Thursday, February 05, 2009

TNR Gold TNR.v Minera Andes MAI.to Los Azules Copper Deposit preliminary assessment. TNR.v, MAI.to, CDNX, FCX, AUY

Now we have a PA for Los Azules and value of the deposit is $496 mln USD with Copper at 1.9 USD per lb and 8% discount rate. Project is very capital intensive at 2.7 bln USD and highly leveraged to Copper prices: with increase of 11% in Copper long term price at 2.1 USD per lb NPV is rising 100% to 1 bln USD.
Solitario is a subsidiary of TNR Gold TNR.v.
"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")."
If TNR Gold (Solitario) is successful, its 25% on the Northern part of the property will be 496*0.5*0.25=62 mln USD of the basic NPV asessment with payment of double exploration expenditures to Xstrata on this potion of property at 5 mln USD.
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
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):
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NPV ($1.90/lb Cu, 8% discount rate) $496 million
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IRR 10.8%
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Initial Capital Expenditure $2,747 million
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LOM Average Operating Costs $7.59/t ore
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LOM C-1 Cash Costs (net by-product credits) $0.85/lb Cu mined
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Nominal Mill Capacity 100,000 tpd
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Annual Throughput 36 million tonnes
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Mine Life 23.6 years
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Life-of-Mine Strip Ratio 1.50
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LOM average annual copper-in-concentrate
production 170,000 tonnes
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First 5 Years average annual copper-in-concentrate
production 213,000 tonnes
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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.
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