The search for new metals to mine is stretching into the far corners of the globe these days as companies start digging under retreating glaciers in Greenland and sifting the streams of the Falkland Islands. Though not an especially prominent mining address, Turkey is nevertheless shaping up well as a place where miners can do business. It's not that far off the beaten track, offers a reasonable level of competency and know-how, and, more to the point, some very promising geological features.
There are already several large mining companies in Turkey, and several large mines too. If Stratex International has its way, there'll be a few more before too long. Stratex has entered into a partnership with North American giant Teck Cominco, and is currently working up several promising looking targets in the centre and north of the country. The foremost among these are the Altintepe project to the north, and the Inlice project further south. Together these two prospects have already delivered a resource base of nearly 700,000 ounces of gold to Stratex.
That's a nice solid foundation from which to work off, but chairman David Hall has much bigger ambitions. His aim is for Stratex to deliver up several properties with at least 2m ounces each. It's a slightly arbitrary number based on an old conservative calculation in which the price of gold was estimated at just $500. At that price, 2m ounce resources could be given a back of the envelope valuation of $1bn (£482m) - a nice pitch to take to the market.
Gold might well drop to $500 by the time Stratex is up and mining, as the company is still years away from first production. On the other hand, at its current level at around $800, if Mr Hall can deliver the ounces he's hoping for he'll be talking about a lot more than $1bn. Heady stuff, but of course those numbers don't take any account of the cost of mining, and the company is still some way off its target in any case. Nonetheless, the currently booked ounces were delivered from a standing start in a relatively small space of time, and with Stratex opening up more and more of its new Konya gold district every day, it looks like there'll be plenty more ounces to come. Buy.
BULL POINTS:
• Good looking exploration portfolio
• Decent track record
• Strong joint venture partner
BEAR POINTS:
• Shares difficult to trade
• Production still some years away
| Stratex (STI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 10p | MARKET VALUE: | £24.0m | |
| TOUCH: | 10-10.25p | 12-MONTH HIGH/LOW: | 12p | 7p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 3.8p* | NET CASH: | £7.4m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£'000) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | - | -247.0 | -0.3 | nil |
| 2006 | - | -503.2 | -0.3 | nil |
| % change | - | - | - | - |
Normal market size:10,000 Market makers:5 Beta:0.3 *Including intangible assets of £1.27m, or 0.5p a share | ||||
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