The delays of earlier in the year have now been worked through, and Stratex’s (LON:STI) joint venture partner Bahar Madencilik has confirmed that production at the Altintepe gold mine in Turkey is due to commence in September.
“It’s very encouraging,” says Stratex chief executive Bob Foster. “We’ve been very pleased with the way our partners have devoted themselves to the project.”
Earlier this year adverse weather conditions caused a delay to the construction of the leach pads, and the overall production schedule slipped by a few months, but Bahar Madencilik is now running ahead of the revised schedule, a result with which Foster says he is “delighted”.
Once the first gold is poured in September, the plan is ramp up the operation as rapidly as possible to an annualised production rate of between 30,000 ounces and 40,000 ounces per year.
Previous guidance put the projected all-in cost per ounce of production at US$530 per ounce, which allows for very healthy margins on the current gold price of US$1,175 per ounce, although while the ramp-up is underway costs will be higher.
Stratex owns 45% of Altintepe, but under the terms of the joint venture deal Bahar Madencilik will receive 80% of the net cash until it has recouped the US$39mln that it will spend on construction.
Stratex is therefore entitled to an immediate 20%, rising to 45% thereafter.
For Foster, this is the key to the whole arrangement, because although Stratex’s expertise is primarily in the field of project generation, he recognises that the funding environment for that sort of work is severely constrained at the moment.
“To be a company without cash flow is not a sustainable future in the current market place,” he says. “I don’t see the market bouncing back in the near future.”
Accordingly, the company is keeping its eye out for projects of similar scope and scale to Altintepe that presents an opportunity for early cash flow.
In the meantime work continues across Stratex’s wider portfolio both in East and West Africa.
Stratex owns 33% of Goldstone Resources (LON:GRL), a company with significant exploration ground not far from AngloGold’s famous Obuasi gold mine.
Here Goldstone, under the watchful eyes of the two Stratex directors who now sit on its board, has just completed a round of infill auger sampling, the results of which Foster hopes will shortly lead directly on to new drill campaign.
If that is indeed the outcome, the resultant news flow could breathe new life into Goldstone’s share price, with a corresponding uplift to Stratex too.
Elsewhere, work continues on the Dalafin prospect in Senegal, while former Stratex director David Hall is making progress with the new spin-out vehicle that contains the former East African assets, now combined with a promising-looking Egyptian project.
But for now all eyes will be on Turkey, and Stratex’s long-awaited transition from explorer to producer.