Antofagasta Gold Signs Option Agreement to Acquire The Pampas El Penon Property in Northern Chile

TORONTO, ONTARIO--(Marketwire - Feb. 21, 2013) - Antofagasta Gold Inc. ("Antofagasta" or the "Company") (TSX VENTURE:AN) is pleased to announce it has entered into an option agreement (the "Option Agreement") with a Chilean based mining company (the "Vendor") to acquire between 85% and 100% of various claim blocks collectively called Pampas El Peñon Property (the "Property"). The Property consists of 70 mining claims totaling 19,300 hectares partially surrounding Yamana Gold's El Peñon mine and is located approximately 130 km south-east of Antofagasta, Chile. The Property consists of seven separate blocks as close as 4 km from El Peñon, including the land package immediately to the west of the Pampa Augusta Victoria discovery veins. Over 20 epithermal veins, with a cumulative strike length in excess of 10 km, have been identified on surface, some of which have been explored by trenching and/or reverse circulation drilling by previous owners.

The Property covers land in the same geological environment as the El Peñon Mine (total of 7.5 million gold equivalent ounces in mineral reserves and resources as of December 31, 2012), hosting several identified north-south trending epithermal quartz veins with anomalous gold and silver at or near surface. The veins are typically 1 to over 6 metres wide with individual strike lengths of over 1.5 kilometres. The most prominent vein identified to date lies approximately 1000 metres west of Yamana's Pampa Augusta Victoria discovery vein system.

Historical results from trenching and drilling on these veins, as provided to the Company by the Vendor, have demonstrated anomalous values up to 1.2 gpt Au & 16.9 gpt Ag at or very near surface. Mineralized veins in this area, including those at Yamana's Pampa Augusta Victoria and El Peñon deposits, are predominantly north-south trending and typically host gold & silver resources starting between 150-300 metres below surface. Anomalous gold and silver in veins overlying the resource is common and considered a positive indicator of economic mineralization. Historical work consisted primarily of mapping, surface sampling, trenching, and reverse circulation drilling.

William Randall, President & CEO of Antofagasta Gold, commented: "We are extremely satisfied with what we have achieved to date. Since September of 2012 Antofogasta Gold has signed the Capricornio option agreement, completed a $7.5 million private placement, commenced a diamond drilling program, and has now closed the Pampas El Peñon option agreement. We expect to continue actively looking for opportunities to grow the company and create shareholder value while working the existing portfolio.

William Randall added "The Pampas El Peñon Property complements our flagship Capricornio Property nicely. Both properties host known epithermal gold and silver bearing quartz veins in a well recognized and developed mining district. The Pampas El Peñon land package increases our exposure to high grade gold districts increasing our chances of defining quality ounces. Antofagasta Gold now has two strategic land positions and is in a strong position to continue advancing its goal to be a leading explorer and developer of mineral properties in Chile."

A map of the Pampas El Peñon property can be found here.

Antofagasta Gold planned exploration

The Company intends to initiate an exploration program covering the Property as soon as possible. In general, exploration will initially focus on the areas with identified north-south epithermal veins that have only been explored at or near surface. The program is designed to initially identify the veins by surface mapping and geophysical surveys (primarily ground magnetic & CSAMT surveys). Once the veins, or potential veins if not outcropping, have been identified diamond drilling will commence. Diamond drilling is anticipated to occur in "fences", where sections are drilled off down to a depth of at least 400 metres below surface on regular spacing.

Terms of the Deal

The Pampas El Peñon Property has been divided into two groups of claims, the Worked Claims and the Greenfield Claims, based on the mineral exploration work completed by the Vendor.

The Worked Claims have an aggregate surface area of 4,300 hectares. Within these claims significant work has been performed, including, but not limited to, trenching and diamond drilling.

The Greenfield claims have an aggregate surface area of 14,900 hectares. Within these claims there has been very little work completed.

Pursuant to the Option Agreement entered into between the Company and the Vendor with respect to the 4,300 hectares of Worked Claims, the Company may acquire a 100% interest in the Property by paying to the Vendor, on a per hectare basis, as follows: (i) USD$10 per hectare on signing; (ii) USD$20 per hectare on or before February 11, 2014; (iii) USD$50 per hectare on or before February 11, 2015; (iv) USD$130 per hectare on or before February 11, 2016; and (v) USD$240 per hectare on or before February 11, 2017. The initial payment on signing has been made.

In addition, the Company has committed to incur exploration and development expenditures on the Worked Claims over the option term as follows: (i) USD$150 per hectare by February 11, 2014; (ii) an additional USD$250 per hectare by February 11, 2015; (iii) an additional USD$325 per hectare by February 11, 2016; and (iv) an additional USD$350 per hectare by February 11, 2017. The Vendor shall retain a sliding scale royalty with respect to the precious metals produced from the Pampas El Peñon Property.

The Company may reduce the land position by any number of hectares it chooses at its sole discretion during the term of the Option Agreement, thus reducing the size of its Worked Claims property package, future payments and exploration commitments.

In addition, pursuant to the Option Agreement entered into between the Company and the Vendor with respect to the 14,900 hectares of Greenfield Claims, the Company may acquire an 85% interest in the Property by paying to the Vendor, on a per hectare basis, as follows: (i) USD$1 per hectare on signing; (ii) USD$3 per hectare on or before February 11, 2014; (iii) USD$6 per hectare on or before February 11, 2015; (iv) USD$15 per hectare on or before February 11, 2016; and (v) USD$40 per hectare on or before February 11, 2017. The initial payment on signing has been made.

In addition, the Company has committed to incur exploration and development expenditures on the Greenfield Claims over the option term, as follows: (i) USD$10 per hectare by February 11, 2014; (ii) an additional USD$20 per hectare by February 11, 2015; (iii) an additional USD$50 per hectare by February 11, 2016; and (iv) an additional USD$290 per hectare by February 11, 2017. The Vendor shall retain a sliding scale royalty with respect to the precious metals produced from the Pampas El Peñon Property.

The Company may reduce the land position by any number of hectares it chooses during the term of the Option Agreement, thus reducing the size of its Greenfield Claims property package, future payments and exploration commitments. The Vendor shall retain a sliding scale royalty with respect to the precious metals produced from the Pampas El Peñon Property.

The technical and scientific aspects of this news release have been reviewed and approved by Mr. Vernon Arseneau, P.Geo, who has been designated as a qualified person pursuant to under NI 43-101. As the Vice President of Exploration of the Company, Mr. Arseneau is not considered independent.

On behalf of the Board of Directors of Antofagasta Gold Inc.

William Randall, President and CEO

Cautionary Note Regarding Forward-Looking Information and Mineral Resources:

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements (express or implied) relating to production results and/or the impact of such production results with respect to the timing, cost and/or amount of future exploration and development of any property, the timing, cost and/or amount of future production, the future price of gold or other minerals, the successful implementation of development plans at any of the Company's properties and/or the future financial or operating performance of Antofagasta, its properties and/or its projects. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company, its properties and/or its projects to be materially different from those expressed or implied by such forward-looking information, including but not limited to those risks described in the annual information form of the Company, which is available under the profile of the Company on SEDAR. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws. It should also be noted that mineral resources that are not mineral reserves do not have demonstrated economic viability.