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

Stratex International Plc   

(‘Stratex’ or ‘The Company’)

Strategic Investment in GoldStone Nears Completion

Stratex International Plc, the AIM-quoted exploration and development company focused on gold and base metals in Turkey, East Africa and West Africa, is pleased to report that, further to the Company’s announcement on 21 July 2014, the directors of GoldStone Resources Limited (AIM: GRL, “GoldStone”) have announced that they will today post a circular to their shareholders in relation to a proposed share consolidation, the proposed subscription by Stratex of £1.25 million and the approval of a waiver of the Company’s obligations under Rule 9 of the City Code in relation to the acquisition of 33.4% of GoldStone Resources Limited. The circular incorporates notice of an extraordinary general meeting of GoldStone to be held on 30 October 2014 at 9.30 a.m. (or such later time as the annual general meeting to be held at 9.00 a.m. on the same day concludes).

Background to the Proposals

Following an evaluation of available funding options, GoldStone announced on 21 July 2014 a conditional subscription (the “Subscription”) by Stratex to raise gross proceeds of £1.25 million in order to provide GoldStone with funding to continue its exploration in West Africa. 

The Subscription will further Stratex’s stated strategy of investing in quality opportunities arising in its sector in order to accelerate exploration progress. The combination of GoldStone’s assets, particularly the advanced Homase-Akrokerri property in Ghana and the likely synergies in Senegal, with the financial and technical strengths of Stratex, should deliver significant benefits for both companies.

The Subscription will occur after the proposed sub-division and 1 for 10 consolidation of GoldStone’s issued Ordinary Shares into New Ordinary Shares and Deferred Shares and will be for 20,833,333 New Ordinary Shares at a price of 6 pence per share.

The Subscription is further conditional upon the approval by independent shareholders of GoldStone of a waiver of obligations under Rule 9 of the City Code.

Subscription

On 29 August 2014 in the announcement of its final results for the year ended 28 February 2014, GoldStone reported that GoldStone and Stratex had agreed an amendment to the Subscription Agreement with the effect that Admission must occur by 8.00 a.m. on 31 October 2014 (“Long Stop Date”).

Under the terms of the Subscription Agreement, Stratex agreed to subscribe for the Subscription Shares at the Subscription Price, conditional, inter alia, upon:

· Admission of the new ordinary shares to trading on AIM ("Admission") becoming effective on or before 30 September 2014 or such later date as GoldStone and Stratex may agree, being not later than the Long Stop Date;

· the issue of the Warrants;

· the approval by independent shareholders of GoldStone at the General Meeting of the resolutions, including the Whitewash Resolution;

· the appointment to the GoldStone Board (which is to include no more than five directors in total) of three non-executive directors by Stratex, one of whom will serve as Chairman; and

· the approval by Stratex of the terms of employment and incentive arrangements of certain Directors and employees of GoldStone.

The Subscription Agreement provides that in the event that such conditions are not satisfied, or waived by Stratex where capable of waiver, or become incapable of fulfilment, before the Long Stop Date, the Subscription Agreement will terminate.  The Subscription Agreement may be terminated by Stratex prior to completion in certain circumstances, including if the warranties given to Stratex by GoldStone in the Subscription Agreement were not true or accurate, or were misleading when given or are breached before Admission, or if prior to Admission there occurs an event or omission which materially and adversely affects the financial position and/or prospects of GoldStone or which, in the reasonable and proper opinion of Stratex, is or may be materially prejudicial to GoldStone or the Subscription.

Waiver of the obligation to make a mandatory offer under Rule 9 of the City Code

If the Subscription completes, Stratex will hold 33.45% of the voting rights of GoldStone. If Stratex exercises the Warrants, which will be exercisable immediately on Admission, in full and assuming no other issues of New Ordinary Shares, Stratex would hold 50.1% of the voting rights of GoldStone.  In those circumstances, Stratex would be permitted to make further purchases of New Ordinary Shares without incurring an obligation under Rule 9 to make a general offer to all holders of New Ordinary Shares.

The Panel has agreed, subject to the Whitewash Resolution being passed by independent shareholders of GoldStone, to waive the requirement under Rule 9 of the City Code for Stratex to make a mandatory offer for the entire issued ordinary share capital of GoldStone as would otherwise be required as a result of the Subscription and exercise of the Warrants.

The Whitewash Resolution is subject to the approval of independent shareholders of GoldStone at the General Meeting to be held on 30 October 2014 at 9.30 a.m.

GoldStone’s business and prospects

GoldStone is a gold exploration company with five projects in West Africa.  The projects range from advanced exploration to early stage exploration and are located in Senegal, Ghana and Gabon. GoldStone’s business is to explore, evaluate, develop and potentially produce from gold properties in West Africa.  The acquisition, disposal or relinquishment of projects are within the ordinary course of GoldStone’s business.

GoldStone’s exploration activities have been constrained due to a lack of funding in the currently poor equity market conditions for junior mining companies.  Emphasis has been placed on cash conservation, project retention and keeping their licences in good standing.  The GoldStone Board believes each of the licences is in good standing and expects renewal of those which are currently subject to applications.

The funds raised through the Subscription will provide GoldStone with sufficient cash resources to conduct meaningful exploration at the Homase/Akrokerri project in Ghana, keep the most prospective projects in good standing for the foreseeable future and allow it to investigate other measures of funding, if practicable and expedient.  Exploration at Homase/Akrokerri will be directed at potentially adding shallow oxide resources, metallurgy drilling (to define the metallurgical possibilities), mine studies to advance understanding of the optimum production capacity of the Homase resource and a number of boreholes to test the potential of the high grade shoots to depth. 

Joint ventures will be considered for some of the projects, including Sangola in Senegal where there is now extensive data from the exploration activities undertaken by Randgold Resources Limited through the joint venture, as well as the projects in Gabon.  If momentum is gained through the relationship with Stratex, there may also be some corporate activity around acquiring smaller deposits in and around Homase/Akrokerri to provide the project with critical mass or by acquiring or partnering on assets from funding-stressed companies in West Africa.

Proposed GoldStone Board changes

As detailed above, the Subscription Agreement provided for certain changes to the GoldStone Board to take place on Admission.

As a result, with effect from Admission, Christopher Hall, Bob Foster and Emma Priestley will be appointed to the GoldStone Board with Mr. Hall serving as GoldStone's Chairman.  Also with effect from Admission, Jonathan Best, Dr. Hendrik Schloemann and Benjamin Hill will resign from the GoldStone Board. 

Expected Timetable of Principal Events and Key Statistics

The full text of the announcement by Goldstone, containing further details of the transaction and definitions, can be found at http://www.goldstoneresources.com/investors/news-releases.html.    

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For further information please visit www.stratexinternational.com, email [email protected], or contact:

Notes to editors:

Stratex International is a well-funded AIM-quoted exploration and development company focussed on gold and high-value base metals in Turkey, East Africa and West Africa. Since listing on AIM in 2006, Stratex has had an impressive track record of successful exploration supported by joint-venture partnerships, both with major international mining companies and local companies to maximise the potential of its discoveries.

In December 2012 the Company announced the sale of its 30% interest in the Öksüt gold project for cash of 20 times its original US$1 million investment and retained a royalty of 1% up to a maximum additional value of US$20 million.

To date Stratex has discovered more than 2.2 million ounces of gold and 7.9 million ounces of silver, as well as 186,000 tonnes of copper. The Company has a robust cash balance and is therefore well-placed to advance its existing exploration programmes and is also actively seeking to acquire advanced projects that are at the drill-ready stage or even have identified resources, particularly in East Africa and West Africa.