Apollo Gold (AMEX:AGT)
Historical Stock Chart
5 Years : From May 2008 to May 2013
Apollo Gold Corporation (“Apollo” or the “Company”) (TSX: APG) (NYSE
Amex: AGT) reports net income of approximately $6.45 million and
operating income of approximately $1.79 million for the first quarter
ended March 31, 2010 (“Q1 2010”). All dollars reported in this news
release are in U.S. currency, unless otherwise noted.
Q1 2010 and year-to-date highlights included:
-
Execution of a definitive agreement for a proposed business
combination (the “Merger”) by way of a court-approved plan of
arrangement with Linear Gold Corp. (“Linear”), whereby Apollo has
agreed to acquire all of the outstanding common shares of Linear in
exchange for Apollo common shares at an exchange ratio of 5.4742
Apollo shares per Linear share, expected to be adjusted for Apollo’s
proposed share consolidation of one post-consolidation common share
for every four Apollo common shares outstanding immediately prior to
the share consolidation;
-
Completion of a Cdn$25.0 million private placement equity subscription
by Linear, with Apollo using the proceeds (i) to reduce the principal
of the Company’s Black Fox project debt facility by $10.0 million,
(ii) to advance the underground mine development at the Black Fox Mine
and (iii) for working capital purposes;
-
Reduction of the project debt facility by approximately $18.2 million,
including a $10.0 million reduction during the quarter from proceeds
of the Linear subscription and an $8.2 million reduction as a result
of proceeds from the opportunistic closing out of in-the-money
Canadian currency hedge contracts subsequent to the end of the quarter;
-
Production of 14,175 ounces of gold from approximately 178,000 tonnes
of ore processed at an average gold grade of approximately 2.7 grams
per tonne during Q1 2010;
-
Gold sales during Q1 2010 of 15,796 ounces at total cash costs of $631
per ounce; all of which were delivered into the Company’s gold forward
sales contracts at a realized gold price of $875 per ounce;
-
Commissioning of a new conveyor and crusher scalping circuit and water
management holding facility at the Black Fox Mill in Q1 2010;
-
Divestiture of all of the capital stock of the Company’s subsidiary,
Montana Tunnels Mining, Inc., which held the Company’s 50 percent
joint venture interest in the Montana Tunnels mine and mill.
Financial Overview
For Q1 2010, the Company reported net income of approximately $6.45
million ($0.02 per share) due mainly to (i) an approximate $10.0 million
non-cash realized gain on equity-linked financial instruments, related
to a mark to market change in the value of the Company’s Canadian dollar
denominated warrants, and (ii) an approximate $2.0 million non-cash
unrealized gain on derivative instruments related to the mark to market
change in fair value of the Company’s Canadian currency and gold forward
contracts from December 31, 2009 to March 31, 2010.
The recognition of the gain of $10.0 million on the Canadian dollar
denominated warrants was in accordance with guidance from the Accounting
Standards Codification of the Financial Accounting Standards Board as
these warrants are considered a liability and are adjusted to their fair
value at the end of every period.
The Company reports its financials under United States generally
accepted accounting principles (“US GAAP”), as allowed under both Canada
and U.S. securities laws. Its initial presentation of financial
statements under US GAAP was in its Annual Report on Form 10-K for the
year ended December 31, 2009. One effect of the adoption of US GAAP is
that a slightly greater proportion of development costs for Company’s
mining operations are expensed as current period costs and reflected in
total cash costs than would be under Canadian GAAP.
Capital expenditures for Q1 2010 were $1.1 million and included
completion of the crushing circuit at the Black Fox Mill in January
2010. All start-up capital for the Black Fox Mine and Mill has been
completed, which lowers the operating and capital risk considerably for
Black Fox, now operating at a steady mill processing rate of
approximately 2,000 tonnes per day. The Black Fox Mine commenced gold
production in May 2009.
Exploration Overview
Apollo’s 2010 exploration drilling program began in April 2010 and, to
date, four holes have been completed in the Contact Zone at the Grey Fox
and Pike River properties. The approximate $4.0 million exploration
program is expected to include 20,000 meters of drilling from surface as
well as underground drilling. Surface drill targets are located at the
Grey Fox and Pike River properties, including the Contact Zone, which
extends north towards the intersection of the Destor-Porcupine Fault
Zone, the host structure of the Black Fox deposit. The exploration
program will also seek to extend the Black Fox mineral deposit along
strike to the Pike River property by drilling from underground beginning
at the 235 meter level.
At Grey Fox, the Company expects to complete its initial National
Instrument 43-101-compliant mineral resource estimate by the end of Q2
2010. The Grey Fox resource estimate will include some Measured and
Indicated Resources and will cover the first 500 meters (“m”) of strike
length, to a maximum depth of 250 m, at the Contact Zone. The known
Contact Zone mineralization has been intercepted along 850 m of strike
and remains open on strike to the north, south and down dip. Grey Fox is
located 3.5 kilometers southeast of the Black Fox Mine.
Outlook for 2010
Gold production for the full year 2010 is estimated at between 90,000
and 100,000 ounces of gold, of which 60 percent to 65 percent is
expected to be produced in the second half of 2010. As noted in Apollo’s
May 5, 2010, news release, total cash costs per ounce of gold sold are
expected to be between $500 and $550 for the full year, with higher ore
grade from the open pit and higher ore grade from the underground mine
commencing in July, resulting in expected increased production from the
mine and lower cash costs in the second half of 2010 compared to the
first half.
Pending Business Combination with Linear
Pursuant to a definitive agreement executed by Apollo and Linear, Apollo
and Linear agreed to the “Merger” to create an emerging Canadian
mid-tier gold producer (“New Company”). The Merger is expected to close
by the end of June 2010, subject to customary closing conditions,
including receipt of all necessary regulatory, court and respective
shareholder approvals.
About Apollo
Apollo is a growing gold producer that operates the wholly owned Black
Fox Mine in Ontario, Canada, which commenced gold production in May
2009. Apollo is also exploring the adjoining Grey Fox and Pike River
properties, all in the Timmins gold district in Ontario, Canada, as well
as the Huizopa Joint Venture, (80 percent Apollo and 20 percent Minas De
Coronado, S. de R.L. de C.V.), an early stage, gold-silver exploration
project, approximately 16 kilometers (10 miles) southwest of MineFinders
Dolores gold-silver mine, in the Sierra Madres in Chihuahua, Mexico.
About Linear
Linear Gold Corp is a well financed gold exploration and development
company committed to maximizing shareholder value through a strategy of
mine development, focused exploration, and effective risk management
through selective partnerships and acquisitions. Linear's flagship
development property located near Uranium City, Saskatchewan, hosts an
economic gold deposit and is now in the development stage to become a
70,000 - 90,000 ounce per year gold producer. Linear also holds an
extensive and diverse portfolio of mineral projects in the Dominican
Republic and Mexico.
Forward-looking Statements
Certain statements in this press release relating to the proposed Merger
and Apollo’s exploration activities, project expenditures, production
and financial results, and business plans are “forward-looking
statements” within the meaning of securities legislation. These
statements include statements regarding future production by Apollo, the
commencement of underground mining at the Black Fox Mine and production
and capital estimates in connection therewith, future ore grades at the
Black Fox Mine, estimates of cash costs, grades and future development
at the Black Fox Mine, completion of the Merger, future exploration
activities at the Grey Fox and Pike River properties and the costs
associated therewith and completion of a NI 43-101 technical report for
Grey Fox and the contents and timing thereof. Apollo does not intend,
and does not assume any obligation, to update these forward-looking
statements, except as required by applicable securities legislation.
These forward-looking statements represent management's best judgment
based on current facts and assumptions that management considers
reasonable, including that the required approval will be obtained from
the shareholders of Apollo or Linear, that all third party regulatory
and governmental approvals to the Merger will be obtained and all other
conditions to completion of the Merger will be satisfied or waived, that
operating and capital plans will not be disrupted by issues such as
mechanical failure, unavailability of parts, labor disturbances,
interruption in transportation or utilities, or adverse weather
conditions, that there are no material unanticipated variations in
budgeted costs, that contractors will complete projects according to
schedule, and that actual mineralization on properties will not be less
than identified mineral reserves. Apollo makes no representation that
reasonable business people in possession of the same information would
reach the same conclusions. Forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the companies to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. In
particular, fluctuations in the price of gold or in currency markets
could prevent the companies from achieving their targets. Other factors
are disclosed under the heading “Risk Factors” and elsewhere in Apollo
documents filed from time to time with the Toronto Stock Exchange and
the NYSE Amex Equities Exchange and, on SEDAR and with other regulatory
authorities, including the United States Securities and Exchange
Commission.
Non-GAAP Financial Measures
The term “total cash cost” 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 found on the Consolidated Statements of Operations and
includes by-product credits for payable silver production. We have
included total cash cost information to provide investors with
information about the cost structure of our mining operations. This
information differs from measures of performance determined in
accordance with GAAP in the United States and Canada 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.
Cautionary Note to U.S. Investors Concerning Estimates of Mineral
Resources
The terms “mineral resources” and “resources” are recognized and
required by Canadian regulations. However, the SEC does not recognize
them and U.S. investors are cautioned not to assume that any part or all
of a mineral deposit in this category will ever be converted into
mineral reserves.
Additional Information and Where to Find It
In connection with Apollo’s solicitation of proxies with respect to the
meeting of shareholders of Apollo to be held to consider the proposed
Merger, Apollo will file a proxy statement with the SEC and with
regulatory authorities in Canada. SHAREHOLDERS ARE ADVISED TO READ THE
PROXY STATEMENT/INFORMATION CIRCULAR WHEN IT IS FINALIZED AND
DISTRIBUTED TO SHAREHOLDERS BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION. Shareholders will be able to obtain a free-of-charge copy
of Apollo’s proxy statement (when available) and other relevant
documents filed with the SEC and with regulatory authorities in Canada
from the SEC’s website at http://www.sec.gov
and from SEDAR at http://www.sedar.com,
as applicable. Shareholders of Apollo will also be able to obtain a
free-of-charge copy of the proxy statement and other relevant documents
(when available) by directing a request by mail or telephone to Apollo
Gold Corporation, 5655 South Yosemite St., Suite 200, Greenwood Village,
Colorado 80111-3220 or (720) 886-9656, extension 217, or from Apollo’s
website at http://www.apollogold.com.
Interests of Participants in the Solicitation of Proxies
Apollo and certain of its directors, executive officers and other
members of its management and employees may, under the rules of the SEC,
be deemed to be “participants” in the solicitation of proxies from its
shareholders in connection with the proposed Merger. Information
concerning the interests of the persons who may be considered
“participants” in the solicitation is set forth in Apollo’s proxy
statements and Annual Reports on Form 10-K (including any amendments
thereto), previously filed with the SEC, and in the proxy statement
relating to the plan of arrangement when it becomes available. Copies of
these documents can be obtained, without charge, at the SEC’s Internet
website at www.sec.gov
or by directing a request to Apollo at the address above.
APOLLO GOLD CORPORATIONCONDENSED CONSOLIDATED
BALANCE SHEETS
(In thousands of U.S. dollars)(Unaudited)
March 31,2010
December 31,2009
ASSETS
CURRENT
Cash
$
1,931
$
–
Restricted cash
17,695
6,731
Accounts receivable and other
1,107
1,690
Prepaids
1,578
394
Derivative instruments
8,167
1,961
Inventories
8,718
8,189
Total current assets
39,196
18,965
Derivative instruments
–
4,844
Long-term investments
4,476
1,036
Property, plant and equipment
113,561
116,171
Investment in Montana Tunnels joint venture
–
3,440
Restricted certificates of deposit
15,318
14,805
TOTAL ASSETS
$
172,551
$
159,261
LIABILITIES
CURRENT
Bank indebtedness
$
–
$
328
Accounts payable
5,395
6,789
Accrued liabilities
2,245
2,129
Derivative instruments
12,757
12,571
Current portion of long-term debt
41,305
34,860
Total current liabilities
61,702
56,677
Accrued long-term liabilities
353
483
Derivative instruments
30,849
31,654
Long-term debt
34,094
48,909
Equity-linked financial instruments
17,305
27,318
Accrued site closure costs
5,710
5,345
Future income tax liability
450
1,304
TOTAL LIABILITIES
150,463
171,690
SHAREHOLDERS’ EQUITY (DEFICIENCY)
Common stock – Nil par value, unlimited shares authorized,
337,973,660 and 264,200,927 shares issued and outstanding,
respectively
230,450
202,769
Additional paid-in capital
45,942
45,555
Accumulated deficit
(254,304
)
(260,753
)
TOTAL SHAREHOLDERS’ EQUITY (DEFICIENCY)
22,088
(12,429
)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY)
$
172,551
$
159,261
APOLLO GOLD CORPORATIONCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(U.S. dollars and shares in thousands, except per share amounts)(Unaudited)
Three months endedMarch 31,
2010
2009
Revenue from the sale of gold
$
17,626
$
–
Operating expenses
Direct operating costs
9,984
–
Depreciation and amortization
3,461
10
Accretion expense – accrued site closure costs
175
–
General and administrative expenses
1,949
932
Exploration and business development
271
227
15,840
1,169
Operating income (loss)
1,786
(1,169
)
Other income (expenses)
Interest income
54
40
Interest expense
(3,342
)
(830
)
Debt transaction costs
–
(1,239
)
Loss on modification of convertible debentures
(513
)
(1,969
)
Linear acquisition costs
(577
)
–
Fair value change on equity-linked financial instruments
10,013
(4,753
)
Realized (losses) gains on derivative instruments
(3,343
)
368
Unrealized gains (losses) on derivative instruments
1,981
(18,418
)
Foreign exchange gain and other
222
97
4,495
(26,704
)
Income (loss) before income taxes and equity loss in Montana Tunnels
joint venture
6,281
(27,873
)
Income taxes
869
73
Equity loss in Montana Tunnels joint venture
(701
)
(624
)
Net income (loss) and comprehensive income (loss) for the period
$
6,449
$
(28,424
)
Basic and diluted net income (loss) per share
$
0.02
$
(0.13
)
Basic weighted-average number of shares outstanding
276,461
226,459
Diluted weighted-average number of shares outstanding
312,656
226,459
APOLLO GOLD CORPORATIONCONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands of U.S. dollars)(Unaudited)
Three months endedMarch 31,
2010
2009
Operating activities
Net income (loss) for the period
$
6,449
$
(28,424
)
Items not affecting cash:
Depreciation and amortization
3,461
10
Stock-based compensation
238
182
Shares and warrants issued for services and payment of interest
599
4,020
Accretion expense – accrued site closure costs
175
–
Accretion expense – amortization of debt discount
1,583
–
Accretion expense – convertible debentures
215
802
Interest paid on convertible debentures
(772
)
(567
)
Unrealized (gains) losses on derivative instruments
(1,981
)
18,418
Net change in equity-linked financial instruments
(10,013
)
4,753
Other
193
(63
)
Income taxes
(869
)
(73
)
Equity investment in Montana Tunnels joint venture
589
624
Net change in non-cash operating working capital items
(1,246
)
587
Earnings distribution from Montana Tunnels joint venture
–
480
Net cash (used in) provided by operating activities
(1,379
)
749
Investing activities
Property, plant and equipment expenditures
(1,062
)
(21,866
)
Restricted cash and certificates of deposit, including bank
indebtedness
(11,292
)
8,170
Net cash used in investing activities
(12,354
)
(13,696
)
Financing activities
Proceeds on issuance of shares
24,497
–
Proceeds from exercise of warrants
2,145
499
Proceeds from debt
–
38,034
Repayments of debt
(10,973
)
(20,937
)
Net cash provided by financing activities
15,669
17,596
Effect of exchange rate changes on cash
(5
)
(4
)
Net increase in cash
1,931
4,645
Cash, beginning of period
–
–
Cash, end of period
$
1,931
$
4,645
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid
$
2,674
$
880
Income taxes paid
$
–
$
25
|
