Key Highlights

  • Gran Colombia Gold (“GCM” “company”) is in the process of completing a reverse takeover, and spin-out its Marmato project into a TSXV listed company, to be renamed Caldas Gold Corporation. GCM will also invest C$5 million in the company, and Caldas is currently in the process of another C$10 – C$15 million equity financing. Upon completing all these transactions, we estimate that GCM’s equity ownership will be between 63% and 67% in Caldas.
  • A recent Preliminary Economic Assessment (“PEA”) on Marmato showed an initial CAPEX estimate of $269 million to expand operations. Management’s decision to spin-out is to separate the impact of future financings, and potential share dilution, required to expand operations at Marmato.
  • Eric Sprott recently invested C$15 million in GCM at C$4.60 per unit.
  • Q3-2019 revenues were up 25% YoY to $83 million (primarily due to stronger gold prices). EBITDA was up 51% YoY to $37 million. Note that our EBITDA calculations are slightly different from the company’s calculations.
  • We are raising our 2019 revenue forecast from $320 million to $326 million. As we expect the spin-out to be completed before the year-end, we are removing our forecasts on Marmato for 2020.
  • Balance sheet is strong, with $63 million in cash at the end of Q3, and a healthy debt to capital of 27% versus the gold industry average of 56% (Source: S&P Capital IQ).

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