Apollo Gold Corporation ("Apollo) (TSX: APG) (AMEX: AGT) is pleased to announce the results of the bankable feasibility study ("BFS or "Study) for its 100% owned Black Fox Project ("Black Fox) located near Timmins, Ontario, Canada. The study was prepared by SRK Consulting ("SRK), Denver, Colorado. As used herein the term "bankable feasibility study means a comprehensive analysis of a project's economics (+/- 15% precision) which Apollo believes would be acceptable to a lender in making a determination as to whether to provide financing. SRK has confirmed that the study complies in all respects with Canadian National Instrument 43-101 ("NI 43-101).
Highlights of the Bankable Feasibility Study include:
- Net Present Value ("NPV) of $302 million using a gold price per ounce of $750,
- Internal Rate of Return ("IRR) of over 62% and capital payback of 2.0 years,
- Gold production of over 150,000 ounces annually over the life of the project,
- Average total cash costs for first three years of production estimated at $326 per ounce,
- 1.33 million contained ounces of gold in probable reserves.
R. David Russell, President & CEO of Apollo, said, "I am very happy with the results of this BFS and now look forward to arranging the funding and putting the mine into production in 2009. I believe that the BFS presents a very conservative base case as we can already see items that can be optimized based on our decision to purchase the Stock Mill from St. Andrews Goldfields Ltd (and assuming that the proposed purchase is successfully completed). This Study assumes that we will treat 1,100 tonnes per day at Stock Mill and that the excess ores mined will be treated at a third-party plant, which can be more expensive when compared to treating ores at your own plant. We have commissioned an additional engineering study to evaluate the expansion of the Stock Mill from its current level of 1,100 tonnes per day up to 1,500 tonnes per day and also to 2,500 tonnes per day. I would expect to see the results of this study before the end of the second quarter 2008. The initial purchase price for the Stock Mill of $20 million has been taken into account within the capital cost section of the Study. Since we have only recently entered into the letter of intent concerning the Stock Mill purchase, we have not fully evaluated the extent of the potential costs savings on the proposed Black Fox infrastructure capital, contained within this Study, of $24 million. We will be reviewing this in the coming months as the Stock Mill has many facilities, other than just the plant itself, which we would not need to purchase or construct for the Black Fox mine.
"I would also point out that the BFS does not include any additional gold resources from the inferred category which are mentioned in the NI 43-101. For example, the open pit design includes 2.7 million tonnes of 4.7 grams per tonne gold inferred resources which the BFS economics assumes has a nil grade even though this material is expected to be mined. This will, most likely represent additional gold production and could lower the cash cost per ounce of gold produced
The BFS economics, using reserve ounces only, assuming a gold price of US$750 per ounce, has an NPV of US$302.1 million and an IRR of 62%. The average annual total cash cost per ounce of gold is calculated at $387 per ounce. Variations of NPVs and discount rates are as follows:
NPV Values & IRR's (Pre-Tax)
Gold Price US $ / oz |  | NPV @ 0 % US $ millions |  | NPV @ 5% US $ millions |  | IRR % |
$ 650 |  | 176.1 |  | 127.9 |  | 42 |
$ 750 |  | 302.1 |  | 227.1 |  | 62 |
$ 850 |  | 428.0 |  | 326.2 |  | 81 |
$ 950 |  | 554.0 |  | 425.4 |  | 97 |
The mineral reserves shown in the table below formed the basis of the BFS and were calculated based on a gold price of US$650/oz.
Black Fox Probable Reserve Statement as of February 29, 2008
Mining Method |  | Cut-off Au |  | Tonnes |  | Grade (grams of |  | Contained oz Au |
Open Pit |  | 1 |  | 4,350,000 |  | 5.2 |  | 730,000 |
Underground1 |  | 3 |  | 2,110,000 |  | 8.8 |  | 600,000 |
Total |  |  |  |  |  |  |  | 1,330,000 |
1Underground Reserves assume 95% mining recovery 17% planned dilution and 5% unplanned dilution both at 0 gpt grade.
Assumptions
The BFS has the following major assumptions:
- necessary permits are received mid-2008,
- that the project would be developed as a combined open pit and underground mine,
- removal of the open pit glacial till cover commences in the 3rd quarter 2008,
- ore from the open pit is delivered to the mill from January 2009,
- development of the underground mine commences 3rd quarter 2008,
- ore delivery from the open pit is at a rate of 1,000 tonnes per day in 2009 rising to 1,500 tonnes per day in 2011,
- ore delivery from the underground mine is at a rate of 500 tonnes per day in 2009 rising to 1,000 tonnes per day in 2011,
- the Stock Mill (proposed purchase) is completed and operates at a throughput of 1,100 tonnes per day,
- the balance of daily ore produced, over the 1,100 tonnes to the Stock Mill, is toll treated at a local mill, and
- plant gold recoveries equal 96%.
Production Profile
A summary of proposed mined and milled production is shown in the table below:
 |  | Open Pit |  | Open |  | Strip |  | U/ground |  | Ore |  | Ore |  | Total |  | Gold |  | Total |
YEAR |  | t 000's |  | t 000's |  |  |  | t 000's |  | t 000's |  | t 000's |  | t 000's |  | Ounces |  | $ per |
2009 |  | 3,312 |  | 364 |  | 9.1 |  | 202 |  | 396 |  | 190 |  | 586 |  | 164,000 |  | 271 |
2010 |  | 5,068 |  | 408 |  | 12.4 |  | 314 |  | 396 |  | 325 |  | 721 |  | 177,000 |  | 323 |
2011 |  | 11,595 |  | 542 |  | 21.4 |  | 355 |  | 396 |  | 501 |  | 897 |  | 206,000 |  | 372 |
2012 |  | 7,694 |  | 543 |  | 14.2 |  | 335 |  | 396 |  | 482 |  | 878 |  | 150,000 |  | 466 |
2013 |  | 5,828 |  | 541 |  | 10.8 |  | 358 |  | 396 |  | 503 |  | 899 |  | 140,000 |  | 494 |
2014 |  | 4,372 |  | 541 |  | 8.1 |  | 358 |  | 396 |  | 504 |  | 900 |  | 153,000 |  | 438 |
2015 |  | 3,285 |  | 541 |  | 6.1 |  | 165 |  | 396 |  | 310 |  | 706 |  | 132,000 |  | 382 |
2016 |  | 3,282 |  | 543 |  | 6.0 |  | 9 |  | 396 |  | 156 |  | 552 |  | 93,000 |  | 355 |
2017 |  | 1,608 |  | 325 |  | 4.9 |  | 0 |  | 396 |  | 71 |  | 325 |  | 48,000 |  | 391 |
 |  | 46,044 |  | 4,348 |  | 10.6 |  | 2,096 |  | 3,564 |  | 2,900 |  | 6,464 |  | 1,263,000 |  | 387 |
Other Costs: |  | |
Total Cash Cost(a) | $387 per ounce gold | |
((a) See note on non-GAAP financial measures below) | ||
Operating Cost per tonne milled | $75.40 per tonne milled | |
 | ||
Mining Cost | $41.15 per tonne ore milled | |
Processing Cost | $31.17 per tonne ore milled | |
G & A Cost | $ 3.08 per tonne ore milled | |
Total Operating Cost | $75.40 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.
Mining Costs (LOM average costs) | ||
 | ||
Open Pit average Mining Costs |  | $2.13 per tonne mined |
Underground average Mining Costs | $55.39 per tonne ore mined |
Capital Costs
Pre-production capital costs are $86.9 million.
Open Pit Equipment |  | $ | 13.4 million |
Pre-Stripping Open Pit | $ | 4.0 million | |
Underground Equipment | $ | 7.8 million | |
Purchase of Mill | $ | 20.0 million | |
Infrastructure | $ | 23.0 million | |
Other | $ | 8.7 million | |
 | |||
Total Capital | $ | 86.9 million |
Life of Mine capital/sustaining capital is an additional $69.2 million.
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, Associated 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.
FORWARD-LOOKING STATEMENTS
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 of the Black Fox project, the stated assumptions contained in the Study, efforts to improve economic efficiencies and cost savings at Black Fox as a result of the proposed acquisition of the Stock Mill, commencement of production at Black Fox, the timing of future engineering studies at Black Fox and assumptions and statements regarding development of a mine at Black Fox, the commencement of production at Black Fox, the timing of mining and processing operations at Black Fox; successful completion of project financing at Black Fox; and the completion, cost and timing of the proposed purchase of the Stock Mill from St Andrew Goldfields Ltd., the receipt of permits, the removal of open pit glacial till, future ore delivery rates, throughput rates of the stock mill and treatment of ore are forward-looking statements that involve various risks and uncertainties. There is no assurance that the proposed purchase of the Stock Mill will be completed. 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 outcome of assays and additional exploration sampling and drilling efforts; 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
The term "total cash costs" is a non-GAAP financial measure and is used on a per ounce of gold basis. Total cash cost is equivalent to direct operating cost as would be found in our financial statements and would include by-product credits for payable silver production. We have included total cash cost information to provide investors with information about the planned cost structure of Black Fox mining operation. This information differs from measures of performance determined in accordance with GAAP in Canada and in the United States and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. 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.