Apollo Gold sizes up Black Fox near Timmins

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 gold price cutoff 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 ounces of contained gold. The Denver-based company says another 552,000 oz. are contained in unclassified mineralized material.

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 mining at the daily rate of 1,500 tonnes to produce an average of 81,000 oz. gold annually for more than five years.

Apollo intends to mine the deposit itself, with ore shipped elsewhere for toll milling over the life of the open pit. An underground mining phase would follow if additional reserves are developed. Underground mining would require development of a mill and tailing impoundment facility on site.

A prefeasibility study, including metallurgical and environmental studies, concludes that the project has a pretax net present value of US$29.5 million and an internal rate of return 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, Apollo has begun developing a 1,250-metre underground exploration drift. The drift will allow for a proposed 67,000-metre drill campaign, which will include 40,000 metres sunk from surface. The holes will target immediate extensions of the deposit plus other areas farther downdip.

The drift is being cut from existing underground workings at the 235-metre level in the hangingwall, along the strike of the mineralized zone. Looking ahead, the drift will also allow development of test stopes for underground mining, and the collection of a bulk sample for metallurgical tests.

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 round of drilling on the open-pit reserve are as follows:

— Hole 253 intersected 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, which cut 2.9 metres running 229 grams gold starting at 413.9 metres, followed a 0.8-metre interval of 29.6 grams beginning at 445.5 metres;

— hole 209, which intersected 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, which cut 2.4 metres of 13.4 grams gold starting at 437 metres down-hole; and

— hole 284, which cut 1.6 metres of 25.1 grams gold starting at 395 metres.

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

Meanwhile, back in the U.S., proven and probable reserves at the Montana Tunnels mine, near Helena, Mont., have more than doubled (from the beginning of 2003) to 692,5000 oz. contained in some 39.2 million tonnes grading 0.55 gram gold per tonne. The reserves are situated within the existing and planned pit expansion. The increase reflects improved metal prices and modelling techniques.

Montana Tunnels produced 44,124 oz. gold at a cash operating cost of US$267 per oz. during commercial production over the past nine months of 2003.

Reserves at the Florida Canyon mine, some 6 km to the north, rose 13% to 22 million tonnes averaging 0.5 gram gold, or 374,393 oz. of contained gold. Florida Canyon has produced more than 1.3 million oz. gold over its 15-year life. The mine managed 101,811 oz. gold at a cash operating cost of US$276 per oz. in 2003. Proceeds from the 60,065 oz. of byproduct silver were counted against costs.

In Nevada, reserves at the Standard Gold project climbed nearly 30% to 404,100 oz. contained in 20.4 million tonnes grading 0.6 gram gold. The heap-leach project will target uncrushed, run-of-mine material and is expected to see its first full year of production in 2005.

Apollo says company-wide reserves have more than doubled since the beginning of 2003.

In all, Apollo produced 157,717 oz. gold at a cash operating cost of US$273 per oz. in 2003. The company expects to churn out 176,000 oz. for less than US$260 apiece in 2004.