American Bonanza Gold Corp.
TSX : BZA
FRANKFURT : AB2
PINK SHEETS : ABGFF

American Bonanza Gold Corp.

October 05, 2010 13:43 ET

American Bonanza Moving Mill to the Copperstone Gold Mine

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 5, 2010) - American Bonanza Gold Corp. (TSX:BZA)(PINK SHEETS:ABGFF)(FRANKFURT:AB2) ("Bonanza") is pleased to report that work is progressing smoothly at the recently purchased 700 ton per day milling and flotation/gravity plant and building which is currently located in Calumet, Michigan. Disassembly is nearly complete, and components are being organized into shipments to the 100%-owned high-grade Copperstone gold mine in Arizona; and into shipments to a facility where refurbishing of some components will be conducted. Transportation of the equipment is expected to commence during October.

The purchase of the mill is expected to reduce the capital cost of the Copperstone project by approximately $500,000 once transportation, refurbishing and construction are complete. The mill was operated for less than one year and is in very good condition. It comes with a full set of engineering drawings, which will accelerate construction timelines and reduce costs.

The mill includes a rod mill, ball mill, fume scrubber, flotation cells, cleaner cells, concentrate filter drum, tank thickeners, water storage tank, concentrate ore samplers, cyclones, duplex gravity concentrating jigs, the mill building, control panel and conveyor. The mill does not include a crusher and crusher building, which Bonanza will purchase separately.

Photographs of the Copperstone milling, flotation and gravity plant during disassembly are available for review at http://www.americanbonanza.com/s/Copperstone.asp?ReportID=141269.

About the Copperstone Gold Mine

The following highlights from the recent feasibility study entitled "NI 43-101 Technical Feasibility Report, Copperstone Project, La Paz County, Arizona" dated February 2, 2010 (the "Study") can be viewed on www.sedar.com and www.americanbonanza.com, as previously announced in Bonanza's news release dated February 3, 2010.

The Copperstone Gold Mine is estimated to produce on average 46,000 ounces of gold annually for the first 3 years, and have a capital investment payback period of only 13 months using a gold price of US$962 per ounce. The 2010 feasibility study details a total capital cost of US$17.7 million, including working capital, G&A startup, reclamation bonding, and contingencies. The feasibility study estimates the cash production cost to be US$415 per ounce of gold produced.

The After Tax Net Present Value ("AT-NPV") of the mine is US$51.3 million and the Internal Rate of Return ("IRR") is 96.3% in the base case using a future gold price estimate of $962 per ounce and a 5% discount rate. At recent gold prices ($1250 per ounce on www.kitco.com during inter-day trading on August 31, 2010) the AT-NPV is $84.9 million and a capital payback period of less than 6 months. The table below provides a range of economic results at various gold price assumptions.

Copperstone Economic Sensitivities at various Gold Prices:

      Undiscounted Net Present Value
Gold Price Gold Price   pre-tax After-Tax (US$)
Case (US$/Oz) IRR (%) Cash Flow (US$) (Discounted)
Low $850 74.3% $50,162,532 $37,194,541
Base Case $962 96.3% $74,169,910 $51,291,204
Recent $1250 145.1% $135,727,452 $84,874,376
High $1400 170.4% $167,814,296 $101,878,924

The feasibility study results indicate a total of 256,430 ounces of gold can be mined from current known diluted Proven and Probable Mineral Reserves during the 6.3 year mine life at Copperstone. Note that all numbers may not add up to total due to rounding.

Technical information regarding the Copperstone project required to be disclosed under NI 43-101 can be found in the Study. Information regarding risks and uncertainties relating to the Copperstone project development can be found in Bonanza's annual information form, filed on SEDAR, and specific risks related to the results of the Study can be found in Bonanza's news release dated February 3, 2010, also available on SEDAR.

About Bonanza

Bonanza is working to re-activate mining at the preproduction-stage Copperstone gold mine in Arizona. Bonanza has 129 million shares outstanding, and has no debt. For more information please visit Bonanza's website at www.americanbonanza.com.

AMERICAN BONANZA GOLD CORP.

Brian Kirwin, President & Chief Executive Officer

This news release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, including the likelihood of commercial mining and possible future financings are forward-looking statements. Although Bonanza believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include unsuccessful exploration results, changes in the price of gold, changes in the availability of funding for mineral exploration and/or development, unanticipated changes in key management personnel and general economic conditions. Mining exploration and development is an inherently risky business. Accordingly the actual events may differ materially from those projected in the forward-looking statements. For more information on Bonanza and the risks and challenges of its business, investors should review Bonanza's annual filing on Form 20-F with the U.S. Securities Commission and its home jurisdiction filings that are available at www.sedar.com.

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