ASX RELEASE 8 August 2017
Stratex Investor PresentationAs announced on 15 June 2017, Brazil-focused exploration and mining company Crusader Resources Limited (ASX: CAS) (Crusader) has entered into a binding Scheme Implementation Deed providing for a merger with London AIM-listed Stratex International plc (AIM: STI) (Stratex).
Further details of the proposed transaction are detailed in Crusader's ASX announcement dated 15 June 2017. Stratex has today released the attached investor presentation in relation to the proposed merger.
Crusader has lodged the draft Scheme Booklet with the Australian Securities and Investments Commission and will provide further updates to the market regarding the indicative timetable for the merger process, including the shareholder scheme meeting, in due course.
For further information, please contact:
Mr. Rob Smakman Mr. Paul Stephen
Managing Director, Brazil Executive Director, Australia
Office (Brazil): +55 31 2515 0740 Office (Aus): +61 8 9320 7500
Email: rob@crusaderdobrasil.com Email: paul@crusaderresources.com
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MERGERCREATING A DIVERSIFIED GOLD EXPLORER AND NEAR TERM PRODUCER
DisclaimerSummary Information
These presentation slides (the "Slides") contain summary information relating to Stratex International plc (the "Company"). The information is general background information and does not purport to summarise all information that an investor should consider when making an investment decision. Figures may not sum due to rounding. The Slides do not comprise an admission document, listing particulars or a prospectus relating to the Company or any subsidiary of the Company, do not constitute an offer or invitation to purchase or subscribe for any securities of the Company and should not be relied on in connection with a decision to purchase or subscribe for any such securities. The Slides and the accompanying verbal presentation do not constitute a recommendation regarding any decision to sell or purchase securities in the Company.
The Slides and the accompanying verbal presentation are confidential and the Slides are being supplied to you solely for your information and may not be reproduced or distributed to any other person or published, in whole or in part, for any purpose. No reliance may be placed for any purpose whatsoever on the information contained in the Slides and the accompanying verbal presentation or the completeness or accuracy of such information. No representation or warranty, express or implied, is given by or on behalf of the Company, Hannam & Partners, or their respective shareholders, directors, officers or employees or any other person as to the accuracy or completeness of the information or opinions contained in the Slides and the accompanying verbal presentation, and no liability is accepted for any such information or opinions (including in the case of negligence, but excluding any liability for fraud). Accordingly, neither the Company nor its directors makes any representations or warranty in respect of the contents of the Slides.
Not investment advice
The Slides have been prepared for information purposes only and do not constitute financial product or investment advice or a recommendation to acquire entitlements or shares. The Slides are not a prospectus or a product disclosure statement nor do they constitute an offering document under any law, and they have not been lodged with any regulator. The information in the Slides has been prepared without taking into account the investment objectives, financial circumstances, taxation position or particular needs of investors. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek appropriate legal, financial and taxation advice appropriate to their jurisdiction.
Forward Looking Statements
The Slides contain forward-looking statements, which relate, inter alia, to the Company's proposed strategy, plans and objectives. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from such forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, you should not rely on any forward-looking statements and the Company accepts no obligation to disseminate any updates or revisions to such forward-looking statements. All information included in this presentation is based on the assumption that the proposed merger will complete.
For Persons in the United Kingdom and other EEA member states
The Slides and their contents are directed only at persons who fall within the exemptions contained in Articles 19 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (such as persons who are authorised or exempt persons within the meaning of the Financial Services and Markets Act 2000 and certain other persons having professional experience relating to investments, high net worth companies, unincorporated associations or partnerships and the trustees of high value trusts) and persons to whom distribution may otherwise lawfully be made. Any investment, investment activity or controlled activity to which the Slides relates is available only to such persons and will be engaged in only with such persons.
Persons of any other description, including those that do not have professional experience in matters relating to investments, should not rely or act upon the Slides.
Other Information
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The Securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "US Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered or sold within the United States or to, or for the account or benefit of, any US Person as that term is defined in Regulation S under the US Securities Act. The Company has not been registered and will not register under the United States Investment Company Act of 1940, as amended.
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Stratex Target CriteriaCREATING AN
Focus on developing countries
INDEPENDENT GOLD PRODUCER AND EXPLORER
Near or in-production gold assets, AISC
Leverage management expertise
Under-capitalised / Requiring funding
Underlying value not recognised by market
Opportunities to resolve technical or social issues
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Proven Management TeamMarcus Engelbrecht
CEO 32 years' experience in the global mining industry
Previously Managing Director and CEO of Archipelago Resources plc where he took the company from construction to production of >150kozpa. Took reserves from 1 to 3 Moz
Previously CFO and interim CEO of OceanaGold where he had realigned the core strategy and implemented significant
management and operational changes
Significant capital and debt markets experience
Served as CFO of the Diamonds & Speciality Products group of BHP Billiton
Perry Ashwood
CFO Qualified as a chartered accountant after training with Spain Brothers & Co. and KPMG
Held senior roles in financial positions ranging from Group Chief Accountant to Finance Director at British Oxygen and Rank Xerox Ltd. over 25 years. He has held both technical accounting and international operational roles
Previously Finance Director at Intermec International Inc
Independent consultant in 2000 prior to joining Stratex in 2005
Paul Stephen
Proposed Executive Director
Robert Smakman
Proposed Senior Executive
More than 20 years' experience in resources and financial services sector
Senior roles and directorships at Montague Stockbrokers, Patersons Securities Ltd and Macquarie Bank
Previously Managing Director of Integrated Fuel Serviced Pty Ltd
More than 20 years' international experience as a geologist and manager in Australia, Africa, South America and Europe
Experience managing exploration, development and mining of metals including gold, silver, copper, uranium, tin and iron ore
Responsible for various mineral discoveries and resource drill-outs including Southern Star Gold in Australia, Dikulushi Copper/Silver (DRC) and the Certej epithermal Gold/Silver deposit in Romania
For Crusader in Brazil, led the negotiations, exploration, resource definition, engineering studies and licensing for the main assets including Posse Iron, Borborema and Juruena Gold. Developed and profitably operated the Posse Iron Ore mine for >4 years (operated with a single Lost Time Injury (LTI))
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Combined Corporate ProfileBoard of Directors4
Stratex
Crusader
> POST MERGER STRUCTURE
Merger terms
MergeCo US$M
Crusader to be acquired at an offer price of AUD$0.18/share, which represents a premium of 63.6% to the 15D VWAP1
GBP/USD exchange rate: 1.30, AUD/USD exchange rate: 0.74, AUD/GBP: 0.571
Exchange ratio of 6.60x
Consolidation factor post transaction of 20.0x
AIM Reverse Takeover
Share o/s 122.7M
Market cap 47.52
Cash 8.43
Total debt 1.2
Minority Interest 0.1
EV 40.4
Marcus Engelbrecht (CEO) Paul Stephen (proposed ED) Perry Ashwood (CFO) Jim Rogers (proposed NED) Peter Addison (NEC) John Evans (proposed NED)
Emma Priestley (NED) -
Chris Worcester (NED) -
Enlarged share capital Shares (M) %
Existing Stratex shares 467.3 19.0%
Shares issued to Crusader 1,987.3 81.0%
Options 291.9 -
Convertible loan 76.2 -
Total (undiluted) 2,454.6 100.0%
Total (diluted) 2,852.7 100.0% Total consolidated shares (undil.) 122.7 100.0%
Total consolidated shares (dil.) 142.6 100.0%
Shares issued to Crusader 81.0%
Existing Stratex shares 19.0%
Top 5 shareholders of MergeCo (undiluted)5
Stephen Copulos 16.8%
Farjoy Pty Ltd 8.1%
International Finance Corp 3.7%
Matchpoint Inv. Man. 3.1%
Chris Retzos 3.1%
1As at 17th May 2017
2At current Stratex market cap of US$7.4M and Crusader offer price of US$40.1M as at 1st August 2017 3US$8.0M as at 30th June 2017 for Stratex; US$0.4M as at 30th June 2017 for Crusader; pre-transaction balance 4NEC: Non-Executive Chairman, ED: Executive Director, NED: Non-Executive Director
5Shareholder structure is based on registers of both groups as at 30th June 2017
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Stratex Enlarged GroupUS$47.5M
1.61
Moz
Market capitalisation1
Total JORC reserves
3.01
Moz
Au Eq
Total JORC resources2
US$8.4M
Cash on balance sheet3
>US$40M
Invested in projects to date
>US$120M
Borborema NPV
1At current Stratex market cap of US$7.4M and Crusader offer price of US$40.1M as at 1st August 2017
2Measured (0.35 Moz Au) + Indicated (1.66 Moz Au) + Inferred resources (1.0 Moz Au), attributable gold equivalent ounces. Includes 2.87 Moz Au.
3US$8.0M as at 30th June 2017 for Stratex; US$0.4M as at 30th June 2017 for Crusader; pre-transaction balance 6
4Not considered to be material to merged entity; 5JORC 2012
Investment HighlightsExperienced team with proven development and operational success
Path to production and earnings
Attractive pipeline of projects - enhanced ability to fund Stratex's existing portfolio
Borborema is an advanced project with significant optimisation potential
Undervalued assets with high grade advanced exploration exposure
Improved capital markets profile and liquidity
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Combined Group - Significantly Undervalued vs. PeersBoth Stratex and Crusader currently trading at large discounts to advanced exploration and development peers:
MergeCo is expected to trade at an EV/Resource multiple of US$13.4/oz and a P/NAV of 0.29x
Re-rating expected on completion of transaction
Stratex trading at less than cash with no value attributed to assets
>US$40M spent on MergeCo material assets to date
Crusader currently trades at:
an EV/Resource multiple of US$10.9/oz vs. peer average of US$53.2/oz and;
a P/NAV of 0.19x vs. peer average of 0.48x
PEER BENCHMARKING
0.70x
0.75x
0.65x
0.74x
0.64x
0.53x
0.62x
MergeCo
140 0.8x
EV/Resource (US$/oz)
120
0.26x
0.29x
100
0.6x
0.39x
0.32x
0.49x
0.37x
0.36x
80
0.20x
60 Av: US$53.2/oz
0.12x
40
115.5
103.1
85.9
66.1
64.7
61.6
53.9
51.8
50.6
49.1
43.6
37.7
29.7
29.3
18.1
17.3
20
0.19x
(Negative EV)
P/NAV
0.4x
10.9
0.2x
26.8
13.4
0 0.0x
Source: Company releases, CapitalIQ; data as at 24th July 2017
Note: Share prices rebased to 100, no value ascribed to Stratex assets
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Development value curve> ASSETS AT INFLECTION POINTS ON THE VALUE CURVE
Exploration Evaluation Construction Production
Probable/ Proven Reserves
Measured
Increasing value
Turkish assets
Dalafin, Tembo
Inferred
Goldstone, ThaniStratex
Indicated
Juruena Borborema
Resources
Closure
Commissioning
Bankable Feasibility Study
Discovery
Desktop
Study
Pre- Feasibility Study (CPR)
Crusader assets
Stratex assets and JVs
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Borborema (100%)> CLEAR PATH TO PRODUCTION
Low risk, large, open-pittable gold project in North- Eastern Brazil with high grade core
Targeting BFS within 6 months and construction within 12 months1
Operating and environmental/LP licences granted. Installation licence to be submitted post transaction
Excellent regional infrastructure
2 Mtpa CIL processing for ~70,000 oz p/a gold
Ore body remains open and grades increasing at depth
1.61 Moz
Source: Draft BFS study 2012
JORC Reserve2
2.43 Moz
JORC Resource2
95,000 m
Drilling to date3
1Subject to funding
2Updated to JORC 2012
3By Crusader, 17 km drilled prior
BFS
Multiple optimisation opportunities
Source: Crusader Resources - Latin America Downunder Presentation - May 2016
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Borborema - AdvantagesLow risk, straight-forward, open-pit mining and standard CIL processing for >93% recoveries from well-defined ore body
EIA recently approved - Installation licence expected in late 2017
Efficient logistics and power infrastructure significantly reduce project development and execution risk
All major exploration expenses and drilling complete
High level of existing support infrastructure
Bitumen highway BR226, 140km from city (and port) of Natal to mine gate
Power lines traverse Crusader's tenements (expected power cost 7c/kWh)
25km from mining town of Currais Novos - experienced labour easily available
Multiple water options available
Conducive regulatory environment
Sudene tax concessions1 may be available - overall tax rate of 15.25%
Low government mineral royalties2 - currently 1%
1A federal government economic stimulus scheme, called Sudene, provides significant benefits for businesses operating in the north east of Brazil, including Rio Grande do Norte. The scheme was introduced to boost economic activity in a relatively impoverished area of Brazil. Company tax rates are reduced from 34% to 15.25% for a period of 10 years.
Other benefits include reduction in the rates of taxes such as goods and services taxes, sales taxes and import duties.
2The current rate of government royalty is 1% of sales revenue. There is also a 0.5% royalty payable to the landowners. Note that Crusader owns a number of farms in the immediate area including the one that covers the central part of the ore body.
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