Andean Resources Expands Bajo Negro Target

VANCOUVER — Andean Resources’ (AND-T, AND-A) latest drill results extend gold-silver mineralization at depth and along strike in both directions at the Bajo Negro target on the company’s Cerro Negro property in Argentina.

“The mineralization is open in both directions, but is especially promising to the northwest, where the vein is branching into several splays, with two of these splays containing high gold grades,” said Dave Shatwell, Andean Resources’ chief exploration geologist at Cerro Negro, in a release.

Andean Resources has two drill rigs operating at Bajo Negro, 110 km northeast of the Argentine town of Las Heras. Bajo Negro is a gold-silver target within a dozen or so kilometres of the company’s two chief gold-silver zones on the property: Eureka West, 13 km to the east, and the Vein zone, 2 km to the southwest.

At Bajo Negro, four holes have extended mineralization 75 metres northwest within two major splays that have piqued Andean Resources’ interest. For example, hole 935 hit 6 metres grading 34.8 grams gold per tonne and 29 grams silver starting 142 metres down-hole and 10 metres of 14.2 grams gold and 38 grams silver starting at 183 metres.

Likewise, hole 937 intersected 10 metres grading 22.1 grams gold and 30 grams silver starting at 267 metres depth and then 6 metres at 17.7 grams gold and 20 grams silver starting at 285 metres.

Drilling to the southwest extended mineralization 50 metres. Hole 936 hit 3 metres grading 5.6 grams gold and 7 grams silver and hole 938 returned 3 metres grading 17 grams gold and 13 grams silver. Both intercepts started near a depth of 200 metres.

Within the previously defined gold-silver mineralized area at Bajo Negro, Andean pushed mineralization at depth with, for example, hole 925 hitting 9 metres grading 22.1 grams gold and 42 grams silver.

So far, mineralization has been defined along about 800 metres of strike and the company says minable widths and grades can be inferred along 650 metres of that and over a vertical extent of at least 150 metres.

The two drill rigs that Andean has dedicated to Bajo Negro will continue to turn throughout mid- 2009 and additional drill rigs will begin to target other areas on the property, including the Eureka zone starting in September, the company says.

Andean’s prefeasibility study of the Cerro Negro project pegged probable reserves at the Eureka West and Vein zones at 7.2 million tonnes grading 6.4 grams gold and 75 grams silver, or 1.5 million contained ounces gold and 17.3 million oz. silver.

In the study, the company envisaged a 4,000-tonne-per-day operation at Cerro Negro. Half the tonnage would come from a Vein zone open-pit while the other half would come from an underground mine at Eureka West. The proposed project has a six-year mine life and would produce 350,000 oz. gold and 3 million oz. silver a year.

With cash costs of US$198 per oz. gold net of silver credits and provincial and federal royalties, capital expenditures of US$281 million and based on US$800-per-oz. gold and US$13-per-oz. silver, Cerro Negro showed an internal rate of return of 40%, and a net present value of $203 million, discounted at 8%.

On news of the drill results from Bajo Negro, Andean Resources shares gained 3¢ to $1.80. The company has 402 million shares outstanding.