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Stratex International Plc

(“Stratex”, the "Company” or the "Group")

Interim Results

For the six-month period ended 30 June 2016

Stratex International Plc, the AIM-quoted exploration and development company focused on gold and base metals in West Africa and Turkey, where it holds a 45%-interest in Altıntepe, a producing gold mine, announces its unaudited interim results for the six-month period ended 30 June 2016.

Operational Highlights:

• Altıntepe – production at the Altıntepe Gold Mine (“Altıntepe” or the “Mine”) in Turkey is on track to meet the minimum annual production target of 30,000 oz Au this year – 19,467 oz Au produced during H1-16;
• Muratdere - dilution to 14.87% interest in the Muratdere Cu-Au porphyry project in Turkey following the decision not to contribute to the Group’s pro rata share of project development costs on the basis of low copper prices;
• Dalafin - low-cost exploration programme, comprising mapping, soil sampling, and outcrop and lag sampling, completed at Dalafin gold project in Senegal. Further zones of mineralisation identified, including a 750m extension of the Faré South prospect soil anomaly; 
• Thani Stratex Resources – US$1.25 million and US$2 million raised to fund drilling in Djibouti (commenced Q2) and exploration in Egypt, respectively. Stratex interest diluted to 30.4% as a result of the raisings and an issue of shares to employees;
• Goldstone – £1 million raised for development of Homase-Akrokerri gold project in Ghana (including c.2,000m reverse circulation drilling programme) following appointment of Stratex Director Emma Priestley as Goldstone CEO. Stratex interest remains unchanged at 33.45%.

Financial Overview:

• The Group's operating loss for the first six months is £1,185,819 and compares to an operating loss for the same period last year of £1,182,009. The pre-tax loss of £1,984,573 compares to a pre-tax loss for the same period last year of £1,388,082;
• The increase in the pre-tax loss during the period arises due to the reduction in the Company’s interest in its associated companies, Thani Stratex Resources Limited and Muratdere Madencilik, resulting in accounting losses in the period of £832,472 and £319,414 respectively. Additionally, the Company has withdrawn from the management of Tembo Gold Corporation and Dr Bob Foster has resigned from its board of directors. As a result, the investment in Tembo no longer meets the requirements for equity accounting and a net loss of £1,069,267 has been recognised;
• The above losses have been partially offset by the Company’s share of profits from production at the Altıntepe Mine which amount to £1.6 million;
• The Company continues to keep a tight control on costs and the net cash used in operating activities during the period was £802,260 compared to £1,670,921 in the same period last year;
• The cash balance for the Group as at 30 June 2016 was £2,728,190 (30 June 2015: £2,533,278).

Chairman’s Statement

Looking back at the first half of 2016 it would appear that the fortunes of smaller exploration and mining companies have at last bottomed.  The gold price has improved significantly and the outlook for base metals is looking more positive, although many commodities' prices remain relatively weak. The shares of juniors, including Stratex, have strengthened and equity funding has recommenced on improved terms.

Stratex’s operating loss for the period, at £1.18 million, was similar to 2015 although the accounting treatment of associated companies contributed to an increased pre-tax loss of £1.98 million against £1.39 million last year; our interest in Thani Stratex Resources was diluted by a third party equity funding and Muratdere Madencilik and Tembo Gold Corporation ceased to be treated as associates for accounting purposes.  The consolidated cash balance at 30 June 2016 was £2.73 million (£2.53 million at 30 June 2015).

On the exploration front, further zones of mineralisation were identified at 85% owned Dalafin in Senegal, following additional mapping, soil sampling, outcrop and lag sampling principally at Faré South. The best means of furthering the project are under consideration, including further exploration and the involvement of a joint-venture partner. 

At the Muratdere Cu-Au porphyry project in Turkey, Stratex’s interest has been diluted to 14.87% following a decision not to contribute pro rata to further project development costs, on the basis of low copper prices. The Company will continue to assess the supply-demand scenario for copper and may consider supporting future work should it believe that the demand for copper, and hence the price, justifies its participation.

Thani Stratex Resources has successfully raised significant joint-venture funding for drilling in Djibouti and, as a result of the fundraisings and an issue of shares to employees during the period, Stratex’s interest has now been diluted to 30.4%.  A diamond drilling programme has commenced and the results are awaited.  Funds are also in place, following an equity issue, to commence exploration in Egypt.

No work was possible at 33.45% owned Goldstone’s Homase-Akrokerri project in Ghana in the first 6 months of the year.  Following the resignation of former CEO Jurie Wessels, Stratex Director Emma Priestly took the role of interim CEO and has now been formally appointed to the board of Goldstone as CEO.  Since the period end, Goldstone has raised £1 million.  Stratex maintained its holding through a combination of converting a loan issued by Stratex to Goldstone of US$250,000 and subscribing for additional ordinary shares in Goldstone at a cost of £143,637. With the appointment of Emma, I considered it appropriate to step down, handing over to independent director Neil Gardyne as Chairman.  Goldstone plans to drill the encouraging geochemical anomalies delineated in early 2015, which could deliver a near surface extension to the oxide part of the existing resource.  We remain optimistic towards Goldstone’s future as there are many other opportunities, principally in Ghana, for a well-managed, well-funded junior.

Operations at the 45% owned Altintepe Gold Mine in Turkey are progressing well.  Some additional capital was required to treat clay-rich plant feed more effectively, but with 19,467 oz of gold being produced in the first half of this year, the project is well on track to meet the 30,000 oz annual minimum target.  Project revenues in the first half of 2016 were US$32.7 million. However, with the exception of agreed loan repayments of US$4.2 million to our partners Bahar Madencılık, and US$190,000 to Stratex, no funds have yet been distributed.   

The board of Altıntepe Madencilik is currently considering the longer-term future of the Mine and the optimum means to provide for, or fund, future capital expenditure, including a provision for ultimate closure and restoration, which was always to be financed out of cash flow.  Once the longer term planning of the Mine has been fully evaluated and costed, to allow an estimate of distributable cash flow, distribution of net cash can be initiated on the accelerated payback basis of 80% to Bahar and 20% to Stratex until Bahar's pre-production costs are repaid. Thereafter, net cash distributions will be made 55% to Bahar and 45% to Stratex.

I look forward to updating you on developments at Altintepe, Dalafin, Muratdere, Thani Stratex and Goldstone in due course.

Christopher Hall

Non-Executive Chairman

10 August 2016

Statement of Consolidated Changes in Equity