Presentation on theme: "STRATEX IN DJIBOUTI – A CASE HISTORY"— Presentation transcript:
1 STRATEX IN DJIBOUTI – A CASE HISTORY DAVID J. HALL – Executive Director
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3 Overview WHO IS STRATEX ? Focussed on exploration and development of gold and high-value base metals, AIM-quoted STRATEX INTERNATIONAL is active in Turkey, East Africa and West Africa and, in the seven years since it was listed, has discovered more than 2.2 million ounces of gold and 7.9 million ounces of silver.The Company has a successful track record in forming joint-venture partnerships with both successful local private companies and major international mining companies, including Antofagasta, Centerra and Teck in Turkey, and Thani Ashanti in East Africa.Company Value - £24 MillionCompany cash - £17.5 Million3
4 Redefining Exploration Success Stratex in Djibouti – invested over US$1.5 million to dateOctober 2009: Stratex discover epithermal gold in Afar in Ethiopia.January 2010: First visit to Djibouti – meet with HE President Ismail Omar GuellehMay 2010: Sign agreement for 5 EEL’s with Minister Moussa BouhOctober 2010: Field review with Dr. R. Sillitoe, world renowned consultantJoint venture with Thani Ashanti – introduce one of world’s largestgold mining companies into DjiboutiJune 2011: New Minister Natural Resources - Fouad Ahmed AyeFebruary 2012: Pandora discovery Oklila EELJune 2012: Exploration suspended by Minister FouadSeptember 2012: Work recommencesApril 2013: New Minister #3 – HE Ali Jacoub Mahamoud4
5 Stratex-Thani Ashanti Joint Venture Thani Ashanti – joint venture company (50:50) between Thani Group of Dubai andAngloGold Ashanti – world’s 3rd largest gold mining company.Thani Ashanti funded first US$1.4 million to earn 51% of Stratex projects in DjiboutiThani Ashanti now investing US$4 million per EEL to earn 70%.Standard industry joint venture sharing early stage exploration riskNOTE Exploration HIGH RISK – no guarantee of economic successDjibouti no domestic mining industryStratex initially identified potential for gold mineralizationView shared by Thani AshantiNumber of early stage discoveries to be tested by first pass drill programmes in 2013
6 The Exploration-Mining Value Curve The E & DBusiness The Mining BusinessVALUEResource definitionUS$10MPre-feasibilityTo Feasibility US$30MConstruction US$200MHigh risk ExplorationUS$1M to US$20MNo cost to DjiboutiPOSITIVEFEASIBILITYLONG TERM VALUE ADDEDFor countries and companiesStratex-Thani-AshantiAt this pointFINANCING & START-UPCONSTRUCTION PROBLEMSIn recent times the brokers and markets have focused on the mining business……when will you be in production? Is the frequent question…………how much resources and reserves do you have? Not how far along are you in discovering major deposit? How many exploration projects have you in your portfolio? What is needed is the possibility of a major ore body that can be quickly and DECISIVELY tested.E&D is where the most value is added – one drill hole could define a billion dollars of metal……………..and also the low risk end.TIMEDiscovery Development Production
7 Key Factors for Attracting Investment Public policy factors that encourage or discourage investment include:uncertainty concerning the administration of current regulations and environmental regulations;regulatory duplication;the legal system and taxation regime;uncertainty concerning protected areas and disputed land claims;Infrastructure;Socioeconomic and community development conditions;trade barriers;political stability;labour regulation;quality of geological database; andsecurity, labour and skills supply, corruption and uncertainty.
8 What would a New Gold Mine mean to Djibouti? TARGET 2 Million Ounce Contained Gold DepositIn-situ value at US$1500/oz = US$3 BillionCapital expenditure to build mine US$200 millionProduction of 200,000 oz / annum at total production cost of US$1000/ozGross annual cash flow US$100 millionDjibouti state 5% plus 2% royalty = US$7 million per yearDjibouti tax revenues at 35% = US$35 million per yearTotal of potential US$42 million per year direct income to DjiboutiPLUS employment, training, school and medical support for mineALL FINANCIAL RISK TAKEN BY THANI ASHANTI / STRATEXSUCCESS BENEFITS EVERYONE - Republic of Djibouti, local population through employment,development of infrastructure, etc.
10 Pandora, Afar Projectg/t Au (P-CH-30)KEYg/t Au (P-CH-29)Early channel sampling over main 1,500 m vein has identified wide gold- mineralised zones with multiple higher-grade intervalsFollow-up drilling anticipated Q3/Q – timing dependent on logistics11.91 g/t Au over 2.60 m (P-CH-22)20.35 g/t Au over 1.90 m (P-CH-17)15.42 g/t Au over 1.65 m incl g/t Au over 0.50 m (P-CH-4))g/t Au (PS-CH-3)65.7 g/t Aug/t Au (PS-CH-4)High-grade zones10
11 Drilling – Key to Exploration Success Drilling - US$180 per metre m = US$900,000Assays for gold, silver and other elements US$35/sample = US$175,000Plus camp support - US$500,000Local labourFirst testing drill programme to cost excess of US$1,575,000
12 The Next Steps in Djibouti ONGOING REVIEW OF GEOLOGY AND GEOCHEMISTRYFORMAL RECOGNISION OF JV BY MINISTRY; AWAITING NEW LICENCES FROM MINISTRYPREPARE ROAD ACCESS AND CAMP SUPPORT AT OKLILAFIRST PASS 5,000 METRE DRILL PROGRAMME IN Q TO TEST PANDORA –AIMS TO PROVE EXISTENCE OF ECONOMIC GOLD GRADES AT DEPTH ALONG 1,500 METRES STRIKEINSHALLAH SUCCESSLEAD TO MORE INVESTMENT10,000 METRES OF ADDITIONAL DRILLINGDEVELOPMENTDJIBOUTI’S FIRST GOLD MINE