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.
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