Newstrike outlines maiden resource at Ana Paula

VANCOUVER — It has been a fun ride for Vancouver-based explorer Newstrike Capital (NES-V) at its flagship Ana Paula gold-silver project along the emerging gold belt in Guerrero State, Mexico. After acquiring the project three years ago, Newstrike started an aggressive exploration campaign that resulted in impressive gold grades before culminating a month ago with the release of a maiden resource estimate.

Newstrike outlined two types of mineralization at Ana Paula, which features a central zone of higher-grade mineralization hosted in breccia that is surrounded by an alteration halo of lower-grade mineralization in intrusion, hornfels, skarn and sedimentary rocks.

The company tried to strike a balance between grade and tonnage during its delineation drilling, hoping to show potential for a long mine life from lower-grade zones.

Newstrike’s floating cone-pit model assumes a 0.45 gram gold per tonne cut-off and a gold price of US$1,450 per oz., along with a silver price of US$28 per oz. Under the given constraints, Ana Paula hosts 44.8 million measured and indicated tonnes grading 1.56 grams gold and 7.5 grams silver for 2.25 million contained oz. gold and 2.32 million contained oz. silver.

Newstrike believes there are two opportunities to boost resources around its proposed pit. First, there is near-surface material near the pit boundaries that would require more shallow-infill drilling to determine grade cut-off and resource classification. Second, the company found a number of “pod-like bodies” in the lower portion of its breccia zone below the pit shell that could be mined from undergound.

Ana Paula will need more metallurgical tests, with preliminary results based on composite samples of the higher-grade breccia material. Newstrike reports that carbon-in-pulp and carbon-in-leach cyanide tests returned gold recoveries of 77% and 81% over a 96-hour period, while conventional flotation testing resulted in recoveries of 93% to 96% in concentrate. The company will likely look at additional grinding and flotation options in its processing circuit, as it moves forward with economic modelling.

Newstrike incorporated 68,000 metres of drilling in its maiden resource, and the company shows no signs of slowing down. Four rigs will keep turning at the project in 2013, with a focus on adding near-surface gold mineralization and tapping into deeper underground potential in the breccia zone.

And with a sizeable gold-silver resource in its pocket, Newstrike will be turning its attention to a greater regional property package that totals 800 sq. km. The company owns 100% in its 596 sq. km Aurea Norte property, which covers the northwest extension of the Guerrero gold belt and surrounds Ana Paula. Newstrike began a 3,000-metre drill campaign at its San Luis target in late 2012, and has outlined more anomalies slated for exploration in 2013.

Meanwhile regional mapping and geochemical testing continue at Newstrike’s 217 sq. km Aurea Sur land package south of Ana Paula, with areas of interest including the Vinatas, Cienega and Tepetates showings. The company plans to spend US$14 million on exploration this year, though its primary focus will be de-risking its mine plan at Ana Paula.

Newstrike has had a rough ride along with other gold explorers so far in 2013 with shares dropping 56% year-to-date en route to a 93¢ press-time close. The company is sometimes seen as an acquisition target due to Goldcorp’s (G-T, GG-N) nearby Los Filos gold mine, and Torex Gold’s (TXG-T) development-stage Morelos gold project next door.

Newstrike had US$32 million in cash and equivalents to end the third quarter. The company had 115 million shares outstanding at press time for a $107-million market capitalization.