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  • Keeping an Eye on the Guerrero Gold Belt by on Oct 30th, 2012

    Below is an excerpt from the The Gold Report article titled “Geologist Merrill McHenry Keeps His Eye on the Guerrero Gold Belt.”

    The Gold Report, October 29th, 2012.

    The Gold Report: Merrill, speaking as a geologist, what makes the Guerrero Gold Belt in Mexico so highly prospective for gold and silver mineralization?

    Merrill McHenry: Two words: plate tectonics. Two tectonic events in that area of sufficient scale to create an entire region filled with gold mineralization.

    In more detailed terms, the Chortis plate, which was about the size of Colorado, impacted the western side of southern Mexico. The first event, about 140 million years ago, created “laramide” north-south extensional faults. That was followed, about 70 million years later, by a strike-slip to the southeast. As the strike-slip slipped and subducted under the southern portion—what is today Guerrero State—it rotated many of those north-south transitional faults and shear zones into roughly 40-degree and other angles, creating a chimney effect, which brought the mineralization, in liquid form, much closer to the surface. In geological terms, this is called a metasomatic transfer. The strike-slip also created various low-angle extensional faulting allowing laterally displaced mineralization and improving strike-length potential.

    TGR: How does the creation and mineralization of the Guerrero Gold Belt compare to the Carlin Trend in Nevada?

    MMcH: Both had tectonic events that liquefied the subterranean minerals and resulted in events that could transport the minerals to the surface. The Carlin Trend, which is older, was formed underwater. On Carlin, hydrothermal channels were created and bubbled up for long periods. In the Guerrero Gold Belt, the minerals were liquefied and brought up as structurally controlled magmatic events along various intrusive zones.

    “Two tectonic events in that area of sufficient scale to create an entire region filled with gold mineralization.”

    Typically, economic mineralization is highest along these intrusion zones. (The structural control is a key to creating and allowing for higher-grade mineralization.) These systems are most fully developed either at (e.g., El Limon-Guajes) or below (e.g., Los Filos-Bermejal) the contact of the local Mezcala formation (shales and sandstones) with the underlying Morelos formation (carbonates).

    In addition, the strike-slip and subduction that created the Guerrero Gold Belt arguably covered a larger area. To date the Carlin Trend is roughly 40–60 kilometers (km) long; mineralization in the Guerrero Gold Belt has been found along a 60km-plus range.

    Another difference is that the Carlin Trend has been mined and prospected for well over 100 years, with the first large mine—Carlin—opening nearly 50 years ago. The first major mine in the Guerrero Gold Belt went into production in 2008 and most of the exploration remains to be done. So far, two companies—Goldcorp Inc. (G:TSX; GG:NYSE) and Torex Gold Resources Inc. (TXG:TSX)—have reported 16 million ounces (Moz) of NI 43-101 gold resources in the Guerrero Gold Belt. I expect Newstrike Capital Inc.’s (NES:TSX.V) Ana Paula project will report near 3 Moz of NI-43-101-compliant in-pit gold mineralization, and roughly 4.5 Moz in global resources, mostly to be included in subsequent pits, by the end of 2012. Ana Paula has some breccia pipe areas of spectacular grade and width.

    TGR: What can you tell us about the kind of precious metals deposits discovered in the Guerrero Gold Belt so far?

    MMcH: Because it is a long, intrusion-hosted system, much of the gold mineralization is at or near the surface. You can find the intrusions—an orange-red oxidized ore (retrograded calc-silicate skarn)—at the surface. Gold mineralization in the district tends to be in the most oxidized alkaline significantly reduced iron and magnesium host rock that conversely hosts increasingly higher gold values.

    Essentially, you want heavily magnetite/hematite (iron) initial fluid flows, but later during the retrograde (cooling) phase, you want the magnetite to precipitate out and become more oxidized Calc-alkaline potasically altered and biotite rich. That is where the highest gold mineralization occurs.

    “So far, two companies have reported 16 Moz of NI 43-101 gold resources in the Guerrero Gold Belt.”

    Gold occurs either in chlorine complexes or in a variety of high-sulfidation complexes that are stable at lower temperatures, which tend to drop out at lower near-surface temperatures, usually because of some event that changes the oxidation state. Therefore, you can get multiple economic mineralization in the same hydrothermal system—higher temperatures and less fluid mixing at depth giving you gold, copper, and silver; and lower temps and magmatic/meteoric mixing as you move higher in the system, giving you gold with much less silver and copper.

    TGR: Is there a company working on one of those polymetallic deposits?

    MMcH: Torex is working on the Media Luna project, to the south of the Balsas River, where the mineralization tends to be deeper. To date, Media Luna is 300 to 600 meters deep and looks to be polymetallic, not predominantly a gold project.

    TGR: It is rare for a polymetallic deposit to get developed at depth, given the expense of bringing the minerals up.

    MMcH: Yes. Before Torex released its feasibility study, I had moved it from a Buy to a Hold and changed the price target to $2/share. The stock has hung in there around $1.90–1.95/share because it is a show-me situation. Pending further Morelos gold project development, the market needs to see that Media Luna has enough mineralization and thick intercepts that can be accessed, ideally through an adit, to make the project economically viable.

    TGR: It was exploration of the Carlin that led to the discovery of the Cortez Trend, where Barrick Gold Corp. (ABX:TSX; ABX:NYSE) now operates its massive Cortez gold mine. Have similar high-grade trends been found in the Guerrero?

    MMcH: Yes, that is one of the Guerrero’s calling cards. When it opens several years from now, Torex’s Morelos project, at 3.14 grams per ton (g/t) Measured and Indicated, will be one of the highest-grade open-pit mines in the world.

    Newstrike’s Ana Paula project has some phenomenal drill results. To give you an idea, just one hole at Ana Paula had 174m of 5.4 g/t gold that included a 76m interval of more than 10.57 g/t gold and 15 g/t silver.

    TGR: Are there advantages to mining the Guerrero over the Carlin?

    MMcH: Many projects in the Carlin Trend are destroyed limestone—black rock formed by the hot springs upwelling mineralization while deforming the host rock—so you cannot distinguish what is gold mineralized. That makes finding the ore bodies difficult visually; in most respects, you are drilling blind without geophysical signatures other than the generalized trend to guide you. The intrusion-hosted mineralization in the Guerrero tends to be quite visible so you can see where you are likely to have potential gold intercepts.

    Also, a fair amount of the ore in the Carlin Trend is refractory ore and a lot of that has to go through an autoclave. That process is expensive, and a lot of the cost of an autoclave is capital expense, not processing.

    TGR: Mexico is now on the list of the top 10 gold-producing countries. What are some mines that helped it crack that list?

    MMcH: Mexico also had the fastest growth of any gold-producing country last year, and the Guerrero had a lot to do with both accomplishments. Last year, Goldcorp’s Los Filos project produced 336,500 oz, with cash costs roughly $463/oz. The company estimates production of 345,000 oz gold in 2012.

    Mexico is a very fertile country for gold production. In central Mexico, you have the volcanic trends for mineralization, which tend to be vein swarms and silver-oriented projects. Then, you have the unique mineralization of the Guerrero.

    TGR: All of the mineralization created in the past is good news, but present-day Mexico has its troubles. What issues—security, nationalization, rising costs—might make Mexico a riskier jurisdiction?

    MMcH: Mexico had its nationalization experiment with PEMEX, its national oil company. PEMEX was a jobs machine, but its production growth has been flat to declining because it is not operated efficiently or effectively.

    “As long as QE in is play and economies remain stagnant, gold will continue to do well.”

    There can be security concerns when a project is just starting up. For example, five trucks were stolen from Torex at gunpoint last year. So, the company built its own security force. Other companies have taken a different route. Number one, they employ a lot of local Mexicans. Number two, they work on community relations, support the community and fund social projects. Number three, they just lay low and try not to attract attention.

    TGR: What recent discoveries might add to Mexico’s gold and silver production?

    MMcH: As I mentioned, I expect Newstrike to have 3 Moz in pit resource by year-end. The most logical efficient outcome is to tie Ana Paula in with Torex’s planned mill and use a conveyer belt to deliver it to Torex for processing.

    Bear in mind that Newstrike has the largest land holding in the region. I believe it will have other successes. Newstrike has already extended and increased the width of the high-grade breccia zone; it is currently pending an “in-pit” NI 43-101 resource. It also has land to the northwest and southwest of the Ana Paula region, where I expect additional resources to be found.

    TGR: Has Newstrike done any metallurgical studies to determine the amount of recoverable gold?

    MMcH: Yes, it is expected to be in the mid-80s percentage range, similar to Torex.

    TGR: Is either Torex or Newstrike likely to be bought out?

    MMcH: Richard Whittall, CEO of Newstrike, is a very credible and capable operator who does things on a very conservative basis. My take from him, and he has clarified this for the Street, is that Newstrike does not plan to develop Ana Paula.

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  • Canadian Mining Journal: “Newstrike’s Whittall on Guerrero Gold” by on Oct 17th, 2012

    The following article has been reprinted by Canadian Mining Journal with permission from CMJ’s sister publication The Northern Miner. “Richard Whittall has been near the forefront of discovery on Mexico’s prolific Guerrero gold belt for nearly two decades. The president and CEO of Vancouver-based Newstrike Capital knows all the players and has been involved in a long [...]

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  • Richard Whittall, Newstrike Capital CEO on BNN by on Oct 3rd, 2012

    Richard Whittall, CEO of Newstrike Capital is interviewed by Andrew Bell, host of BNN’s Commodity show.

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  • Across Latin America, Quest for Gold Brings Riches, Conflict by on Oct 2nd, 2012

    Excerpt from McClatchy Newspapers, by Tim Johnson. Click here to read article in its entirety. Mexico, known for centuries for its silver mines, recently saw gold surpass silver to become its No. 1 mineral export, partly because gold production has more than tripled since 2004 to more than 84 metric tons a year. And new [...]

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  • “A Golden Takeover Target?” Article by the World of Mining by on Sep 20th, 2012

    The blog “World of Mining” posted the following article written by by James Kwantes about Newstrike Capital.  Newstrike’s 100%-owned Ana Paula property is located in Mexico’s prolific Guerrero Gold Belt, which hosts 16 million ounces of gold in all categories. Down the road is Goldcorp’s Los Filos, which at 345,000 ounces annually is Mexico’s largest gold mine [...]

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  • Mexico’s record gold production takes it closer to bullion superpower status by on Aug 9th, 2012

    Source: Mexico may not be breaking records at London’s Olympic Games, but back home it is scoring big. On Monday, the Mexican Chamber of Mining (Camimex) announced the country hit a new record in gold production in 2011, reaching 88.6 tons of the precious metal, nearly 22% more than in 2010. The report’s summary, published [...]

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  • The “Make or Break Factor:” The Geology Teams of Junior Explorers by on Aug 2nd, 2012

    In a June 18th article, Mining Weekly discusses how “the task of exploring for new mineral deposits is increasingly falling in the hands of junior exploration companies, underscoring their need to attract and maintain a team of passionate, gifted and experienced geologists,” reports Henry Lazenby. “It is exactly this area that differentiates a junior explorer from [...]

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  • Newstrike Capital in The Wall Street Journal: “In Mexico, Gold Mines Beckon Once More” by on Aug 2nd, 2012

    Nicholas Casey of The Wall Street Journal interviewed Newstrike’s CEO Richard Whittall in the article detailing Mexico’s “new gold rush” underway with discoveries of highly concentrated deposits. Casey writes: “These high-grade discoveries include the find late last year of an underground deposit the size of a high-rise building in the mountains of Guerrero—a strike nearly [...]

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  • “Mine Investor” Article on Newstrike Capital’s Latest Results by on Aug 2nd, 2012

    The blog “Mine Investor” discusses the recent Newstrike drill results from Ana Paula and notes “one factor which hasn`t been discussed so far in detail is that Newstrike not only drills great results, but many holes show high gold silver values very close to surface.” The article highlights the near surface high grade intervals that were reported [...]

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  • Mexico Mining: Reeling in the Big Bucks by on Jul 27th, 2012’s “Beyond Brics” published an article about the growing popularity of Mexico’s mining industry and why they name it “a sector to watch.” Latin America has been an increasingly hostile place for international mining companies in recent years. From Peru to Panama, blood has been spilled in protests inspired by a potent mix of resource [...]

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