A little known mining company, Apella Resources (TSX: V.APA. Stock Forum ), has over $50 billion of resource in the ground, a feasibility study, a mineral in very high demand, future low cost production with a near surface open pit, and a market cap at under $12 million. Amazingly, with all this mining company has going on, its hovering between 8 cents and 12 cents per share on the Toronto Venture Exchange.

Apellas greatest resource, vanadium, could be one of the solutions to our energy problems in North America. All one has to do is go to Apellas web page (www.apellaresources.com ) and click on the links to find out how valuable a resource it is.

Unfortunately, 99% of the investors will pass up on this investment of a lifetime, because they will not spend the time to do the research, so Ive done it for them.

Outlined below is a report on the company, its properties and their respective resources, the feasibility study on Lac Dores vanadium resource and the potential value of this stock.

1. The company

Apella has about $2 million in term deposits in the bank, near $1 million in cash and about $600,000 worth of securities in the value of the Raglan property they have just sold off.

2. Apella Resources properties and resources

Lac Dore — vanadium, titanium, and iron ore

Original owner of the Lac Dore was McKenzie Bay which spent $12 million on drilling and over $2 million on a feasibility study. McKenzie found that along with an astonishing 5 billion pounds of vanadium (said to be the 2nd largest vanadium deposit in the world), it has 35% iron ore and good grades of titanium. This little gem is in Canada and close enough to all the infrastructure needed for a modern mine and mill. This property has now been staked by Apella.

Bell (now the Iron T) vanadium, titanium and iron ore

This property, whose original owner was Noranda, has just been bought 100% by APA. Drilling has been done with holes almost identical to Lac Dore except the grades of vanadium are slightly higher. This resource has the potential to be larger than the Lac Dore!

The Sideline — high grade titanium, vanadium and iron ore

In an April 2, 2008, news release on Apellas website, assay results were given on a key intersection drill hole: 1.32% vanadium and 8% titanium over 98 meters.

Other properties — gold, copper, uranium, and possible platinum and palladium

Apella has other properties such as the Touchdown Gold Project which is now being drilled and is an exciting prospective gold property. The other properties, the Uranium and Chibougamau area, may be joint-ventured off as Apella will possibly be focusing on the three major vanadium properties.

3. The feasibility study

A 14 page feasibility study was completed by SNC-Lavalin Group Inc. where a comparison was made between the worlds largest supplier of vanadium, Highveld in South Africa, and Lac Dore. A number of important observations were noted.

The concentrated grades were comparable at 1.5 % to 1.7 % for Highveld and 1.45% to 1.6% for Lac Dore. The marked difference: The SA resource has a thickness of 5 feet and Lac Dore at 330 feet to 660 feet. Translated, that means the distance to the SA mine mill is up to 110 km and rising whereas the distance to the Lac Dore mine mill would be a maximum of 2 km.

A few other items of interest: Electricity was rated as expensive in SA, and cheap and abundant at Lac Dore. One only has to review the news headlines of the last few months on the South African shortage of electricity to understand the problem Highveld will have going forward for years. Fresh water was expensive in SA and cheap and abundant at Lac Dore. Finally, the feasibility study showed the cost of production was cheaper for Lac Dore at $1.40 to $1.70 per lb. than for SA which was $1.50-$2.00 per lb.

www.secinfo.com/d11A75.335.htm#178k

4. Vanadium uses

85% of Vanadium is used for high strength steel (pipelines, etc.), 10% for titanium aluminum vanadium alloys used in the aerospace industry, and 5% for production of catalysts, ceramics, glasses and pigments, electronics and batteries in the chemical industry.

www.gizmag.com/go/8281/

5. The potential value

As stated earlier, Apella Resources is trading as APA on the venture exchange at about 8 to 12 cents, and with about 90 + million shares out, the market cap is extremely low compared to its resource base. I would think that in a year or so we will see this one on the Toronto Exchange, as any company that can prove up a few tens of billions of dollars in resource more than qualifies for that exchange. There are several ways to value a future companys worth.

If an investor is very patient and waits the three to five years it will take to get into production, we have the potential value of $10 per share or more. Now that is a long way from its current trading price but the increase on the original investment per year should be phenomenal. Of course, thats not taking into consideration other factors, like the two other main vanadium properties, which could be worth as much or more in the future. Nor are we considering the demand for vanadium if the auto industry or the redox storage industry starts to crank up.

www.nrcan.gc.ca/mms/cmy/content/2001/65.pdf

The aforementioned feasibility study estimated the annual production of the Lac Dore at 12,000 tons or 24 million lbs. of vanadium pentoxide. Multiply that by $10 a lb. = $240 million just in vanadium per year, not to mention the titanium and iron ore. If costs of production have doubled since the 2002s feasibility study then at the current price of vanadium at $12 per pound Apella would make $200 million dollars per year times a price earning of 10 and this would give us a market cap of $2 billion (and if they issued another 100+ million shares over the next three years, they would have 200 million shares out) or $10 per share. That does not take into consideration the potential profit for the price of $3.85 per lb. for titanium, and the 35% iron ore.

5. The risk and the negatives

There will always be risks in the venture exchange, and as I have over 40 stocks, I more than understand the risks. This one has the risk of the staked claims. As far as I am concerned, the risk is very small, but it should be dealt with.

McKenzie Bay dropped its claims, (I think management just closed down) and so it would be open for staking at 7:00 am in the morning after the expiry date to any company that did not have a prior investment in those claims. McKenzie could not re-stake the claims. APA hired all the professional stakers in the Chibougamau area and they cut the lines prior to the staking day, as allowed under the rules. They then sent in a crew of over 30, and encountered only one other competitor there. It was Soquem with about 10 office staff. APA brought in high tech GPS, video equipment, etc. to ensure the staking was performed correctly and recorded.

Apella was finished in about 15 minutes and went back to check all the stakes and legal requirements. From what I can gather, APA just out-manned, out-gunned and out-planned the competition, and so should be getting over 80% of the claims, if not all of them.

There is one side legal item. Soquem was a JV partner with McKenzie Bay, and by law should not have been in on the staking, and I am sure legal work is being worked on that side. There will be an inspection of the staking, and the parties involved have already given evidence. With the data and videos APA has submitted Apella should get all the claims.

Talking with management of APA, the date of the inspection will be June 11th and the results should be available I would think in two to three weeks. This one does not go to court, and the minister of mines has the final say.

If in the worst case scenario they only get 60% of the Lac Dore, Apella still has 100% ownership of the Iron T and the Sideline properties, with each property positive to contain over $50 billion in resource of vanadium, titanium and iron ore. Not much risk there if you ask me.

The other risk would be the price of any resource, and the demand and supply. I think in time the price should stabilize and with the prospect of the new vanadium battery demand in the years ahead, I would think that this resource in North America will be vital for our energy needs. The down side is small compared to the resources APA has. The new great gold property that is being drilled right now, and the uranium and other Chibougamau properties, gives this one a solid floor.

As usual, anyone who writes an article will have a vested interest in the stock, and I have been quietly buying up my % ownership because I think its more than worth the risk. The only real short term risk I see is the market does not recognize the real value of APA. It may take a few months to several years, but I am patient, and will hold my shares until the market starts to recognize what APA has in a value resource.

As mentioned, on Apellas web page you will find a section on informative articles on vanadium. Also you should read up on the news dated April 3 rd. 2008, on the world-class vanadium geologist/mineralogist who joined the advisory board.

www.smartstox.com/

This article was written by a member of the Stockhouse community.