Interim Results

Stratex International Plc / Index: AIM / Epic: STI / Sector: Mining

Stratex International Plc ('Stratex' or 'the Company')

Interim Results

Stratex International Plc, the AIM-quoted exploration and development company focused on gold and base metals in Turkey, East Africa and West Africa, announces its results for the six month period ended 30 June 2012.

Operational Overview

·; Highly positive exploration results achieved in Turkey, Ethiopia and Djibouti

·; Total gold discovered to date reaches 2.26 million ounces

Turkey

·; Resources at the Öksüt project exceed 1 million oz level

·; New partner for the Muratdere copper project

o Lodos, a mining investment subsidiary of Pragma, has agreed to acquire a 50% interest for a cash payment of US$1.7 million.

·; Progress towards production at Inlice and Altıntepe gold projects

o First gold production is targeted for the latter part of 2013

East Africa

·; Results from initial drilling at Blackrock Project in Ethiopia confirms extensive gold mineralisation across four of five key targets in Black Water area

·; Excellent continuity of gold grades now demonstrated over more than 1,000 metre strike of Pandora gold vein, Djibouti.

·; 1,000 metre drilling programme completed at Shehagne project in Ethiopia

West Africa

·; On-going progress with Senegal and Mauritania properties acquired through takeover of Silvrex in January 2012

Financial Overview

·; Significant reduction in the pre-tax loss to £707,411 compared to the loss for the same period last year of £984,468

·; A gain of £419,546 recorded on the sale of 50% of Öksüt to Centerra driving the reduction in losses

·; Successful share placing raised £7.9 million gross, which contributed to an increase in net assets of £6.4 million since 31 December 2012

·; Over £7 million of cash on hand at 30 June 2012

Chairman's Statement

I am pleased to report that the first six months of 2012 have been characterised by good progress across our projects, in particular we have seen very exciting results in Turkey, Ethiopia and Djibouti, as we develop our discoveries following a raft of initiatives in 2011. We have also taken significant steps forward in developing successful partnerships to maximise the potential of our exploration activities.

In March, we completed a share placing which was oversubscribed and closed at market price. This demand for participation was very pleasing indeed, as it suggests our strategy and activities to date are held in substantial regard. The entry of major fund management group Blackrock to our register is most welcome and signifies a step up in our profile. Having raised £7.9 million gross, we ended the period with a cash balance of £7.0 million and no debt, which places us well to implement our programme of further exploration, including drilling, from now into 2013.

In Ethiopia, where we continue to add to our pioneering land position in the Afar region, the Phase 1 diamond drilling programme has recently been completed at our 95%-owned Blackrock project. Drilling of 33 holes for a total of 4,745 metres has confirmed extensive low-grade gold mineralization within four of the five veins identified to date, as well as higher grade zones of hydrothermal breccia - up to 15.97 g/t Au over 0.25 m. Although we have been immensely encouraged by multiple gold-bearing intersections of 4 to 5 metres, the relatively low grades observed to date indicate that closer-spaced drilling - currently set to 100 m - may be required to ensure that we do not miss any of the high grade ore shoots that are typical of such low-sulphidation Au systems. At Blackrock, work to date has only tested a portion of the total strike length of gold-bearing veins that we have identified and exploration, including further detailed sampling, is planned to re-start in the autumn when temperatures ease. At this stage we are targeting Phase 2 drilling to commence by Q1-2013.

Elsewhere in the Afar, a helicopter survey undertaken by the Company's joint venture with Thani Ashanti (earning 51%) made a spectacular discovery at Pandora in Djibouti. Chip-channel sampling on 25 metre centres over part of a 5 km-long structure returned multiple high grades (15-17 g/t Au) over 1-2 metres. An airborne geophysical (magnetic) survey should soon be completed over the Megenta JV project in the central Afar region of Ethiopia, which may help locate favourable locations for initial drilling, again probably in Q1 - 2013.

In northern Ethiopia, Stratex completed a 1,000 metre diamond drilling programme at the Shehagne project in the Arabian-Nubian shield, and vested a 65% interest. Our original joint venture partner, Sheba, was taken over by Centamin last year and discussions continue with them regarding the way forward.

Stratex has continued to make progress with its properties in Senegal and Mauritania, which were acquired with the completed takeover of Silvrex in January 2012. We have hit the ground running at Dalafin, in Senegal, with a trenching programme over selected prospects and a major soil-sampling programme that is nearing completion. An airborne geophysical survey (magnetic and radiometric) has been commissioned and we anticipate that the outcome of this intensive exploration work will lead to further trenching and drilling of priority targets before the end of the year. As a result of the exploration activity, Stratex is now close to vesting its 51% interest in this exciting project. In Mauritania, reconnaissance work has already begun on one of our four licences and follow up recommendations are expected shortly.

In Turkey, total resources discovered to date at the Öksüt project exceeded the 1.0 million oz level in February. Our partner, Centerra, earned its 50% interest by expending US$3.0 million and exercised its option to move to 70% by committing to a further US$3.0 million expenditure. The bulk of the resource is contained in the Ortaçam North breccia deposit which holds 758,000 oz of gold of mostly inferred resources and is still open below 300 metres depth and to the north and east. Drilling on the property continues with four rigs and we look forward to updating shareholders with results later in the year.

After several months of due diligence, including confirmation drilling and some metallurgical testwork, we now have a new partner for the Muratdere copper porphyry project in Turkey. Lodos, a mining investment subsidiary of Pragma, which itself is a substantial Turkish financial services company, has agreed to acquire a 51% interest for a cash payment of US$1.7 million. Lodos can increase its interest to 54% for a further US$0.25 million, 60% by funding 3,000 metres of drilling and paying US$0.25 million, and ultimately 70% by funding a feasibility study. Muratdere currently has a JORC-compliant inferred resource of 51 million tonnes at grades of 0.36% Cu (186,000 tonnes), 0.12 g/t Au (204,296 oz), 2.40 g/t Ag (3.90 million oz), 0.0125% Mo (6,390 tonnes) and 0.34 ppm Re (17,594 kg), which is open at depth and along the remainder of the 4,000 metre strike length. Stratex believes there may be potential for near-term development of the higher-grade, supergene enriched blanket as well as a full-scale primary sulphide deposit. However, drilling out a porphyry consumes much time, effort and cash and so we decided to seek a partner to take the project forward and reduce shareholder-risk. We retain the right to maintain a 30% working interest, post-feasibility, or to dilute to a net smelter 1.2% royalty.

Progress continues towards production at our two 45%-owned gold projects Inlice and Altıntepe, although tangible evidence is limited. At Inlice, the long awaited Environmental Impact Assessment was finally approved in mid-June. GBM, a respected UK engineering firm was retained to review the feasibility study, particularly in the areas of capital costs and daily throughput. With the results of this review expected shortly, we will be meeting with our 55% partner Eren Insat to decide the way forward. At Altıntepe, our partners Bahar Mining have undertaken confirmation drilling and metallurgical testwork, and have commenced the first stages of the application for Environmental Impact Assessment approval. This will include the in-house feasibility study which, as they are fully funding the project to production, is all that they believe necessary to make a production decision. Assuming all technical hurdles are overcome, we would hope to see Stratex as a gold-producer in the latter part of 2013. 

As with most non- producing exploration companies, the results for the period showed a loss, albeit reduced to 0.17 p from 0.35 p per share in the same period last year. This is very much a function of accounting policies where our operating expenses were offset by a notional gain arising from the vesting of a 50% interest in Öksüt to Centerra.

In summary the past six months have seen exciting developments across our portfolio of exploration and development projects and we look forward in particular to the results of further drilling at the Öksüt, Blackrock, Pandora, and Megenta prospects, working with our partners on the Muratdere porphyry project, the commencement of drilling in Senegal, and further progress towards production at Inlice and Altıntepe. We believe we have now established the foundations for very positive and risk-reduced growth of your company.

Stratex International plc

Interim Results

Statement of Consolidated Changes in Equity

Notes to the unaudited financial statements

1. Basis of preparation

The condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'. The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2011, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

2. Financial Information

The interim financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 2006. It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union. Except as described below, the accounting policies applied in preparing the interim financial information are consistent with those that have been adopted in the Group's 2011 audited financial statements. Statutory financial statements for the year ended 31 December 2011 were approved by the Board of Directors on 23 March 2012 and delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified.

Risks and uncertainties

The key risks that could affect the Group's short and medium term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group's 2011 Annual Report and Financial Statements, a copy of which is available on the Company's website: www.stratexinternational.com . The Group's key financial risk is foreign exchange risk.

Accounting Policies:

Critical accounting estimates and judgements

The preparation of condensed consolidated interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in note 4 of the Group's 2011 Annual Report and Financial Statements. The nature and amounts of such estimates have not changed significantly during the interim period.The condensed consolidated interim financial statements have been prepared under the historical cost convention as modified by the measurement of certain investments at fair value.

(a) New and amended standards, and interpretations mandatory for the first time for the financial year beginning 1 January 2012 but not currently relevant to the Group.

The following standards and amendments to existing standards have been published and are mandatory for the Group's accounting periods beginning on or after 1 January 2012 or later periods, but not currently relevant to the Group:

·; Amendments to IFRS 1 "First-time Adoption of International Financial Reporting Standards" replace references to a fixed date of 1 January 2004 with "the date of transition to IFRSs", thus eliminating the need for companies adopting IFRSs for the first time to restate derecognition transactions that occurred before the date of transition to IFRSs, and provide guidance on how an entity should resume presenting financial statements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation.

·; Amendments to IFRS 7 "Financial Instruments: Disclosures" are designed to help users of financial statements evaluate the risk exposures relating to transfers of financial assets and the effect of those risks on an entity's financial position.

(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2012 and not early adopted

The Directors are assessing the possible impact of these standards on the Group's Financial Statements:

·; IFRS 9 "Financial Instruments" specifies how an entity should classify and measure financial assets, including some hybrid contracts, with the aim of improving and simplifying the approach to classification and measurement compared with IAS 39. This standard is effective for periods beginning on or after 1 January 2015, subject to EU endorsement.

·; Amendments to IFRS 1 "First-time Adoption of International Financial Reporting Standards" require that first-time adopters apply the requirements in IFRS 9 "Financial Instruments" and IAS 20 "Accounting for Government Grants and Disclosure of Government Assistance" prospectively to government loans existing at the date of transition to IFRSs. Entities may choose to apply the requirements retrospectively if the information needed to do so had been obtained at the time of initially accounting for the loan. The amendments are effective for periods beginning on or after 1 January 2013, subject to EU endorsement.

·; Amendments to IFRS 9 "Financial Instruments" and IFRS 7 "Financial Instruments: Disclosures" require entities to apply IFRS 9 for annual periods beginning on or after 1 January 2015 instead of on or after 1 January 2013, subject to EU endorsement. Early application continues to be permitted. The amendments also require additional disclosures on transition from IAS 39 "Financial Instruments: Recognition and Measurement" to IFRS 9.

·; Amendments to IFRS 10 "Consolidated Financial Statements", IFRS 11 "Joint Arrangements" and IFRS 12 "Disclosure of Interests in Other Entities" clarify the IASB's intention when first issuing the transition guidance in IFRS 10, provide similar relief in IFRS 11 and IFRS 12 from the presentation or adjustment of comparative information for periods prior to the immediately preceding period, and provide additional transition relief by eliminating the requirement to present comparatives for the disclosures relating to unconsolidated structured entities for any period before the first annual period for which IFRS 12 is applied. The amendments are effective for periods beginning on or after 1 January 2013, subject to EU endorsement.

·; Amendments to IAS 12 "Income Taxes" introduce a presumption that recovery of the carrying amount of an asset measured using the fair value model in IAS 40 "Investment Property" will normally be through sale. The amendments are effective for periods beginning on or after 1 January 2012, subject to EU endorsement.

·; "Annual Improvements 2009 - 2011 Cycle" sets out amendments to various IFRSs and provides a vehicle for making non-urgent but necessary amendments to IFRSs:

o An amendment to IFRS 1 "First-time Adoption of International Financial Reporting Standards" clarifies whether an entity may apply IFRS 1:

(a) if the entity meets the criteria for applying IFRS 1 and has applied IFRS 1 in a previous reporting period; or

(b) if the entity meets the criteria for applying IFRS 1 and has applied IFRSs in a previous reporting period when IFRS 1 did not exist.

The amendment also addresses the transitional provisions for borrowing costs relating to qualifying assets for which the commencement date for capitalisation was before the date of transition to IFRSs.

o An amendment to IAS 1 "Presentation of Financial Statements" clarifies the requirements for providing comparative information:

(a) for the opening statement of financial position when an entity changes accounting policies, or makes retrospective restatements or reclassifications; and

(b) when an entity provides financial statements beyond the minimum comparative information requirements.

o An amendment to IAS 16 "Property, Plant and Equipment" addresses a perceived inconsistency in the classification requirements for servicing equipment.

o An amendment to IAS 32 "Financial Instruments: Presentation" addresses perceived inconsistencies between IAS 12 "Income Taxes" and IAS 32 with regard to recognising the consequences of income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction.

o An amendment to IAS 34 "Interim Financial Reporting" clarifies the requirements on segment information for total assets and liabilities for each reportable segment.

The amendments are effective for periods beginning on or after 1 January 2013, subject to EU endorsement.

The financial information for the 6 months ended 30 June 2012 and the 6 months ended 30 June 2011 has not been audited.

3. Operating Segments

Operating segments are reported in a manner which is consistent with internal reports provided to the Board and are used by the Directors to make strategic decisions. The management structure reflects these segments. The Company's exploration operations are based in three geographical areas, namely Turkey, East Africa and West Africa. The Group's head office is located in the UK and provides corporate and support services to the Group and researches new areas of exploration opportunities.

The allocation of losses, assets and liabilities by operating segment is as follows:

Other assets include cash and cash equivalents amounting to £7,071,447 at 30 June 2012, (2011: £3,412,049).

4. Sale of subsidiary company:

On 17 February 2012, Centerra Exploration BV, having spent US$3million on the Oksut gold project and in in accordance with the joint venture agreement dated 13 August 2009, acquired 50% of the shareholding and operational control of the wholly-owned subsidiary Oksut Madencilik Sanayi ve Ticaret SA. This resulted in a net gain to the Group of £419,546, which comprised the following:

£

Loss on disposal of subsidiary undertaking (679,457)

Retained interest in former subsidiary undertaking 1,099,003

Net gain 419,546

5. Share capital and share premium

There have been the following increases in share capital during the period:

·; On 6 January 2012 10,152,581 ordinary shares of 1 pence each were issued fully paid at 7 pence per share to the shareholders of Silvrex Limited in acquisition of the company. A further 466,875 ordinary shares of 1 pence each were issued fully paid at 7 pence per share to the Silvrex shareholders on 5 March 2012.

·; On 6 February 2012 1,635,000 ordinary shares of 1 pence each were issued fully paid at 8 pence per share under a private placement.

·; On 28 March 2012 35,272,745 ordinary shares of 1 pence each were issued fully paid at 7.625 pence per share as the first tranche of a private placing. A further 68,333,813 ordinary shares of 1 pence each were issued fully paid at 7.625 pence per share as the second tranche of the same placing.

6. Related party transactions

Directors of the Company received total remuneration of £265,041 for the six months ended 30 June 2012 (six months ended 30 June 2011 - £203,614).

7.  Loss per share

The calculation of loss per share is based on the loss attributable to equity holders of the Company of £692,468 for the period ended 30 June 2012 (30 June 2011: £1,051,005) and the weighted average number of shares in issue in the period ended 30 June 2012 of 407,192,727 (30 June 2011: 298,436,560). There is no difference between the diluted loss per share and the loss per share shown.

8. Post balance sheet event

On 30 July 2012, the Company signed an agreement with Lodos Maden Yatırım Sanayii ve Ticaret A.Ş., a wholly-owned subsidiary of Pragma Finansal Danışmanlık Ticaret A.Ş., to sell 51% of the Muratdere project in return for a cash payment of US$1.7 million. Completion will occur within five days of the satisfaction of certain conditions precedent.

9. Approval of interim financial statements

The interim financial statements were approved by the Board of Directors on 15 August 2012.

* * ENDS * *

For further information please visit www.stratexinternational.com, email [email protected], or contact:

Notes to editors:

Stratex International is an AIM-quoted exploration and development company focussed on gold and high-value base metals in Turkey, East Africa and West Africa. Since listing on AIM in 2006, Stratex has had an impressive track record of successful exploration supported by joint-venture partnerships, both with major international mining companies and local companies to maximise the potential of its discoveries.

It currently has a substantial portfolio of projects, with two in Turkey that are scheduled for gold production in 2013. To date Stratex has discovered more than 2.2 million ounces of gold and 7.9 million ounces of silver, as well as 186,000 tonnes of copper.