NEW YORK (Mineweb.com) -- As a hobby over the years, contract miner Neal Degerstrom acquired a number of exploration concessions in Argentina, which, he believed, had potential.
At the time, Argentina was relatively under-explored and remote. Nevertheless, its proximity to Chile and general geology convinced Degerstrom of Argentina's potential as a future mining nation.
After Argentina enacted the Mining Investments Act to encourage mineral exploration and foreign investment in Argentina in 1993, Degerstrom conveyed the majority ownership of these interests in 1995 to Minera Andres [MAI.V, MNEAF] Spokane, Washington-based junior exploration company, trading on the TSX-V. Degerstrom remains the company’s largest shareholder with a 10% interest.
During the recent New York Institutional Gold Conference, Minera Andes executives Allen Ambrose, President, and Brian Gavin, Vice President of Exploration, and Art Johnson, investor relations, participated in an interview with Mineweb. Geologist Ambrose is a co-discoverer of the Brisas del Cuyuni gold deposit in the Kilometer 88 mining area of Venezuela. Gavin has worked in Argentina since 1993.
Johnson said those legal and regulatory chances included full repatriation of profits, no import duties, tax incentives, and a permitting system, which appears to function very well. Meanwhile, the success of AngloGold’s Cerro Vanguardia gold mine in the Sierra Cruz Province of Patagonia helped to convince Minera Andes that the country offered much as a future mining nation. By July 2003, Peruvian miner Mauricio Hochschild and Cia (MHC) became a majority partner in a holding company of Minera Andes.
Having a Peruvian partner proved a tremendous advantage, according to Ambrose, as the company’s experience in the region considerably speeded up the permitting process. MHC operates three high-grade underground mines and one open pit mine producing 450,000 ounces of gold and 10 million ounces of silver annually.
The 88-square-kilometer San Jose property in the Santa Cruz province is proving to be particularly promising. MHC is acting as operator of the property. Snowden Mining Industry Consultants calculated an indicated resource of 1.5 million tonnes averaging 211.8 grams of silver and 2.6 grams gold per tonne, or 12.8 million ounces of silver and 128,000 ounces of gold. Inferred resources include 24.7 million ounces of silver and 221,000 ounces of gold.
Ambrose said the partnership with MHC has also helped to ensure “secure access and secure title” to San Jose. MHC is expected to make a decision this year whether to begin production for Huevos Verdes gold-silver deposit, which is one of the discovery areas within the San Jose project. A $12.2 million 17-month exploration and development program for San Jose is expected to be concluded this November. Since the project is located in an industrial area, Minera Andres doesn’t expect to encounter opposition to developing a mine. Two incline shafts have been built and an underground exploration program is underway.
Since Argentina tends to be a recent natural resources culture, Gavin said much of it is under-explored and even virgin mining territory. Minera Andes has an overall portfolio of 12 properties, all in Argentina. The company is preparing to drill a large copper/gold porphyry system on a 100%-owned property in central Argentina.
Johnson told Mineweb that Minera Andes has attracted major institutional investors. Using forms of debt financing, the company currently has cash flow ranging from $5.5 million to $6 million and no long-term debt, he said.
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