BCSC taps Andean American with cease trade order

Vancouver – The British Columbia Securities Commission (BCSC) has taken issue with certain statements contained in Andean American Mining‘s (AAG-V, ANMCF-O) technical reporting and has issued the company a cease trade order until it has re-filed a 2006 technical report on its Invicta property located in west-central Peru.

We got an email from the BCSC with an order to correct some disclosuregoing back to a 43-101 report that was filed in October of 2006 by our qualified person, stated Andean American chairman and CEO John Huguet. The report was filed with the exchange, reviewed and accepted for filing so we found it a little strange, although they do raise a couple of issues.

They dont like the fact that the report contains a historical resource estimate, and that it has higher grades than the report that we put out well it has higher grades but much, much lower tonnage, continued Huguet. They never looked at the coppers, zincs or the leads back in 1988, or even the silvers, they only looked at high grade gold, and we put out a resource estimate that included all metal values and put them out in ranges, from 3 grams cut-off down to 1.5 grams in the measured (resource), down to one gram in indicated and one gram in inferred.

In early July, Andean was also prompted to issue a retraction on a news release where it reviewed a series of objectives and production targets, as well as projections of mine life at Invicta. It also gave geological potential tonnage estimates of certain drill targets, all contrary to National Instrument 43-101 guidelines without noting in disclaimers that there is no certainty projections will be achieved, nor any proposed operation will be economically viable.

We are in good communication with them (the BCSC) and there is nothing of a scandalous nature, said Huguet. They want to see the 43-101 issues addressed by the author of the report. They are interactive with us now, which is a good sign, and have given us options on how to do things. I dont think its an issue that is going to run on for a long time.

Andean recently saw its share price rally about 25%, to the 65-level, following release of initial results from its latest drill campaign at Invicta returning a 14.25-metre interval of 18.45 grams gold per tonne plus 18.5 metres of 2.87% copper.

The company has development goal for Invicta looking at building a minimum 7-year mine life, starting with two years of high-grade production. A phased, 3,000-tonne per-day mill complex has been modeled with projections for payback in less than three years; however a feasibility study still needs to be conducted on the project.

Andean American acquired its option on the advanced, prefeasibility-stage project from a Barrick Gold (ABX-T, ABX-N) subsidiary in late 2005. It can acquire 100% interest for cash and shares totaling US$700,000 paid in the first year, followed by annual advanced royalty payments of US$100,000 to Barrick upon exercising its option plus a lump sum payment of US$800,000 on commencement of production. Barrick retains a 1% NSR, capped at US$1 million, and a back-in right for up to 51% interest should Andean American delineate more than 2 million contained oz. gold in proven and probable reserves.

The August 3rd trading halt came after Andean had closed at 71 per share. The companys stock has a 52-week trading range of 48.5-$1.10.