By Alastair Ford
“It’s obviously a bit disappointing”, says Stratex’s Bob Foster. He’s talking about the latest update from the company’s joint-ventured Altintepe gold project in Turkey, currently under construction, but which has been the subject of delays due to severe rains and bad weather.
It had been hoped that the first gold pour from Altintepe might be taking place around about now, but that’s been moved back. “We believe mid-to-late May is realistic now”, says Bob.
Meanwhile, in a further twist, it’s emerged that a legal protest has now been lodged against the Ministry that approved construction at Altintepe. It’s a serious development, and Bob makes no attempt to downplay it. But he’s also confident that it’s unlikely to derail the new timetable to production.
The company’s partner, Bahar, has “intervened to seek the overturning of these challenges”, according to the official release, which also goes on to state that “construction has been unaffected”.
So, ultimately, it’s all about the weather. And that at least is now beginning to ease off. “The rains have receded”, says Bob. “There’s a bit of snow.”
So now it’s all systems go to get the mine up and running. “There’s some serious finishing touches to be done”, says Bob, “but it now looks as though we’ll be the next gold mining company in Turkey.”
As we speak, the installation of the crushers is underway, the ADR plant has been installed, the metallurgical and analytical laboratories completed and fully functional, while the leach pads and ponds are nearing completion – all of which Bob calls “sound progress”.
In a way though, there’s more than just a mine that’s being established here. It’s a vindication of Stratex’s modus operandi, or proof of concept if you like. “Altintepe has given us a model for going forward”, says Bob.
“The possibility for delivering similar sized projects with similar partners now looks very real. What we’re trying to do is to continue to be project generators – so we’re happy in West Africa with Dalafin and Goldstone – but if we do see another Altintepe we will do it. We like Turkey as an operating environment. The technology is easy to work. There is a skilled labour force.”
Having said that, the new mining code in Turkey has reduced incentives to conduct exploration, as any ground explored and applied for has first to be put up for auction. That means that inside Turkey at least any new opportunity for Stratex is more likely to come from a project inside the portfolio of an existing company rather than from pure-and-simple prospecting.
But that doesn’t mean grass-roots prospect generation won’t be happening elsewhere. Stratex has shown in more than one jurisdiction – think Turkey, Ethiopia, Djibouti, Ghana, Tanzania, Senegal – that it is able to get onto the trail of significant and interesting mineralisation early on, and move it forward.
The cashflow from Altintepe, and from any future Altintepes will be more than helpful in continuing that work.
Not that the recent delay has upset the applecart on that score in any way. “Our current cash position is just under £3 million”, says Bob. “With our present rate of exploration this will see us comfortably through this year and, if we cut back a little, into next year as well.”
That’s before any cashflow from Altintepe is factored in. And although it’s been delayed, it looks a pretty clear certainty that it is coming – 20 per cent net cash flow during the intitial payback period and 45 per cent thereafter. Given that Bahar funded the construction completely, that’s not a bad return on your dollar, even if it is running slightly later than scheduled.