SMR: Newstrike anticipates that your projects including Ana Paula will be low-cost producers. Can you explain what features would enable them to produce more efficiently?
RW: A combination of factors contributes to our view that Ana Paula will be a very low-cost producer, namely a modest life of mine “LOM” strip ratio at 2.6:1, an average head grade over 8.2 years at 2.24 au g/t and a very conventional flow sheet (gravity/flotation/CIL).
SMR: What have been any physical limitations or benefits of an exploration program in the Guerrero gold belt, in terms of terrain and other regional factors?
RW: Certain parts of the “GGB” are indeed challenging topographically. Ana Paula and the area surrounding it, ‘Aurea Norte’, are topographically weak, making access for road building and getting rigs in and out much easier. Certainly, we our exploration team has to cope with steep ravines, but in general, set up and drilling over the past four years has gone smoothly.
SMR: Can you tell us about any experience that you have had relating to ejidos and other communities in Guerrero; have there been any objections or obstacles to your activities and why or why not?
RW: The one and only eijdo known to us is located approximately 10km north of Ana Paula and just outside of the town of Cuetzala del Progresso. If my memory serves me correctly, this eijdo was the first group among some 60 individual landowners to sign our surface access agreements when we first arrived in September 2010. As explorers, I would say that we’ve had excellent community relations, but we’ve worked diligently at building this relationship over the past four years. We are fortunate that we have 42 members of the community of Cuetzala working on site at present.
SMR: What is your outlook on the current Mexican political administration-- do you believe that it is as mine-friendly as the last administration? How friendly is the federal government compared to the state and local government?
RW: We believe the current administration, both at the federal and state levels, remains ‘mine-friendly’ and that is a continuation of the past administration. The introduction of a new tax regime in a deteriorating gold and silver price environment certainly makes investment more challenging, although the industry in Mexico is resilient and will have to deal with the added burden. It goes without saying that increases in corporate taxes are never terribly popular with shareholders.
SMR: What is your overall message to the Denver Gold Forum?
RW: We had two primary messages. We continue to be believe that Mexico is one of the most favored mining jurisdictions and that the Guerrero Gold Belt is one of the most exciting gold and silver districts in the world.
SMR: Every year, new mining and geologist are produced by universities and colleges. What's the job market perspective for these young graduates?
RW: There is no question we are concerned. Without risk dollars being raised for exploration, over a prolonged period, there will be fewer students enrolling in geology and engineering programs. We still believe that there will be an increase in the underlying commodity prices, but the burning question is when?
SMR: What's the mood of the industry and gold market?
RW: I thought the mood was one of “quiet resignation” in light of current gold price, although vastly improved over 2013’s forum.
SMR: Newstrike Capital has recently reported exciting results from the Ana Paula Project in Guerrero, Mexico. Can you tell us a bit more about that and how this will influence work in 2015?
RW: At the DGF, we released our first PEA (preliminary economic assessment) on the ‘Ana Paula’ project.” We worked hard to deliver a low-capex, high margin project that will produce a significant number of gold and silver ounces over an 8-year period. In short, despite the current environment, we are moving forward with plans for a PFS (preliminary feasibility study) for 2015. We are very excited that this project has significant margins and is simple – which should translate into low costs.
SMR: What do you think the future holds for the gold price and the companies mining it?
RW: I am of the view that the price of gold has reached its low point and is gradually moving up, although it might continue to be range bound. For all companies, big and small, it is critical to focus on costs and ensure that projects can be financed. The emphasis will continue to be margins.
SMR: Newstrike Capital recently reported that a recently completed ZTEM airborne geophysical survey flown over the Company’s Aurea Norte property has successfully identified several high priority anomalies on a parallel trend with its flagship gold deposit at Ana Paula. Can you tell us a bit more about this?
RW: In short, we think that the results of our recent ZTEM survey have unlocked the enormous potential for additional gold discoveries in Aurea Norte. There’s much more work to do, but this survey confirms many high priority drill targets that will become the focus of our next campaign in 2015.
SMR: What are the major trends and issues that will influence the gold mining industry in 2015?
RW: I see an upward trend in the price of gold, but the over trend in the industry will be on improving margins. In a word, “doing more with less” will become the norm in the industry, although I definitely see signs of an overall recovery. The pain of 2013 is behind us now.