Gran Colombia Gold Corp. (GCM), Colombia’s second-largest gold producer, forecasts a return to profit in the third quarter of this year as modernizing mines and labor force cuts help to boost production and reduce costs.
Last year’s slide in gold prices produced losses and forced a major restructuring by the producer, changes that are now bearing fruit, according to Chief Executive Officer Lombardo Paredes. The company reduced staff and outsourced to third parties to reorganize.
“It was a company with high costs of production and we had to attack the problem,” Paredes said in an interview in Cartagena today. “The numbers for the third quarter will be much better.”
Gran Colombia Gold is modernizing mines by adding machinery at its Segovia site in northern Colombia, with total costs of $1,025 an ounce or lower expected by year-end, Paredes said. That’s $205 an ounce less than the company’s costs in the fourth quarter last year.
Gran Colombia Gold posted an adjusted first-quarter net loss of $4.5 million on May 13. The company produced 19,200 ounces of gold in the quarter, down from 24,350 ounces a year earlier. Gran Colombia produced 102,792 ounces of gold in 2013.
Total production this year will be 112,000 ounces or higher as the Pampa Verde project comes online, climbing to between 173,000 and 193,000 ounces in 2015, Paredes said.
Gran Colombia Gold will consider a potential expansion at its Marmato site once the Segovia reorganization is completed. The site, which could hold as much as 25 million ounces of gold, will need a partner to develop and significant funding, Paredes said.
Gold futures for June delivery dropped 0.7 percent to $1,296.20 an ounce at 8:48 a.m. on the Comex in New York, heading for the biggest loss since May 7. The metal has rebounded in 2014, climbing 8.6 percent this year through yesterday, as tensions mounted between Ukraine and Russia.
Mineros SA is Colombia’s biggest gold producer.
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