Initiating Coverage of Apollo Gold Corporation

MIKE NIEHUSER, Beacon Rock Research (02/27/2009)
"Apollo Gold Corporation is developing the Black Fox gold project near Timmins, Ontario. The project is scheduled to produce 130,000 to 150,000 ounces of gold per year over 8.75 years commencing April of 2009. They have acquired an existing 1,100 tpd mill, which is being upgraded to 2,000 tpd. The Black Fox deposit has an estimated reserve of 1.33 million ounces of gold. The combination of an existing mill and well-understood deposit located in an established district contributes to providing a reduced risk profile. Apollo has an effective management team. Near-term highlights include the following:
  • Gold resource expansion potential
  • Operating capacity increase potential
  • Exposure to higher gold prices
Apollo recently signed an agreement for US$70 million to complete project financing of the Black Fox project. Upon initiating production, expanding the current resource, or achieving full commercial production, shares of Apollo should enjoy significant increase in value from current levels. In the meanwhile, we are initiating coverage of Apollo Gold Corporation with a near-term price target of US$1.00 per share, a Buy rating, and a High risk assessment.

We anticipated that Apollo would be successful in securing project financing based on our assessment of management, the careful assembling of the components for the mine, and an inclination toward stable or higher gold prices. We are impressed with the prospects for success."

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