“Stratex has discovered more than 2.2 million ounces of gold and 7.9 million ounces of silver, and generated £16.7mln through the sale of several projects in the past two years. The funds generated from these sales underpin the company’s current net cash position of £13.7mln,” the broker notes in a ‘buy’ note on the AIM-listed gold explorer.
Follow-up drilling is to begin shortly at Dalafin, its latest discovery, and Northland says that with Stratex’s exploration pedigree, the company is “significantly undervalued” at 4.38p; 12.8p is a more realistic valuation, Northland reckons.
The acquisition of a 10.3% stake in Tembo Gold (CVE:TEM), announced last week, gets the thumbs-up, and “will be another example of the company rapidly adding value for a small consideration,” Northland predicts.
“With the risk of discovery already removed from the project by Tembo, Stratex and its partners in the investment group will provide c. £5.2m that will be used to fund step-out drilling and resource definition over the next two field seasons. A maiden resource at the project is likely to be a major share price catalyst and drill results from the project should provide further positive news flow,” the broker argues.