Apollo Gold Announces Credit Facility of $5,150,000
Apollo Gold Corporation (“Apollo”) (AMEX: AGT) (TSX: APG) wishes to announce that its wholly owned subsidiary Montana Tunnels Mining Inc. (“MTMI”) has entered into a $5,150,000 extension of an existing debt facility with RMB Australia Holdings Ltd. (“RMB”) arranged by RMB Resources Inc. of Lakewood, Colorado (“RMB Resources”). As at June 30, 2008 Apollo owes RMB $1,653,000 from the original facility, which amount is scheduled for payment on September 30, 2008. All figures are in United States dollars, unless otherwise stated.
The primary use of funds from this extended facility will be the payment of C$4,000,000 to St Andrew Goldfields as a partial payment of the purchase price for the Stock Mill complex as announced in Apollo’s press release dated June 30, 2008.
The credit facility, which may be drawn from immediately, matures June 30, 2009 and will bear interest at LIBOR plus 2.0%, repayable in three equal quarterly payments beginning December 31, 2008. The loan is guaranteed by Apollo Gold Inc. and Apollo and is secured by all of the assets of MTMI and Apollo. Subject to the approval of the Toronto Stock Exchange, Apollo has agreed to issue 650,000 shares of its common stock to RMB Resources as partial consideration for arranging the extended credit facility.
In order to meet certain loan criteria, Apollo on July 1, 2008 hedged 5,973 ounces of gold, 50,238 ounces of silver, 1,026 tonnes (approximately 2,260,000 lbs) of lead and 2,784 tonnes (approximately 6,140,000 lbs) of zinc, which equates to approximately 50% of Apollo’s share of expected metal production from the Montana Tunnels Mine in the fourth quarter of 2008 and the first quarter 2009. The hedges are in the form of a no premium collar (buy a put, sell a call) at the following prices:
Gold = put $800 per ounce, call $1,075 per ounce. Silver = put $16.25 per ounce, call $18.80 per ounce. Lead = put $0.775 per lb, call $0.835 per lb. Zinc = put $0.80 per lb, call $0.943 per lb.
Apollo Gold Corporation
Apollo is a gold mining and exploration company that operates the Montana Tunnels mine, which is a 50% joint venture with Elkhorn Tunnels, LLC, the Black Fox advanced stage development project in Ontario, Canada, and the Huizopa project, an early stage exploration project in the Sierra Madres in Chihuahua, Mexico.
FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended, with respect to our financial condition, results of operations, business prospects, plans, objectives, goals, strategies, future events, capital expenditure, and exploration and development efforts. Forward-looking statements can be identified by the use of words such as “may,”"should,”"expects,”"plans,”"anticipates,”"believes,”"estimates,”"predicts,”"intends,”"continue,” or the negative of such terms, or other comparable terminology. These statements include comments regarding the use of proceeds from the credit facility. These forward-looking statements are subject to numerous risks, uncertainties and assumptions including unexpected changes in business and economic conditions, the results of current and future exploration activities, and other factors disclosed under the heading “Risk Factors” in Apollo’s Annual Report on Form 10-K for the year ended December 31, 2007 and elsewhere in documents that Apollo files from time to time with the Toronto Stock Exchange, the American Stock Exchange, the United States Securities and Exchange Commission and other regulatory authorities. There can be no assurance that future developments affecting the Company will be those anticipated by management. The forecasts contained in this press release constitute management’s current estimates, as of the date of this press release, with respect to the matters covered thereby. Apollo disclaims any obligation to update forward-looking statements, whether as a result of new information, future events or otherwise.