Stratex International is Turkish delight

Turkey may have its political problems but the geological sun appears to have kept shining on the exploration company Stratex International since Proactive last covered the company just over a year ago. Then we noted the efforts of a highly focused exploration company making good headway at a number of its Turkish projects ? arguably against the backdrop of a more luke warm market response than it deserved. How has the company fared since?

Above: Stratex has focused on western Turkey

Pretty well on the evidence of an early October site visit by us scribblers, along with analysts and investors. Basking in some real autumn heat, we were taken to see the company's Inlice and Doganbey prospects as well as being brought up close with the company's cash rich partner, Canadian major Teck Cominco Limited, whose representative waxed positive both about the importance of his company's investment in Turkey and its strategic alliance with Stratex.

In fact, we heard, Turkey is more important to TC than much of its exploration in South America and the Konya Volcanic Belt, the scene of our visit in Western Turkey, was generating particular enthusiasm. No surprise then that Teck Cominco will invest US$1 million over the next year Stratex's exploration prospects and, given an inkling of what those in know expect in terms of drilling results, is likely to step up its investment after that.

Following a £7 million fund raising in June ? just beating the market correction ? and the continuing strategic partnership with Teck Cominco Stratex appears to be well placed by any standards. Add to this the location of its key projects, Turkish infrastructure, local management and, perhaps most important of all, the quality and enthusiasm of the senior team and it's not difficult to see why investors ? certainly those spoken to on this trip ? remain committed to the company.

 In a country where mining dates back to 7,000 BC there is good reason to get excited about a new high-sulphidation gold discovery like Inlice which somehow failed to attract past attention and where the company has already defined a JORC-compliant initial gold resource of 372, 971 ounces and where multiple new targets look likely to move things on and up towards (and beyond) the two million ounce mark.  Add to this the company's unexplored, 100%-owned slice of the Konya Belt and it's easy to see why Teck Cominco is a) expressing itself very happy with progress and the relationship so far and b) thinks it very likely that further investment will be forthcoming for the next phase.

"They are interested in us because we can bring projects onto their radar," is how Stratex's ebullient CEO Bob Foster sums it up. "They've got the technical and financial expertise to reduce our financial exposure and risk when a project reaches that stage." The stage in question, it seems, could be an indicated resource which tops the two million ounce mark and which therefore has Teck Cominco seriously considering the prospect of a mine. According to TCL's exploration manager for Turkey, Tayfun Cerrah, the country's prospects are currently more important to them than those in either Chile or Peru ? one reason why they will invest US$20 million in Turkey this year with Konya remaining an important part of the equation.

While Inlice and its silica zones and surrounding alteration are impressive, so too are those at nearby Doganbey where Stratex and TCL are currently drilling the first three holes on this porphyry gold-molybdenum prospect and where new targets are likely to emerge following an imminent (at the time of writing) airborne magnetic survey over the surrounding Konya Belt. "This will provide a geological framework," says chairman David Hall "helping to highlight potential intrusions and focus our exploration."

Like Bob Foster, Hall is an economic geologist who knows Turkey well, having previously worked in the country as exploration manager for South African company Minorco. He stresses both the importance of the strategic partnership which involves genuine planning and the sifting of opportunities in both directions and the value of Stratex's contribution as a specialist exploration company.  "There has been no major discovery of gold since the market picked up and the market needs to understand the importance of exploration," he says.  "The lack of supply will ensure the price of gold remains high ? even if demand falls off."

 The upshot is that Stratex will maintain its focus on exploration, seeking to build its resource at Inlice and Doganbey as well as developing other prospects in Turkey. Drilling has started, for example, at Muratdere, a porphyry copper-gold-molybdenum project to the west of Konya where the company will drill four to five holes before making a decision on whether to push forward or walk away. To the north-east and close to the Black Sea coast the company is exercising a 100% option from Teck Cominco on Altintepe where it can get a 100% earn-in by doing 5,000 metres of drilling. "It gives us a base in a whole new mineral province," says Foster. "Cominco as it then was did a substantial amount of drilling on the project in the late 90's and around three years ago a signed-off resource of almost 312,000 ounces was identified."

Above: Inlice project - there is gold in them there hills!

The company's financial strength - £7 million in the bank plus exploration funding from Teck Cominco ? provides a springboard to look elsewhere says Foster. "We're not going to lose our focus on the Turkish assets but we're just beginning to look elsewhere, including a look at some mineral-rich and politically "sensible" jurisdictions in Africa." Like Turkey, Africa plays to the strengths of the Foster-Hall double act and in Foster's case this includes 10 years in what was then Rhodesia and a resulting sound knowledge of the mineral potential and operating requirements for working in the under-explored continent. Looking ahead "I'd like to think that we could widen our project portfolio in terms of mineral assets and country bases," says Foster.

Turkey, though remains the top priority and the target, ideally over the next couple of years or so, says Foster, is to see Stratex start to share in some production success. "By 2009 I'd like to think that we've identified a major project and are working with Teck Cominco to take this forward to feasibility. As a company focused on the discovery of new projects and adding immediate value by drilling, we've got the best kind of pipeline. We're drilling at Inlice and Doganbey. We've got a resource in the ground at Altintepe and we're taking a long hard look at Muratdere. We also have new Konya-like areas under licence that we are beginning to evaluate, exploration that should generate new drill targets for 2008 "  Tayfun Cerrah for one believes that Teck Cominco has every reason to bask in this particular partnership.