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.
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