Gran Colombia Gold Corp. has released its unaudited interim condensed consolidated financial statements and accompanying management’s discussion and analysis (MD&A) for the three (3Q21) and nine months (9M21) ended 30 September 2021.
3Q21 and 9M21 highlights
- Gran Colombia is continuing to implement its strategy to grow through diversification while returning value to its shareholders through its monthly dividend programme.
- On 4 June 2021, Gran Colombia acquired all of the shares of Gold X Mining Corp it did not already own and then closed a US$300 million offering on 9 August 2021 of 6.875% senior unsecured notes due 2026 (the senior notes) to fund the development of the Toroparu Project in Guyana, to prepay the remaining US$18 million balance of its gold notes in September and for general corporate purposes. The company is nearing completion of an updated mineral resource estimate and preliminary economic assessment (PEA) for the Toroparu Project incorporating the high-grade results from the 2020 – 2021 drilling program undertaken by Gold X and expects to announce the results in December.
- Gran Colombia’s gold production from its Segovia Operations totalled 49 848 oz in 3Q21 compared with 51 555 ounces in 3Q20. Total gold production from Segovia for 9M21 amounted to 151 104 oz compared with 146 278 oz in 9M20. In October 2021, Segovia’s gold production was 19 456 oz, bringing the company’s trailing 12-months total gold production from its Segovia Operations at the end of October 2021 to 203 739 oz, up 4% over 2020. The company remains on track with its annual production guidance and has narrowed the range to between 203 000 – 210 000 oz gold (Au) from Segovia in 2021. Including Marmato production up to 4 February 2021, consolidated gold production for 9M21 was 153 532 oz compared with 162 929 ounces in 9M20.
- Gran Colombia is adding revenue diversification at its Segovia Operations through a new polymetallic recovery plant that will recover commercial quantities of zinc and lead as well as gold and silver into concentrate from its tailings. The company completed construction of the plant in 3Q21 and the plant is currently in the commissioning process with first concentrate production expected in 4Q21.
- Consolidated revenue amounted to US$90.7 million and US$289 million in 3Q21 and 9M21, respectively, compared with US$113.1 million and US$291.2 million in 3Q20 and 9M20, respectively. Spot gold prices in 3Q21 were lower than the same quarter a year ago, decreasing the company’s realised gold price by 5% to an average of US$1784/oz sold in 3Q21 compared with an average of US$1875/oz sold in 3Q20. Revenue in 3Q20 and 9M20 also included US$13.3 million and US$30.2 million, respectively, from the Marmato mining operations.
- At the Segovia Operations, total cash costs averaged US$845/oz in 3Q21, compared with US$722/oz in 3Q20, bringing the average for 9M21 to US$812/oz compared with US$659/oz in 9M20. During 3Q20, the company increased the payment rates for material sourced from its contract miner and the small-scale miners in its Segovia title which had not changed since 2017. Segovia’s total cash cost per ounce sold in 3Q21 reflected an increased proportion of its material coming from these higher grade, higher cost sources in response to the scheduled maintenance shutdown at the plant in July. Including the Marmato mining operations, consolidated total cash costs were US$825/oz in 9M21 compared with US$725/oz in 9M20.
- All-in sustaining costs (AISC) per ounce sold for the Segovia Operations were US$1218 and US$1145 in 3Q21 and 9M21, respectively, compared with US$1031 and US$939 in 3Q20 and 9M20, respectively. The y/y increase in Segovia’s AISC in 2021 reflects: The increased total cash costs as described above. An increase in exploration and mine geology, mine development and other sustaining capital expenditures. Sustaining capital expenditures at Segovia amounted to US$30.9 million in 9M21, up from US$22.2 million in 9M20 which reflected a slowdown in activity in 2020 during the COVID-19 national quarantine in Colombia that delayed many of the company’s initiatives until later in 2020. Including Marmato, consolidated AISC in 9M21 was US$1122/oz compared with US$1014/oz in 9M20.
- Adjusted EBITDA amounted to US$39.9 million for 3Q21 compared with US$56.7 million in 3Q20. This brings the total adjusted EBITDA for 9M21 to US$134.3 million compared with US$144.7 million in 9M20. Adjusted EBITDA in 3Q20 and 9M20 included US$2.4 million and US$4.6 million, respectively, from the Marmato mining operations.
- Net cash provided by operating activities in 3Q21 was US$26.7 million compared with US$68 million in 3Q20. For 9M21, net cash provided by operating activities amounted to US$53.1 million compared with US$106.9 million in 9M20 reflecting the increase in income tax payments in 2021, changes in non-cash working capital items, including the impact from the delay in receiving 2021’s VAT refund claims, and the reduction in adjusted EBITDA from the Segovia Operations in the current year resulting from the increase in production costs and social programs expenses.
- Free Cash Flow in 3Q21 was US$12.1 million compared with US$53.7 million in 3Q20, bringing the total free cash flow for 9M21 to US$11.6 million compared with US$67.8 million in 9M20. In addition to an increased level of sustaining capital expenditures in the current year, non-sustaining capital expenditures in the first nine months of 2021 included US$6.8 million at its Segovia Operations associated with the Maria Dama plant expansion, construction of the new polymetallic plant and the brownfield exploration program and US$2.4 million to advance the PEA and pre-construction activities at its Toroparu Project.
- The company’s balance sheet benefitted from the senior notes financing, raising its cash position to US$329.6 million and working capital to US$331.5 million at the end of September 2021. S&P Global Ratings and Fitch Ratings have each issued B+ ratings for the company’s senior notes issued in August 2021.
- The company returned a total of IS$11.2 million to shareholders in 9M21 with payment of its monthly dividends totalling US$8 million and the repurchase of 702 000 shares for cancellation at a cost of US$3.2 million. The company renewed its NCIB in October 2021.
- The company reported net income of US$25.3 million (US$0.26 per share) in 3Q21 compared with US$18 million (US$0.39 per share) in 3Q20 reflecting an improvement in other income (expense) items and lower income tax expense which more than offset the impact of lower income from operations in 3Q21. For 9M21, net income amounted to US$173.4 million (US$2.32 per share) compared with US$23.7 million (US$0.53 per share) in 9M20. Although net income in 9M21 reflected the impact of lower income from operations this year, it benefitted from other income items including the US$56.9 million gain on loss of control of Aris, the US$52.1 million gain on financial instruments (compared with a US$21.3 million loss on financial instruments in the first nine months last year) and the US$8.9 million gain on sale of the Zancudo Project. Net income in 9M21 included Aris Transaction costs of US$9.8 million, while net income in 9M20 included Bluenose RTO transaction costs of US$16.7 million.
- Adjusted net income for 3Q21 was US$14.4 million (US$0.15 per share) compared with US$29.5 million (US$0.47 per share) in 3Q20. For 9M21, adjusted net income totalled US$59.9 million (US$0.78 per share) compared with US$68.2 million (US$1.14 per share) in 9M20. The y/y decrease in adjusted net income in 3Q21 and 9M21 largely reflects the impact of the factors noted above regarding revenue and total cash costs per ounce on adjusted EBITDA, partially offset by a decrease in income tax expense.
- The company added a 27% equity interest in Denarius Silver Corp. to its portfolio in 9M21, giving it exposure to the Lomero-Poyatos polymetallic deposit located in Spain, in close proximity to the Matsa JV project in the Iberian Pyrite Belt, and to the Guia Antigua and Zancudo Projects in Colombia. Denarius, fully funded to carry out its current exploration campaigns, commenced drilling at its Guia Antigua Project in mid-2021 and in October, commenced a 23 500 m drilling campaign at its Lomero Project designed to validate some selected historical holes drilled within the existing mine and then conduct a 50 x 50 m in-fill drilling programme in the lower levels of the same mine.
- Gran Colombia remains committed to the health and safety of its employees, and through COMFAMA Colombia, was the first mining company in Antioquia to secure COVID-19 vaccines to immunise its employees and their families in 3Q21. Published in June 2021, the company’s inaugural sustainability report reflects a focused effort on measuring and disclosing its environmental, social and governance (ESG) priorities and performance moving forward.
Read the article online at: https://www.globalminingreview.com/finance-business/19112021/gran-colombia-announces-3q21-and-nine-months-2021-results/