**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**







**FORM
      10-QSB**







(*Mark
                One*)x
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d)****OF
                THE SECURITIES EXCHANGE ACT OF 1934**For
                the
                quarterly period ended September 30, 2005 ̈
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15(d)****OF
                THE
                SECURITIES EXCHANGE ACT OF
                1934**





For
      the
      transition period from  to
      __________


Commission
      file Number **000-22731**








**MINERA
      ANDES INC.**


( *Exact
      name of small business issuer as specified in its charter* )





**ALBERTA,
      CANADA**


( *State
      or other jurisdiction of incorporation or organization* )





**NONE**


( *I.R.S.
      Employer Identification No.* )





**111
      E. MAGNESIUM ROAD, SUITE A, SPOKANE, WA 99208**


( *Address
      of principal executive offices* )





**(509)
      921-7322**


( *Issuer’s
      telephone number* )





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x  No  ̈





Shares
      outstanding as of November 18, 2005: 90,941,931 shares of common stock, with
      no
      par value





Transitional
      Small Business Disclosure Format ( *Check
      One* ):
      Yes  ̈ No x







-
            1
            -
 TOC





**TABLE
      OF CONTENTS**

















**PART
                I - FINANCIAL INFORMATION**
            
            **Page**Item
                1Consolidated
                Financial Statements (Unaudited)Consolidated
                Balance Sheets
            3Consolidated
                Statements of Operations andAccumulated
                Deficit
            4Consolidated
                Statements of Mineral Properties andDeferred
                Exploration Costs
            5Consolidated
                Statements of Cash Flows
            6Notes
                to Consolidated Financial Statements
            8Item
                2Management’s
                Discussion and Analysis and Plan of Operations
            18Item
                3Controls
                and Procedures ...
            24**PART
                II - OTHER INFORMATION**Item
                2Changes
                in Securities
            25Item
                6Exhibits
                and Reports on Form 8-K
            25**SIGNATURES**
            
            26








































































-
          2
          -
 TOC




**MINERA
      ANDES INC.**


**“An
      Exploration Stage Corporation”**


**CONSOLIDATED
      BALANCE SHEETS**


**(U.S.
      Dollars - Unaudited)**





**September
                30,**
              **2005**
            
            **December
                31,**
              **2004****ASSETS**Current:Cash
                and cash equivalents
            
            $
            1,367,029
            
            $
            1,726,820Receivables
                and
                prepaid expenses
            
            
            79,779
            
            
            111,570Total
                current assets
            
            
            1,446,808
            
            
            1,838,390Mineral
                properties and deferred exploration costs (Note 4)
            
            
            4,220,047
            
            
            2,827,655Investment
                (Note 5)
            
            
            15,685,112
            
            
            7,345,840Equipment,
                net
            
            
            75,466
            
            
            97,655Total
                assets
            
            $
            21,427,433
            
            $
            12,109,540**LIABILITIES**Current:Accounts
                payable and accruals
            
            $
            65,122
            
            $
            257,268Bank
                loan interest payable
            
            
            50,838
            
            
            3,913Total
                current liabilities
            
            
            115,960
            
            
            261,181Bank
                loan (Note 6)
            
            
            3,541,314
            
            
            653,800Total
                liabilities
            
            
            3,657,274
            
            
            914,981**SHAREHOLDERS’
                EQUITY**Preferred
                shares, no par value, unlimited number
              authorized,
                none issued
            
            
            --
            
            
            --Common
                shares, no par value, unlimited number authorizedIssued
                September 30, 2005 - 90,818,505 shares (Note 3)
              Issued
                December 31, 2004 - 71,586,806 shares
            
            
            36,659,678
            
            
            28,711,334Contributed
                surplus - stock option compensation
            
            
            1,954,880
            
            
            1,663,677Accumulated
                deficit
            
            
            (20,844,399
            )
            
            (19,180,452
            )Total
                shareholders’ equity
            
            
            17,770,159
            
            
            11,194,559Total
                liabilities and shareholders’ equity
            
            $
            21,427,433
            
            $
            12,109,540





Approved
      by the Board of Directors:




/s/
      Allen V. Ambrose ** /s/
      Bonnie L. Kuhn


Allen
      V.
      Ambrose, Director  Bonnie
      L.
      Kuhn, Director




*The
      accompanying notes are an integral part of these consolidated financial
      statements.*


-
          3
          -
 TOC




**MINERA
        ANDES INC.**
 **“An
        Exploration Stage Corporation”**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT**
 **(U.S.
        Dollars-Unaudited)**
  **Three
                    Months Ended**
                
                **Nine
                    Months Ended**
                
                **Period
                    from**
                  **July
                    1, 1994 (commencement)****September
                    30,**
                  **2005**
                
                **September
                    30,**
                  **2004**
                
                **September
                    30,**
                  **2005**
                
                **September
                    30,**
                  **2004**
                
                **through**
                  **September
                    30, 2005 (Cumulative)**Consulting
                    fees
                
                $
                101,749
                
                $
                202,730
                
                $
                296,251
                
                $
                431,927
                
                $
                2,262,475Depreciation
                
                
                2,691
                
                
                10,816
                
                
                7,683
                
                
                28,187
                
                
                85,180Equipment
                    rental
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                21,522Foreign
                    exchange (gain) loss
                
                
                (73,188
                )
                
                (241,049
                )
                
                68,627
                
                
                (124,899
                )
                
                165,310Insurance
                
                
                18,069
                
                
                18,419
                
                
                53,589
                
                
                55,289
                
                
                375,660Legal,
                    audit and accounting fees
                
                
                55,020
                
                
                48,797
                
                
                129,232
                
                
                183,295
                
                
                1,640,437Materials,
                    supplies and maintenance
                
                
                --
                
                
                361
                
                
                --
                
                
                361
                
                
                49,260Office
                    overhead and administration fees
                
                
                45,528
                
                
                170,808
                
                
                232,711
                
                
                322,641
                
                
                2,621,455Telephone
                
                
                7,413
                
                
                8,871
                
                
                25,161
                
                
                24,033
                
                
                441,995Transfer
                    agent
                
                
                12,218
                
                
                1,602
                
                
                15,429
                
                
                6,127
                
                
                132,185Travel
                
                
                6,207
                
                
                14,354
                
                
                61,071
                
                
                49,281
                
                
                519,898Wages
                    and benefits
                
                
                79,712
                
                
                359,967
                
                
                211,734
                
                
                456,616
                
                
                2,268,751Write-off
                    of deferred exploration costs
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                8,540,235Total
                    expenses
                
                
                255,419
                
                
                595,676
                
                
                1,101,488
                
                
                1,432,858
                
                
                19,124,363Gain
                    on sale of equipment
                
                
                --
                
                
                (4,614
                )
                
                --
                
                
                (4,614
                )
                
                (112,330
                )Gain
                    on sale of property
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (898,241
                )Loss
                    on investment (Note 5)
                
                
                212,098
                
                
                --
                
                
                539,673
                
                
                --
                
                
                960,022Interest
                    income
                
                
                (15,277
                )
                
                (21,042
                )
                
                (52,750
                )
                
                (60,703
                )
                
                (593,153
                )Net
                    loss for the period
                
                
                452,240
                
                
                570,020
                
                
                1,588,411
                
                
                1,367,541
                
                
                18,480,661Accumulated
                    deficit, beginning of the period,
                  as
                    previously reported
                
                
                20,392,159
                
                
                17,919,068
                
                
                19,180,452
                
                
                16,356,398
                
                
                --Adjustment
                    for change in accounting for stock-based
                  compensation
                    (Note 2)
                
                
                --
                
                
                --
                
                
                --
                
                
                678,569
                
                
                678,56920,392,159
                
                
                17,919,068
                
                
                19,180,452
                
                
                17,034,967
                
                
                678,569Adjustment
                    on acquisition of royalty interest
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                500,000Share
                    issue costs
                
                
                --
                
                
                --
                
                
                75,536
                
                
                86,580
                
                
                1,167,954Deficiency
                    on acquisition of subsidiary
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                17,215Accumulated
                    deficit, end of the period
                
                $
                20,844,399
                
                $
                18,489,088
                
                $
                20,844,399
                
                $
                18,489,088
                
                $
                20,844,399Basic
                    and diluted net loss per common share
                
                $
                0.00
                
                $
                0.01
                
                $
                0.02
                
                $
                0.02Weighted
                    average shares outstanding
                
                
                90,657,475
                
                
                70,333,061
                
                
                78,519,041
                
                
                67,475,720
 .


-
            4
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 TOC


**MINERA
      ANDES INC.**


**“An
      Exploration Stage Corporation”**


**CONSOLIDATED
      STATEMENTS OF MINERAL PROPERTIES**


**AND
      DEFERRED EXPLORATION COSTS**


**(U.S.
      Dollars-Unaudited)**


**Three
                    Months Ended**
                
                **Nine
                    Months Ended**
                
                **Period
                    from July 1, 1994**
                  **(commencement)****September
                    30,**
                  **2005**
                
                **September
                    30,**
                  **2004**
                
                **September
                    30,**
                  **2005**
                
                **September
                    30,**
                  **2004**
                
                **through**
                  **September
                    30, 2005 (Cumulative)**Administration
                    fees
                
                $
                --
                
                $
                --
                
                $
                --
                
                $
                --
                
                $
                392,837Assays
                    and analytical
                
                
                12,374
                
                
                44,256
                
                
                99,224
                
                
                93,553
                
                
                1,157,041Construction
                    and trenching
                
                
                --
                
                
                --
                
                
                7,932
                
                
                170
                
                
                534,283Consulting
                    fees
                
                
                18,390
                
                
                13,977
                
                
                118,785
                
                
                53,447
                
                
                1,291,578Depreciation
                
                
                6,268
                
                
                --
                
                
                18,789
                
                
                --
                
                
                215,856Drilling
                
                
                --
                
                
                1,383
                
                
                396,110
                
                
                244,343
                
                
                1,589,393Equipment
                    rental
                
                
                --
                
                
                --
                
                
                84,303
                
                
                132,688
                
                
                505,252Geology
                
                
                60,022
                
                
                43,581
                
                
                223,345
                
                
                335,172
                
                
                3,972,680Geophysics
                
                
                2,700
                
                
                --
                
                
                65,058
                
                
                --
                
                
                374,960Insurance
                
                
                --
                
                
                --
                
                
                1,853
                
                
                --
                
                
                257,412Legal
                
                
                24,723
                
                
                --
                
                
                64,781
                
                
                220
                
                
                806,268Maintenance
                
                
                688
                
                
                4,231
                
                
                6,112
                
                
                15,994
                
                
                187,326Materials
                    and supplies
                
                
                3,598
                
                
                2,648
                
                
                29,805
                
                
                31,641
                
                
                505,078Project
                    overhead
                
                
                13,437
                
                
                1,488
                
                
                44,225
                
                
                15,597
                
                
                429,883Property
                    and mineral rights
                
                
                10,871
                
                
                13,208
                
                
                31,210
                
                
                54,477
                
                
                1,443,809Telephone
                
                
                4,589
                
                
                2,211
                
                
                20,890
                
                
                9,780
                
                
                129,906Travel
                
                
                18,013
                
                
                10,925
                
                
                81,605
                
                
                60,712
                
                
                1,295,619Wages
                    and benefits
                
                
                33,558
                
                
                23,777
                
                
                98,365
                
                
                89,760
                
                
                1,394,843Costs
                    incurred during the period
                
                
                209,231
                
                
                161,685
                
                
                1,392,392
                
                
                1,137,554
                
                
                16,484,024Deferred
                    costs, beginning of the period
                
                
                4,010,816
                
                
                1,891,168
                
                
                2,827,655
                
                
                915,299
                
                
                --Deferred
                    costs, acquired
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                576,139Deferred
                    costs, contributed to MSC
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (2,320,980
                )Deferred
                    costs written off
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (8,540,235
                )Mineral
                    property option proceeds
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (1,978,901
                )Deferred
                    costs, end of the period
                
                $
                4,220,047
                
                $
                2,052,853
                
                $
                4,220,047
                
                $
                2,052,853
                
                $
                4,220,047


*The
      accompanying notes are an integral part of these consolidated financial
      statements.*


-
          5
          -
 TOC




MINERA
      ANDES INC.


**“An
      Exploration Stage Corporation”**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(U.S.
      Dollars-Unaudited)**




**Three
                Months Ended**
            
            **Nine
                Months Ended**
            
            **Period
                from**
              **July
                1, 1994 (commencement)****September
                30,**
              **2005**
            
            **September
                30,**
              **2004**
            
            **September
                30,**
              **2005**
            
            **September
                30,**
              **2004**
            
            **through**
              **September
                30, 2005 (Cumulative)**Operating
                Activities:Net
                loss for the period
            
            $
            (452,240
            )
            $
            (570,020
            )
            $
            (1,588,411
            )
            $
            (1,367,541
            )
            $
            (18,480,661
            )Adjustments
                to reconcile net loss to net cash provided by (used in) operating
                activities:Write-off
                of incorporation costs
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            665Write-off
                of deferred exploration costs
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            8,540,235Loss
                on investment
            
            
            212,098
            
            
            --
            
            
            539,673
            
            
            --
            
            
            960,022Depreciation
            
            
            2,691
            
            
            10,816
            
            
            7,683
            
            
            28,187
            
            
            85,180Stock
                option compensation
            
            
            9,230
            
            
            413,507
            
            
            27,403
            
            
            447,686
            
            
            666,311Gain
                on sale of equipment
            
            
            --
            
            
            (4,614
            )
            
            --
            
            
            (4,614
            )
            
            (112,330
            )Gain
                on sale of mineral properties
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            (898,241
            )Change
                in:Receivables
                and prepaid expenses
            
            
            7,243
            
            
            154,794
            
            
            31,791
            
            
            178,535
            
            
            (79,779
            )Accounts
                payable and accruals
            
            
            (201,146
            )
            
            (33,897
            )
            
            (192,147
            )
            
            (49,797
            )
            
            65,122Due
                to related parties
            
            
            --
            
            
            --
            
            
            --
            
            
            (30,531
            )
            
            --Cash
                used in operating activities
            
            
            (422,124
            )
            
            (29,414
            )
            
            (1,174,008
            )
            
            (798,075
            )
            
            (9,253,476
            )Investing
                Activities:Incorporation
                costs
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            (665
            )Purchase
                of equipment
            
            
            (1,798
            )
            
            (35,277
            )
            
            (4,283
            )
            
            (46,682
            )
            
            (305,613
            )Proceeds
                from sale of equipment
            
            
            --
            
            
            6,500
            
            
            --
            
            
            6,500
            
            
            14,225Proceeds
                from sale of property
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            898,241Mineral
                properties and deferred exploration
            
            
            (202,963
            )
            
            (161,685
            )
            
            (1,373,603
            )
            
            (1,137,554
            )
            
            (16,268,168
            )Investment
            
            
            (3,812,687
            )
            
            (1,921,569
            )
            
            (9,080,705
            )
            
            (1,921,569
            )
            
            (14,922,001
            )Proceeds
                from sale of subsidiaries
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            9,398Acquisition
                of royalty interest
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            (500,000
            )Mineral
                property option proceeds
            
            
            200,000
            
            
            200,000
            
            
            400,000
            
            
            400,000
            
            
            2,778,901Cash
                used in investing activities
            
            
            (3,817,448
            )
            
            (1,912,031
            )
            
            (10,058,591
            )
            
            (2,699,305
            )
            
            (28,295,682
            )


-
          6
          -
 TOC





**MINERA
                ANDES INC.**
              **“An
                Exploration Stage Corporation”**
              **CONSOLIDATED
                STATEMENTS OF CASH FLOWS**
              **(U.S.
                Dollars-Unaudited)****Three
                Months Ended**
            **Nine
                Months Ended**
            **Period
                from**
              **July
                1, 1994 (commencement)****September
                30,**
              **2005**
            **September
                30,**
              **2004**
            **September
                30,**
              **2005**
            **September
                30,**
              **2004**
            **Through**
              **September
                30, 2005 (Cumulative)**Financing
                Activities:Shares
                and subscriptions issued for cash, less issue costs
            42,654
            40,267
            7,872,808
            4,670,319
            34,916,187Bank
                loan proceeds received
            2,000,000
            --
            3,000,000
            --
            4,000,000Cash
                provided by financing activities
            2,042,654
            40,267
            10,872,808
            4,670,319
            38,916,187Increase
                (decrease) in cash and cash equivalents
            (2,196,918)
            (1,901,178)
            (359,791)
            1,172,939
            1,367,029Cash
                and cash equivalents, beginning of period
            3,563,947
            5,308,459
            1,726,820
            2,234,342
            --Cash
                and cash equivalents, end of period
            $1,367,029
            $3,407,281
            $1,367,029
            $3,407,281
            $1,367,029Supplementary
                disclosure cash flow information:Interest
                paid
            $26,007
            $--
            $56,544
            $--
            $56,544Non-cash
                investing and financing activities and other information:Stock
                option compensation
            $9,230
            $413,507
            $27,403
            $447,686
            $666,311Capitalized
                interest (Note 6)
            $99,727
            $--
            $198,239
            $--
            $202,153Depreciation
                capitalized to mineral properties
            $6,268
            $--
            $18,789
            $--
            $215,856Adjustment
                for change in accounting for stock-based compensation (Note
                2)
            $--
            $--
            $--
            $--
            $678,569Deferred
                costs, acquired
            $--
            $--
            $--
            $--
            $576,139Deferred
                costs, contributed to MSC
            $--
            $--
            $--
            $--
            $2,320,980Shares
                issued for acquisition
            $--
            $--
            $--
            $--
            $575,537*The
                accompanying notes are an integral part of these consolidated financial
                statements.*








-
          7
          -
 TOC





**MINERA
      ANDES INC.**


**“An
      Exploration Stage Corporation”**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(U.S.
      Dollars-Unaudited)**







**1.
      Accounting Policies, Financial Condition and Liquidity**




The
      accompanying consolidated financial statements of Minera Andes Inc. (the
“Company”) for the three and nine month periods ended September 30, 2005 and
      2004 and for the cumulative period from commencement (July 1, 1994) through
      September 30, 2005 have been prepared in accordance with accounting principles
      generally accepted in Canada which differ in certain respects from accounting
      principles generally accepted in the United States, as described in Note 11.
      Also, they are unaudited but, in the opinion of management, include all
      adjustments, consisting only of normal recurring items, necessary for a fair
      presentation. Interim results are not necessarily indicative of results which
      may be achieved in the future. The December 31, 2004 financial information
      has
      been derived from the Company’s audited consolidated financial
      statements.





These
      consolidated financial statements should be read in conjunction with the audited
      consolidated financial statements and notes thereto for the year ended December
      31, 2004 included in our annual report on Form 10-KSB (“the 2004 10-KSB”) for
      the year ended December 31, 2004 on file with the Securities and Exchange
      Commission and with the TSX Venture Exchange. The accounting policies set forth
      in the audited annual consolidated financial statements are the same as the
      accounting policies utilized in the preparation of these consolidated financial
      statements, except as modified for appropriate interim
      presentation.





The
      recoverability of amounts shown as mineral properties and deferred exploration
      costs is dependent upon the existence of economically recoverable reserves,
      the
      ability of the Company to obtain necessary financing to complete their
      development, and future profitable production or disposition thereof. Concerning
      the recoverability of the amount shown as investment in MSC, we announced the
      results of a feasibility study subsequent to September 30, 2005 (see note 12);
      a
      letter of offer to provide a limited recourse project finance loan facility
      was
      accepted in July 2005 (see note 5),





The
      accompanying consolidated financial statements have been prepared using
      accounting principles generally accepted in Canada applicable to a going
      concern. The use of such principles may not be appropriate because, as of
      September 30, 2005, there was substantial doubt that the Company would be able
      to continue as a going concern.





For
      the
      nine months ended September 30, 2005 the Company had a loss of $1.6 million
      and
      an accumulated deficit of $20.8 million. In addition, due to the nature of
      the
      mining business, the acquisition, exploration and development of mineral
      properties requires significant expenditures prior to the commencement of
      production. To date, the Company has financed its activities through the sale
      of
      equity securities and joint venture arrangements. The Company expects to use
      similar financing techniques in the future.





Although
      there is no assurance that the Company will be successful in these actions,
      management believes that they will be able to secure the necessary financing
      to
      enable it to continue as a going concern. Accordingly, these financial
      statements do not reflect adjustments to the carrying value of assets and
      liabilities, and the reported revenues and expenses and balance sheet
      classifications used that would be necessary if the going concern assumption
      were not appropriate. Such adjustments could be material.





Although
      we have taken steps to verify title to mineral properties in which we have
      an
      interest, in accordance with industry standards for the current stage of
      exploration of such properties, these


-
          8
          -
 TOC


procedures
      do not guarantee title. Property title may be subject to unregistered prior
      agreements and noncompliance with regulatory requirements.





**2.
      Change in Accounting Policy**





Effective
      January 1, 2004, we adopted, on a retroactive basis without restatement, the
      recommendations of CICA Handbook Section 3870, “Stock-based compensation and
      other stock-based payments”, which now requires companies to adopt the fair
      value based method for all stock-based awards granted on or after January 1,
      2002. Previously we were only required to disclose the pro forma effect of
      stock
      options issued to employees and directors in the notes to the financial
      statements. The effect of this change in accounting policy was to increase
      the
      accumulated deficit at January 1, 2004 by $678,569 with a corresponding increase
      to reported contributed surplus .





**3.
      Changes to Share Capital**





**Number**
              **of
                Shares**
            
            **Amount**Balance,
                December 31, 2004
            
            
            71,586,806
            
            $
            28,711,334Issued
                for cash on
                exercise of options
            
            
            253,500
            
            
            34,055Issued
                for cash on
                exercise of warrants
            
            
            22,500
            
            
            9,230Issued
                for cash on
                exercise of broker warrants
            
            
            775,249
            
            
            221,606Issued
                for cash
                (private placement Cdn$0.55 each)
            
            
            18,180,450
            
            
            7,683,453Balance,
                September 30, 2005
            
            
            90,818,505
            
            $
            36,659,678





During
      the three months ended September 30, 2005, we issued 228,500 common shares
      for
      the exercise of stock options and 40,286 shares for the exercise of broker
      warrants with gross proceeds of $42,654.





During
      the three months ended June 30, 2005, we issued 25,000 common shares for the
      exercise of stock options and 445,215 shares for the exercise of broker warrants
      with gross proceeds of $129,069.





During
      the three months ended March 31, 2005, we
      issued
      22,500 common shares for the exercise of purchase warrants and 289,748 shares
      for the exercise of broker warrants with gross proceeds of $93,168.





On
      March
      22, 2005, we sold 18,180,450 units to accredited investors at a price of
      Cdn$0.55 per unit for net proceeds of Cdn$9,299,300 (US$7,683,453). Each unit
      consists of one common share and one-half of one common share purchase warrant.
      One whole common share purchase warrant entitles the holder to purchase one
      additional common share at an exercise price of Cdn$0.70 per share for a period
      of 5 years from the closing date. The agents received a cash commission of
      7% of
      the gross proceeds of the financing. The agents also received agent’s warrants
      equal to 7% of the aggregate number of units sold pursuant to the offering.
      Each
      agent’s warrant upon exercise will entitle the holder to acquire one common
      share at an exercise price of Cdn$0.70 per common share for a period of 2 years
      from the date of issue. A total of 18,180,450 common shares were issued pursuant
      to the private placement, and 9,090,225 common shares are reserved for issuance
      on exercise of the warrants and 1,272,632 common shares are reserved for
      issuance on the exercise of the agent’s warrants.





**4.
      Mineral Properties and Deferred Exploration Costs**




At
      September 30, 2005, the Company, through its subsidiaries, held interests in
      approximately 203,562 hectares of mineral rights and mining lands in three
      Argentine provinces, including approximately 40,000 hectares in the co-owned
      San
      José project. Under its present acquisition and exploration programs, the


-
          9
          -
 TOC


Company
      is continually acquiring additional mineral property interests and exploring
      and
      evaluating our properties. If, after evaluation, a property does not meet the
      Company's requirements, then the property and deferred exploration costs are
      written off to operations. Mineral property costs and deferred exploration
      costs, net of mineral property option proceeds, are as follows:





**2005
                COSTS BY PROPERTY****Description**
            
            **San
                Juan Cateos**
            
            **Santa
                Cruz Cateos**
            
            **Chubut
                Cateos**
            
            **General
                Exploration**
            
            **Total**Balance,
                beginning of period
            
            $
            1,065,399
            
            $
            1,582,043
            
            $
            180,213
            
            $
            --
            
            $
            2,827,655Assays
                and analytical
            
            
            --
            
            
            99,224
            
            
            --
            
            
            --
            
            
            99,224Construction
                and trenching
            
            
            --
            
            
            7,932
            
            
            --
            
            
            --
            
            
            7,932Consulting
                fees
            
            
            2,448
            
            
            42,457
            
            
            11,044
            
            
            62,836
            
            
            118,785Depreciation
            
            
            --
            
            
            --
            
            
            --
            
            
            18,789
            
            
            18,789Drilling
            
            
            --
            
            
            396,110
            
            
            --
            
            
            --
            
            
            396,110Equipment
                Rental
            
            
            --
            
            
            84,303
            
            
            --
            
            
            --
            
            
            84,303Geology
            
            
            1,186
            
            
            179,194
            
            
            3,480
            
            
            39,485
            
            
            223,345Geophysics
            
            
            --
            
            
            65,058
            
            
            --
            
            
            --
            
            
            65,058Insurance
            
            
            --
            
            
            --
            
            
            --
            
            
            1,853
            
            
            1,853Legal
            
            
            --
            
            
            --
            
            
            --
            
            
            64,781
            
            
            64,781Maintenance
            
            
            --
            
            
            5,429
            
            
            --
            
            
            683
            
            
            6,112Materials
                and supplies
            
            
            51
            
            
            24,360
            
            
            350
            
            
            5,044
            
            
            29,805Project
                overhead
            
            
            95
            
            
            2,581
            
            
            1,574
            
            
            39,975
            
            
            44,225Property
                and mineral rights
            
            
            9,536
            
            
            20,489
            
            
            1,185
            
            
            --
            
            
            31,210Telephone
            
            
            3
            
            
            13,357
            
            
            11
            
            
            7,519
            
            
            20,890Travel
            
            
            148
            
            
            46,568
            
            
            183
            
            
            34,706
            
            
            81,605Wages
                and benefits
            
            
            3,923
            
            
            14,718
            
            
            --
            
            
            79,724
            
            
            98,365Overhead
                allocation
            
            
            27,021
            
            
            317,163
            
            
            11,211
            
            
            (355,395
            )
            
            --**Balance,
                end of period**
            
            **$**
            **1,109,810**
            
            **$**
            **2,900,986**
            
            **$**
            **209,251**
            
            **$**
            **--**
            
            **$**
            **4,220,047**








The
      San
      Juan Province project is comprised of six properties totaling 20,900 hectares
      (“ha”) in southwestern San Juan province. Land holding costs for 2005 are
      estimated at $1,616. Expenditures to date in 2005 relate to an ongoing land
      maintenance and exploration program at the Los Azules project.





In
      Santa
      Cruz, we control 20 cateos and 57 manifestations of discovery totaling 122,263
      ha. Land holding costs for 2005 are estimated at $3,819. Expenditures to date
      in
      2005 on the Santa Cruz properties reflect the continuation of a regional
      reconnaissance program.





We
      currently hold 20 manifestations of discovery, totaling 19,900 ha, in Chubut
      province. Land holding costs for 2005 are estimated at $2,020. Expenditures
      to
      date in 2005 relate to an ongoing reconnaissance exploration program on lands
      acquired in 2002.





**5.
      Investment (San José Project)**





The
      investment in Minera Santa Cruz S.A. is comprised of the
      following:


-
          10
          -
 TOC





**2005**Investment
                in MSC, January 1, 2005
            
            $
            7,345,840Plus:Deferred
                costs
                incurred
            
            
            409,945Advances
                during the
                period
            
            
            8,869,000Option
                agreement
                proceeds
            
            
            (400,000
            )Loss
                from equity
                investment
            
            
            (539,673
            )Investment
                in MSC, September 30, 2005
            
            $
            15,685,112





The
      San
      José project is owned by Minera Santa Cruz S.A. (“MSC”), an Argentine
      corporation owned by Minera Andes Inc. (49%) and Mauricio Hoschschild & Cia.
      Ltda. (“MHC”) (51%). Our obligation will be 49% of the costs related to the San
      José project, to maintain our interest in MSC.





Deferred
      costs incurred for $409,945 include, among other things, engineering consulting
      costs, legal fees, and interest and finance costs related to our investment
      in
      MSC.





In
      July
      2005, MSC accepted a letter of offer from Standard Bank Plc (“Standard Bank”)
      and Bayerische Hypo- und Vereinsbank AG (“HVB”) to provide a limited recourse
      project finance loan facility of up to US$50 million for construction through
      production at the San Jose/Huevos Verdes gold/silver project in Argentina.
      The
      offer from Standard Bank and HVB was chosen after a competitive tender process
      and negotiations with several consortiums of international banks all well
      recognized as having extensive mining finance experience.





The
      US$50
      million debt facility to be provided by Standard Bank and HVB is subject, among
      other things, to completion of a bankable feasibility study, bank due diligence,
      documentation and certain regulatory approvals. It is anticipated that the
      facility will be available for drawdown in the 1 st quarter
      of 2006. The facility is substantially non-recourse to Minera Andes and Mauricio
      Hochschild. As part of the overall facility amount, there is a stand-by facility
      of up to US$5million available for unanticipated cost over-runs prior to
      completion and commercial production. The commercial terms of the loan are
      customary for a loan of this nature and include certain fees and expenses with
      interest rates of Libor + 3.0% pa prior to project completion and LIBOR + 2.75
      to 3.0% pa thereafter.  Subject
      to the completion of the definitive agreement for the debt facility, Minera
      Andes will pay $250,000 in consulting fees for services rendered to obtain
      the
      facility.





MAI
      will
      continue to finance its 49% interest of the project costs incurred prior to
      the
      drawdown of the loan facility. Our 49% portion of these costs, from October
      2005
      through drawdown, is estimated to be $7.7 million of which $637,000 were paid
      subsequent to September 30, 2005.





A
      bankable feasibility study was completed in October 2005 as further detailed
      in
      Note 12.





**6.
      Bank Loan**





In
      December 2004, we secured a two-year loan facility of up to $4 million from
      Macquarie Bank Limited (“Macquarie”). All amounts advanced are due in December
      2006. This facility was provided in two tranches to assist in funding our 49%
      portion of the costs of completing a bankable feasibility study and related
      development work for the San Jose/Huevos Verdes gold/silver project in
      Argentina.





The
      commercial terms of the loan include a facility fee of 1.5% of the principal
      amount of each tranche at the time of the advance and interest of LIBOR plus
      2%
      per year, currently totaling approximately 6.1%


-
          11
          -
 TOC


per
      year.
      In addition, we issued share purchase warrants to acquire 2,738,700 of our
      Common Shares at an exercise price of Cdn$0.91 per share. The warrants exercise
      price was calculated at a 20 percent premium to the volume weighted average
      of
      our common stock determined from the ten business days prior to acceptance
      of
      the loan facility. Each warrant is exercisable for two years. The loan is
      collateralized by our interest in Minera Andes S.A., our 49% interest in MSC,
      and personal property.





The
      fair
      value of the warrants for the first tranche was calculated using the
      Black-Scholes option pricing model with the following assumptions: dividend
      yield - Nil; risk free interest rate - 3.53%; expected volatility of 62% and
      an
      expected life of 24 months. The difference between the allocated fair value
      and
      the face value of the debt of $346,200 was initially recorded as a debt discount
      with a corresponding entry to contributed surplus. The debt discount is being
      accreted and capitalized to our investment in MSC (Note 5) over the term of
      the
      debt using the effective interest rate method. No amount of the discount was
      accreted in 2004 since the debt agreement only became effective in December
      2004. The accretion of the debt discount began in January 2005.





We
      received $1,000,000 of the first tranche in December 2004 and the remaining
      $1,000,000 of the first tranche in February 2005.





In
      July
      2005, we received the second tranche of $2,000,000. In addition, we issued
      share
      purchase warrants to acquire 3,987,742 of our Common Shares at an exercise
      price
      of Cdn$0.62 per share. The warrants exercise price was calculated at a 20
      percent premium to the volume weighted average of our common stock determined
      from the ten business days prior to acceptance of the loan facility. Each
      warrant is exercisable for two years.





The
      fair
      value of the warrants for the second tranche was calculated using the
      Black-Scholes option pricing model with the following assumptions: dividend
      yield - Nil; risk free interest rate - 3.99%; expected volatility of 55.8%
      and
      an expected life of 24 months. The difference between the allocated fair value
      and the face value of the debt of $263,800 was initially recorded as a debt
      discount with a corresponding entry to contributed surplus. The debt discount
      is
      being accreted and capitalized to our investment in MSC (Note 5) over the term
      of the debt using the effective interest rate method. The accretion of the
      debt
      discount began in August 2005.





The
      bank
      loan and debt discount are summarized as follows:





Face
              Amount
            
            Discount
            
            Carrying
              ValueBank
                loan, initial tranche, being the balance at January 1,
                2005
            
            $
            1,000,000
            
            $
            346,200
            
            $
            653,800Remainder
                of first tranche received
            
            
            1,000,000
            
            
            --
            
            
            1,000,000Second
                tranche received
            
            
            2,000,000
            
            
            263,800
            
            
            1,736,200Accretion
                of debt discount
            
            
            --
            
            
            (151,314
            )
            
            151,314Bank
                loan, initial and second tranche,
              being
                the balance at September 30, 2005
            
            $
            4,000,000
            
            $
            458,686
            
            $
            3,541,314




As
      at
      September 30, 2005, interest expense incurred of $103,469, and accreted interest
      expense related to the debt discount of $151,314 were capitalized to the
      Investment in MSC (Note 5).





**7.
      Stock Options**





A
      summary
      of the status of the Company’s stock option plan as of September 30, 2005
      is:


-
          12
          -
 TOC





**Options**
            
            **Weighted
                Ave.**
              **Exercise
                Price (Cdn)**Outstanding
                at January 1, 2005
            
            
            4,698,500
            
            $
            0.49Exercised
            
            
            (253,500
            )
            $
            0.16Outstanding
                and exercisable at September 30, 2005
            
            
            4,445,000
            
            $
            0.51Exercisable
                at December 31, 2004
            
            
            4,608,500
            
            $
            0.49





At
      September 30, 2005, there were options held by directors, officers, employees
      and consultants of the Company for the purchase of common shares as
      follows:








**Number
                of Shares**
            
            **Exercise
                Price**
            
            **Expiry
                Date**715,000
            
            
            Cdn$0.40
            
            
            June
                27, 200725,000
            
            
            Cdn$0.36
            
            
            August
                27, 20081,500,000
            
            
            Cdn$0.59
            
            
            December
                5, 2008100,000
            
            
            Cdn$0.50
            
            
            March
                29, 20091,500,000
            
            
            Cdn$0.55
            
            
            September
                10, 200950,000
            
            
            Cdn$0.61
            
            
            December
                14, 2009555,000
            
            
            Cdn$0.31
            
            
            March
                21, 20134,445,000





Concerning
      stock option compensation, the fair value of each option granted is estimated
      on
      the date of grant using the Black-Scholes option-pricing model. The following
      weighted average assumptions were used for employee and non-employee option
      grants: ****






**2005**
            
            **2004**Dividend
                yield (%)
            
            
            -
            
            
            -Expected
                volatility (%)
            
            
            82.3
            
            
            93Risk-free
                interest rates (%)
            
            
            3.40
            
            
            2.90Expected
                lives (years)
            
            
            5.0
            
            
            5.0





We
      recorded $27,403, and $447,686 of stock option compensation, related to the
      vesting of certain non-employee stock options, during the nine months ended
      September 30, 2005 and 2004, respectively.





**8.
      Warrants**





**Warrants**
            
            **Weighted
                Ave.**
              **Exercise
                Price (Cdn)******Outstanding
                and exercisable, January 1, 2005
            
            
            20,422,759
            
            $
            0.62Purchase
                warrants
            
            
            13,077,967
            
            $
            0.68Brokers’
                warrants
            
            
            1,272,632
            
            $
            0.70Exercised
            
            
            (797,749)
            
            $
            0.35Expired
            
            
            (6,000,000)
            
            $
            0.80Outstanding
                and exercisable, September 30, 2005
            
            
            27,975,609
            
            $
            0.63





-
          13
          -
 TOC


At
      September 30, 2005, there were warrants outstanding and exercisable as
      follows:





**Number
                of Warrants**
            
            **Exercise
                Price**
            
            **Expiry
                Date**557,185
            
            
            Cdn$0.35
            
            
            November
                13, 20052,738,700
            
            
            Cdn$0.91
            
            
            December
                14, 20061,272,632
            
            
            Cdn$0.70
            
            
            March
                22, 20073,987,742
            
            
            Cdn$0.62
            
            
            July
                20, 200710,329,125
            
            
            Cdn$0.50
            
            
            November
                13, 20089,090,225
            
            
            Cdn$0.70
            
            
            March
                22, 201027,975,609





**9.**  **Agreements,
      Commitments and Contingencies**





In
      March
      2005, MSC discovered an alleged employee fraud committed by the former
      purchasing manager during the period June 2004 through March 2005. Respective
      to
      our 49% interest, the fraud amounted to approximately $57,300 in 2004 and
      $56,500 in 2005. MSC will vigorously pursue full recovery but the final amount
      recoverable is not certain at this time. Canadian accounting standards require
      a
      high level of certainty in recording a recovery on the balance sheet that is
      contingent on future events, as a result the full amount of the fraud for each
      period respectively, has been written off against our investment in MSC and
      is
      included in our loss from equity investment (Note 5). Funds recovered in the
      future related to the fraud will be recorded if and when they are
      received.





**10.
      Related Party Transactions**





During
      the period ended September 30, 2005 we incurred legal fees to a director and
      officer totaling $33,015 (September 30, 2004 - $58,104). This transaction was
      in
      the normal course of operations and was measured at the exchange amount, which
      is the amount of consideration established and agreed to by the related
      parties.





**11.
      Differences Between Canadian and United States Generally Accepted Accounting
      Principles**





Differences
      between Canadian and U.S. generally accepted accounting principles (“GAAP”) as
      they pertain to the Company relate to accounting for the acquisition of Scotia
      Prime Minerals, Incorporated, compensation expense associated with the release
      of shares from escrow, mineral properties and deferred exploration costs,
      stock-based compensation, warrants and bank loan and are described in Note
      12 to
      our consolidated financial statements for the year ended December 31, 2004
      in
      the 2004 10-KSB Annual Report.





During
      2004, we adopted new Canadian GAAP rules regarding the utilization of the fair
      value based method to account for options granted to employees. U.S. GAAP does
      not require the fair value based method to account for employee based options
      as
      of January 1, 2002. Since we have not granted any options to employees in 2005,
      the retroactive adoption without restatement of the new Canadian requirements
      has not created differences between Canadian and U.S. GAAP with respect to
      shareholders’ equity at September 30, 2005 nor the net loss for the nine months
      ended September 30, 2005. There would however have been no adjustment to
      retained earnings at January 1, 2004 under U.S. GAAP as was required under
      Canadian GAAP.





Under
      Canadian GAAP, the corresponding entry to record the debt discount of $346,200
      related to the first tranche warrants and $263,800 related to the second tranche
      warrants granted to Macquarie Bank in connection with a credit facility (Note
      6)
      was to contributed surplus. Under US GAAP, as the Company is required to
      maintain its listed company status as part of the loan covenant, in accordance
      with Emerging Issues Task Force (“EITF”) 00-19, the corresponding entry to
      record the debt discount is to a liability. This would result in total
      liabilities for US GAAP purposes to be $4,115,960, as at September 30, 2005
      (December 31, 2004 - $1,261,181). Subsequent to the initial measurement, the
      discount is remeasured on each balance sheet date based on the fair value of
      the
      warrants with the adjustment


-
          14
          -
 TOC


charged
      to the Statement of Operations. The fair value of the first tranche warrants,
      as
      at September 30, 2005, was calculated using the Black-Scholes option pricing
      model with the following assumptions: dividend yield - Nil; risk free interest
      rate - 3.53%; expected volatility of 46% and an expected life of 15 months.
      The
      fair value of the second tranche warrants, as at September 30, 2005, was
      calculated using the Black-Scholes option pricing model with the following
      assumptions: dividend yield - Nil; risk free interest rate - 3.99%; expected
      volatility of 48.3% and an expected life of 22 months.





The
      impact of the above on the interim consolidated financial statements is as
      follows:





**September
                30, 2005**
            
            **December
                31,**
              **2004**Shareholders’
                equity, end of period, per Canadian GAAP
            
            $
            17,770,159
            
            $
            11,194,559Adjustment
                for mineral properties and deferred exploration costs
            
            
            (4,220,047
            )
            
            (2,827,655
            )Adjustment
                for mineral property and deferred exploration cost portion of
                investment
            
            
            (15,685,112
            )
            
            (7,345,840
            )Adjustment
                for fair value of warrants
            
            
            299,468
            
            
            --Adjustment
                for the debt discount
            
            
            (610,000
            )
            
            (346,200
            )Shareholders’
                equity, end of period, perU.S.
                GAAP
            
            $
            (2,445,532
            )
            $
            674,864







**Three
                Months Ended**
            
            **Nine
                Months Ended**
            
            **Period
                from**
              **July
                1, 1994**
              **(commencement)****September
                30,**
              **2005**
            
            **September
                30,**
              **2004**
            
            **September
                30,**
              **2005**
            
            **September
                30,**
              **2004**
            
            **through**
              **September
                30, 2005**
              **(Cumulative)**Net
                loss for the period, per Canadian GAAP
            
            $
            452,240
            
            $
            570,020
            
            $
            1,588,411
            
            $
            1,367,541
            
            $
            18,480,661Adjustment
                for acquisition of Scotia
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            248,590Adjustment
                for compensation expense
            
            
            --
            
            
            (302,614
            )
            
            --
            
            
            (302,614
            )
            
            6,022,300Adjustment
                for fair value of warrants
            
            
            (126,609
            )
            
            --
            
            
            (299,468
            )
            
            --
            
            
            (299,468
            )Adjustment
                for deferred exploration costs, net
            
            
            209,231
            
            
            161,685
            
            
            1,392,392
            
            
            1,137,554
            
            
            4,220,047Adjustment
                for deferred exploration cost portion of investment
            
            
            3,500,316
            
            
            1,721,569
            
            
            8,339,272
            
            
            1,521,569
            
            
            15,685,112Net
                loss for the period, per U.S. GAAP
            
            $
            4,035,178
            
            $
            2,150,660
            
            $
            11,020,607
            
            $
            3,724,050
            
            $
            44,357,242Net
                loss per common share, per U.S. GAAP,
              basic
                and diluted
            
            $
            .04
            
            $
            0.03
            
            $
            0.14
            
            $
            0.05





During
      1995, we issued 336,814 Common Shares for the acquisition of Scotia Prime
      Minerals, Incorporated (“Scotia”). Under U.S. GAAP, these shares would be valued
      at $248,590, the fair market value of the shares issued. This value, plus the
      $17,215 of net liabilities of Scotia assumed by the Company, would have been
      recorded as property rights at the acquisition date under U.S.
      GAAP.





-
          15
          -
 TOC


We
      continue to account for stock-based compensation awarded to employees using
      the
      intrinsic method. We did not grant any options to employees during the nine
      months ended September 30, 2005, therefore there was no pro-forma
      difference.





*New
      U.S. Accounting Pronouncements*




In
      March
      2005, the Financial Accounting Standards Board (“FASB”) issued Interpretation
      No. 47, “Accounting for Conditional Asset Retirement Obligations—an
      interpretation of FASB Statement No. 143.” This Interpretation clarifies that
      the term conditional asset retirement obligation as used in FASB Statement
      No.
      143, Accounting for Asset Retirement Obligations, refers to a legal obligation
      to perform an asset retirement activity in which the timing and (or) method
      of
      settlement are conditional on a future event that may or may not be within
      the
      control of the entity. The obligation to perform the asset retirement activity
      is unconditional even though uncertainty exists about the timing and (or) method
      of settlement. Thus, the timing and (or) method of settlement may be conditional
      on a future event. Accordingly, an entity is required to recognize a liability
      for the fair value of a conditional asset retirement obligation if the fair
      value of the liability can be reasonably estimated. The fair value of a
      liability for the conditional asset retirement obligation should be recognized
      when incurred—generally upon acquisition, construction, or development and (or)
      through the normal operation of the asset. Uncertainty about the timing and
      (or)
      method of settlement of a conditional asset retirement obligation should be
      factored into the measurement of the liability when sufficient information
      exists. Statement 143 acknowledges that in some cases, sufficient information
      may not be available to reasonably estimate the fair value of an asset
      retirement obligation. This Interpretation also clarifies when an entity would
      have sufficient information to reasonably estimate the fair value of an asset
      retirement obligation.







In
      May
      2005, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 154,
“Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20
      and FASB Statement No. 3.” SFAS No. 154 changes the requirements for the
      accounting for and reporting of a change in accounting principle. This Statement
      applies to all voluntary changes in accounting principle. It also applies to
      changes required by an accounting pronouncement in the unusual instance that
      the
      pronouncement does not include specific transition provisions. The statement
      requires retrospective application to prior periods’ financial statements of
      changes in accounting principle, unless it is impracticable to determine either
      the period-specific effects or the cumulative effect of the change. When it
      is
      impracticable to determine the period-specific effects of an accounting change
      on one or more individual prior periods presented, this statement requires
      that
      the new accounting principle be applied to the balances of assets and
      liabilities as of the beginning of the earliest period for which retrospective
      application is practicable and that a corresponding adjustment be made to the
      opening balance of retained earnings (or other appropriate components of equity
      or net assets in the statement of financial position) for that period rather
      than being reported in an income statement. When it is impracticable to
      determine the cumulative effect of applying a change in accounting principle
      to
      all prior periods, this statement requires that the new accounting principle
      be
      applied as if it were adopted prospectively from the earliest date
      practicable.





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued (“SFAS”)
      No. 123R (revised 2004), “Share-Based Payment.” SFAS No. 123(R) requires the
      Company to measure all employee stock-based compensation awards using a fair
      value method and record such expense in its consolidated financial statements.
      In addition, SFAS No. 123(R) requires additional accounting related to the
      income tax effects and additional disclosure regarding the cash flow effects
      resulting from share-based payment arrangements. For public entities that do
      not
      file as a small business issuer, SFAS No. 123(R) is effective for the first
      annual reporting period beginning after December 15, 2005.





In
      December 2004, FASB issued SFAS No. 153 to amend Opinion 29 by eliminating
      the
      exception for non-monetary exchanges of similar productive assets and replaces
      it with general exception for exchanges of non-monetary assets that do not
      have
      commercial substance. A non-monetary exchange is defined to have commercial
      substance if the future cash flows of the entity are expected to change
      significantly as a result of the exchange.





-
          16
          -
 TOC


We
      are
      assessing the effect on the consolidated financial statements as a result of
      implementation of these new U.S. standards.





**12.**
            **Subsequent
                Events**





Subsequent
      to September 30, 2005, we issued 123,426 common shares for the exercise of
      broker warrants with gross proceeds of $36,140.





In **** October
      2005, **** we
      announced the results of the recently completed feasibility study on the Frea
      and Huevos Verdes veins at the San José project in Santa Cruz province, southern
      Argentina. The highlights of the study are detailed in the overview section
      of
      Management's Discussion and Analysis and Plans of Operations.




In
      November 2005, we were not in compliance with the cash position covenant in
      our
      loan with Macquarie. Macquarie is aware of our cash position and we have not
      been notified of any default.


-
          17
          -
 TOC


**Item
      2. Management’s Discussion and Analysis and Plan of
      Operations**





The
      following discussion should be read in conjunction with Minera Andes’ audited
      consolidated financial statements and notes thereto for the year ended December
      31, 2004 and the unaudited consolidated interim financial statements and notes
      thereto for the period ended September 30, 2005, which have been prepared in
      accordance with generally accepted accounting principles (“GAAP”) in Canada.
      These statements along with additional information relating to Minera Andes
      are
      available on SEDAR at www.sedar.com .
      Financial condition and results of operations are not necessarily indicative
      of
      what may be expected in future years.





All
      amounts in this discussion are in US Dollars unless otherwise
      indicated





**Note
      Regarding Forward-Looking Statements**





The
      information in this report includes “forward-looking” statements within the
      meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
      Securities Exchange Act of 1934 (“1934 Act”), and is subject to the safe harbor
      created by those sections. Factors that could cause results to differ materially
      from those projected include, but are not limited to, results of current
      exploration activities, the market price of precious and base metals, the
      availability of joint venture partners or sources of financing, and other risk
      factors detailed in our Securities and Exchange Commission filings.





**Overview**





Minera
      Andes was incorporated in Alberta in July 1994 and went public in November
      1995
      through an amalgamation with Scotia Prime Minerals, Incorporated, also an
      Alberta Corporation. We are a reporting issuer in Alberta, British Columbia,
      Ontario and Nova Scotia and trade our common shares on the TSX Venture Exchange
      under the symbol MAI. We are also a Form 10-KSB filer in the U.S. and trade
      on
      the NASD OTCBB under the symbol MNEAF.





The
      principal business of Minera Andes is the exploration and development of mineral
      properties, located primarily in the Republic of Argentina, consisting of
      mineral rights and applications for mineral rights, covering approximately
      203,562 hectares in three provinces in Argentina. We carry out our business
      by
      acquiring, exploring and evaluating mineral properties through our ongoing
      exploration program. Following exploration, we either seek to enter joint
      ventures to further develop these properties or dispose of them if the
      properties do not meet our requirements. Our properties are all early stage
      exploration properties and no proven or probable reserves have been identified
      except at one project where reserve definition is underway.





Through
      our subsidiaries and joint ventures we own a 49% equity interest in MSC, which
      owns the San José gold/silver property in Southern Argentina, and a 100%
      interest in over 10 mineral properties in Argentina. San José is currently in
      advanced exploration and underground development and a production decision
      is
      expected in the last quarter of 2005. The production decision originally
      anticipated last year has taken longer due to positive exploration results
      which
      expanded the exploration program and feasibility study. The program for 2005
      consists of a comprehensive program with a feasibility study that includes
      underground exploration/development totaling about 3.5 kilometers of workings,
      environmental studies, metallurgical studies, and construction with over 200
      employees on site.





In
      July
      2005, our jointly owned company, Minera Santa Cruz, accepted a letter offer
      to
      finance the advancement of the San Jose project. The US$50 million debt facility
      to be provided by Standard Bank and HVB is subject, among other things, to
      completion of a bankable feasibility study, bank due diligence, documentation
      and certain regulatory approvals. It is anticipated that the facility will
      be
      available for drawdown in the 1 st quarter
      of 2006.  The facility is substantially non-recourse to Minera Andes and
      Mauricio Hochschild.  As part of the overall facility amount, there is a
      stand-by facility of up to US$5million available for unanticipated cost
      over-runs prior to completion and commercial production.  The commercial
      terms of the loan are customary for a loan of this nature and include certain


-
          18
          -
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fees
      and
      expenses with interest rates of Libor + 3.0% pa prior to project completion
      and
      LIBOR + 2.75 to 3.0% pa thereafter. Subject to the completion of the definitive
      agreement for the debt facility, Minera Andes will pay $250,000 in consulting
      fees for services rendered to obtain the facility.





Subsequent
      to September 30, 2005, **** we
      announced the results of the recently completed feasibility study on the Frea
      and Huevos Verdes veins at the San José project in Santa Cruz province, southern
      Argentina. The highlights of the study are as follows:





·
            Proven
                and probable mineral reserves: 1,160,859 tonnes (t) with an average
                grade
                of 7.7 g/t gold and 406 g/t silver.


·
            Gold
                contained: 288,094 ounces proven and probable
                reserves


·
            Silver
                contained: 15,229,380 ounces proven and probable
                reserves


·
            Average
                gold production: 60,633 ounces per
                year


·
            Average
                silver production: 3,119,533 ounces per
                year


·
            Average
                operating cost: $200 per ounce of gold
                equivalent


·
            Start
                up capital costs: $61.2 million


·
            Construction
                period: 14 months (already completed are 3.3 km of underground workings,
                infrastructure and base camp for 330 workers, and start up development
                of
                3 ramps to access the orebodies).





Based
      on
      the results of the feasibility study (effective date October 2005), using the
      key assumptions, project parameters and a long-term gold price of $425 per
      ounce
      (oz) and $6.50 per oz for silver, the internal rate of return (IRR) after taxes
      of the San José project is estimated at 12.5 percent as highlighted in the price
      sensitivity analysis below. At recent metals prices the IRR is about 26.1
      percent. Based on the parameters listed above, the undiscounted Net Present
      Value (NPV) is $22.0  .





Within
      our mineral exploration land in Argentina our focus is primarily on gold, silver
      and copper mineralized targets. In addition, several new exploration properties
      have been acquired through the filing of mineral applications. These properties
      reveal numerous similarities to Minera Andes’ San José property in northern
      Santa Cruz province. Two properties, Cerro Mojón and San Agustin, contain
      several mineralized structures with favorable geologic indicators and silver
      values up to 10 ounces per ton and were drilled during the 2 nd quarter
      of this year. Other prospects contain structures with sinter-like quartz
      veining.





**Plan
      of Operations**





At
      quarter end, we had working capital of approximately $1.3 million. MAI will
      continue to finance its 49% interest of the San José  project
      costs incurred prior to the drawdown of the loan facility. Our 49% portion
      of
      these costs, from October 2005 through drawdown, is estimated to be $7.7 million
      of which $637,000 were paid subsequent to September 30, 2005. Funding
      requirements for the project may change depending on changes in development
      costs, production decision dates, and the time needed to acquire required
      permits.





In
      addition to planned expenditures on the San José project, we plan to spend $2.6
      million on our mineral property and exploration activities and general and
      administrative expenses through September 30, 2006. We will be conducting work
      on several properties including an ongoing reconnaissance program designed
      to
      make new acquisitions. It is anticipated that exploration on other projects
      and
      acquisition of new projects will require additional cash.





-
          19
          -
 TOC


**Results
      of Operations**





**Third
      quarter 2005 compared with third quarter 2004**


We
      had a
      net loss of approximately $452,000 for the third quarter of 2005, compared
      to a
      net loss of approximately $570,000 for the third quarter of 2004, due to loss
      on
      investment and costs associated with our investor relations
      program.





**Nine
      months ended September 30, 2005 compared with nine months ended September 30,
      2004**


We
      had a
      net loss of approximately $1,588,000 for the nine months ended September 30,
      2005, compared to a net loss of $1,368,000 for the comparable period in 2004,
      due to loss on investment. For the nine months ended September 30, 2005, our
      49%
      portion of San José  project
      costs were $9,080,000 and total mineral property/deferred exploration costs
      were
      approximately $1,392,000, compared with approximately $1,922,000 and
      $1,138,000,respectively, in the same period of 2004. The mineral
      property/deferred exploration costs are associated with ongoing reconnaissance
      exploration programs, new property acquisitions, evaluation of existing
      properties, and exploration at our Los Azules project.





Administrative
      expenditures for the nine months ended September 30, 2005 included $296,000
      in
      consulting fees. The costs are associated with our investor relations program
      and stock compensation expense for consultants. Legal, audit and accounting
      activities were $129,000 for the nine months ended September 30, 2005 compared
      to $183,000 in the same period last year. Travel for the nine months ended
      September 30, 2005 was $61,000 compared with $49,000 in the same period in
      2004.
      Foreign exchange loss was $69,000 for the nine months ended September 30, 2005
      compared with a gain of $125,000 in the same period in 2004, due to the effect
      of a weakening U.S. dollar offset by the associated impact on the value of
      cash
      equivalents invested in Canadian dollar instruments.





In
      the
      nine months ended September 30, 2005, we issued 18,180,450 units through a
      private placement at a price of Cdn$0.55 per unit for gross proceeds of Cdn$10
      million. Under terms of the offering, each unit consists of one common share
      and
      one-half of one common share purchase warrant. One whole common share purchase
      warrant will entitle the holder to purchase one additional common share at
      an
      exercise price of Cdn$0.70 per share for a period of 5 years from the closing
      date. Our agents received a 7% commission and agents’ warrants equal to 7% of
      the aggregate number of units issued pursuant to the offering. Each agent’s
      warrant upon exercise will entitle the holder to acquire one common share at
      an
      exercise price of Cdn$0.70 per common share for a period of 2 years from the
      date of issue. We used the proceeds from the offering to fund our investment
      in
      MSC and for general corporate purposes.




**Liquidity
      and Capital Resources**





Due
      to
      the nature of the mining industry, the acquisition, exploration and development
      of mineral properties requires significant expenditures prior to the
      commencement of production. To date, we have financed our activities through
      the
      sale of equity securities and joint venture arrangements. We expect to use
      similar financing techniques in the future. However, there can be no assurance
      that we will be successful with such financings. See “Plan of
      Operations”.





At
      September 30, 2005 we had cash and cash equivalents of approximately $1.4
      million compared to approximately $3.4 million at September 30, 2004. Working
      capital at September 30, 2005 was approximately $1.3 million. Our operating
      activities used approximately $1,174,000 in the nine months ended September
      30,
      2005 compared with using approximately $798,000 in the same period last year.
      Administrative expenditures for the period included approximately $296,000
      in
      consulting fees (a decrease of $136,000 over the same period last year);
      approximately $61,000 in travel; approximately $233,000 in office overhead
      and
      approximately $25,000 in telephone expenditures. These costs are due to our
      investor relations and public relations program.





Investing
      activities used approximately $10 million, due to funding our 49% interest
      in
      the San Jose project, less property option proceeds received, and expenditures
      related to mineral properties and


-
          20
          -
 TOC


deferred
      exploration in the nine months ended September 30, 2005 compared with
      approximately $2.7 million used in the same period last year.





Financing
      activities provided approximately $10.9 million, as a result of a private
      placement, exercise of warrants and bank loan proceeds received in the nine
      months ended September 30, 2005 compared with approximately $4.7 million
      provided in the same period last year. Cash and cash equivalents decreased
      in
      the nine months ended September 30, 2005 by approximately $360,000 compared
      with
      an increase of approximately $1.2 million in the same period in
      2004.





The
      recoverability of amounts shown as mineral properties and deferred exploration
      costs is dependent upon the existence of economically recoverable reserves,
      our
      ability to obtain necessary financing to complete their development, and future
      profitable production or disposition thereof. The accompanying consolidated
      financial statements have been prepared using accounting principles generally
      accepted in Canada applicable to a going concern. The use of such principles
      may
      not be appropriate because, as of September 30, 2005, there was significant
      doubt that we would be able to continue as a going concern. (See Auditor’s
      Comment in the December 31, 2004 Audit Report and Note 1 in the December 31,
      2004 Financial Statements).





For
      the
      nine months ended September 30, 2005, we had a loss of $1,588,000 and an
      accumulated deficit of approximately $20.8 million. In addition, due to the
      nature of the mining business, the acquisition, exploration and development
      of
      mineral properties requires significant expenditures prior to the commencement
      of production. To date, we have financed our activities through the sale of
      equity securities, debt and joint venture arrangements. We expect to use similar
      financing techniques in the future and are actively pursuing such additional
      sources of financing.





Although
      there is no assurance that we will be successful in these actions, we believe
      we
      will be able to secure the necessary financing to enable us to continue as
      a
      going concern. Accordingly, these financial statements do not reflect
      adjustments to the carrying value of assets and liabilities, the reported
      revenues and expenses and balance sheet classifications used that would be
      necessary if the going concern assumption were not appropriate. Such adjustments
      could be material.





**Subsequent
      Events**





Subsequent
      to September 30, 2005, we issued 123,426 common shares for the exercise of
      broker warrants with gross proceeds of $36,140.





In **** October
      2005, **** we
      announced the results of the recently completed feasibility study on the Frea
      and Huevos Verdes veins at the San José project in Santa Cruz province, southern
      Argentina. The highlights of the study are detailed in the overview section
      of
      Management’s Discussion and Analysis and Plan of Operations.





In
      November 2005, we were not in compliance with the cash position covenant in
      our
      loan with Macquarie. Macquarie is aware of our cash position and we have not
      been notified of any default.





**Critical
      Accounting Policies**





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make a wide variety of estimates
      and assumptions that affect (i) the reported amounts of assets and liabilities
      and disclosure of contingent assets and liabilities as of the date of the
      financial statements, and (ii) the reported amounts of revenues and expenses
      during the reporting periods covered by the financial statements. Our management
      routinely makes judgments and estimates about the effect of matters that are
      inherently uncertain. As the number of variables and assumptions affecting
      the
      future resolution of the uncertainties increases, these judgments become even
      more subjective and complex. The most significant accounting policies that
      are
      most important to the portrayal of our current


-
          21
          -
 TOC


financial
      condition and results of operations relate to mineralization and deferred
      development costs, valuation of stock-based compensation, and valuation of
      warrants.





Mineral
      properties consist of exploration and mining concessions, options and contracts.
      Acquisition and leasehold costs and exploration costs are capitalized and
      deferred until such time as the property is put into production or the
      properties are disposed of either through sale or abandonment. If put into
      production, the costs of acquisition and exploration will be depreciated over
      the life of the property, based on estimated economic reserves. Proceeds
      received from the sale of any interest in a property will first be credited
      against the carrying value of the property, with any excess included in
      operations for the period.





We
      review
      the carrying value of our investment in MSC and in other mineral properties
      on a
      regular basis. This review includes, but is not limited to, the timing of
      exploration and/or development work, work programs proposed, the exploration
      results achieved by Minera Andes and others, sales and/or joint venture value,
      current market price of minerals, ability to finance ongoing development and,
      in
      the case of producing properties, the estimated future operating results and
      net
      cash flows. When the carrying value of a property is estimated to exceed its
      net
      recoverable amount, provision is made for the decline in value. If a property
      is
      abandoned, the property and deferred exploration costs will be written off
      to
      operations.





**New
      U.S. Accounting Pronouncements**





In
      March
      2005, the Financial Accounting Standards Board (“FASB”) issued Interpretation
      No. 47, “Accounting for Conditional Asset Retirement Obligations—an
      interpretation of FASB Statement No. 143.” This Interpretation clarifies that
      the term conditional asset retirement obligation as used in FASB Statement
      No.
      143, Accounting for Asset Retirement Obligations, refers to a legal obligation
      to perform an asset retirement activity in which the timing and (or) method
      of
      settlement are conditional on a future event that may or may not be within
      the
      control of the entity. The obligation to perform the asset retirement activity
      is unconditional even though uncertainty exists about the timing and (or) method
      of settlement. Thus, the timing and (or) method of settlement may be conditional
      on a future event. Accordingly, an entity is required to recognize a liability
      for the fair value of a conditional asset retirement obligation if the fair
      value of the liability can be reasonably estimated. The fair value of a
      liability for the conditional asset retirement obligation should be recognized
      when incurred—generally upon acquisition, construction, or development and (or)
      through the normal operation of the asset. Uncertainty about the timing and
      (or)
      method of settlement of a conditional asset retirement obligation should be
      factored into the measurement of the liability when sufficient information
      exists. Statement 143 acknowledges that in some cases, sufficient information
      may not be available to reasonably estimate the fair value of an asset
      retirement obligation. This Interpretation also clarifies when an entity would
      have sufficient information to reasonably estimate the fair value of an asset
      retirement obligation.





In
      May
      2005, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 154,
“Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20
      and FASB Statement No. 3.” SFAS No. 154 changes the requirements for the
      accounting for and reporting of a change in accounting principle. This Statement
      applies to all voluntary changes in accounting principle. It also applies to
      changes required by an accounting pronouncement in the unusual instance that
      the
      pronouncement does not include specific transition provisions. The statement
      requires retrospective application to prior periods’ financial statements of
      changes in accounting principle, unless it is impracticable to determine either
      the period-specific effects or the cumulative effect of the change. When it
      is
      impracticable to determine the period-specific effects of an accounting change
      on one or more individual prior periods presented, this statement requires
      that
      the new accounting principle be applied to the balances of assets and
      liabilities as of the beginning of the earliest period for which retrospective
      application is practicable and that a corresponding adjustment be made to the
      opening balance of retained earnings (or other appropriate components of equity
      or net assets in the statement of financial position) for that period rather
      than being reported in an income statement. When it is impracticable to
      determine the cumulative effect of applying a change in accounting principle
      to
      all prior periods, this statement requires that the new accounting principle
      be
      applied as if it were adopted prospectively from the earliest date
      practicable.





-
          22
          -
 TOC


In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued (“SFAS”)
      No. 123 (revised 2004), “Share-Based Payment.” SFAS No. 123(R) requires the
      Company to measure all employee stock-based compensation awards using a fair
      value method and record such expense in its consolidated financial statements.
      In addition, SFAS No. 123(R) requires additional accounting related to the
      income tax effects and additional disclosure regarding the cash flow effects
      resulting from share-based payment arrangements. For public entities that do
      not
      file as a small business issuer, SFAS No. 123(R) is effective for the first
      annual reporting period beginning after December 15, 2005.





In
      December 2004, FASB issued SFAS No. 153 to amend Opinion 29 by eliminating
      the
      exception for non-monetary exchanges of similar productive assets and replaces
      it with general exception for exchanges of non-monetary assets that do not
      have
      commercial substance. A non-monetary exchange is defined to have commercial
      substance if the future cash flows of the entity are expected to change
      significantly as a result of the exchange.





We
      are
      assessing the effect on the consolidated financial statements as a result of
      implementation of these new U.S. standards.





See
      Note
      11 in the Financial Statements.





-
          23
          -
 TOC


**Item
      3. Controls and Procedures**





**Evaluation
      of Disclosure Controls and Procedures**





As
      of the
      end of the period covered by this report, we carried out an evaluation of the
      effectiveness of the design and operation of our “disclosure controls and
      procedures” (as defined in the Securities Exchange Act of 1934 (“Exchange Act”)
      Rules 13a-14(c) and 15d-14(c)) under the supervision and with the participation
      of management, including our President and Chief Financial Officer. Based upon
      that evaluation, our President and Chief Financial Officer concluded that our
      disclosure controls and procedures are effective.





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in Company reports filed or
      submitted under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the Securities and Exchange
      Commission’s rules and forms. Disclosure controls and procedures include, but
      are not limited to, controls and procedures designed to ensure that information
      required to be disclosed in Company reports filed under the Exchange Act is
      accumulated and communicated to management to allow timely decisions regarding
      required disclosure.





**Changes
      in Internal Controls**





There
      were no significant changes in our internal controls or, to our knowledge,
      in
      other factors that could significantly affect our disclosure controls and
      procedures subsequent to the date we carried out this evaluation.


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          -
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**PART
      II - OTHER INFORMATION**








**Item
      2.**  **Changes
      in Securities**





During
      the nine months ended September 30, 2005, we
      issued
      253,500 common shares for the exercise of stock options, 22,500 common shares
      for the exercise of purchase warrants and 775,249 shares for the exercise of
      broker warrants with gross proceeds of US$264,891.





On
      March
      22, 2005, we sold 18,180,450 units to accredited investors at a price of
      Cdn$0.55 per unit for net proceeds of Cdn$9,299,300 (US$7,683,453). Each unit
      consists of one common share and one-half of one common share purchase warrant.
      One whole common share purchase warrant entitles the holder to purchase one
      additional common share at an exercise price of Cdn$0.70 per share for a period
      of 5 years from the closing date. The issued securities are subject to a
      four-month hold period. The agents received a cash commission of 7% of the
      gross
      proceeds of the financing. The agents also received agent’s warrants equal to 7%
      of the aggregate number of units sold pursuant to the offering. Each agent’s
      warrant upon exercise will entitle the holder to acquire one common share at
      an
      exercise price of Cdn$0.70 per common share for a period of 2 years from the
      date of issue. A total of 18,180,450 common shares were issued pursuant to
      the
      private placement, and 9,090,225 common shares are reserved for issuance on
      exercise of the warrants and 1,272,632 common shares are reserved for issuance
      on the exercise of the agent’s warrants.





In
      reliance on Rule 903 of Regulation S under the Securities Act of 1933, as
      amended (the “Securities Act”), units were offered and sold to purchasers
      outside of the United States subject to Category 2 offering restrictions,
      without any directed selling efforts. In reliance on Rule 506 of Regulation
      D
      under the Securities Act, units were also offered and sold, without general
      solicitation or advertising and subject to resale restrictions, to accredited
      investors in the United States who represented they were purchasing with
      investment intent and without a view to distribute the units.




**Item
                6.****Exhibits****Exhibit****Number**
            **Identification
                of Exhibit**31.1
            Certification
                of President (Principal Executive Officer)
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.31.2
            Certification
                of Chief Financial Officer (Principal
                Financial Officer) pursuant to Section 302 of the Sarbanes-Oxley
                Act of
                2002.32.1
            Certification
                of President pursuant to 18 U.S.C. Section
                1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act
                of
                2002.32.2
            Certification
                of Chief Financial Officer pursuant to 18
                U.S.C. Section 1350, as adopted, pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.



















-
          25
          -
 TOC


**SIGNATURES**








In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.













**MINERA
                  ANDES INC.**Date:****November
                  18, 2005
              By:/s/
                  Allen V. AmbroseAllen
                  V. AmbrosePresidentDate:November
                  18, 2005
              By:/s/
                  William V. ScharaWilliam
                  V. ScharaChief
                  Financial Officer