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

Andean American Gold Corp.

June 17, 2011 09:00 ET

Andean American Gold Provides Invicta Project Update

Trade-Off Studies Underway as Part of Upgrade to Optimised Feasibility Study

TORONTO, ONTARIO--(Marketwire - June 17, 2011) - Andean American Gold Corp. ("Andean American" or the "Company") (TSX VENTURE:AAG)(FRANKFURT:AQN) is pleased to provide an update on its Invicta gold project, located in the mineral rich Western Pre-Cordillera of the Peruvian Andes.

Surface Land Use Agreements

Negotiations regarding the Surface Land Use Agreements are continuing with the local communities, though at a slower pace than anticipated due to the recent municipal elections in the area, which required the attention of community leaders. Andean has positive and constructive relationships with the local communities and is focused on completing these agreements as soon as possible. Most of the community agreements required to access the land for infrastructure development to support a mine at Invicta have been signed. The Company is actively involved in environmental and socio-economic development in the local communities, including the establishment of a 38-hectare pine tree plantation, the upgrade of 12km of water canals, and a technical study for the development of irrigation for 220 hectares of agricultural land.

As part of the trade-off studies related to the upgraded of the optimised Feasibility Study, the Company and its consultants, DRA Americas Inc., are investigating the possibility of relocating the plant and tailings dam to an area that will minimize the impact on the Lacsanga and Paran communities. If this trade-off study yields positive results, it will require less land use from these communities.

Upgrade of the optimised Feasibility Study

As previously announced in October 2010, Andean appointed SRK Consulting (U.S) Inc. ("SRK") to upgrade the Invicta optimised Feasibility Study, completed in July 2010, to a Feasibility Study that would be acceptable to Senior Project Lenders. The completion date for this upgraded study was originally targeted for June 2011. The in-depth work conducted by SRK, incorporating preliminary estimates from other project consultants, indicates certain increases in the original capital costs forecast in the July 2010 study, especially in the area of roads, water, power and other infrastructure, which accounts for approximately one third of the preliminary initial capital cost estimate.

The management of Andean has asked SRK, and the partner consultants working on the project, to conduct trade-off studies to determine where capital costs can be reduced. Examples of trade-offs include the relocation of the plant and tailings dam (as mentioned above) to reduce duplicated infrastructure, and the use of an aerial cableway transportation system to move ore, people and consumables to reduce the number of kilometres of road development. Management has allowed a further seven months for completion of the upgraded Feasibility Study.

Commenting on the revised date for completion of the upgrade to the existing Feasibility Study David Rae, President and CEO of Andean American, said: "A robust and reliable feasibility study is an essential basis for a successful project. It was the view of the new management team and board that the existing optimised Feasibility Study could be improved and that was the reason for hiring SRK to do the upgrade. We now anticipate an increase in capital costs to build the mine, but believe that trade-off studies will identify areas for cost savings. We are confident that a more robust feasibility study will best serve the company and its shareholders in the longer term."

Planned Exploration Program

The known 2.7 km mineralized structure at Invicta remains relatively under-explored with only 27,107 metres of drilling having been conducted to date. The Company is planning to carry out a further 20,000 metres of drilling to expand and upgrade the resource as soon as the community agreements are completed. Seven priority drilling targets have been identified and drilling contractors have been selected.

Political Developments in Peru

The Company is closely monitoring political developments in Peru following the outcome of this month's Presidential elections. Peru has had the fastest growing economy in Latin America over the past decade with mining bringing US$7.3 billion in foreign direct investment into the country last year and contributing to a 7% growth rate in the economy for the past 13 months. "While we are optimistic that President Humula will act in the best interests of the Peruvian people and their economy, we will maintain a close eye and an adaptive strategy with regard to our assets in Peru," said David Rae.

About Andean American

Andean American 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 60% of Sinchao Metals Corp., owner of the Sinchao gold-silver-copper exploration project. In addition, the Company is actively targeting early stage gold and silver prospects in Peru.

For further information about Andean American, please visit the Company's website at www.AAGgold.com.

On behalf of Andean American Gold Corp.,

David Rae, President and Chief Executive Officer

Forward Looking Information

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.

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 press release.

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