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Canada’s Gran Colombia Gold (TSX:GCM) has decided to spin off its Marmato project, in the country’s department of Caldas, into a separate listed company to generate the funding required for ongoing exploration, development of an underground mine and the expansion of operations.
The Toronto-based miner, which will retain a major stake in the new company, said expected work at the asset included the construction of a new processing plant and additional tailings storage facilities to support an increased level of production.
The Canadian miner will retain a major stake in the new company while leveraging the capital markets to provide further funding.
Gran Colombia is nearing completion of an underground mine expansion study at Marmato, first announced in 2017 and expects to file a preliminary economic assessment before the end of the year.
“Immediately thereafter, we will proceed with the prefeasibility study,” executive chairman Serafino Iacono said in the statement. “We are excited to be in a position to see a path forward to develop this world class deposit and to begin to get a return on investment for our shareholders.”
As part of the proposed mine plan, the company will look to optimize mining activities in the upper existing mine, which produces 24,000-to-26,000 ounces a year of gold. It will also aim at increasing production and reducing cash costs.
Gran Colombia plans to concurrently begin development of the Deeps mineralization underneath the current mine for a modern, mechanized mining operation.
The company acquired Marmato, in the heart of the Middle Cauca gold district, in 2011, through a merger with Medoro Resources.
The underground gold mine is expected to have a minimum 12-year productive life, generating over 1.5 million ounces of the precious metal during that time.
In the last decade, the project has been plagued by controversy. Residents of the 500 year-old Marmato town, mostly opposed the miner’s intention of flattening a mountain to create an open pit. That is no longer an issue, as Gran Colombia has opted for underground mining at Marmato.
The property has also been unlawfully occupied. The first group of illegal miners took over the area in 2016, blocking roads and costing Gran Colombia $2 million in daily losses.
In 2017, the miner filed a $700 million lawsuit against Colombia, under the Colombian-Canadian free trade agreement, after the government ordered the company to cease operations at the El Burro site in Marmato, requesting further consultation with locals.
The asset is located in a region that has been exploited since pre-Colonial times by the Quimbaya people. The Spanish colonists assumed control of the zone’s mines in 1527 and the area has been in almost continuous production ever since.
Marmato’s known riches were key to support the cause of Simon Bolivar, a revolutionary leader who liberated much of South America from Spanish rule. According to historians, Bolivar used the mines as collateral with British banks to secure funding for a war of independence against Spain.
