TSX.V:AAG
ANDEAN AMERICAN GOLD CORP.
MARCH 2011
MINE DEVELOPMENT WITH CONFIDENCE
ABOUT ANDEAN AMERICAN
Andean American is developing one of the lowest cost gold mines in Peru—The Invicta Project.
Andean American is an international
Invicta is an advanced stage gold and copper project located in the mineral rich Western PreCordillera of the Peruvian Andes, approximately 250 km north of Lima.
on value growth through the development
mining and exploration company focused of gold and copper projects in Peru. The Company currently has two key assets: the 28,200 hectare Invicta gold-silver-copper
INVICTA PROJECT HIGHLIGHTS • Near term low cost gold production in Peru • 160,000 AuEq Oz per year at US$275/Oz projected LOM • Excellent access to infrastructure in well established mining region • 20,000 m drilling program planned to expand resource and extend life of mine to 12 years • Construction financing secured
www.AAGgold.com
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.
Andean American Gold is an international mining & exploration company focused on advanced stage gold & copper opportunities in Peru
www.AAGgold.com
INVICTA PROJECT OPTIMIZED FEASIBILITY STUDY—SUMMARY An optimized feasibility study, filed in July 2010, demonstrates robust project economics over an initial 5-year mine life. Production • 97,931 oz Au per year and 160,000 oz AuEq 2 per year over an initial 5-year LOM • 5,000 tpd at full production from an underground mine LOM cash cost per oz Au • On a co-product basis: US$451.38 • On a gold equivalent basis: US$274.80 • On a by-product basis: US($126.91) 2
PROGRESS TOWARDS PRODUCTION Andean American has made significant progress on all fronts in preparing the Invicta Project for construction.
COMMUNITY AGREEMENTS: First of three agreements with primary communities signed. Completion of second one expected in March 2011 and third by mid-2011.
MINING AND BENEFICIATION PERMITS: Applications will be submitted following signed community agreements, environmental studies in progress and EIA being prepared, permit anticipated late Q4 2011.
FINANCING:
Operating costs of US$28.31 per tonne
Well funded for pre-construction activities.
Capital Expenditure of US$68 million allocated as follows:
Project Debt Finance Facility of US$68 million to fund project construction is in place with Barclays Capital and West LB.
• • • •
US$49 million project costs US$9 million in refundable IGV taxes US$7 million contingency funds US$3 million start-up facility
5 year average annual free cash flow of US$65,273,398 3 Net Present Value of US$265,057,808, using an 8% discount rate3 Mine life is based on mineral reserves of 7.8 million tonnes grading: • 2.14 g/t gold • 18.76 g/t silver • 0.52% copper • 0.38% lead • 0.30% zinc4 Indicated resources not included in mine life total 2.3 million tonnes grading: • 1.99 g/t gold • 14.74 g/t silver • 0.4% copper • 0.28% lead • 0.27% zinc4 Inferred resources not included in mine life total 14.2 million tonnes grading: • • • • •
0.67 g/t gold 11.20 g/t silver 0.36% copper 0.24% lead 0.15% zinc4
The optimized feasibility study is currently being upgraded by SRK Consulting and this is expected in June 2011.
MINE PLANNING: Improvements have been made to the mine plan. Longhole stoping will be the primary method with cut and fill extraction being used in areas where ground faulting or low stopes make it necessary. Current plans envisage a production rate of between 4,000 and 4,500 tonnes per day. The plant design remains at 5,000 tonnes per day to accommodate upside potential.
METALLURGY: Following studies conducted on the two principal ore types to be mined at Invicta, the mineral processing flow sheet has been simplified with the removal of the gravimetric separation and zinc recovery equipment. Space will be left in the design for the installation of the zinc recovery equipment should it become economically favourable in the future. The processing plant will extract gold contained in a copper concentrate and silver which is principally contained in the lead concentrates. The Company has signed an offtake agreement with Trafigfura Beheer B.V. for the bulk concentrates.
MINE DESIGN AND ENGINEERING: An independent technical engineering report has been commissioned and is expected in Q3 2011.
CONSTRUCTION PREPARATION: Long lead items such as the rod mill, overhead crane and filtration equipment have already been purchased. Construction on the roads, power and water provision will begin once the remaining community agreements have been signed.
GOOD GOVERNANCE— A PRE-REQUISITE FOR LONG-TERM SUCCESS Andean American is committed to cooperative and mutually beneficial mine development. We aim to create economic prosperity for our shareholders and the communities in which we operate and in a safe, environmentally and socially responsible manner. Andean American Gold and its Board of Directors take a proactive approach to corporate governance requiring the highest standards of ethical behaviour and practice throughout the company’s business. Please visit our website at www.AAGgold.com to learn more about our commitments to good governance, environmental and social responsibility. In accordance with the company’s commitment to good governance, the Invicta Project has adopted the “Equator Principles”, a financial industry benchmark for determining, assessing and managing social and environmental risk in project financing. These principles are aimed at ensuring that projects which are financed by the institutions which subscribe to them, are developed in a manner that is socially responsible and environmentally sound. In this way, negative impacts on project-affected ecosystems and communities should be avoided where possible, and where unavoidable, they should be reduced, mitigated and/or compensated for appropriately. For more information on this, please see the Invicta Project Feasibility study which is filed on SEDAR and can be downloaded from the Andean American Gold website.
COMMUNITY RELATIONS AND ENVIRONMENTAL STEWARDSHIP 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. In addition, the Company is currently conducting a technical study for the irrigation of 220 hectares of agricultural land in the community of Sayán. The Company has hosted numerous educational visits to the project site for the local communities and is engaged in ongoing consultation.
www.AAGgold.com
STRONG SENIOR MANAGEMENT DAVID RAE—PRESIDENT AND CEO
MARK ZABEL—VP CORPORATE DEVELOPMENT
Ten years in senior operating and executive positions with Falconbridge/Xstrata, including Senior Vice President Europe & Africa, and worldwide head of sales for all Nickel Group products. Previously he managed the Sudbury Smelter and the Timmins Copper Operations. Prior to joining Andean American, Mr. Rae provided consulting services to companies such as Kinross, Vale Inco and Iamgold on operational, productivity and strategic challenges.
From 2005–2010 Mr. Zabel worked in equity investments at Praetorian Capital Management LLC, a highly successful small cap long/short equity hedge fund based in Miami, Florida. Mr. Zabel has development experience as an active shareholder across an array of industries, having worked closely with senior management teams to help implement business expansion plans, restructure management, and define new corporate and operational strategy.
BRUCE RAMSDEN—VICE PRESIDENT AND CFO
MIGUEL HUAMAN—VP OPERATIONS
Vice President and CFO with noted resource companies since 1996 and has received the 2006 Mining Journal Development Funding Award for his work with Tiomin Resources Inc. He has a Bachelor of Commerce as well as a degree from the Institute of Chartered Secretaries and Administrators. Mr. Ramsden is a member of the Institute of Commercial and Financial Accountants of Southern Africa; the Institute of Chartered Secretaries and Administrators in both South Africa and Canada; and Financial Executives International Canada.
From 2004 to 2009, Mr. Huaman was the President of Minera Huallanca, where he managed the 1000tpd Pucarrajo Zn-Pb-Ag mine and the 850tpd Contonga Zn-Pb-Ag-Cu mine, both underground operations. From 2002 to 2004, he was General Manager of Cedimin SAC, a subsidiary of the BRGM–France and Buenaventura Mining Company Peru. Mr. Huaman is an Engineering Graduate of the Universidad Nacional Mayor de San Marcos and a Geologist Engineer with a Postgraduate degree in Exploration and Valuation of Mineral Resources from the University of Nancy, France. Mr. Huaman is a former President of the Geological Society of Peru.
CORPORATE INFO
INVESTOR ENQUIRIES
Updated as at February 28, 2010
Telephone.................................................................... 604-681-6186
Market Cap at . . ................................................................... CDN$118,412,690
Toll Free. . .................................................................. 1-888-356-4784
Basic Shares Outstanding.......................................................... 142,665,892
Email...........................................................investors@AAGgold.com
Options. . ...................................................................................... 7,770,588 Warrants .. .................................................................................... 5,589,368
Head Office Toronto Office
Attributable M&I Resources (gold only, as at May 15, 2009)
Andean American Gold Corp. 55 University Avenue Suite 1340, 1090 West Georgia Street 11th Floor, Suite 1105 Vancouver, BC V6E 3V7 Toronto, ON M5J 2H7
Invicta............................................................................... 709,000 ounces 1 Sinchao . . ........................................................................ 2,237,000 ounces 1,5
TSX.V: AAG 1. Invicta resource numbers taken from the NI 43-101 Invicta Technical Report dated Nov 20, 2009. Sinchao attributable resource is 60.16% of global resource of 237 million tonnes containing 3.73 million oz Au, 2.45 lb Cu and 92 million oz Ag with average grades of 47% Cu, 0.49g/t Au and 12.1 g/t Ag. Resource was calculated using cut-off grade. 2.4g/t Au and 27% Cu, using prices of $1.50/lb Cu, $600/oz Au and $8/oz Ag from NI 43-101 Sinchao Technical Report, October 30, 2008. Metallurgical recoveries and net smelter returns are not considered. 2. Price deck: Gold $900/oz, Silver $12.50/oz , Copper $2.50/lb, Lead $0.70/lb, Zinc $0.75/lb. 3. Price deck: Gold $900/oz, Silver $12.50/oz , Copper $2.50/lb, Lead $0.70/lb, Zinc $0.75/lb. 4. Victor Jaramillo, P. Geo., of Discover Geological Consultants Inc. is an Independent Qualified Person as defined by National Instrument
43-101 and is responsible for the resource estimates. Guy Lokhorst, P. Eng., of The Lokhorst Group, is an Independent Qualified Person as defined by NI 43-101 and is responsible for the review of the mining methodology, including the probable reserves and life of mine, for the Invicta Feasibility Study. Deepak Malhotra, PhD., MS in Metallurgical Engineering and PhD. in Mineral Economics, Independent Qualified Person as defined by NI 43-101, of Resource Development Inc., reviewed the metallurgy for the Invicta project and developed the finalized process flow diagram for the Invicta Feasibility Study. Leslie F. Tarnai, P. Eng., General Manager of Engineering for Invicta Mining Corp., is a Qualified Person as defined by NI 43-101 and is responsible for the Invicta Feasibility Study. 5. The Sinchao properties are subject to an ownership review as reported in the press release dated February 7, 2011, and the outcome of my affect the resources attributed to Sinchao.