Minera Andes announces the San Jose project increases silver and gold reserves by 71 percent
4/10/2007 8:30:00 AM
TSX: MAI NASD-OTCBB: MNEAF
SPOKANE, WA, April 10, 2007 /PRNewswire-FirstCall via COMTEX/ -- Minera Andes Inc. (TSX: MAI and US OTC: MNEAF) is pleased to announce the results of the 2006 exploration program at the San Jose project in Santa Cruz province, southern Argentina, where production is scheduled to commence in the second quarter of this year. The San Jose project is operated by, Hochschild Mining plc ("Hochschild") (HOC.L Reuters, HOC.LN Bloomberg, London Stock Exchange). Minera Andes has a 49% interest in the San Jose Project.
In 2006, a 21,241 meter drilling program increased silver and gold reserves by approximately 71% from the reserves announced in the news release of October 24, 2005. The highlights of the new reserve estimate from Hochschild and the expected initial mine production are as follows (all amounts are expressed in U.S. dollars, unless otherwise indicated):
- Proven and probable mineral reserves at December 31, 2006 are:
1,958,430 tonnes (t) with an average grade of 7.2 g/t gold and 450
g/t silver (using a cutoff off grade of $75/t - using a price of
$500/oz for gold and $8.50/oz for silver).
- Gold contained: 453,348 ounces proven and probable reserves
- Silver contained: 28,334,242 ounces proven and probable reserves
- Forecast average gold production: 60,633 ounces per year
- Forecast average silver production: 3,119,533 ounces per year
- Initial production 750 t/day - with plant and infrastructure
constructed to be upgraded to 1,500 t/day
- Forecast average operating costs of: $200 per ounce of gold
equivalent from October 2005 feasibility study
- Mine life increased from 4.3 years to 6.8 years
- Production: Scheduled start up second quarter 2007
The drilling completed on the San Jose mine at year end 2006 increased the project mine life by 58 percent from 4.3 years (as previously announced from the results of the feasibility study in October 2005) to 6.8 years. The new mineral reserves indicate an increase of approximately 71% in contained gold and silver and the mine now contains over 55 million silver equivalent ounces in the proven and probable categories (see reserve tables below). Inclusive of reserves the mineral resources (measured and indicated) on the property now total approximately 58.8 million silver equivalent ounces plus an additional 12.2 million silver equivalent ounces in the inferred category. This increase is primarily due to the addition of the Kospi vein to the reserve/resource category.
The Kospi vein is the first of the four new veins discovered on the property in the last 18 months to be drilled and placed into the reserve category. Sufficient drilling has not yet been done on the other veins to include them in the reserve category.
Allen Ambrose, president of Minera Andes, said "Even with the new drilling, less than 15% of the known 40 kilometers of the vein trends at San Jose have been drilled. The 21,241 meter drill program in 2006 increased the mine's reserves by 71%. The joint venture is drilling 38,228 meters in 2007 to define new reserves and continue evaluating new targets. These factors are expected to allow an expansion of production at the project within a short period after mine start-up. With production expected to begin in the second quarter of 2007, it is an exciting time for Minera Andes. We are on the road to becoming a producing company. In a few short months, we expect to be an unhedged low cost silver producer in Argentina."
The San Jose mine is in the final construction stages and scheduled to start up in the second quarter of this year. Approximately nine kilometers of underground workings have been developed at the mine along with the associated infrastructure. Completion of construction of the processing plant is underway, where the final product will be a silver/gold dore. This year mining will begin at the Huevos Verdes and Frea veins. All of the personnel have been hired for the mine and the processing plant personnel are currently being hired. During construction approximately 700 people are working at the site and when construction is complete the mine will be staffed by approximately 450 personnel.
The new San Jose mineral resource and reserve estimates, mine life, and mining rates, disclosed herein are from a report provided by our joint venture partner Hochschild which have been reported according to JORC code and use JORC categories that are recognized under Section 7.1(b) of NI 43-101. Minera Andes will have its independent qualified persons review the disclosure made herein and will have an independent technical report prepared and filed as soon as practicable. Investors should consider this in their investment decisions.
At December 31, 2006 total unaudited measured and indicated resources at the San Jose Project were 480,197 ounces of gold and 29.9 million ounces of silver, contained in 1.8 million tonnes grading 8.36 g/t gold and 522 g/t silver. An additional 99,015 ounces of gold and 5.9 million ounces of silver, in 317,824 tonnes, grading 9.69 g/t gold and 576 g/t silver are classified as inferred resources. The cutoff grade used to calculate the resources is $45/t (using a price of $500 for gold and $8.50 for silver).
Mineral Resources - Measured and Indicated(x)
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Grades Classified Resource
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Area Total
Resources Au Ag Resource Measured Indicated
(12/31/06) (g/t) (g/t) (t) (t) (t)
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HUEVOS VERDES 7.47 551 563,266 216,026 347,240
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