S. E. Wells'  Instablog

S. E. Wells
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I'm a middle aged guy who's falling apart at the seams and trying to make a few bucks for retirement. I've had a lot of experience mining gold with artisanal methods and by dredging. I understand gold geology pretty well and can make sense of geological reports so I tend toward investing in what... More
  • Minera Andes (MNEAF) moves to a profit 1 comment
    Nov 17, 2009 8:24 AM | about stocks: MNEAF

    Minera Andes, with operations and exploration properties in Argentina, just reported a $.02 per share net income ($5.2 million total) on 11/16/2009.  This income mostly derived from Minera Andes 49% share of Minera Santa Cruz' operations of the San Jose gold/silver mine in southern Argentina.  Hoschild owns the other 51% of Minera Santa Cruz.

    This move to profitability comes on top of Minera Andes strong position for the future in its Los Azules project (copper) now that Xstrata is out of the way and Minera Andes is in a 100% ownership position of Los Azules.

    Los Azules is a relatively straight-forward play.  It has a little over 11 billion pounds of copper in 922+ million tons of .55% copper ore.  It's going to cost a little bit less than $3 billion dollars to develop the mine.  Do the math.  With copper at approximately $3 per pound, there is huge potential here.  The project was analyzed with a copper price of $1.90 per pound and found to be justifiable in a preliminary assessment, a synopsis of which can be seen at http://www.minandes.com/s/NewsReleases.asp?ReportID=337344&_Type=News-Releases&_Title=Minera-Andes-Announces-Results-Of-Preliminary-Assessment-At-Los-Azules-Copp....  At higher prices for copper, the project becomes a potential profit whale for Minera Andes.

    There are a couple of negatives.  Minera Andes has a lot of shares outstanding.  Over 220 million. And, while Argentina is no Democratic Republic of the Congo or Indonesia or Venezuela in terms of political risk, it's not the top rated jurisdiction in terms of political risk either.

    Still, all in all, there is tremendous upside potential here with the solid income stream over the next 3 years at San Jose (and resource expansion at San Jose seems likely to me), the Los Azules copper project, and the other promising gold/silver exploration properties in Argentina.

    I'm long MNEAF and accumulating more.

    Stocks: MNEAF
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  • Danny Furman
    , contributor
    Comments (1030) | Send Message
    Well said, sir. I'm with you on this one.
    17 Nov 2009, 11:11 AM Reply Like
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