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UPDATE - Stratex rises on £1mln Tembo Gold investment

Stratex International shares rose on the news it is to plough £1 million into Tembo Gold in exchange for a 10.3% stake in the Canadian junior



Stratex International (LON:STI) shares rose on the news it is to plough £1 million (C$1.66mln) into Tembo Gold (CVE:TEM) in exchange for a 10.3% stake in the Canadian junior.

The AIM-listed gold explorer will form part of a strategic group of investors that includes the New Africa Mining Fund II and Concept Capital Management.

It is Stratex’s first investment in Tanzania, adding to a portfolio made up of Turkish and East and West African assets.

Stratex’s shares rose 8.6% to 4.75p on Wednesday.

In total, the three groups are funding up to £5.2mln (C$8.66mln) to continue work on the Tembo gold property in Tanzania.

Tembo’s five-strong board will now be composed of three members from the investor group, including Stratex’s chief executive Bob Foster.

The trio could end up controlling more than 60% of Tembo, whose gold property comprises 100 square kilometres of highly prospective licences and applications in Tanzania, next to Barrick Gold’s Bulyanhulu mine.

Highlights of recent drilling there include 3.1 grams per tonne (g/t) of gold over 35.9 metres and 22.8 g/t gold over 15 metres.

The funds are to be spent on defining a resource over the next two field seasons.

The deal is subject to a number of conditions, one being a minimum subscription of £4.2mln (C$7mln).

Stratex’s chairman Christopher Hall said: “Tembo has built on extensive historic work and artisanal activity with encouraging results from over 35,000m of drilling on half a dozen targets; however, it has yet to report a resource.

“Stratex and its partners believe they can guide, support and provide the finance for management to focus on priority targets, with infill and step-out drilling, before moving to resource estimation.

“In line with our restated strategy, we see Tembo as a 'tipping point' opportunity, where tightly focused exploration can accelerate the exploration process.

He added that the negotiations and structuring of the deal were drawn out, with some hurdles still to overcome, but there has been “an immense amount of goodwill on all sides as the financing is clearly in the interests of Tembo and all its stakeholders”.

Broker SP Angel said: “The Stratex team have a good track record but looking for a major gold discovery in Tanzania is like trying to find forest elephants in the Congo, i.e. you knew the elephants were there but still took years to find them.

“Stratex are in good company with their co-investors and with Tembo’s team in Tanzania but it will take some very smart geological interpretation to work up a coherent gold resource.”

Quick facts: Oriole Resources PLC

Price: 0.365 GBX

Market: LSE
Market Cap: £3.33 m

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