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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 Africa, is pleased to announce its results for the year ended 31 December 2014. 

The results below are extracted from the Company’s audited financial statements 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:

· Significant progress made on construction of the mine at Altıntepe in Turkey in which Stratex holds a 45% stake. Completion of the mine is scheduled for Q2-2015 (see release dated 23 February 2015);

· Completion of the feasibility study funded by our partner Lodos Maden Yatırım Sanayii ve Ticaret A.Ş. (‘Lodos’) at the Muratdere copper-molybdenum-gold project in Turkey. The Environmental Impact Assessment (‘EIA’) permitting process has been initiated with the Environment Ministry (see release dated 11 March 2015);

· Completed a £1.25 million strategic investment in AIM-quoted Goldstone Resources Limited (‘GoldStone’) giving Stratex a 33.45% equity interest plus warrants which could increase its shareholding to 50.1%. GoldStone’s principal asset is the Homase-Akrokerri project in Ghana with a gold resource of 602,000 oz  (see release dated 3 November 2014);

· Agreement finalised with the Dubai-based Thani Group for the establishment of a North and East Africa joint-venture company for the pooling of the partners’ existing gold projects in the region (see release dated 27 October 2014); and

· Further extensive drilling undertaken at the Dalafin project in Senegal. The area remains very prospective, in particular the Madina Bafé zone which has returned 9.6 m @ 16.08 g/t Au and 15 m @ 6.10g/t Au.  Results warrant further field work but overall do not presently support the declaring of a resource (see release dated 19 January 2015).

Financial Overview:

· Loss for the year before tax of £2,580,713 compared to a loss in 2013 of £3,830,681;

· Administration expenses 16% lower than 2013;

· Impairment write-offs in the year amount to £510,035 and relate to the withdrawal from the Sinoe project in Liberia and the revaluation of the for-sale licenses in Turkey. Additionally, Goodwill of £926,546 arising on the acquisition of Silvrex Limited in 2011 has been fully written down;

· The deferred consideration of £1,140,064 brought forward from 2013 in respect of commitments to the Silvrex shareholders is no longer payable and accordingly has been released back to profit or loss;

· The pooling of interests in North and East Africa has resulted in the replacement in the statement of financial position of the £4.8 million asset in respect of the Blackrock exploration project with the Group’s 40% investment in the new joint-venture company amounting to £6.2 million. Both partners each contributed US$1 million for working capital. The transaction has resulted in a gain for the Group of £303,294;

· GoldStone has been treated as a fully consolidated subsidiary under IFRS 10. The fair value of the net assets acquired is £3.7 million; and

· Cash balances at the end of the year totalled £4,706,958.

Chairman’s Statement

The year ended 31 December 2014 has seen some significant changes at Stratex, in addition to solid progress on the ground in all areas of operation. Construction has gathered pace throughout the year at our 45% owned Altıntepe gold project in Turkey and we carried out further drilling at Dalafin in Senegal.

The main structural change was the formation of Thani Stratex Resources Ltd (‘TSR’), the exchange of our assets in Ethiopia and Djibouti for shares in TSR and the resignation of David Hall, our Executive Director with responsibility for East Africa, to take up the position of Chief Executive of TSR. This is an exciting development which gives Stratex exposure to the more advanced Egyptian gold assets which were contributed by our partners Thani Emirates Resources (‘Thani’). Thani was previously Stratex’s joint venture partner in East Africa and the new business combination will be more efficient than running two separate organisations. Stratex and Thani both contributed US$1.0 million of seed equity but in recognition of the differential underlying asset values, the equity split is 40% Stratex and 60% Thani. I was invited to join the TSR board and, after completion in Q4-2014, the new company has recommenced exploration at the Blackrock project in northern Ethiopia. We await an update on this work and the continuing development of the company where we no longer are required to contribute to the operating costs.

The projects which are closest to generating either cash or additional value for the Company’s shareholders are in Turkey. Our 45% owned Altintepe gold mine near Fatsa is approaching the completion of construction but heavy rain has seriously affected progress, particularly on the heap leach pad. Work on the other aspects of the project is progressing well but it would appear from our partners Bahar that the completion of construction is now unlikely to occur until May. Bahar has informed us that it is seeking to overturn the exclusion of part of the Kayatepe licence from the permitted area which was due to some minor archaeological finds. A favourable decision could be beneficial in the longer term but, whatever the outcome, there can be no negative impact on the existing planned and permitted operation. Bahar has also joined with the Ministry of Environment and Urban Development in opposing legal challenges to the approval by the Ministry of the EIA. The court has requested expert opinion but in the meantime there has been no effect on the progress of construction.

Muratdere is a copper-gold porphyry deposit where our Turkish partner, Lodos, has funded a feasibility study as the final stage of its commitment to earn up to 70% of the project.  Work continued throughout the year using a variety of respected international consultants. The concept is to concentrate on the modest resource of near surface, secondary enriched copper sulphide which occurs as a blanket over the more extensive primary mineralisation. This resource contains around 70,000 tonnes of copper which would allow modest production for several years, during which time the viability of the larger underlying primary resource would be investigated. The results of the feasibility study have been received and the EIA permitting process initiated.  Stratex will now be able to make the decision to continue to contribute to development costs, to dilute to a royalty or to discuss a sale or other arrangement with Lodos.

Stratex also holds a 1% Net Smelter Royalty (‘NSR’) on the Öksüt gold project, which it sold to partner Centerra Gold in 2013 for US$20 million and a royalty, capped at US$20 million. Centerra released the results of a Preliminary Economic Assessment of the project during the year, with anticipated production beginning in late 2016. Centerra is currently undertaking a feasibility study, on completion of which Stratex will have a clearer idea of when the royalty will commence and at what level.  They recently announced a 295,000 oz increase in measured and indicated resources at Öksüt, largely from transition zone material, which they state should be amenable to heap leaching.

At the Dalafin gold project in Senegal, Stratex reported results in February, May and November from Reverse Circulation (‘RC’) and diamond drilling on a number of priority targets. Excellent results were reported in the first half, principally from Faré South and Madina Bafé, and after a geophysical survey to assist with interpretation it was decided to drill the strike extensions of the mineralisation at Faré South.  While drilling extended the mineralisation to the north-east and south-west, the widths and grade were only moderately encouraging. Meanwhile, the focus for the rest of this season is on Madina Bafé, where the potential remains largely untested. Having explored the property professionally and diligently for three years since the acquisition of Silvrex, which was our obligation under the purchase agreement, it is apparent that consideration of a resource estimate is premature.  Consequently, no further consideration is payable to the Silvrex shareholders. At the end of 2014, John Cole-Baker, who joined the board after the Silvrex transaction, and who has been responsible for our West Africa assets for the last three years, announced his retirement with effect from 31 March 2015. John has made an enormous contribution in West Africa, particularly in dealing with partners and local authorities at all levels, and he was responsible for the successful renegotiation of the JV agreement in Senegal where Stratex now holds 85%. He has agreed to remain on the board of our local operating companies for the time being in order to ensure an orderly transition.

In February, we acquired an option over Aforo Resources’ Sinoe licence in the southeast of Liberia and Stratex undertook some preliminary exploration work. Unfortunately the results were insufficiently encouraging for Sinoe to remain a priority target and we informed Aforo that we would not be proceeding with the purchase.

Elsewhere in West Africa, Stratex concluded a £1.25 million, 33.45% strategic equity investment in AIM quoted GoldStone at the end of October, with warrants to increase the holding to 50.1%.  GoldStone has exploration assets in Gabon and at Sangola in Senegal not far from Dalafin. However the principal attraction was its existing resource centred on a small former open pit mine, almost within sight of the head frame at Obuasi, Ghana’s oldest and largest gold mine. Stratex believes that there is considerable potential to add to the 100,000 oz, near surface, oxide portion of the resource and is working closely with GoldStone’s management to test this concept. Stratex has two directors on the GoldStone board which is currently considering the results of a comprehensive data review, and an augering programme over key targets is currently underway. This is expected to result in an improved understanding of the gold geochemistry, optimisation of the exploration approach and priority drilling targets.

Stratex’s other strategic investment, a 13% interest in TSX-V Tembo Gold, saw almost 7,000 m of drilling in a 27 hole programme. Tembo’s 100 sq km property lies immediately to the northwest of the Bulyanhulu gold mine in Tanzania and work by Tembo and previous operators had reported many deep high grade intersections. It has not yet proved possible to establish the necessary degree of continuity to estimate a resource at depth and following a strategic review recent effort has shifted to concentrate on some of the wider, near surface intersections which have not yet been followed up. Stratex has a representative on the Tembo board and continues to work closely with management though there is no obligation to make any further contributions to operating costs.

In late November, we welcomed Emma Priestley to the Stratex Board as an executive director, principally responsible for developing new business.  Emma qualified as a mining engineer and has worked as a consultant and at a Corporate Finance house in the City before joining Lonrho as an executive director, where she worked for seven years until the company was taken over.  During this time she maintained her contacts in the City, developed new networks in Africa and was involved in acquiring and managing a wide range of businesses including mining.

Our smaller restructured Board is actively seeking to reduce overheads in the UK, Senegal and Turkey pending the start of cash flow from Altıntepe and Öksüt, though without undermining our operational capability.

Stratex is no longer required to contribute to the operating costs of Thani Stratex Resources, Tembo, GoldStone or Aforo and the recent announcement of a deal on the Karaağac project in Turkey, will permit the redeployment of some Turkish geological staff.

Stratex has an enviable reputation for successful exploration and monetisation of the resulting discoveries. The equity markets remain difficult, particularly for companies wanting to raise funds to drill, let alone those at an earlier stage of exploration.  In the view of the Board too many companies are chasing the same potential investors and there exists a relative shortage of competent management. Your Board continues to believe that combining small companies with sensible, like-minded management saves costs, allows the available funds to go further and builds value. The challenge is to find companies with worthwhile assets whose management is like-minded and prepared to think outside-the-box; our search continues.

I look forward to Stratex becoming the next gold producer in Turkey with the start of production at Altıntepe later in the year. This will be a transformational event for the Company as it achieves the important objective of sustainable cash flow which will surely begin to translate into shareholder value.

Christopher Hall

Non-Executive Chairman

11th March 2015

Financial Statements

Statement of consolidated comprehensive income

Statement of consolidated financial position

Statement of consolidated changes in equity