SALT LAKE CITY, UTAH--(Marketwire - July 29, 2010) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES AND NOT FOR DISSEMINATION IN THE UNITED STATES.
Andean Resources (TSX:AND)(ASX:AND) (the "Company") is pleased to report the results for the quarter ended June 30, 2010 (the "Quarter"), covering the Company's activities at its 100% owned Cerro Negro epithermal high-grade gold project in southern Argentina.
Highlights from releases during the quarter
Mariana Central - continuing to intercept bonanza grades and significant widths, including:
-- MDD-1025: 8.5m of 46.1 g/t Au and 157 g/t Ag from 105.3m
-- MDD-1028: 8.65m of 33.3 g/t Au and 460 g/t Ag from 149.5m and
10.1m of 143.0 g/t Au and 1,219 g/t Ag from 188.4m
-- MDD-1041: 5.1m of 39.3 g/t Au and 90 g/t Ag from 86.9m
-- MDD-1050: 9.0m of 127.1 g/t Au and 272 g/t Ag from 168.0m
-- MDD-1051: 7.0m of 52.0 g/t Au and 240 g/t Ag from 119.0m
San Marcos - confirmed mineralization now to 550 meters along strike and extended up to 250 meters down dip, including:
-- SDD-1013: 7.6m of 14.9 g/t Au and 142 g/t Ag from 123.0m and
8.0m of 10.4 g/t Au and 97 g/t Ag from 189.0m
-- SDD-1023: 12.9m of 11.2 g/t Au and 110 g/t Ag from 191.6m
-- SDD-1025: 15.2m of 19.3 g/t Au and 243 g/t Ag from 325.0m
-- SDD-1032: 3.7m of 20.42 g/t Au and 125 g/t Ag from 129.1m
Mariana Norte - continued drilling success, including:
-- MDD-1011: 9.0m of 15.8 g/t Au and 72 g/t Ag from 163.4m
-- MDD-1015: 8.4m of 22.7 g/t Au and 57 g/t Ag from 173.6m
-- MDD-1018: 13.9m of 16.2 g/t Au and 176 g/t Ag from 76.0m
-- MDD-1034: 6.6m of 8.6 g/t Au and 162 g/t Ag from 113.3m
-- MDD-0155: 1.7m of 112.1 g/t Au and 141 g/t Ag from 212.0m
Completed the positive Feasibility Study at quarter-end, with highlights:
-- Annual production up to a rate of 285,000 oz of gold at an average by-
product cash cost of $60/oz during the first five years of operation
-- Significant internal rate of return using $850/oz gold ("Au") and $14/oz
silver ("Ag") on an initial capital investment of $275 million
-- Mine life of at least 10 years
-- A sustainable development fund to invest 1% of after-tax profits into
the local communities
-- Overall metallurgical recoveries have improved to 95% for gold and 86%
of silver
-- International Cyanide Management Code compliant design
-- Significant upside remains
Further Board and Management team additions, including:
-- Appointment of Mr. Charles Winograd to the Board of Directors
-- Appointment of Mr. Eric Edwards, Chief Financial Officer and Mr. Robert
Menard, Vice-President of Engineering and Construction
Cash Balance at the end of the Quarter was AU$62.5 million
To advance the exploration and development of the Cerro Negro project, entered into a bought deal arrangement with underwriters on July 21st for Cdn$234.5 million
Built the Eureka West portal and developed 100m of the underground access
Continued Exploration Success
During the first half of 2010, exploration activities at the Cerro Negro property included the completion of the 1:5,000 scale geologic map, the perforation of over 36,900 meters of exploration, development and geotechnical drilling, and the expansion of the San Marcos, Mariana Norte, and Mariana Central veins. In addition, Andean implemented the Century Systems database management software for drillhole logging and QAQC procedures and reinstituted on-site sample pulp preparation, which is now operated by Acme Labs of Mendoza, Argentina.
The Mariana Central, Mariana Norte and San Marcos veins are clustered together approximately 5 to 6 kilometers northeast of the Eureka complex and are located adjacent to the planned haulage road midway between the Eureka complex and proposed plant site. All three veins display classic low sulfidation epithermal mineralogy and vein textures. Dark-gray ginguro banding is commonly associated with the high-grade values and is present in the three vein systems. Hydrothermal quartz and quartz-cemented breccias are common within and along the vein boundaries. Precious metal-bearing quartz stockworks are common and are found immediately adjacent to the veins in the andesite host rock.
Mariana Central
The Mariana Central target, located northeast of the Eureka West vein, was identified in late 2009, along with the Mariana Norte and San Marcos veins. During the first half of 2010, Andean completed 1,117 meters of reverse circulation and 8,403.4 meters of diamond drilling, totalling 9,520.4 meters in 43 holes on the Mariana Central target. The exploration program has confirmed the presence of quartz veining for over 770 meters along strike and at least 170 meters down dip. Assay results received during the first half of 2010 reveal important gold and silver grades for at least 600 meters along strike and 100 meters down dip. Most gold and silver grades are similar to those contained in the Eureka vein; however, bonanza grades over significant widths were identified in several drill holes at Mariana Central.
The bulk of the bonanza grades identified to date in the Mariana Central vein lie to the northwest of local section 250SE. This main segment of the vein strikes 305 degrees to the northwest, dips 68 degrees N, has a 5 to 10 meter true width, and is at least 450 meters in length. To the southeast of section 250SE, the dip of the Mariana Central vein flattens to 50 degrees N, the true width narrows to 1 to 3 meters, and the average precious metal values decrease to less than 1.0 g/t Au with local narrow high-grade intercepts. The Mariana Central vein is open up-dip, to depth, and along strike to the northwest. Andean believes that additional veins similar to the Mariana Central vein remain to be discovered at Cerro Negro.
Andean currently has two diamond rigs working in the Mariana Central area and will provide additional updates as the information becomes available.
Mariana Norte
The Mariana Norte mineralization is located along a northwest trending regional structure that can be seen in the Quickbird satellite image for over 3.7 kilometers. The Mariana Norte vein dips 54 to 68 degrees N and has an overall strike of 285 degrees to the northwest. Drilling in the central portion of the known vein reveals a slight bend to the west in the structure that corresponds to a decrease in thickness of the veins for approximately 100 meters along strike. Holes drilled to the west of this narrow zone have cut wide intervals of quartz veining for at least 200 meters along strike. The structure remains open to the west and to depth.
To date, Andean has completed 1,855 meters of RC drilling and 5,208.6 meters of diamond core drilling for a total of 7,085.9 meters in 35 holes at Mariana Norte. This program has identified one to three coalescing quartz veins for over 700 meters along strike and 150 meters down dip. Assay results confirm gold mineralization along 460 meters of the strike length and for 100 meters of the dip extent.
At Mariana Norte, the western-most drill intercept is 600 meters to the east of the projected intersection with the Mariana Central vein trend. The testing of this intersection is a priority target for the second half of 2010.
San Marcos
At San Marcos, Andean has completed 2,511 meters of RC drilling and 7,014.4 meters of diamond core drilling for a total of 9,525.4 meters in 46 holes during 2010. The San Marcos vein system is comprised of two sub-parallel near-vertical quartz veins that strike east-west and which dip 80 degrees N to 80 degrees S. Mineralization plunges 30 degrees E and is best developed in structural dilation zones which remain open at depth. Mineralization occurs over 250 meters vertically and for 550 meters along strike.
True widths average 5 to 6 meters with additional narrow 1 to 2 meter intercepts along the margin of the primary mineralized structure; true widths can exceed 12 meters where both structures merge into one.
Andean will continue to drill test the San Marcos vein in the second half of 2010 and is awaiting metallurgical testwork of vein material submitted to SGS Labs in May, 2010.
Feasibility Study
On July 6th, the Company announced the results of the Feasibility Study. The study defined an operation based on sequential mining of the three deposits by underground and open pit mining, along with milling and refining of the ore on site. The mine will initially operate at a production rate of 1,850 tonnes per day, producing an average of 200,000 ounces ("oz") of gold over a 10 year mine life, at an average cash cost of about $168/oz (based on silver by-product credits of $14/oz).
-- For the first five years, Cerro Negro would produce up to a rate of
285,000 oz of gold per year at an average cash cost of $60/oz (inclusive
of silver by-product credits), making Cerro Negro one of the lowest-cost
undeveloped gold projects in the world
-- An initial capital investment of $275 million to construct a processing
facility for 1,850 tpd, an underground mine at Eureka West, and the
required infrastructure in this remote location.
-- Probable reserves of 2.1 million oz of gold and 20.6 million oz of
silver based on mining the indicated resources only at Eureka West, Bajo
Negro and Vein Zone
-- Inferred resources at Eureka West, Bajo Negro and Vein Zone have been
excluded from the FS. In addition, the newly discovered veins at San
Marcos, Mariana Norte and Mariana Central have also been excluded. The
mineralization excluded from the FS will be included in subsequent
plans.
-- Mine life of 10 years with direct employment of 533 employees with a
plan for responsible sustainable development in the region. A
sustainable development fund to invest 1% of after-tax profits into the
local communities
-- International Cyanide Management Code compliant design
-- Significant upside remains:
-- Converting the significant inferred gold resources to indicated
status with infill and step-out drilling, thereby allowing these
resources to be included in a future mine plan
-- Further defining the size and potential of the latest discoveries at
the San Marcos, Mariana Norte and Mariana Central deposits, with the
intent to incorporate these into future mine plans
-- The Eureka West deposit remains open to the west and at depth, with
exploration to resume once the current underground development is
sufficiently advanced
-- The Bajo Negro deposit remains open along strike and at depth, with
exploration to re-commence later this year
-- Further exploration potential at other Cerro Negro deposits
For further information on the Feasibility Study results, please see the release dated July 6, 2010, available on the Company's website at: www.andeangold.com.
Cerro Negro Timeline
-- Drilling Campaign - The winter drill program continues at site, with two
winterized Major 50 core rigs working on the Mariana Central and San
Marcos targets. Once operational conditions improve in September, Andean
will add three exploration drill rigs. The Company also has at least 26
geophysical targets to explore on a first pass basis and will continue
to develop the growing resource base in the Mariana's and at San Marcos.
A total of 43,000 meters of drilling is planned for Cerro Negro during
the second half of 2010.
-- Financing - On July 21st, the Company announced the bought deal
financing for C$235M, with the expected closing date on or about August
11, 2010. The proceeds will be used to advance the exploration and
development of the Cerro Negro project and for general working capital
purposes.
-- Permitting - Andean submitted the Environmental Impact Assessment (EIA)
during the Second Quarter to the provincial authorities in Santa Cruz,
Argentina.
-- Underground Decline - portal construction began in February 2010 and is
now advancing as per schedule, with about 100m of decline constructed as
of the end of June.
Corporate
Board Changes
During the Quarter, the Company announced the appointment of Chuck Winograd to the Board of Directors. Mr. Winograd is currently the President of Winograd Capital Inc., an external consulting services and private investments company. Previously, Mr. Winograd was Chief Executive Officer of RBC Capital Markets, a position he held from 2001 to 2008. Mr. Winograd holds a Master of Business Administration degree from the University of Western Ontario and is a Chartered Financial Analyst (CFA). Mr. Winograd is currently a director of RioCan Real Estate Investment Trust, Talisman Energy, RBC Dexia, Tamir Fishman (Israel), Mount Sinai Hospital, Winograd Capital Inc. and James Richardson & Sons, Limited.
Management Changes
Post quarter-end, Andean announced the appointment of Mr. Eric Edwards as its new Chief Financial Officer and Mr. Robert Menard as its Vice President, Engineering and Construction, consistent with the development phase of its 100% owned Cerro Negro gold project in Southern Argentina.
Mr. Edwards, who joins the Andean team as the new Chief Financial Officer, has over 25 years total experience in the gold mining sector holding a number of positions in operations, business development and corporate finance. Mr. Menard, joins the Company as Vice-President, Engineering and Construction, and has been involved in all aspects of mine development and construction during his nearly 40 year career in the mining industry.
Finance
During the quarter the company paid approximately $13 million in operating activities and approximately $9 million in investing activities to continue the exploration, complete the Feasibility Study, and advance the Cerro Negro project in Argentina. The cash balance at June 30, 2010 was approximately $62.5 million. For more information, please refer to the Mining Exploration Entity Quarterly Report (Appendix 5B).
Subsequent to quarter end, on July 21st, Andean entered into an agreement with a syndicate of underwriters who agreed to buy on a bought deal basis 70 million common shares at a price of C$3.35 for gross proceeds of C$234.5 million. The net proceeds will be used to advance the exploration and development of the Cerro Negro project and for general working capital requirements. The offering is expected to close on or about August 11, 2010.
Share Capital
At Quarter-end the Company's issued securities were as follows:
-- 471,299,534 ordinary shares
-- 9,817,500 unlisted options (at various strike prices between AU$0.30 and
AU$1.60)
Wayne Hubert, Andean Resources CEO, summarized the quarter, "I am delighted in our progress we are making in Argentina and for the support of our stakeholders in Argentina. Significant milestones were achieved this quarter: we completed the feasibility study on Cerro Negro, we completed appointments to the Andean Board with the addition of Chuck Winograd, we rounded out the management team with the addition of Eric Edwards and Robert Menard, and our exploration program has significantly enhanced Cerro Negro's future. I want to congratulate all of Andean's employees who have made significant sacrifices to deliver these important results."
Quality Control and Assurance
The analytical results quoted in this release are derived from half drill core in the case of diamond drill holes, or from cuttings in the case of reverse circulation holes. Samples are prepared by ACME Analytical Laboratories SA (Mendoza) in Mendoza, Argentina, and assayed by the same laboratory in Santiago, Chile. Gold is determined initially by fire assay with AA finish. Samples assaying more than 10 ppm gold are re-assayed using a gravimetric finish. Silver is determined initially by AAS, and samples assaying more than 100 ppm silver are re-assayed by fire assay with gravimetric finish. Quality control of the analytical results is maintained by inserting standards, blanks, and duplicates into the sample run, approximately every twenty samples. Additional quality control is maintained by sending assay sample splits to a second laboratory from time to time. These checks are evaluated statistically at regular intervals. All analytical data are entered into a Microsoft Access database, with limited access and numerous checks to ensure integrity of the data.
Qualified Persons Statement
The information in this quarterly report that relates to exploration results is based on information provided by William H. Wulftange, Vice President of Exploration for Andean Resources, who is a Licensed Professional Geologist (#5219574-2250) by the State of Utah and a is member (#4037018) of a Recognised Overseas Professional Organization (ROPO), the Society of Mining, Metallurgy and Exploration America. Mr. Wulftange has extensive experience relevant to the style and type of mineralization and deposits under consideration, and to the activity undertaken, to qualify as a "Qualified Person" as defined in Canadian National Instrument 43-101, as well as a "Competent Person" as defined in the JORC Code. Mr. Wulftange has reviewed and verified that the information presented in this quarterly report conforms to NI 43-101 standards and industry Best Practices and consents to the inclusion in the report of the matters based on his information in the form and the context in which it appears.
Andean Resources Ltd. is a dual listed company (TSX:AND)(ASX:AND), actively and aggressively exploring for gold resources in Argentina. The company is well positioned to become a mid-tier gold producer over the next two years as it commences production from its 100% owned Cerro Negro project. This high-grade, world-class deposit is located in the province of Santa Cruz, in southern Argentina, and contains a growing resource base of over 3.1 million ounces of gold and 25 million ounces of silver. In order to expand its resource base and add to the future production profile, Andean is committed to ongoing exploration and building its resource inventory at the Cerro Negro project and, in the process, generating enhanced returns for its shareholders as a platform for future growth.
Forward Looking Statement
This quarterly report contains certain "forward-looking statements". All statements, other than statements of historical fact, that address activities, events or developments that Andean Resources Limited ("Andean" or the "Company") believes, expects or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", and "intend" and statements that an event or result "may", "will", "can", "should", "could", or "might" occur or be achieved and other similar expressions. These forward-looking statements reflect the current internal projections, expectations or beliefs of Andean based on information currently available to Andean. Forward-looking statements are subject to a number of risks and uncertainties, including those detailed from time to time in filings made by Andean with securities regulatory authorities, that may cause the actual results of Andean to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on Andean. Andean expressly disclaims any obligation to update or revise any such forward-looking statements. The securities discussed herein have not been and will not be registered under the United States Securities Act of 1933 (the "US Securities Act"), as amended, or the securities laws of any state and may not be offered or sold in the United States or to US persons (as defined in Regulation S of the US Securities Act) unless an exemption from registration is available.
Appendix 5B
MINING EXPLORATION ENTITY QUARTERLY REPORT
Name of entity
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES AND NOT FOR DISSEMINATION IN THE UNITED STATES.
Andean Resources (TSX:AND)(ASX:AND) (the "Company") is pleased to report the results for the quarter ended June 30, 2010 (the "Quarter"), covering the Company's activities at its 100% owned Cerro Negro epithermal high-grade gold project in southern Argentina.
Highlights from releases during the quarter
Mariana Central - continuing to intercept bonanza grades and significant widths, including:
-- MDD-1025: 8.5m of 46.1 g/t Au and 157 g/t Ag from 105.3m
-- MDD-1028: 8.65m of 33.3 g/t Au and 460 g/t Ag from 149.5m and
10.1m of 143.0 g/t Au and 1,219 g/t Ag from 188.4m
-- MDD-1041: 5.1m of 39.3 g/t Au and 90 g/t Ag from 86.9m
-- MDD-1050: 9.0m of 127.1 g/t Au and 272 g/t Ag from 168.0m
-- MDD-1051: 7.0m of 52.0 g/t Au and 240 g/t Ag from 119.0m
San Marcos - confirmed mineralization now to 550 meters along strike and extended up to 250 meters down dip, including:
-- SDD-1013: 7.6m of 14.9 g/t Au and 142 g/t Ag from 123.0m and
8.0m of 10.4 g/t Au and 97 g/t Ag from 189.0m
-- SDD-1023: 12.9m of 11.2 g/t Au and 110 g/t Ag from 191.6m
-- SDD-1025: 15.2m of 19.3 g/t Au and 243 g/t Ag from 325.0m
-- SDD-1032: 3.7m of 20.42 g/t Au and 125 g/t Ag from 129.1m
Mariana Norte - continued drilling success, including:
-- MDD-1011: 9.0m of 15.8 g/t Au and 72 g/t Ag from 163.4m
-- MDD-1015: 8.4m of 22.7 g/t Au and 57 g/t Ag from 173.6m
-- MDD-1018: 13.9m of 16.2 g/t Au and 176 g/t Ag from 76.0m
-- MDD-1034: 6.6m of 8.6 g/t Au and 162 g/t Ag from 113.3m
-- MDD-0155: 1.7m of 112.1 g/t Au and 141 g/t Ag from 212.0m
Completed the positive Feasibility Study at quarter-end, with highlights:
-- Annual production up to a rate of 285,000 oz of gold at an average by-
product cash cost of $60/oz during the first five years of operation
-- Significant internal rate of return using $850/oz gold ("Au") and $14/oz
silver ("Ag") on an initial capital investment of $275 million
-- Mine life of at least 10 years
-- A sustainable development fund to invest 1% of after-tax profits into
the local communities
-- Overall metallurgical recoveries have improved to 95% for gold and 86%
of silver
-- International Cyanide Management Code compliant design
-- Significant upside remains
Further Board and Management team additions, including:
-- Appointment of Mr. Charles Winograd to the Board of Directors
-- Appointment of Mr. Eric Edwards, Chief Financial Officer and Mr. Robert
Menard, Vice-President of Engineering and Construction
Cash Balance at the end of the Quarter was AU$62.5 million
To advance the exploration and development of the Cerro Negro project, entered into a bought deal arrangement with underwriters on July 21st for Cdn$234.5 million
Built the Eureka West portal and developed 100m of the underground access
Continued Exploration Success
During the first half of 2010, exploration activities at the Cerro Negro property included the completion of the 1:5,000 scale geologic map, the perforation of over 36,900 meters of exploration, development and geotechnical drilling, and the expansion of the San Marcos, Mariana Norte, and Mariana Central veins. In addition, Andean implemented the Century Systems database management software for drillhole logging and QAQC procedures and reinstituted on-site sample pulp preparation, which is now operated by Acme Labs of Mendoza, Argentina.
The Mariana Central, Mariana Norte and San Marcos veins are clustered together approximately 5 to 6 kilometers northeast of the Eureka complex and are located adjacent to the planned haulage road midway between the Eureka complex and proposed plant site. All three veins display classic low sulfidation epithermal mineralogy and vein textures. Dark-gray ginguro banding is commonly associated with the high-grade values and is present in the three vein systems. Hydrothermal quartz and quartz-cemented breccias are common within and along the vein boundaries. Precious metal-bearing quartz stockworks are common and are found immediately adjacent to the veins in the andesite host rock.
Mariana Central
The Mariana Central target, located northeast of the Eureka West vein, was identified in late 2009, along with the Mariana Norte and San Marcos veins. During the first half of 2010, Andean completed 1,117 meters of reverse circulation and 8,403.4 meters of diamond drilling, totalling 9,520.4 meters in 43 holes on the Mariana Central target. The exploration program has confirmed the presence of quartz veining for over 770 meters along strike and at least 170 meters down dip. Assay results received during the first half of 2010 reveal important gold and silver grades for at least 600 meters along strike and 100 meters down dip. Most gold and silver grades are similar to those contained in the Eureka vein; however, bonanza grades over significant widths were identified in several drill holes at Mariana Central.
The bulk of the bonanza grades identified to date in the Mariana Central vein lie to the northwest of local section 250SE. This main segment of the vein strikes 305 degrees to the northwest, dips 68 degrees N, has a 5 to 10 meter true width, and is at least 450 meters in length. To the southeast of section 250SE, the dip of the Mariana Central vein flattens to 50 degrees N, the true width narrows to 1 to 3 meters, and the average precious metal values decrease to less than 1.0 g/t Au with local narrow high-grade intercepts. The Mariana Central vein is open up-dip, to depth, and along strike to the northwest. Andean believes that additional veins similar to the Mariana Central vein remain to be discovered at Cerro Negro.
Andean currently has two diamond rigs working in the Mariana Central area and will provide additional updates as the information becomes available.
Mariana Norte
The Mariana Norte mineralization is located along a northwest trending regional structure that can be seen in the Quickbird satellite image for over 3.7 kilometers. The Mariana Norte vein dips 54 to 68 degrees N and has an overall strike of 285 degrees to the northwest. Drilling in the central portion of the known vein reveals a slight bend to the west in the structure that corresponds to a decrease in thickness of the veins for approximately 100 meters along strike. Holes drilled to the west of this narrow zone have cut wide intervals of quartz veining for at least 200 meters along strike. The structure remains open to the west and to depth.
To date, Andean has completed 1,855 meters of RC drilling and 5,208.6 meters of diamond core drilling for a total of 7,085.9 meters in 35 holes at Mariana Norte. This program has identified one to three coalescing quartz veins for over 700 meters along strike and 150 meters down dip. Assay results confirm gold mineralization along 460 meters of the strike length and for 100 meters of the dip extent.
At Mariana Norte, the western-most drill intercept is 600 meters to the east of the projected intersection with the Mariana Central vein trend. The testing of this intersection is a priority target for the second half of 2010.
San Marcos
At San Marcos, Andean has completed 2,511 meters of RC drilling and 7,014.4 meters of diamond core drilling for a total of 9,525.4 meters in 46 holes during 2010. The San Marcos vein system is comprised of two sub-parallel near-vertical quartz veins that strike east-west and which dip 80 degrees N to 80 degrees S. Mineralization plunges 30 degrees E and is best developed in structural dilation zones which remain open at depth. Mineralization occurs over 250 meters vertically and for 550 meters along strike.
True widths average 5 to 6 meters with additional narrow 1 to 2 meter intercepts along the margin of the primary mineralized structure; true widths can exceed 12 meters where both structures merge into one.
Andean will continue to drill test the San Marcos vein in the second half of 2010 and is awaiting metallurgical testwork of vein material submitted to SGS Labs in May, 2010.
Feasibility Study
On July 6th, the Company announced the results of the Feasibility Study. The study defined an operation based on sequential mining of the three deposits by underground and open pit mining, along with milling and refining of the ore on site. The mine will initially operate at a production rate of 1,850 tonnes per day, producing an average of 200,000 ounces ("oz") of gold over a 10 year mine life, at an average cash cost of about $168/oz (based on silver by-product credits of $14/oz).
-- For the first five years, Cerro Negro would produce up to a rate of
285,000 oz of gold per year at an average cash cost of $60/oz (inclusive
of silver by-product credits), making Cerro Negro one of the lowest-cost
undeveloped gold projects in the world
-- An initial capital investment of $275 million to construct a processing
facility for 1,850 tpd, an underground mine at Eureka West, and the
required infrastructure in this remote location.
-- Probable reserves of 2.1 million oz of gold and 20.6 million oz of
silver based on mining the indicated resources only at Eureka West, Bajo
Negro and Vein Zone
-- Inferred resources at Eureka West, Bajo Negro and Vein Zone have been
excluded from the FS. In addition, the newly discovered veins at San
Marcos, Mariana Norte and Mariana Central have also been excluded. The
mineralization excluded from the FS will be included in subsequent
plans.
-- Mine life of 10 years with direct employment of 533 employees with a
plan for responsible sustainable development in the region. A
sustainable development fund to invest 1% of after-tax profits into the
local communities
-- International Cyanide Management Code compliant design
-- Significant upside remains:
-- Converting the significant inferred gold resources to indicated
status with infill and step-out drilling, thereby allowing these
resources to be included in a future mine plan
-- Further defining the size and potential of the latest discoveries at
the San Marcos, Mariana Norte and Mariana Central deposits, with the
intent to incorporate these into future mine plans
-- The Eureka West deposit remains open to the west and at depth, with
exploration to resume once the current underground development is
sufficiently advanced
-- The Bajo Negro deposit remains open along strike and at depth, with
exploration to re-commence later this year
-- Further exploration potential at other Cerro Negro deposits
For further information on the Feasibility Study results, please see the release dated July 6, 2010, available on the Company's website at: www.andeangold.com.
Cerro Negro Timeline
-- Drilling Campaign - The winter drill program continues at site, with two
winterized Major 50 core rigs working on the Mariana Central and San
Marcos targets. Once operational conditions improve in September, Andean
will add three exploration drill rigs. The Company also has at least 26
geophysical targets to explore on a first pass basis and will continue
to develop the growing resource base in the Mariana's and at San Marcos.
A total of 43,000 meters of drilling is planned for Cerro Negro during
the second half of 2010.
-- Financing - On July 21st, the Company announced the bought deal
financing for C$235M, with the expected closing date on or about August
11, 2010. The proceeds will be used to advance the exploration and
development of the Cerro Negro project and for general working capital
purposes.
-- Permitting - Andean submitted the Environmental Impact Assessment (EIA)
during the Second Quarter to the provincial authorities in Santa Cruz,
Argentina.
-- Underground Decline - portal construction began in February 2010 and is
now advancing as per schedule, with about 100m of decline constructed as
of the end of June.
Corporate
Board Changes
During the Quarter, the Company announced the appointment of Chuck Winograd to the Board of Directors. Mr. Winograd is currently the President of Winograd Capital Inc., an external consulting services and private investments company. Previously, Mr. Winograd was Chief Executive Officer of RBC Capital Markets, a position he held from 2001 to 2008. Mr. Winograd holds a Master of Business Administration degree from the University of Western Ontario and is a Chartered Financial Analyst (CFA). Mr. Winograd is currently a director of RioCan Real Estate Investment Trust, Talisman Energy, RBC Dexia, Tamir Fishman (Israel), Mount Sinai Hospital, Winograd Capital Inc. and James Richardson & Sons, Limited.
Management Changes
Post quarter-end, Andean announced the appointment of Mr. Eric Edwards as its new Chief Financial Officer and Mr. Robert Menard as its Vice President, Engineering and Construction, consistent with the development phase of its 100% owned Cerro Negro gold project in Southern Argentina.
Mr. Edwards, who joins the Andean team as the new Chief Financial Officer, has over 25 years total experience in the gold mining sector holding a number of positions in operations, business development and corporate finance. Mr. Menard, joins the Company as Vice-President, Engineering and Construction, and has been involved in all aspects of mine development and construction during his nearly 40 year career in the mining industry.
Finance
During the quarter the company paid approximately $13 million in operating activities and approximately $9 million in investing activities to continue the exploration, complete the Feasibility Study, and advance the Cerro Negro project in Argentina. The cash balance at June 30, 2010 was approximately $62.5 million. For more information, please refer to the Mining Exploration Entity Quarterly Report (Appendix 5B).
Subsequent to quarter end, on July 21st, Andean entered into an agreement with a syndicate of underwriters who agreed to buy on a bought deal basis 70 million common shares at a price of C$3.35 for gross proceeds of C$234.5 million. The net proceeds will be used to advance the exploration and development of the Cerro Negro project and for general working capital requirements. The offering is expected to close on or about August 11, 2010.
Share Capital
At Quarter-end the Company's issued securities were as follows:
-- 471,299,534 ordinary shares
-- 9,817,500 unlisted options (at various strike prices between AU$0.30 and
AU$1.60)
Wayne Hubert, Andean Resources CEO, summarized the quarter, "I am delighted in our progress we are making in Argentina and for the support of our stakeholders in Argentina. Significant milestones were achieved this quarter: we completed the feasibility study on Cerro Negro, we completed appointments to the Andean Board with the addition of Chuck Winograd, we rounded out the management team with the addition of Eric Edwards and Robert Menard, and our exploration program has significantly enhanced Cerro Negro's future. I want to congratulate all of Andean's employees who have made significant sacrifices to deliver these important results."
Quality Control and Assurance
The analytical results quoted in this release are derived from half drill core in the case of diamond drill holes, or from cuttings in the case of reverse circulation holes. Samples are prepared by ACME Analytical Laboratories SA (Mendoza) in Mendoza, Argentina, and assayed by the same laboratory in Santiago, Chile. Gold is determined initially by fire assay with AA finish. Samples assaying more than 10 ppm gold are re-assayed using a gravimetric finish. Silver is determined initially by AAS, and samples assaying more than 100 ppm silver are re-assayed by fire assay with gravimetric finish. Quality control of the analytical results is maintained by inserting standards, blanks, and duplicates into the sample run, approximately every twenty samples. Additional quality control is maintained by sending assay sample splits to a second laboratory from time to time. These checks are evaluated statistically at regular intervals. All analytical data are entered into a Microsoft Access database, with limited access and numerous checks to ensure integrity of the data.
Qualified Persons Statement
The information in this quarterly report that relates to exploration results is based on information provided by William H. Wulftange, Vice President of Exploration for Andean Resources, who is a Licensed Professional Geologist (#5219574-2250) by the State of Utah and a is member (#4037018) of a Recognised Overseas Professional Organization (ROPO), the Society of Mining, Metallurgy and Exploration America. Mr. Wulftange has extensive experience relevant to the style and type of mineralization and deposits under consideration, and to the activity undertaken, to qualify as a "Qualified Person" as defined in Canadian National Instrument 43-101, as well as a "Competent Person" as defined in the JORC Code. Mr. Wulftange has reviewed and verified that the information presented in this quarterly report conforms to NI 43-101 standards and industry Best Practices and consents to the inclusion in the report of the matters based on his information in the form and the context in which it appears.
Andean Resources Ltd. is a dual listed company (TSX:AND)(ASX:AND), actively and aggressively exploring for gold resources in Argentina. The company is well positioned to become a mid-tier gold producer over the next two years as it commences production from its 100% owned Cerro Negro project. This high-grade, world-class deposit is located in the province of Santa Cruz, in southern Argentina, and contains a growing resource base of over 3.1 million ounces of gold and 25 million ounces of silver. In order to expand its resource base and add to the future production profile, Andean is committed to ongoing exploration and building its resource inventory at the Cerro Negro project and, in the process, generating enhanced returns for its shareholders as a platform for future growth.
Forward Looking Statement
This quarterly report contains certain "forward-looking statements". All statements, other than statements of historical fact, that address activities, events or developments that Andean Resources Limited ("Andean" or the "Company") believes, expects or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", and "intend" and statements that an event or result "may", "will", "can", "should", "could", or "might" occur or be achieved and other similar expressions. These forward-looking statements reflect the current internal projections, expectations or beliefs of Andean based on information currently available to Andean. Forward-looking statements are subject to a number of risks and uncertainties, including those detailed from time to time in filings made by Andean with securities regulatory authorities, that may cause the actual results of Andean to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on Andean. Andean expressly disclaims any obligation to update or revise any such forward-looking statements. The securities discussed herein have not been and will not be registered under the United States Securities Act of 1933 (the "US Securities Act"), as amended, or the securities laws of any state and may not be offered or sold in the United States or to US persons (as defined in Regulation S of the US Securities Act) unless an exemption from registration is available.
Appendix 5B
MINING EXPLORATION ENTITY QUARTERLY REPORT
Name of entity
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related entities
Compliance Statement
1. This statement has been prepared under accounting policies which comply -with accounting standards as defined in the Corporations Act or other standards acceptable to ASX(see note 4).
2. This statement does give a true and fair view of the matters disclosed.
Sign here: /s/ Heber J Sheffield
---------------------
Heber J. Sheffield
Corporate Officer
Notes
1. The quarterly report is to provide a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. Any entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this
report.
2. The "Nature of Interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
3. Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
4. The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.
5. Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
ABN 064 494 319
For more information, please contact
Andean Resources Limited1. This statement has been prepared under accounting policies which comply -with accounting standards as defined in the Corporations Act or other standards acceptable to ASX(see note 4).
2. This statement does give a true and fair view of the matters disclosed.
Sign here: /s/ Heber J Sheffield
---------------------
Heber J. Sheffield
Corporate Officer
Notes
1. The quarterly report is to provide a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. Any entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this
report.
2. The "Nature of Interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
3. Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
4. The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.
5. Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
ABN 064 494 319
For more information, please contact
Krista Muhr
Director of Investor Relations
In North America: +1.647.330.1478
In Australia: +61 (0) 448.886.460
krista.muhr@andeangold.com
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