Gran Colombia Announces Letter of Intent to Spin Out Its Zancudo Project

TORONTO, Sept. 24, 2020 (GLOBE NEWSWIRE) -- Gran Colombia Gold Corp. (TSX: GCM; OTCQX: TPRFF) announced today that it has entered into a letter of intent (the “LOI”) dated effective September 23, 2020 with ESV Resources Ltd. (“ESV”) (TSXV: ESV.H) to spin out its interest in the Zancudo Project to ESV. Gran Colombia will also subscribe for CA$3,000,000 of subscription receipts in a non-brokered private placement being completed concurrently by ESV as described further below.

Serafino Iacono, Executive Chairman of Gran Colombia, commenting on the news stated, “In light of the bullish outlook for silver, we see the acquisition of an investment in ESV as a tremendous opportunity to participate in a new vehicle that is turning its attention to becoming a silver focused company looking to offer its shareholders exposure and leverage to the precious metal. We also see the spin out of our interest in the Zancudo Project as an opportunity to create value for our shareholders in this undervalued silver-gold asset. We will be providing in-country operational expertise to ESV to advance their projects in Colombia, including an exploration program planned for the Guia Antigua Project following completion of the transactions and financing by ESV.”

Zancudo Project Spin Out

The Zancudo Project consists of a 1,052-hectare mining concession area located in the Titiribi mining district in Antioquia, Colombia, about 27 kilometers southwest of Medellin. Zancudo comprises a historical silver-gold mine (the Independencia Mine) located in the Middle Cauca Gold Belt. Gran Colombia acquired Zancudo in 2010 and completed a 14,000 meter drilling program carried out in 2011 and 2012.

In March 2017, Gran Colombia signed an option agreement with IAMGOLD Corp. (“IAMGOLD”) for the exploration and potential purchase of an interest by IAMGOLD in Zancudo. Under the agreement, IAMGOLD was granted an option to acquire an initial undivided 65% interest (the “First Option”) in Zancudo by incurring an aggregate of US$10 million of mineral exploration expenditures over a six-year period, subject to meeting specified annual work commitments during this period. From 2017 through 2019, IAMGOLD has completed a total of approximately 16,224 meters of drilling at Zancudo and has incurred over US$4 million of its exploration commitment. However, due to COVID-19, IAMGOLD has suspended its drilling program thus far in 2020. IAMGOLD was also granted an additional option (the “Second Option”) to acquire a further 5% undivided interest, for an aggregate 70% undivided interest in Zancudo, by completing a feasibility study within three years after exercising the First Option. Upon exercise of the First Option or the Second Option, as the case may be, the parties will form a joint venture to hold Zancudo, to advance the exploration and, if feasible, to advance the development and mining of any commercially exploitable ore body.