According to Allen V. Ambrose, president and director of Minera Andes Inc., the wild Argentinean countryside reminds him of the way the American West looked a century ago.

“A lot of the terrain looks very similar (to gold rush days in Nevada) in Argentina, in that you can go over the hill in Argentina and nobody’s even sampled it before. Yet, there are big, eroded veins visible on the ground,” said Ambrose.

Minera Andes is about to realize some of the mineral potential of Argentina when its co-owned San Jose silver/gold mine enters production in mid-year. The relatively high-grade mine (average grade of 450 grams-per-ton silver, and 7.2 g/t gold) is programmed to produce 3.1 million ounces of silver and 61,000 ounces of gold annually. Potential exists to increase production within 12-18 months of startup, pending a formal decision.

Ambrose said that Argentina, endowed with a wide variety of mineral resources including gold, silver, copper, diamonds, tin, lead, zinc and nickel, in the past has been sidestepped by explorationists and foreign investors because of its unstable political landscape and dicey legislation regarding minerals and mining.

In the early 1990’s, he was employed by N.A. Degerstrom Inc., a U.S. contract mining company, as its exploration manager.

“We started in Argentina where Degerstrom had a joint venture looking at some copper, gold and silver projects, in 1992-93. It was like going back to when Nevada was the big gold producing region in the US 100 years ago,” Ambrose said, adding that he used to work in Nevada for Cyprus and Molycorp.

The fact that the government was in the midst of changing Argentina’s antiquated mining laws to attract foreign investors made Ambrose think about turning Degerstrom’s private venture into a public company, and Minera Andes was born in 1995.

“This is the land of opportunity,” said Ambrose, recalling that Degerstrom had been funding the Argentine project with a modest program during the time the mineral claim and staking laws were changed.

“They were spending $1 million a year, and I said we need to spend a lot more because a lot of other companies are going to show up, so let me take thins thing public. We got our first discovery back in 1997, and Degerstrom was and still is a large shareholder in the company.”

Ambrose noted that Argentina is now one of the larger copper producing regions in the world, saying “The country is situated next to Chile; a country well-known for having abundant copper resources. The geology doesn’t stop at the border.”

With nearly three decades of experience in the mining industry, Ambrose has worked as a geologic consultant in the U.S., Venezuela and Argentina, and boasts extensive experience in all phases of exploration, project evaluation and project management. A trained geologist, he was a co-discoverer of a Venezuelan auriferous massive sulfide deposit known generally as the Brisas deposit, and has worked as a geologist for Cyprus Minerals, Kidd Creek Mines, Molycorp, Boise Cascade and Dennison Mines. Ambrose currently serves as a director for several junior exploration companies and a capital company and provides management and geologic consulting services to several companies.

Minera Andes is a gold, silver and copper exploration company working with 12 projects located in Argentina that are primarily focused on gold, silver and copper mineralization targets. The corporation holds about 410,000 acres of mineral exploration land in Argentina including the co-owned San Jose silver/gold project; the Los Azules copper project in San Juan province; and other exploration properties, primarily gold and silver, in southern Argentina. The company presently has about 166 million shares issued and outstanding.

Minera Andes waited a long time for this resource-rich country to finally unveil its bounty with much help from mining-friendly legislation. “They put in the new mining law in 1993. We made a discovery by 1997,” said Ambrose, referring to the company’s San Jose silver/gold mine in southern Argentina which will go into production in mid-2007.

In recent years, Argentina has made great strides in becoming one of Latin America’s major copper and gold producers. “Argentina is very pro-development,” said Ambrose, pointing out that Barrick recently spent $600 million to develop the Pascua-Lama and Veladero properties in Argentina. “There’s a real sense of support for the business community. Argentina’s really trying to attract foreign investment. That’s one of the reasons they put the mining laws into place, because they don’t really have a well-developed mining industry like their neighbor Chile. But Argentina has the potential. The government has been very supportive.”

Located in the same area as one of South America’s largest oil and gas producing regions, Minera Andes’ San Jose mine benefits from good regional infrastructure as a result, including a 28-kilometer all-weather access road, more than 9,000 meters of underground workings and surface structures for vehicles, power, employees, equipment storage, drill core storage and other uses. Certainly the metals deposits exist. “That whole region of Argentina missed modern day exploration. It’s isolated terrain: a few ranches and a small amount of sheep farming. In fact, it looks like the plains of Wyoming.”

Using a methodical approach to exploration, Minera Andes often brings in a partner for projects, and San Jose is a good example of the way the junior exploration company works. “San Jose looked like it was probably going to be a mine, so we sought a joint venture partner in Mauricio Hochschild & Cia. Ltda. (a Peruvian mining company that operates gold and silver mines in Peru, and conducts metal exploration in South America),” said Ambrose, adding that Hochschild has a lot of underground mining experience. “San Jose has very high grade resources; we’re getting up to 350 ounces of silver per ton and four ounces of gold per ton, so you get the high grade pockets, but the average vein is running about seven grams gold and 450 grams of silver: good grade and simple metallurgy.

“We try to mix and match in the mining or project type or the partner, and Hochschild has come in and has really been developing it over the past many years, and now we’re close to production. The interesting thing about the San Jose project is the size. We’ve gone through an interesting transition in Minera Andes whereby we started out with this exploration project at San Jose. We recognized many veins, but because of the way mineralization occurs in the typical vein deposit, you can’t drill it all off. Minera Andes discovered the target, went in, and with our partner, drilled off enough reserves just to satisfy what we thought would be a bankable feasibility study in order to get to production and cash flow. Normally, we would develop additional reserves with the cash flow so we’re not putting in too much capital. But we do like to see a significant amount of reserves, because as a public company, we get credit for the ounces in the ground.

Hochschild’s recent move into the public sector has been well-received on the London Stock Exchange. “They’re about a 260,000 ounce-a-year producer, mainly from their mines in Peru, and they also produce about 13 million ounces of silver,” said Ambrose. “With that profile they went public and became a company with an instant $2 billion market cap. Now they’ve come back to us and they’ve been drilling a lot more reserves, because they get the credit for what’s in the ground. Right now, it’s the best of both worlds for Minera Andes. We’re going into production and we currently have pending a third-party, independent analysis of a resource exploration program carried out earlier this year by our operating partner. Hochschild, as operator, is also building in increased processing capacity should the formal decision be made to expand production. Our partner is looking at increasing production significantly within the first 12 to 18 months of startup at the mine. This may bode well for us in the future.”

Ambrose added that the project has more than 40 kilometers of vein systems, of which only about 15 percent has been drill-tested. “Right now we’re going into production based on the three kilometers of veins and at startup we’ll be producing 750 tons a day, producing 110,000 gold equivalent ounces.” With Hochschild as the operator (51 percent), Minera Andes owns 49 percent of the San Jose project.”

Minera Andes’ newest discovery is the Los Azules copper prospect, also in Argentina. Los Azules, based on two seasons of an economic scoping study, appears to be emerging as a sizeable copper porphyry system. “Last year we drilled probably two of the highest-grade holes that I’ve ever seen,” said Ambrose, noting that the potential of Los Azules is suggested from the results of the first one-third of the scoping study, completed earlier in 2006. “For a porphyry copper system, we drilled 221 meters of 1.62 percent copper and then another couple of hundred meters away from that we drilled 173 meters of one percent copper. So that 221 meters is the equivalent of over a 70-story building; that’s a thick section of copper, and 1.62 percent is a very high grade as copper goes. The typical grade of a copper deposit being minded is about .5 percent.”

Additional work is planned for Los Azules, for which Minera Andes has a non-binding letter of intent with Xstrata Copper Americas. The companies are discussing a more definitive business agreement regarding Los Azules.

Says Ambrose, “Because we are an exploration company, we always have multiple other projects we’re looking at,” explained Ambrose. “We’re looking for that next discovery to repeat our business cycle, which is to bring these projects along, get the cash flow and then find the next one and bring in an operating partner. What makes us unique is we’re an exploration company, but we’ve also making a successful transition to production status.”

For more information contact:

Art Johnson
Investor Relations
111 East Magnesium Road; Ste. A
Spokane, WA USA 99208
(509) 921-7322
(509) 921-7325 (fax)
E-mail: info@minandes.com
http://www.minandes.com