Gran Colombia Gold (TSX: GCM) has an ambitious plan: to produce 540,000oz/year gold Projects update: Gran Colombia Gold on Segovia, Marmato progress
By Greta Bourke Wednesday, March 27, 2013
Toronto-based miner Gran Colombia Gold (TSX: GCM) has an ambitious plan: to produce 540,000oz/year gold at its operations in the South American country by increasing output at its Segovia operation in Antioquia department to 200,000oz/y and to 340,000oz/y at the Marmato operation in Caldas department.
The miner put out a total of 100,895oz of gold in 2012, a 10% increase over 2011. Full year 2013 production is set at 110,000oz gold.
"In 2012 we built a foundation for the future of Gran Colombia... 2013 is about cash and cost reduction and execution... doing what we say we will do," CEO María Consuelo Araujo said in a webcast to discuss 2012 financials.
SEGOVIA
Segovia put out 79,178oz gold in 2012, 15% up on the previous year, and production is expected to reach 90,000oz in 2013.
The expansion of gold production at Segovia involves a two-stage plan. The first stage is the modernization and expansion of the Maria Dama processing plant which started last year with a US$54mn investment.
The company faced a number of challenges at the mill, one of which was an unexpected power disruption, leading to a processing rate of 732t/d at end-2012. The target for 2013 is 1,000t/d which was reached in March. This year a small capital investment of US$1mn will ensure throughput and bring it to design capacity of 1,500t/d.
Gran Colombia is also investing in its Pampa Verde project at Segovia which involves the construction of a 2,500t/day mill and the development of a new mechanized underground mine, which will also improve access to the existing mines. Pampa Verde's original cost was US$90mn but this has been revised down to US$84mn. First production is expected in 3Q14.
Gran Colombia expects to use Maria Dama exclusively for processing third-party ore. The Pampa Verde mill will be used to process its own mined ore.
In 2012, Gran Colombia increased resources at Segovia, which comprises four operating underground mines, to 1.4Moz gold with an average grade of 13.3g/t. This year, the company has a 20,000m exploration program and sees "lots of future upside potential at Segovia."
MARMATO
At the company's Marmato operation resources currently total 14.4Moz with an average grade of 0.91g/t. plus a newly discovered deep zone that contains approximately 300Mt of potential mineralization.
Last year, gold production at the operation decreased slightly to 21,717oz.
The expansion project at Marmato is in the prefeasibility stage. The study should be ready in June of this year, according to Araujo. Target production at Marmato is 340,000oz/y. However, the current prefeasibility study is for an underground mine with 3Moz gold with an average grade of 3g/t.
"The prefeasibility study is focused on two options, both open pit and underground," CFO Mike Davies said in the webcast, but the underground option is far more advanced and, due to its smaller scale, it can get started far more rapidly. "We have selected to move ahead with the underground, while studies for the open pit are ongoing and we will get back to that once the underground work is completed," he added.
The company is still considering a possible sale of Marmato and has "a couple of parties actively going through the data and visiting the site," said Davies, adding that the market will be informed of any update.
Gran Colombia is the largest underground gold and silver producer in Colombia. Its operations comprise both company mines and third-party contract miners, the latter accounting for approximately 42% of gold production in 2011. It also has Zancudo project in the Titiribí mining district of Antioquia.
The company also has projects in Venezuela and Mali.
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