Apollo Minerals Limited: June 2018 Quarterly Report

ID: 1539135
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(businesspress24) - Apollo Minerals Limited: June 2018 Quarterly Report

Received government approval for 100% ownership of the Couflens Project whilst finalising drill programs and strengthening management team

HIGHLIGHTS FROM THE JUNE 2018 QUARTER

- Received approval from the French Ministry of Economy and Finance of the proposed acquisition of the remaining 20% interest in the Couflens Project
- Completed the initial phase of health and safety risk assessments within the historical Salau tungsten mine, focused on geotechnical stability, air quality monitoring, ventilation tests and water quality
- Tests confirmed excellent infrastructure servicing the historical mine and excellent ground conditions within competent granite or marble host rock
- Submitted a proposed program of works to the French authorities for the restoration of mine services including ventilation
- Ranked and prioritised numerous drill targets for gold and tungsten based on historical drilling data and 3D modelling completed by Company geologists
- Submitted applications for an extensive airborne geophysics survey at the Couflens Project
- Submitted applications for a drill program at the Aurerene Project in Spain as part of the application for an Investigation Permit
- Strengthened management team with the appointment of Mr Hugo Schumann, an experienced European mining executive, as Executive Director
- Co-founded the Club de Mécènes Mines du Salat to support the cultural and historical heritage of the Couserans province of France
- Completion of A$6 million placement leading European Institutional Investors
- Completed the listing of the Companys former subsidiary Constellation Resources Limited, which holds Fraser Range nickel-copper and gold assets, via an Initial Public Offering (IPO) on the Australian Securities Exchange (ASX) in July 2018
- Tungsten prices continued to strengthen, rising 6% during the quarter and ending at US$347 per mtu, the highest level since 2014



LOOKING AHEAD-

Salau Mine Area:

- Finalise and submit applications for drill programs for gold and tungsten within the Salau mine area
- Final round of health and safety risk assessments to be completed in the coming months
- Planning geotechnical stability tests and additional sampling programs at the tailings disposal areas outside the Salau mine where gold grades of up to 8.94 g/t were recorded and tungsten grades averaged 0.49% WO3

Within the broader ground holding including the Couflens Project (France) and the adjacent Aurenere Project (Spain):

- Extensive airborne geophysical surveys to refine regional targets and enhance understanding of regional geological structures
- Based on the results of the airborne surveys, complete drill program applications to assess the identified tungsten and gold prospects

CORPORATE:

- Appointment of Mr Dylan Browne as Chief Financial Officer and Company Secretary
- The Company held A$5.5 million in cash and no debt at the end of the quarter

Executive Director Hugo Schumann commented:

Our geological team has successfully digitised the assay results of more than 650 historical drill holes at the Couflens Project and constructed 3D geological models focused on the historical Salau mine. Using this 3D modelling, we have now developed multiple drill targets for gold and tungsten and will be advancing planning and applications for drilling in the coming quarter.

The historical Salau mine has been closed for more than 30 years and we have been working closely with the authorities on health and safety risk assessments to ensure safe working conditions for our exploration campaigns. These assessments have so far confirmed excellent infrastructure and ground conditions within the mine, with wide development drives and competent host rock as well as shown numerous visible areas of mineralisation prospective for gold and tungsten.

As we look ahead we plan to finalise the risk assessments, re-establish mine services, and then commence an extensive exploration program including underground drilling and channel sampling. In the wider region across our large licence holding we have planned an airborne geophysics program which will assist with drill targeting across where high-grade gold and tungsten have been identified from field campaigns.

For further information please contact:
Hugo Schumann
Tel: +44 207 478 3900
Email: info(at)apollominerals.com.au

Robert Behets
Tel: +61 8 9322 6322 -

INTRODUCTION

Apollo Minerals Limited is developing the Couflens Project (Couflens Project). and the Aurenere Project (Aurenere Project) in a highly prospective region of the Pyrenees.

The Couflens Project is located in the Pyrenees region of southern France and comprises a 42km² licence area, within which lies the high grade historical Salau tungsten mine. Within the Couflens Project area lies the historical Salau tungsten mine which is open at depth, and with significant gold potential.

Apollo Minerals is focused on brownfields activities within, and immediately adjacent to, the historical Salau mine whilst also conducting aggressive regional exploration programs, focused initially on gold.

FRENCH GOVERNMENT APPROVES TRANSACTION TO INCREASE OWNERSHIP OF COUFLENS TO 100%

The Company received approval from the French Ministry of Economy and Finance of the proposed acquisition of the remaining 20% interest in the Couflens project

Apollo Minerals Limited (Apollo Minerals) acquired an initial 80% interest in the Couflens Project in 2017. Following initial exploration activities on site, which delivered promising results, the Company announced in March 2018 that it had entered into an agreement to acquire the remaining 20% interest in the Couflens Project.

Apollo Minerals will acquire the remaining 20% interest in the Couflens Project through the purchase of Variscan Mines SAS (Variscan France), a wholly owned subsidiary of Variscan Mines Limited (ASX: VAR).

The approval, which was received in June 2018 and was a condition precedent to completion of the transaction, required the Ministry of Economy and Finance to confirm compatibility of the proposed transaction with decree 2006-648 of 2 June 2006 relating to mining titles.

The acquisition ensures Apollo Minerals will have full upside to the Couflens Project, just as the Company ramps up its major exploration campaigns and study programs.

Following the completion of the transaction the Company will own 100% of the Couflens Project.

EXCELLENT INFRASTRUCTURE AND GROUND CONDITIONS CONFIRMED AT HISTORICAL SALAU TUNGSTEN MINE

Prior to the commencement of exploration works within the Salau mine, the Company was required to complete a series of health and safety risk assessments aimed at ensuring safe conditions for workers during the exploration phase of the Couflens Project.

An initial phase of risk assessments, focused on geotechnical stability, air quality monitoring, ventilation tests and water quality have been completed and results confirmed excellent infrastructure and ground conditions within the mine.

A review of ground conditions at the main levels 1230, 1320 and 1430 confirmed they were in excellent condition, with limited degradation having occurred in the 30 years since the mines closure.

The excellent conditions are largely due to the nature and competence of the granodiorite or marble host rock into which historical mine developments were driven.
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Figure 1: Mine access at level 1230 (Historical Photo)
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Figure 2: Mine development drive at level 1230 (Modern Photo)

The mineralised areas of the main levels were also assessed to be in good condition which is expected to facilitate mapping, sampling and drilling during upcoming exploration programs.

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Figure 3: Veronique fault showing in level 1230

COMMITMENT TO WORKING WITH THE LOCAL COMMUNITIES

On 19 July 2018, the Company announced that it had demonstrated its commitment to local communities through the creation of a significant cultural heritage initiative - the Club de Mécènes Mines du Salat (CMMS).

The CMMS was established by Apollo Minerals French subsidiary, Mines du Salat along with a number of local businesses. The CMMS was established to ensure the cultural and historical heritage of the Couserans province in the Ariege region continues to be upheld.

The following projects have been identified for funding:
- the restoration of three paintings in the Vic d''Oust church;
- the renovation of the roof, electricity and paintings of the Romanesque church of Saint-Jacques d''Aubert in Moulis; and
- a study of the statues at the chapel Notre-Dame du Pouech in Oust, classified as historical monuments.

Work on the above programs will commence in the coming months.

Every restoration project that the CMMS commits to financing has the potential to create direct and indirect jobs.

Companies donating to the CMMS may be eligible to benefit from a 60% corporate tax reduction, up to a limit of 5% of turnover excluding taxes (as opposed to a direct contribution by the French Government as previously announced).

The establishment of the CMMS further strengthens the Companys commitment to the region and reinforces its desire to develop strong and lasting relationships with local stakeholders.

PLANNED WORK PROGRAMS

Salau Mine Area

The historical Salau deposit remains open at depth, with previous drilling below the base of the existing underground development confirming continuation of the mineralised system.

A database of more than 650 historical drill holes has been digitised by Company geologists and 3D models of the resource have been constructed which have resulted in numerous gold and tungsten targets being identified.

During the quarter, the Company completed a process of ranking and prioritising drill targets for in-mine drilling campaigns. A drilling program was then designed to confirm known zones of mineralisation within the Salau mine area and to test for extensions of these zones.
The drilling program targets both gold and tungsten mineralisation.

Drilling contractors were invited to supply high level quotations for drill programs which has allowed the Company to commence with applications for drilling which will be submitted to the authorities in the coming quarter.

The Company is evaluating the applicability of underground geophysical surveys to facilitate the identification of new drill targets and enhance the Companys understanding of geological structures within the Salau mine environment.

Having completed the first phase of health and safety risk assessments, the Company has submitted a proposed program of works to the French authorities for the restoration of mine services including ventilation.

The proposed safety works are required to facilitate the safe access of staff and independent experts for the final phase of health and safety risk assessments, and ultimately for exploration activities to occur.

The Company is working with the authorities to complete the final phase of health and safety risk assessments, which it hopes to complete in the coming months.

Tailings Area

The Company is planning geotechnical stability tests and sampling programs at the two historical tailings disposal areas at the Salau mine. These sampling programs may ultimately target the definition of tungsten and gold resources within the tailings, where gold grades of up to 8.94 g/t were recorded and tungsten grades averaged 0.49% WO3 based on recent tailings sampling programs.

Whilst very early stage in nature, the Company plans to study the potential to reprocess the tailings to extract the gold and tungsten whilst at the same time restoring the natural habitat and improving soil conditions left over from the historical tungsten operations.

Several international engineering firms have been engaged to bid for these studies. Once the geotechnical stability of the tailings has been confirmed, the Company will submit work plans to the authorities for approval.

Broader Ground Holding (France and Spain)

A number of regional exploration targets for gold and tungsten have been identified in the broader ground holding at the Couflens Project based on historical and recent field campaigns.

Plans for an extensive airborne geophysical survey over the Couflens Project area were finalised during the quarter and plans have now been submitted to the authorities for approval.

The airborne geophysical survey is intended to refine regional targets and improve the Companys understanding of regional geological structures, particularly focused on gold targets. Following the completion of airborne geophysics programs, the company will finalise its drill targeting and submit regional drill program applications to the authorities for approval.

Aurenere Project in Spain

The application for an Investigation Permit for Aurenere required the submission to the Spanish authorities of a Simplified Environmental Impact Assessment and a Restoration Program. The Company worked with Amphos21, an international environmental consultancy based in Barcelona, to prepare the relevant documentation and the application was submitted at the end of the quarter.

The application includes an application for an initial drill program to test the Aurenere Prospect, an outcrop of approximately 100m2 of pyrrhotite rich skarn located at the contact between a granodiorite and carbonate-bearing sediments, which was mapped and systematically sampled in late 2017.

CORPORATE

Following completion of the placement in April 2018 to leading European Institutional Investors, Apollo Minerals is in a good financial position with current cash at bank of approximately A$5.5 million and no debt.
In the coming months, the Company will look to make key appointments to its project management team.

Successful Listing of The Fraser Range Nickel-Copper and Gold Assets

Following the recent successful capital raising by the Company and its increased focus on its European tungsten and gold projects, the Companys former subsidiary Constellation Resources Limited (Constellation), which holds the Fraser Range nickel-copper and gold assets, has successfully listed via an initial public offering (IPO) on the ASX on 30 July 2018.

Shareholders of Apollo Minerals with a registered address in Australia and holding at least 12,500 shares as at 10 May 2018 (Record Date) received a priority entitlement to subscribe for Constellation shares on a 1 for 5 basis.

Constellation has since issued 35 million new shares at an issue price of A$0.20 each to raise A$7.0 million (before costs). Subscribers also received one free attaching listed option with an exercise price of A$0.20 expiring on 31 July 2021 for every three shares subscribed under the IPO.

The separate listing of Constellation allows Apollo Minerals management to focus on its Couflens and Aurenere projects. The listing also ensures that Constellation has a dedicated management team and funding for exploration activities on the Fraser Range nickel-copper and gold assets (which are also referred to as the Orpheus Project).

Detailed information on Constellation, the offer of securities under the IPO and the capital structure was included in a prospectus lodged with the Australian Securities and Investments Commission and ASX.

Appointment of Executive Director

The Company has strengthened its management team to support the development of the Couflens Project with the appointment Mr Hugo Schumann, an experienced European mining executive, as Executive Director.

Mr Schumann worked with Apollo Minerals on its acquisition of the remaining 20% of the Couflens Project, the acquisition of the Aurenere Project in Spain and the successful A$6.0 million equity financing for the Company which delivered leading European Institutional Investors onto the register including one of the worlds largest mining funds.

Mr Schumann was previously Chief Commercial Officer at Berkeley Energia Limited where he lead the US$120 million financing of the Salamanca uranium mine with the sovereign wealth fund of Oman at the bottom of the uranium price cycle and managed the companys off-take marketing program.

Mr Schumann holds an MBA from INSEAD in France, is a CFA Charterholder and holds a Bachelor of Business Science (Finance CA) from the University of Cape Town.

Change of Company Secretary

Mr Dylan Browne has been appointed Company Secretary and Chief Financial Officer of the Company following the resignation of Mr Clint McGhie effective today. Mr Browne is a Chartered Accountant and Associate Member of the Governance Institute of Australia (Chartered Secretary) who is currently Company Secretary for a number of ASX and European listed companies that operate in the resources sector. He commenced his career at a large international accounting firm and has since been involved with a number of exploration and development companies operating in the resources sector, based from London and Perth, including Berkeley Energia Limited, Prairie Mining Limited and Papillon Resources Limited. Mr Browne successfully listed Prairie Mining Limited on the Main Board of the London Stock Exchange and the Warsaw Stock Exchange in 2015 and recently oversaw Berkeleys listings on the Main Board LSE and the Madrid, Barcelona, Bilboa and Valencia Stock Exchanges.

The board would like to thank Mr McGhie for his excellent service to the Company in particular his instrumental input into the acquisitions of both the Couflens and Aurenere projects.

COMPETENT PERSONS STATEMENT
The information in this report that relates to Exploration Results from the Couflens Project in France and Aurenere Project in Spain is extracted from announcements on 29 November 2017, 5 February 2018 and 27 March 2018. These announcements are available to view on www.apollominerals.com.au. The information in the original announcement that related to Exploration Results were based on, and fairly represents, information compiled by Mr Robert Behets, a Competent Person who is a Fellow of The Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Mr Behets is a holder of shares and options in, and is a director of, Apollo Minerals Limited. Mr Behets has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement. The Company confirms that the form and context in which the Competent Persons findings are presented have not been materially modified from the original market announcement.

FORWARD LOOKING STATEMENTS
Statements regarding plans with respect to Apollo Minerals projects are forward-looking statements. There can be no assurance that the Companys plans for development of its projects will proceed as currently expected. These forward-looking statements are based on the Companys expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company, which could cause actual results to differ materially from such statements. The Company makes no undertaking to subsequently update or revise the forward-looking statements made in this announcement, to reflect the circumstances or events after the date of that announcement.

Appendix 1: Summary of Mining Tenements
As at 30 June 2018, the Company has an interest in the following projects:
Project Name Permit Percentage Status
Number Interest

Couflens Project, Couflens 80% Granted
France PER
(1)
Aurenere Project, I.P. Alt d75% Application
Spain Aneu
(2)
Fraser Range, E63/1281(370% Granted
Western )
Australia

E63/1282(370% Granted
)

E28/2403(370% Granted
)

E63/1695(370% Application
)

E28/2738(3100% Application
)

Commonwealth Hill, EL5969 100% Granted
South
Australia

EL6013 100% Granted

Notes:
(1) The Company entered an agreement in March 2018 to acquire the remaining 20% interest in the Couflens Project. Completion is subject to a number of conditions precedent which are expected to occur in the September 2018 quarter.
(2) During the quarter, the Company completed the acquisition of a 75% interest in the Aurenere Project. The Aurenere Project comprises an Investigation Permit (Permiso de Investigación del Alt d''Aneu) application that covers a 55km2 area directly adjacent to the Companys Couflens Project.
(3) Subsequent to the end of the quarter and following the successful IPO of Constellation, Apollo Minerals no longer had any interest in the Fraser Range tenements.

Appendix 2: Summary of Performance Shares on Issue
In accordance with ASX Waiver dated 4 May 2017, the Company provides the following information in respect of the Performance Shares on issue:
a) The number of Performance Shares on issue as at 30 June 2018:
a. 10,000,000 Class A Convertible Performance Shares;
b. 10,000,000 Class B Convertible Performance Shares;
c. 10,000,000 Class C Convertible Performance Shares;
d. 15,000,000 Class D Convertible Performance Shares; and
e. 20,000,000 Class E Convertible Performance Shares.
b) Each Performance Share will convert into one Share upon the earlier of the satisfaction of the relevant milestone or an Asset Sale, on or prior to the Expiry Date:
a. Class A Milestone means the announcement by the Company to ASX of the delineation of at least an Inferred and Indicated Mineral Resource of at least 25,000 tonne WO3 at an average grade of not less than 1.0% WO3 using a cut-off grade of not less than 0.3% WO3 on the Project Licences and which is prepared and reported in accordance with the provisions of the JORC Code. For the avoidance of doubt, the referenced tonnes and grade are WO3 values, not WO3 equivalent values incorporating by-products credits.
b. Class B Milestone means the announcement by the Company to ASX of the delineation of at least an Inferred and Indicated Mineral Resource of at least 500,000 troy ounces of gold at an average grade of not less than 0.8 grams per tonne on the Project Licences and which is prepared and reported in accordance with the provisions of the JORC Code.
c. Class C Milestone means the release of a comprehensive announcement by the Company to ASX of the results of a positive Scoping Study on all or part of the Project Licences.
d. Class D Milestone means the release of a comprehensive announcement by the Company to ASX of the results of a positive Pre-Feasibility Study on all or part of the Project Licences.
e. Class E Milestone means the release of a comprehensive announcement by the Company to ASX of the results of a positive Definitive Feasibility Study on all or part of the Project Licences.
f. Asset Sale means the announcement by the Company of any completed direct or indirect sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or part of the Exploration Permit, other than to an entity controlled by the Company, provided that the total amount of consideration received by the Company is at least A$21 million.
g. Expiry Date means 5.00pm (Perth time) on the date which is 5 years after the date of issue of the Performance Shares (ie. 30 June 2022).
c) No Performance Shares were converted or cancelled during the quarter.
d) No vesting conditions were met during the quarter.



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Date: 07/31/2018 - 02:04
Language: English
News-ID 1539135
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