Southern Andes Energy Inc.
TSX VENTURE : SUR

Southern Andes Energy Inc.

September 29, 2010 12:56 ET

Southern Andes Energy Inc. Creates Caracara Mining Inc.

Caracara Mining Focused on Advanced Stage Silver-Zinc-Lead Projects in Peru

TORONTO, ONTARIO--(Marketwire - Sept. 29, 2010) - Southern Andes Energy Inc. ("Southern Andes" or "the Company") (TSX VENTURE:SUR) is pleased to announce the creation of Caracara Mining Inc. ("Caracara"), a wholly-owned subsidiary of the Company, which will focus on advancing and developing Southern Andes extensive silver-zinc-lead projects in southern Peru.

Silver-Zinc-Lead Projects

Southern Andes retains 100% ownership of its exploration portfolio located in the emerging Macusani Uranium District, located 650 kilometres southeast of Lima where it is the largest landowner. Southern Andes also controls two important silver-zinc-lead projects known as Princesa and Pilunani. Located 220 kilometres north of Juliaca, Princesa hosts NI 43-101 inferred mineral resources of 4.6 million tonnes grading 90.88 grams silver per tonne, 1.69% zinc and 1.66% lead or a total of 28.7 million silver equivalent ounces(1).

Caracara Expands its Portfolio

Following a review of the Princesa-Pilunani database and the regional geologic potential, Caracara staked an additional 10,000 hectares of ground and concluded an option agreement with a private vendor to acquire four additional projects in the region with similar mineralization. All of the newly acquired ground includes areas characterized by historic surface mine workings and zones of mineralization which have never been drill tested. Combined with the original Princesa and Pilunani holdings, Caracara now holds more than 24,000 hectares of prospective ground anchored around the Princesa silver-zinc-lead project.

In consideration for the four projects and geologic database which was used to stake 10,000 hectares in the Princesa-Pilunani Belt, Caracara will issue a total of 3 million common shares over a two year period of which 2 million shares will be issued on a going public transaction and a further one million shares issued on the first anniversary date of the going public transaction. In addition, cash payments totalling US$500,000 will be made over a two year period.

Nick Tintor, CEO of Southern Andes commented: "With silver prices reaching 30-year highs and zinc and lead prices nearing the $1 per pound mark, we believe our Princesa-Pilunani play will be accretive for Southern Andes which plans to stay focused on our uranium projects in the Macusani Uranium District. Further underscoring the prospective nature of Caracara's large land holdings, three grab samples taken by management during a field review generated promising results."

On the Parcuyo property which hosts a large diatreme breccia zone, two samples from outcrop returned the following results:

Sample No.   Zinc   Lead
         
PAR01   8.54%   11.95%
PAR02   24.07%   9.43%

At the Princesa project, one sample from a diatreme breccia structure several hundred metres from the main Princesa zone returned the following result.

Sample No.   Silver   Zinc   Lead
    (g/t)        
             
Princesa   854   >30%(2)   8.52%(3)

Management believes there is considerable potential to increase both open pit and underground resources at Princesa as the main mineralized zones remain open along strike and at depth.

The Company expects to have Caracara commence drilling its silver projects in the first quarter of 2011.

Caracara Mining Highlights

  • Princesa project hosts in excess of 28 million silver equivalent ounces in the main Princesa zone.
  • Several parallel structures with high silver values on surface have never been drill tested.
  • Potential to add resources on parallel structures and laterally and at depth on the main Princesa zone.
  • Land holdings covering silver-zinc targets in the region total 24,000 hectares(4).
  • Road access from the city of Juliaca to the project areas is excellent.
  1. Silver equivalence is based on the spot bid price for silver of US$18.23 per ounce and the spot bid price per pound for zinc and lead of US$0.827 and US$0.815 respectively and as published by Kitco at www.kitco.com on July 14, 2010. The complete report titled "NI 43- 101 Report, Princesa Property, May 2008" by Alain Vachon,. P.Eng, can be found under Southern Andes Energy listing at www.sedar.com.

  2. Samples were assayed at CIMM Peru SA in Lima, an ISO 9001 certified laboratory, utilizing atomic absorption spectrometry and a four acid digestion process which has a detection limit of 30% for zinc.

  3. The Company cautions that grab samples may not be representative of mineralized zones sampled and that the zones sampled may not lead to the estimation of a mineral resource as defined under NI 43-101.

  4. See map attached.

About Southern Andes Energy Inc.

Southern Andes Energy Inc. is a growing Canadian-based exploration company focused on the advancement of its prospective uranium and base metals properties in southern Peru. Southern Andes is the largest landowner in the newly emerging Macusani Uranium District in Peru, controlling more than 900 km² of land concessions where in excess of 55 uraniferous anomalies have been identified. The Company also owns a 12.7% interest in Macusani Yellowcake Inc., which controls two advanced stage uranium deposits and, through its wholly-owned subsidiary Caracara Mining Inc., a large portfolio of advanced stage silver-zinc-lead projects.

Mr. Alain Vachon, P. Eng., the Company's Qualified Person as defined by National Instrument 43-101, has reviewed and approved the contents of this press release.

This news release may contain forward-looking statements that are based on Southern Andes Energy Inc.'s expectations, estimates and projections regarding its business and the economic environment in which it operates. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Therefore, actual outcomes and results may differ materially from those expressed in these forward-looking statements and readers should not place undue reliance on such statements. Statements speak only as of the date on which they are made, and the Company undertakes no obligation to update them publicly to reflect new information or the occurrence of future events or circumstances, unless otherwise required to do so by law.

To view the map associated with this press release, please click on the following link:

http://media3.marketwire.com/docs/sur929.pdf

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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