Apollo Minerals in alliance with Robert Friedland to find copper-gold
Apollo Minerals (ASX:AON)
has entered a strategic alliance and gained an investment from a
privately owned exploration company of well-known billionaire mining
entrepreneur Robert Friedland.
Friedland's net worth is
estimated at US$1.1 billion by Forbes Magazine and is also the founder
and executive chairman of Canadian listed $1 billion capped Ivanhoe Mines (TSE:IVN).
Now here is where it gets interesting.
Unlisted
High Powered Exploration Inc or HPX, which is indirectly controlled by
Robert Friedland, will form a strategic alliance with Apollo to find
major Iron Oxide Copper Gold (IOCG) deposits on Apollo’s licenses in the
Gawler Craton in South Australia.
Given recent results, this
looks to be an better than even chance after numerous new iron
oxide-copper-gold drill targets were identified in February at the Bundi
prospect within Apollo's Titan base and precious metals project in
South Australia.
The Bundi gravity anomaly, consistent with the dominant IOCG target, is several times larger than that of Oz Minerals' (ASX:OZL) Carrapateena Deposit.
In
fact, the Bundi prospect shares striking similarities to major IOCG
deposits in the area including the Prominent Hill, and BHP's behemoth
Olympic Dam deposit.
An independent review of the Bundi Prospect
by geophysicist Chris Anderson, who was instrumental in the discovery of
Carrapateena, has demonstrated potential for a large IOCG system.
This promise is clearly a defining factor in the entry of HPX and Robert Friedland onto the Apollo share register.
HPX
will apply its in-house geophysical tools and expertise at the Bundi
Prospect, which has a large and highly prospective IOCG type footprint.
This technology can penetrate to greater depths with high accuracy and
has been successfully deployed in Australia, Africa and South America.
Titan
lies within a prized new IOCG frontier in the Gawler Craton copper-gold
belt, close to the world class Prominent Hill and Olympic Dam deposits.
HPX has also some "serious" exploration talent in ex-Anglo
American geoscientist Mark Gibson and ex-CEO of Gold Fields Ltd Ian
Cockerill as key HPX executives.
By the look of it, HPX will
become the Australian exploration vehicle of Robert Friedland, who has
latched onto Apollo and looking for the next Olympic Dam or super Tier 1
mineral deposit.
Apollo has scored a coup with its attracting
Friedland to an equity investment and project funding into its South
Australian licenses. The joint venture will be known as the Commonwealth
Hill Joint Venture.
“Apollo has conducted an extensive process
to identify a strategic and joint venture partner. We have been
fortunate to attract a group like HPX which has world class technology,
highly skilled and experienced people, and a successful track record,” Apollo executive director Richard Shemesian said.
“It
is this sort of exploration expertise, know-how and finance that Apollo
requires to make discoveries in this new IOCG Frontier in South
Australia.”
HPX chief executive officer Mark Gibson said the
company was excited about the potential of Apollo’s project in South
Australia and looked forward to applying its expertise and technology at
the Commonwealth Hill Joint Venture.
He added the company was
looking forward to working with Apollo to test some of the targets which
Apollo has already identified, and others.
Gibson also noted
that HPX’s technology was ideally suited to the geological environment
and surface conditions found at Commonwealth Hill, and can quickly
evaluate the large geological features present there.
“We anticipate a rapid survey turnaround, to generate targets for follow up drilling.”
Funding details
HPX
will make an initial equity investment of $1 million by subscribing for
shares priced at $0.02 each, giving it a 10% stake in Apollo.
It
can increase this to 20% by making a further investment of about $1.4
million by 30 June 2014 by subscribing for shares priced at $0.024 each.
HPX will have a right to appoint one person to the board on completion of the first placement
Under
the joint venture component of the agreement, HPX will have the right
to earn a 51% interest in the Commonwealth Hill Joint Venture by
expending $1.7 million by 31 December 2015 and a further 29% by
expending a further $1.7 million within 18 months after the phase 1
earn-in period.
The total farm-in expenditure by HPX would be
$3.4 million to earn an 80% interest in the JV. An amount of up to $1.25
million of HPX’s placement moneys will form part of HPX’s total JV
expenditure.
In addition, HPX can earn an 80% interest in
Apollo’s South Australian licences under the Commonwealth Hill Joint
Venture by investing up to $3.4 million in funding.
Apollo will
retain exclusive access to the Mars tenement block (18 square
kilometres), and all mineral rights over the Sequoia Iron Deposit (7
square kilometres) unless HPX identifies, before 31 December 2015, the
potential for the extraction of minerals other than iron ore from the
Sequoia block.
The JV does not affect the Eaglehawk JV where Apollo continues to hold the right to earn a 75% interest from Mincor (ASX: MCR).
Robert Friedland details
Friedland
made his first fortune when he struck it rich at the Voisey’s Bay
nickel deposit in Labrador, which he sold to Inco for $4.3 billion in
1996.
Later he found the massive Oyu Tolgoi copper deposit in
Mongolia, one of the biggest in the world, but last year he lost control
of the $6 billion project to his partner, Rio Tinto, in a deal that required him to step down from his company, Ivanhoe Mines Ltd.
For
Apple watchers, Robert Friedland is actually credited with having
taught Apple founder Steve Jobs about the ‘reality distortion field’
when the latter was in college in 1972.
Analysis
For a small cap company like Apollo Minerals with a market cap of circa $6 million to capture an investment by HPX
and Robert Friedland - which is effectively his re-entry into Australian
exploration, is no small beer.
It is an endorsement of the
work and review of the Bundi Prospect by geophysicist Chris Anderson,
who was instrumental in the discovery of Carrapateena, which has
generated the excitement for potential for a Tier 1 large IOCG system.
The
agreement with HPX is strong validation of the area’s discovery
potential, and provides the funding and technical expertise to rapidly
advance the project.
The review has confirmed the significance of the Bundi prospect and to advance Bundi exploration as a priority.
Preliminary drill targets have been identified before embarking on a maiden drill program.
HPX’s
geophysical technology can penetrate to great depths with high accuracy
and has been successfully deployed in Australia, Africa and South
America and suited to the geological environment and surface conditions
found at Commonwealth Hill.
While early days, but at a similar
stage of exploration, the Bundi prospect has some striking similarities
to major IOCG deposits in the area including the Prominent Hill, and
BHP's behemoth Olympic Dam deposit.
While the initial investment
by HPX is $1 million at $0.02 and with an option to invest a further
$1.4 million at $0.024 by June 30 2014 are not large by market terms; if
exploration does unearth a large IOCG deposit, there is further project
investment to come from HPX. Which, Apollo would surely need in the
event.
Before that, the investment and expertise of HPX will de-risk Apollo Minerals and provide a ride for investors and will surely make the
pre-announcement million market cap. of $6 million a blip in the rear
view mirror not too far away.
