Australian iron ore developer Apollo Minerals has signed a strategic alliance with High Power Exploration (HPX) to explore iron oxide-copper-gold (IOCG) deposits in the Northern Gawler Craton in South Australia.

The total farm-in expenditure by HPX is about $3.4m, which will be a two tranche equity investment, to earn an 80% interest in the Commonwealth Hill joint venture (JV).

Up to $1.25m of the placement amount will be applied towards the expenditure.

Following the farm-in, a JV will be established between the parties.

Under the terms of the deal, HPX will make an initial equity investment of $1m at $0.02 per share, to acquire a 10% stake in Apollo.

HPX can increase its stake to 20% by making a further investment of about $1.4m before 30 June, by subscribing for shares priced at $0.024 each.

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Upon completion of the first placement, the company will have the right to appoint one person to the board.

The JV component of the agreement requires HPX to expend $1.7m by 31 December 2015 to earn a 51% interest in the JV, and a further $1.7m 18 months after the phase one, for an additional 29%.

HPX will apply its in-house geophysical tools and expertise at the Bundi prospect, which is said to have a large and highly prospective IOCG type footprint.

According to Apollo, the transaction with HPX will not affect the company’s existing JV arrangements, including its right to earn a 75% interest in the adjacent Eaglehawk (Mincor JV) and the Aurora-Tank JV.

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."

Apollo believes that its project area in the northern Gawler Craton has strong a potential to host a tier one base and precious metals deposit.

Image: Apollo’s Bundi prospect is in a new IOCG Frontier in South Australia. Photo: courtesy of Apollo Minerals Ltd