Latest News

Released 11:00 12-Mar-2014

Number 1190C

Stratex International plc / Index: AIM / Epic: STI / Sector: Mining

Stratex International plc

(‘Stratex’ or ‘the Company’)

Final Results

Stratex International plc, the AIM-quoted gold exploration and development company focused on Turkey, East Africa and West Africa, is pleased to announce its results for the year ended 31 December 2013.

The results below are extracted from the Company’s audited accounts which are available in full at the Company’s web site www.stratexinternational.com. Copies of the Company's Annual Report and Notice of AGM will be sent to shareholders in early April.

Operational highlights:

 •        Exciting results from drilling at the Dalafin project, Senegal. The latest drilling programme has returned long gold-rich intersections from the Faré South zone, including 57.6m @ 2.20g/t Au.

•        Sale of Inlice project in Turkey for US$10million, of which Stratex’s share was US$4.5 million, giving a profit on disposal of £2.1m.

•        Turkish JV partner Bahar Mining (“Bahar”) has taken up the option to acquire 51% of the Altıntepe project and has made good progress in advancing the project. We believe the issue of a Forestry Permit is imminent and initial production is expected late 2014.

•        Investment of Cdn$1.75m in a Toronto stock exchange listed company as part of a three-party consortium for the further development of a very promising gold prospect in Tanzania.

•        Following further drilling at Muratdere, Turkey our JV partner Lodos Maden Yatırım Sanayii ve Ticaret A.Ş. exercised the option to increase their interest to 61% on completion of 3,000m drilling and payment of US$500k.

•        Awarded the Mines & Money (London) Small Cap Deal of the Year, in recognition of the completion of the sale of our interest the Őksűt project to Centerra for US$20m plus a downstream royalty of US$20m.

Financial Overview:

•        Loss for the year before tax of £3,628,385, which compares to a profit in 2012 0f £9,564,449. The profit in 2012 was bolstered by the gain from the sale of Őksűt for US$20million.

•        During the year the Group recorded a gain of £2.3million from the sale of the Inlice project in Turkey and a gain of £660,676 from the investment in Tembo Gold Corp, which arises because the Group’s share of the net assets of Tembo are greater than the acquisition price.

•        Cash balances at the end of the year totalled £10,574,966.

Chairman’s Statement

The tangible achievements of 2012, which were measured in hard currency, were a difficult act to follow. Having rehearsed our business model, of making money from exploration, for several years we had delivered results. The challenge was to demonstrate that this kind of success can be repeated.

We refined our strategy into two strands; first, to continue our search for exploration success from near greenfield opportunities, but with the financial strength to move them further up the value curve before choosing the best moment to monetise them; and second, to seek investment or acquisition opportunities where we could compress the likely timescale to success.

This involved evaluating companies and projects with more advanced exploration projects, which we might support technically and financially, in order to reach the point of monetisation in only one or two field seasons. I am pleased to say that we have made solid progress on both fronts.

After closing the sale of our interest in the Ӧksüt project to Centerra, we entered into a strategic alliance with them to look for new gold opportunities in central Turkey. Centerra is funding the generative stage and any selected project up to US$1.5 million, at which point Stratex may contribute its 49% share of future costs. We may defer our contribution for up to six months, which allows us to see the results of the work before we fund it; a considerable benefit. We have continued working in a broadly similar alliance with Antofagasta but focusing on the search for copper and copper-gold prospects.

In the Rift Valley of Ethiopia, Stratex undertook two drill programmes. In the north, we embarked on a follow up programme at the 95%-owned Blackrock project. This continued to demonstrate the potential for gold in a rift-related, bi-modal volcanic environment. We have extensive evidence of gold deposition at surface and at depth with numerous narrow high grade and wide low-grade intersections. As yet we have not encountered the potentially economic, bonanza grades and widths seen in analogous provinces such as the Deseado Massif in Patagonia.

The story is similar in the Afar joint venture at Megenta, where deeper drilling continued to return gold intersections but without hitting “the big one”. Given the more exciting prospects in our portfolio, we no longer see Megenta as a priority and we, along with our joint venture partners, have decided to relinquish the licences. We are now planning to drill the Pandora vein at the Oklila project in Djibouti when the programme has been agreed with the authorities. The surface sampling from Pandora makes it the most attractive target in our rift region portfolio, with high grades, good widths and significant strike lengths.

We have been excited by results from the Dalafin project in Senegal. A 33,000 m RAB drilling programme over several significant soil anomalies returned encouraging results, which we are currently following up with reverse circulation and diamond drilling. Results from the first target, Faré South, returned good grades and widths including 59.6 m averaging 2.2 g/t Au. Although we are still at an early stage in the follow-up drill programme we do feel we may have found something of significance.

Dalafin was acquired through the purchase of Silvrex Limited, a private UK company, which also had several properties in Mauritania. These were reviewed during the year and dropped in order to focus on Senegal. Elsewhere in West Africa, we signed a joint-venture agreement with another private UK company, BG Minerals to explore their North Suehn project in northern Liberia. However, after completion of additional trenching on the Blackiestown target and follow-up soil sampling over areas of interest identified by stream sediment sampling, no compelling targets have emerged to justify further expenditure. More recently we have entered into an agreement with a privately-owned Australian company, Aforo Resources Limited, for the exploration and possible purchase of their gold project Sinoe in Liberia.

Stratex was founded on Turkish assets and that is where our most advanced projects are located. After a strategic shift by our partner NTF, we completed the sale of the small Inlice gold project, our share being US$4.5 million. At Muratdere, a copper-gold porphyry prospect, our Turkish partner Lodos is funding a feasibility study, which should be completed by the third quarter. Lodos paid a further US$0.5 million to increase their interest from 51% to 61%, and will be entitled to a 70% interest on completion of the study. Stratex may contribute to the cost of some work outside the scope of the study but we will await completion before considering any other future action.

The Altıntepe project, 51% owned by our partner Bahar Mining, is the likely game changer. Bahar is required to fund the project to production and will recover its investment from 80% of the cash flow. After pay-out, Stratex’s share will rise to 45%. Altıntepe has an oxide gold resource of almost 500,000 oz in three main zones and we expect annual gold production in the 30-40,000 oz range from a relatively low cost, open pit, heap leach operation focusing on the first of the three zones. Bahar is currently refining its mine plan and cost estimates, and we expect to be able to update the market once the final permit, Forestry, is granted. All Forest Permits in Turkey have been delayed, whether for mines, roads, or hotels, but we are growing increasingly confident that ours will be announced by the end of the first quarter. With an estimated construction period of six months at a favourable time of year, we look forward to reporting the start of production before year end.

In line with the second strand of our strategy, we have conducted an intensive search for investments. Negotiations have reached an advanced level with a number of companies but have not been consummated largely because of management attitudes. In spite of the very difficult market and shrinking cash balances, we are finding it difficult to agree on the value of historic exploration work, which frequently appears unfocussed.

Nevertheless the search continues. We have closed one strategic investment, in Tembo Gold, a TSX-V listed company with a property adjacent to the multimillion ounce Bulyanhulu project in Tanzania. As part of a strategic investment consortium, in conjunction with the New Africa Mining Fund II out of Johannesburg, and a German investment group, Stratex has invested C$1.75 million for a 14% interest in Tembo. Our CEO, Bob Foster provided considerable technical input during the due diligence period and Stratex was paid a C$0.5 million consulting fee, reducing its net cost to C$1.2 million. After obtaining Tembo shareholder consent, the consortium now has control of the board and a majority shareholding in the company with the opportunity to increase this position to around 65%. Tembo is now well-funded and has commenced drilling with the ultimate aim of developing a resource out of the wealth of historic drilling data.

We have great enthusiasm for 2014. We believe we have excellent management and, as a result of our recent successes, we start the year with some US$16 million in cash. There will be results from Dalafin and Tembo and, in due course we hope, Pandora. We should see the start of recurring cash flow from Altıntepe once production commences, and the result of the Muratdere feasibility.

Dalafin will see the focus of our effort and expenditure, subject to continuing success, but this leaves capacity to continue the quest for investment in companies with discoveries or resources who will welcome our support. We also expect some restructuring of our activities in East Africa as a result of rebalancing within our joint-venture partner, Thani-Ashanti. AngloGold Ashanti have taken a strategic view to cut back some elements of their world-wide exploration programme, including withdrawal from their alliance with Thani. Preliminary discussions with Thani indicate potential for exciting developments in the region.

We have strengthened our advisers with the appointment of Yellow Jersey, an energetic, young PR company, and SP Angel as joint brokers. I would like to thank them, our other advisers and our shareholders for the support during the year. We are delighted to welcome new investors, including Exploration Capital Partners, a Sprott company, who have a substantial holding.

None of this is possible without the diligence and enthusiasm of my fellow directors, our staff in the UK and our teams on the ground in our three operating regions; Turkey, East Africa and West Africa. We were delighted to be given the Small Cap Company Deal of the Year award at Mines and Money in December but will be working hard to add recognition from the wider market to that of our peers in the industry.

Christopher Hall

Non-Executive Chairman

12th March 2014

Financial Statements

Statement of consolidated comprehensive income

Statement of consolidated financial position

Statement of consolidated changes in equity