Andean American Gold Corp. ("Andean American" or the "Company") (TSX
VENTURE:AAG)(FRANKFURT:AQN) announces that it has received an updated NI 43-101
Technical Report of the mineral resources at the Invicta Gold Project in Huaura
Province in Peru. The report was prepared by SRK Consulting (US) Inc. ("SRK").
The mineral resources for the Invicta gold-silver-copper-lead-zinc deposit are
estimated by SRK at 8,644 kt grading an average of 2.13 g/t gold, 15.90 g/t
silver, 0.43% copper, 0.24% lead and 0.29% zinc, classified as Measured and
Indicated mineral resources; with an additional 2,534 kt grading an average of
1.61 g/t gold, 12.02 g/t silver, 0.46% copper, 0.27% lead and 0.18% zinc,
classified as Inferred mineral resources.
Table 1: Mineral Resource Statement for the Invicta Gold-Silver-Copper-Lead-
Zinc Deposit, Huaura Province, Peru, SRK Consulting (Inc.), April 6, 2012(i)
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Metal Grade
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Resource Tonnes AuEq Au Ag Cu Pb Zn
Zone Category (000's) (g/t) (g/t) (g/t) (%) (%) (%)
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Atenea - All Zones Measured 131 6.65 4.29 31.71 0.73 0.39 0.38
Indicated 5,696 3.83 2.34 17.99 0.45 0.28 0.34
M+I 5,827 3.89 2.39 18.29 0.46 0.28 0.34
Inferred 1,533 3.56 2.35 10.93 0.46 0.13 0.19
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Dany Measured 0 0.00 0.00 0.00 0.00 0.00 0.00
Indicated 868 1.97 0.54 13.45 0.58 0.11 0.09
M+I 868 1.97 0.54 13.45 0.58 0.11 0.09
Inferred 668 1.72 0.14 12.66 0.53 0.58 0.16
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Pucamina Measured 0 0.00 0.00 0.00 0.00 0.00 0.00
Indicated 1,064 2.53 1.97 6.98 0.10 0.23 0.28
M+I 1,064 2.53 1.97 6.98 0.10 0.23 0.28
Inferred 202 1.96 1.38 8.68 0.14 0.14 0.18
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Ydalias - All Zones Measured 0 0.00 0.00 0.00 0.00 0.00 0.00
Indicated 12 7.16 3.63 34.89 1.43 0.29 0.19
M+I 12 7.16 3.63 34.89 1.43 0.29 0.19
Inferred 35 2.66 0.41 58.19 0.21 1.25 0.04
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Zone 4 Measured 0 0.00 0.00 0.00 0.00 0.00 0.00
Indicated 872 3.31 2.15 12.94 0.44 0.12 0.10
M+I 872 3.31 2.15 12.94 0.44 0.12 0.10
Inferred 95 2.74 0.87 15.37 0.78 0.16 0.14
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Total - All Zones Measured 131 6.65 4.29 31.71 0.73 0.39 0.38
Indicated 8,513 3.43 2.09 15.65 0.42 0.24 0.28
M+I 8,644 3.48 2.13 15.90 0.43 0.24 0.29
Inferred 2,534 2.90 1.61 12.02 0.46 0.27 0.18
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Contained Metal (000's)
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Resource Tonnes AuEq Au Ag Cu Pb Zn
Zone Category (000's) Oz Oz Oz Lbs Lbs Lbs
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Atenea - All Zones Measured 131 28 18 133 2,119 1,110 1,105
Indicated 5,696 701 429 3,294 56,848 35,251 43,094
M+I 5,827 729 447 3,427 58,967 36,361 44,198
Inferred 1,533 175 116 539 15,574 4,495 6,373
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Dany Measured 0 0 0 0 0 0 0
Indicated 868 55 15 375 11,151 2,153 1,723
M+I 868 55 15 375 11,151 2,153 1,723
Inferred 668 37 3 272 7,876 8,496 2,387
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Pucamina Measured 0 0 0 0 0 0 0
Indicated 1,064 87 67 239 2,277 5,315 6,614
M+I 1,064 87 67 239 2,277 5,315 6,614
Inferred 202 13 9 56 625 605 781
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Ydalias - All Zones Measured 0 0 0 0 0 0 0
Indicated 12 3 1 13 379 77 51
M+I 12 3 1 13 379 77 51
Inferred 35 3 0 65 159 951 27
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Zone 4 Measured 0 0 0 0 0 0 0
Indicated 872 93 60 363 8,393 2,375 2,000
M+I 872 93 60 363 8,393 2,375 2,000
Inferred 95 8 3 47 1,645 344 285
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Total - All Zones Measured 131 28 18 133 2,119 1,110 1,105
Indicated 8,513 939 573 4,285 79,048 45,171 53,482
M+I 8,644 967 591 4,418 81,167 46,281 54,587
Inferred 2,534 236 131 979 25,879 14,891 9,854
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(i) Mineral Resources are not Mineral Reserves and do not have demonstrated
economic viability. There is no certainty that all or any part of the Mineral
Resources estimated will be converted into a Mineral Reserves estimate. The
resource is stated above a 1.30 g/t gold equivalent cut-off and contained within
potentially economically mineable mineralized solids. Metal prices assumed for
the gold equivalent calculation are US$1,500/oz for gold, US$32.50/oz for
silver, US$3.90/lb for copper, US$1.05/lb for lead and US$1.00/lb for zinc. The
gold equivalent calculation assumes 100% metallurgical recovery, and does not
account for any smelting, transportation or refining charges. Mineral resource
tonnage and contained metal have been rounded to reflect the accuracy of the
estimate, and numbers may not add due to rounding. Mineral resource tonnage and
grade are reported as diluted to reflect a potentially mineable underground SMU
(Selective Mining Unit) of 3.0m. The resource model has not been depleted for
historical artisanal mining, as the location and extent of these workings are
largely un-documented.
Mineral Resource Sensitivity
In order to assess the sensitivity of the resource to changes in gold equivalent
cut-off grade, SRK summarized tonnage and grade above cut-off at a series of
increasing gold equivalent cut-offs by resource category. The sensitivity
analysis for Measured plus Indicated blocks and Inferred category blocks are
provided in Tables 2 and 3, respectively.
Table 2: Cut-off Grade Sensitivity Analysis - All Measured and Indicated
Blocks
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Metal Grade
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AuEq
CoG Tonnes AuEq Au Ag Cu Pb Zn
(g/t) (000's) (g/t) (g/t) (g/t) (%) (%) (%)
----------------------------------------------------------------------------
0.50 15,750 2.30 1.32 11.14 0.31 0.17 0.22
1.00 10,881 3.00 1.79 14.01 0.38 0.22 0.26
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1.50 7,531 3.79 2.35 17.08 0.45 0.26 0.30
2.00 5,572 4.51 2.88 19.83 0.51 0.29 0.34
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2.50 4,299 5.18 3.37 22.43 0.57 0.31 0.36
3.00 3,401 5.83 3.86 24.67 0.61 0.33 0.39
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3.50 2,778 6.41 4.31 26.52 0.65 0.36 0.42
4.00 2,290 6.98 4.75 28.44 0.69 0.38 0.44
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4.50 1,893 7.55 5.17 30.57 0.74 0.41 0.47
5.00 1,586 8.10 5.58 32.48 0.77 0.43 0.49
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Contained Metal (000's)
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AuEq
CoG Tonnes AuEq Au Ag Cu Pb Zn
(g/t) (000's) (oz) (oz) (oz) (lb) (lb) (lb)
----------------------------------------------------------------------------
0.50 15,750 1,164 670 5,639 107,074 60,757 76,704
1.00 10,881 1,049 626 4,903 91,608 51,938 62,619
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1.50 7,531 917 569 4,135 75,053 42,696 50,111
2.00 5,572 808 516 3,552 62,665 35,304 41,267
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2.50 4,299 716 466 3,100 53,836 29,443 34,424
3.00 3,401 637 422 2,698 46,023 24,886 29,252
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3.50 2,778 572 385 2,368 39,909 21,861 25,420
4.00 2,290 514 349 2,094 34,881 19,335 22,302
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4.50 1,893 460 315 1,861 30,701 17,074 19,554
5.00 1,586 413 285 1,656 26,974 15,169 17,240
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Table 3: Cut-off Grade Sensitivity Analysis - All Inferred Blocks
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Metal Grade
------------------------------------------------------
AuEq
CoG Tonnes AuEq Au Ag Cu Pb Zn
(g/t) (000's) (g/t) (g/t) (g/t) (%) (%) (%)
----------------------------------------------------------------------------
0.50 5,870 1.72 0.83 8.57 0.32 0.17 0.12
1.00 3,390 2.45 1.28 11.06 0.42 0.24 0.16
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1.50 2,111 3.20 1.86 12.84 0.50 0.18 0.19
2.00 1,604 3.68 2.25 13.69 0.55 0.14 0.19
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2.50 1,286 4.05 2.57 14.20 0.59 0.10 0.16
3.00 858 4.71 3.47 12.91 0.47 0.09 0.17
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3.50 556 5.46 4.92 8.51 0.13 0.11 0.15
4.00 497 5.66 5.14 8.61 0.12 0.11 0.15
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4.50 377 6.10 5.59 6.38 0.13 0.12 0.17
5.00 190 7.36 6.71 8.70 0.18 0.11 0.19
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Contained Metal (000's)
------------------------------------------------------
AuEq
CoG Tonnes AuEq Au Ag Cu Pb Zn
(g/t) (000's) (oz) (oz) (oz) (lb) (lb) (lb)
----------------------------------------------------------------------------
0.50 5,870 324 156 1,618 41,044 21,885 15,990
1.00 3,390 268 139 1,206 31,280 18,161 11,828
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1.50 2,111 218 126 871 23,382 8,191 8,810
2.00 1,604 190 116 706 19,494 4,801 6,839
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2.50 1,286 168 106 587 16,722 2,891 4,614
3.00 858 130 96 356 8,845 1,748 3,294
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3.50 556 98 88 152 1,625 1,332 1,794
4.00 497 90 82 138 1,308 1,197 1,627
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4.50 377 74 68 77 1,077 974 1,425
5.00 190 45 41 53 750 466 802
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SRK has made certain recommendations in terms of further exploration work and
trade-off studies. They suggest completing detailed structural-geological
mapping over the entire project and the development of a structural and
stratigraphic 3D model to identify exploration targets, as well as a regional
structural geological interpretation of airborne and remote sensing data.
Trade-off studies to determine the most suitable mining method and production
rate are recommended, as well as the completion of preliminary project cash flow
modeling to estimate project economics. This evaluation is currently in progress
for higher grade and lower treatment tonnage options.
Rationale for the Revised Resource Estimate on the Invicta Project
In October 2011, Andean announced that the initial capital cost to build an
underground mine at the Invicta Project would be considerably higher than
forecast in the July 2010 Feasibility Study, partly due to increases in the
estimates for infrastructure. Andean's management and Board of Directors decided
to delay completion of the SRK Feasibility Study on the Invicta Project in
October 2011, and indicated that the (then ongoing) engineering studies would
not be completed to a feasibility level at that stage. The SRK Feasibility Study
on the Invicta Project was discontinued at that time.
There is neither a current Pre-Feasibility Study (PFS) nor Feasibility Study
(FS) for the Invicta Project, which incorporates all presently applicable
Invicta Project cost estimates. It follows that there are no current mineral
reserves for the Invicta Project in accordance with the Canadian Institute of
Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves:
Definitions and Guidelines, November 27, 2010 (CIM).
For this reason, in a press release issued on February 13, 2012, Andean
announced that it had commissioned SRK to do a revised resource estimate which
reclassifies the (previous) Mineral Reserves as Mineral Resources as set out in
the table above. There are no current Mineral Reserves estimated for the Invicta
Project.
Commenting on the revised resource estimate for Invicta, Mr. David Rae,
President and CEO of Andean American, said: "We believe that this new resource
estimate for Invicta supports our view that the Invicta Project lends itself to
a higher grade lower tonnage mining scenario and we continue to review
alternatives which will reduce the capital costs and improve project economics.
This revised technical report incorporates the structural geology work completed
in late 2011 and has given us some valuable insight into the potential on the
property. We are anxious to realize value from the Invicta Project which will
benefit both our shareholders and the local communities. Much of the work we
would like to do requires the support of the local communities and we continue
to seek agreements with them which will ensure benefits for all parties."
The full NI 43-101 Technical Report on the Invicta Gold Project is available on
SEDAR at www.sedar.com and on the Company's website at www.aaggold.com.
Qualified Person
The resource estimate was completed by Frank Daviess, MAusIMM under the
direction of Jeffrey Volk, CPG, FAusIMM, Principal Resource Geologist with SRK.
Mr. Volk is independent of the issuer and an Independent Qualified Person, as
this term is defined in NI 43-101 and has reviewed and approved the scientific
and technical disclosure contained in this release. The effective date of this
resource estimate is April 6, 2012 and is based on data received by SRK in
November, 2010. The mineral resources are reported in accordance with Canadian
National Instrument 43-101 (NI 43-101) and have been estimated in conformity
with generally accepted Canadian Institute of Mining, Metallurgy and Petroleum
(CIM) "Estimation of Mineral Resource and Mineral Reserves Best Practices"
Guidelines. Mineral resources are not mineral reserves and do not have
demonstrated economic viability. There is no certainty that all or any part of
the mineral resource will be converted into mineral reserves.
ABOUT ANDEAN AMERICAN GOLD CORP.
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 31,600 hectare Invicta gold-silver-copper advanced
exploration stage project and 64.95% (65.8% once it has exercised its 2,222,222
warrants) of Sinchao Metals Corp., owner of the Sinchao gold-silver-copper
exploration project. Once the abovementioned Transaction is complete, Andean
will own 17.3% of the newly combined company referred to in this press release
which expects to change its name to Southern Legacy Minerals Inc.
For further information about Andean American Gold Corp. please visit the
Company's website at www.aaggold.com or view the Company's documents on SEDAR at
www.sedar.com.
On behalf of Andean American Gold Corp.,
David Rae
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.
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