SANTA ROSA - ANDEAN AMERICAN

Andean American reported that metallurgical work to increase the recovery rates attained to process ore from its 100% owned Santa Rosa mine in Peru is underway. The company announced a plan to upgrade the technology being implemented over the next 30 days to bring recoveries up to between 28 and 38 per cent for precious metals.

Announced that metallurgical work to increase the recovery rates attained to process ore from the Santa Rosa mine in Peru was underway. The company announced a plan to upgrade the technology being implemented over the next 30 days to bring recoveries up to between 28 and 38 per cent for precious metals. Santa Rosa continues to process recycle material. On the metallurgical front it appears that a solution for the poor gold and silver recoveries is in sight in the form of a new CIL agitated leach process and Merrill Crowe plant.

During fiscal 2006 operations at the Santa Rosa Mine have been negatively affected by a microporosity problem with the ore. A solution to the problem has been developed and is now being transferred from the laboratory to the field. This problem should be solved in the coming months. Once a reliable solution has been proven in the field, production will be accelerated. During this process, the Santa Rosa Mine continues to operate at a small profit.