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Andean American Moves toward Feasibility at Invicta, Announces 416 Million Tonne Resource Estimate at Sinchao

The Camp at Invicta

Interview with John Huguet, Chairman & CEO, Andean American

Andean American’s two projects in Peru have both leapt to the next stage of exploration since we last spoke with Chairman and CEO John Huguet in 2008. In September, the company announced a resource estimate for its wholly-owned Invicta project, establishing a million ounce gold equivalent deposit. Then in October, Sinchao Metals, which Andean holds a 61% interest in, announced its whopper of a resource estimate, which included 416 million tonnes grading 0.36% Copper, 0.33 g/t Gold and 9.2 g/t Silver at a 0.13% Copper cut-off.

GRR: Do your recent press releases signal that you achieved your objectives for 2008?

JH: Yes, particularly since the posting of the Sinchao resource estimate. While Invicta is our production target, Sinchao is a very major holding for us. We have a 416 million tonne inferred resource estimate at Sinchao, containing an estimated 4.4 million ounces of gold, more than 123 million ounces of silver and more than 3.3 billion pounds of copper. Even at $1.50 per pound copper that‘s still a lot of money.

GRR: Nevertheless, Invicta is showing a lot of potential, too. To what extent are you looking at the tip of the iceberg?

JH: While we only have a measured and indicated resource estimate of 7.9 million tonnes and an inferred resource estimate of 11.6 million tonnes we do have a considerable amount of geological potential. It’s open to depth, and even if it goes down only 100, 200 or 300 metres, that would mean potentially another 14 to 37 million tonnes.

GRR: You’ll be releasing a pre-feasibility study soon. What will it tell us about the journey to production at Invicta?

JH: We have all of the detailed engineering completed. We have purchased some equipment in advance, such as a grinding bay, which means we have taken away the delivery risk from the project. We have purchased and have secured disk filters and some vacuum pumps that took 28 months to deliver. And we have purchased our building steel and our building cranes. We put in the permitted water wells and we need to put in the water lines. So we have made very, very good progress and when investors see the study, they will be comforted by the fact that this has been well thought out, well planned and certainly well engineered, and well priced.

GRR: It sounds like you’re well on your way, but what will it cost to build the mine?

JH: We need $65 million of debt or maybe a strategic partner who is willing to allow us to use his line of credit in exchange for a percentage interest in our Sinchao holdings.

GRR: And what is your present cash position?

JH: We have just confirmed with the Peruvian government taxation agency that we are entitled to three million soles for our Invicta value added tax refund and a 2.4 million soles value added tax refund on the Sinchao project. We should have those funds any day now.

GRR: John, once the drills are turning again what is the game plan for Andean American?

JH: We have 16,500 metres of additional drilling planned at Invicta. Our total drilling to date at the Invicta project is in excess of 27,000 metres.

And Sinchao is just a remarkably large target. We believe that the 416 million tonne resource estimate that we have put out there is somewhere around 15% of its potential. It’s still early, but all of the geological indications that you can get from geophysical work, from mapping, sampling and outcroppings show that the area we are in can still grow by another 50% or so. We have people who are very, very interested in the Sinchao property.

GRR: Who have you been speaking to with respect to financing?

JH: Well, under the terms of the seventeen confidentiality agreements we have sighed, we have to respect them, but we’ve been talking with the industry.

At the moment, traditional sources for venture capital have been somewhat nullified in the past five or six months, so we’re now focusing on strategic partners and majors who have deeper pockets.

GRR: John, you have developed more than a few mines in your time, haven’t you?

JH: In my 33 years with Atkinson Holdings and Commonwealth, we put eighty six major mines into production. I certainly didn’t do all of them. I did I think 27 with Placer Dome. We did ten with Newmont, seven with Teck, and there have been many more. I’ve been at this for about 40 years, so you could say I know my way around an exploration project.

Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by the inability to obtain required environmental and other regulatory approval, environmental or operating permits. The estimate may also be materially affected by global economic conditions such as the price of gold and silver, the price of oil and other commodities utilized in the production of gold and silver. Unknown geologic or hydrologic conditions or other unknown factors may materially affect the resource estimates. Metallurgical recoveries and net smelter returns have not yet been determined. See News Release of September 4, 2008 for Andean American and October 30, 2008 for Sinchao Metals. There has been no metallurgical work done at the Sinchao Property to date. Gold equivalents based on US$600/oz gold, US$1.50/lb copper and US$8/oz silver.