DENVER, Aug. 14 /PRNewswire-FirstCall/ -- Apollo Gold Corporation ("Apollo" or the "Company") (TSX: APG) announced today that it has filed a Canadian National Instrument 43-101 ("NI 43-101") pre-feasibility study on SEDAR (http://www.sedar.com/) regarding the mineral resources and reserves at the Black Fox Project ("Black Fox") located near Timmins, Ontario, Canada. This news release should be read in conjunction with the release issued on July 2, 2007. This mineral resource and reserve estimate was prepared by SRK Consulting Inc., Denver, Colorado. SRK has confirmed that the resource and reserve study complies in all respects with NI 43-101 guidelines. Table 1 below summarizes the Black Fox Indicated Resources: (All US$)
The minable reserve was calculated based on a gold price of US$525/oz of gold which is the trailing three year average gold price. The average total cash cost per ounce of gold was calculated at $236 per ounce.
Table 1: Black Fox Probable Reserve Statement*As of June 30, 2007
Mining Method Cut-off Au g/t Tonnes (000s) Grade g/t-Au Contained oz Au
Open Pit 1 3,362 5.8 625,000
Underground* 3 1,108 10.6 377,000
Total 1,002,000
*Underground Reserves include dilution of 66,000 tonnes of indicated
material with an average grade of 1.26 g/t Au.
In addition to the reserves above, the 43-101 contains the following indicated resources shown in Table 2 below:
Table 2: Black Fox Indicated Resource Statement*As of June 30, 2007
Mining Method** Category Cut-off g/t-Au Tonnes Grade g/t-Au
Open Pit Indicated 1 997,000 4.5
Underground Indicated 3 667,000 10.1
* Mining Method is determined by relative location above or below the
9815m elevation
Also, In addition to the reserves above, the 43-101 contains the following inferred resources shown in Table 3 below:
Table 3: Black Fox Inferred Resource Statement*As of June 30, 2007
Mining Method* Category Cut-off g/t-Au Tonnes Grade g/t-Au
Open Pit Inferred 1 3,255,500 4.7
Underground Inferred 3 929,000 12.3
* Mining Method is determined by relative location above or below the
9815m elevation
The resource and subsequent reserve estimates are based on information from 1,826 drill holes totaling 324,625 meters. All assays over 170 grams of gold per tonne (5.5 oz of gold per ton) were capped at this level, representing 0.25% of the assays.
Combined Open Pit and Underground Economics
The pre-feasibility study economics, using reserves only, assuming a gold price of US$525 per ounce and assuming a milling capacity of 1,500 tonnes per day has a Net Present Value ("NPV") of US$104 million at a 4% discount rate and an Internal Rate of Return ("IRR") of 33%. The total cash cost per ounce of gold produced is calculated at $236 per ounce. Various gold prices with associated NPVs at a 4 % discount rates, and IRRs are as follows:
Table 4 - NPV Values & IRR's (Pre-Tax)
Gold Price NPV @ 4% IRR
US $ / oz US $ millions %
$ 525 104 33
$ 550 122 39
$ 575 140 46
$ 600 159 55
$ 650 196 76
Criteria used in the Economic Analysis:
Production Rate 1,500 tonnes per day
Plant Gold Recovery 96%
Results:
Total Cash Cost (1) $236 per ounce gold
(1) See note on non-GAAP financial measures below
Open Pit Mining Cost ($1.60/tonne of material) $28.33 per tonne ore milled
Underground Mining Cost $31.75 per tonne ore milled
Mining G&A $3.41 per tonne ore milled
Toll Mill (only for associated tonnes) $32.57 per tonne ore milled
Owner Milling $13.26 per tonne ore milled
G & A Cost $3.90 per tonne ore milled
Total Operating Cost $56.11 per tonne ore milled
Note: Based on Life of Mine ("LOM") costs for open pit and underground mining as well as toll and owner operated milling.
Capital Costs (LOM and sustaining capital)
Processing Plant and Infrastructure $71.0 million
Pre-Stripping Open Pit $8.0 million
Open Pit Equipment $8.0 million
Underground Equipment $15.0 million
Underground Mine Development $19.0 million
Total Capital (LOM and Sustaining Capital) $121.0 million
The pre-feasibility study assumes that mining would commence in 2009 with ore being toll treated initially and then treated by an on-site mill from 2012 onwards. Apollo Gold is completing a bankable feasibility study that will optimize the mining sequence and total capital requirements as well as timing of capital requirements.
Recommendations
Contained within the 43-101 there are two main recommendations made by SRK. "Black Fox should continue to be developed to the feasibility level. The following recommendations for the project should be considered by Apollo":
-- Continue with the advanced feasibility level studies for the project
including commissioning the bankable feasibility project as soon as
possible;
-- Continue to core drill specific areas of the ore body to further
upgrade and extend the geological modeling for the project;
The report further states "At the time of this report, SRK has provided Apollo a listing of approximately 62 drillholes totaling 10,000m of additional required drilling. The main focus of this campaign is to target infill areas of known mineralization in order to convert inferred resource into indicated category and subsequently incorporate into a reserve."
Following a review of the 43-101 Apollo Gold has implemented the recommended drilling program at Black Fox starting August 2007.
Apollo Gold Corporation
Apollo is a gold mining and exploration company which operates the Montana Tunnels Mine, which is a 50% joint venture with Elkhorn Tunnels, LLC, in Montana, the Black Fox advanced stage development project in Ontario, Canada, and the Huizopa project, an early stage exploration project in the Sierra Madres in Chihuahua, Mexico.
This press release has been reviewed and approved for release by Dr. Bart Stryhas, Professional Geologist, of SRK Consulting; David Young, Professional Mining Engineer, Associate Consultant for SRK Consulting; and Richard Nanna, Professional Geologist, Apollo's Senior Vice-President, Exploration and Development. Each of Dr. Stryhas, Mr. Young and Mr. Nanna is designated a "Qualified Person" under NI 43-101.
Since we report our mineral reserves to both NI 43-101 and SEC Industry Guide 7 standards, it is possible for our reserve figure to vary between the two. Where such a variance occurs it will arise from the differing requirements for reporting mineral reserves. For example, the NI 43-101 has a minimum requirement that reserves be supported by a pre-feasibility study, whereas SEC Industry Guide 7 requires support from a full feasibility study done to bankable standards. The Black Fox project thus reports reserves under NI 43-101, but reports no reserves under SEC Industry Guide 7 as a final bankable feasibility study has not been completed.
(1) Cautionary Note to US Investors concerning estimates of Indicated Mineral Resources. This press release uses the term "indicated mineral resources". We advise US investors that while the term is recognized and required by Canadian regulations, the US Securities and Exchange Commission does not recognize it. US investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into mineral reserves.
(2) Cautionary Note to US Investors concerning estimates of Inferred Mineral Resources. This press release uses the term "inferred mineral resources". We advise US investors that while the term is recognized and required by Canadian regulations, the US Securities and Exchange Commission does not recognize it. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. In accordance with Canadian rules, estimates of inferred mineral resources cannot form the basis of feasibility or other economic studies. US investors are cautioned not to assume that part or all of the inferred mineral resource exists, or is economically or legally minable.
Contact Information:
Investor Relations - Marlene Matsuoka
Phone: 720-886-9656 Ext. 217 Toll Free: 1-877-465-3484
E-mail:
This press release includes "Forward-Looking Statements" within the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by the use of words such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "continue," or the negative of such terms, or other comparable terminology. All statements regarding estimated reserves and resources; net present values of the Black Fox project and anticipated internal rates of return; assumptions regarding Black Fox plant gold recovery, cash costs, operating costs, mining costs and capital expenditures; assumptions regarding development of a mine at Black Fox and the timing of mining and processing operations at Black Fox; completion and timing of a bankable feasibility study regarding Black Fox are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from these forward-looking statements include: the results of independent Canada NI 43- 101 reports, the outcome of assays and additional exploration sampling and drilling efforts; delays in completing or less favorable than anticipated results of a bankable feasibility study on Black Fox; increases in anticipated cash costs, operating costs, mining costs, capital expenditures and other costs; decreases in anticipated plant gold recoveries and gold prices; delays or problems in construction, permitting and start-up; variations in ore grade, mining, or processing problems or issues, and other factors disclosed under the heading "Risk Factors" and elsewhere in Apollo documents filed from time to time with the Toronto Stock Exchange, The American Stock Exchange, The United States Securities and Exchange Commission and other regulatory authorities. All forward-looking statements included in this press release are based on information available to Apollo on the date hereof. Apollo assumes no obligation to update any forward-looking statements.
Non-GAAP financial measures. In this press release, we use the term "total cash cost per ounce". The term "total cash cost," is considered a non- GAAP financial measure as defined in the United States Securities and Exchange Commission (the "SEC") Regulation S-K Item 10 and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. These terms are used by management to assess performance of individual operations and to compare our performance to other gold producers. The term "total cash cost" at Black Fox is equivalent to direct operating cost as would be found on the Consolidated Statements of Operations. This measure is not necessarily indicative of operating profit or cash flow from operations as determined under GAAP and may not be comparable to similarly titled measures of other companies.
