aon -

Ever so rarely one finds a Gem of a company which is flying that far under the radar that it's hard to believe.

Apollo minerals is one such company.

As one of the very few Junior Iron Ore Explorers in the highly prospective Pilbara region, AON offers massive upside from these levels.

Here are a few reasons why i believe AON will provide me with a 4-5 fold return from current prices.

1) Tight share structure:

Only 156 million shares on issue, and the Top 20 own almost 80%, and even more impressive is that the Top 5 own almost 60% of all shares. With a Market Cap of only 14 million, it is no wonder that nobody wants to sell their shares at current prices. I am also extremely buoyed by the fact that Tiger Resources, with a MC of over $260 million owns almost 20% of AON.

2) Strategic alliances with key Chinese steel firms:

It is extremely encouraging that so soon after listing, AON were able to strike key relationships with both China Armco Metals (who paid 16c per share) and Hugo. We all know that the Chinese demand for Iron Ore is rapidly outweighing supply and AON has prime acreage to capitalise on this.

3) Location - Mt. Oscar and Mt.Oscar East:

The Mt Oscar Project has particular appeal due to its proximity to infrastructure. It is located 25 km south of the port of Cape Lambert and a proposed multi-user Ankatell Point port. The proposed port would potentially be used by Aquila Resources, Fortescue Metals, China Metallurgical Group and Apollo Minerals. The Apollo Project is close to existing roads, rail infrastructure and towns such as Karratha, the major regional centre.

The previous posts here have accurately outlined the plethora of activity within the Pilbara region, with Chinese Take overs becoming the norm and AON, for the moment, is the glaringly obvious exception.

** In August last year, Fox Resources (next door) agreed to a JV over its area of Mt. Oscar (inferred resource of 72.4MT at 34% Fe). This corporate transaction effectively implied a value of FXR's resource of A$0.53/Tonnes!

*** We are targetting between 350 and 650 Million Tonnes, however, based on a very conservative resource of only 100 mt, AON would be worth 34c/share using FXR's implied value.

4) Diversity:

Commonwealth Hill: We have a very exciting project (currently 100% owned) covering 760km2 in SA's Gawler Craton. One of the prospects, Sequoia, is located only 5km from the Adelaide-Darwin railway. We have identified 7 new Iron targets in the region and a thorough review of the project should be available very shortly.

So in effect, we have a Junior Iron explorer in the Pilbara, with chinese backing and an extremely tight share registry, who have currently completed Phase 2 drilling and will, in my opinion, surprise many with a significantly increased JORC compliant resource in the near future. Coupled with this is the fact that Magnetite has been highly sought after by the Chinese, as is evidenced by numerous examples throughout the Pilbara.

I believe AON will be trading at 40c within a few months.

I've taken a large position over the last 3 months, and there will be many, many more who will be trying to do the same over the next few months as further metallurgical results come to hand, and the JORC resource gets closer.