An update from W. Adrian Bakker:

Apella is uniquely capable of meeting a surging demand for Vanadium thanks to the following advantages it holds over all other known vanadium deposits:

• Provide multi-commodity income streams, unlike single commodity competitors.

• The vast majority of Vanadium over the last century has been produced from magnetite.

• Large scale supply capable of stabilizing Vanadium pricing and supplying these emerging market

• Uncommitted Future Production.  

• Low Projected Production cost.  

• High Quality Mineralization.  

• Both projects are open pittable and do not need the costly underground method of mining like the Rhovan Mine in South Africa, the world's present production leader.

• Hosted in known recognized mining camps where necessary infrastructure is in place or nearby.  

• Located in the world's most favored mining locale - Quebec, Canada - one of the world's most politically stable countries.

We feel the timing of development toward production at the the Lac Dore project would coincide perfectly with projected increase in demand for all three metals which expected to be significant. Having a small standalone Vanadium mine would be disadvantage in today's market stage as you would be 100% reliant on a single spot market which has been historically volatile. Production of Ferrovanadium as an example is a natural blend for steel and is always preferred to pure vanadium as pure vanadium for steel is typically added artificially, resulting in higher cost. We will ill be looking at complete separation of all the metals of the Lac Dore deposit. This would result in production of ferrovanadium and concentrate initially, than ferrotitanium, titanium dioxide, iron oxide, and vanadium pentoxide, which would also allow us to supply the predominant steel market which uses more than 90% of Vanadium and also supply the metal alloy and vanadium redox battery markets which represents blue sky potential.

The use of vanadium (V) has been on a steady rise in the past few years, interrupted only by the recent recession. As outlined in our November 12, 2009 industry report, Vanadium: The Supercharger, high-strength steels use anywhere from a few tenths to a few percent V as an alloying material by weight. V has the dual advantage of not only significantly increasing the hardness of steel, but also doing so without making the resulting steel brittle, so its strength is also enhanced. As nations around the world mandate the use of stronger steels for construction, Vanadium is in greater demand.

We also foresee two other uses for V that are not largely anticipated by the market and are non-metallurgical in nature. V serves to make what is arguably the best cathode material for lithium-ion batteries, a material called lithium vanadium phosphate, or Li3V2(PO4)3. This compound makes a battery that is higher voltage (so likely higher power) and capable of storing more energy per given battery size than any other commonly referenced cathode material. It is also less expensive, from a pure raw material point of view, than the more commonly used lithium cobalt oxide cathode, ubiquitous in laptop computers.

V can also be used in a completely different type of battery to store grid-level amounts of electrical energy. What are known as vanadium redox batteries can be scaled up to provide millions of watts of power, and store millions of watt-hours of energy, enough to keep thousands of North American homes powered for nearly a full day. These batteries are widely touted as being able to provide the storage required to make unreliable (the industry term is "non-dispatchable") alternative sources of electrical power, such as wind or solar, more widely deployable within the grid. We believe the common use for this type of battery is likely to be more pedestrian in nature, with utilities using such batteries to postpone required capital expenditures on substation upgrades and the like, thereby improving their IRR. This type of use does not require waiting for the construction of wind or solar farms.

Our projections show a potential 58% increase in V demand between 2008 and 2014, with new applications contributing a 34% increase on their own. But, and this is a critical requirement, in order to use V in lithium-ion batteries for automotive and electronic use, or in redox batteries for augmenting the electrical grid, the price of V must be stabilized. V prices have ranged between US$20 and US$85/kg since February 2008 and May 2009. Quadrupling of a basic input price, when it contributes perhaps 40% of the cost of a redox battery and perhaps as much as 20% of the cost of a lithium-ion battery, is unacceptable. To stabilize prices, more vanadium will be needed to be produced.

Apella 3D Drill Tour

  W. Adrian Bakker

  Vice President of Corporate Communications
  Apella Resources Inc. APA-TSX-V
  1600-543 Granville St.
  Vancouver, BC, Canada V6C 1X8
  Ph.604.683.8990
  Direct.604.641.4474

  Toll Free:1-800-663-8990