According to the deal, Apollo Minerals will split its iron ore assets into a new listed company, NewCo, on the Australian Securities Exchange.
JSPL will acquire majority stake in NewCo by investing A$10 million at the time of its listing through an IPO.
In a statement, Apollo Minerals said that its existing shareholders would get about 49 per cent stake, as part of the demerger, in NewCo on a pro-rata basis after JSPL investment.
JSPL, with 11.7 per cent stake, is already a significant shareholder in Apollo Minerals — a diverse iron ore, base and precious metals exploration company.
As part of the demerger, all iron ore assets will be transferred to NewCo, while Apollo will retain its base and precious metals portfolio, the statement said.
“The demerger will consist of an in-specie distribution of NewCo shares to Apollo shareholders, an initial public offer by NewCo, through which JSPL will invest A$10 million and listing of NewCo shares on the ASX,” it added.
Both the firms have signed a non-binding termsheet for the deal and “formal documentation and binding agreements are expected to be signed over the next two months“.
Apollo’s Non-executive Chairman Tony Ho said: “This is a transformational event for Apollo and one that will allow us to unlock maximum value for our shareholders. The separation of our iron ore and base—precious metals assets is an important part of this process.”
Talking about partnership with JSPL, he said that “we now have the key ingredients required to take Apollo’s iron ore projects from exploration to production in the shortest possible time“.
Following the deal announcement, shares of Apollo Minerals shot up 20 per cent to close at A$0.072 on the ASX.
JSPL scrip was trading at Rs 342.30 in the late afternoon trade on the BSE, down 3.43 per cent from the previous close.
Apollo is a Sydney-based firm, having three major iron ore assets—Commonwealth Hill project in South Australia, Mount Oscar Project in the Pilbara region of Western Australia and 70 per cent stake in Gabon’s North Kango iron project. It also has a Titan Base—Precious Metals Project in South Australia.