16/11/2007 - 13:28

Apollo to acquire Pilbara iron ore project for $1m

16/11/2007 - 13:28

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West Perth-based uranium and iron ore company Apollo Minerals Ltd will acquire an 80 per cent interest in an iron ore project in the Pilbara for up to $1 million under an option agreement, the company has announced.

West Perth-based uranium and iron ore company Apollo Minerals Ltd will acquire an 80 per cent interest in an iron ore project in the Pilbara for up to $1 million under an option agreement, the company has announced.

Under the terms of the Option Agreement, Apollo has an option to acquire an 80 per cent interest in the two tenements, after paying a non-refundable option fee of $50,000.

Subject to the successful completion of the due diligence, Apollo may elect to enter into a Joint Venture Agreement in relation to these tenements.

The JVA terms will include provisions for the vendor to retain all uranium rights, a net smelter royalty entitlement of 1.5 per cent and a 20 per cent free carried interest (subject to Apollo having the right to re-acquire this free carried interest at any time).

Upon the JVA being entered into, Apollo will pay up to $450,000 in cash and shares. A further $500,000 in cash and shares will be paid upon the granting of the tenements.

 

 

 

The full text of a company announcement is pasted below

Key points:

  • Apollo Minerals enters option agreement to acquire 80% interest in a recently discovered iron ore project in the Pilbara region of Western Australia.
  • Initial results at Mt Oscar Iron Ore Project (being adjoining E47/1217 held by Fox Resources Limited) show up to 46% iron (Fe) at surface
  • The Apollo Iron Project Area (being ELA 47/1378 and ELA 47/1379) lies 25km south of Cape Lambert magnetite project presently being developed by Cape Lambert Iron Ore Limited (Current resource of 977 million tonnes @ 32.4% Fe) and is adjacent to Fox Resources Limited's recent iron ore discovery, the Mt Oscar Iron Ore Project .
  • The Mount Oscar Iron Ore Project straddles both the Apollo Iron Project Area and Fox Resources tenement
  • Significant historical iron ore results contained on Apollo Iron Project Area

Newly listed Australian resources company Apollo Minerals Ltd (ASX code: AON) ("Apollo") has reached agreement to acquire an 80 per cent interest, under an Option Agreement, in two exploration licence applications covering an area of approximately 212 square kilometers (ELA 47/1378 and ELA 47/1379) ("Apollo Iron Project Area") located in the Pilbara region of Western Australia (refer attached map).

On 2 July 2007, ASX listed Fox Resources Ltd (ASX Code: FXR) announced to the ASX the discovery of a new iron ore prospect, the Mt Oscar Iron Ore Project (Exploration Licence Application 47/1217). The geology comprises partially outcropping Banded Iron Formation (BIF) over an area of approximately 5km by 2km. The BIF outcrop is coincident with a regional strong magnetic high. On 9 August 2007, Fox Resources advised the ASX that rock chip
sampling confirmed surface iron ore enrichment in excess of 40% iron.

This highly magnetic unit straddles both the Fox Resources tenement and the Apollo Iron Project Area. The Apollo Iron Project Area lies 32 kilometres east of Fox's Radio Hill nickel-copper mine and 25km south of Cape Lambert's iron ore project. Cape Lambert has advised the ASX it has targeted a 1 billion tonne plus magnetite project and is currently completing a feasibility study. The Central Target Area recently delivered a total resource estimate of 977 million tonnes at 32.4% Fe.

Apollo's Iron Project Area is believed to host the same potential iron ore unit as found at Cape Lambert. Iron ore assays from samples taken over Fox Resources and Apollo's ground results have been recently released by Fox Resources to the ASX on 9 August 2007 (see table 1).

On 17 October 2007, Fox Resources announced to the ASX after its initial assessment of exploration results at the Mt Oscar Iron Ore Project that:

"These early exceptionally high magnetic results confirm the potential for a significant magnetic iron ore unit to exist."

The Mt Oscar Iron Ore Project as reported by Fox Resources to the ASX includes the following significant results:

  • "The area of interest is partially outcropping banded iron formation which is 5km long and 2km wide and is coincident with a regional magnetic high
  • Initial aeromagnetic modeling for the main anomalies have suggested the presence of a folded sequence and believe two strong and broad magnetic units 400-600 metres thick are related by folding within a synclinal structure. The modelled magnetic characteristics are very high and support the presence of potential magnetite development below surface.
  • Mt Oscar has been subject to exploration in the past which started in the 1960s and the latest work was completed by KKR Resources in 1994. KKR's work included mapping, airborne magnetics and rock chip sampling.
  • Independent assays by Fox confirm surface iron enrichment in excess of 40% Fe on the prospect. A review of work by KKR Resources undertaken in 1994 included rock chip sampling and also showed results averaging above 40% iron(see table 1)
  • Higher grade iron enrichment are below the surface as indicated by the recent geophysics interpretation
  • Fox to conduct further surveys to delineate potential areas of hematite iron or direct shipping grade iron ore."

Terms of agreement

Under the terms of the Option Agreement, Apollo has an option to acquire an 80% interest in the two tenements. Apollo has paid a non-refundable option fee of A$50,000 and has been given 45 days to complete due diligence on the two tenements.

Subject to the successful completion of the due diligence, Apollo may elect to enter into a Joint Venture Agreement ("JVA") in relation to these tenements.

The JVA terms will include provisions for the vendor to retain all uranium rights, a net smelter royalty entitlement of 1.5% and a 20% free carried interest (subject to Apollo having the right to re-acquire this free carried interest at any time).

Upon the JVA being entered into, Apollo will pay up to $450,000 in cash and shares. A further $500,000 in cash and shares will be paid upon the granting of the tenements.

Mr Sevag Chalabian (Chairman of Apollo) commented:

"The acquisition strategically places Apollo in the middle of a significant iron ore discovery at Mount Oscar in the Pilbara where other explorers such as Cape Lambert and Fox Resources presently are actively engaged in the development of similar types of deposits. We at Apollo are excited by this new opportunity."

Upon the JVA being entered into, Apollo will immediately commence exploration on the tenements. Work will include the acquisition of aeromagnetic and gravity data followed by modeling, detailed geological mapping and sampling and drill testing programme.

Other Projects of Apollo:

Apollo continues to progress the exploration program for its portfolio of 1,793 sq km of mineral tenements in South Australia as well as continuing to seek new projects both within Australia and overseas.

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