Overview

Stratex is an AIM-listed company currently focusing on the exploration and development of gold and high-value base metals in Turkey and Ethiopia. Together with Turkish partner NTF it is progressing the Inlice and Altıntepe oxide gold resources through feasibility studies, with initial production anticipated from Inlice by 2011 and from Altıntepe by 2013. Stratex is also exploring and drilling its latest oxide-gold discovery, Öksüt, financed by option/JV partner Centerra Gold and exploring Hasançelebi through a JV funded by Teck Resources. Stratex’s strong cash position has enabled the Company to consider opportunities outside Turkey, and in September this year the Company announced its expansion into Ethiopia through a JV agreement with Sheba Exploration. In addition, Stratex has secured exploration licencing for a further 1,579 km2 within the Afar Region of Ethiopia, based on encouraging results from initial channel sampling at the Megenta project.

History

Formed in 2004, the company has been positioned to take advantage of the current paucity of exploration activities and the resultant projected shortage in supply of precious and base metals. Since formation Stratex has rapidly amassed a portfolio of high-potential exploration licences in central and western Turkey, and in Ethiopia. This portfolio underpinned a successful listing on AIM on 4th January 2006 and has since been added to as a result of the Company's informed and aggressive approach to terrane analysis and prospect identification.

Strategy overview

The strategic intent is to maximize shareholder value through the continuing development of this focused portfolio. Revenues will be generated by:-

• Developing defined gold resources into mines via a production joint-venture agreement with Turkish civil engineering and contract mining company NTF; or
• Discovery of major new gold projects via joint-venture agreements with companies that have the technical and financial capabilities to put large resources into production. Those projects not meeting the +1 million oz gold resource requirements of  major companies would be spun into the NTF JV, thus ensuring growth of the NTF-driven company into a significant gold producer; or
• Ongoing go-it-alone exploration to define new targets in Turkey and Ethiopia using the innovative exploration philosophies and techniques that have proved so successful to date and selling resulting new discoveries to a third-party company whilst retaining a royalty payment based on future metal production.

Joint venture

Stratex currently has three key joint venture operating agreements in Turkey:-

• NTF Ä°nÅŸaat Ticaret Limited Åžirketi, whereby NTF earns up to 55% in both Inlice and Altıntepe by financing them to completion of feasibility studies; and
• Centerra Gold Inc., whereby Centerra can earn up to a maximum of 70% of the Öksüt project by financing exploration to a total of US$ 6 million, with a commitment to an initial US$ 500,000 of expenditure in the first year.
• Teck Resources Limited, whereby Teck can earn up to a maximum of 70% of the Hasançelebi project by financing exploration to a total of US$ 5 million, with a commitment to an initial US$ 500,000 of expenditure by 31st December 2010.

Operations

Stratex has a UK-based Board of Directors, including Chairman, CEO, CFO and two non- executive directors, with a head office in London. The Turkish operations are managed from offices in Ankara and include the country manager plus a team of geologists. Operations in Ethiopia are managed from offices in Addis Ababa and include a country manager, GIS technician, and four geologists.

Additional specialist exploration resources are provided through variable outsourcing contracts in order to minimise overheads.

Turkey

Turkey is situated within the Tethyan Eurasian Metallogenic Belt (TEMB) which forms part of the Alpine-Himalayan orogenic system. The major mineral endowment of Turkey is located centrally, to the west, and to the north; regions in which a number of volcanic-associated gold and gold-copper deposits have been discovered during the past decade.

Turkey has a history of mining that extends back to gold and copper mining in pre-Roman times and has been actively engaged in base metal mining during the past century. The Directors believe that recent changes in mining and investment law in Turkey have created a positive environment for exploration and mining. Discoveries by other companies in central and western Turkey in recent years include Eldorado Gold's Kisladag gold deposit (7.78 million ounce resource, measured and indicated) and Anatolia Mineral's Çöpler gold deposit (1.99 million ounce resource, measured and indicated) and a number of other smaller discoveries. Kisladag commenced commercial production in July 2006 while Anatolia is hoping to take Çöpler into production 2010.

Projects

The current project portfolio is focused on gold targets in Turkey and covers eleven licence blocks totalling approximately 1,690 km2:-

• Öksüt: A new 75.51 km2 licence area with key licence acquired in late March 2008. Gold mineralization hosted in Miocene volcanics, similar to the Konya Volcanic Belt. Sixteen holes for a total of 3352.50 metres has been completed at the Ortaçam Zone; best intersection to date of 93.60 m @ 5.61 g/t gold. Mapping and soil sampling across the entire property have highlighted six new prospective target zones. In August 2009, the Company signed an option/joint venture agreement with Centerra to explore and develop Öksüt. Under the terms of the agreement, Centerra is committed to spending a minimum of US$ 500,000 in the first year, with the option to fund US$ 3 million over three years for a 50% interest in the project. Centerra also has the option to increase its interest to 70% after the first three years by expending an additional US$ 3 million over the following two years.
• Hasançelebi: High-sulphidation gold system hosted within Miocene andesitic and dacitic rocks. Initial sampling has confirmed multiple silica zones extending over seven kilometres. The highest continuous intersection to date is 0.69 g/t gold over an average width of 7.4 m along a strike distance of 858 m, including a higher-grade zone averaging 0.99 g/t Au over a width of 9.1 m and a length of 278 m. Silica-replacement of relatively low-angle volcanic tuff beds indicates a potential for the identification of areally extensive and hence large-tonnage zones of mineralization. In September 2009, Stratex signed a JV with Teck Resources to explore and develop Hasançelebi. Under the terms of the agreement, Teck has the option to fund US$2 million by 31st December 2012 to acquire a 51% interest in the project, with a commitment of US$500,000 before 31st December 2010. This initial funding will be utilised for a mapping, sampling and drilling programme to include at least 2,000 metres of drilling. Teck then has the option to increase its interest to 70%, by expending a further US$3 million over the subsequent three years.
• Konya:  Multiple porphyry gold targets (including DoÄŸanbey) within the Konya Volcanic Belt. Geological mapping and geophysical surveys indicated a number of potentially large systems. At DoÄŸanbey, initial drilling returned gold grades of approximately 0.1 g/t Au, with best intersection of 274 m @ 0.13 g/t Au. Follow-up RC drilling at Konya has identified three futher targets (DoÄŸanbey South, Karacaören, and Gölcük ), all of which are confirmed as gold-bearing porphyries. Best intersections of 155 m grading 0.17 g/t gold in DoÄŸanbey South and 170 m grading 0.12 g/t Au  and 70 m grading 0.27 g/t Au in Karacaören. A further potential porphyry system has been identified at OÄŸlakçı prospect in the southern part of Konya Volcanic Belt on basis of soil geochemistry, alteration, and magnetic signature. The Company believes that these results continue to indicate that the district has the potential to host an economic porphyry gold deposit. Further exploration is underway.
• Altıntepe: A multi-occurrence prospect comprising a number of discrete gold-bearing zones. Stratex has defined a JORC-compliant in-house oxide resource of 472,318 oz gold. In June 2009, the Company signed a Memorandum of Understanding (MoU) with major Turkish construction and contract mining company NTF, prior to signing a definitive agreement later this year whereby Altıntepe will be fast-tracked alongside Inlice towards feasibility and production.
• Inlice: A high-sulphidation gold discovery in a previously unexplored area – the Konya Volcanic Belt. Stratex has defined a JORC-compliant resource of 262,300 oz gold, including 98,000 oz of gold in oxide material, of which 70,000 oz is in bedrock and the remainder in overlying talus material . In June 2009, the Company signed a Memorandum of Understanding (MoU) with major Turkish construction and contract mining company NTF, prior to signing a definitive agreement later this year whereby Inlice will be fast-tracked alongside Altıntepe towards feasibility and production.
• KaraaÄŸaç-Murat DaÄŸi:  A partially exposed, gently dipping, gold-bearing zone, extending over an area of approximately 3.5 km2. Drilling has identified a resource of approximately 6,389,000 t @ 0.78 g/t gold for a total of 156,798 oz gold. A joint venture partner is being sought to extend the resource and undertake feasibility studies, with a view to mid-term production. Two licences within the Murat DaÄŸi licence block (that contain no gold resource) have been transferred to Turkish company Kucuk in return for 2.5 % NSR royalty (of which 1.5 % payable to Teck Cominco Madencilik) on all mineral production. Stratex has concluded that the gold potential of the two licences is very low and they will now be evaluated by Kucuk with a view to exploiting the known antimony mineralization.  

Stratex also has a strong pipeline of early-stage projects that are being investigated:

• Altunhisar and Karapinar: Two new areas of volcanic rocks similar to Konya within which multiple occurrences of Konya-type alteration have already been identified. At Altunhisar, anomalous zones of gold and additional elements have flagged the potential of two alteration zones and led to the identification of porphyry gold-style veinlets in the Karanlikdere zone. Further exploration is underway.
• Muratdere: A porphyry gold-copper-molybdenum occurrence that is exposed over an area of approximately 4,000 m x 500 m. Encouraging results from early drilling returned a best intersection to date of 284.7 metres grading 0.30 % copper, 0.13 g/t Au, and 0.013 % Mo.
• Åžehitler: Two new licences have been registered in north-western Turkey, over a significant zone of alteration along the eastern extension of a known gold mineralization belt in northern Greece. A short follow-up programme of mapping and sampling is planned.

Ethiopia

In September 2009, Stratex acquired a 5.6% interest in Sheba for £40,000 through a private placement at 0.75p and is also entitled to matching warrants at 0.75p exercisable for two years.  Additionally, Stratex and Sheba have signed a Binding Letter of Intent giving Stratex the option to earn-in to an initial 60% of Sheba’s Shehagne EEL by expending £100,000 in the initial three months and a further £250,000 over the subsequent 18 months. Shehagne is a highly prospective licence where a broad anomaly has already been defined and where there is also the potential for base metal discoveries. Futhermore, Stratex and Sheba will continue to acquire licences and generate new targets as part of a new 70:30 joint venture agreement to explore northern Ethiopia.

A further gold discovery has been made by Stratex at the Megenta prospect in the Afar Region of Ethiopia, where exploration is curretly underway (Please see the Ethiopia section of our website for further details).

People

Stratex recognizes that its single key strength is its personnel. This starts with its team of young and very able geologists based in Turkey and Ethiopia. Our Turkish team is led by General Manager Bahri Yildiz, who has unsurpassed knowledge of the geology and mineral deposits of Turkey and a superb track record of mineral deposit discoveries over the past 28 years. The senior executive is led by Chairman David Hall and CEO Bob Foster, who between them have over 60 years of exploration and development experience around the world. Supporting the Board is CFO Perry Ashwood, with a track record of senior financial management positions, and Non-Executive Directors Christopher Hall and Peter Addison.

Summary

In summary the key attributes and strengths of the company are:-

• Road map to mid-term gold production with Turkish company NTF
• Joint venture with Centerra Gold Inc to fast-track investigation of the important new Öksüt gold discovery
• Joint venture with Teck Resources to fast-track investigation of the Hasançelebi high-sulphidation property
• Valuable and continually evolving portfolio of projects with identified resources and considerable exploration potential
• Highly experienced management team supported by top-level financial and commercial colleagues at Board level
• Highly effective operating model with a low cost base