Apollo Gold sizes up Black Fox

Armed with nearly 83,000 metres of drilling in 296 holes, Apollo Gold (APG-T) has tabled an initial reserve estimate for the Black Fox gold project near Timmins, Ont.

Based on a cut-off gold price of US$350 per oz., proven and probable reserves are pegged at 3 million tonnes grading 4.8 grams gold per tonne, or 456,673 oz. of contained gold. The Denver-based company says another 552,000 oz. are contained in unclassified mineralized material.

Apollo says the open-pit reserve is covered by some 11.1 million tonnes of alluvium pre-strip. Under the current open-pit mine plan, the operation would see the removal of more than 44 million tonnes of waste rock, for a waste-to-ore ratio of 14.9-to-1.

Plans at Black Fox call for a mining rate of 1,500 tonnes per day to produce an average of around 81,000 oz. of gold annually for more than five years.

Apollo envisages mining the deposit itself, while ore would be shipped elsewhere for toll milling over the life of the open-pit. An underground mining phase could follow if additional reserves can be developed. That eventuality would require development of a mill and tailing impoundment facility on site.

A pre-feasibility study, including metallurgical and environmental studies, concludes the project has a pre-tax net present value (NPV) of US$29.5 million and an internal rate of return (IRR) of 22.6%, based on a gold price of US$350 per oz. At a gold price of US$430 per oz., the NPV more than doubles to US$64.5 million and the IRR climbs to 51.4%.

Meanwhile, on the exploration front, Apollo recently began development of a planned 1,250-metrer underground exploration drift. The drift is being cut to allow for a proposed 67,000-metre drill campaign; the program will include 40,000 metres sunk from surface. The holes will target immediate extensions of the deposit plus other areas further down dip.

The drift is being developed from existing underground workings at the 235-metre level in the hanging wall along the strike of the ore zone. Looking ahead, the drift will also used to develop test stopes for underground mining, and to obtain a bulk sample for metallurgical studies.

Apollo is chasing two targets at Black Fox. The property is home to shallow mineralization above, and along strike to the east, of the old workings of the Glimmer mine on the Destor-Porcupine fault in the Abitibi greenstone belt. The second target represents deep mineralization downdip and along strike of previous mine development and exploration.

Highlights from the latest rounds of drilling on the open-pit reserve include:

• Hole 253 cut 3.8 metres grading 39.2 grams gold per tonne starting at a down-hole depth of 11.7 metres, followed by a 6-metre section of 135.3 grams gold, beginning at 21.3 metres.
• Hole 258 cut 3.1 metres of 139.1 grams gold starting at 89 metres down-hole.
• Hole 270 cut 10.2 metres of 20.2 grams gold starting at 44.8 metres down-hole.
• Hole 227 cut 13.2 metres of 7.6 grams gold starting at 31.8 metres.

Deeper drilling on Black Fox’s underground sections was highlighted by:

• Hole 196 cut 2.9 metres running 229 grams gold starting at 413.9 metres, followed a 0.8-metre interval averaging 29.6 grams, beginning at 445.5 metres.
• Hole 209 cut 3.7 metres of 12.3 grams gold starting at 413.9 metres down-hole, followed by 3.9 metres of 5.4 grams beginning at 424 metres down-hole.
• Hole 229 cut 2.4 metres of 13.4 grams gold starting at 437 metres down-hole.
• Hole 284 cut 1.6 metres of 25.1 grams gold starting at 395 metres.

In all, Apollo plans to spend US$10 million completing the underground exploration drift, core drilling, permitting, and feasibility studies at Black Fox during 2004.