Gran Colombia Gold posts increased net profit in Q1

Toronto-based miner Gran Colombia Gold (TSX: GCM) posted net income of US$9.6mn in the first quarter of 2013, compared to US$1.07mn in 1Q12, according to the company's latest earnings release. The quarterly results were also an improvement from the US$22.7mn net loss in 4Q12, according to the MD&A for the quarter. The year-over-year increase in net income was due to a US$15.5mn gain on financial instruments in the quarter, compared to a US$4.6mn loss in 1Q12, partially offset by lower revenues and higher cash costs. Revenue fell to US$37.6mn, down from US$42.7mn in the year ago quarter, as an increase in revenue from the sale of silver was offset by a drop in gold revenue. The company sold 22,289oz gold at an average realized price of US$1,639/oz, down from 24,814oz at US$1,676/oz in 1Q12. Gold production from the mines totaled 24,350oz during the quarter, down from 26,260oz in 1Q12. Average cash costs increased to US$1,281/oz, from US$1,199/oz in 1Q12. The average cash cost was an improvement from US$1,534/oz in 4Q12, due to cost reductions and the improvement in gold production at the Segovia operations in Colombia. Gran Colombia has several underground mines in Colombia at its Segovia and Marmato operations, located in Antioquia and Caldas departments, respectively. Mine development work is continuing at the Segovia operations and the company expects that head grades will begin to show improvement by the end of 2Q13. During the month of March, the tons processed averaged a daily rate of 1,033t/d The company has completed 72 holes and 18,000m of drilling of the drilling campaign that started in October of last year. The drilling campaign to upgrade and expand the mineral resources at Segovia is approximately 88% complete and the company expects it to be completed in 2Q13.