In this article, I will take a quick look at Stratex International Plc’s (AIM:STI) recent ownership structure – an unconventional investing subject, but an important one. Ownership structure of a company has been found to affect share performance over time. The same amount of capital coming from an activist institution and a passive mutual fund has different implications on corporate governance, which is a decisive factor for a long-term investor. It also impacts the trading environment of company shares, which is more of a concern for short-term investors. Therefore, it is beneficial for us to examine STI’s ownership structure in more detail.View our latest analysis for Stratex International
Institutional OwnershipSTI’s 13.61% institutional ownership seems enough to cause large share price movements in the case of significant share sell-off or acquisitions by institutions, particularly when there is a low level of public shares available on the market to trade. These moves, at least in the short-term, are generally observed in an institutional ownership mix comprising of active stock pickers, in particular levered hedge funds, which can cause large price swings. For STI shareholders, the potential of this type of share price volatility shouldn’t be as concerning as hedge fund ownership is is not significant,indicating few chances of such sudden price moves. While that hardly seems concerning, I will explore further into STI’s ownership type to find out how it can affect the company’s investment profile.
Insider OwnershipInsiders form another group of important ownership types as they manage the company’s operations and decide the best use of capital. Insider ownership has been linked to better alignment between management and shareholders. Although individuals in STI hold only a 0.42% stake, it’s a good sign for shareholders as the company’s executives and directors have their incentives directly linked to the company’s performance. It would also be interesting to check what insiders have been doing with their shareholding recently. Insider buying can be a positive indicator of future performance, but a selling decision can be simply driven by personal financial requirements.
General Public OwnershipA big stake of 33.38% in STI is held by the general public. This size of ownership gives retail investors collective power in deciding on major policy decisions such as executive compensation, appointment of directors and acquisitions of businesses. Such level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and potential acquisitions. This is a positive sign for an investor who wants to be involved in key decision-making of the company.
Public Company OwnershipAnother important group of owners for potential investors in STI are other public companies that hold a stake of 52.59% in STI. These are the companies that are mainly invested due to their strategic interests or incentivized by reaping capital gains on investments. With this size of ownership in STI, this ownership class can affect the company’s business strategy. As a result, potential investors should further explore the company’s business relations with these companies and find out if they can affect shareholder returns in the long-term.
STI has a significant level of institutional ownership, which often causes long bull and bear trends if the perceived value of the stock changes for these big-ticket investors. This will allow an investor to reduce the impact of non-fundamental factors, such as volatile block trading impact on their portfolio value. However, other important factors we must never forget to assess are the fundamentals. I recommend you take a look at our latest free analysis report on Stratex International to see STI’s fundamentals and whether it could be considered an undervalued opportunity.
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Stratex's principal asset in Senegal is the Dalafin gold licence. Following an earn-in to 75% of the project, the Company signed an agreement with its private Senegalese partner, Energy & Mining Corporation S.A. (EMC), to acquire 85% through the establishment of a new Senegal-registered operating company Stratex EMC S.A.
Located in south-eastern Senegal, the 472.5 sq km Dalafin licence is positioned in the centre of the Birimian-age Kédougou-Kenieba gold belt that extends from eastern Senegal into western Mali and has already seen multiple major gold discoveries including Randgold Resources' Massawa deposit (3.4 million oz Au) and Oromin Exploration's Sabodala deposit (3 million oz Au) in Senegal, and Randgold's Loulo (12 million oz Au) and Gounkoto projects (5.76 million oz Au) in Mali. Of critical importance is the fact that a number of the gold-rich deposits in the general vicinity of the Dalafin licence are hosted by NNE-trending fault zones, some of which also transect the Dalafin area.
To date, four main geochemical targets, Faré, Baytilaye, Saroudia, and Madina Bafé, have been confirmed by a 33,408 metre RAB (Rotary Air Blast) and AC (Air Core) drilling programme.
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Stratex has a 23.09% interest in AIM-quoted GoldStone Resources Ltd for its 602,000 oz Homase/Akrokerri gold project in Ghana, located within the highly prospective Ashanti Gold Belt that hosts AngloGold Ashanti’s Obuasi mine to the southwest.
Exploration at the project area is targeting along-strike extensions of the known ore body, and the definition of oxide resources within the wider licence area. Goldstone also has early-stage exploration licences in Senegal and Gabon.
Stratex has a 30.5% interest in privately-owned Thani Stratex Resources Limited for its projects in Egypt and Djibouti. In May 2017, Stratex participated in a US$1 million fund raise to advanced Thani Stratex's Hodine licence in Egypt, which hosts the Hutite and Anbat prospects.
The Hutite system, located in south-eastern Egypt, is hosted by a melange of ultramafic/mafic rocks and represents one of the many suture zones between tectonic terranes in the Eastern desert of Egypt and indeed as seen all over the Arabian Nubian Shield.
Former operator Thani Ashanti drilled over 30,000 metres of RC and diamond drilling between December 2010 and March 2013. On the basis of this work, South Africa-based Quantitative Group estimated an Inferred Resource (non-JORC) of 11,410,000 tonnes grading 1.41 g/t Au for 520,000 in-situ ounces using 0.4 g/t Au cut-off.
The Anbat-Shakoosh district, located within a 15 km-long belt to the south of Hutite, hosts broad zones of near-surface gold mineralisation within steeply-dipping, silicified (and sulphide-rich) felsic dikes as well as more shallow-dipping sheeted veining within an adjacent granitic unit.The district currently hosts three prospects: North Anbat, Anbat and Shakoosh. Anbat and, to a lesser extent, Shakoosh have been the main focus of exploration to date, with former operator Thani Ashanti completing a total c.14,000 meters of diamond and reverse circulation drilling across the prospects.
At Anbat, recent drilling by Thani Stratex has suported a revised geological model for a near-surface, flat-lying zone of gold-mineralisation on the eastern side of an identified mineralised intrusion. Reported intercepts have confirmed the continuity of broad zones of mineralisation defined by the historic drilling, as well as narrower high-grade intervals of up to 227 g/t Au over 1.25 m.
Thani Stratex has also drilled 12 holes at the newly discovered Anbat North zone, confirming Sukari-style intrusion-hosted gold mineralisation, where gold is associated with thin quartz veins and sulphides. Thani Stratex plan to use new funds to target large outcropping veins at the Nofret Zone, located between Anbat and Anbat North.
Pandora and Assaleyta
Stratex has a 30.5% interest in privately-owned Thani Stratex Resources Limited for its projects in Egypt and Djibouti. The portfolio in Djibouti comprises 12 concessions, including Oklila (Pandora) and Assaleyta.
The 93 sq km Oklila licence includes the main Pandora epithermal vein target which is up to 2.5 metres wide at surface and can be traced NW for approximately 1.5 kilometres. Mapping and sampling has demonstrated that this structure outcrops for a further 510 metres to the SE, giving a total vein strike length of 2,300 metres.
Rock-chip sampling by Stratex returned up to 25.9 g/t Au, whilst vein float material taken 6.5 kilometres NW of the main zone returned 80.1 g/t Au, highlighting the potential scale of this system, which may now extend beyond the current mapped area.
Located 250 metres SW of the main Pandora structure, the Pyrrha Vein has been identified over a strike length of 1,540 km. The vein is generally less than 1 m in thickness. High gold assays of up to 71.60 g/t Au at surface could indicate a potential for the presence of high gold grades at depth. Further mapping in the area has also discovered the Thyia Zone that appears to be a linkage structure between Pyrrha and Pandora.The entire system at Oklila comprises over 10 km strike of outcropping and inferred veins.
A maiden diamond drilling programme was recently completed for 2,159 m in 15 holes across the Pandora South and Pandora Central zones. The best results were yielded from paired holes OK-D-10 and OK-D-11, and OK-D-12 and OK-D-13 that were drilled 200 m apart and included 1.36 m @ 10.55 g/t Au and 6.87 m @ 4.45 g/t Au. These holes have confirmed continuity of surface mineralisation to a vertical depth of approximately 150 m below surface, with the intersections in holes OK-D- 10 and OK-D-11, and OK-D-12 and OK-D-13 correlating with surface values of 1.30 m @ 6.40 g/t Au and 1.90 m @ 20 g/t Au respectively.
Located c.16 km to the North of Pandora, low-sulphidation epithermal gold occurs as high-grade veins and disseminated mineralisation in rhyolite domes. Phase 1 exploration by Thani Stratex during Q2-2015 comprised 303 samples (126 grab and 177 chip samples across 13 channels) and 1:2,000 mapping across the sample areas. Channel sampling returned best values of 19 m @ 4 g/t Au and 6 m @ 10 g/t Au (600 m apart), and five selective grab samples assayed >20 g/t Au (highest grade of 41 g/t Au).
In 2016, a maiden drilling programme was completed across the three main prospects, Porcupine Hill, Red Eagle Mountain and Black Mamba. The drilling confirmed vertical continuity to a depth of at least 175 m and returned best intercepts of 17.40 m @ 2.24 g/t Au from surface (AY-DD-03), 3.16 m @ 6.79 g/t Au from 20 m (AY-DD-03) and 1.58 m @ 8.67 g/t Au.
Located 250 km west of Ankara, the Muratdere property comprises three licences covering a substantial copper-gold- granodiorite-porphyry system with significant silver, molybdenum and rhenium credits. The porphyry system extends east-west for a distance of c.4,000 m and has a width of between 200 m and 400 m. The JORC-compliant Inferred Resource of 51 million tonnes (186,000 tonnes Cu, 204,296 oz Au, 3.9 million oz Ag, 6,390 tonnes Mo and 17,594 kg Re) extends over a distance of approximately 2,000 metres but is open-ended to the east and west and at depth, suggesting considerable potential to increase the resource.
In December 2011, Stratex entered into a joint-venture agreement with Lodos, a wholly-owned mining investment company of Pragma Finansal Danışmanlık Ticaret A.Ş. ('Pragma', previously referred to as 'InvestCo'), a leading private Turkish financial institution and investment company, for the development of the Muratdere project. As part of its earn-in to a 70% interest in Muratdere, Lodos completed drilling, made cash payments totalling US$2.2 million to Stratex, and completed a feasibility study in May 2015. Please click here for further details.
Since that time the economic environment has continued to deteriorate and the prices of copper and gold have declined. As such, Stratex has decided not to contribute its pro-rata share of recent project financing and as a result its interest in the project has been reduced to 14.87%. The Company will continue to assess the supply-demand scenario for copper and may consider supporting future work should it believe that the demand for copper and hence the price justifies its participation.
In the event that a party's equity interest falls below 10%, its interest shall be converted to a 1.2% Net Smelter Returns royalty.
Located in Eastern Thrace, about 261 km west of Istanbul, the 19.94 sq. km Enez licence covers and area of Tertiary volcanics that are prospective for epithermal gold mineralisation.
At the Karaağac gold project, located 300 km west-south-west of Ankara, mineralisation is hosted by an outcropping thrust zone and altered limestone. Systematic chip sampling has yielded numerous values in excess of 0.5 g/t gold and high values of 2 m @ 9.71 g/t gold and 1 m @ 6.92 g/t gold along approximately 7 km of the exposed thrust contact.
Karaağac has an inferred non-JORC resource of 156,798 oz Au. Under the terms of a joint-venture agreement, Turkish partner Anadolu Export Maden Sanayi ve Ticaret Limited Şirketi is funding a resource-drilling programme at the project and will shortly be submitting an application for a forest permit to allow drilling to proceed. Anadolou will spend up to US$1.5 million on exploration and drilling at Karaağac within two years and will pay Stratex US$500,000 cash if a minimum JORC-compliant indicated resource of 50,000 oz gold is confirmed during this period, plus a 1.5% net smelter returns royalty on any future mineral production.
Following the discovery of the Inlice project, which the Company sold in April 2013, satellite-image studies of the wider Konya Volcanic Belt led to the identification three key targets - Doğanbey, Doğanbey South and Karacaören - and a number of other areas of hydrothermal alteration.
Aster image of the Konya Volcanic Belt, highlighting key areas of alteration
At Doğanbey, pilot holes to investigate the coincident geochemical and geophysical targets, indicate that mineralisation is associated with porphyry- and epithermal-style gold mineralisation at depth. Initial RC drilling has also been undertaken at Karacaören and Doğanbey South, confirming that both prospects host gold-bearing porphyries.
The Company is in discussion with a number of Turkish companies that have variously expressed interest in the Konya licences.
Approximately 500 km SE of Ankara, the Hasançelebi high-sulphidation epithermal gold-silver project hosts stratigraphically-controlled mineralisation over a strike length of approx. 7 km.
Drilling to date has demonstrated the potential for low-grade, high-tonnage, near-surface gold mineralisation extending over a distance of between 1,000 metres and 2,000 metres, and vertical continuity of the system confirmed down to 300 metres in some areas. Best results include 16.05 metres averaging 0.45 g/t Au and 15.75 metres averaging 0.28 g/t Au. Two holes were also drilled into a new prospect (Karakaya Tepe) near the eastern end of the main Hasançelebi system, believed to be an iron oxide-copper-gold occurrence. The two best intersections returned were from hole HCD-11 - 28.00 metres averaging 0.30 g/t Au and 40.80 metres averaging 0.69 g/t Au.
Negotiations are currently underway with a third party that has expressed interest in the project.