Apollo Gold Still a Risky Proposition for Most - Blackmont

Miner Apollo Gold Corp. (AGT) recently completed a C$13-million equity financing, but Blackmont still sees the company as a risky proposition for most investors.

In the financing deal, Apollo issued 13.9 million common shares at 45 cents and 12.2 million flow-through shares at 54 cents.

The company announced it would use money from the flow-through shares for exploration expenses at its Black Fox property in Northern Ontario, while the rest will go towards ramping up production at the site.

Blackmont estimates 10,000 ounces of gold production in the second quarter of 2009, and for Black Fox to double that to 20,000 ounces in the third quarter.

However, Apollo also has a $9.3-million debt repayment due in September that will put pressure on the company.

"We continue to believe the stock offers an attractive level of return, albeit at a heightened level of risk," Richard Gray, Blackmont analyst, said in a note Friday. "It is an investment for risk tolerant investors only."

Blackmont has cut its price target to C$.95 from C$1, while also dropping earnings-per-share estimates for 2009 and 2010 to C$.02/C$.14 from C$.03/C$.16 cents. Apollo does hold on to its Outperform rating, however.

Comments

[Bobwins:]

Company is in production and they have confirmed 1500tpd with 1800tpd as a near term goal. Cash costs are below $400/oz so 20,000 oz of production will result in cashflow of 10 million + for Q3.

Company is certainly aware of the first debt repayment and did the recent PP to accelerate drilling near the 13 oz/tonne results at Grey Fox. Production cashflow should provide ample cash for debt repayment. Company has been in production for a couple years at their Montana base metal mine so has experienced production staff used to much higher production levels.

Apollo is very undervalued and should move beyond Blackmont target by yearend after proving they can produce at 1800tpd and then 2100 by year end. Bobwins

Jul 20 09:59 AM

[shuane:]

Blackmont underwrites Flow through for Apollo Gold!
Doesnt sound like they are too worried to me!

In connection with the Offering, the Company entered into an Underwriting Agreement with Haywood Securities Inc. (“Haywood”) and Blackmont Capital Inc. (“Blackmont”) and an amendment thereto, each dated July 15, 2009 as amended, (the “Underwriting Agreement”). Pursuant to the Underwriting Agreement, Haywood and Blackmont (together, the “Underwriters”) agreed to act as underwriters/agents in respect of the Offering and, in consideration therefor, the Company agreed to....

Jul 20 05:49 PM