HPX

As a shareholder in Aon I note reference being made of potential dilution through the HPX Aon agreement in this discussion.

Not coming from a legal background but referring to the agreement highlight below can someone clarify where the dilution concern comes from.
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HIGHLIGHTS
 Apollo and High Power Exploration Inc (HPX) have entered into a strategic alliance to explore for Iron Oxide Copper Gold (IOCG) deposits on Apollo’s licenses in South Australia
 Key terms of the binding agreements: o HPX to make an initial equity investment of $1m at $0.02 per share
o HPX has an option to make a further investment of approximately $1.4m by 30 June 2014 at $0.024 per share (total equity investment of $2.4m)
o HPX can provide up to $3.4m of funding to earn an 80% interest in Apollo’s South Australian licenses, under the joint venture to be known as the Commonwealth Hill Joint Venture
 HPX will apply its in-house geophysical tools and expertise at the Bundi Prospect, which has a large and highly prospective IOCG type footprint.
Apollo Minerals Ltd (ASX:AON) is pleased to announce that it has entered into a strategic alliance with High Power Exploration Inc. (HPX) to explore for base metals in a new IOCG frontier in the Northern Gawler Craton in South Australia (See Figure 1).
The strategic alliance involves a two tranche equity investment in Apollo shares of up to $2.4m and a two phase $3.4m farm in to earn up to an 80% interest in certain tenements. Up to $1.25m of the placement moneys will be applied towards the farm in expenditure. Following the farm in, the Commonwealth Hill Joint Venture will be established between the parties.
The transaction with HPX does not affect Apollo’s existing joint venture arrangements, including its rights to earn a 75% interest in the adjacent Eaglehawk JV (Mincor JV) and the Aurora-Tank JV (see JV area map).
Apollo is
DETAILS OF STRATEGIC ALLIANCE
The Strategic Alliance includes an equity investment and joint venture. Under the terms of the equity investment, HPX will acquire an initial stake of 10% of Apollo by way of a placement of $1.0 million at 2 cents per share.
HPX has the right to increase its interest in Apollo to 19.99% by making a further placement in Apollo by 30 June 2014 of approximately $1.4 million at a price of 2.4c per share. Completion of these two placements will raise the company a total $2.4 million from HPX. Both share issues will require shareholder approval.
HPX will have a right to appoint one person to the board on completion of the first placement. The investment by HPX comes after Apollo completed a placement of $1.25 million from sophisticated and institutional investors last week.
Under the joint venture component of the agreement, the Commonwealth Hill Joint Venture, HPX will have the right to earn a 51% interest in the Joint Venture by expending $1.7 million by 31 December 2015 and a further 29% by expending a further $1.7 million within 18 months after the phase 1 earn-in period. The total farm-in expenditure by HPX would be $3.4 million to earn an 80% interest in the JV. An Amount of up to $1.25 million of HPX’s placement moneys will form part of HPX’s total JV expenditure.
Other key terms of the Apollo and HPX Subscription