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December
16, 2010 - Minera Andes Inc. (TSX: MAI and US OTC:
MNEAF) - is
pleased to announce the results of an updated preliminary assessment
("PA") on its 100% owned Los Azules
Copper Project (the "Project") located in the San Juan Province of
western central Argentina. It is based on the updated resource estimate
announced in June 2010 and higher base case metal price assumptions.
- Using a Copper price of $3.00/ lb
- Base case pre-tax Net Present Value
("NPV") is $2.8 billion and the Internal Rate of Return
("IRR") is 21.4%, at a discount rate of 8%
- Life of mine Cash Operating Costs of
$0.96/lb of copper net of gold and silver by-product credits.
- Initial Capital $2.9
billion
- Capital Payback in 3 years.
- Mine life of 25 years.
Rob
McEwen, Chairman and CEO of Minera Andes, said:
"We
are advancing the engineering studies on Los Azules
to systematically de-risk the project. The field season is just getting
underway, and we are currently mobilizing the first two of five drill rigs to
the project. In addition to continuing the infill and step out drilling, we
will start to test some of the newly identified deeper geophysical targets
this season."
The Los Azules
Copper Project is an advanced-stage porphyry copper exploration project
located in the cordilleran region of San Juan Province, Argentina near the
border with Chile. The deposit is a typical porphyry
copper system in that the upper part of the system consists of a barren
leached cap, which is underlain by a high-grade secondary enrichment blanket,
and the primary mineralization below the secondary enrichment zone extends to
at least 650 meters, which is the depth of the deepest holes drilled to date.
The deposit is approximately one kilometer wide by four kilometers long, and
it is open in several directions.
Highlights of the updated Preliminary Assessment are shown below. Details may
be found in an updated technical report which will be posted on SEDAR
following the issuance of this news release.
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NPV
($3.00/lb Cu, 8% discount rate)
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$2,826 million
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IRR
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21.4%
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Initial Capital Expenditure
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$2,851 million
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LOM Average Operating Costs
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$7.82/t ore
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LOM C-1
Cash Costs (net by-product credits)
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$0.96/lb Cu mined
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Nominal Mill Capacity
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100,000 tpd
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Annual Throughput
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36 million tonnes
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Mine Life
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25.4 years
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Life-of-Mine
Strip Ratio
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1.37
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LOM average
annual copper-in-concentrate production
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169,100 tonnes
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First 5
Years average annual copper-in-concentrate production
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226,500 tonnes
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All monetary amounts are
expressed in US dollars unless otherwise stated. The PA is preliminary in
nature and includes the use of inferred resources which are considered too
speculative geologically to have the economic considerations applied to them
that would enable them to be categorized as mineral reserves. Thus, there is
no certainty that the results of the PA will be realized. Actual results may
vary, perhaps materially. The level of accuracy for Preliminary Assessment
estimates is approximately +/- 35%.
Compared to the previous Preliminary Assessment released in March 2009, the
NPV discounted at 8% has increased from $496 million to $2.9 billion and the
IRR has increased from 10.8% to 21.4%. In addition, the payback of
pre-production capital has decreased from 6.4 years to 3.1 years from the
start of production.
The main driver of the improved project economics is that the base case
copper price has been increased from $1.90/pound to $3.00/pound.
Specifically, the higher copper price added approximately $3.2 billion to the
NPV, and the increased resources added approximately $2.1 billion.
The benefits of the higher copper price and increased resources were
significantly offset by increases in the estimated operating costs ($695
million), capital costs ($100 million) and export retention taxes and
royalties ($3.4 billion).
The updated Preliminary Assessment also incorporates updated property status
and ownership information, revised locations for the project facilities, and
an updated geological interpretation.
Project Economics
The Preliminary Assessment contains a cash flow valuation model based upon
the geological and engineering work completed to date and technical and cost
inputs developed by Samuel Engineering, Inc., Ausenco
Vector and MTB Project Management Professionals, Inc. The base case was
developed using long term forecast metal prices of $3.00/lb for copper,
$980/oz for gold, and $15.60/oz for silver.
The following chart shows the sensitivity of the base case's NPV and IRR to
changes in the copper price: (8% real discount rate).
Click to enlarge
The following chart shows the sensitivity to metal prices, operating costs,
and capital cost. The graph shows that the project NPV is much more sensitive
to metal prices than to capital or operating costs.
Click to enlarge
About Minera Andes
Minera Andes is an exploration company exploring
for gold, silver and copper in Argentina with three significant assets: A 49%
interest in Minera Santa Cruz SA, owner of the San
José Mine in close proximity to Andean Resources' Cerro Negro project;
100% ownership of the Los Azules copper deposit
with an inferred mineral resource of 10.3 billion pounds of copper and an
indicated resource of 2.2 billion pounds of copper; and, 100% ownership of a
portfolio of exploration properties bordering Andean's Cerro Negro project in
Santa Cruz Province. The Corporation had $10 million USD in cash as at
September 30, 2010 with no bank debt. Rob McEwen, Chairman and CEO, owns 33%
of the company.
This news release has been submitted by Jim Duff, Chief Operating Officer of
the Corporation. For further information, please contact Jim Duff or visit
our Website: www.minandes.com.
James K. Duff
Chief Operating Officer
99 George St. 3rd Floor
Toronto, Ontario, Canada, M5A 2N4
Toll-Free: 1-866-441-0690
Tel: 647-258-0395
Fax: 647-258-0408
E-mail: info@minandes.com
Scientific
and Technical Information:
The information presented in this press release has been reviewed and
approved by the Qualified Persons responsible for the Technical Report that
presents the results of the Updated Preliminary Assessment. They are: Kathleen
Altman, Ph.D., PE,, Robert Sim,
P.Geo,. Bruce Davis, PhD, FAusIMM,
Richard Jemielita, Ph.D., MIMMM, William Rose, PE,
and Scott Elfen, PE. All are independent Qualified
Persons as defined by National Instrument 43-101 "Standards of
Disclosure for Mineral Projects" ("NI 43-101"). Robert Sim, Bruce Davis, and William Rose are responsible for
the mineral resource estimate. Bruce Davis is responsible for the quality
control for the assaying of the Los Azules drill
core. All samples were collected in accordance with industry standards.
Splits from the drill core samples were submitted to the ACME sample
preparation laboratory in Mendoza, Argentina and then transferred to ACME's
laboratory in Santiago, Chile for fire assay and ICP analysis. Accuracy of results
is tested through the systematic inclusion of standards, blanks and check
assays. William Rose is responsible for developing the mine production
schedule and participating in the resource estimate. Scott Elfen of Ausenco Vector is
responsible for information about Environmental Liabilities, Environmental
Permitting and for the Geotechnical designs used for the Study. Richard Jemielita is responsible for information about the
Geological Setting, Deposit Types, Mineralization, Exploration, and Drilling.
Kathleen Altman, Samuel Engineering, Inc., is the principal author of the
Report with specific responsibility for Mineral Processing and Metallurgical
Testing, the capital and operating cost estimates and the economic
evaluation.
Mineral resources are generated using ordinary kriging
with a nominal block size of 20x20x15m. Block grade estimates are derived
from drill hole sample results and the interpretation of a geologic model
which relates to the spatial distribution of copper, gold, silver and molybdenum
in the deposit. There are a total of 114 drill holes in the Los Azules database with a cumulative length of 30,997 meters
and a total of 15,260 samples analyzed for a suite of elements including
total copper, gold, silver and molybdenum. A total of 58 of the drill holes
have some portion of the sample intervals tested for sequential copper
analysis. This information contributed to the development of the mineral zone
domains. The portion of the new mineral resource that has been defined as
"indicated" is based on a drilling configuration that exhibits the
degree of continuity required for higher level mineral resources. Inferred
mineral resources are limited to blocks within a maximum distance of 200
meters from a drill hole. As required by NI 43-101, the possible future
economic viability of the mineral resource has been exhibited by restriction
within a pit shell derived about the copper content in indicated and inferred
class blocks at a copper price of $2.50/lb, total operating costs of $5.25/tonne and an average pit slope of 34 degrees. Mineral
resources are presented at a cut-off grade of 0.35%Cu, which is the same base
cut-off grade used in the 2008 mineral resource estimate. These are mineral
resources, not mineral reserves.
For further information in respect of the Los Azules
project please refer to the technical report entitled "Canadian National
Instrument 43-101 Technical Report Updated Preliminary Assessment, Los Azules Project, San Juan Province, Argentina" dated
December 1, 2010, the "Los Azules
Report." This report will be made available on SEDAR (www.sedar.com)
concurrent with the filing of this news release. Inferred mineral resources
are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized as
mineral reserves. There is no certainty that the project as described in the
Los Azules Report will be realized.
Cautionary Note to U.S. Investors:
All resource estimates reported by the Corporation were calculated in accordance
with NI 43-101 and the Canadian Institute of Mining and Metallurgy
Classification system. These standards differ significantly from the
requirements of the U.S. Securities and Exchange Commission. Mineral
resources which are not mineral reserves do not have demonstrated economic
viability.
Caution Concerning Forward-Looking Statements:
This press release contains certain forward-looking statements and
information. The forward-looking statements and information express, as at
the date of this press release, the Corporation's plans, estimates,
forecasts, projections, expectations or beliefs as to future events and
results and management's understanding of proposed legislative changes.
Forward-looking statements involve a number of risks and uncertainties, and
there can be no assurance that such statements will prove to be accurate.
Therefore, actual results and future events could differ materially from
those anticipated in such statements. Risks and uncertainties that could
cause results or future events to differ materially from current expectations
expressed or implied by the forward-looking statements include, but are not
limited to, factors associated with fluctuations in the market price of
precious metals, mining industry risks, risks associated with foreign
operations, risks related to litigation, property title, the state of the
capital markets, environmental risks and hazards, uncertainty as to
calculation of mineral resources and reserves and other risks.
Readers should not place undue reliance on forward-looking statements or
information. The Corporation undertakes no obligation to reissue or update
forward-looking statements or information as a result of new information or
events after the date hereof except as may be required by law. See the
Corporation's annual information form for additional information on risks,
uncertainties and other factors relating to the forward-looking statements
and information. All forward-looking statements and information made in this
news release are qualified by this cautionary statement.
The TSX has not reviewed and does not accept responsibility for the
adequacy or accuracy of the contents of this news release, which has been
prepared by management.
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