Apollo Minerals Ltd (ASX:AON) has reached a strategically important milestone after securing 100% ownership of the Kroussou Zinc-Lead Project in Gabon, central Africa, via agreements with Trek Metals Ltd (ASX:TKM) and Battery Minerals Ltd.
The agreement will see Trek become a shareholder of Apollo Minerals.
Two diamond rigs are currently active at Kroussou with results expected in due course.
In addition to the current active drill program, planning has commenced for an airborne electromagnetic (AEM) survey, which is scheduled to be completed during the June quarter.
“Strong value driver”
Apollo Minerals executive director Neil Inwood said: “Securing 100% ownership of the province scale Kroussou zinc-lead exploration project is an outstanding outcome for Apollo Minerals and represents a strategically important milestone.
“We welcome Trek as a shareholder of Apollo Minerals.
“Our exploration success at Kroussou has been built on sound geological work by their team and we appreciate their confidence in converting their minority project interest into a direct shareholding interest in Apollo Minerals.
“The acquisition of the minority ownership interests and the removal of all future vendor royalty and payment obligations underlines the company’s belief in the future potential of Kroussou and de-risks the development pathway.
"The transaction is considered a strong value driver for Apollo Minerals given the exciting discoveries made at Kroussou and our excellent ongoing results.”
Exposure to future upside of Apollo’s activities
Commenting on the agreement, Trek CEO Derek Marshall said: “This agreement with Apollo Minerals is structured in a way that converts our minority project exposure into a direct equity interest in Apollo, giving us exposure to the future upside of Apollo’s activities.
“This will allow us to crystallise value from our remaining interest in the Kroussou Project and is consistent with our strategic focus as an explorer-developer in the Pilbara region of WA.”
Earn-in deal
Apollo Minerals previously entered into an earn-in-agreement with Trek in September 2019 under which the Company has earned an 80% interest in Kroussou.
The commercial terms of the earn-in agreement required Apollo Minerals to spend a total of $4 million to earn the 80% interest, following which, both Trek and Apollo Minerals were required to contribute to expenditure on a pro-rata basis to maintain their respective interest in the Project.
The terms also included various other rights and obligations including the requirement for Apollo Minerals to assume Trek’s obligation to make a payment of US$500,000 to Battery Minerals, the previous owner of the Project, upon any decision to mine.
The conditions precedent to the agreement included receiving a valid mining convention and any other approvals required from the Gabon Government relating to Apollo Minerals assuming control of the Project.
All conditions precedents were met in May 2020 with the Gabon Government awarding Apollo Minerals a Mining Convention and approving the change of control of the Project.
Share sale deed
Under the terms of a share sale deed between Apollo Minerals, Trek and their relevant subsidiaries, Apollo Minerals will acquire all of the shares in Select Exploration, the wholly-owned subsidiary of Trek, which indirectly holds ownership of Kroussou.
In consideration, Apollo Minerals will, subject to shareholder approval, issue the following securities to Trek (and/or its nominees):
➢ 3,000,000 fully paid ordinary shares in Apollo Minerals (Shares); and
➢ 1,000,000 unlisted options exercisable at A$0.12 each on or before 30 June 2024.
Completion is conditional on satisfaction (or waiver) of the following conditions precedent by 30 September 2022 (End Date):
➢ Apollo Minerals' shareholders approving the issue of the consideration securities to Trek;
➢ no breach of the share sale deed by the parties (other than Apollo Minerals) occurring; and
➢ no material adverse change occurring in respect of Select Exploration or the Project.
A company general meeting will be held to approve the issue of the securities to Trek and a notice of meeting will be sent to shareholders in due course with the general meeting expected to be held in May 2022.
Deed of termination & release
Apollo Minerals, Battery Minerals, Trek and its subsidiary have entered into a deed of termination and release pursuant to which Apollo Minerals has been released from various vendor payment obligations owed to Trek and Battery Minerals under the earn-in agreement.
The deed will:
➢ consolidate 100% ownership of the Kroussou project; and
➢ be released from the decision to mine payment of US$500,000 to Battery Minerals and all residual royalty and or production rights held by Trek and/or Battery Minerals including any rights to a 1% net smelter royalty over any future production from Kroussou.
Subject to completion under the share sale deed, the consideration payable by Apollo Minerals under the deed of termination and release is a cash payment of A$250,000 to Battery Minerals.
2022 exploration program
Two diamond rigs are currently onsite at Kroussou and currently drilling at Dikaki.
Dikaki is one of 18 prospects identified along the more than 80 kilometres of strike length of prospective geology at Kroussou.
Recently reported results have been positive and included 6.5 metres at 8.0% zinc+lead from Dikaki and 5.3 metres at 10.3% zinc+lead from Niamabimbou.
Further assay results will be reported as received.
Data from the AEM survey will allow the company to test the entire strike length of prospective geology at Kroussou and potentially highlight further shallow high-grade mineralisation similar to Dikaki and Niamabimbou at other identified prospects.
Metallurgical test work is ongoing with around 500kg of HQ diamond core samples taken from Dikaki currently undergoing flow-sheet test work in Perth with initial results expected to be reported during the June 2022 quarter.