Gran Colombia Gold (TSX:GCM) expects to complete in February the spin off of its Marmato project, located in the country’s department of Caldas, into a separately listed company, executive chairman Serafino Iacono said at a trade conference in Vancouver, Canada.
The Canadian miner, which will retain a major stake in the new listed company, said the move should help generate the funding required for ongoing exploration, development of an underground mine and the expansion of operations.
Caldas Gold, the new miner’s name, will initially have the same executive team as Gran Colombia, but the project team will be different.
Planned work at Marmato includes the construction of a new processing plant and additional tailings storage facilities to support an increased level of production.
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.
The Toronto-based miner plans to concurrently begin development of the Deeps mineralization underneath the current mine for a modern, mechanized mining operation.
Gran Colombia 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.