American Bonanza Gold Corp (fka ABGFF)

[gsfl]

Progress at Copperstone Mine and Completion of a Gold Facility

June 14th 2012 - American Bonanza Gold Corp. (TSX: BZA) ("Bonanza” or "Company") is pleased to announce a progress update at the high-grade Copperstone Mine during April 2012, and to announce that it has completed a second priority secured gold prepayment facility to support the successful ramp-up of the Copperstone Mine to full production.

Bonanza continues to make positive progress during its expected ramp-up stage as it approaches its objective of reaching design rates for mining and production. Performance during April represents a substantial improvement over the first quarter of 2012. Once at design rates, Bonanza will be able to announce commercial production. Current improvements during the ramp-up phase include:
1. Mill Performance – 5,455 tons were milled during April. On a day-to-day basis, the mill has performed at design throughput rates and is capable of running at these target rates. Increased through-put will be seen in the coming months as the mine’s ore tonnage to the processing plant increases from the ‘D’, ‘C’ and ‘North D’ Zones. The target throughput rate is 450 tons per day.
2. Recovery – 1,060 ounces gold was recovered in the mill during April, which is approximately 35% of the monthly design rate for year one of the mine life.
3. Overall Recovery Rate - stands at 85% for the full month of April. This will further improve as the feed from the mine evens out over the summer. The tailings grade is low at 0.036 ounces per ton, in line with expectations.
4. Concentrate Shipment Grade – During April, the concentrates graded between 48 and 54 ounces of gold per ton, which is several times higher than design grades.
5. Gold Sales – preliminary gold sales in April of 1,186 ounces were achieved, representing 40% of Year 1 monthly design rates. The gravity concentrate is currently being sent to Metals Research in Idaho, and the flotation concentrate to Global Metal Technologies in Spokane.
6. The Mine – 5,375 tons of ore was mined in April, which is approximately 180 tons per day, representing 40% of design output rates.
The mining activity is focusing on three zones. Within the next two or three months, these three zones will ensure that the mine has more than sufficient ore stopes available to achieve design output:

‘D’ Zone – this zone has been the focus of the mining activity during 2012 and mining ore at higher rates will resume when current curing of the backfill is completed shortly. The backfill activity had led to a short-term drop in mine output. ‘C’ Zone – stopes are currently under development and are expected to be developed for the mining of ore within two weeks. The ‘C Zone’ will be the second zone to be developed.

‘North D’ Zone - a development heading is being driven out to ‘North D Zone’ and is expected to arrive in approximately two months.

Gold Facility Details
In order for Bonanza to expedite the opening up of the ‘North D’ Zone and develop stopes in the ‘C’ Zone, plus improve equipment availability and the building of a spare parts inventory, Bonanza completed a second priority secured gold prepayment facility. The gold prepayment facility was completed with an arms-length Lender, whereby Bonanza has agreed to deliver 3,215 ounces of gold for delivery on June 1, 2015, for gross proceeds of US$4,501,000 (the "Facility").
The Facility will be repaid through the delivery of 3,215 ounces of gold (the “Gold”) on June 1, 2015, subject to the Lender’s option to receive the Gold or cash. The Gold that has been committed under this Facility represents approximately 1% of the measured and indicated mineral resources at the Copperstone gold mine.

The Facility is subject to optional early repayment by the Company after eight months have passed with a prepayment equal to the gross proceeds plus the outstanding interest which would become due until June 1, 2015, less interest previously paid. The Company will pay an interest rate of 12% per annum, commencing on July 1, 2012. The Facility is secured by a second priority charge over the personal property of the Company and the Company’s wholly owned subsidiary, Bonanza Explorations Inc.

This news release was reviewed by Douglas Wood, P.G., Vice President, Exploration of Bonanza, a non-independent Qualified Person within the meaning of NI 43-101.