JSPL to invest A$10 mn in Apollo Minerals' newly spun-off iron ore company

19 Mar 2013


Naveen Jindal-led Jindal Steel and Power (JSPL) has struck an A$10-million (Rs56 crore) deal to acquire a majority stake in a newly-listed pure-play iron ore company that will be spun off from Australian junior miner Apollo Minerals.

In order to fast-track development of its iron ore assets, Sydney-based Apollo will transfer all its iron ore assets into a new Australian Securities Exchange-listed company called NewCo, while Apollo will retain its base and precious metals portfolio.

Apollo shareholders will receive shares in the new company on a pro-rata basis and will own 49 per cent of NewCo once it is listed.

JSPL, which already holds 11.7 per cent stake in Apollo, will invest A$10 million in NewCo and will also assist in evaluating the mine development options available for each of its iron ore projects.

In May 2012, JSPL had acquired a 9.2-per cent stake in Apollo for A$1 million (Rs5.30 crore), and last month acquired an additional 2.45 per cent for about AS$0.4 million (Rs2.20 crore).

Both companies have signed a non-binding term sheet for the new investment and "formal documentation and binding agreements are expected to be signed over the next two months," Apollo said in a statement.

Apollo's non-executive chairman, Tony Ho, said, "This is a transformational event for Apollo and one that will allow us to unlock maximum value for our shareholders. The separation of our iron ore and base-precious metals assets is an important part of this process."

"We now have the key ingredients required to take Apollo's iron ore projects from exploration to production in the shortest possible time," he added.

Apollo owns two undeveloped iron ore projects, the Mount Oscar Project in the Pilbara region of Western Australia and the Commonwealth Hill Project in the highly prospective Gawler Craton in South Australia.

It also holds a 70-per cent interest in the Kango North Iron Project in North Gabon, West Central Africa.

The Mount Oscar Project is located 25km south of the port of Cape Lambert and close to proposed multi-user Ankatell Point Port.  Apollo Minerals has a total exploration target of 500 million tonnes of iron ore with 31-37 per cent Fe grade.

The Commonwealth Hill tenements are located near to some of South Australia's world-class uranium, iron ore and base metal projects, including the iron oxide-copper-gold-uranium (IOCGU) deposits at Olympic dam and Prominent Hill.

The company is evaluating the potential to develop a medium-sized iron-ore mine at the Commonwealth Hill property, which has the potential to support a 17-year mine life at 2.5 million tonnes per annum sales.

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