As part of the Company's stated objective to minimise risk during exploration, and develop key projects towards production with companies having the appropriate technical and financial capability, the Company has now entered into the following joint-venture agreements and strategic alliances. This strategy of de-risking key projects, both financially and technically, will allow Stratex to move forward, confident that we are managing in the best way possible a portfolio that will take us towards gold, provide the opportunity for sharing in the considerable upside potential of key exploration projects, and allow the Company the flexibility to continue developing new exploration concepts and projects alongside partners and in its own right.
On 27th April 2010, the Company announced the closure of a joint-venture production agreement with major Turkish construction and contract mining company NTF (Fig. 1) following the announcement of an initial Memorandum of Understanding (MoU) on 15 June 2009. This agreement set out the terms under which Stratex would work with NTF to develop the Inlice and Altintepe gold projects towards feasibility and production.
Following the successful completion of the production joint-venture agreement, NTF paid Stratex a purchase fee of US$1 million and, having completed the feasibility study, vested at 55 % of the new gold mining company NS Madencilik (45% held by Stratex) into which Inlice has been vended.
On 18th August 2011, Stratex resumed 100% of the Altintepe project after NTF stated it was unwilling to commit to a feasibility study on the project before start of production at Inlice. For information on Stratex's new partner at Altintepe, please see the Bahar Mining section below.
Figure 1. David Hall and Bob Foster with NTF management after closing the joint-venture production agreement
On 6th December 2011, the Company signed a Heads of Agreement to enter into a joint venture with private Turkish mining company Bahar to advance the 490,000 oz Altintepe oxide-gold project in northern Turkey to production.
Within one month of signing the Agreement, Stratex will transfer the two Altintepe licences to Altintepe Madencilik, a wholly-owned company of Stratex Gold AG, which in turn is wholly owned by Stratex International plc. Within seven days of transfer of the licences Bahar will pay Stratex US$250,000.
Bahar then have the option to vest at 55% of Altintepe Madencilik by funding an Environmental Impact Study, completing a project feasibility study, and making a commitment to go to production. Should Bahar opt not to proceed to production, Stratex will assume 100% ownership of the Project.
Teck retain an underlying 1.5% Net Smelter Return ('NSR') royalty from any future production. One of the two projects is also held by a third party that holds a NSR royalty of 2.5 % which can be reduced to 1.25 % by a payment of US$ 750,000.
The Company signed a joint-venture agreement with North American gold mining major Centerra on 13 August 2009 for the continued exploration and development of the Öksüt project. On 17th November 2011, Stratex announced that, under the terms of the agreement, Centerra had met its initial earn-in expenditure of US$3 million to gain 50% of the project within three years, including 4,600 m diamond drilling, and has approved further drilling on the project. Centerra is currently earning into an additional 20% interest through a further US$3 million exploration expenditure on the property within a further two years. Stratex will be responsible for managing the exploration programme until further notice.
The Company signed a second joint-venture agreement with Centerra in May 2011 to explore and develop the Company's extensive Altunhisar licence. Under the terms of the agreement, Centerra will fund US$1.5 million within three years to acquire a 51% interest in the Project including a minimum commitment of US$500,000 in year 1. Subsequent to vesting its 51% interest, Centerra has the option to earn a further 24% in the Project, taking its interest to 75%, by expending an additional US$2 million over the following two years. Stratex will manage the project and exploration programme until further notice.
The Company's long standing partnership with Teck continues with an option agreement for the advancement of the Hasançelebi project in Turkey. Under the agreement Teck is funding US$2 million to acquire a 51% interest in the project, of which a minimum committment of US$500,000 is to be expended on exploration in the first year, including 2,000 metres of drilling. Thereafter, Teck can increase its interest to 70% by expending an additional US$3 million by end-2015. Stratex will initially be responsible for managing the exploration programme.
Following the withdrawal of previous partner Aydeniz Group, Stratex has resumed 100% interest the Muratdere porphyry copper-gold project in Turkey. In December 2011, the Company signed a Heads of Agreement with a leading private Turkish financial institution and investment company, 'InvestCo' (NB. fictional name - company has requested thats its identity not be disclosed until successful completion of due diligence), to enter into a joint venture to develop the project.
Subject to successful completion of due dilligence, InvestCo will pay Stratex US$1.7 million to acquire 51% of the project, and may acquire a further 10% by making a cash payment to Stratex of US$500,000 and completing and funding a further 3,000 metres of diamond drilling within 15 months of their 51% acquisition. Thereafter, InvestCo can acquire a further 9%, for a total of 70%, by funding a comprehensive feasibility study to be completed within the subsequent twelve months.
Once InvestCo has vested at 70%, all subsequent costs to be shared pro rata by InvestCo and Stratex Madencilik, a wholly-owned subsidiary company of Stratex International. In the event that either party does not contribute, its equity interest will be reduced according to a standard contribute or dilute formula, as defined by expenditures. In the event that a party's equity interest falls below 10%, its interest shall be converted to a 1.5% Net Smelter Returns royalty.
In May 2011, Stratex signed a Strategic Alliance Agreement with Antofagasta Minerals S.A., a subsidiary of a leading global copper producer Antofagasta plc, to undertake exploration for copper and copper-gold deposits in Turkey outside of the Company's existing licence areas.
Under the terms of the Agreement, Antofagasta will fund an initial target-generation and exploration programme over a 16-month period expending US$1 million. During this period it is anticipated that a number of priority areas will be identified for detailed follow-up exploration and possibly drilling. These areas, up to 120 sq km in extent, will be acquired under licence and defined as Designated Properties. Any such DP will then be vested 51% Antofagasta and 49% Stratex. Thereafter Antofagasta has the option to earn a further 19% of any DP by expending an additional US$3 million on that DP, for an aggregate interest of 70%.
Antofagasta also has the option to continue the target-generation programme after completion of the initial 16-month programme by funding both desk-based and follow-up reconnaissance exploration work to the amount of at least US$250,000 for each subsequent year that the Alliance is extended.
In January 2011 the Company announced the finalisation of a joint-venture agreement with Thani Ashanti, an AngloGold Ashanti Limited joint-venture company, to fast-track development on five of the Company's licence blocks that comprise the Tendaho Exclusive Exploration Licence (EEL) in the Afar Depression of Ethiopia and six EEL's in the Republic of Djibouti (collectively 'the Afar Project').
Under the terms of the Agreement, Thani Ashanti can earn 51% of the Afar Project by expending a total of US$3 million on exploration and development over two years. Thani Ashanti is committed to expending US$1 million in the first twelve months and this will include a 3,000 metre drill programme to test the Megenta prospect in Ethiopia. Subsequently Thani Ashanti must expend a further US$2 million in the second year to earn 51% in the project. Thani Ashanti may then earn an additional 19% (for a total of 70%) in any one EEL by further expenditure of US$4 million within four years on that EEL from the start of the Agreement.
Having expended 50% of its first year commitment of US$1 million, Thani Ashanti has now also acquired 5% of Stratex East Africa (SEA), a subsidiary company of Stratex International, with Stratex remaining majority shareholder at 95%. SEA holds all Stratex's Ethiopian and Djibouti assets, including the Afar Project, Blackrock, Shehagne, AbiAdi, Berahale, Tigray and Gedemsa EEL's.
Thani Ashanti has also made a direct investments of US$500,000, £92,640 and £20,800 into Stratex to develop Stratex's Ethiopian and Djibouti portfolio not included in the Afar Project; this wider portfolio includes the Company's Shehagne, Berahale, and Tigray EEL's in northern Ethiopia and the Gedemsa EEL in the Central Ethiopian Rift.
In September 2009, Stratex partnered with Plus-quoted Sheba Exploration to provide a footprint for the Company's initial move into Ethiopia. As part of the agreement, the Company injected £40,000 into Sheba for a 4.93% interest in the company, together with a similar number of warrants exercisable for a period of two years. At the same time the Company entered into a binding letter of intent with Sheba to earn into the Shehagne project by committing to initial expenditure of £100,000, and thereafter an option to expend a further £250,000 to acquire 60% of the project, followed by the option to move to 80% by taking the project to completion of feasibility. The agreement also included the exploration of new prospective licence areas in northern Ethiopia on a 70:30 basis, Stratex: Sheba.
On 29 July 2011, LSE/TSX-quoted Centamin declared the offer for the entire issued and to be issued share capital of Sheba unconditional in all respects. Centamin therefore replaces Sheba as the Company's JV partner on the Shehagne and northern Ethiopia exploration agreements.
In November 2010 Stratex signed a binding Heads of Terms agreement with privately owened LozBez for the AbiAdi-Gichke Gold Project (AbiAdi) project located in the prospective Tigray province in northern Ethiopia. Under the terms of the agreement, following expenditure of US$50,000 during an initial three month due-diligence period, Stratex can earn up to 75% of AbiAdi following the funding of all exploration to a total expenditure of US$1 million and the completion of 3,000 metres of diamond drilling over a 36 month period. Upon earning the 75%, Stratex and LozBez will form a JVC, into which AbiAdi will be placed. Stratex may then earn a further 10% of the JVC through additional expenditure of US$2 million, to a total US$3 million giving Stratex 85% of the JVC. Stratex can commission a feasibility study at any time following the initial expenditure of US$1 million and the formation of the JVC.
Following the completion of the feasibility study and the decision to proceed to mine production, if either party fails to contribute to the construction and commissioning costs, their equity share will be reduced using an industry-standard contribute-and-dilute formula. Should either party be reduced below 10%, their equity share will be diluted to a 2% Net Smelter Return royalty. Stratex's interest in AbiAdi will reside in Stratex East Africa (SEA).
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