Spokane firm to build mine
A Spokane company plans to build a gold-and-silver mine on the wind-swept plains of Patagonia.
Minera Andes Inc. secured the mineral rights to the San Jose deposit, located in southern Argentina, in the late 1990s. After eight years of hard work, several key pieces recently slipped into place, allowing the firm to target an opening date in early 2007, said Allen Ambrose, company president.
Minera Andes finished a feasibility study in October, which gave company officials production estimates to take to the bank. With numbers in hand, the firm recently qualified for a $50 million loan to build an ore processing facility. Now, Minera Andes is working on getting permits from the Argentine government.
The project would be the first mine developed by Minera Andes, a small Canadian company whose main offices are in Spokane. The company has a joint-venture agreement with a Peruvian firm, Maurico Hochschild y Companis Ltda., which will operate the mine. Hochschild owns 51 percent of the San Jose deposit, and Minera Andes owns 49 percent.
“We’re exploration oriented,” Ambrose said. “Our focus is on finding these things.”
The mine is located in a remote corner of Argentina, near the Chilean border. The country’s relatively unexplored terrain attracted Minera Andes’ geologists, Ambrose said.
“It’s kind of like going back to Nevada 100 years ago. There are ore bodies sitting at the surface,” he said. “It hadn’t had much modern exploration.”
The San Jose deposit is located in an area of Patagonia with terrain similar to eastern Montana or Wyoming – rolling hills and ranchland, Ambrose said. Geologists studied satellite images of the landscape to detect areas of mineralization. Geologists on pack mules found the San Jose’s surface outcropping.
“It was modern-day prospector meets mules,” Ambrose said.
N.A. Degerstrom Inc., a Spokane construction firm that also specializes in contract mining, filed the original claims on the property. The claims were later spun off into Minera Andes, a separate firm that began trading publicly in 1995.
Degerstrom remains one of Minera Andes’ largest investors.
On Wednesday, Minera Andes announced that Rob McEwen, chairman of U.S. Gold Corp., had purchased a $5.4 million (Canadian) stake in the firm, which gives him a 14 percent ownership in the company. McEwen plans to purchase another $4.6 million (Canadian) worth of stock, according to a company press release. The cash infusion will help Minera Andes finance the San Jose mine and explore other South American properties.
About 300 people already work at the San Jose site. The company has been drilling shafts for the underground mine while it explores the extent of the San Jose deposit, Ambrose said. The mine will produce 60,000 ounces of gold and 3.1 million ounces of silver annually over at least 4½ years, according to the feasibility study.