Vancouver — Denver-based
For the first quarter, Apollo Gold tabled a net loss of $1.86 million (or 4 per share), compared with a consolidated net loss of $139,000 (17) per share in the corresponding period last year.
Direct operating expenses for the period were $8.28 million on total revenue of $12.94 million. Administrative and business development costs added $3.2 million.
During the fourth quarter last year, the junior hedged about 100,000 oz. gold using combinations of put and call options with a put-option strike price of US$295 per oz. and a call-option strike price of US$345 per oz. The program was required as a result of a short-term funding arrangement, and Apollo says it intends to remain otherwise unhedged.
At the end of March, Apollo had $10.2 million in its coffers and anticipates that its mining operations will be cash-flow-positive for 2003.
Apollo operates the Florida Canyon mine in Nevada and is in the midst of prestripping at the Montana Tunnels mine. The prestripping is designed to bring the mine into full production during the second quarter of 2003. The company is also preparing the Standard mine for production next year, and drilling its Black Fox prospect, near Timmins, Ont.
“The first quarter of 2003 represented a unique challenge to our staff,” says Apollo Gold President R.D. Russell. “We needed to get the Montana Tunnels operational again, as well as focus on our internal growth.”
During the first quarter of 2003, the Florida Canyon operation produced 25,057 oz. gold at cash and production costs of US$231 and US$313 per oz. Total production for the year is estimated at 118,000 oz.
At the beginning of the year, Florida Canyon hosted a reserve of 18.2 million tonnes averaging 0.57 gram gold per tonne, or 330,800 contained equivalent oz.
The Standard mine is 6.4 km south of the Florida Canyon mine, on the northern end of the Humboldt Range in Nevada. At last report, Standard had a reserve of about 15.6 million tonnes averaging 0.63 gram gold, or 332,500 oz. gold.
The permit application for the mine was submitted during the quarter, and Apollo is now designing the leach pad, as well as building roads and utilities. Independent consultants have been hired to complete a feasibility study by early summer. Apollo anticipates startup in the second half of 2004. The company is also evaluating the mine site’s potential for reserve expansion, and believes the South Pit area holds the most promise.
“At the Standard mine the permitting process is well under way and production is expected as early as next year,” says Russell. “The mill is operating at Montana Tunnels and commercial production of ore-grade material resumed in the second quarter as planned. We have had some minor pit-wall slides on the east side of the pit, and are dealing with them.”
At the Montana Tunnels mine, Apollo moved 6.5 million tons of waste and development material during the quarter as part of the ongoing prestripping. So far, 24.9 million tons have been removed from the K-pit, and another 1.3 million tons from the L-Pit.
The company spent $30.1 million on the Montana Tunnels operation during the quarter and processed 1.0 million tons of development material through the mill. This added $10.4 million to revenues and offset some of the deferred stripping costs.
Pit-wall problems and a wet spring plagued operations during the first five months of the year. As a result, there has been a delay in the production schedule.
The current mine plan calls for the K-pit to be mined for the rest of the year, as this should create positive cash flow. Apollo intends to resume stripping the L-pit in the next several months at a cost of about $10 million.
Reserves at Montana Tunnels at the beginning of the year were estimated at 17.3 million tonnes grading 0.53 gram gold, or 523,000 oz.
Meanwhile, at the Black Fox property in Timmins, 22,860 metres of a 90,000-metre program have been drilled. The program began in December 2002 and is expected to continue until October 2003. A fifth drill rig was added to the property in April. At last report, in mid-May, 74 holes had been completed, and assays for 52 of those had been received. Forty-seven of the holes cut gold mineralization.
The Black Fox project is near the site of the former Glimmer mine, on the Destor-Porcupine fault in the Abitibi greenstone belt.
Two targets
Apollo is testing two distinct targets on the property. The first consists of shallow mineralization above the old Glimmer mine workings, as well as along strike to the east. Initial drilling of this target is complete and geologic modeling is in progress. Eighty per-cent of holes cut gold mineralization. Highlights are as follows:
— Hole 12 cut 0.6 metre grading 23.11 grams gold per tonne starting at a down-hole depth of 29.5 metres, and this was followed by a 4-metre interval of 29.31 grams gold.
— Hole 15 cut 9.6 metres of 5.27 grams gold starting at 18.7 metres down-hole.
— Hole 16 cut 3 metres of 18.4 grams gold starting at 30.9 metres down-hole.
— Hole 22 cut 4.1 metres of 12.04 grams gold starting at 25.7 metres down-hole, followed by an 8-metre interval grading 36.83 grams gold starting at 55.6 metres down-hole.
— Hole 23 returned 1.4 metres of 6.37 grams gold starting at 45 metres down-hole; this was followed by a 9-metre interval of 3.47 grams gold starting at 55.7 metres down-hole.
— Hole 24 cut 3.3 metres of 363.84 grams gold starting at 44.1 metres down-hole.
— Hole 02BF-01 cut 6.7 metres averaging 7.65 grams gold starting at 77.3 metres down-hole, followed by a 5.1-metre interval of 12.29 grams gold starting at 111 metres down-hole.
The second target represents deep mineralization downdip and along strike of previous mine development and exploration. The first 15 deep holes were drilled in fences spaced 100 metres apart along a strike length of 300 metres. Four rigs are currently drilling 19 infill holes to establish continuity of mineralization, and so far 14 of these (74%) have cut gold mineralization. The following are highlights:
— Hole 5 cut 10.9 metres averaging 26.51 grams gold starting at 309 metres down-hole.
— Hole 11 cut numerous intervals starting at 257 metres down-hole. These included 2 metres averaging 3.09 grams gold, 3 metres of 5.42 grams gold, 2.7 metres of 4.35 grams gold, 0.4 metre of 25.65 grams gold, and 1 metre of 59.9 grams gold.
— Hole 29 cut 3.1 metres of 14.61 grams gold starting at 308.6 metres down-hole.
— Hole 30 cut 2.1 metres of 22.72 grams gold starting at 244.8 metres down-hole. This was followed by a 3.2-metre interval of 6.72 grams gold starting at 283 metres down-hole.
— Hole 31 cut 8.3 metres of 7.58 grams gold starting at 352.8 metres down-hole.
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