Minera Andes announces first quarter 2009 San José mine production and reduced cash costs



    
    TSX: MAI                                               NASD-OTCBB: MNEAF
    

    SPOKANE, WA, April 29 /CNW/ - Minera Andes Inc. (TSX: MAI and US OTC:
MNEAF) is pleased to announce details of the San José mine production for the
first quarter of 2009. The San José project is owned by Minera Santa Cruz S.A.
("MSC"), which in turn is owned 49% by Minera Andes and 51% by Hochschild
Mining plc ("Hochschild") (HOCM.L: Reuters and HOC LN: Bloomberg - London
Stock Exchange). Hochschild is the operator of San José. Production for San
José in the first quarter (on a co-product basis) totaled 1,299,000 ounces of
silver at a cash cost of $4.99 per ounce and 16,560 ounces of gold at a cash
operating cost of $357 per ounce, of which 49% of the production is
attributable to Minera Andes. (All dollars in this news release are US
dollars.)
    The San José gold/silver mine saw a decrease in gold and silver
production and a significant lowering of unit operating costs in Q1 2009
compared to Q4 2008 as reported by MSC to the owners. Silver production was 2%
lower and gold production was 5% lower in Q1 2009 compared to the previous
quarter, because approximately 20% of the mill feed was derived from low-grade
surface stockpiles. This was partially offset by the higher tonnage being
treated in the current quarter. Unit operating costs were lower due to
increased production and the economies of scale associated with the processing
capacity expansion completed in Q4 of 2008.
    Production cash operating costs were $12.2 million. Total operating cash
costs during Q1 2009 decreased approximately 28% compared to Q4 2008 mainly
due to lower costs for marketing, labor, supplies, energy, and repairs and
maintenance, all of which was partially offset by an increase in the tonnage
mined and processed.
    The cash cost per tonne was $111.80 in Q1 2009. The cash cost per tonne
decreased approximately 34% in Q1 2009 compared to Q4 2008 due to the lower
total cash costs explained above and, to a lesser extent, by the higher volume
extracted from the mine and processed at the plant.
    Cash cost per ounce of silver and gold, on a co-product basis, decreased
approximately 28% and 21% respectively in the Q1 2009 compared to Q4 2008.
    Mill throughput increased 10% in Q1 2009 compared to the previous quarter
due to the plant expansion completed in October, which was partially offset by
the lower number of production days in Q1 2009 (87 days) than in Q4 2008 (95
days). The San José mine entered into full commercial production on January 1,
2008, however there were 317,000 ounces of silver and 4,319 ounces of gold
produced in the second half of 2007 during the commissioning period. A planned
expansion project to double the original design capacity of the processing
plant from 750 tonnes per day ("MTPD") to 1,500 MTPD was completed in October
2008.
    Mill production has now been ramped up to the expanded capacity, and the
first quarter of 2009 marked the first full quarter of production at near the
expanded capacity rate. Approximately half of the concentrate produced by the
mill is converted on site to doré bullion.
    MSC sales of precious metal were lower in Q1 2009 compared to Q4 2008
because of current negotiations for new contracts and better conditions for
the sale of doré bars and concentrates. As a result, the company had
accumulated final product inventory of silver and gold that have been sold in
Q2 2009. Product inventories at the end of Q1 2009 consisted of 7,437 kg of
high-grade precipitate from the Gekko electrowinning circuit (3,951 kilograms
at the end of Q4 2008), 12,110 kilograms of silver-gold doré bullion (9,954
kilograms at the end of Q4 2008), and 1,449 tonnes of silver-gold concentrate
(195 tonnes at the end of Q4 2008), containing 11,290 ounces of gold and
898,000 ounces of silver (6,190 ounces of gold and 459,000 ounces of silver at
the end of Q4 2008).

    
                         SAN JOSE MINE PRODUCTION (*)
    -------------------------------------------------------------------------
                                            Q1           Q4           Q1
    Production                             2009         2008         2008
    -------------------------------------------------------------------------
    Ore production (tonnes) 	            118,986      107,875       59,897
    -------------------------------------------------------------------------
    Average head grade silver (g/t)            427          463          624
    -------------------------------------------------------------------------
    Average head grade gold (g/t)             5.29         5.91         7.10
    -------------------------------------------------------------------------
    Silver produced (ounces)             1,299,000    1,329,000      968,000
    -------------------------------------------------------------------------
    Gold produced (ounces)                  16,560       17,370       12,140
    -------------------------------------------------------------------------
    Net silver sold (ounces)               838,000    1,135,000      323,000
    -------------------------------------------------------------------------
    Net gold sold (ounces)                  11,380       13,930        5,050
    -------------------------------------------------------------------------
    (*)  The company has a 49% interest in MSC that owns the San José mine.


                             SAN JOSE MINE COSTS
    -------------------------------------------------------------------------
                                            Q1           Q4           Q1
    Costs                                  2009         2008         2008
    -------------------------------------------------------------------------
    Operating Cash Costs ($)            12,219,000   16,987,000    8,719,000
    -------------------------------------------------------------------------
    Operating cash cost/tonne(xx) ($/t)      111.8        168.2        141.6
    -------------------------------------------------------------------------
    Operating cash cost/oz Au ($/oz)           357          494          286
    -------------------------------------------------------------------------
    Operating cash cost/oz Ag ($/oz)          4.99         6.32         5.42
    -------------------------------------------------------------------------
    (xx) The cash cost per tonne considers both the extracted and processed
         tonnes.
    

    Work is underway to also increase mine production from 750 MTPD to 1,500
MTPD, primarily by accessing the Kospi vein, located between the Huevos Verdes
and Frea veins which are the source of the current production. Production from
the Kospi vein is anticipated to commence during the second quarter of 2009.
In the meantime, mill feed is being generated from expanded mine production at
the Huevos Verde and Frea veins and from a surface stockpile of low-grade ore.
    Allen V. Ambrose, Minera Andes' President, who is a "qualified person" as
defined by National Instrument 43-101, is responsible for the information used
in this news release and has supervised the preparation of the information and
reviewed all information used in this news release.
    Minera Andes is a gold, silver and copper exploration company working in
Argentina. The Corporation holds or has an interest in approximately 304,000
acres of mineral exploration land in Argentina, including the properties
comprising the 49% owned San José silver/gold mine. Minera Andes is also
exploring the Los Azules copper project in San Juan province, where a scoping
study has been completed and a 43-101 technical report filed. Other
exploration properties, primarily silver and gold, are being evaluated in
southern Argentina. The Corporation presently has 230,538,851 shares issued
and outstanding.
    This news is submitted by Allen V. Ambrose, CEO, President and Director
of Minera Andes Inc.

    Non-GAAP Financial Measures:

    In this news release, we use the term "operating cash cost." Operating
cash costs are defined as the sum of the geology, mining, processing plant,
general and administration costs as well as royalties, refining and treatment
charges and sales costs applied to doré, but with respect to concentrate sales
do not include refining, treatment charges and sales costs. The operating cash
costs per ounce are calculated on a co-product basis by dividing the
respective proportionate share of the total costs for the period for each
metal by the ounces of each respective metal produced. The proportionate share
of the total costs is calculated by multiplying the total cash costs by the
percentage of total production value that the respective metal represents. For
2008, approximately 58% of the value of the production was derived from silver
and 42% was derived from gold based on the year 2008 average London PM fix for
silver and for gold. We use operating cash cost per ounce as an operating
indicator. We provide this measure to our investors to allow them to also
monitor operational efficiency of MSC's mine at San José. Operating cash cost
per ounce should be considered as non-GAAP Financial Measure and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with GAAP. There are material limitations associated
with the use of such non-GAAP Financial Measures. Since these measures do not
incorporate revenues, changes in working capital and non-operating cash costs,
they are not necessarily indicative of operating profit or cash flow from
operations as determined under GAAP. Changes in numerous factors include, but
are not limited to, mining rates, milling rates, silver and gold grades,
silver and gold recoveries, and the costs of labor, consumables and mine site
operations general and administrative activities that can cause these measures
to increase or decrease.

    Caution Concerning Forward-Looking Statements:

    This news release contains forward-looking statements and forward-looking
information within the meaning of applicable US and Canadian securities laws.
Such forward-looking statements or information include expected production at
MSC's San José Project. In making the forward-looking statements and providing
the forward-looking information, we have made numerous assumptions. Although
our management believes that the assumptions made and the expectations
represented by such statements or information are reasonable, there can be no
assurance that the forward-looking statements will prove to be accurate.
Forward-looking statements and information involve known and unknown risks,
uncertainties and other factors that may cause our actual results to be
materially different from that expressed or implied by such forward-looking
information. Such risks, uncertainties and other factors include among other
things, declines in the price of gold, silver, copper and other base metals,
capital and operating cost increases, changes in general economic and business
conditions, including changes in interest rates and the demand for base
metals, economic and political instability in Argentina, discrepancies between
actual and estimated production and mineral reserves and resource, operational
and development risk, and the speculative nature of mineral exploration and
regulatory risks.
    Readers should not place undue reliance on forward-looking statements or
information. We undertake 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 our 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. Minera Andes' joint venture partner, a subsidiary of
Hochschild Mining plc, and its affiliates do not accept responsibility for the
use of project data or the adequacy or accuracy of this release.





For further information:

For further information: Art Johnson at the Spokane office, or Krister
A. Kottmeier, investor relations - Canada, at the Vancouver office. Visit our
Web site: www.minandes.com; Spokane Office, 111 East Magnesium Road, Ste. A,
Spokane, WA, 99208, USA, Phone: (509) 921-7322, E-mail: info@minandes.com;
Vancouver Office, 911-470 Granville Street, Vancouver, B.C., V6C 1V5, Phone:
(604) 689-7017, (877) 689-7018, E-mail: ircanada@minandes.com

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