It promises to be a busy end of year for news-flow from Stratex International (LON:STI) as it bids to get its first gold project in Turkey up and running by the end of 2011.
In many ways the Inlice discovery, in the south west of the country, is perhaps its least exciting in terms of the size of the deposit. From a total resource of 260,000 ounces of gold it is likely only to yield a total of 100,000 of oxide gold over two to three years of mine life.
But its significance for Stratex at least should not be under-estimated. If with its Turkish joint venture partner it can get the heap leach-pit up and running it willIt may also set the seal on a wider collaboration with local contract mining firm NTF, which is earning 55 per cent of Inlice by spending up to US$2 million on feasibility studies. The feasibility study by the American outfit Kappes, Cassidy & Associates is expected to be completed in a super-fast time of six months, giving a deadline of October.
"We are looking at first gold pour by the end of next year," Stratex chief executive Bob Foster told Proactive Investors. "Our confidence levels are sufficient that we believe there is a high probability it will happen."
Running in parallel, but about a year behind, is Altıntepe, second of four gold prospects in Turkey.
It is another where it is partnered with NTF, which will use its expertise in earth moving and open cast mining to develop and run the operation.
Although there are many similarities with Inlice, this is a far bigger project with an estimated 470,000 ounces of oxide gold in the ground and three major zones.
"Our confidence level of the gold in the ground for two of the three zones is not particularly high," Foster admits. "This is why we used the term inferred reserves.
"Because of the high degree of uncertainty about what is in the ground our partner (NTF) has the right to earn 55 percent in this project by undertaking the feasibility study to US$2.5m with the proviso that the first half million is committed to a scoping study.
"We will review then to go to a full feasibility study." Foster hopes to be able to make a decision on this full study by the end of the year.
In both cases the earn-in deal with NTF sees the Turkish partner shouldering the bulk of the financial burden.
One potential cost Stratex will have to bear is a contribution to the Inlice open-cast mine and facilities, which will cost around US$10 million to construct.
Stratex must decide whether it will turn to a number of local banks for the project finance, or activate a U$2 million line of credit with NTF.
The capex on Altıntepe, meanwhile, is expected to be in the order of US$20-$30million, with completion of mine construction and first gold production very provisionally pencilled in for late 2012, or early 2013.
"We are not seeing major stumbling blocks here," says Foster. "So we will see an overlap of production for one, maybe two years.
"Production levels we would hope – and it depends on the feasibility studies – to be 30,000 to 50,000 ounces a year. 50,000 ounces of gold a year is a significant earner going forward.
"Realistically we aim to go into gold production from next year onwards on those two gold projects for eight or nine years, with Inlice perhaps running two to three years and Altıntepe five to nine."
Perhaps the most exciting project the group has, the third of its four in Turkey, is Öksüt, where the group has partnered up with Centerra Exploration - part of Centerra Gold (TSX:CG) - , which is also active in Kyrgyzstan.
Initial drilling has identified 147,000 ounces of gold oxide in the Ortacam zone – one of five separate areas in a two kilometre by four kilometre project.
The deal with Centerra has a number of fund managers scratching their heads as Stratex could potentially hand over a large chunk of its most prized asset.
The mid-cap miner will spend US$3 million assessing the scale of the resource in return for a 50 per cent stake, rising to 70 per cent if it spends another US$3million.
"Centerra will be looking for at least 1 million ounces if not 2 million," Foster explains.
"Anything less will be a waste of time. If the results of the ongoing drilling are positive – and we are really excited by it all – then Centerra will continue to drill.
"They have the option to go to at least 50 per cent and if it is looking really good they will go to 70 per cent.
"We are asked by fund managers why we are giving away 70 per cent of a really good project. The answer is we are not giving it away. We are managing the risk. You can never be certain that what you have on the surface will continue deep into the ground.
"So in managing the risk, the reality check is that if Centerra earns the 70 per cent that means it is a major project. They are not going to expend US$6 million for a few tens of thousands of ounces of gold. They are going to be looking for 1 million to 2 million ounces. In which case we have had a free carry to a very big discovery. It is a no brainer in many ways."
The downside is also limited. If the group fails to add ounces to the 147,000 ounces already pinpointed, then it will roll Öksüt in with Inlice and Altıntepe to bolster its partnership with NTF.
For Öksüt the next news will be the results of the assay on the five infill holes drilled at Ortacam, which should be published by the end of this month. And you sense speaking to Foster that he is quietly confident about the results.
The fourth and final Turkish prospect is Hasançelebi, in the central region, where it is partnered with major shareholder Teck Resources (TSX, NYSE: TCI).
Teck will invest US$2 million in the project for a 51 per cent stake. "We are happy with this arrangement," says Foster. "Hasançelebi does not exhibit the good gold grades at surface that we see at Öksüt but it is a big system, extending along strike for 6-7 km, and there is considerable potential for discovering better grades at depth."
Results of the first phase of drilling ought to come in the next two months, though the release of the information is the responsibility of Teck.
The real blue sky prospect for Stratex is northern Ethiopia and Djibouti, where it has acquired some sizeable exploration acreage from Plus-listed Sheba Exploration.
The geology of the area, which is in part of the rift valley that extends to the Red Sea, is similar to the gold bearing rifts of Nevada and Patagonia in Argentina, which have yielded bonanza grades of the yellow metal.
On the surface Stratex is finding low sulphidation gold deposits of around 0.3 grams per tonne. But elsewhere at Megenta the surface grades are better. "We have seen two grams, and we have even found a 16 grams of gold body at the surface, which has elevated the excitement."