Minera Andes announces increase in forecast production at the San Jose gold/siver mine



    
    TSX: MAI
    NASD-OTCBB: MNEAF
    

    SPOKANE, WA, Jan. 16 /CNW/ - Minera Andes Inc. (TSX: MAI and US OTC:
MNEAF) is pleased to provide an update on the producing San José mine in
southern Argentina. The San José project is operated by Minera Santa Cruz S.A.
("MSC") owned 51% by Hochschild Mining plc ("Hochschild") (HOC.L: Reuters and
HOC.LN: Bloomberg - London Stock Exchange) and 49% by Minera Andes. MSC
forecasts that at the expanded production rate, the San José mine will produce
approximately 95,000 ounces of gold and 7,500,000 ounces of silver in 2009.
    MSC has reported to Minera Andes that during the fourth quarter of 2008
the completion of the expansion project to double the processing capacity of
the plant at San José from the original design rate of 750 metric tons per day
("MTPD") to 1,500 MTPD was achieved. Approximately half of the concentrate
produced by the mill is converted on site to doré bullion. The increased
production volume and connection to the national power grid, which is forecast
to be completed in the first quarter of 2009, should enable a significant
reduction in unit operating costs in 2009.

    
    Allen Ambrose, President of Minera Andes commented:

        "The successful completion of the expansion and related optimization
        projects will lower unit costs and help maintain San José's position
        as a low-cost silver/gold mine at a time of market volatility. Future
        capital projects are planned to be financed through the mine's
        operational cash flow."

    Expansion Project
    -----------------

    -   In November 2007 MSC committed to double the capacity of the San José
        mine and processing facility, to increase the capacity from 750 MTPD
        to 1,500 MTPD. In addition to increasing the output from the
        operation, the expansion is intended to reduce unit operating costs
        by realizing economies of scale at the increased production level. As
        previously reported by Minera Andes, completion of the expansion of
        the processing facility was delayed from the original date of mid-
        August to late-October 2008 due to delays in the delivery of critical
        components, especially the second 750 MTPD grinding mill. As a result
        of the delays and other commissioning issues, the production target
        for 2008 was reduced by about 65,000 metric tonnes compared to the
        original 2008 budget.

    -   At the expanded rate, MSC forecasts that about half of the
        gold/silver concentrates will be converted to doré bullion on site by
        the Gekko intensive leaching circuit, and the other half will be
        marketed directly as concentrates. Conversion of the concentrates to
        doré bullion reduces treatment and refining costs, selling expenses
        and also reduces the export tax from 10% to 5%.

    -   In parallel with the expansion of the process facility, mine
        production is being increased from 750 MTPD to 1,500 MTPD. This is
        being achieved mainly by developing the Kospi vein, which is
        centrally located between the currently producing Huevos Verde and
        Frea veins. Difficult ground conditions were encountered in the
        decline ramp access to the Kospi vein, which has delayed development.
        The ramp has been re-routed, and MSC expects that the re-routed ramp
        will intersect the vein early in the first quarter and that
        production on the vein will commence in the second quarter of 2008.
        Meanwhile, mill feed will be generated from expanded mine production
        on the Huevos Verde and Frea veins plus a surface stockpile of low-
        grade ore.

    Optimization Projects
    ---------------------

    -   A project is underway to connect the project to the national power
        grid though the construction of a 130 kilometer 132kV electric
        transmission line. The project was due to be completed by the end of
        September 2008, but MSC now forecasts that completion will be early
        in the first quarter of 2009 because the Province of Santa Cruz
        denied the permits to build the electric line along the right of way
        of the Provincial highway. As a result, MSC had to redesign and
        lengthen the location of the electric line and negotiate agreements
        with private land owners along the redesigned route. MSC estimates
        that the cost for the transmission line has increased approximately
        75% to about US$21 million due to the re-routing and increased
        materials and installation costs. MSC expects that the grid
        connection will cut its power costs by more than half. The existing
        diesel generators, which are fully capable of providing sufficient
        power for the expanded 1,500 MTPD operation, will remain on site for
        back-up.

    -   As described above, approximately half of the concentrates produced
        at San José are converted to doré bullion on site by means of the
        Gekko intensive leaching circuit. Converting the concentrate to doré
        bullion allows substantial savings in transportation and refining
        costs as well as savings on export duties. MSC has initiated a
        project to expand the Gekko circuit to process all of the concentrate
        so that 100% of the output for the operation would be in the form of
        doré bullion. MSC has already spent or committed approximately US$9.7
        million on this project, but MSC has suspended further capital
        expenditures on the project until it can be fully funded from cash
        flow from operations.

    2008 Capital Expenditure
    ------------------------

    As of the end of the third quarter 2008, the capital expenditures during
    2008 were as follows:

                                                  US$ Millions
                                                  ------------
        Mine Development                               6.4
        Plant Expansion                               21.6
        Sustaining Development & Improvements          7.3

        Electric Transmission Line                     4.1
        100% Doré Project                              0.2
        Exploration                                    1.9
                                                     ------
                                               Total  41.5
                                                     ------
                                                     ------
    

    During the fourth quarter, the Argentine tax authority refunded $4.9
million in value added taxes.
    As reported on December 19, 2008, the Company announced that it would
receive a cash call of approximately US$11.3 million due on February 17, 2008
from MSC to finance the higher than budgeted costs for the expansion and
development of the San José project. The cash call was made notwithstanding
previous assurances from MSC that additional cash calls would not be required
and that MSC expected to pay for plant expansion costs from cash flow. Most of
the capital expenditure for the expansion will have been completed by the end
of January 2009, and MSC forecasts that the operation will be fully self
funding after the February cash call.
    Technical and financial results were reported to Minera Andes by MSC. The
data was reviewed by Allen Ambrose, Minera Andes' President, who is a
qualified person as defined by National Instrument 43-101.
    Minera Andes is a gold, silver and copper exploration company working in
Argentina. The Company holds about 304,000 acres of mineral exploration land
in Argentina including the 49% owned San José silver/gold mine. Minera Andes
is also exploring the Los Azules copper project in San Juan province, where an
exploration program has defined a resource and a scoping study is underway.
Other exploration properties, primarily silver and gold, are being evaluated
in southern Argentina. The Corporation presently has 190,158,851 shares issued
and outstanding.

    This news is submitted by Allen V. Ambrose, President and Director of
Minera Andes Inc.

    For further information, please contact: Art Johnson at the Spokane
office, or Krister A. Kottmeier, investor relations - Canada, at the Vancouver
office. Visit our Web site: www.minandes.com.

    Caution Concerning Forward-Looking Statements:

    This press release contains certain "forward-looking statements",
including, but not limited to, the statements regarding the Company's
strategic plans, evolution of mineral resources and reserves, work programs,
development plans and exploration budgets at the Company's San José Project.
The forward-looking statements express, as at the date of this press release,
the Company's plans, estimates, forecasts, projections, expectations or
beliefs as to future events and results. 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. In
particular, there can be no assurance that production forecasts, or cost
savings at the San José mine will be successfully achieved, increased, or that
resources and reserves at the San José mine will be increased. 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, the state of the capital markets,
environmental risks and hazards, uncertainty as to calculation of mineral
reserves and other risks. We refer readers to the risk factors and
uncertainties described in the Company's continuous disclosure record, a copy
of which is available under the Company's profile at www.sedar.com. 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: 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

Organization Profile

MINERA ANDES INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890