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Apella Resources begins new strategy with Lac Dore sale to Prestige Mining unit

Last updated: 16:31 10 Feb 2012 GMT, First published: 17:31 10 Feb 2012 GMT

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Apella Resources (CVE:APA)(OTCQX:APAFF) said late Thursday that it sold its Lac Dore Vanadium-Iron-Titanium project to its 100 percent-owned Prestige Mining unit.

Under the terms of the sale agreement, Prestige Mining will pay Apella $1.5 million in a promissory note secured by 81.7 million non-restricted common shares in Prestige Mining.

The transaction is the first move within Apella's 2012 "go-forward plan" and the company expects to undertake similar agreements for its other Vanadium-Iron-Titanium projects in the near-term.

Earlier this year, Apella decided on a strategy of placing three of its Vanadium-Iron-Titanium assets - the Lac Dore/Lac Dore North project, the Iron-T project and the Game Changer project - into wholly-owned subsidiaries dedicated primarily to that particular asset.

As funds are raised to develop the projects, since they are held within subsidiaries, share dilution to the company as a whole is avoided.

Apella said it has entered into preliminary discussions, directly and indirectly, with several international mining and investment entities about potential equity investments directly into Prestige Mining, and management will consider all proposals based on the particular merits of each one.

The company believes that its current and future potential will be fully maximized from its initiatives targeted toward moving its extensive Canadian Vanadium-Iron-Titanium projects into production.

As part of the sale of Lac Dore, Prestige will also pay 35 percent of any and all funds received as a result of the Province of Quebec mining/exploration incentive and tax refund programs.

Prestige Mining will also grant a three percent Net Smelter Royalty in favour of Apella.

Apella has been engaged as the operator of the Lac Dore project and will receive an operator's management fee equal to 15 percent of the total expenditures spent on the property in each fiscal year for services rendered.

In addition, Prestige Mining is obligated to deliver to Apella a bankable feasibility study for the Lac Dore project on or before June 30th, 2014.

Lac Dore itself consists of 42 contiguous mineral claims covering an area of 650.22 hectares located in the Rinfret and Lemoine townships, 70 kilometres south-east of the town of Chibougamau, Quebec.

Vanadium is used in new battery storage technologies for solar and wind power projects and to enhance the performance of lithium batteries. The element is also a vital ingredient in high-grade steel.

In other news, Prestige Mining plans to undertake its first phase of diamond drilling at Lac Dore in the spring of 2012. Drill targets have now been identified for the first two phases.

Vancouver-headquartered Apella Resources is focused on securing a stable Canadian supply of vanadium through its numerous exploration projects in the province of Quebec. The junior explorer also has gold and copper assets in its portfolio.

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