Newstrike cuts long gold hit in Mexico

Vancouver – The first set of drill results from Newstrike Capital‘s (NES-V) exploration and twinning program on its Ana Paula gold project in southern Mexico returned several significant gold intercepts including a long stand-out.

The company drilled 12 holes on the property in Guerrero state, which it acquired from Goldcorp (G-T, GG-N) last summer.  

The best intercept, hole 19, returned 214 metres grading 3 grams gold per tonne and 5.5 grams silver per tonne from 109 metres depth, including 1.1 metres carrying 105 grams gold and 6.6 grams silver.

Other notable results include hole 13 that hit 24 metres averaging 2.14 grams gold and 2.7 grams silver, hole 16 that cut 23.1 metres carrying 4.06 grams gold and 6.1 grams silver, and hole 17 that intercepted 20.2 metres of 1.53 grams gold and 4.3 grams silver.

Newstrike reports that hole 12, which twinned Goldcorp’s hole 6, has demonstrated the reliability of Goldcorp’s previous database from a limited 2005 drill program. The hole hit a 40.1-metre intercept carrying 0.8 gram gold and 14.4 grams silver and included 4.4 metres carrying 5.07 grams gold and 130.8 grams silver.

A second drill rig was added to the site last December with which Newstrike is conducting further infill drilling.

Step-out drilling, meanwhile, extended known mineralization from a 400-by-600-metre area established by Goldcorp to a 500-by-1,000-metre area and still remains open in all directions and at depth.

The company acquired Ana Paula from Goldcorp last June, while the gold major still controls the producing Los Filos project in the same district.

The junior reports that assays to date indicate that mineralization is consistent with other gold-bearing iron skarn-porphyry discoveries in the Guerrero gold belt.

Newstrike controls 880 sq. km of the Guerrero gold belt, including the 76-sq.-km Ana Paula project, the Aurea Norte property that surrounds it, and the Aurea Sur project adjacent to the south.  

The day before the drill results were released, Newstrike announced that it plans to buy certain surface rights from Goldcorp’s local subsidiary. The company is paying $76,000 and issuing roughly 83,000 shares to the subsidiary.

To secure the actual Ana Paula concessions, Newstrike agreed last May to pay $1.5 million in cash plus $600,000 worth of Newstrike stock. 

The company was previously paid a $2-million break fee by Goldcorp last March after a deal to acquire Goldcorp’s 21.2% stake in the Morelos gold project, also in the Guerrero gold belt, fell through. The deal broke after Gleichen Resources, now Torex Gold Resources (txg-t), exercised its right of first refusal.

On the day the latest drill results were released, Newstrike’s share price jumped as much as 25¢ before closing the day up 7¢ at $1.22 on 3.2 million shares traded. The closing price marked a 52-week high, while the company’s shares were trading at a 52-week low of 27¢ in March 2010. The company has 77.7 million shares outstanding.