Quick Facts

The Lac Dore (Vanadium-Iron-Titanium) Project consists of 42 contiguous mineral claims covering an area of 1,607.09 acres (650.22 hectares) located in the Rinfret and Lemoine townships,  70 kilometres south-east of the town of Chibougamau.

According to the Lac Dore Feasibility Study – Executive Summary (Exhibit EX-99.02) filed on EDGAR 08/28/02 by McKenzie Bay International Ltd. the Lac Dore deposit contains 102 million tonnes at 35% magnetite, 17.4% ilmenite and 0.50% V₂O₅.

History of this remarkable deposit: It was discovered in 1954 and staked by Dominion Gulf. In 1958 a firm named Jalore Mining did a short exploration program including six drill holes.  In 1966, the discovery of Vanadium content in the Lac Dore titaniferous deposit, made by Dr. Gilles Allard, while mapping the region for the Ministere des Richesses Naturelles du Quebec (MRN), changed the economic perspective of the project.  MRN re-staked the property and drilled 13 additional holes between 1970 and 1974 that at that time outlined resources of 72 million tonnes grading 31.3% Fe and 0.5% V2O5.

In 1977, SOQUEM, a division of SGF Mineral Inc., a subsidiary of Societe Generale de Financement du Quebec, a Quebec crown corporation, took over the exploration of the project.  SOQUEM did additional work including 19 drill holes that confirmed the resource outlined by MRN.  In 1983 SOQUEM reduced the Lac Dore deposit holdings to the specific 21 claims it identified as covering the most significant and mineable portion of the mineralization, which incidentally covered a significant five kilometres of strike length.   In 1997, Lac Dore Mining Inc. acquired the deposit and conducted a systematic surface sampling program. Lac Dore Mining was subsequently sold to McKenzie Bay International Ltd. who in 2001 engaged SNC-Lavalin to carry out a Feasibility Study of the Lac Dore deposit.

The mandate of this third-party 2002-2003 non-NI 43-101 Feasibility Study was to develop an open pit mine based on the deposit and to build a process plant consisting of primary crushing and stockpiling, ore reclaiming, milling and magnetic separation of concentrate, and roasting and refining of magnetite concentrate. The scope of the study also included geology definition and resource estimation, as well as an audit drilling program on the deposit to validate the extent of the mineral reserves as derived from the various drill holes and surface trenches done since 1958.  While SNC-Lavalin’s original mandate consisted of the development of the mine plan, processing facilities and infrastructure required to produce vanadium pentoxide (V₂O₅) intended for the conventional steel alloys market. However, the mandate was subsequently increased to include the development of processing facilities to produce, as an alternative, Vanadium-based chemicals intended for use in Vanadium Redox Batteries (VRBs).

In 2002, SNC-Lavalin delivered a Positive Feasibility Study (non NI 43-101) validating the then existing database and geological interpretation. They created a block model of the deposit using the Kriging method of estimation.  Utilizing their block model, SNC-Lavalin estimated the measured and indicated resources of the Lac Dore deposit at an exceptional 102 million tonnes at 35% magnetite, 17.4% ilmenite and 0.50% V₂O₅.

This early pre NI 43-101Feasibility Study prepared in 2002-2003 confirmed the viability of mining of the Lac Dore Deposit by the open pit method and further confirmed the processing technology to produce high purity Vanadium chemicals from Lac Dore ore.  The study confirmed the availability of the infrastructure necessary for sustainable mining operations onsite.  At that time initial capital costs of the project were estimated to be C$364 million (December 2001) with an initial processing rate of 7.9 million tonnes per year.  The internal rate of return (IRR) was calculated at 19.0% based on a 100% equity investment and a 29.8% IRR based on 30% equity funding.  Although the Executive Summary available on EDGAR detailing the 2002-2003 SNC-Lavelin Feasibility Study does not provide the market price for V₂O₅ they utilized we are able to determine from the USGS report “Vanadium in May 2003” which states that V₂O₅ prices at that time ranged between US$2.50/lb – US$2.75/lb and that in June 2002 V₂O₅ ranged from US$1.50/lb – US$ 1.75/lb This 2002-2003 period was the time frame when SNC-Lavelin calculated its figures above. Today’s market price for V₂O₅ ranges between US$6.60 - US$7.00/lb.

The SNC-Lavelin study concluded by stating “The financial analysis of the project indicates a good IRR. The project would have a very positive impact on the economy of the Chibougamau area through the creation of direct jobs and the potential of doubling the number of indirect jobs.  The development of the project may also result in the creation of other companies which produce batteries and other related industries”.

In 2007, it appears that McKenzie Bay International unintentionally allowed the 21 claims covering the Lac Dore deposit to lapse.  At that time Apella Resources and another competing party sought to stake and capture ownership to the 21 claims covering the Lac Dore deposit. In January, 2010, following an earlier site inspection, the Quebec MRNF issued a decision awarding 9 claims to Apella and 2 claims to the competing party while refusing to award the remaining claims to either party.

Apella appealed the decision of the MNRF and on February 23, 2011 the Honourable Francois Godbout, J.C.Q. awarded the sought after nine claims to Apella.

Patrick D O’Brien, ICD.D, Apella’s Chief Executive Officer commented “this is precisely the outcome we sought, nothing more, nothing less. Judge Francois Godbout, J.C.Q. made a just and appropriate decision which now allows Apella to expeditiously focus on the development of the Lac Dore. In concluding this lengthy multi-year process Apella has rightfully gained entitlement for its shareholders to the near entirety of the Lac Dore, notably, the world’s second largest vanadium deposit. Apella’s Board and Management wish to extend their sincere gratitude to all of the planners, stakers, geologists, legal advisors, and consultants; and especially our patient and devoted shareholders for standing by and supporting us through this long but achievable undertaking. Our goal has been achieved.”

Current objectives and development

• Drill program TBA, will target development of a NI-43101 resource.

• Drill targets on Lac Dore North have been selected from geophysics, sampling and drilling in 2009 (see map above).
• Drill targets on Lac Dore are currently being selected utilizing historic data.
• 3D modelling is currently underway to outline the historic Lac Dore deposit utilizing historic data (drill intersects and sampling) from government files and SNC feasibility study. The 3D model of the deposit will be constructed using the most current technology available.

Continued...The Lac Dore claims in this matter form a very important and integral part of the well known Lac Dore Vanadium Deposit in Chibougamau, Quebec. The geological setting and mineralization encountered in the Lac Dore Deposit has many similarities to that of Apella’s 100% owned Iron-T Vanadium-Iron-Titanium project located in the Bell River Complex to the west, and with typical world-class magmatic Fe-Ti-V oxide deposits associated with a layered intrusive complex. Most of these deposits that are of producible importance world-wide are associated with mafic-ultramafic layered complexes such as the Lake Doré Complex; the Windimurra Complex in Australia; the Panzhihua layered intrusion in China and the Bushveld Complex in South Africa. About 39.5% of total world vanadium production (55 700 t in 2006 (USGS, 2006)) is said to come from the Bushveld Complex alone, in particular the Rhovan Mine. The V-Fe-Ti oxide ores at Bushveld, have one major disadvantage, in that they are formed by concordant layers varying from 0.1 m to only 10 m in thickness within the Upper Zone but most of these layers are relatively thin and less than 30 cm in thickness.

“The economically important Main Magnetite Layer varies from 1.0 to 2.5 m in thickness and covers a strike length of 200 km in the western Bushveld Complex and 120 km in the Eastern Bushveld Complex” (Reynolds, 1985). The Rhovan mine is the primary vanadium producer situated within the Western Lobe of the Bushveld Complex. The mine is located some 35 km ENE of Rustenburg, South Africa. The vanadium mineral resource and ore reserve of Rhovan mine reported by Xstrata Alloys as of September 2007 (Xstrata Alloys, 2008) are:

Proven Ore Reserves – 39.2 Mt @ 0.51% V

Probable Ore Reserves – 10.5 Mt @ 0.53% V

Measured Mineral Resources – 64.4 Mt @ 0.51% V

Indicated Mineral Resources – 13.7 Mt @ 0.53% V

Inferred Mineral Resources – 124.9 Mt @ 0.51% V

The Lac Doré Complex is a Bushveld-type Archean layered mafic intrusion (Allard, 1976) located some 250 km due east of Matagami in the Chibougamau mining camp. The Lac Doré is an advanced Vanadium project; currently the largest vanadium deposit in North America, and the second largest in the world. It shows a geological setting and vanadiferous mineralization similar to Apella’s Iron-T vanadium project. Unlike the Bushveld, the Lake Doré Complex itself is 5 to 7 km in thickness. The magnetite horizons vary from 50 to 200 m in thickness and extend several km along strike as inferred from airborne magnetic data. “The Lac Doré Vanadium deposit at Chibougamau is estimated to host 100.0 Mt grading 0.49% V₂O₅ including 32.2 Mt of measured resources at 0.65% V₂O₅” (Girard and Allard, 1998). Apella derived these details from the public domain.

It should be noted that in accordance with present reporting requirements the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a mineral resource, and it is uncertain if further exploration will result in discovery of a mineral resource on the property. However, it should also be noted for clarification that historically the Lac Dore deposit was subject to a positive feasibility study in 2003 by SNC-Lavelin for the production of V₂O₅. The reader is referred to the USA’s EDGAR reporting system to access and review a copy of the McKenzie Bay International Ltd Executive Summary.

Apella has concluded that with the ownership of the aforementioned 18 Lac Dore Vanadium-Iron-Titanium deposit claims, coupled together with Apella’s present 100% ownership in the near-by Iron-T and Lac Dore North Vanadium-Iron-Titanium projects, the Company has the potential to quite rapidly control enough mineralization to propel Apella into the position of having the most extensive Vanadium assets in the world.

The feasibility study completed by SNC-Lavalin Group Inc. in 2002 drew a parallel or comparison between the source of ore in the Bushveld of world’s largest supplier of vanadium, Highveld in South Africa which supplies approx 40% of world supply, and Lac Dore. Grades of concentrate from the Bushveld were comparable at 1.5 % to 1.7 % for Highveld and 1.45% to 1.6% for Lac Dore. The marked difference: the Bushveld resource has a thickness of only 5 feet stretching over several hundred km whereas the resource at the Lac Dore is nice and compact at 330 feet to 660 feet and easily open pitable at a low cost.

As a result, the haul distance reported to the Bushveld mine mill is up to 110 km and rising as the mineralization is depleted; whereas the distance to the Lac Dore mine mill would be a maximum of 2 km from the open pit. Electricity was rated as expensive in Bushveld, but cheap and abundant at Lac Dore. Fresh water not abundant or easily replenishible at Bushveld, in fact is was expensive in Bushveld; whereas in comparison it is both cheap and abundant at Lac Dore. Finally, the 2002 SNC Lavelin study showed the cost of production was cheaper for Lac Dore at $1.40 to $1.70 per lb. than for the Bushveld which was $1.50-$2.00 per lb.

Highlights

• Apella’s claims cover approximately 95% of the Lac Dore Deposit, reported to be the largest Vanadium deposit in North America and second-largest in the world
• A 2002 feasibility study recommended development of a mine and processing facilities, with capital costs estimated at $364 million, including equipment and infrastructure.      (Pre-NI-43101)
• 2008/9 Channel sampling returned results of up to 1.089% V2O5, 13.08% TiO2, and 70.8% Fe
• 2009 Drill Program successfully intersected mineable grade mineralization at depth in six holes
• 2009 Magnetic Survey completed indicating additional drill targets
• 3D Modelling

Apella Lac Dore North Milestones

• Stripping and Channel Sampling Program Completed Fall 2008
• Initial 10 Hole Drill Program to test NE Extension of main zone Completed Summer 2009; with disseminated to massive magnetite intersected in holes 1 through 6
• Surface Magnetometer Survey –Completed in August 2009 by Geosig; Defined strong magnetic anomalies over 3700 metres
• Stripping and Channel Sampling Program #2 Completed Summer 2009