Stratex International (LON:STI) will undertake exploration work at the Sinoe gold licence in Liberia, owned by private Australian company Aforo Resources, expanding its portfolio in the West African country.
Liberia, which suffered from a brutal 14-year civil war until 2003, has had a democratically elected government since 2006. The country has offshore oil deposits and a good mining potential, but has so far been underexplored for gold.
Liberia’s first commercial gold mine is expected to start in 2015 when Aureus Mining’s (LON:AUE) flagship project, New Liberty, is set to enter production. Gold explorer Hummingbird Resources (LON:HUM) is also planning to develop its Dugbe gold project in the country.
Sinoe is situated close to Dugbe and was previously held by Hummingbird before they were required to reduce their area by a statutory 50%.
Cash rich explorer Stratex has agreed to spend a minimum of A$160,000 (£88,000) on exploration at Sinoe by July 4. It also has the option to acquire either Aforo Resources Liberia, a wholly owned unit of Aforo Resources, or the Sinoe project for a further A$100,000 once Stratex’s spending on the project reaches A$320,000.
"We have monitored work on this licence for the past nine months and have decided that the results of the exploration programme, especially a soil-sampling programme, justifies us taking this step,” said Stratex chief executive Bob Foster.
Liberia has received about US$18bn (£11bn) foreign direct investment to date, mainly in the mineral, oil and agricultural sectors, with miners BHP Billiton, Arcelor Mittal, Vedanta and Severstal already operating in the country. The economy is expected to grow almost 7% this year, according to the International Monetary Fund.
“We already have a footprint in Liberia as a result of our joint venture with BG Minerals Ltd and this has allowed us to evaluate the wider exploration potential of the country, which we rate very positively, a view shared by a number of investors and funds that we have met in London in recent months," said Stratex’s Foster.
Stratex has an option to earn to 75% of the North Suehn gold licence in north-western Liberia by spending US$1.1mln within two years following an agreement last year with BG Minerals.
This year is an important one for Stratex with maiden production expected at the Altintepe project and the start of construction at Muratdere, both in Turkey. It started 2014 with around with £10mln in cash, helped by the recent sale of its interest in the Öksüt gold project in Turkey, putting the company in an enviable position when so many explorers are struggling for finance.