Canadian gold miner Apollo Gold Corp. (NYSE: AGT) is negotiating with its lenders for an additional $70 million to complete the company’s Black Fox project in Ontario. The company may make the deal, but it’s a costly one.
Essentially, Apollo will issue warrants for about 37% of the company to its financiers at prices around $0.25/share. The company’s shares closed at $0.34 last Friday.
Black Fox reserves are estimated at 1.33 million ounces of gold and mining at Black Fox is expected to begin in April. The $70 million the company seeks would be disbursed by June and repayments would start in September. The company’s market cap on Friday was about $75 million.
Gold is inching its way back toward $1,000/ounce, and Apollo wants to be in the game. The company recently laid off 82 workers at its Montana Tunnels mine with another 104 employees likely to follow soon. The company failed to get financing to keep the Montana Tunnels mine open. Apollo is trying to do better with Black Fox.
Paul Ausick
February 16, 2009
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