Preliminary Results and Notice of AGM

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

Stratex International plc

('Stratex' or the 'Company')

Preliminary Results and Notice of AGM

Stratex, the AIM-quoted gold-focused exploration and development company in Turkey and Africa announces its preliminary results for the year ended 31 December 2017.

Copies of the Company's Annual Report will be posted to shareholders on 16 March 2018. The Company's AGM will be held at 3.00 pm on 19 April 2018 at the offices of Grant Thornton UK LLP, 30 Finsbury Square, London, EC2P 2YU.

Operational Highlights:

· Sale of the Company's 45% interest in the Altıntepe gold project in Turkey was completed in April 2017 and the proceeds of US$8m duly received;

· Following dilution of Stratex's shareholding in Goldstone Resources Limited ("Goldstone"), the Company's ownership had dropped below what the Company considered meaningful with regard to the ability to influence Goldstone's technical programme and strategic direction and subsequently, the Company sold its 13.7% interest for £547k in October 2017;

· The Company has maintained its interest in Thani Stratex Resources Ltd ("TSR"), currently at 30.1%, by investing a further US$590k during the year under review, with a further US$200k to be invested before end Q1 2018 whereby the Company's holding will increase to 30.4%;

· At the Company's former Karaaǧaç gold project in Turkey, the current owner, Anadolu Export Maden Sanayi ve Ticaret Limited Şirketi ("Anadolu"), is working towards resource definition having received first stage permitting in November 2017;

· Aforo Resources Ltd ("Aforo"), in which the Company has an 7.84% interest, has announced the signing of JV/Option agreements for two gold projects in Burkina Faso. One of the projects, Niare, has a non-JORC gold resource of 98,000 oz at 1.36 g/t Au;

· The Company announced its intention during 2017 to acquire the ASX listed explorer, Crusader Resources Limited ("Crusader"). The proposed acquisition was close to finalisation when it was terminated following a requisitioned shareholder meeting and the Company had to write-off £1.6m of legal and advisory costs incurred;

· As a result of the above shareholder action the Company also had to replace its CEO, Marcus Engelbrecht. Dr Bob Foster was re-engaged as CEO on an interim basis and will be replaced by Tim Livesey on 1 March 2018. Bob will step down from the board on Tim's appointment but will continue to support the Company on a consultancy basis as required.

Financial Overview:

· The Company and its subsidiaries (the "Group") realised a loss after tax for the year of £5.4m, which compares with a loss in 2016 of £2.7m.  

The current year's loss includes a profit of £2.9m from the sale of the Altıntepe mine. This was additional to a profit of £1.5m related to the sale, which was recognised in the Financial Results for 2016.

This year's results were affected by a number of significant one-off costs, notably:

o The accounting treatment for Goldstone was changed during the year as a result of Stratex's reduced board representation and a dilution in the Company's shareholding interest. The investment in Goldstone was subsequently sold on 17 October 2017. This resulted in a net loss of £655k, and it has been treated as a discontinued operation in the financial statements;

o Legal and advisory costs of £1.6m related to the aborted acquisition of Crusader, which was close to finalisation prior to shareholder action;

o Write-off of £1.3m receivable from Energy and Mining Corporation SA ("EMC"), our partner on the Dalafin project in Senegal. The Company will continue to seek repayment but the Directors believe that it is prudent to write-off the amount due;

o The Company has been required by the Turkish tax authorities to pay back-taxes plus interest amounting to £0.7m in respect of a former joint venture in Turkey, which the Company exited from in 2013, where the joint venture partner has defaulted on the payment. The Company is actively seeking repayment from the parties concerned;

o HMRC have ruled that the Group's funding of its overseas exploration activities is not an economic activity for VAT purposes and have demanded a refund of the VAT reclaimed in the UK during the past 4 years. This amounts to £0.6m and has been provided for in this year's accounts. The Directors strongly disagree with this decision and have lodged an appeal. The hearing by the Lower Tribunal is expected to take place this summer;

o The Company's investment in the Muratdere copper/gold project amounting to £0.4m has been fully written-off following the decision not to provide further funding for the project, resulting in the Company's interest possibly resorting to a royalty basis.

· The Group ended the year with a cash balance of £2.0m, having started the year with £1.6m. The sale of Altıntepe and Goldstone generated £6.6m in total. The aborted acquisition and the JV tax demand mentioned above utilised a total of £2.4m. Loans totalling £0.9m were granted to Crusader in accordance with the Scheme Implementation Agreement. These loans are subject to a 12% interest coupon and are due for repayment in May 2018. A further £0.5 was invested in TSR to maintain our c.30% interest.

Dr. Bob Foster, interim CEO of Stratex, commented:

"The year has been challenging but has seen the Company take pragmatic and decisive action on a number of its projects within its portfolio, actions which resulted in the realisation of US$8m from the sale of Altıntepe in Turkey and £547k from the Goldstone Resources exit. Importantly, these decisions delivered balance sheet stability and reduced the Company's operational risk. With the termination of the Crusader acquisition, the Company took the opportunity to review its corporate strategy and asset portfolio, communicated our strategic vision to all our shareholders, and, as a result, we exited the year with a renewed sense of purpose. Tim Livesey will join the Company on 1 March as CEO, bringing a wealth of experience to Stratex, and will ensure the Company's firm focus on extracting maximum value from our existing portfolio whilst also assessing new opportunities that can bring value to the Company. I look forward to supporting Tim and the Company as a consultant during this exciting new phase of the Company's growth."

Chairman's Statement

The year under review has been a challenging year for Stratex. It commenced with considerable optimism under a new Chief Executive with plans to transform the Company and move further up the exploration, development and production curve. Several flagship projects, which would have advanced this policy, were considered during the year but for a number of reasons, none of these projects came to fruition.

The Company's strategy continues to be to develop its existing exploration projects and to identify acquisition opportunities that complement our existing portfolio of projects.

Strategic Vision

In 2014, the Company stated its intention to acquire one or more advanced assets to complement its early-stage portfolio. One potential opportunity was the proposed acquisition of Crusader in mid-2017. This particular proposal was rejected by the shareholders during the latter half of 2017. Unfortunately, the acquisition was close to finalisation when abandoned and resulted in the Company incurring £1.6m of legal and advisory costs.

The Board still considers the acquisition of more advanced assets as a valuable way of growing its portfolio quickly, as opposed to acquiring only very early-stage opportunities, where the risk of exploration success is often higher and the time period from discovery to resource is longer. However, the Company acknowledges that its shareholders deemed the proposed Crusader acquisition terms too dilutive and that any future project or corporate level transaction would need to reflect this. Furthermore, following consultation with a number of our shareholders, the Board notes their preference for the Company to maintain its current geographical focus in Africa and Europe.

Also as a result of the shareholder action and the termination of the transaction with Crusader, the Company's then Chief Executive, Marcus Engelbrecht, left the Company. Subsequently the Company approached Dr Bob Foster, the Company's former Chief Executive, to re-join the Board as interim Chief Executive and to carry out a strategic review of the Company's assets, while the Company undertook a search for a permanent Chief Executive. This review has now been completed and the results were announced on 1 February 2018 and are summarised in this Chairman's Statement. Furthermore, the Company also announced on 1 February 2018 that it had identified and would be appointing Tim Livesey as our new Chief Executive with effect from 1 March 2018.

Our intent is to re-build shareholder and market confidence in the Company and to maximise shareholder value through continuing development of a focused portfolio of exploration and development projects while managing the significant risks faced by exploration companies. We continue to seek acquisition opportunities of advanced exploration assets, that could provide a flagship for the Company, whilst actively assessing value-accretive opportunities within our existing portfolio.

Operations

 Altıntepe

Our joint venture at Altıntepe in Turkey proved difficult to advance satisfactorily from our minority position, particularly in the light of the changing political climate in Turkey. During the year, we entered into discussions with our local joint venture partner, Bahar Madencilik, which in April 2017 culminated in the sale of our 45% interest in the project for an aggregate cash receipt of US$8 million net of all taxes and expenses.

Muratdere

At the Muratdere gold project in Turkey, Stratex's joint-venture partner, Lodos Maden Yatırım Sanayii ve Ticaret A.Ş. ("Lodos"), is committed to ongoing expenditure, with a focus on developing the Environmental Impact Assessment programme. As noted in Stratex's announcement on 21 December 2017, Stratex continued to reconsider its options during 2017 - in light of an improving copper price -but ultimately the Stratex Board has confirmed that it will not be committing further funds to this project, instead focusing its efforts and finances on finding a flagship project where it has management and/or shareholder control (Announcement dated 1 February 2018). Consequently, the Company anticipates being diluted to below 10% during H1 2018, which will trigger dilution to a 1.2% (post Turkish tax) royalty.

Hasançelebi and Doğala

At two of the Company's gold projects in Turkey, Hasançelebi and Doğala, the Company has signed an exploration agreement with a local private company in Turkey, TET Madencilik Ltd Sti. ("TET"). Whilst these projects are viewed by the Board as non-core to Stratex's portfolio due to their limited potential, the drilling to date at Hasançelebi, through a former joint venture with Teck, has demonstrated the possibility for low-grade, high-tonnage gold mineralisation. The agreement with TET allows us to share in any upside potential that might be realised from the projects, through a success-based payment (at Hasançelebi-only) and net smelter return ("NSR") royalties on future production. Stratex will manage the exploration programme but its operational overheads in Turkey will be significantly reduced, through the transfer of licencing and project-related staffing costs to TET.

Goldstone Resources Limited

During the year under review, the Company's shareholding interest in Goldstone was reduced to 23%. This percentage was further reduced following an institutional placing, which Stratex was unable to support. As a result, the Company's ownership dropped below 14% and below a level that was considered meaningful with regard to the ability to influence Goldstone's technical programme and strategic direction. Consequently, the Company's interest in Goldstone was sold to institutional investors for a total cash consideration of £0.55 million.

In conjunction with this sale, Ms Emma Priestley resigned as a Non-Executive Director of the Company, due to her full-time commitments as chief executive officer of Goldstone.

Goldstone's results are classified as discontinued operations in the financial statements.

Thani Stratex Resources Limited

At the end of 2017, the Company reviewed the gold assets of TSR in which Stratex owns a 30.1% interest (which will rise to 30.4% later in Q1 2018). This review was undertaken as part of a wider assessment of the Group's portfolio and the findings are summarised below (as reported in the announcement dated 1 February 2018). 

Djibouti

At the Company's former Pandora epithermal gold project in Djibouti, TSR (50%-owner) are undertaking Phase 2 drilling for a planned 3,000 metres. The aim of this drilling is to test the depth-extension of previously drilled mineralisation and identify potential higher-grade ore shoots within the system that is believed could lead to the definition of a resource.

Stratex has agreed to support completion of the current programme for an additional US$200,000, alongside further funding of US$300,000 by Thani Emirates Resources Holdings to be invested as equity in TSR. Stratex will await full results of this programme before making a decision on whether to support further exploration.

At Assaleyta, also in Djibouti, TSR (50%-owner) completed an initial 5-hole drilling programme in 2016 across 3 key zones. Following up on good outcrop sample results, further drilling is required to define the extent and mineral potential of the system.

TSR has highlighted its intention to spin-off its Djibouti portfolio as a separate entity, seeking exposure to public markets. We await further details on their plans in this regard.

Egypt

In Egypt, TSR (100%-owner) is focused on advancing the Anbat project, where, in December 2017 it announced a maiden Mineral Resource Estimate of 209,000 oz at 1.11 g/t Au1 within porphyry sills (Announcements dated 6 and 13 December 2017). The geometry of these sills is yet to be fully resolved and will need to be addressed before any future resource estimation is undertaken.

Potential upside has also been highlighted within the granodiorite, where an Exploration Target has been disclosed. More drilling is required to ascertain whether there is any potential for a larger open-pit resource. TSR is currently reviewing its exploration programme at Anbat and other projects within TSR's Egypt portfolio.

Dalafin

The review of the Dalafin project in Senegal ("Dalafin"), where Stratex holds 85% equity in the JV company that owns Dalafin, is now complete. The Company believes that there is still upside at the project but we have announced that we are not prepared to commit further funding at this time. We are now seeking joint-venture financing in order to advance exploration work on the project. Discussions are advancing well with an identified joint-venture partner, and the Board hopes to conclude the deal later in Q1 2018.

Aforo Resources Limited

During the year Aforo, in which Stratex has a 7.84% interest, completed a placement with Indo Gold Limited for US$20,000, and sold its projects in Cote d'Ivoire for a further US$225,000. It has also signed JV/Option agreements for two prospective gold projects in Burkina Faso, one of which, Nordgold's Niare project, has a non-JORC Mineral Resource Estimate of 98,000 oz at 1.36 g/t Au2 (calculated using a 0.5 g/t Au cut-off).

Incoming Chief Executive

I am very pleased to report the upcoming appointment of Tim Livesey as our new Chief Executive with effect from 1 March 2018. Tim has 28 years' experience in gold and base metals, with a distinct focus on Africa, Europe and Asia. He has worked at all stages of exploration, development and mining, and has a strong track record of delivery, both at the technical and commercial level within previous positions. Tim is well known to the technical team at the Company.

Dr Bob Foster will stand down from the Board as interim Chief Executive on 1 March 2018. Bob will continue to support the Company as required as a consultant and provide continuity on the strategic review he has conducted with the Stratex team in the last few months.

Outlook

Looking forward, there is much to do. Under its new Chief Executive, the Board will have the objective of re-establishing Stratex's profile as a successful exploration and development company focusing on gold and high-value base metals and of re-enforcing the Group's stated strategy of maximising shareholder value. We will do this by realising value-accretive opportunities in our current portfolio of exploration and development projects in Turkey and Africa, either by means of further investment, focused exploration programmes or through seeking joint venture partnerships and by securing a more advanced exploration asset(s), via an earn-in, direct purchase or corporate acquisition, that could provide a flagship for the Company. As previously reported, the Company has identified and shortlisted several priority targets that could offer such a growth opportunity for the Company, and has initiated discussions with a number of asset owners.

On behalf of Stratex's executive and management team, I would like to express our appreciation and thanks to all of our employees for their efforts and hard work during the past year.

Peter Addison

Non-Executive Chairman

26 February 2018

Financial Statements

Statement of consolidated comprehensive income

Statement of consolidated financial position

Statement of consolidated changes in equity

Statement of consolidated cash flows

Notes to the consolidated financial statements

1. Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), IFRIC interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention as modified by the measurement of certain investments at fair value and have been prepared on a going concern basis.

 The financial information set out in this announcement does not constitute the Group's statutory accounts for the year ended 31 December 2017 or the year ended 31 December 2016 under the meaning of Section 434 the Companies Act 2006 but is derived from those accounts. The annual report and financial statements will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The statutory accounts for the year ended 31 December 2016 have been filed with the Registrar of Companies. The auditor's report on the statutory accounts for the year ended 31 December 2016 was unqualified and does not contain a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.

The auditor's report on the statutory financial statements for the year ended 31 December 2017 has not been issued as the Directors have not approved the annual report which is expected to be approved by shareholders at the Company's Annual General Meeting. The audit is complete to an advanced stage except for Director approval of the annual report, the audit of post balance sheet events to the date of the audit report and the finalisation of the audit report. Consequently, there can be no absolute certainty that the audit report on the financial statements will be unmodified and consistent with the results and financial position reported in the preliminary announcement. At the present time the auditors have included a material uncertainty in relation to going concern relating to the reliance of Crusader successfully listing on the AIM before being able to repay the loan of £900k.

It is the prime responsibility of the Board to ensure the Company and the Group remains a going concern. At 31 December 2017 the Group had cash and cash equivalents of £2,038,970 and no borrowings. The Company and the Group have minimal contractual expenditure commitments and the Board based on the information available expects the loan to Crusader to be paid on or before its due date of 9 May2018. The Board therefore considers the present funds sufficient to maintain the working capital of the Company and Group for a period of at least 12 months from the date of signing the annual report and financial statements based on the forecasts of the Directors. For these reasons the Directors continue to adopt the going concern basis in the preparation of the financial statements.

2. Segment reporting

The Group's main exploration operations are located in 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 management structure and the management reports received by the Directors and used to make strategic decisions reflect the split of operations.

The capitalised cost of the principal projects and the additions during the year are as follows:

b) The allocation of profits and losses for the year by segment is as follows:

On 2 June 2017, the Group's representation on the Board of Directors of Goldstone Resources Limited ("GRL") was reduced at which point the Directors consider the Group had relinquished full control of the subsidiary and GRL was de-consolidated from the Group and measured at fair value as an equity-accounted associate. To this effect, a fair value of £1,318,884 was attributed to the investment in the associate, which was equal to the Group's share of the net assets of GRL at that date. On the same day, the Group's shareholding in GRL was diluted from 30.4% to 23.4%, which resulted in a loss of £351,542 and was netted against the balance on the Translation reserve in respect of Goldstone of £272,049 and an amount of £79,493 was recognised in the consolidated statement of comprehensive income.

On 1 July 2017, the Directors made the decision that the investment in GRL should be reclassified as an available-for-sale asset as a result of the Group losing significant influence. On that date the carrying value of the investment in associate of GRL was £951,858 and the Directors assessed the fair value, under level 1 of the fair value hierarchy at £444,761 based on the value of GRL shares on the AIM stock market on that date. This resulted in a loss of £507,097 being recognised in the Statement of consolidated comprehensive income.

Subsequently, a GRL fund raise resulted in a further dilution of the Group's shareholding to 13.7% and the investment was eventually disposed on 17 October 2017 for proceeds of £547,287. A profit on disposal of £96,703 has been recognised in the consolidated statement of comprehensive income.

4. Profit on sale of available-for-sale financial assets

On 23 April 2017 the Company completed the sale of its 45% shareholder interest in Altıntepe Madencilik Sanayi ve Ticaret AS for aggregate cash consideration of US$8million. Included in the proceeds is US$2million in respect of past geological services provided by Stratex. This was accrued for in the prior year results. A fair value of £1,794,886 had been attributed to Company's investment in Altıntepe at 31 December 2016 and a profit of £2,883,352 has been recognised in the current year consolidated statement of comprehensive income.

5. Investment in equity-accounted associates

The balance at 31 December represents the Company's investment in Thani Stratex Resources Limited ("TSRL"). The shareholding interest reduced from 30.4% to 29.5% in April 2017. Following a further investment of £451,355 (2016: £189,208) during November and December the Company's interest increased to 30.1% at 31 December 2017.

 Altıntepe Madencilik Sanayi ve Ticaret AŞ, Muratdere Madencilik Sanayi ve Ticaret AS and Tembo Gold Corporation all ceased to meet the requirements for equity accounting in 2016 and were transferred to assets held for sale.

6. Available-for-sale financial assets

Available -for-sale financial assets at 31 December 2017 represents a 11% investment in Tembo Gold Corporation and an 8% investment in Aforo Resources Limited. The fair value of the investment in Tembo has been valued under level 1 of the fair value hierarchy and has been reduced to £353,853 following a prolonged reduction in the quoted value of its shares on the Toronto Stock Exchange. This has resulted in a loss of £53,016 being recognised in the consolidated statement of comprehensive income. The investment in Aforo has been valued under level 3 at £227,082 taking into account the early stage nature of the project.

On the 23 April 2017the Company completed the sale of its 45% shareholding in Altıntepe Madencilik Sanayi ve Ticaret

AS. A profit of £2,883,352 was realised on sale (see note 4). An overall disposal of £1,891,830 was recognised, consisting of £1,794,887 brought forward from prior year and £96,943 from translation in the year.

Following a decision by the Directors not to provide further funding for Muratdere Madencilik Sanayi ve Ticaret AS, the Company's interest will revert to a 1.2% Net Smelter Royalty and the investment has been fully written-off resulting in a loss of £439,488 being recognised in the consolidated statement of comprehensive income.

The combined loss of the £439,488 write off of the Muratdere Madencilik Sanayi ve Ticaret AS and the £53,016 reduction in fair value of Tembo make up the overall fair value adjustment of £492,504.

7. Intangible assets

The Group's Intangible assets comprise entirely of exploration assets.

Goldstone Resources Limited ("GRL") ceased to be accounted for as a fully consoldated subsidiary on 2 June 2017 and was subsequently sold. GRL owns the Homase/Akrokerri gold project. All additions in the year relate to Goldstone, and therefore no additions in the year have been recognised at year-end.

The exploration asset impairment write-offs represent the writing down to nil carrying value for those projects where the Directors have decided that no further exploration or evaluation work will be undertaken as these projects are not thought to be economically viable. The write-offs have been recognised in the consolidated statement of comprehensive income.

** ENDS **

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Following the publication of this announcement, this inside information is now considered to be in the public domain.

For further information please visit www.stratexinternational.com, @StratexPLC on Twitter, or contact:

Stratex International Plc Tel: +44 (0)20 830 9650

Bob Foster / Claire Bay

Camarco (IR/PR Contact) Tel: +44 (0)20 3757 4980

Gordon Poole / Nick Hennis /

Monique Perks

Grant Thornton UK LLP Tel: +44 (0)20 7383 5100

Samantha Harrison

Hannam & Partners Tel: +44 (0)20 7907 8500

Neil Passmore / Andrew Chubb

Notes to Editors:

Since listing in 2006, Stratex has discovered more than 2.2 million ounces of gold and 7.09 million ounces of silver, as well as 186,000 tonnes of copper. The Company owns an exciting exploration project in Senegal and 14.87% of a copper-gold project at feasibility stage in Turkey, which will likely default to a 1.2% (post-Turkish tax) royalty position within the next 3 months. The Company also has significant interests in Thani Stratex Resources Ltd and Tembo Gold Corp. for their exploration projects in Djibouti and Egypt, and Tanzania respectively. The Company is currently pursuing value-accretive opportunities within its existing portfolio as well as identifying new value-appropriate projects in Africa and Europe.