Minera Andes holds about 355,000 acres of highly prospective mineral exploration property in Argentina, including its now producing 99,000-acre San José project.
       Resource and exploration drilling located new silver and gold resources last year, reinforcing the company’s belief that San José has the potential to evolve into a mining district. Less than 15% of the known 40 kilometers of mineralized silver/gold vein systems have been explored at depth – while the project’s proven and probable reserves have been calculated from data covering only 4.0 kilometers or about 10% of the mineralized zone.
       According to a recently updated technical report, San José has a proven and probable mineral reserve of 2.4 million tonnes grading at 6.79 g/t gold and 430 g/t silver. The economic cutoff used to calculate the reserves is $94/t using a $500 gold price and $9 silver price. This translates to 602,000 ounces of contained gold and 33 million ounces of contained silver.
       An exploration program, begun about a year ago to lengthen the mine’s life, has successfully located new silver/gold mineralization in the immediate mine area. High-grade silver/gold intercepts have been made on the Odin and Ayelin veins. Potential exists to futher increase the mine’s proven and probable reserve/resource base.
       The San José Mine has 13,000 meters of underground workings, two ramps and a third under construction, and 450 employees on site. Mechanized cut and fill mining, the primary mining method, is supplemented with conventional cut and fill techniques. Mining costs are relatively low, averaging about $3.92 per silver-equivalent ounce as estimated in the 43-101 technical report. Initial mining has focused on the Huevos Verdes and Frea veins, and will soon expand to the Kospi vein and a new section of the Frea vein. The Kospi vein was the first of four new high-grade discoveries made in just the last three years. Other targets for increased exploration are the Odin, Ayelén, Flor, Huevos Verdes West, Lourdes, Frigga, Aguas Vivas, Roadside, and Portuguese West.
       Minera and its 51% joint venture partner, Hochschild Mining plc, are presently mining 750 tonnes of ore a day, while the processing plant is expected to reach full capacity by mid-2008. The proprietary “Gekko system” plant uses a gravity-flotation-intensive leaching process to produce a gold-silver doré. The joint venture plans to double production to 1500 tpd by the end of the year, with annual production increasing from 64,000 ounces of gold and 3.9 million ounces of silver to 6 million ounces of silver and 120,000 ounces of gold with 49% attributable to Minera. The mine’s life, at 750 tpd, has been extended from 5.2 to 9 years.

       The Los Azules project discovered high-grade copper mineralization in 2004 during a reconnaissance drilling program. High-grade copper mineralization included one hole that contained over 1% high-grade copper.
       In November 2007, Minera’s Los Azules project was consolidated with an adjoining project owned by Xstrata Copper as part of a definitive contract between the two companies. The properties straddle a large copper porphyry system in Argentina’s San Juan province, about 30 kilometers from the Chilean border in the Andes. Under the agreement, Minera is earning a 100% ownership in the now consolidated Los Azules project by spending at least $1 million in exploration by November 2010 and completing an economic assessment for the project.
       Road work has been completed and a base camp setup, drilling program and economic scoping study is now underway. There are five drill rigs on site. The 10,000-meter, 24-hole drilling program, begun in late 2007, will define an inferred resource in compliance with Canadian NI 43-101 reporting rules and provide the detailed engineering and technical information needed to complete the scoping study.
       The 2007-2008 drilling season at Los Azules, designed to obtain data for an economic scoping study, has had its successes. One hole encountered 132 meters (433 feet) of 1.11% copper within a larger interval of 250 meters grading to 0.92% copper. Another hole intersected 113 meters of 1.04% copper within a 200.8 meter intercept of 0.89% copper. Based on its work at Los Azules, Minera Andes intends to define an inferred resource in compliance with Canadian NI 43-101 reporting rules.
       If the scoping study, which is expected to be completed by Q3 2008, shows the potential to produce 100,000 tonnes (200 million pounds) of copper per year for 10 years or more, Xstrata has the right to earn a 51% interest in the combined properties. If Xstrata exercises that right, it must pay Minera three times its expenditures and complete a bankable feasibility study within five years.
       “Over the past few field seasons, drilling at Los Azules has discovered new high-grade copper mineralization,” says Ambrose. “Los Azules is evolving as a sizeable porphyry copper target with a high-grade near-surface copper discovery at its core that is still open at depth. This is a big project that the market has yet to notice.”

       Given two major projects – one in production and another under rapid development – it is clear that Minera’s decade-long focus on Argentina is paying off. Minera recently closed a financing of C$34 million financing that will be used to fund its share of development and exploration costs at San José, as well as for exploration drilling and completing the scoping study at Los Azules. The company is also evaluating its other gold, silver and copper properties in southern Argentina.
       One of the keys to the company’s success is its ability to attract world-class partners to bring its best projects to full development and eventual production. And the reason such companies are attracted to Minera is the company’s management team of proven geologists who have a stellar record of locating high-potential targets and the ability to add value to those projects through methodical, systematic exploration.
       Minera’s San José joint venture partner, Hochschild, has more than 40 years experience in the exploration, evaluation and extraction of precious metal epithermal vein deposits in South America. Hochschild operates three underground epithermal vein mines in Peru that are geologically similar to San José. The company is the world’s fourth-largest primary silver producer.
       Xstrata Copper is a division of Xstrata plc, one of the world’s major copper producers and a leader in such other major commodity markets a coking coal, thermal coal, ferrochrome, nickel, vanadium and zinc. Xstrata operates in 18 countries.
       Partnerships of this quality are vital for Minera Andes, which at its core is an exploration company. Minera’s shareholders have the best of both worlds – the excitement and reward associated with the exploration for and discovery of major new mineral deposits; and the financial endorsement of partners who are mining sector leaders. For the retail investor, there is another endorsement that carries special significance – the participation of major investors (e.g. Rob McEwen, about 24% ownership) and about 40% institutional ownership.
       Even as Minera appears poised to establish San José as a mining district capable of hosting multiple mines, proving up a massive copper project, the company has not forgotten its dozen other properties where exploration is ongoing. Says Minera Andes President Allen Ambrose: “We are really excited about our exploration upside.”