Apollo raises $14.4 million for Montana Tunnels

One more sign that things are picking up in the gold business: Apollo Gold (APG-T) has completed a private placement of 6 million units priced at $2.40 each for gross proceeds of $14.4 million.

A unit consists of one Apollo share and half a warrant, with a whole warrant entitling the holder to buy another share for $3.25 within four years. BMO Nesbitt Burns acted as the agent.

Publicly listed since the summer, Apollo Gold is the result of a reverse-takeover by International Pursuit of a creditor-held company, also called Apollo Gold. The creditor company was running the last two Pegasus Gold gold mines still operating after the latter went bankrupt in 1999 (T.N.M., June 10/02).

Apollo now has 100% ownership of two open-pit mines, Montana Tunnels in Montana and Florida Canyon in Nevada, and in July it took control of the dormant Glimmer mine, near Timmins, Ont.

At Montana Tunnels, Apollo has completed a new plan that takes into account a slippage that occurred in July 2002 in the southwest wall.

This slide will likely have little impact on the overall mine plan, though some waste-rock stripping will be carried out in 2003, one year earlier than anticipated.

This rescheduling will result in US$6 million in additional capital development costs.

The recent financing provides Apollo with all the capital it needs to complete prestripping and have Montana Tunnels in full production by April 2003. For the full year, Apollo expects Montana Tunnels to incur a cash cost of the range of US$225-250, owing to the mining of the lower-grade materials in a transition zone. Beginning in 2004, the company hopes costs will fall below US$175 per oz.

In 2002, Apollo spent $18 million at Montana Tunnels on waste-stripping, mining equipment and infrastructure.

The company expects to produce 175,000 gold-equivalent ounces in 2002, with Florida Canyon contributing 120,000 oz.