Minera Andes makes headway at San Jose mine (March 11, 2011)

Exploration drilling in and around the San Jose underground mine in Argentina last year uncovered 7.5 km of new high-grade silver-gold veins, a 44% year-on-year increase in the cumulative strike length of all the known veins at the mine, Minera Andes (MAI-T, MNEAF-O) reports. The new veins are within the area of mine operations and can be accessed from existing underground workings. 

The drilling — 54,476 metres in 265 diamond drill holes — resulted in a doubling of the inferred resource and the discovery of eleven new veins. Nine of the veins, plus extensions to two other veins for a total of more than 5 km of strike length, were unveiled in October.

Highlights of intercepts from some of the new veins include: 2.45 metres of 8.33 grams gold per tonne and 1,484 grams silver per tonne, and 1.09 metres of 33.50 grams gold and 2752 grams silver on the Micaela Vein. On the Sofia vein, intercepts included 10.13 metres of 14.96 grams gold and 1096 grams silver; 5.45 metres at 13.54 grams gold and 206 grams silver; and 1.72 metres at 10.94 grams gold and 1255 grams silver on the Sofia Vein.

The Susana Vein returned 3.10 metres at 22.19 grams gold and 2,318 grams silver, while the Luli Vein returned 2.70 metres at 5.35 grams gold and 26.90 grams silver.

Currently measured and indicated resources stand at 3 million tonnes grading 462 grams silver for 44.2 million oz. of contained silver and 6.81 grams gold for contained gold of 651,000 ounces. Inferred resources add 4.6 million tonnes grading 317 grams silver for 46.4 million oz. of contained silver and 4.87 grams gold for 712,000 oz. gold.

Minera Andes owns 49% of the mine with Hochschild Mining (HOC-L) holding 51%.

San Jose is about 20 km north of Goldcorp.’s (G-T, GG-N) Cerro Negro epithermal gold deposit project in the northwest corner of the Deseado Massif region of Argentina’s southern province of Santa Cruz, 1,750 km southwest of Buenos Aires. The nearest town is Perito Moreno, about 30 km west of San Jose. The mine started commercial operations in January 2008 and is operated year-round by Hochschild Mining.

San Jose produced 5.3 million ounces of silver and 84,000 ounces of gold in 2010. Plant capacity at the mine is 1,500 tonnes per day.  

Ore is concentrated by conventional bulk flotation to produce a gold-silver bearing sulfide concentrate. About half of the concentrate is shipped to smelters internationally, and the other half is treated on site by the Gekko process to produce a silver-gold dore bullion that is sold internationally. 

Minera Andes is exploring Argentina for gold, silver and copper and in addition to its interest in the San Jose mine, owns 100% of the Los Azules copper deposit. Los Azules, an advanced-stage porphyry copper project in the cordilleran region of San Juan province, has indicated resources of 2.2 billon pounds of copper and inferred resources of 10.3 billion pounds of copper and exploration and infill drilling is currently underway at the project.

In December Minera Andes released results from a preliminary assessment, which demonstrated that Los Azules, at a copper price of US$3 per lb., would have a mine life of 25 years, a pre-tax net present value of US$2.8 billion and an internal rate of return of 21.4% at a discount rate of 8%.

Life of mine cash operating costs were estimated at US$0.96 per lb. of copper net of gold and silver by-product credits. Initial capital was estimated at US$2.9 billion with a payback period of three years.

The deposit is about one km wide by four km long and is open in several directions.

Minera Andes also owns a large portfolio of exploration properties in the country, some of which border Goldcorp.’s Cerro Negro project.

As of Feb.7 2011, Minera Andes held US$31 million in cash with no bank debt.

Rob McEwen, chairman and chief executive, owns 31% of the shares of the company.

At presstime in Toronto Minera Andes was trading at $2.52 per share and has traded in a range of 71¢ and $3.24 per share over the last year. It has about 282.3 million shares outstanding.