Gold firm Stratex (LSE:STI) shined today after one of its investment companies identified zones of mineralisation at a project in Djibouti. Shares were up by nearly a fifth to 0.8p following the news that Thani Stratex – in which Stratex owns a 30pc stake – had found broad zones of multi-gram gold mineralisation at its Pandora epithermal gold project.
In the final results of its phase 2 drilling programme at Pandora, Thani Stratex also said it found narrower zones of higher-grade mineralisation toward the north-west end of the main outcropping Pandora vein. It added that it has also received interest in the project from third parties.
Tim Livesey, chief executive of Stratex, said: ‘It’s great to see that the latest results from the current drilling phase at the Pandora Gold Project are continuing to show promising intersects. It is clear that the Djibouti team’s understanding of the geology in the area is increasing with every hole, as is the potential scale of the district. We look forward to reviewing the project with TSR in detail over the coming months.’
The news comes just two weeks after we highlighted Stratex as a possible buy opportunity, arguing that it looked undervalued at 0.6p a share and a market cap of just £2.9m. Stratex collapsed last year following a battle between its board and shareholders over the proposed acquisition of Crusader Resources.
Stratex’s shares have struggled to recover this lost ground despite the business bringing in a new chief executive and shifting its focus. Most notably, it has managed to secure a game-changing option agreement with significant mining player IAMGOLD on its Dalafin asset in Senegal. IAMGOLD has the right to acquire an initial 51pc interest in Dalafin by spending $4m over four years, potentially diluting Stratex’s holding to 41.7pc. After this, it can increase its stake by a further 19pc to 70pc by spending another $4m. This deal means funding the project is no longer an issue for Stratex.
Beyond Dalafin, Stratex has an extensive portfolio of early-stage exploration interests. It owns a 30pc stake in Thani Stratex Resources for its projects in Egypt and Djibouti and an 11.6pc holding in Tembo Gold for its project located next to Acacia Mining’s 20Moz Au Bulyanhulu mine. It also has a 7.8pc position in private Australian company Aforo Resources for projects in Burkina Faso. Finally, it owns stakes in several licences in Turkey including 14.9pc in copper-gold project Muratdere that is expected to default to a 1.2pc royalty position shortly. Indeed, today’s news marks just the icing on the cake for Stratex, given its broad base of operations.
Looking to the future, Stratex has proposed a capital reorganisation at its Annual General Meeting later this month. Assuming shareholders vote in favour of this, the company will be left well positioned to pounce should it find an attractive project. With the company’s market cap still sitting at just £3.2m, it could be worth having a punt on shares continuing to re-rate to better reflect fundamental value as the business releases more news.
Author: Daniel Flynn
Disclosure: The author does not hold positions in any of the stocks mentioned above