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

Andean American Gold Corp.

March 01, 2012 15:15 ET

Andean American Reviews Potential for Higher Grade/Lower Tonnage Project at Invicta

TORONTO, ONTARIO--(Marketwire - March 1, 2012) - Andean American Gold Corp. ("Andean" or the "Company") (TSX VENTURE:AAG)(FRANKFURT:AQN) is pleased to provide an update on recent activities. Concurrently with the review of strategic merger and acquisition opportunities announced on November 2, 2011, the Company is reviewing lower capital cost alternatives for the development of Invicta, based on a higher cuff-off grade approach, and has completed structural mapping work aimed at prioritizing further exploration.

Resource Remodeling

On February 13, 2012, the Company announced that it had commissioned SRK Consulting (US) Inc. to update the existing Invicta Project resource estimate dated November 2009. This new (SRK) resource model will be used to report the resources at various cut-offs. Management believes that, based on this new resource model, subsequent mining studies will indicate there is significant potential for a higher grade/lower tonnage scenario. If this proves feasible, a higher grade/lower tonnage operation would help to reduce the capital costs associated with the construction of the plant. The SRK Technical Report detailing the new resource estimate will include recommendations for future mining studies. The SRK Technical Report is expected in mid-April 2012.

Exploration Potential

In January 2012, Andean and SRK Consulting (Canada) Inc. completed a structural geological study of the Invicta Project. The objective of this study was to improve Andean's understanding of the controls on the distribution of gold, silver and base metal mineralization at Invicta with a view to identifying additional potential mineralization and to develop an integrated structural framework to be used for future exploration targeting.

This study has identified a number of exploration priorities, including the possible continuation of the Atenea Vein to the north of an east-west trending dextral-reverse fault that post-dates and offsets mineralization. More detailed structural-geological mapping is being undertaken by Andean to identify exposed vein systems which are sub-parallel to the Atenea Vein and north of the Pucamina and south of the Dany Faults. In addition, Andean is evaluating the potential for vein systems that may occur sub-parallel to the Pucamina and Dany Faults. SRK also recommended developing a structural and stratigraphic 3D model combined with a regional interpretation of available remote sensing data to identify targets covering a wider region. Upon the completion of this work Andean will consider further exploration programs.

Community Negotiations

The Company continues to work with the local communities to provide socio-economic support and to advance the negotiations for the required surface land use agreements. The Company's relationship with Santo Domingo de Apache continues to be strong and the community is receiving benefits in terms of the agreement which was reached with them in October 2010.

In January 2012, Andean presented a draft surface land use agreement to the community of Paran and a number of constructive meetings have been held recently with the community in this regard. The Company is awaiting a formal response from the community to this proposed agreement. In the meantime, the Company has established a small project team and is undertaking engineering studies for the construction of four new classrooms and a basic medical building to be used by the community of Paran and its annex, Huamboy. These are items that were agreed as part of the exploration phase for Invicta and are currently in progress.

There have been three different formal offers to complete the land use agreements with Lacsanga, the last of which was tabled in October of 2011. Negotiations with the community of Lacsanga are proceeding at a slow pace and Andean is sensitive to the internal issues which are facing this community, however the Company continues to seek areas for common understanding and mutual benefit that will trigger the signing of a land use agreement. The Company has provided technical and financial support to local community agencies who are working with the local government in order to access government funding for the upgrade of roads in the area. These upgraded roads will improve transportation between the communities and contribute to the roads required for access to the Invicta Project.

Strategic Opportunities

The Company and its financial advisor have had discussions with a number of potential merger and acquisition partners recently. Discussions are continuing with a small number of interested parties and the Company is committed to seeking the best fit for Andean American in order to maximize the value of its assets.

"The work we are doing to identify the exploration potential of our assets and advance community negotiations will stand us in good stead regardless of whether we develop the Invicta Project ourselves or in conjunction with an M&A partner," said David Rae, President and CEO of Andean American. "We are optimistic about the indications for lower cost alternatives associated with the higher grade, lower tonnage model and will continue to seek innovative ways to reduce mine development costs wherever possible."

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 64.95% of Sinchao Metals Corp., owner of the Sinchao gold-silver-copper exploration project.

For further information about Andean American, please visit the Company's website at www.AAGgold.com or call 416 368 9500.

Qualified Person

Peter Clarke, [B Sc., P Eng.], a mining engineer with SRK Consulting (US) Inc., and a qualified person for the purposes of National Instrument 43-101 has reviewed and approved the scientific and technical disclosure contained in this release.

On behalf of Andean American Gold Corp.,

David Rae, President and CEO

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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