Montana Tunnels in full swing

Vancouver After months of pre-stripping, the Montana Tunnels gold mine near Helena, Montana has resumed full commercial production.

Denver-based Apollo Gold (APG-T) expects to produce 70,000-75,000 oz of gold from the operation this year, along with zinc, lead and silver credits.

The mid-tier gold producer acquired the project back in April 2002, just as the mine was set to close. Apollo immediately launched a three-phase waste-stripping program aimed at redeveloping the operation. The first phase of stripping consisted of 23 million tons of waste.

The second round of stripping is underway with 10 million tons of waste rock to be removed from the southwest pit wall. The program is slated to be complete by Dec.

In 2002, Apollo invested US$22.9 million in capital at the operation, its overall goal being to develop enough reserves to sustain another eight years of production. The company also spent US$16.9 million on the waste stripping.

The open-pit operation has been in production since 1987, with ore processed through a 14,500-tonne-per-day mill and flotation concentrator. A gravity circuit recovers some 15% of the annual gold production. By the end of 2001, more than 63.5 million tonnes had been milled, resulting in 1.1 million oz. gold.

The lead-zinc concentrates, which, though treated as a byproduct, represent half the value of the ore, have been shipped to various smelters around the world. In 2002, Apollo inked a 5-year deal with Teck Cominco (TEK-T) to treat the concentrate at its Trail smelter in southeastern British Columbia.

The average grade of ore produced since then has been constant: 0.58 gram gold and 10.9 grams silver per tonne, plus 0.22% lead and 0.6% zinc. The soft friable nature of the mineralized body, along with good recovery rates, made the operation profitable until all the available ore was mined out in April 2002.

The deposit is hosted in the central portion of the Montana Tunnels diatreme, the throat of an extinct 30-million-year-old volcano. The mineralized zone, dubbed the Core zone, consists of a matrix of tuffaceous quartz latite that hosts sub-angular-to-rounded fragments of earlier volcanic rocks. The zone shows a notable lack of silicification and is intensely sericitized.

The sulphide minerals are sphalerite and galena, with gold occurring in native form or as inclusions in the base metal sulphides and pyrite.

The Core zone ranges from 60 to 300 metres wide and 430 to 600 metres long. Despite some post-mineralized faulting, the deposit remains as a circular-pipe-like zone striking northeast 30 and dipping steeply to the northwest.

Apollo Gold posted a loss of $4.78 million, or $0.25 per share in 2002. Nearly half of the loss came in the final three months of year, when revenue hit $15 million but loses tallied $1.87 million or $0.05 per share. Driving the loss was a $964,000 expensing charge for the issuance of shares to members of senior management and $600,000 of reclamation expenses. For the year ended Dec. 31, revenue tallied $32 million, while direct operating costs hit $23 million.

Publicly listed since last 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).

At Dec. 31, 2002, Apollo had $13.3 million in cash and working capital of $23.5 million.