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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, and East and West Africa, is pleased to announce its results for the year ended 31 December 2016.

The results below are extracted from the Company’s audited financial statements which will be available from today at the Company’s website: www.stratexinternational.com. Copies of the Company's Annual Report and Notice of AGM will be posted to shareholders on 24 May 2017. The Company’s AGM will be held at 3.00 pm on 27 June 2017 at the offices of Grant Thornton UK LLP, 30 Finsbury Square, London, EC2P 2YU.

Operational Highlights:

· The Altıntepe mine in Turkey, which became operational towards the end of 2015, had production of circa 35,800oz gold and 41,600oz silver for 2016. Under an agreement with our Turkish partners, Stratex would have the right to a cash distribution once the operation was profitable. We had been frustrated in enforcing our rights under our agreement with our Turkish partners and coupled with the current changes occurring in country, and the potential for protracted legal action, we commenced discussions with our partners with a view to a sale of our 45% interest in the project. Negotiations were successful and the Board accepted an offer to sell our full interest in the Altıntepe mine for an aggregate cash receipt of US$8 million net of any taxes and costs;

· Goldstone successfully raised £1 million during the year and Stratex followed its investment to maintain its interest at 33.45%. RC drilling at Akrokerri confirmed mineralisation at the AK02 prospect, and auger drilling defined a new zone of gold enrichment 100-200m to the east of AK02. At Homase, a diamond drilling programme confirmed the depth continuity of the identified mineralised zone beneath the historic pit and also highlighted the potential for identifying further parallel orebodies within the broader structural corridor;

· A low-cost exploration programme was completed at the Dalafin gold project, comprising mapping, soil sampling, and outcrop and lag sampling. Further zones of mineralisation have been identified, including a 750m extension of the Faré South prospect soil anomaly;

· Thani Stratex Resources Ltd has successfully raised US$4.5 million during the year and as a result Stratex’s shareholding interest had been diluted to 30.4% by the year-end. Drilling commenced at the Anbat gold project in Egypt, and at the Assaleyta and Pandora gold projects in Djibouti;

· An Environmental Impact Study has been submitted for the Muratdere copper-gold project in Turkey and approval is awaited before construction of the mine can commence.  Stratex had not contributed during the year to the development of the project, due to our view on value, based on low copper prices.  Consequently Stratex’s interest in the project has been diluted to 14.87%. As a result the investment is no longer accounted for as an associate.

Financial Overview:

· The Company and its subsidiaries (the "Group") realised a loss after tax for the year of £2.66 million which, compares with a loss in 2015 of £0.6 million. The loss in 2015 included a £3.04 million profit from the sale of the Őksűt royalty. Adjusting for this one-off gain, the loss in 2015 would have been £3.67 million;

· Administration costs amounted to £2.81 million, an increase of £0.66 million over 2016. The amount for 2016 includes certain non-cash accounting adjustments. On a like-for-like cash basis, administration cost have reduced year-over-year by £0.68 million, reflecting the continued focus on cost controls;

· The owners of the Altıntepe mine agreed to pay US$2 million, net of taxes, (approximately £1.6 million) for services related to the operation of the mine provided by the Company’s geological team based in Turkey. This forms a part of the US$8 million net consideration for the sale of Stratex’s 45% interest in the mine and has been reported as “Other Income” for the year;

· The Company’s investments in Altıntepe Madencilik, Muratdere Madencilik and Tembo Gold Corp were recategorised as they no longer meet the criteria for equity accounting. Together with the dilution of the Company’s interest in Thani Stratex Resources Limited, this change in accounting treatment has given rise to an accounting loss in 2016 of £0.7 million;

· The value of the Company’s operations in Goldstone and Dalafin, which are denominated in US Dollars and Euros respectively, have increased significantly in Sterling terms due to the weakening of Sterling against the US Dollar and Euro, following the UK vote on Brexit. This has resulted in an unrealised currency translation gain of £3.37 million, which, in accordance with International Financial Reporting Standards, has been taken directly to equity and is not reflected in the loss for the year.

Chairman’s Statement

Over the last twelve months we have made strong operational and financial progress across the business as we continue to execute the Company’s strategy of becoming a significant gold producing company. The focus of the period remained firmly on advancing our highly prospective exploration and development assets in Turkey and Africa as well as collaborating with our partner in Turkey to ramp up production at the Altıntepe gold mine. The period included the appointment of Marcus Engelbrecht as the Company’s Chief Executive Officer with which has come renewed impetus and new capabilities that will enable the Company to grow and generate meaningful value for our shareholders. 

The Company’s strategy is to develop its existing exploration projects and seek to identify accretive acquisition opportunities that complement our portfolio of projects. Stratex continues to identify a number of opportunities to take this vision forward.

Our joint venture at Altıntepe commenced production in November 2015 and during the year some 35,800oz of gold and 41,600oz of silver had been recovered. Notwithstanding positive discussions with our partners in Turkey, we were continually frustrated in our attempts to enforce our contractual rights to receive a cash distribution. Although both UK and Turkish legal advice on the issue was very positive, given the climate change in Turkey we recommenced our discussions with our joint venture partners with a view to a sale of our 45% interest in the project. These discussions culminated in an offer by our joint venture partners to buy our 45% interest in the Altıntepe project for an aggregate cash sum of US$8 million, net of taxes and costs. This offer was accepted and the full amount of the consideration has now been received. Given that our financial investment in the project was less than US$2 million, this outcome is regarded as highly accretive and fully reflects the inherent value of the Group's investment in Altıntepe. The Altıntepe Gold Mine has played an important role in the historic growth of the Company and the funds released from this sale now place Stratex in a strong position to develop its strategy with respect to its advancing discussions with other companies with near or in production assets.

Thani Stratex Resources Limited (“TSRL”) continues to report encouraging exploration results at its Anbat gold project in Egypt. The Arabian Nubian Shield of Egypt represents a highly prospective yet relatively underexplored gold region that continues to be extremely positive with regard to TSRL’s progress at Anbat. The expectation is that this exploration programme will continue to be advanced during 2017. The Board is equally encouraged by TSRL’s exploration activity in Djibouti and looks forward to further updates from the Assaleyta and Pandora gold projects. Marcus Engelbrecht has been appointed as Stratex’s representative on the board of TSRL.

Emma Priestley has now been confirmed as Chief Executive Officer of Goldstone. This company raised £1 million during the year to enable it to progress its Homase-Akrokerri project in Ghana. Stratex followed its investment to maintain its interest at 33.45%. This project hosts an existing 600,000oz gold JORC compliant resource.

Stratex is nearing completion of a review of its 85% owned Dalafin gold exploration project in Senegal. The Company and its Senegalese partner, Energy and Mining Corporation S.A., have concluded a significant in-country cost reduction initiative and will be jointly defining a strategic approach to funding and progressing the planned exploration programme. This follows a drilling programme earlier in the year, which showed encouraging results. Stratex remains committed to the project and believes the exploration carried out to date shows significant up-side potential.

In light of commodity price pressures, the Group’s interest in the Muratdere copper-gold project has been diluted to 14.87% following the Board’s decision in February 2016 not to commit further funds to the project. The Board will continue to monitor the Group’s interest in Muratdere as the copper price changes.

The period saw some significant changes in the management structure of Stratex. In September our Chief Executive Officer, Dr Bob Foster, who had been a founder director of the Company, retired from the Board after more than ten years. Bob was instrumental in the development of the Company and Stratex owes him a huge debt of gratitude. The Board is fortunate that his knowledge and experience in the industry continue to be available on a consultancy basis. He has been replaced as Chief Executive Officer by Marcus Engelbrecht who brings a wealth of industry experience and contacts that will enable to Company to execute its next phase of stated growth strategy. Marcus is a senior executive with some 30 years’ experience in the global mining industry and has demonstrated an ability to articulate a strong corporate vision and to build and motivate effective management teams. With his proven experience developing and building successful resource based companies, Marcus will lead Stratex’s quest for rapid growth by acquisition.

Emma Priestley, who joined the executive Board in 2014, became a Non-Executive in November 2016 upon taking up her role as Chief Executive Officer of Goldstone Resources Limited, a company in which Stratex holds a significant interest.

At the end of 2016 our former Chairman, Christopher Hall, announced his retirement. Christopher had been on the Board since 2008 and had been appointed Chairman in 2011. The Board is extremely grateful to Christopher for his leadership and the valuable contribution he has made to the Company.

As an experienced non-executive director and chairman, I replaced Christopher as Chairman on 1 January 2017, having joined the Board of the Company in 2008. I had practiced as a solicitor for some 20 years and subsequently provided corporate finance advice to a wide range of companies in the UK and Ireland.

Looking forward to the current year, Stratex is now well placed financially to take advantage of the opportunities available in the mining sector. The Company continues to work towards its strategic vision of acquiring high-quality near or in production mining projects and is currently advancing a number of discussions with companies and asset owners over prospective projects which would be complementary to Stratex's strategic goals. As and when these discussions reach fruition, appropriate announcements will be made to shareholders and the market.

On behalf of Stratex’s executive and management team I would like to express my appreciation and thanks to all our employees for their efforts and hard work during the past year.

Peter Addison

Non-Executive Chairman

15 May 2017

Financial Statements

Statement of consolidated comprehensive income

Statement of consolidated financial position 

Statement of consolidated changes in equity