TORONTO, ONTARIO--(Marketwire
- March 1, 2011) - Andean
American Gold Corp. ("Andean
American" or the "Company") (TSX
VENTURE:AAG)(FRANKFURT:AQN) is pleased to report that its Invicta
gold project, located in the mineral rich Western Pre-Cordillera of the
Peruvian Andes, is progressing as planned with phase one of construction
anticipated to begin in the third quarter of 2011.
"We have a strong
management and operations team, supported by world-class engineering
consultants, and they are confidently working through the key components
required to successfully build a mine. Financing is in place, our relationships
with the local communities are positive, engineering design and mine planning
are advanced and we are on track to begin construction this year of one of the
lowest cost gold mines in Peru.
We are also planning a 20,000 metre exploration drilling program to run concurrently
with mine development and this is aimed at extending the life of mine from five
to 12 years," said David Rae, President and CEO of Andean
American Gold.
COMMUNITY AGREEMENTS
The Company has made
significant progress towards the completion of Surface Land Use agreements with
the three primary communities surrounding the Invicta Project. The
first of these agreements has been signed with the community of Santo
Domingo de Apache. The Company anticipates that the second agreement
will be signed during March 2011 and the final one by mid-year.
Once the third and final agreement is completed, phase one construction of the
site infrastructure will begin.
In addition, Andean
American has completed a number of minor agreements for the use of the land required
to build the infrastructure for the site and anticipates that the last of these
agreements will be signed in March 2011.
The Company is contributing
actively to environmental programs and socio-economic development in the
surrounding communities. In the Santo
Domingo de Apache community, Andean American and a big group of
community members recently planted 30,000 pine trees on 38 hectares of land.
The trees bring multiple benefits to the community including providing wood,
acting as windbreaks and providing a good substrate for the cultivation of
mushrooms as an additional source of revenue. Furthermore, in this community,
two pilot programs will be launched in March for irrigation to support the
cultivation of peaches and blueberries. Andean American has upgraded, and is
maintaining, 12 km of canals providing water to the local communities and the
Company is currently conducting a technical study for the irrigation of 220
hectares of agricultural land in the community of Sayan. The Company has hosted
numerous educational visits to the project site for the local communities and
is engaged in ongoing consultation.
FEASIBILITY STUDY
As announced on October
12, 2010, the Company has commissioned SRK Consulting (U.S.) Inc.
("SRK") to upgrade the Optimised Feasibility Study, which was filed
in July 2010. SRK has confirmed that this upgraded study will be
completed in June 2011.
MINERAL RESERVES AND
RESOURCES
SRK is in the process of
updating the resource and reserve estimate for Invicta and
indications are that there are no material changes to the NI 43-101 compliant
resource and reserve disclosure filed on December 10, 2009.
MINE PLANNING
Certain improvements have
been made in the mine plan. Additional geotechnical studies have been completed
and SRK is upgrading the design on the Atanea, Pucamina, Dany and Zone 4
measured and indicated resources to feasibility level.
The improved understanding
of maximum stable stope sizes has resulted in a simplification of mining
practices withlongholestoping as the predominant extraction method. Cut and
fill extraction is limited to those ground areas where faulting or low slopes
make it necessary. Open pit and shrinkage mining are no longer included in the
planning.
Current indications are
that the mining methods and orebody geometry will support a total production
rate of between 4,000 and 4,500 tonnes per day of ore from the combined mining
areas. The ore production rate will be finalized when the design is complete
and detailed scheduling commences.The plant design remains at a 5,000 tonnes
per day capacity to allow for the anticipated increase in tonnage which the
Company expects will result from the planned drilling program to expand the Invicta
resource.
METALLURGY
SGS Laboratories
in Vancouver, Canada,
and Resource Development Inc. of Denver,
Colorado, have conducted studies on the two principal ore types to
be mined at Invicta. Studies of abrasion, work indexes, settling
rates and filtration have resulted in a simplified, conventional mineral
processing flowsheet. The gravimetric separation and zinc recovery equipment
havebeen removed from the scope for construction, which will simplify operation
considerably. Space will be left in the design for the subsequent installation
of zinc recovery equipment should it become economically favourable in the
future.
ENGINEERING DESIGN AND
INFRASTRUCTURE FOR CONSTRUCTION
To facilitate rapid
progress towards production, the Company has retained DRA Americas Inc.
to complete the engineering design to a level commensurate with the upgraded
Feasibility Study. Their initial priority has been to complete the early works,
or phase one, engineering in readiness for construction. This first phase
includes roadways, power and water provision to the site and is a necessary
precursor to the subsequent mine and metallurgical plant construction.The
Company has already purchased certain long lead items such as the rod mill,
overhead crane and filtration equipment. Construction will begin as soon as the
remaining community agreements are signed. The project is being structured on
an Engineering, Procurement, and Construction Management (EPCM) basis and DRA
have been awarded the early works contract.DRA Americas Inc. is a
subsidiary of a South African based project engineering company with
international operations, a staff of over 800 people, and a growing presence in
the mining industry in South America.
PERMITTING PROCESS
The Company is preparing
the application for the beneficiation permit which will be submitted once all
the community agreements are signed. Environmental baseline studies are in
progress and the mine closure permit was filed on December 28, 2010,
in accordance with the Environmental Impact Assessment. Assuming the community
agreements are completed in mid-year, the Company expects to receive the
beneficiationand mining permits late in the last quarter of this year, granting
the Company the approval to build and operate the mine and metallurgical sites.
FINANCING
Andean American is well
funded for pre-construction activities. Importantly, the Company has
commitments for a Project Debt Finance Facility of US$68 million
in place with Barclays Capital and West LB.
NEXT STEPS AND GROWTH
POTENTIAL
Once the remaining
community agreements are signed, the Company will submit the application for the
beneficiation permit, early works will commence and major equipment will be
staged. The time lines for the development of the mine at Invicta
are dependent on successful completion of each previous phase and will be
clearer once the upgraded Feasibility Study and Independent Technical
Engineering Report is received in mid-2011.
Concurrent with mine
development, Andean American plans to conduct a 20,000 metre drilling program
to expand the resource and life of mine at Invicta. It is
anticipated that this drilling program will commence in the third quarter of
2011.
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 28,200 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.
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 release.
FOR FURTHER INFORMATION PLEASE CONTACT:
Andean American Gold Corp.
David Rae
416 368 9500
investors@aaggold.com
Andean American Gold Corp.
(604) 681-6186 or Toll Free: 1-888-356-4784
www.AAGgold.com
Source: Andean American Gold Corp.
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