Sprott takes strategic stake in Gran Colombia
Gran Colombia Gold Corp. [GCM-TSX] on Wednesday October 30 announced a $15 million strategic investment by Bay Street financier Eric Sprott.
The company said Sprott has agreed to purchase 3.26 million units of Gran Colombia in a non-brokered private placement at $4.60 per unit. Each unit consists of one common share and one common share purchase warrant exercisable into a full common share at $5.40 per share for a period of four years after the date of issuance.
Proceeds are earmarked for general working capital and corporate purposes.
Gran Colombia shares advanced on the news, rising 3.8% or 18 cents to $4.88. The shares are currently trading in a 52-week range of $2.25 and $5.91.
Gran Colombia is a Canadian-based gold and silver producer with a focus on Colombia, where it is currently the largest underground gold and silver producer in that country, with several underground mines in operation at its Segovia and Marmato operations. The majority of the company’s production comes from the Segovia Operations, which are located in the Segovia-Remedios mining district in Antioquia, roughly 180 kilometres east of Medellin, north-west Colombia. Segovia is expected to produce 201,000 to 214,000 ounces of gold in 2019.
The company recently said it is on track to meet its 2019 production guidance of between 250,000 and 240,000 ounces of gold. That figure includes production from the Marmato assets which are being spun out into a new publicly listed vehicle, Bluenose Gold Corp. [TSXV-BN.H]. The existing underground mine at Marmato is expected to produce between 24,000 and 26,000 ounces of gold this year. However, production at Marmato is expected to increase to 150,000 ounces annually between 2024 and 2027.
Sandspring Resources Ltd. [SSP-TSXV, SSPXF-OTCQX] recently raised $7.5 million from a non brokered private placement that included a $1 million investment from Gran Colombia that left Gran Colombia’s equity position in Sandspring at 19.4%
In connection with the placement, Gran Colombia acquired five million Sandspring units. As a result it now has control over an aggregate of 53.3 million common shares, 31.8 million share purchase warrants and 5.2 million subscription receipts.
Assuming conversion of the receipts and exercise of the share purchase warrants, when combined with the company’s existing ownership, Gran Colombia will be left with control and direction over 95.5 million common shares, representing approximately 30.20% on a partially diluted basis of the then outstanding shares of the company.
As a result, Gran Colombia can become a control person of Sandspring if the receipts are converted or the share purchase warrants are exercised. Sandspring intends to seek shareholder approval for the creation of Gran Colombia as a control person at its annual meeting later this year.