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1 ASX ANNOUNCEMENT 26 February 2014 APOLLO AND HIGH POWER EXPLORATION INC. ENTER STRATEGIC ALLIANCE TO EXPLORE NEW COPPER-GOLD FRONTIER HIGHLIGHTS Apollo and High Power Exploration Inc (HPX) have entered into a strategic alliance to explore for Iron Oxide Copper Gold (IOCG) deposits on Apollo s licenses in South Australia Key terms of the binding agreements: o HPX to make an initial equity investment of $1m at $0.02 per share o HPX has an option to make a further investment of approximately $1.4m by 30 o June 2014 at $0.024 per share (total equity investment of $2.4m) HPX can provide up to $3.4m of funding to earn an 80% interest in Apollo s South Australian licenses, under the joint venture to be known as the Commonwealth Hill Joint Venture HPX will apply its in-house geophysical tools and expertise at the Bundi Prospect, which has a large and highly prospective IOCG type footprint. Apollo Minerals Ltd (ASX:AON) is pleased to announce that it has entered into a strategic alliance with High Power Exploration Inc. (HPX) to explore for base metals in a new IOCG frontier in the Northern Gawler Craton in South Australia (See Figure 1). The strategic alliance involves a two tranche equity investment in Apollo shares of up to $2.4m and a two phase $3.4m farm in to earn up to an 80% interest in certain tenements. Up to $1.25m of the placement moneys will be applied towards the farm in expenditure. Following the farm in, the Commonwealth Hill Joint Venture will be established between the parties. The transaction with HPX does not affect Apollo s existing joint venture arrangements, including its rights to earn a 75% interest in the adjacent Eaglehawk JV (Mincor JV) and the Aurora-Tank JV (see JV area map). Apollo is delighted to have entered into this strategic alliance. Apollo believes that its project area in the northern Gawler Craton has strong potential to host a tier 1 base and precious metals deposit. The agreement with HPX is strong validation of the area s discovery potential, and provides the funding and technical expertise to rapidly advance the project. 1

2 South Australia hosts a number of recent world class copper discoveries including Carrapateena and Prominent Hill in the Gawler Craton. Significant renewed exploration has been undertaken by Rio Tinto and Oz Minerals which has resulted in a new discovery by Oz Minerals in 2013; the Khasmin Deposit, located near Carrapateena. Apollo and HPX believe that further exploration, and the use of new technology, has the potential to make significant new discoveries to the west of the Olympic Dam IOCG province. Richard Shemesian, Executive Director of Apollo said: Apollo has conducted an extensive process to identify a strategic and joint venture partner. We have been fortunate to attract a group like HPX which has world class technology, highly skilled and experienced people, and a successful track record. 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. Mark Gibson, Chief Executive Officer of HPX, said: HPX is excited about the potential of Apollo s project in South Australia and we look forward to applying our expertise and technology at the Commonwealth Hill Joint Venture. We are looking forward to working with Apollo to test some of the targets which Apollo has already identified, and others. HPX s geophysical technology can penetrate to great depths with high accuracy and has been successfully deployed in Australia, Africa and South America. It is ideally suited to the geological environment and surface conditions found at Commonwealth Hill, and can quickly evaluate the large geological features present there. We anticipate a rapid survey turnaround, to generate targets for follow up drilling. Preparation and planning for the first IP geophysical survey over the Bundi IOCG Target has commenced and it is anticipated that survey works will commence in March 2014 subject to relevant approvals, and a decision to drill is expected by the first half of It will be the first time the HPX technology has been used in South Australia. High-Priority IOCG Zones: Apollo s Bundi prospect in a New IOCG Frontier in South Australia (Figure 1) (Geoscience Australia Map) 2

3 DETAILS OF STRATEGIC ALLIANCE The Strategic Alliance includes an equity investment and joint venture. Under the terms of the equity investment, HPX will acquire an initial stake of 10% of Apollo by way of a placement of $1.0 million at 2 cents per share. HPX has the right to increase its interest in Apollo to 19.99% by making a further placement in Apollo by 30 June 2014 of approximately $1.4 million at a price of 2.4c per share. Completion of these two placements will raise the company a total $2.4 million from HPX. Both share issues will require shareholder approval. HPX will have a right to appoint one person to the board on completion of the first placement. The investment by HPX comes after Apollo completed a placement of $1.25 million from sophisticated and institutional investors last week. Under the joint venture component of the agreement, the Commonwealth Hill Joint Venture, HPX will have the right to earn a 51% interest in the Joint Venture by expending $1.7 million by 31 December 2015 and a further 29% by expending a further $1.7 million within 18 months after the phase 1 earn-in period. The total farm-in expenditure by HPX would be $3.4 million to earn an 80% interest in the JV. An Amount of up to $1.25 million of HPX s placement moneys will form part of HPX s total JV expenditure. Other key terms of the Apollo and HPX Subscription and JV Agreements are included on page 6 of this announcement. COMMONWEALTH HILL JOINT VENTURE TO EXPLORE FOR IOCG DEPOSITS The Commonwealth Hill Joint Venture only relates to Apollo s 100% owned tenements in South Australia (see map below). A key outcome of Apollo s exploration efforts to date has been the identification of a major IOCG target the Bundi Prospect, where the gravity anomaly is several times larger than the Carrapateena and Prominent Hill deposits. Further geophysical exploration using IP is needed to generate drill targets in this area where most of the geology is under cover. This will be the initial focus of the JV s exploration efforts. ADVANTAGES OF STRATEGIC ALLIANCE AND JOINT VENTURE Apollo s strategic alliance and joint venture with HPX will have a number of advantages to shareholders: 1. HPX will manage and direct $3.4m in funding to acquire an 80% interest in the project ($1.7m to earn an 51% interest by December 2015 and a further $1.7m to earn 80% within 18 months of the phase 1 earn in) 2. HPX will deploy its high powered geophysical technologies to rapidly evaluate buried geological targets. These innovative, ground-breaking technological hardware and software solutions will address the limitations of existing exploration technology and increase the chances of success of the joint venture discovering a major deposit. This is supported by a highly skilled and experienced team. 3. The JV project area only relates to Apollo s 100% owned tenements. (See map on page 4). 4. Apollo will retain its right to earn a 75% interest in the Eaglehawk JV area which is adjacent to the Commonwealth Hill JV area. 3

4 5. Apollo will also retain its interest in all minerals within the Mars-Aurora Tank iron and gold project area. 6. Apollo will have the right to explore and develop the Sequoia iron ore deposit unless other minerals are confirmed at the Sequoia block before 31 December In the event that Apollo dilutes to below a 5% interest in the Joint Venture, Apollo will retain a 2% Net Smelter Royalty from the project. ABOUT HPX EXPLORATION HPX is a private metals-focused exploration company deploying proprietary geophysical technologies to rapidly evaluate buried geological targets. The company combines leading geological and geophysical expertise with innovative, ground-breaking technological hardware and software solutions to address the limitations of existing exploration technology. HPX has a highly experienced board and management team and is led by CEO Mark Gibson, a geoscientist formerly with Anglo American. Ian Cockerill, formerly CEO of Gold Fields Ltd chairs the company. HPX is indirectly controlled by international financier and mining entrepreneur Robert Friedland. ABOUT APOLLO MINERALS Apollo Minerals Ltd (ASX Code: AON) is an iron ore and minerals explorer and developer with projects in South Australia, Western Australia and Gabon, western central Africa. Apollo s project at Commonwealth Hill in the Gawler Craton of South Australia is situated close to existing infrastructure including the Darwin-Adelaide railway line, highway, ports. The Sequoia Iron Deposit contains a JORC defined resource previously announced to the market. The Titan Base-Precious Metals Project is focussed on discovering a major IOCG deposit in a new frontier of the world class Gawler Craton. This project consists of: 4

5 Commonwealth Hill Project JV (HPX earning up to 80% interest) Eaglehawk JV (Apollo earning up to 75% interest) Aurora Tank JV (Apollo earning up to 75% interest) In Gabon, Apollo has a 82.5% interest in the Kango North Iron Project. Apollo s major shareholders include one of India s largest companies, Jindal Steel and Power Ltd. FOR FURTHER INFORMATION CONTACT: Richard Shemesian Dominic Tisdell Executive Director Chief Executive Officer Apollo Minerals Limited Apollo Minerals Limited info@apollominerals.com.au info@apollominerals.com.au Tel: Tel: Media and Investor Enquiries: James Moses Mandate Corporate james@mandatecorporate.com.au Tel:

6 OTHER KEY TERMS OF THE APOLLO AND HPX SUBSCRIPTION AND JV AGREEMENTS: Apollo and its wholly owned subsidiaries have entered into agreements with Wirrida Holdings Pty Ltd and HPX Australia Holdings Pty Ltd, which are wholly owned subsidiaries of parent company HPX Techco Inc (HPX). Subscription Agreement A placement to HPX of 50,000,000 Apollo shares at $0.02 per share is subject to ASX granting a waiver to Apollo relating to anti-dilution provisions which would enable HPX to maintain its 19.99% holding in the event of future equity raisings (top-up right) available for a period of 5 years or termination of the joint venture whichever is earlier. The subscription price to increase HPX s interest to 19.99% will be $0.024 which if HPX elects to do so must be completed by 30 June A condition precedent includes shareholder approval to issue the shares above. HPX will be entitled to nominate one Apollo director while its interest in the company remains above 10%. Farm-in and Joint Venture Agreements The Commonwealth Hill Joint Venture only relates to Apollo s 100% owned tenements in South Australia Apollo will retain exclusive access to the Mars tenement block (18 sq km), and all mineral rights over the Sequoia Iron Deposit (7 sq km) unless HPX identifies, before 31 December 2015, the potential for the extraction of minerals other than iron ore from the Sequoia block. The JV does not affect the Eaglehawk JV where Apollo continues to hold the right to earn a 75% interest from Mincor An amount of $600,000 from the placement will be allocated to high powered surveys and exploration work managed by HPX prior to 30 June During phase 1 of the farm in HPX will have the right to acquire a 51% interest in the tenements by spending $1.7m prior to 31 Dec 2015 Phase 2 of the farm will automatically begin after the phase 1 expenditure has been met. Failure to proceed to phase 2 by 31 December 2015 results in termination of HPX s remaining farm-in rights. At the end of phase 2, HPX will have acquired an 80% interest subject to the full phase 2 budget of $1.7m being spent within 18 months of the conclusion of phase 1. An amount of up to $1.25m of HPX s placement moneys will form part of HPX s total joint venture expenditure. Upon establishment of the Commonwealth Hill Joint Venture at the end of phase 1 a Management Committee will be formed. HPX will have 3 representatives and Apollo 2 representatives, with the parties exercising voting power in accordance with their relative joint venture interests. HPX will be appointed manager and marketing agent for the Commonwealth Hill Joint Venture. 6

7 South Australia IOCG Corridor 7