American Bonanza's Copperstone Mine Ships First Gold

VANCOUVER - American Bonanza Gold Corp. reported that the 100% owned Copper-stone gold mine in Arizona has placed onto transport its first shipment of gold bearing concentrates. The first concentrate shipment consisted of 31.2 tons of concentrate grading an average of 22.8 ounces per ton of gold, containing an estimated 712 ounces of gold in concentrate. Gold content grades in the concentrates are over double the most optimistic expectations, and Bonanza continues to pursue further improvements to the gold grade in concentrate.

The gold-bearing concentrates have been produced during the mine and processing plant ramp up process, during early 2012. Bonanza╒s near term objective is to achieve the design gold production rate of approximately 3,000 ounces of gold per month, and the Company is encouraged to experience continued improvements to throughput as the miners and processing plant operators gain familiarity with the operation, and optimization of the mine and processing plant continues. As part of the optimization program to improve the gold grades in concentrate, a Gemini table has been installed and has been in use. A second Knelson concentrator has been installed.

Performance of the Copper-stone crushing and grinding facilities and the gold processing plant continued to improve. During mid-February the plant operated mainly continuously, with low production for optimization and maintenance taking place in three days out of a thirteen day run. During the ten days that the plant operated continuously, throughput improved to an average of 390 tons per day processed, which represents 87% of design capacity. With continued steady throughput improvement, Bonanza╒s goal is to achieve throughput at the design capacity of 450 tons per day.

Head grades during two weeks of mid-February averaged 0.41 ounces per ton of gold which is above the expected life-of-mine average grade. Currently Bonanza has insufficient data to report any increase in the currently predicted grades over the first year of the mine life. The rising head grades are partially a result of the processing plant working through the low grade rock which has been stockpiled at surface for startup. This initial low grade material is currently being replaced by mine ore production. The surface ore stockpile currently contains approximately 2,700 tons of ore.

The processing plant continues to perform well, as indicated by the consistent and low grade tailings assays, in the order of 0.06 ounces per ton gold during the two weeks of mid-February. Low gold grades in the tailings indicate that most of the gold being fed into the plant is being collected in the gravity and flotation circuits where high grade concentrates are being produced.

During the two weeks of mid-February, overall gold recovery in the processing plant was estimated to be 85%, according to preliminary data. During February, the gold grade of ore delivered to the processing plant roughly doubled as compared to January (a partial month), and the tailings grade rose as a consequence. As the operators become more familiar with the plant and the Copperstone ores, Bonanza expects the processing plant to adapt more quickly to the changing grades, and achieve consistently low tailings grades. This would effectively increase the overall gold recovery. Additionally, optimization of the gravity circuit is aimed at further improving the gold recovery over the next several months.

Underground mine performance continues to improve. During 2012, the mine has been focused both on development mining to gain access to future ore bearing stopes, and mining ore from currently available stopes. Over a ten day operating cycle, excluding one day when the mine did not produce ore, the mine averaged 214 tons of ore per day, nearly half of the design mining rate of 450 tons per day of ore. Surface ore stockpiles currently contain approximately 2,700 tons of ore, which will allow the gold processing plant to continue increasing throughput as the mine tonnages increase to provide ore to the processing plant. Bonanza╒s objective is to bring mine production up to design levels as the processing plant works through the surface stockpile, so that when the stockpile is drawn down, both the mine and the processing plant will be up to their 450 tons of ore per day target levels.

Plans have been formulated for resource expansion drilling. The Bonanza-owned underground drilling rig has been refurbished. While preliminary in nature, the current exploration plan has the goal of now commencing underground resource expansion drilling during April of 2012. Drilling has been re-scheduled by one month to allow for the installation of all underground infrastructure needed for the drill.