Winston’s Growth Stock Report

Your Source for High Potential Stocks

Issue 33, September 29th, 2011

Continuing with our theme of bottom fishing high potential stocks, another prime pick right now is Gran Colombia Gold (GCM, TSX).

This Colombia focused gold producer is well cashed up and is in the process of ramping up their gold production over the next few years from the estimated 90,000 ounces this year to 170,000 in 2012 then 180,000 and 195,000 ounces in 2014. The big bump in production will come from the Marmato open pit which is estimated to boost gold production to 345,000 in 2015 and jump further to 510,000 by 2016.

If all goes as planned, this stock could be another 10 bagger easily from today’s bottom fishing price in the low 50 cent range.

However I’m not the only one who thinks so.

Today the company announced they intend to buyback almost 38 million shares or about 10% of the public float. Upon acceptance by the Toronto Stock Exchange, this will do two things. First it should set a floor price for the stock at 50 cents and secondly the company will remove about 38 million shares which should help tighten up the share price going forward.

Anyone who wants to dump now will have their chance though I can’t see why they would. Here’s some details on the proposed buyback from their news release:

Daily purchases will be limited to 188,842 Common Shares, other than block purchase exceptions. Purchases made pursuant to the bid will be made in the open market through the facilities of the TSX and the price that the Company will pay for any such Common Shares will be the market price at the time of the acquisition.

The Company is proposing to commence the bid on September 30, 2011, and have it remain open until the earlier of September 29, 2012 or the date on which the Company has purchased the maximum number of Common Shares permitted under the bid. The Company has not purchased any Common Shares during the previous year pursuant to any issuer bid.

The Company intends to make the bid because it believes: (i) that the Common Shares may be undervalued from time to time in relation to its current and future business prospects; and (ii) that Common Shares may become available during the period of the bid at prices that would make the purchase of such Common Shares for cancellation an appropriate use of available funds and in the best interests of the Company and its shareholders.

Gran Colombia has stated that they intend to become Colombia’s number one gold producer.

Their merger earlier in the year with Medoro Resources (MRS, TSXV) was an important step in making their objective a reality. This combined company has a large portfolio of development projects which will benefit from economies of scale savings in management and equipment expenses.

According to analyst consensus production estimates the compound annual growth rate from its three flagship projects is 42%. On the exploration side of the business, resources have been growing as drilling continues.

Earlier this month GCM announced a 51% increase in measured and indicated gold resources at the Marmato open pit project. An updated 43-101 resource estimate pegged the Marmato pit as having 10 million ounces of gold in the measured and indicated categories and 2.4 million ounces of inferred gold. Not to mention 64 million ounces of M&I silver and another 11 million ounces inferred.

Further drilling results should be coming out later this fall which will likely boost the resource numbers further. All the data will be incorporated into a prefeasibility study for Marmato which is now underway and is expected in Q1 of 2012.