Andean this week reported continued growth at its Cristal and Pegaso 7 discoveries, both of which sit outside the Cerro Bayo resource.

Drilling at Cristal, a new discovery made by Andean this year, revealed a previously unknown mineralised zone in the footwall along with more high-grade veins.

The most recent hits included 42.2m at 122 grams per tonne silver equivalent, including 4.5m at 584g/t AgEq, including 0.8m at 809g/t AgEq; 1.2m at 1150g/t AgEq; 1.3m at 325g/t AgEq; and 4.5m at 206g/t AgEq.

Drilling has defined a large halo surrounding the Cristal veins with results of 82.4m at 53g/t AgEq and 25m at 62g/t AgEq.

Cristal has so far been defined over a 180m-long strike length and to 100m depth.

SCP Equity Research analyst Brandon Gaspar said drilling at Cristal continued to show a good mix of high-grade veins within a broader halo of mineralisation that could be amenable to bulk mining.

He said the Cristal C1 zone was growing fast and estimated it could already contain around 3-4 million ounces.

At Pegaso 7, Andean reported results including 13.1m at 332g/t AgEq, including 0.9m at 2326g/t AgEq, including 1.9m at 710g/t AgEq; 1.4m at 318g/t AgEq.

“At Pegaso 7, the average of five pierce points is 3.4m at 519g/t AgEq above 248m,” Gaspar said.

“Importantly, we think the highest-grade zones will be likely followed up with infill after continued step outs to test the scale of the system, not dissimilar to Vizsla Silver in the early days in our view.”

Toronto-listed Vizsla owns the Panuco project in Mexico that has a current resource of more than 300Moz AgEq.

Resource set to grow

Andean only acquired Cerro Bayo in February of this year.

Since then, the company has made three new discoveries and tripled the resource estimate to 8.2Mt at 342g/t AgEq for 91Moz.

“It’s been a rapid rise since we acquired the project,” Andean chief executive Tim Laneyrie told the Resources Rising Stars Summer Series this month.

Importantly, around 6Mt of the resource sits within 1.5km of the project’s 500,000t per annum mill.

Andean estimates the project has around A$150 million worth of infrastructure already in place, including a permitted tailings dam, water, power and an assay lab.

An updated resource for the project is due in the March quarter.

Gaspar sees the resource surpassing 100Moz in the next update and estimates 20-30Moz could be added.

Andean has just added a third rig to start resource extension drilling at Coyita North.

Regional upside

Andean also announced this week that it had secured new leases at Cerro Bayo to cover extensions to two major structural corridors within the central and eastern project areas.

The areas are undrilled but contain similar visual and geochemical characteristics to Cerro Bayo.

“With Cerro Bayo’s mineralisation (or indicators of) often evident in outcrop, we think the team likely ‘saw something they liked’ to move quickly on this ground, though it’s still early days,” Gaspar said.

The historical Cerro Bayo mine is 7km from where Andean is currently focused but the company is starting to look further across its tenement package.

“The overall strike is 26km and there’s a lot of ground to cover,” Laneyrie said.

Laneyrie said all of the veins outcropped at surface and there had been limited deep drilling.

“No one has bothered to look for their extensions, go under 5-10m of cover, because they haven’t had to, so that’s going to be one of our focuses,” he said.

Vein samples in the 4km-long by 1km-wide Droughtmaster corridor had returned up to 8677g/t silver and 100.1g/t gold.

“That’s the scale of discoveries we’re still making after 30 years proximal to infrastructure,” Laneyrie said.

Andean has just kicked off what it believes is one of the largest geophysics programs ever seen in the region, which is expected to take around four months.

“This is the same style of program they used to find Cerro Negro over the border,” said Laneyrie.

Coincidentally, Cerro Negro was discovered by the last ‘Andean’ to be listed on the ASX, Andean Resources.

Andean Resources was acquired by Goldcorp for C$3.6 billion in 2010. Today, Cerro Negro remains a core asset in Newmont’s portfolio and is expected to produce 290,000oz of gold this year.

SCP retained a buy rating and A$2.90 price target for Andean, more than triple current levels.

“Big picture, in the near term this is all about growing the MRE (runway towards SCP estimate 200Moz blue sky), with eventual opportunity to carve out the ‘best bits’ along the way to feed a future mine plan,” Gaspar said.

“With circa $31 million cash and three rigs heading into 2025, the stock currently trades at circa US$1.08/oz EV in situ (or US93c/oz net of infrastructure value) vs peers US$1.5-7/oz range. Very simply, we think drilling closes this gap.”