New "Bull and Bear" Report on Minera Andes Inc. November 7th, 2006
Dear Shareholders and Investors,
I am pleased to bring you a recent report on Minera Andes Inc. (MAI-TSX.V; MNEAF-OTCbb) by The Bull and Bear Financial Report. This updated special report discusses Minera Andes' scheduled production plans at the San Jose high-grade gold/silver project. As well, the report discusses the significance of Minera Andes' high-grade copper discovery at the Los Azules project.
Minera Andes’ Journey to a Producing Gold-Silver Mine Nearly Complete as San José Project Keeps Getting Better $55 million mine development program aims at mid-2007 production startup
More than 10 years of exploration and unrelenting focus on an ambitious business plan is about to pay off – big time – for Minera Andes Inc. (OTC: MNEAF; TSX.V: MAI). The company is now mere months away from pushing the production start button at its high-grade San José gold-silver project in southern Argentina.
“The remaining phases of the project are under construction, and we are going ahead with production at San José,” says Minera Andes President Allen Ambrose. At current gold prices, Minera’s projected $200/ounce operating cost certainly leaves the company a lot of play room in the typically volatile metals market.
Mine site development at San José is about 65% complete, according to Ambrose. Permitting is in place, and, with a positive bankable feasibility study in hand, Minera is now in the final stages of activating a $55 million financing package to complete mine and processing mill construction.
And if that isn’t enough good news, ongoing exploration at San José continues to increase both the grade and the extent of the expanding gold-silver deposit. Waiting in the wings is the Los Azules project, a pure copper play where exploration results including a drilling intercept of 221 meters of 1.62 % copper indicates there may be a deposit so big it could be substantially larger than previously thought.
“Are we happy? Absolutely. Both the San José gold-silver project and the Los Azules copper project speak to the success of our business plan,” says Ambrose.
San José Rapidly Approaching High-Grade Gold-Silver Production
Minera Andes’ San José Project epitomizes the company’s multi-step business plan – achieving success through a “mine cycle” of exploration, development and production. The best projects are marketed on a profit-sharing basis to proven mine development/operating companies to bring them to production. Minera Andes’ goal is clear: creating a solid cash flow that will richly reward shareholders and finance the next cycle of mine development.
The company focused early on Argentina, an underexplored region with the potential for high-grade deposits. “We are confident our method of systematic, methodical exploration will yield many more valuable mining projects in Argentina,” says Ambrose. “This is a country that has the same discovery potential as in the American west in the early 19th Century.”
At San José, Minera’s partner is Mauricio Hochschild & Cia. Ltda., a Peruvian mining company operating gold and silver mines in Peru. The company is the operator at San José.
Much of the mine development work at San José is either already completed or well underway. The partnership has built a 28-kilometer all-weather access road, more than 7,000 meters of underground workings including tunnels, drifts, ore passes and raises, and two 45-degree incline shafts, as well as surface structures for vehicles, power generation, employee facilities, equipment and drill core storage. Currently, there are nearly 400 employees and consultants actively working at the mine site.
Over 18,000 tonnes of mineralized material, grading at 5.04 g/t gold and 329 g/t silver, are stockpiled for processing, while the average mining head grade will be 7.7 g/t gold and 406 g/t silver.
Ambrose says the mill itself has been designed to be easily scaleable if the deposit grows as anticipated. “We are already talking about doubling production to 1500 t/d,” he says. Initial production is planned at a rate of 750 t/d – a rate anticipated to produce 60,000 ounces of gold and 3.1 million ounces of silver annually.
That total could easily increase with the recent discoveries of five new high-grade vein structures. Drill holes at the new Kospi silver-gold vein alone encountered extremely high grades: up to 136.72 g/t (4.4 opt) gold and 11,314 g/t (364 opt) silver.
Less than 10 percent of the area’s 40 kilometers of gold and silver mineralized systems have been explored to depth. As new resources are discovered at the 99,000-acre San José property, Minera Andes’ first producing mine shows potential to be much larger and longer-lasting than originally thought. The initial production decision is based on 700,000 ounces of gold equivalent reserves calculated over a 2.2 km trend, which represents only five percent of the entire property.
A US$55 million financing has been offered by Macquarie Bank Limited. In addition, a US$20 million bridge financing has also been made available to the joint venture.
“These loan facilities minimize the need for equity financing, and limit dilution to shareholders,” Ambrose says.
Exploration Results Pointing to Giant High Grade Copper Deposit at Los Azules Property
Los Azules, a potentially large high-grade porphyry copper deposit, was discovered by Minera Andes geologists near the Argentina/Chile border. Recent drilling has intersected significant high-grade mineralization grading up to 1.62% copper over 221 meters and 1% copper over 173 meters in two separate drill holes.
“This discovery at Los Azules is more than exciting. We are seeing the potential for a large high grade copper target developing that is near surface,” says Ambrose, who expects the project to complete the scoping study stage next year. At Los Azules, Minera recently signed a letter of intent with Xstrata Copper, a top-10 copper producer, to consolidate exploration on some 7,500 hectares, and potentially partner in future mine development work.
Xstrata Copper is an impressive partner. As a top-10 global copper producer, the company produces 180,000 tonnes of copper concentrate and 633,000 ounces of gold concentrate and ore annually from one of the world’s major copper deposits, Bajo de la Alumbrera in Argentina.
Under the letter of intent Minera can earn a 100 percent interest in Xstrata’s property by spending $1 million on exploration over the next four years. If Minera produces a scoping study showing the property is potentially economically viable, Xstrata has a right to earn 51 percent in the combined properties by paying Minera three times its exploration costs and completing a bankable feasibility study in five years.
Minera Andes is also actively exploring other properties in its extensive portfolio. Another potentially significant copper prospect is its Rincon de Los Chochones property in San Juan province. Epithermal gold-silver vein targets have been discovered at some of its other projects in Santa Cruz province, home of Minera’s flagship San José project.
Investment Considerations
Minera Andes is led by a close-knit team of experienced geologists who have steadily increased the company’s land holdings to 440,000 acres of highly prospective mineral exploration land in Argentina. The value of their choices is more than evident with its recent charge-ahead production decision at San José, multiple high-grade copper discoveries at Los Azules, and the promising early exploration results at the company’s ten other properties.
“San José marks the completion of the first full cycle of our business plan,” says President Allen Ambrose. “This exploration program has proven to be very successful for us and, with the discovery of new veins, could end up being a multiple-mine project.”
Minera Andes currently has more than $6 million in the bank, and is about to complete its production financing. The income generated from San José is estimated to pay back project financing in just a few years at current metals prices.
Minera Andes’ success and future prospects is attracting major new investors including former Goldcorp CEO Rob McEwen who now holds a 30% share of the company. The company has also attracted the attention of a noted market watcher, John Embry of Sprott Asset Management. Says Embry, “This is a real company ... Not only do they have this producing mine, they have a really good exploration package.”
To download a PDF version of this report, please click on the following link:
I hope you find this report informative. If I can provide you with any further information or answer any questions, please do not hesitate to contact me at toll free 1-877-689-7018 or via email at ircanada@minandes.com .
Thank you for your ongoing support of Minera Andes Inc.
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