Apollo Gold continues at Montana Tunnels mine
2007-01-09 07:41 ET - News Release
Mr. David Russell reports
APOLLO GOLD UPDATES PROGRESS ON THE MONTANA TUNNELS MINE JOINT VENTURE
Apollo Gold Corp. has released an update on the progress of the open-pit wall remediation work and the development of the new ramp system at its Montana Tunnels mine, in Montana.
As previously announced in Stockwatch on Aug. 1, 2006, Apollo entered into a joint venture with Elkhorn Tunnels LLC, an affiliate of Calim Private Equity LLC, in respect of the company's Montana Tunnels mine. The joint venture agreement calls for Elkhorn to earn up to a 50-per-cent interest in the mine by contributing $13-million over a five-month period, with money being contributed on a weekly basis. As of Dec. 31, 2006, Elkhorn had contributed $9.27-million, and as of Jan. 4, 2007, this contribution had risen to a total of $11.0-million.
The parties agreed to amend the joint venture agreement effective Dec. 31, 2006, with Elkhorn. Effective as of that date, Elkhorn has informed MTM that it would complete the full financing of its initial contribution, and the parties have memorialized that obligation by amending the JV agreement and by Elkhorn executing a promissory note to evidence its obligation to complete the full financing of its initial contribution. The general terms of the short-term note contemplate full payment during January, 2007, in the amount of $3.73-million. The final amount now due on the note, after the most recent contribution, is $2-million.
The mine commenced the remediation program on Aug. 10, 2006, with the hiring of key maintenance personnel to repair the mobile equipment fleet followed by the hiring of mine operating personnel during the first week of September, 2006. On Sept. 10, 2006, the first bench was blasted and waste rock removal began along with the construction of a new ramp access to the open-pit ore reserves. To date, the company has excavated approximately six million tons and is currently working on the ramp system below switchback No. 4, which is 100 feet from accessing the open-pit bottom and the orebody. Upon reaching the open-pit bottom during January, 2007, the company intends to proceed to move waste material which will expose the orebody. This primary waste moving project is projected to wind down by late February. Mill personnel have been hired to begin maintenance work in preparation for the mill start-up currently estimated at late February or early March, 2007.
David Russell, president and chief executive officer of Apollo, said: "I am very happy with the remediation progress at the mine and am looking forward to the mill start-up. We have a solid management team at the mine headed up by the vice-president and general manager, Tim Smith, and the joint venture arrangement with Elkhorn is working well and we are optimistic that with Elkhorn fulfilling its contribution we will bring the mine back into production thus allowing our shareholders the opportunity to participate in the prevailing high metal price environment and producing a positive cash flow in 2007."
Since the mine entered production in 1987, it has produced 1.5 million ounces of gold, 28 million ounces of silver, 390 million pounds of lead and over one billion pounds of zinc. The following is the most recent information on reserves at the mine as reported in Apollo's Form 10-K filed with the Securities and Exchange Commission for the year ended Dec. 31, 2005: 33,241,000 tons of ore with gold grades of 0.016 ounce per ton; silver grades of 0.212 ounce per ton; lead grades of 0.185 per cent and zinc grades of 0.598 per cent for total gold reserve ounces of 535,900.
Elkhorn is an affiliate of Calim, a Colorado-based private equity firm. Calim managing director, Patrick Imeson, stated: "We are very pleased with the quick start-up at the mine and progress to date and believe the mine to be a great asset with capable management. Our strategy is to search out niches where we can develop undervalued opportunities, that larger players in an industry have overlooked or are unable to exploit, and Montana Tunnels is such an asset, and we look forward to the successful completion of the remediation project and the mine going back into production."
We seek Safe Harbor.
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