JSPL, which holds an 11.7% stake in Apollo, will acquire a majority interest in the new iron-ore focused firm by investing A$10m ($10.3m) through its Australian subsidiary Jindal Steel and Power.
According to the non-binding term sheet, Apollo's wholly owned subsidiaries that hold iron ore tenements in South Australia and Western Australia, and interest in the Gabon iron ore project will be transferred into NewCo, while Apollo will retain its base-precious metals portfolio.
This move is expected to speed up the development of Apollo's iron ore projects.
Apollo chairman Tony Ho said the deal is a "transformational event" for the company that will allow it to unlock maximum value for its shareholders.
"The separation of our iron ore and base-precious metals assets is an important part of this process.
"We are pleased to have a major partner of the calibre of Jindal Steel and Power involved in our iron ore projects and we believe we now have the key ingredients required to take Apollo's iron ore projects from exploration to production in the shortest possible time," Ho added.
NewCo will transfer exclusive rights to its prospective base-precious metals portfolio in the South Australian and Western Australian tenements to Apollo, under a mineral rights deed, which is to be negotiated.
JSPL and NewCo will work closely to develop the iron ore projects, including the sourcing of capital from both Australian and its traditional investor sources, and the capital markets of India.
Formal documentation and binding agreements for the strategic partnership, which come almost a year after JSPL's initial equity investment in Apollo, are expected to be signed over the next two months.
Apollo Minerals currently operates Commonwealth Hill Project in South Australia and Mount Oscar Project in the Pilbara region of Western Australia.
In February 2013, Jindal Steel and Power increased its stake in Apollo Minerals from 9.25% to 11.7% by acquiring an additional tenmillion shares for A$0.4m ($0.4m).
Apollo Minerals announced at the time that it would use the proceeds in exploration and development of Commonwealth Hill Iron Project and the Titan Base-Precious Metals Project, both of which are located in the prospective Gawler Craton in South Australia.
Image: Apollo Minerals currently operates Mount Oscar Project in the Pilbara region of Western Australia. Photo: Apollo Minerals Ltd.