Andean American Annouces Review of Company Strategy Andean conducts strategic and project review in the light of current market conditions

TORONTO, ONTARIO -- (Marketwire) -- 10/28/11 -- Andean American Gold Corp. ('Andean American' or the 'Company') (TSX VENTURE: AAG)(FRANKFURT: AQN) wishes to provide an update to shareholders following a detailed review, by the Company's management and its Board, of corporate and project objectives in the light of the current financial market conditions, the capital requirements to develop its Invicta Gold Project in Peru and the opportunities for value-adding mergers and acquisitions which arise in such a market.

Taking the abovementioned factors into consideration and with a view to preserving the Company's healthy cash balance, the management and Board of Andean have decided to delay completion of the current Feasibility Study activities on the Invicta Project. The management and Board are considering various merger and acquisition opportunities that may include the involvement of joint venture partners, sale of certain properties and the use of funds to purchase new projects for the Company.

As previously announced on June 17, 2011, and as part of the Feasibility Study which was commissioned from SRK Consulting (U.S.) Inc. ('SRK'), the Company and its consultants are busy with a number of trade-off studies to identify opportunities for capital cost reductions at Invicta. These studies are addressing costs associated with roads, water, power and other infrastructure which accounts for approximately one third of the preliminary initial capital cost estimate for Invicta. These trade-off studies will continue unaffected but the engineering studies for the identified favoured options will not be completed to a feasibility level at this stage.

Although the Feasibility Study is not yet complete, early indications are that the initial capital cost to build an underground mine at Invicta will be considerably higher than forecast in the July 2010 Feasibility Study, and may exceed US$150 million, partly due to increases in the estimates for infrastructure, such as roads and water supply. Indications based on the work done to date are that the mine plan will only support an ore production rate of 4,000 tonnes per day and not 5,000 tonnes per day as per the July 2010 Feasibility Study, and management estimates that project operating costs could be anywhere in the vicinity of US$30 to US$40 per ore tonne (not finalized by SRK and other Feasibility Study consultants), compared to the US$28 per ore tonne indicated in the July 2010 Feasibility Study. Although metal prices have increased since the July 2010 Feasibility Study, management believes that the currently estimated project costs will exceed the Project Debt Finance Facility that the Company has in place with Barclays Capital and West LB, thus delaying the completion of the current Feasibility Study.

Management and the Board believe that the Invicta property is under-explored and are optimistic that further exploration drilling on the property should show an increase in the mineable resources. Increased mine life will strengthen the economics of the project, and will support the Company's efforts to raise the project debt and equity finance required to build the mine.

The Company will continue its community relations program and negotiations to complete the outstanding agreements with the communities surrounding the Invicta Project, which are a pre-requisite for mine construction. In addition to the agreement already reached with the community of Santo Domingo de Apache, significant progress has been made in building relationships with the two other communities of Paran and Lacsanga and Andean is supporting ongoing road and water studies which will benefit both the communities and the future mine.

'We believe it is prudent for the Company to preserve its cash position in a difficult financial market where many junior resource issuers are unable to raise funds. We will use the time to explore the Invicta property for further resources and to advance relationships and negotiations with the local communities, both of which will prepare the Company for future growth,' said David Rae, President and CEO of Andean American.

Qualified Person

This press release has been reviewed by Peter Clarke of SRK Consulting (U.S.) Inc. (SRK), an independent Qualified Person, as this term is defined in NI 43-101. The opinions contained herein are based on available information concerning the Invicta Project, and in part from the Feasibility Study work carried out to date which has not been completed. The quality of information and estimates are based on the data available at the time and level of preparation, and opinions regarding estimates and project status are based on data provided from various sources, including SRK and other project consultants.

Appointment of a new Director to the Board

Andean American is pleased to announce the appointment of Jean-Pierre Chauvin to the Board of Directors. Mr. Chauvin brings significant technical skills and board level experience, as well as experience with mergers and acquisitions, to the Board of Andean American. He is a mining engineer with over 29 years in the mining industry and currently serves on the Boards of PC Gold Inc., LakeSide Minerals Inc., Macusani Yellowcake Inc. and Khan Resources Inc. The Board of Andean American welcomes Mr. Chauvin and believes that he will be a valuable member as the Company seeks new opportunities for growth.

About Andean American

Andean American 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 65% 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.

For further information about Andean American, please visit the Company's website at www.AAGgold.com.

Forward Looking Information

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.

On behalf of Andean American Gold Corp.,

David Rae, President and Chief Executive Officer

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Contacts:

Andean American Gold Corp.

David Rae

President and Chief Executive Officer

416 368 9500
investors@aaggold.com


Andean American Gold Corp.

Linda Dorrington

Investor Relations

416 368 9500
ldorrington@aaggold.com
www.AAGgold.com