Stratex CEO says exciting AngloGold joint venture could have a big impact

Stratex International (LON:STI) chief executive Bob Foster believes that the new joint venture with AngloGold Ashanti (NYSE:AU) may prove to be transformational. 

The company signed a binding ‘heads of agreement’ with AngloGold’s joint venture company Thani Ashanti earlier this month. It covers a 2,780 square kilometre land position in the Afar Depression, straddling Ethiopia and the Republic of Djibouti.

Speaking with Proactive Investors Foster said he is excited about Afar’s potential. And with backing of one of the gold mining industry’s major names, exploration is expected to be fast-tracked in the coming months.

“We are looking at the right kind of project here and we have a high level of excitement,” Foster said.

Foster said that individual discoveries are very easy to identify with satellite imaging, due to the low level of coverage and overburden on the near surface mineralisation.

The former lecturer explained that the sulphide mineralisation in the Afar depression originates from prehistoric hot-springs, which carried the gold and other elements up to surface. As such the resulting vein systems are clearly visible in the volcanic terrain, which is largely free from overburden.

According to Foster the initial prospects are straightforward to target, which allows the team to ‘get boots on the ground’ rapidly, to test the targets identified from satellite images.

The geology team is currently working in the region.

Initially it will be sampling the surface anomalies to prioritise leads, with anomalies returning over 0.1grams per tonne warranting further exploration.

Subsequent sampling and mapping is also being used to prioritise targeting ahead of a drilling programme later this year.

Foster believes that the upcoming drilling may prove to have a big impact on the prospects of the company, with potential bonanza grades believed to be at fairly shallow depths, commonly around 200-300 metres.

“If geological factors coincide we could be looking a ‘multiple digit’ grades ... One good intersect could be company changing for Stratex,” Foster added.

Additionally Foster explained that the mineralisation brought to the surface via the hot-springs may have also seeped into the surrounding rocks.

According to Foster this seepage also provides the potential for low-grade, high tonnage, near surface envelopes of gold mineralisation that may provide further upside potential.

Under the terms of the partnership the AngloGold subsidiary can earn up to 70% of the Afar project by funding exploration cost of up to US$7 million.

Thani Ashanti’s initial spend will focus on the Megenta gold discovery, with a 3,000 metre drill program.

Megenta is the most advanced exploration area within the Afar Project. To date Stratex has carried out geological and structural mapping, as well as chip sampling.

Magenta’s 'Hyena Zone' yielded up to 16.75 grams per tonne (g/t) gold and 8.8 g/t silver. Nearby Magenta’s 'Gazelle Zone' is a 500 metre long prospect which contains significant gold values, including 2.46m grading 2.29g/t.

In response to the deal Westhouse Securities mining analyst Mark Heyhoe emphasised that AngloGold’s interest boosts Stratex’s credentials.

“The interest of the world’s third-largest gold-producer, AngloGold Ashanti ... is also a major endorsement of the exploration team at Stratex,” Heyhoe said.

“We are now entering an exciting period in the development of the company and expect steady news flow over the coming six months.”

“Stratex is clearly undervalued compared to its peers.”

The analyst rates Stratex as a ‘buy’ with a 7.8p target.