Andean American Gold Corp.
TSX VENTURE : AAG
FRANKFURT : AQN

Andean American Gold Corp.

April 30, 2012 18:08 ET

Andean American Announces a Revised Mineral Resource Estimate on its Invicta Property

TORONTO, ONTARIO--(Marketwire - April 30, 2012) - Andean American Gold Corp. ("Andean American" or the "Company") (TSX VENTURE:AAG)(FRANKFURT:AQN) announces that it has received an updated NI 43-101 Technical Report of the mineral resources at the Invicta Gold Project in Huaura Province in Peru. The report was prepared by SRK Consulting (US) Inc. ("SRK").

The mineral resources for the Invicta gold-silver-copper-lead-zinc deposit are estimated by SRK at 8,644 kt grading an average of 2.13 g/t gold, 15.90 g/t silver, 0.43% copper, 0.24% lead and 0.29% zinc, classified as Measured and Indicated mineral resources; with an additional 2,534 kt grading an average of 1.61 g/t gold, 12.02 g/t silver, 0.46% copper, 0.27% lead and 0.18% zinc, classified as Inferred mineral resources.

Table 1: Mineral Resource Statement for the Invicta Gold-Silver-Copper-Lead-Zinc Deposit, Huaura Province, Peru, SRK Consulting (Inc.), April 6, 2012*
Metal Grade Contained Metal (000's)
Zone Resource
Category
Tonnes
(000's)
AuEq
(g/t)
Au
(g/t)
Ag
(g/t)
Cu
(%)
Pb
(%)
Zn
(%)
AuEq
Oz
Au
Oz
Ag
Oz
Cu
Lbs
Pb
Lbs
Zn
Lbs
Atenea - All Zones Measured 131 6.65 4.29 31.71 0.73 0.39 0.38 28 18 133 2,119 1,110 1,105
Indicated 5,696 3.83 2.34 17.99 0.45 0.28 0.34 701 429 3,294 56,848 35,251 43,094
M+I 5,827 3.89 2.39 18.29 0.46 0.28 0.34 729 447 3,427 58,967 36,361 44,198
Inferred 1,533 3.56 2.35 10.93 0.46 0.13 0.19 175 116 539 15,574 4,495 6,373
Dany Measured 0 0.00 0.00 0.00 0.00 0.00 0.00 0 0 0 0 0 0
Indicated 868 1.97 0.54 13.45 0.58 0.11 0.09 55 15 375 11,151 2,153 1,723
M+I 868 1.97 0.54 13.45 0.58 0.11 0.09 55 15 375 11,151 2,153 1,723
Inferred 668 1.72 0.14 12.66 0.53 0.58 0.16 37 3 272 7,876 8,496 2,387
Pucamina Measured 0 0.00 0.00 0.00 0.00 0.00 0.00 0 0 0 0 0 0
Indicated 1,064 2.53 1.97 6.98 0.10 0.23 0.28 87 67 239 2,277 5,315 6,614
M+I 1,064 2.53 1.97 6.98 0.10 0.23 0.28 87 67 239 2,277 5,315 6,614
Inferred 202 1.96 1.38 8.68 0.14 0.14 0.18 13 9 56 625 605 781
Ydalias - All Zones Measured 0 0.00 0.00 0.00 0.00 0.00 0.00 0 0 0 0 0 0
Indicated 12 7.16 3.63 34.89 1.43 0.29 0.19 3 1 13 379 77 51
M+I 12 7.16 3.63 34.89 1.43 0.29 0.19 3 1 13 379 77 51
Inferred 35 2.66 0.41 58.19 0.21 1.25 0.04 3 0 65 159 951 27
Zone 4 Measured 0 0.00 0.00 0.00 0.00 0.00 0.00 0 0 0 0 0 0
Indicated 872 3.31 2.15 12.94 0.44 0.12 0.10 93 60 363 8,393 2,375 2,000
M+I 872 3.31 2.15 12.94 0.44 0.12 0.10 93 60 363 8,393 2,375 2,000
Inferred 95 2.74 0.87 15.37 0.78 0.16 0.14 8 3 47 1,645 344 285
Total - All Zones Measured 131 6.65 4.29 31.71 0.73 0.39 0.38 28 18 133 2,119 1,110 1,105
Indicated 8,513 3.43 2.09 15.65 0.42 0.24 0.28 939 573 4,285 79,048 45,171 53,482
M+I 8,644 3.48 2.13 15.90 0.43 0.24 0.29 967 591 4,418 81,167 46,281 54,587
Inferred 2,534 2.90 1.61 12.02 0.46 0.27 0.18 236 131 979 25,879 14,891 9,854

* Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources estimated will be converted into a Mineral Reserves estimate. The resource is stated above a 1.30 g/t gold equivalent cut-off and contained within potentially economically mineable mineralized solids. Metal prices assumed for the gold equivalent calculation are US$1,500/oz for gold, US$32.50/oz for silver, US$3.90/lb for copper, US$1.05/lb for lead and US$1.00/lb for zinc. The gold equivalent calculation assumes 100% metallurgical recovery, and does not account for any smelting, transportation or refining charges. Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding. Mineral resource tonnage and grade are reported as diluted to reflect a potentially mineable underground SMU (Selective Mining Unit) of 3.0m. The resource model has not been depleted for historical artisanal mining, as the location and extent of these workings are largely un-documented.

Mineral Resource Sensitivity

In order to assess the sensitivity of the resource to changes in gold equivalent cut-off grade, SRK summarized tonnage and grade above cut-off at a series of increasing gold equivalent cut-offs by resource category. The sensitivity analysis for Measured plus Indicated blocks and Inferred category blocks are provided in Tables 2 and 3, respectively.

Table 2: Cut-off Grade Sensitivity Analysis - All Measured and Indicated Blocks
Metal Grade Contained Metal (000's)
AuEq
CoG
(g/t)
Tonnes
(000's)
AuEq
(g/t)
Au
(g/t)
Ag
(g/t)
Cu
(%)
Pb
(%)
Zn
(%)
AuEq
(oz)
Au
(oz)
Ag
(oz)
Cu
(lb)
Pb
(lb)
Zn
(lb)
0.50 15,750 2.30 1.32 11.14 0.31 0.17 0.22 1,164 670 5,639 107,074 60,757 76,704
1.00 10,881 3.00 1.79 14.01 0.38 0.22 0.26 1,049 626 4,903 91,608 51,938 62,619
1.50 7,531 3.79 2.35 17.08 0.45 0.26 0.30 917 569 4,135 75,053 42,696 50,111
2.00 5,572 4.51 2.88 19.83 0.51 0.29 0.34 808 516 3,552 62,665 35,304 41,267
2.50 4,299 5.18 3.37 22.43 0.57 0.31 0.36 716 466 3,100 53,836 29,443 34,424
3.00 3,401 5.83 3.86 24.67 0.61 0.33 0.39 637 422 2,698 46,023 24,886 29,252
3.50 2,778 6.41 4.31 26.52 0.65 0.36 0.42 572 385 2,368 39,909 21,861 25,420
4.00 2,290 6.98 4.75 28.44 0.69 0.38 0.44 514 349 2,094 34,881 19,335 22,302
4.50 1,893 7.55 5.17 30.57 0.74 0.41 0.47 460 315 1,861 30,701 17,074 19,554
5.00 1,586 8.10 5.58 32.48 0.77 0.43 0.49 413 285 1,656 26,974 15,169 17,240
Table 3: Cut-off Grade Sensitivity Analysis - All Inferred Blocks
Metal Grade Contained Metal (000's)
AuEq
CoG
(g/t)
Tonnes
(000's)
AuEq
(g/t)
Au
(g/t)
Ag
(g/t)
Cu
(%)
Pb
(%)
Zn
(%)
AuEq
(oz)
Au
(oz)
Ag
(oz)
Cu
(lb)
Pb
(lb)
Zn
(lb)
0.50 5,870 1.72 0.83 8.57 0.32 0.17 0.12 324 156 1,618 41,044 21,885 15,990
1.00 3,390 2.45 1.28 11.06 0.42 0.24 0.16 268 139 1,206 31,280 18,161 11,828
1.50 2,111 3.20 1.86 12.84 0.50 0.18 0.19 218 126 871 23,382 8,191 8,810
2.00 1,604 3.68 2.25 13.69 0.55 0.14 0.19 190 116 706 19,494 4,801 6,839
2.50 1,286 4.05 2.57 14.20 0.59 0.10 0.16 168 106 587 16,722 2,891 4,614
3.00 858 4.71 3.47 12.91 0.47 0.09 0.17 130 96 356 8,845 1,748 3,294
3.50 556 5.46 4.92 8.51 0.13 0.11 0.15 98 88 152 1,625 1,332 1,794
4.00 497 5.66 5.14 8.61 0.12 0.11 0.15 90 82 138 1,308 1,197 1,627
4.50 377 6.10 5.59 6.38 0.13 0.12 0.17 74 68 77 1,077 974 1,425
5.00 190 7.36 6.71 8.70 0.18 0.11 0.19 45 41 53 750 466 802

SRK has made certain recommendations in terms of further exploration work and trade-off studies. They suggest completing detailed structural-geological mapping over the entire project and the development of a structural and stratigraphic 3D model to identify exploration targets, as well as a regional structural geological interpretation of airborne and remote sensing data. Trade-off studies to determine the most suitable mining method and production rate are recommended, as well as the completion of preliminary project cash flow modeling to estimate project economics. This evaluation is currently in progress for higher grade and lower treatment tonnage options.

Rationale for the Revised Resource Estimate on the Invicta Project

In October 2011, Andean announced that the initial capital cost to build an underground mine at the Invicta Project would be considerably higher than forecast in the July 2010 Feasibility Study, partly due to increases in the estimates for infrastructure. Andean's management and Board of Directors decided to delay completion of the SRK Feasibility Study on the Invicta Project in October 2011, and indicated that the (then ongoing) engineering studies would not be completed to a feasibility level at that stage. The SRK Feasibility Study on the Invicta Project was discontinued at that time.

There is neither a current Pre-Feasibility Study (PFS) nor Feasibility Study (FS) for the Invicta Project, which incorporates all presently applicable Invicta Project cost estimates. It follows that there are no current mineral reserves for the Invicta Project in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves: Definitions and Guidelines, November 27, 2010 (CIM).

For this reason, in a press release issued on February 13, 2012, Andean announced that it had commissioned SRK to do a revised resource estimate which reclassifies the (previous) Mineral Reserves as Mineral Resources as set out in the table above. There are no current Mineral Reserves estimated for the Invicta Project.

Commenting on the revised resource estimate for Invicta, Mr. David Rae, President and CEO of Andean American, said: "We believe that this new resource estimate for Invicta supports our view that the Invicta Project lends itself to a higher grade lower tonnage mining scenario and we continue to review alternatives which will reduce the capital costs and improve project economics. This revised technical report incorporates the structural geology work completed in late 2011 and has given us some valuable insight into the potential on the property. We are anxious to realize value from the Invicta Project which will benefit both our shareholders and the local communities. Much of the work we would like to do requires the support of the local communities and we continue to seek agreements with them which will ensure benefits for all parties."

The full NI 43-101 Technical Report on the Invicta Gold Project is available on SEDAR at www.sedar.com and on the Company's website at www.aaggold.com.

Qualified Person

The resource estimate was completed by Frank Daviess, MAusIMM under the direction of Jeffrey Volk, CPG, FAusIMM, Principal Resource Geologist with SRK. Mr. Volk is independent of the issuer and an Independent Qualified Person, as this term is defined in NI 43-101 and has reviewed and approved the scientific and technical disclosure contained in this release. The effective date of this resource estimate is April 6, 2012 and is based on data received by SRK in November, 2010. The mineral resources are reported in accordance with Canadian National Instrument 43-101 (NI 43-101) and have been estimated in conformity with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices" Guidelines. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the mineral resource will be converted into mineral reserves.

ABOUT ANDEAN AMERICAN GOLD CORP.

Andean is an international mining and exploration company focused on value growth through the development of gold and copper projects in Peru and currently has two key assets: the 31,600 hectare Invicta gold-silver-copper advanced exploration stage project and 64.95% (65.8% once it has exercised its 2,222,222 warrants) of Sinchao Metals Corp., owner of the Sinchao gold-silver-copper exploration project. Once the abovementioned Transaction is complete, Andean will own 17.3% of the newly combined company referred to in this press release which expects to change its name to Southern Legacy Minerals Inc.

For further information about Andean American Gold Corp. please visit the Company's website at www.aaggold.com or view the Company's documents on SEDAR at www.sedar.com.

On behalf of Andean American Gold Corp.,

David Rae

This news release may contain forward-looking information within the meaning of the Securities Act (Ontario) ("forward-looking statements"). Such forward-looking statements may include the Company's plans for its mineral projects, the overall economic potential of its properties, the availability of adequate financing and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements expressed or implied by such forward-looking statements to be materially different. Such factors include, among others, risks and uncertainties relating to potential political risks involving the Company's operations in a foreign jurisdiction, uncertainty of production and costs estimates and the potential for unexpected costs and expenses, physical risks inherent in mining operations, currency fluctuations, fluctuations in the price of gold and other metals, completion of economic evaluations, changes in project parameters as plans continue to be refined, the inability or failure to obtain adequate financing on a timely basis, and other risks and uncertainties, including those described in the Company's Financial Statements, Management Discussion and Analysis and Material Change Reports filed with the Canadian Securities Administrators and available at www.sedar.com.

This press release is not an offer to sell or the solicitation of an offer to buy the securities, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification or registration under the securities laws of such jurisdiction. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended and such securities may not be offered or sold within the United States absent an applicable exemption from U.S. registration requirements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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