broker commentInvestment PotentialAndean Resources is a...

broker comment

Investment Potential
Andean Resources is a speculative exploration play with its future share price to be determined by success
in outlining resources.
However we think they have a strong starting position with the opportunity to infill the main Vein drilling in
the short term which should confirm an initial resource probably in the 300-500,000 oz range, say 3 to 4
million tonnes grading around 3.5 g/t.
Around 400,000 oz would be the minimum to establish a standalone operation of 750,000 tpa producing
around 75,000 oz pa for 5 to 6 years.
Such a project would be likely to be valued at $A50 to $A100 per resource oz say $A25 to $A50 million or
about $0.11 to 0.22 per share.
However this should be viewed as a starting point as we believe the initial drilling is highly likely to confirm
the basic resource scenario.
The real opportunity in the Cerro Negro project is to :
1. Extend the main Vein resource along strike and especially at depth below 150 metres where high
grades are inferred from previous drilling. This alone could take resource potential towards the
0.75 to 1 million oz range.
2. Define areas of potentially economic mineralization in 2 to 3 additional vein targets which could
outline potential for another 1 million oz or more.
Andean Resources has sufficient funding in place to undertake both the resource infill drilling and to follow
up with resource extensions and initial exploration holes in additional identified veins during 2005.
The initial resource estimate should be completed in the next few months which, assuming success, should
give support to a share price in the $0.11 to $0.22 range. Any success in extending resources or adding
other veins should see a $0.20 share price or better by around the end of 2005.
If Andean can outline resource in the 1 to 2 million oz range we would anticipate a share price of ultimately
at least $0.40 to $0.50. We think the geological potential is outstanding, giving this upside scenario a
realistic chance of being realised.
We rate Andean Resources as a Speculative Buy.