Frank,

thanks for the heads up on this one.

After my initial standard DD (website, presentation, SEDAR), I view GCM as an interesting Gold and Silver play at these prices, BUT (and that´s a fairly big "but"), there a quite a few equally interesting PM plays out there.

The biggest concern for me is always a very diluted share count, because it severly limits the upside potential of a company. Gran Colombia has 623 million shares fully diluted, which is massive. But if we get there from the 382 million shares issued, that would translate into additional $ 510 million in cash from the exercise of warrants and options.

A $2 share price would already mean a $ 1.25B market cap. If they achieve that, it would mean a 5-bagger from here, which is not bad at all, though.

Colombia (= country risk) is another issue. Although GCM states a lot of facts on the last page of their presentation, why Colombia is a "great mining jurisdiction", I´m always a little bit reluctant with South American countries, but that´s just my personal risk aversion. I see the involvement of the former Minister of Foreign Affairs as CEO and President as a positive note to the overall country risk.

The next point would be the producer status, as there is normally much less upside potential compared to explorers, but the risk in an undervalued market environment is much lower compared to explorers.

Their underground mines are ok, but will run on a fairly high cash cost basis, needing high gold prices. Segovia is on $ 1,300 per ounce (long-term plan 150,000 ounces at $ 950 cash costs) and the (expected)self-funding El Zancudo operation will run on a $ 600/ounce cash cost basis producing 20,000 ounces per year. Marmato underground is running on $ 1,150 per ounce cash cost for 25,000 ounces per year.

So, they really need to get the massive Marmato Open Pit operation running with expected 340,000 ounces per year at $ 524 cash costs to get to a reasonable overall cost basis of $ 652 for their expected total of 510,000 ounces per year. And they will need quite a bit of money to get that started ($95 million for the next 12 months to start with !). It´s a massive 10M @ 1,0 gpt deposit plus some silver credits, not bad, but nothing to shout about (too loud).

I like their hedged $ 100 million loan on a spot price basis (interests and other financing costs, which I haven´t checked yet, deducted).

All in all, an interesting play which can generate some nice upside if they can achieve their goals over the next few years. But it will certainly be a long-term play. The short-term reward could come through an upside market correction for PM and miners in particular, but as I said, if that happens, then you can see quite a few plays with enourmous upside share price appreciation.

As always, all is just my humble opinion.

Happy New Year to everybody !

FANTOMAS