Aurea Sur Overview

The early stage Aurea Sur exploration project (shown in light blue), consists of four claims totaling 21,742.42 hectares. All claims are 100% owned and controlled by Newstrike. The project lies to the west of the known Guerrero Gold Belt ("GGB") and is contiguous with the Aurea Norte project to the north. A discovery here will redefine the boundaries of this important emerging gold camp as it lies to the west of the northwest trend of the current discoveries of the GGB.

Geological fieldwork started in late 2004 in the south portion of the project, chosen because of an observed GGB style of alteration exposed in surface outcrop. This included outcrops of altered monzonite, diorite, andesite and rhyolite porphyry intrusions, jasperoid, jasperoid breccias, marb le and Hornfels, all typical indicators for a GGB style gold deposit.

Continuing fieldwork increased the area of interest from a 2 km by 400m area, to a roughly 6 km by 10 km area with extensive GGB style skarn alteration in outcrop. Within this area are observed alteration and geology that is comparable to other deposits of the GGB. This includes multiple intrusions ranging from monzodiorite to andesite porphyry, and extensive outcroppings of jasperoid, calc silicate and argillic or potassic alterations, including garnet-pyroxene skarn. Alteration and mineralization have been observed in replacement bodies along intrusion contacts, following stratigraphy, disseminated in intrusions, as a structurally controlled alteration and as stockwork veining. Mapping and detail grid sampling were conducted to help define initial targets for early stage drill testing and four areas were selected for early stage drill testing.

Surface mapping confirmed a platform stratigraphy in the area that is intruded by porphyry intrusions that hosts a skarn alteration system over a 10 km by 6 km area in a geological environment analogous to other deposits of the GGB. A total of 3,886 metres of drill core were completed in 10 drill holes that tested these four diverse areas on the property. Assay results from the drilling and surface mapping programs in general varied but are generally weakly anomalous with sporadic gold spikes, generally from outcrop. The Skarn alteration system on the Aurea Sur property is confirmed mineralized with respect to gold and includes other elements considered to be pathfinders for the GGB style of deposit. While exploration is still in the early stages on this large greenfields property, results to date are considered very encouraging and warrant follow up.

Discussion of Results:

The Vinatas showing, located near the eastern boundary of the property is centered on an abandoned stibnite ‘mine'. The ‘mine' is a historical mine with no known reserves or production records. It had never been tested by modern exploration methods. The geology observed at Vinatas during preliminary prospecting suggested the presence of a gold-bearing mesothermal alteration system. The area was the subject of a semi-detailed mapping and systematic surface sampling program during the third quarter of 2006 (see press release from November 1st, 2006). Of the 72 outcrop chip samples taken during the program fifty nine samples were consistently anomalous in gold, varying from a few ppb above background values up to 0.846 g/ton gold. The better values are located within a higher grade core anomaly that extends 350 meters by 150 meters. These results, combined with a strong correlation coefficient between Au and Sb values (0.78) prompted its inclusion in the recently completed drill program.

The Cienega Showing is located in the south-central portion of the Aurea Sur project, immediately west of the town of La Cienega and 3.5 kilometres southwest of the Vinatas. Preliminary drilling in this area tested a strong north-trending elongated magnetic anomaly that is 2 km in length by 300 to 400 metres wide and that correlated well with surface outcrops of Porphyritic intrusion and jasperoid, both weakly anomalous in gold.

The Tepetates and Aguacate Showings is located about 6 km west of Vinatas and about 3.5 km northwest of Cienegas. The area displays extensive outcroppings of pyroxene-garnet skarn, jasperoid and porphyry intrusion with associated anomalous gold. Results from four drill holes support the interpretation of a north-trending antiform with an axis running easterly. The antiform may represent a broken overturned limb of an anticline - as supported by drill results in the Vinatas area. These structures are compressional features that pre-date the igneous system and which could indicate favourable locations for emplacement of mineral bearing intrusions.

Mapping and drilling are still at an early stage on the Aurea Sur project and a lot remains to be done to bring this project to the discovery stage. The information gained from this drill program is being used to plan future exploration in the area. Current exploration plans are focused on the more advanced Aurea Norte project.