Newstrike Capital, a Canadian junior company headquartered in Vancouver, has reported robust results from an NI 43-101-compliant preliminary economic assessment (PEA) of its Ana Paula gold-silver project in the Guerrero gold belt, Mexico. The study describes a high-margin, rapid-payback, 8.2-year open-pit mining project that benefits from high gold grades and a low strip ratio.

Ore would be processed through a 6,000-mt/d gravity/flotation/carbon-in-leach plant to produce an average of 116,000 oz/y of gold and 239,000 oz/y of silver. Life-of-mine average head grades are 2.24 g/mt gold and 6.89 g/mt silver. The life-of-mine strip ratio is 2.6 to 1, waste-to-mineralized material.

Initial capital costs to develop the Ana Paula project are estimated at $163.9million. Mining will be contracted, so no capital is included for mining equipment. All-in sustaining costs of production are estimated at $526/oz of gold, net of by-product credits.

“The combination of high gold grades, low capital requirements, and low operating costs makes this a compelling development project,” Newstrike President and CEO Richard Whittall said. “With a positive PEA in hand, our next step is to evaluate the significant underground potential at Ana Paula and to support high-priority exploration targets in this prolific gold belt.”

The Ana Paula project is located in Guerrero state about half way between the cities of Mexico City and Acapulco. Formal environmental baseline studies have not been initiated but will be required to obtain environmental permits for future mining operations. Communication with the local community, private landowners, and the “Ejido” (cooperative land tenure system) was initiated as part of the exploration program.