Andean American Gold Corp.

Andean American Gold Corp.

October 12, 2010 16:58 ET

Andean American Provides Update on the Invicta Project

Technical Due Diligence and Community Consultations Advancing at Andean's Poly-Metallic Project in Peru

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 12, 2010) - Andean American Gold Corp. ("Andean" or the "Company") (TSX VENTURE:AAG)(FRANKFURT:AQN) is pleased to provide an update on the progress of its Invicta Gold Project ("Invicta") located in West-Central Peru in the Huara Province, approximately 250 km north of Lima, Peru. The Invicta project will be an underground mine with a planned life-of-mine of five years. The process methodology will include differential flotation for base metal concentrate production. Ore production will start at 3,000 tonnes per day and is projected to ramp up to 5,100 tonnes per day during the second year of production. The Company's new website can be found at

Independent Technical Due Diligence

In September 2010, Andean commissioned SRK Consulting (U.S.) Inc. ("SRK") to conduct an independent gap analysis on the Invicta Feasibility Study which had been completed in July 2010. This gap analysis concluded that, in certain areas, the Feasibility Study fell short of being considered "bankable". The Company has retained SRK to upgrade the Feasibility Study and anticipates completion in Q2 2011.

"We are taking a very thorough approach to all aspects of this project and believe that the rigorous technical review of the Feasibility Study, and the resulting upgraded bankable Feasibility Study, will provide a strong basis upon which to proceed with the development of our underground gold mine," said David Rae, President of Andean American Gold Corp.

Project Timeline and Key Milestones

Negotiations with the local communities are progressing and the Company is optimistic that agreements will be reached by Q1 2011.

The plant and mine construction permit will be initiated on completion of the community agreements and is expected within six months, by which time the bankable Feasibility Study, legal due diligence and bank financing should be completed.

On completion of the community agreements, the planned project construction timeline is twelve months. In order to expedite the construction phase, the Company has already acquired a number of the long lead items such as the two ball mills, a rod mill, the overhead crane for mill construction, concentrate & tailings filtration equipment and associated vacuum pumps. Road construction is the first step in the project and will commence as soon as community agreements are reached.

Project Financing

The Company is currently examining a range of traditional and non-traditional financing alternatives to complement the expected Senior Secured Project Debt Facility. Legal documentation and due diligence for the previously announced Senior Facility is expected to begin during the first quarter of 2011 and to be finalized shortly after the completion of the bankable Feasibility Study. Closing of the Facility, subject to certain conditions (construction permit), is expected in the second quarter of 2011 with drawdown on the Facility expected to take place shortly thereafter.

About Andean American

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 28,200 hectare Invicta gold-silver-copper advanced exploration stage project and 60% of Sinchao Metals Corp., owner of the Sinchao zinc-copper-silver-gold-lead exploration project. In addition, the Company is actively targeting early stage gold and silver prospects in Peru. For further information call (604) 681-6186 or toll free: 1-888-356-4784.

On behalf of Andean American Gold Corp.,

David Rae, President

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

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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