THE BOURSE WHISPERER: Apollo Minerals (ASX: AON) has signed a non-binding term sheet with Jindal Steel and Power (Australia) Pty Ltd, a wholly owned subsidiary of Jindal Steel and Power Limited (JSPL) for a major investment into Apollo’s iron ore projects.
JSPL is a leading public company, listed in India on the National Stock Exchange and the Bombay Stock Exchange with international operations encompassing steel manufacture, power generation, mining, coal to liquids production and cement.
Apollo Minerals explained the partnership with JSPL was established ten months after JSPL’s initial equity investment in Apollo.
The company said it expected the latest deal would deliver long-term benefits to both its and JSPL’s shareholders.
“This is a transformational event for Apollo and one that will allow us to unlock maximum value for our shareholders,” Apollo Minerals non-executive chairman Tony Ho said in the company’s announcement to the Australian Securities Exchange.
“The separation of our iron ore and base-precious metals assets is an important part of this process.
“Apollo has achieved a great deal since getting access to our Commonwealth Hill Iron and Titan base-precious metals projects’ site a little over one year ago.
“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.”
Location of Apollo Minerals’ Commonwealth Hill project. Source: Company announcement
Formal documentation and binding agreements are expected to be signed over the next two months.
The demerger will work in the following way: it is to consist of an in-specie distribution of NewCo shares to Apollo shareholders by way of an Initial Public Offer by NewCo, through which JSPL will invest $10 million and listing of NewCo shares on the ASX.
The demerger of NewCo will result in an iron ore-focused exploration and development company.
Apollo shareholders will receive shares in NewCo via an in-specie distribution that will result in Apollo shareholders holding approximately 49 per cent of the NewCo shares as part of the demerger and after the JSPL investment.
Apollo is expected to remain 100 per cent focused on the exploration and development of its highly prospective base and precious metals portfolio in South and West Australia.
Full details of the in-specie distribution to shareholders are expected to be provided on or around the date of signing of definitive agreements.