Andean American Gold Corp.

Andean American Gold Corp.

November 16, 2010 20:05 ET

Andean American Reports Q2 Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 16, 2010) - Andean American Gold Corp. ("Andean" or the "Company") (TSX VENTURE:AAG)(FRANKFURT:AQN) reports that for the second quarter ended September 30, 2010, it incurred a net loss of $779,363 or $0.01 per share compared to a loss of $402,309 or $0.00 for the same period in 2009. For the six months ended September 30, 2010 the Company reports that it incurred a net loss of $1,970,103 or $0.02 per share compared to a loss of $370,653 or $0.00 per share for the same period in 2009. Andean ended the second quarter with cash on hand of $1,277,506 and a working capital deficit of $2,473,277.

On November 12, 2010, subsequent to the quarter ended September 30, 2010, the cash position was further strengthened when the previously announced bought-deal private placement was completed resulting in the issuance of 18,169,000 common shares (which included the exercise of 1,469,000 common shares of the over-allotment option) at a purchase price of $0.90 per common share for aggregate gross proceeds to Andean of $16,352,100 and net proceeds of $15,534,495 after paying a 5% cash fee on the gross proceeds of the offering to the underwriters.

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 located in the Huaura Province in Peru, and 60.13% 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.

Company Highlights

  • In September 2010, Andean commissioned SRK Consulting (U.S.) Inc. ("SRK") to conduct an independent gap analysis on the Invicta optimized Feasibility Study ("FS") which had been completed in July 2010. This gap analysis concluded that, in certain areas, the FS fell short of being considered bankable. A bankable / definitive Feasibility Study is a comprehensive engineering and economic analysis of a project (typically prepared to +/- 15% precision) that is used by financial institutions to determine the credit worthiness of a proposed development for project financing. The Company has retained SRK to upgrade the OFS and anticipates completion in calendar Q2 2011.
  • Negotiations with the local communities are progressing well, and the Company remains optimistic that agreements will be reached by calendar Q1 2011.
  • 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.
Results of Operations   Three months ended September 30   Three months ended September 30   Six months ended September 30   Six months ended September 30
    2010   2009   2010   2009
Sales of metals $ - $ 30,210 $ - $ 233,328
Royalty revenue $ 32,803 $ - $ 63,366 $ -
Loss before income tax $ 779,363 $ 402,309 $ 1,970,103 $ 370,653
Loss per share $ 0.01 $ 0.00 $ 0.02 $ 0.00
Total assets         $ 50,165,102 $ 45,460,692
Working capital deficit         $ 2,473,277 $ 5,710,790
Mineral properties         $ 46,783,994 $ 42,959,230
Share Capital:                
Outstanding           102,797,287(1)   84,697,288
Warrants           5,005,918(2)   10,018,200
Options           9,240,588   6,888,000
(1) On November 12, 2010, 18,169,000 common shares were issued by way of a private placement at $0.90 per common share.
(2) On November 12, 2010, 908,450 agent warrants were issued and are exercisable at $1.25 per common share.

Cash Flow and Liquidity

As at September 30, 2010 the Company had a working capital deficit of $2,473,277, compared to $5,710,790 at September 30, 2009. For the six months ended September 30, 2010, Andean generated cash of $3,950,941 through proceeds from a private placement and the exercise of options and warrants. This was offset by cash used in operating activities of $2,019,804, cash used in investing activities of $2,249,462 and loans repaid in financing activities of $1,532,800.

During the six months ended September 30, 2010, the Company issued 8,226,594 common shares for cash proceeds of $3,994,252. Share issue costs totaled $43,311.

The information above should be reviewed in conjunction with the Company's unaudited consolidated financial statements, management discussion and analysis, for the three months ended June 30, 2010 that will be available shortly on For further information call (604) 681-6186 or toll free: 1-888-356-4784 or visit our website at

On behalf of Andean American Gold Corp.,

Bruce Ramsden, Vice President, Finance and CFO

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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