Recent Update Text as of 17FEB15 . Timmins and Newstrike Capital (NES-CN, covered by Mike Hocking) have entered into a definitive agreement to combine the two companies. . Newstrike's main asset is a 100% interest in the Ana Paula gold development project in Guerrero, Mexico. The project currently hosts M&I&I gold resources of 1.93 Moz at an average grade of 1.40 g/t. . Based on a 2014 PEA, Ana Paula is expected to produce 116 koz/yr over 8 years at an average operating cash cost of $486/oz or project AISC of $526/oz. Pre-production capital is estimated at $164M. . Under the agreement, TMM will acquire the outstanding shares of NES for 0.9 of a TMM common share implying a price of C$1.15 for NES or a total deal value of ~$110M. The deal is subject to two-thirds approval by Newstrike shareholders and majority approval by Timmins shareholders and is expected to close around the end of April 2015. . We assume the friendly deal closes as expected and have incorporated Ana Paula into our model. Our NAV increases by 4% to C$1.88 as a result but we have maintained our one-year target price at C$1.75. . We see the potential for Ana Paula to contribute meaningfully to Timmins' production profile while helping to reduce per-ounce costs, and believe the company is paying a good price for NES. However, given permitting and funding requirements for both Ana Paula and Caballo Blanco, we are maintaining our Sector Perform rating