APOLLO GETS A NEW FOLLOWER
Apollo's Black Fox gold mine gets Haywood Securities seal of approval
Apollo Gold's new Black Fox gold mine in Ontario has captured the attention of Haywood Securities.
Author: Dorothy Kosich
Posted: Thursday , 24 Sep 2009
RENO, NV -
Haywood Securities has initiated coverage on Apollo Gold Corporation, emphasizing its new Black Fox mine east of Matheson, Ontario.
In analysis published Wednesday, Haywood metals analysts Kerry Smith and Shane Nagle forecast life of mine average production of 125,000 ounces of gold at total cash cost of US$385 per ounce over 10 years.
The US$90 million Black Fox mine, which began commercial production in June, is forecast to produce 58,000 ounces of production at a cash cost of US$480/oz this year. Haywood predicted cash costs will be higher during the third quarter of this year.
Apollo Gold also owns a 50% interest in Montana Tunnels-a zinc, lead, gold and silver operation in Montana-which was placed on care and maintenance in April 2008 due to low zinc and lead prices.
Haywood estimated Apollo has 1.33 million ounces of gold reserves and a total resource of 2.18 million ounces at Black Fox. Current reserves at Montana Tunnels for the entire joint venture are 508,000 ounces of gold, 416 million pounds of zinc, 142 million pounds of lead, and 8.4 million ounces of silver.
The company is now is discussions with lenders to reschedule a US$9 million debt payment due September 30th. Haywood said the company has US$5 million in cash available for debt repayment and a further US$6.5 million of a $7.5 million flow-through financing, which is only available for exploration.
Smith and Nagle suggested exploration should be a priority at Black Fox, which consists of 3,195 acres. The company has also recently secured the surface and mineral rights to 1,145 acres between Apollo's Black Fox and Grey Fox properties. "The land package is known as Pike River and lies along the strike length of the Destor-Porcupine Fault Zone," they noted.
Apollo Gold rose out of the ashes of the former Pegasus Gold in 2002, which had crashed and burned and filed for bankruptcy. Investment banks took over the chief Pegasus assets of Florida Canyon and Montana Tunnels, subsequently selling those assets to the newly formed Apollo Gold. Florida Canyon would eventually be sold to Jipangu of Japan.
Haywood gave Apollo Gold a "Sector Outperform" rating with a target price of $1 with speculative risk.
