Oct 13 2010
Andean American Gold Corp. (TSX VENTURE:AAG)(FRANKFURT:AQN) has provided an update on the progress of its Invicta Gold Project located in West-Central Peru in the Huara Province, approximately 250 km north of Lima, Peru.
The Invicta project will be an underground mine with a planned life-of-mine of five years. The process methodology will include differential flotation for base metal concentrate production. Ore production will start at 3,000 tonnes per day and is projected to ramp up to 5,100 tonnes per day during the second year of production.
Independent Technical Due Diligence
In September 2010, Andean commissioned SRK Consulting (U.S.) Inc. ("SRK") to conduct an independent gap analysis on the Invicta Feasibility Study which had been completed in July 2010. This gap analysis concluded that, in certain areas, the Feasibility Study fell short of being considered "bankable". The Company has retained SRK to upgrade the Feasibility Study and anticipates completion in Q2 2011.
"We are taking a very thorough approach to all aspects of this project and believe that the rigorous technical review of the Feasibility Study, and the resulting upgraded bankable Feasibility Study, will provide a strong basis upon which to proceed with the development of our underground gold mine," said David Rae, President of Andean American Gold Corp.
Project Timeline and Key Milestones
Negotiations with the local communities are progressing and the Company is optimistic that agreements will be reached by Q1 2011.
The plant and mine construction permit will be initiated on completion of the community agreements and is expected within six months, by which time the bankable Feasibility Study, legal due diligence and bank financing should be completed.
On completion of the community agreements, the planned project construction timeline is twelve months. In order to expedite the construction phase, the Company has already acquired a number of the long lead items such as the two ball mills, a rod mill, the overhead crane for mill construction, concentrate & tailings filtration equipment and associated vacuum pumps. Road construction is the first step in the project and will commence as soon as community agreements are reached.
Project Financing
The Company is currently examining a range of traditional and non-traditional financing alternatives to complement the expected Senior Secured Project Debt Facility. Legal documentation and due diligence for the previously announced Senior Facility is expected to begin during the first quarter of 2011 and to be finalized shortly after the completion of the bankable Feasibility Study. Closing of the Facility, subject to certain conditions (construction permit), is expected in the second quarter of 2011 with drawdown on the Facility expected to take place shortly thereafter.
Source: Andean American Gold Corp.