000 (2) 149, ,879 Cash cost/oz sold $700 $720 $699 (1) $700 AISC/oz sold $825 $850 $832 (1) $836 (1) 9M 2016 average. (2) Initial guidance was 120,000 to 138,000 ozs. 11

12 RESULTS Gold Production Segovia Marmato 000 s ozs AISC ( 23%) Growth in Gran Colombia s total gold production has been driven by the high grade Segovia Operations. Marmato has been steady. 12

13 RESULTS Cash Cost Per Ounce (1) $1,200 Segovia 85% of 9M 2016 gold sales US$/oz sold 117 Marmato 15% of 9M 2016 gold sales $1,000 $916 $800 $600 $656 $ (2) (2) LTM LTM LTM 2016 total cash cost for the Company was $700/oz, down from $729/oz in 2015, benefitting from: Principal source of Gran Colombia s gold production is the high grade resources at Segovia where the Company has cut costs and optimized its operating cost structure in recent years. Fixed costs on a per ounce basis have decreased as a result of increased production in Devaluation of the Colombian peso in H positively impacted US$ equivalent costs in 2016 vs (1) By product credit basis. Refer to Company s MD&A for computation. (2) LTM: latest 12 month ended September 30,

14 RESULTS All In Sustaining Costs (1) $1,400 $1,200 $1,000 US$/oz sold G&A,Sustaining Capex and Other Total Cash Cost $836 AISC ( 23%) $800 $600 $400 (2) LTM Reductions in total cash costs and G&A have been the key to success in reducing AISC to the current level. Anticipate 2016 full year average AISC of $825 to $850 per ounce. (1) All In Sustaining cash cost per ounce includes total cash costs per ounce and adds the sum of G&A, sustaining capital and certain E&E costs and provision for environmental discharge fees. Refer to the Company s MD&A for computation. (2) LTM: latest 12 months ended September 30,

15 RESULTS All In Sustaining Costs (1) New Gold Barrick Gold Guyana Goldfields Timmins Gold Centerra Gold Gran Colombia Gold Goldcorp Yamana Gold $832 AISC ( 23%) Kirkland Lake Gold Argonaut Gold Kin Ross Gold (TAHOE) Lakeshore Gold Alamos Gold IamGold $0 $200 $400 $600 $800 $1,000 $1,200 US$/oz sold Cash Cost AISC Gran Colombia s AISC is well positioned amongst industry peers. (1) Nine months 2016 reported results per Q filings; AISC is a common performance measure but does not have any standardized meaning within the industry and therefore its computations may vary between companies. 15

16 RESULTS Adjusted EBITDA (1) $70 $60 $59.6M US$M $50 $40 $38.4M $30 $20 $10 $ LTM (2) Improved production together with reductions in total cash costs and G&A have been the key to our success in increasing Adjusted EBITDA. (1) Refer to Company s MD&A for computation. (2) LTM = Latest 12 months ended September 30,

17 RESULTS Excess Cash Flow 9M 2016 Adjusted EBITDA $49.6M Capex Interest paid, net Equity, wealth & income taxes Receivables and inventories Payables reduction Debt restructuring costs Adjusted EBITDA has been used in 2016 in accordance with Gran Colombia s Priorities: to meet interest obligations related to its Senior Debt, to invest in its Segovia Operations and to improve its working capital deficit. The Excess Cash Flow generated has been deposited to the Sinking Funds and used to repurchase Senior Debt for cancellation under the NCIBs. Local debt repayments Other obligations Excess Cash Flow (1) $2.3M US$M (1) As defined in the Indentures (available on the Company s web site) for the 2018 and 2020 Debentures. 17

18 RELATIVE PERFORMANCE Relative Performance Since January 1st 2016 (%) 200.0% 150.0% 100.0% 50.0% 0.0% 87.2% 63.7% 19.9% 11.3% (23.1%) (50.0%) (100.0%) 1-Jan Jan-16 1-Mar Mar Apr May Jun Jul Aug Sep Oct Nov Dec-16 Gold Spot $/Oz Silver Spot $/Oz GCM GDX GDXJ Chart data as at January 9, 2017 Source: Bloomberg 18

19 VALUATION OPPORTUNITY Price / NAV Price / CFPS (2017e) EV / EBITDA (2017e) EV / Production (2017e) 0.7x 6.0x 3.1x 4.1x $2,662/oz $1,392/oz 0.2x 0.8x Peer Group Peer Peer Group GCM GCM Group GCM GCM Peer Group Undervalued Compared to Peer Group Significant Upside Opportunity Market data as at January 6, Peer Group comprises 14 junior gold producers. Peer Group amounts represent Median values. GCM has not provided guidance yet for GCM 2017e represent GMP Equity Research estimates. Source: FactSet, Bloomberg, equity research and company disclosure. NAV per GMP Equity Research. 19

20 For Further Information, Contact: Mike Davies Chief Financial Officer (416) Town of Segovia 20