Newstrike Capital's Ana Paula Features Low Cash Costs, Opportunities to Expand

Newstrike Capital's Ana Paula Features Low Cash Costs, Opportunities to ExpandOn Monday, gold- and silver-focused exploration company Newstrike Capital (TSXV:NES) reported the results of a preliminary economic assessment (PEA) for its Ana Paula project in Mexico, and the numbers certainly appear to stack up well.

With an after-tax net present value of $232.1 million at a 5-percent discount, an internal rate of return of 32.8 percent and a 2.4-year payback period, Newstrike looks to have a project with strong potential under its belt.

Those numbers are for a gold price of $1,300, but as others have done recently, Newstrike's PEA also lists a range of scenarios that set the gold price anywhere between $1,000 and $1,500, highlighting the strength of its project. On the low end of the price scale, investors would be looking at an after-tax internal rate of return of 17.6 percent and a payback period of 3.3 years, indicating that Ana Paula "has the potential to provide investors with commodity resilience as well as significant leverage to movements in the gold price."

Ana Paula is slated to be developed as an open-pit mine with a 6,000-tonne-per-day processing plant, and is expected to produce an average of 116,000 ounces of gold and 239,000 ounces of silver over its 8.2-year life of mine. The project will require $163.9 million in initial capital costs, and importantly will feature all-in sustaining costs of just $567 per ounce of gold.

Newstrike's president and CEO, Richard Whittall, commented on the results, stating "[t]his PEA supports our view Ana Paula is one of the best development-stage gold projects in Mexico." Specifically, he said high gold grades, low capital requirements and low operating costs make Ana Paula "a compelling development project."