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Stratex International's exploration pedigree is worth backing

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Stratex International's (LON:STI) track record of rapidly turning its discoveries into cash makes it an exploration and development company worth backing, Northland Capital asserts.

“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.

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Price: 0.535 GBX

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