Apollo Gold Corporation (TSX: APG) (NYSE Amex: AGT) (“Apollo”) and
Linear Gold Corp. (TSX: LRR) (“Linear”) report performance improvements
at the Black Fox Mine are continuing with operating results during April
and May 2010 demonstrating significant increases in ore grade and
corresponding gold production compared to results for the first quarter
of 2010 (“Q1 2010”).
During April and May 2010, the Black Fox Mine produced over 12,000
ounces of gold from 119,000 tonnes of ore milled at an average gold
grade of approximately 3.5 grams per tonne at a 93% recovery rate. The
average ore grade was approximately 30% higher than Q1 2010 and in line
with the mine plan.
For the full year 2010, Apollo expects to produce 90,000 to 100,000
ounces of gold at total cash costs of between $500 and $550 per ounce.
Production is expected to continue to trend higher and cash costs are
projected to continue to trend lower during the second half of the year
as underground ore production is blended with open pit ore production
and expected to result in a higher overall ore grade at Black Fox.
During May 2010, Black Fox recorded its first sale of gold at the spot
price, selling 1,019 ounces of gold at an average gold price of $1,220
per ounce. All previous gold sales since the commencement of production
in late May 2009 were delivered into Apollo’s gold hedge book at an
approximate gold price of $876 per ounce. For the period June through
December 2010, Apollo expects to sell between 32,000 and 42,000 ounces
of its estimated gold production to the spot market with a balance of
approximately 31,700 ounces for delivery into the hedge book. This would
reduce Apollo’s hedge book to 142,685 ounces of gold at year-end 2010.
Underground Development Update
At the Black Fox Mine, construction work has begun in preparation for
initial underground mining of ore in the third quarter of 2010 (“Q3
2010”). Cementation Inc., the underground development and ventilation
raise bore contractor, has been mobilizing its crews and equipment to
the property. All engineering and electrical design work and concrete
foundations for surface facilities as well as the ventilation raise bore
drill pad have been completed. Mobile mining equipment, including three
jumbo drills, three scoop trams, two 50-tonne capacity haul trucks and
one 40-tonne capacity haul truck, has been ordered for delivery in Q3
2010.
During underground development, the contractor will handle initial
underground ore production with Black Fox’s crews ramping up during Q3
2010. Underground production is expected to reach a steady rate of 750
tonnes per day by the end of 2010.
Proposed Merger with Linear Gold
Pursuant to a definitive agreement executed by Apollo and Linear, Apollo
and Linear agreed to a business combination (the “Merger”) by way of a
court approved plan of arrangement to create an emerging Canadian
mid-tier gold producer. The consummation of the Merger as contemplated
by the Arrangement Agreement is subject to a number of precedent
conditions, including approval of the shareholders of each of Apollo and
Linear at respective shareholder meetings on June 24, 2010. The parties
currently anticipate that the Merger will be completed by the end of
June 2010. The proxy and management information circulars have been
filed with the regulatory authorities and mailed to respective Apollo
and Linear shareholders.
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 100 percent owned Grey Fox
and Pike River properties, all in the Timmins gold district in the
Township of Black River-Matheson 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. The Goldfields
property, representing 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
are “forward-looking statements” within the meaning of securities
legislation. These statements include statements about future production
by Apollo, commencement of underground production, underground
development and construction, future average ore grades and 2010
estimates of production and total cash costs, and statements regarding
the Merger, including the ability of each of Apollo and Linear to obtain
applicable shareholder approvals in respect of the proposed Merger,
Linear and Apollo to obtain requisite court approval, the timing of the
completion of the arrangement. Neither Apollo nor Linear intends, nor
assumes any obligation, to update these forward-looking statements,
except as required by applicable securities laws. 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. Neither Apollo nor Linear makes any 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
documents filed by Apollo and Linear from time to time with the Toronto
Stock Exchange, the NYSE Amex Equities Exchange and, on SEDAR and with
other regulatory authorities, including the United States Securities and
Exchange Commission.
Additional Information and Where to Find It
In connection with Apollo’s and Linear’s solicitation of proxies with
respect to the meeting of shareholders of each of Apollo and Linear to
be called with respect to the proposed plan of arrangement, Apollo has
filed a proxy statement with the SEC and with regulatory authorities in
Canada and mailed such statement to its shareholders and Linear has
filed an information circular with regulatory authorities in Canada.
SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT/ INFORMATION
CIRCULAR BECAUSE IT CONTAINS IMPORTANT INFORMATION. Shareholders are
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 are able to obtain a free-of-charge copy of
Linear’s information circular (when available) and other relevant
documents filed with regulatory authorities in Canada on SEDAR at http://www.sedar.com.
Shareholders of Apollo can also obtain a free-of-charge copy of the
proxy statement and other relevant documents 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, or
from Apollo’s website, www.apollogold.com.
Shareholders of Linear can also obtain a free-of-charge copy of the
information circular and other relevant documents by directing a request
by mail or telephone to Linear Gold Corp., Suite 502, 2000 Barrington
Street, Halifax, Nova Scotia B3J 3K1 or (902) 422-1421, or from Linear’s
website, www.lineargoldcorp.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. 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.
