Minera Andes announces results of preliminary assessment at Los Azules Copper Deposit

    TSX: MAI

    SPOKANE, WA, Feb. 5 /CNW/ - Minera Andes Inc. (TSX: MAI and US OTC:
MNEAF) is pleased to announce the results of a preliminary assessment ("PA")
on the Los Azules Copper Project (the "Project") located in the San Juan
Province of western central Argentina. The deposit as currently defined is
open in several directions, and further drilling will be required to fully
define the limits of the mineralization, especially along the strike to the
north and at depth.
    The Project is an exploration area comprised of adjoining properties that
straddle a large copper porphyry system and is subject to an Option Agreement.
The properties are owned by Minera Andes through its subsidiary company,
Minera Andes S.A. (the "MASA Properties" and "MASA", respectively) and by
Xstrata Copper, one of the commodity business units within Xstrata plc (London
Stock Exchange: XTA.L and Zurich Stock Exchange: XTRZn.S), through Xstrata
Queensland Limited and its subsidiary company, MIM Argentina Exploraciones
S.A. (the "MIM Properties" and "MIM", respectively).


    Highlights of the study are as follows (all figures are expressed in US
dollars unless otherwise stated):

    -   The base case for the Project on a pre-tax basis indicates a Net
        Present Value ("NPV") of $496 million and an Internal Rate of Return
        ("IRR") of 10.8% (using $1.90/lb copper, 8% discount rate, $70/tonne
        treatment charge and $0.075/lb refining charge).

    -   Capital payback in 6.4 years.

    -   Average copper-in-concentrate production estimated at 170,000 tonnes
        per annum for 23.6 years. Annual by-product production estimated to
        average 38,000 ounces of gold, and 1.26 million ounces of silver.

    -   C-1 Life of Mine ("LOM") cash costs (net of by-product credits) are
        estimated to average $0.85 per pound of copper mined.

    -   The Project would generate approximately 550 permanent jobs.

    The salient details of the PA are summarized in the table below (all
dollar figures are in US dollars unless otherwise stated):

    NPV ($1.90/lb Cu, 8% discount rate)                         $496 million
    IRR                                                                10.8%
    Initial Capital Expenditure                               $2,747 million
    LOM Average Operating Costs                                  $7.59/t ore
    LOM C-1 Cash Costs (net by-product credits)            $0.85/lb Cu mined
    Nominal Mill Capacity                                        100,000 tpd
    Annual Throughput                                      36 million tonnes
    Mine Life                                                     23.6 years
    Life-of-Mine Strip Ratio                                            1.50
    LOM average annual copper-in-concentrate
     production                                               170,000 tonnes
    First 5 Years average annual copper-in-concentrate
     production                                               213,000 tonnes

    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 PA was finalized by Samuel Engineering, Inc. and Randolph P.
Schneider, MAusIMM. The PA was managed by MTB Project Management Professionals
(project management, infrastructure, capital and operating costs) and Robert
Sim (SIM Geological Inc.) and Bruce Davis (BD Resource Consulting Inc.)
developed the resource estimate, Ken Rippere completed pit slope studies,
while Bill Rose (WLR Consulting Inc.) developed the mine plan and production
schedule, C.H. Plenge & Cia (metallurgy), Samuel Engineering (process
engineering, infrastructure, capital and operating costs, cash flow modeling,
and valuation), Vector Engineering (tailings, waste rock, environmental
management, capital and operating costs, and baseline environmental and
socioeconomic studies).

    Project Economics

    The PA 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 and MTB. The base case was developed using long term
forecast metal prices of $1.90/lb for copper, $750/oz for gold, and $12/oz for
    The following table shows the NPV of the base case at various discount

                        Discount Rate
                           (Real)                NPV
                             0%            $4,691 million
                             5%            $1,399 million
                             8%             $496 million
                            10%             $113 million
                            15%            $(428) million

    The following chart shows the sensitivity of the base case's NPV and IRR
to changes in the copper price: (8% real discount rate):


    The resource block model used in the PA were reported in the technical
report titled "Los Azules Copper Project San Juan Province, Argentina" dated
September 26, 2008 and filed under the Company's profile at www.sedar.com in
October 2008 (the "October Technical Report"). That resource estimate
determined Inferred Mineral Resources of 922 million tonnes grading 0.55%
copper at a 0.35% total copper cutoff. Mineral resources that are not mineral
reserves do not have demonstrated economic viability.
    The resource block model was used to evaluate potential economic pit
limits using the floating cone algorithm and develop a mine plan and
production schedule for the PA. The resulting designed ultimate pit was
estimated to contain 843 million tonnes of Inferred Mineral Resources grading
0.51% copper above an internal cutoff of 0.22% copper. A total of 1,273
million tonnes of waste rock were also estimated within this pit. A mine
production schedule from these estimates indicates 150 million tonnes of
pre-production stripping and a mine life of 23.6 years. The average stripping
ratio over the life of the mine is projected at about 1.5:1 (tonnes of waste
per tonne of ore).
    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.

    Mining & Milling

    The Project will utilize conventional mining and milling processes and
will benefit from having a higher grade copper core.
    Production is scheduled to deliver 100,000 tonnes per day (36 million
tonnes per year) of sulphide ore to the primary crusher for 23.6 years. The
milling and concentrator plant are forecast to produce, on average, 170,000
tonnes per year of copper in concentrate, 38,000 ounces per year of gold, and
1.26 million ounces per year of silver. Average LOM metallurgical recoveries
have been estimated to be 92.5% for copper, 61% for gold, and 66% for silver,
producing a copper concentrate grading on average 31.9% copper, 2.2 g/t gold
and 74 g/t silver.

    Capital Costs

    The following table summarizes the capital cost estimates for the

    Direct Capital Costs                                      $1,118 million
    Indirect Capital Costs                                      $486 million
    Owner Direct and Indirect Capital Costs                     $602 million
    Additional Costs                                            $541 million
                              Total (Base Case)               $2,747 million
    Upfront Working Capital                                      $39 million
    LOM Sustaining Capital Costs                                $704 million

    The capital cost estimates have been compiled with an accuracy level of
    -35% to +35%.

    Operating Costs

    The average LOM operating cost is estimated to be $7.59 per tonne of ore
and the C-1 cash costs (net of by-products) over the LOM will average $0.85
per pound of copper mined. C-1 cash costs include at-mine cash operating
costs, concentrate transportation and freight costs and all treatment and
refining charges.


    The Project is in a remote location near the border of Chile in an
isolated section of the Argentinean Andes at an elevation ranging from 3,500
to 4,500 meters above sea level (masl). Consequently, no infrastructure is
present. In addition, there are no nearby towns and/or settlements. The key
access issue for the Project throughout the year is road closures due to snow
and high stream flows in the spring. The snowline is at an approximate
elevation of 3,000 masl. Presently, the Project is accessible approximately 5
months out of the year with snow removal along the existing central road and
after the snow fall season.
    San Juan is a major regional center serviced by an airport and highways.
An existing highway extends from San Juan to a wide valley in which the
community of Calingasta is located. Three potential mine access roads have
been considered: a northern route, a central (existing) route, and a southern
route. Both the central and southern routes were discarded due to their
capital and operating costs as the length, terrain and high altitude crossings
would likely make the routes prone to significant snowfalls and require snow
removal operations. Therefore, the northern route was selected for the
economic valuation of the Project.
    Given the remote location of the Project a man camp facility will be
provided onsite. It is assumed to contain facilities for 500-600 individuals
at any given time. The man camp will also contain dining and recreation
    The Calingasta substation is the nearest source of power to the Project;
however, it is isolated from the provincial network. Power supply to the
region is currently satisfied by means of local hydro or thermal generation.
    The infrastructure facilities addressed by the capital cost estimate
include on-site ancillary facilities and infrastructure (man camp, offices,
and other buildings), off-site infrastructure (access roads, power lines,
concentrate and fresh water pipelines) and tailings impoundment.


    Preliminary baseline studies completed to date have included initial
hydrologic studies of surface water quality, climate, and biological studies
of the local flora and fauna.

    Property Agreements

    The Project is subject to an Option Agreement dated November 2, 2007.
Under the Option Agreement, MASA has the right to earn a 100% interest in the
MIM Properties by spending at least US$1.0 million on the MIM Properties by
November 2010, maintaining the property in good standing and delivering to
Xstrata Copper an independent scoping study that contains an economic
evaluation of inferred mineral resources and a technical report prepared in
accordance with National Instrument 43-101 "Standards of Disclosure for
Mineral Properties" ("NI 43-101") in respect of the combined MIM Properties
and MASA Properties (the "Combined Property") and delivering a notice of
exercise. If in the opinion of Xstrata Copper, the independent scoping study
and technical report shows the potential to economically produce 100,000
tonnes (224 million pounds) of contained copper per year for 10 years or more
on the Combined Properties then MIM will have a right to earn a 51% interest
in the Combined Property (the "Back-in Right"). To satisfy the conditions of
the Back-in Right, Xstrata Copper must assume control and responsibility for
the Combined Property, make a cash payment to Minera Andes of three times
MASA's and it affiliates' direct expenditures incurred and paid on the
Combined Properties after the 25th of November 2005 and complete a bankable
feasibility study within five years of its election to exercise the Back-in
Right. In the event that the independent scoping study and technical report do
not, in Xstrata Copper's opinion, meet the criterion contemplated above,
Xstrata Copper's interest would be limited to a right of first refusal on a
sale of the Combined Property, or any part thereof or interest therein.
    Certain of the MIM Properties are subject to an underlying option
agreement, which is the subject of a dispute between Xstrata Copper, as option
holder, and Solitario Argentina S.A. ("Solitario"), as the grantor of that
option and the holder of a back-in right of up to 25%, exercisable upon the
satisfaction of certain conditions, within 36 months after the exercise of the
option by Xstrata Copper. The dispute surrounds the validity of the 36 month
restriction described above. If Solitario is successful, MIM's interest in
substantially all of the MIM Properties may be reduced by up to 25% and upon
exercise of the MASA Option, MASA's interest in that part of the Combined
Property may be similarly reduced (the "Solitario Claim").
    A technical report in support of the PA, prepared in accordance with NI
43-101 will be filed on SEDAR (www.sedar.com) within 45 days. This news
release was prepared by, or under the supervision of, Mr. Allen Ambrose,
President of Minera Andes, a "qualified person" within the meaning of NI
43-101. For (i) the effective date of the resource estimate contained herein;
(ii) a description of the key assumptions, parameters and methods used to
estimate the mineral resources referred to in this news release; and (iii) a
general discussion of the extent to which the estimate of mineral resources
may be materially affected by any unknown environmental, permitting, legal,
title, taxation, socio-political, marketing, or other relevant issues, please
refer to the October Technical Report.

    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. The producing San José silver/gold mine is 49% owned by Minera
Andes through a joint venture. 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 has been completed. Other exploration
properties, primarily silver and gold, are being evaluated in southern
Argentina. The Corporation presently has 190,158,851 shares issued and
    This news is submitted by Allen V. Ambrose, President and Director of
Minera Andes Inc.

    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, but are not limited
to, statements or information with respect to the price of gold, silver,
copper and other base metals, operating and capital costs, production
estimates, and estimation of mineral reserves.
    In making the forward-looking statements and providing the
forward-looking information, we have made numerous assumptions. These
assumptions include among other things, assumptions about the price of gold,
silver, copper, anticipated costs and expenditures, future production and
recovery and that there is no unanticipated fluctuation in interest rates and
foreign exchange rates. 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, the outcome of the Solitario Claim, 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 resources; operational and development
risk; 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.

    Cautionary Note to U.S. Investors:

    The United States Securities and Exchange Commission (the "SEC") permits
mining companies, in their filings with the SEC, to disclose only those
mineral deposits with "mineral reserves" that a company can economically and
legally extract or produce. We use certain terms in this news release, such as
"mineral resources", that the SEC guidelines strictly prohibit us from
including in our filings with the SEC, because these terms are common usage in
Canada and form part of our Canadian filing requirements. U.S. Investors are
urged to consider closely the disclosure in our Form File No. 40F, which may
be secured from us, or from the SEC's website at

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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