UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-31593

APOLLO GOLD CORPORATION
(Exact name of registrant as specified in its charter)

Yukon Territory, Canada
Not Applicable
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)

5655 South Yosemite St., Suite 200
Greenwood Village, Colorado 80111-3220
(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code: (720) 886-9656

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x        No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o
Accelerated Filer o
Non-Accelerated Filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o        No x

At November 9, 2007, there were 156,248,123 common shares of Apollo Gold Corporation outstanding.
 




TABLE OF CONTENTS

   
Page
PART I
FINANCIAL INFORMATION
4
     
ITEM 1.
FINANCIAL STATEMENTS (Unaudited)
4
     
 
Condensed Consolidated Balance Sheets - As of September 30, 2007 and as of December 31, 2006
5
 
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2007 and 2006
6
 
Condensed Consolidated Statements of Shareholders’ Equity for the Year ended December 31, 2006 and the Nine Months Ended September 30, 2007
7
 
Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2007 and 2006
8
 
Notes to the Condensed Consolidated Financial Statements
9
     
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
28
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
36
ITEM 4.
CONTROLS AND PROCEDURES
37
     
PART II
OTHER INFORMATION
38
     
ITEM 1.
LEGAL PROCEEDINGS
38
ITEM 1A.
RISK FACTORS
38
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
38
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
39
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
39
ITEM 5.
OTHER INFORMATION
39
ITEM 6.
EXHIBITS
39
     
INDEX TO EXHIBITS
41
   
 
Certification of CEO Pursuant to Section 302
Exhibit 31.1
 
Certification of CFO Pursuant to Section 302
Exhibit 31.2
 
Certification of CEO and CFO Pursuant to Section 906
Exhibit 32.1
 
STATEMENTS REGARDING FORWARD LOOKING INFORMATION
 
This Quarterly Report on Form 10-Q contains forward looking statements as defined in the Private Securities Litigation Reform Act of 1995 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:
 
 
·
future cash flow and operational results from the Montana Tunnels mine;
 
2

 
 
·
the establishment and estimates of mineral reserves and resources;
 
 
·
the timing of completion of feasibility studies at Black Fox;
 
 
·
production and production costs;
 
 
·
daily production rates;
 
 
·
throughput rates;
 
 
·
cash operating costs;
 
 
·
total cash costs;
 
 
·
grades of ore mined and milled;
 
 
·
expenditures;
 
 
·
exploration;
 
 
·
permits;
 
 
·
expansion plans;
 
 
·
plans for Black Fox and Huizopa;
 
 
·
closure costs;
 
 
·
cash flows;
 
 
·
future financing;
 
 
·
liquidity;
 
 
·
estimates of environmental liabilities;
 
 
·
our ability to obtain future financing to fund our estimated operating and capital requirements;
 
 
·
anticipated exploration, development and corporate overhead expenditures;
 
 
·
factors impacting our results of operations;
 
 
·
the impact of adoption of new accounting standards.
 
These forward looking statements are subject to numerous risks, uncertainties and assumptions including: unexpected changes in business and economic conditions; significant increases or decreases in gold and zinc prices; changes in interest and currency exchange rates; timing and amount of production; unanticipated grade changes; unanticipated metal recovery or production problems; changes in mining and milling costs; operational problems at our mining property; availability of materials, equipment, supplies and water; determination of reserves; changes in project parameters; costs and timing of development of new reserves; results of current and future exploration activities; results of pending and future feasibility studies; joint venture relationships; political or economic instability, either globally or in the countries in which we operate; local and community impacts and issues; timing and receipt of government approvals; accidents and labor disputes; environmental costs and risks; competitive factors, including competition for property acquisitions; availability of external financing on reasonable terms or at all; and the factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2006 under the heading “Risk Factors.” Many of these factors are beyond our ability to control and predict. These factors are not intended to represent a complete list of the general or specific factors that may affect us. We disclaim any obligation to update forward looking statements, whether as a result of new information, future events or otherwise.
 
 
3


ACCOUNTING PRINCIPLES, REPORTING CURRENCY AND OTHER INFORMATION
 
Apollo Gold Corporation prepares its consolidated financial statements in accordance with accounting principles generally accepted in Canada and publishes its financial statements in United States dollars. This Quarterly Report on Form 10-Q should be read in conjunction with our condensed consolidated financial statements and related notes included in this quarterly report, as well as our annual financial statements for the fiscal year ended December 31, 2006 included in our Annual Report on Form 10-K. Certain reclassifications have been made to the prior period financial statements to conform with the current period presentation.
 
Unless stated otherwise, all dollar amounts are expressed in United States dollars.
 
References to “we,” “our,” “us,” the “Company” or “Apollo” mean Apollo Gold Corporation and its consolidated subsidiaries, or to any one or more of them, as the context requires.
 
NON-GAAP FINANCIAL INFORMATION
 
Cash operating, total cash and total production costs are non-GAAP financial measures and are used by management to assess performance of individual operations as well as a comparison to other gold producers. We have included cash operating costs information to provide investors with information about the cost structure of our mining operations.
 
The term “cash operating costs” is used on a per ounce of gold basis. Cash operating costs per ounce is equivalent to direct operating cost as found on the Consolidated Statements of Operations, less production royalty expenses and mining taxes but includes by-product credits for payable silver, lead and zinc.
 
The term “total cash costs” is equivalent to cash operating costs plus production royalties and mining taxes.
 
The term “total production costs” is equivalent to total cash costs plus non-cash costs including depreciation and amortization.
 
This information differs from measures of performance determined in accordance with generally accepted accounting principles (GAAP) in Canada and the United States and should not be considered in isolation or a substitute for measures of performance prepared in accordance with GAAP. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP and may not be comparable to similarly titled measures of other companies. See Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for a reconciliation of these non-GAAP measures to our Statements of Operations.
 
PART I FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
These condensed consolidated financial statements should be read in conjunction with the financial statements, accompanying notes and other relevant information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 filed with the Securities and Exchange Commission on April 2, 2007.
 
 
4


APOLLO GOLD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
(Unaudited)

   
September 30,
2007
 
December 31,
2006
 
ASSETS
     
CURRENT
     
Cash and cash equivalents
 
$
6,637
 
$
4,512
 
Accounts receivable and other
   
2,304
   
728
 
Note receivable (Note 4)
   
   
1,865
 
Prepaids
   
713
   
301
 
Inventories (Note 5)
   
1,476
   
660
 
Total current assets
   
11,130
   
8,066
 
Property, plant and equipment
   
44,484
   
38,868
 
Deferred stripping costs (Note 3)
   
4,427
   
 
Restricted certificates of deposit
   
6,097
   
4,605
 
Deferred financing costs
   
   
265
 
TOTAL ASSETS
 
$
66,138
 
$
51,804
 
 
LIABILITIES
             
CURRENT
             
Accounts payable
 
$
2,908
 
$
1,710
 
Accrued liabilities 
   
2,611
   
1,254
 
Notes payable
   
1,312
   
671
 
Property and mining taxes payable
   
709
   
442
 
Convertible debentures
   
8,598
   
7,660
 
Total current liabilities
   
16,138
   
11,737
 
Accrued long-term liabilities
   
133
   
370
 
Notes payable
   
195
   
569
 
Convertible debentures (Note 6)
   
4,676
   
 
Accrued site closure costs
   
7,536
   
7,135
 
Deferred gain (Note 4)
   
2,976
   
3,750
 
TOTAL LIABILITIES
   
31,654
   
23,561
 
               
Continuing operations (Note 1)
             
               
SHAREHOLDERS’ EQUITY
             
Share capital (Note 7)
   
160,187
   
159,029
 
Equity component of convertible debentures (Note 6)
   
4,047
   
1,809
 
Note warrants (Note 6)
   
3,204
   
1,062
 
Contributed surplus
   
12,228
   
11,166
 
Deficit
   
(145,182
)
 
(144,823
)
TOTAL SHAREHOLDERS’ EQUITY
   
34,484
   
28,243
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
 
$
66,138
 
$
51,804
 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 
5


APOLLO GOLD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(In thousands of U.S. dollars, except share and per share amounts)
(Unaudited)

   
Three months ended
September 30,
 
Nine months ended
September 30,
 
   
2007
 
2006
 
2007
 
2006
 
Revenue from sale of minerals
 
$
11,863
 
$
372
 
$
27,594
 
$
10,177
 
Operating expenses
                         
Direct operating costs
   
7,285
   
3,211
   
18,280
   
13,957
 
Depreciation and amortization
   
377
   
324
   
1,007
   
1,282
 
General and administrative expenses
   
902
   
1,123
   
2,901
   
3,594
 
Accretion expense – accrued site closure costs
   
126
   
237
   
380
   
711
 
Amortization of deferred gain (Note 4)
   
(345
)
 
   
(774
)
 
 
Exploration and business development
   
291
   
188
   
2,028
   
788
 
Loss on sale of property, plant and equipment
   
   
3
   
   
7
 
     
8,636
   
5,086
   
23,822
   
20,339
 
Operating income (loss)
   
3,227
   
(4,714
)
 
3,772
   
(10,162
)
Other income (expenses)
                         
Interest income
   
146
   
99
   
485
   
253
 
Interest expense (Note 8)
   
(1,584
)
 
(726
)
 
(4,197
)
 
(1,939
)
Financing costs
   
   
   
(480
)
 
 
Foreign exchange gain (loss) and other
   
33
   
(29
)
 
31
   
(42
)
Income (loss) from continuing operations before income taxes for the period
   
1,822
   
(5,370
)
 
(389
)
 
(11,890
)
Income taxes
   
295
   
   
295
   
 
Income (loss) from continuing operations for the period
   
2,117
   
(5,370
)
 
(94
)
 
(11,890
)
Loss from discontinued operations for the period
   
   
   
   
(250
)
Net income (loss) and comprehensive income (loss) for the period
 
$
2,117
 
$
(5,370
)
$
(94
)
$
(12,140
)
                           
Basic and diluted net income (loss) per share from:
                         
Continuing operations
 
$
0.01
 
$
(0.04
)
$
0.00
 
$
(0.10
)
Discontinued operations
   
   
   
   
 
 
 
$
0.01
 
$
(0.04
)
$
0.00
 
$
(0.10
)
                           
Basic weighted-average number of shares outstanding
   
143,922,308
   
121,997,402
   
143,358,591
   
120,131,131
 
Diluted weighted-average number of shares outstanding
   
145,202,005
   
121,997,402
   
143,358,591
   
120,131,131
 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 
6


APOLLO GOLD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands of U.S. dollars)
(Unaudited)

   
 
 
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Component
 
 
 
 
 
 
 
 
 
 
 
Share Capital
 
of
 
 
 
 
 
 
 
 
 
 
 
Number
 
 
 
Convertible
 
Note
 
Contributed
 
 
 
 
 
 
 
of Shares
 
Amount
 
Debentures
 
Warrants
 
Surplus
 
Deficit
 
Total
 
Balance, December 31, 2005
   
107,456,451
 
$
148,526
 
$
1,809
 
$
781
 
$
10,561
 
$
(129,236
)
$
32,441
 
Units issued for cash
   
11,650,000
   
3,488
   
   
   
   
   
3,488
 
Shares issued for 2005 stock-based compensation
   
2,290,408
   
955
   
   
   
   
   
955
 
Reduction of exercise price of Note Warrants
   
   
   
   
305
   
   
   
305
 
Note warrants exercised
   
600,000
   
264
   
   
(24
)
 
   
   
240
 
Shares issued for services
   
1,325,000
   
668
   
   
   
   
   
668
 
Flow-through units issued for cash
   
2,222,221
   
746
   
   
   
27
   
   
773
 
Units issued for cash 
   
16,688,206
   
4,357
   
   
   
156
   
   
4,513
 
Options exercised
   
50,000
   
25
   
   
   
(5
)
 
   
20
 
Stock-based compensation
   
   
   
   
   
427
   
   
427
 
Net loss
   
   
   
   
   
   
(15,587
)
 
(15,587
)
Balance, December 31, 2006
   
142,282,286
   
159,029
   
1,809
   
1,062
   
11,166
   
(144,823
)
 
28,243
 
Change in accounting policy (Note 3)
   
   
   
   
   
   
(265
)
 
(265
)
Balance (as adjusted), January 1, 2007
   
142,282,286
   
159,029
   
1,809
   
1,062
   
11,166
   
(145,088
)
 
27,978
 
Shares issued for services
   
20,000
   
10
   
   
   
   
   
10
 
Shares issued for Huizopa settlement (Note 7(a)(i))
   
1,000,000
   
540
   
   
   
   
   
540
 
Shares issued for Black Fox mineral rights (Note 7(a)(ii))
   
1,057,692
   
527
   
   
   
   
   
527
 
Income tax benefits renounced to shareholders of flow-through units issued in 2006 (Note 10)
   
   
(295
)
 
   
   
   
   
(295
)
Equity component of convertible debentures (Note 6)
   
   
   
2,292
   
   
   
   
2,292
 
Note warrants (Note 6)
   
   
   
   
2,292
   
   
   
2,292
 
Debenture compensation warrants (Note 6)
   
   
   
   
   
467
   
   
467
 
Note warrants exercised
   
198,500
   
229
   
   
(150
)
 
   
   
79
 
Debentures converted
   
400,000
   
147
   
(54
)
 
   
   
   
93
 
Stock-based compensation
   
   
   
   
   
595
   
   
595
 
Net loss and comprehensive loss
   
   
   
   
   
   
(94
)
 
(94
)
Balance, September 30, 2007
   
144,958,478
 
$
160,187
 
$
4,047
 
$
3,204
 
$
12,228
 
$
(145,182
)
$
34,484
 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 
7


APOLLO GOLD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
 
   
Three months ended
September 30,
 
Nine months ended
September 30,
 
   
2007
 
2006
 
2007
 
2006
 
Operating activities
                 
Net income (loss) for the period
 
$
2,117
 
$
(5,370
)
$
(94
)
$
(12,140
)
Items not affecting cash:
                         
Depreciation and amortization
   
377
   
324
   
1,007
   
1,282
 
Amortization of deferred stripping costs
   
597
   
   
1,258
   
0
 
Amortization of deferred financing costs
   
   
80
   
   
239
 
Financing costs
   
   
   
174
   
0
 
Loss from discontinued operations
   
   
   
   
250
 
Reduction in exercise price of Note Warrants
   
   
   
   
305
 
Stock-based compensation
   
208
   
126
   
595
   
315
 
Shares issued for services and settlement of claims
   
   
668
   
550
   
668
 
Accretion expense – accrued site closure costs
   
126
   
237
   
380
   
711
 
Accretion expense – convertible debenture
   
1,052
   
271
   
2,523
   
775
 
Loss on sale of property, plant and equipment and other
   
(2
)
 
24
   
(2
)
 
64
 
Amortization of deferred gain (Note 4)
   
(345
)
 
   
(774
)
 
 
Income taxes
   
(295
)
 
   
(295
)
 
 
Net change in non-cash operating working capital items (Note 12)
   
797
   
470
   
433
   
(1,243
)
Discontinued operations
   
   
   
   
(250
)
Net cash provided by (used in) operating activities
   
4,632
   
(3,170
)
 
5,755
   
(9,024
)
                           
Investing activities
                         
Property, plant and equipment expenditures
   
(2,072
)
 
(591
)
 
(5,749
)
 
(5,029
)
Deferred stripping costs
   
(1,937
)
 
   
(5,685
)
 
 
Proceeds from disposal of property, plant and equipment
   
   
   
   
92
 
Restricted certificate of deposit and other assets
   
(600
)
 
(525
)
 
(1,492
)
 
9,488
 
Net cash (used in) provided by investing activities
   
(4,609
)
 
(1,116
)
 
(12,926
)
 
4,551
 
                           
Financing activities
                         
Proceeds on issuance of shares
   
   
   
   
3,488
 
Proceeds on issuance of convertible debentures and note warrants, net
   
   
   
8,062
   
 
Proceeds from exercise of warrants
   
13
   
240
   
79
   
240
 
Proceeds from notes payable
   
   
309
   
1,250
   
309
 
Payments of notes payable
   
(475
)
 
(315
)
 
(1,960
)
 
(763
)
Funding by Elkhorn Tunnels, LLC
   
   
3,050
   
1,865
   
3,050
 
Net cash (used in) provided by financing activities
   
(462
)
 
3,284
   
9,296
   
6,324
 
                           
Net (decrease) increase in cash and cash equivalents
   
(439
)
 
(1,002
)
 
2,125
   
1,851
 
Cash and cash equivalents, beginning of period
   
7,076
   
2,980
   
4,512
   
127
 
Cash and cash equivalents, end of period (Note 12)
 
$
6,637
 
$
1,978
 
$
6,637
 
$
1,978
 
                           
SUPPLEMENTAL CASH FLOW INFORMATION
                         
Interest paid
 
$
867
 
$
349
 
$
1,471
 
$
899
 
Income taxes paid
 
$
 
$
 
$
 
$
 
 
See Note 12 for additional supplemental cash flow information.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.
 
 
8


APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2007
(Stated in U.S. dollars; tabular amounts in thousands)
(Unaudited)
 
1.
CONTINUING OPERATIONS
 
These condensed consolidated financial statements are prepared on the basis of a going concern which assumes that Apollo Gold Corporation (“Apollo” or the “Company”) will realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. To date the Company has funded its operations through issuance of debt and equity securities, joint venture contributions from Elkhorn Tunnels, LLC (“Elkhorn”) and cash generated by the Montana Tunnels joint venture (Note 4). The Company’s ability to continue as a going concern is dependent on its ability to generate cash flow from the Montana Tunnels joint venture and/or continue to issue debt and equity securities.
 
If the Company is unable to generate sufficient cash flow from the Montana Tunnels joint venture and/or secure additional financing, it may be unable to continue as a going concern and material adjustments would be required to the carrying value of assets and liabilities and balance sheet classifications used.
 
2.
NATURE OF OPERATIONS
 
Apollo is engaged in gold mining including extraction, processing, refining and the production of other co-product metals, as well as related activities including exploration and development. The Company is the operator of the Montana Tunnels mine (the “Mine”), which is a 50% joint venture with Elkhorn. The Mine is an open pit mine and mill located in the State of Montana that produces gold dore࿸ and lead-gold and zinc-gold concentrates. The Company owns the Diamond Hill mine, which is also located in Montana and is currently under care and maintenance.
 
Apollo has a development property, the Black Fox development project (the “Black Fox Project”), which is located near the Township of Matheson in the Province of Ontario, Canada. Apollo also owns Mexican subsidiaries that own concessions at the Huizopa exploration project (the “Huizopa Project”), which is located in the Sierra Madres in Chihuahua, Mexico.
 
3.
SIGNIFICANT ACCOUNTING POLICIES
 
(a) These unaudited consolidated interim financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) and except as described in Note 14, conform in all material respects with accounting principles generally accepted in the United States (“U.S. GAAP”). The accounting policies followed in preparing these financial statements are those used by the Company as set out in the audited financial statements for the year ended December 31, 2006, except as disclosed in (b), (c), and (d) below. Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with Canadian GAAP have been omitted. These interim financial statements should be read together with the Company’s audited financial statements for the year ended December 31, 2006.
 
In the opinion of management, all adjustments considered necessary for fair presentation have been included in these financial statements. Interim results are not necessarily indicative of the results expected for the fiscal year.
 
Certain of the comparative figures have been reclassified to conform to the presentation for the three and nine months ended September 30, 2007. In particular, for the three and nine months ended September 30, 2006, $0.1 million and $0.3 million of stock-based compensation, respectively, charged to operations have been reclassified to general and administrative expenses rather than disclosed separately.
 
 
9


APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2007
(Stated in U.S. dollars; tabular amounts in thousands)
(Unaudited)
 
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
 
(b) Effective January 1, 2007, the Company includes ore stockpiles within Inventories. Ore stockpiles represent ore that has been mined and is available for further processing. Work-in-process inventories, including ore stockpiles, are valued at the lower of average production cost and net realizable value, after a reasonable allowance for further processing and sales costs.
 
(c) On March 2, 2006, the Emerging Issues Committee issued EIC-160, Stripping Costs Incurred in the Production Phase of a Mining Operation, which requires stripping costs that represent a betterment to the mineral property to be capitalized and amortized in a rational and systematic manner over the reserves that directly benefit from the specific stripping activity. The Company adopted EIC-160 as of January 1, 2007 on a prospective basis. During the three and nine months ended September 30, 2007, the Company capitalized $1.9 million and $5.7 million, respectively, in deferred stripping costs and recorded amortization thereon in the amount of $0.6 million and $1.3 million, respectively. Deferred stripping costs are amortized using the units-of-production method over the expected life of the operation based on the estimated recoverable gold equivalent ounces.
 
(d) Effective January 1, 2007, the Company adopted CICA Handbook Section 1530, Comprehensive Income, CICA Handbook Section 3855, Financial Instruments - Recognition and Measurement, CICA Handbook Section 3865, Hedges, and CICA Handbook Section 3251, Equity. These new Handbook Sections provide comprehensive requirements for the recognition and measurement of financial instruments, transaction costs incurred on financial instruments, as well as standards on when and how hedge accounting may be applied. CICA Handbook Section 1530 also introduces a new component of equity referred to as comprehensive income. The Company has adopted these standards prospectively.
 
In accordance with this new standard, the Company now classifies all financial instruments as either held-to-maturity, available-for-sale, held-for-trading, loans and receivables, or other financial liabilities. Financial assets held to maturity, loans and receivables and financial liabilities other than those held for trading, are measured at amortized cost. Available-for-sale instruments are measured at fair value with unrealized gains and losses recognized in other comprehensive income. Instruments classified as held for trading are measured at fair value with unrealized gains and losses recognized in the statement of operations. Transaction costs are expensed as incurred.
 
Upon adoption of this new standard, the Company has designated its cash and cash equivalents as held-for-trading, which are measured at fair value. Accounts receivable and other are classified as loans and receivables, which are measured at amortized cost. Restricted certificates of deposit are classified as held-to-maturity, and are measured at amortized cost. Accounts payable and accrued liabilities, property and mining taxes payable, convertible debentures, notes payable, and accrued site closure costs are classified as other liabilities, which are measured at amortized cost.
 
Under CICA Handbook Section 3855, the Company adopted a policy to expense debt financing costs when they are incurred and as a result the Company recorded a non-cash adjustment to increase opening deficit by $0.3 million to eliminate the opening balance of deferred financing costs that were capitalized and amortized under the Company’s previous accounting policy.
 
Comprehensive income is the change in shareholders’ equity during a period from transactions and other events and circumstances from non-owner sources. The adoption of CICA Handbook Section 1530 had no impact on the Company.
 
 
10


APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2007
(Stated in U.S. dollars; tabular amounts in thousands)
(Unaudited)
 
4.
MONTANA TUNNELS JOINT VENTURE
 
On July 28, 2006, Apollo entered into a joint venture (“JV Agreement”) with Elkhorn in respect of the Mine. Elkhorn contributed $13 million in return for a 50% interest in the Mine.
 
Elkhorn receives 55% and Apollo receives 45% of the positive free cash flow, as defined in the JV agreement, from the Mine until such time as Elkhorn has received cash flow of $13 million (at which time Apollo will have received $10.6 million). At that time, Apollo would become entitled to 60% and Elkhorn 40% of the positive free cash flow from the Mine, until both parties have received an equal amount (at which time Apollo and Elkhorn will have each received $17.7 million). Thereafter, the sharing would be 50/50. Additionally, Elkhorn is entitled to a 10% interest distribution (reduced from 12% effective April 1, 2007) charged to the joint venture as interest expense (Note 8) on its initial contribution of $13 million until it has received cash flow of $13 million. The interest distribution is based on the declining balance of this cash flow of $13 million and, as of September 30, 2007, Elkhorn had received cash flow of $2.8 million.
 
Apollo accounts for its 50% interest in the Montana Tunnels joint venture using the proportionate consolidation method. As of December 31, 2006, the Company recorded a deferred gain on the transfer of assets and liabilities to the joint venture of $3.8 million. The deferred gain is amortized using the units-of-production method over the expected life of the operation based on the estimated recoverable gold equivalent ounces. Amortization of the deferred gain was $0.3 million and $0.8 million for the three and nine months ended September 30, 2007, respectively.
 
Apollo’s 50% share of the assets and liabilities of the Montana Tunnels joint venture is as follows:
 
   
September 30,
2007
 
December 31,
2006
 
Cash and cash equivalents
 
$
759
 
$
(64
)
Other non-cash current assets
   
3,336
   
2,570
 
     
4,095
   
2,506
 
Property, plant and equipment
   
7,555
   
7,151
 
Deferred stripping costs
   
4,427
   
-
 
Restricted certificates of deposit
   
4,827
   
3,430
 
Total assets
 
$
20,904
 
$
13,087
 
               
Current liabilities
 
$
3,954
 
$
1,819
 
Notes payable
   
168
   
527
 
Accrued site closure costs
   
6,472
   
6,127
 
Total liabilities
 
$
10,594
 
$
8,473
 
 
 
11


APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2007
(Stated in U.S. dollars; tabular amounts in thousands)
(Unaudited)
 
4.
MONTANA TUNNELS JOINT VENTURE (continued)
 
Apollo’s 50% share of the Montana Tunnels joint venture for the three and nine month periods ended September 30, 2007 are as follows:

   
Three months
ended
September 30,
2007
 
Nine months
ended
September 30,
2007
 
Revenue from sale of minerals
 
$
11,863
 
$
27,594
 
Direct operating costs
   
7,283
   
18,278
 
Depreciation and amortization
   
351
   
929
 
Accretion expense – accrued site closure costs
   
114
   
345
 
     
7,748
   
19,552
 
Operating income
   
4,115
   
8,042
 
Interest income
   
60
   
157
 
Interest expense
   
(199
)
 
(786
)
Income from continuing operations
 
$
3,976
 
$
7,413
 
               
Net cash used in investing activities
 
$
(3,183
)
$
(8,090
)
Net cash (used in) provided by financing activities
 
$
(324
)
$
1,459
 

5.
INVENTORIES
 
Inventories consist of:
 
   
September 30,
2007
 
December 31,
2006
 
Concentrate inventory
 
$
123
 
$
 
Stockpiled ore inventory (Note 3(b))
   
320
   
 
Materials and supplies
   
1,033
   
660
 
   
$
1,476
 
$
660
 

6.
CONVERTIBLE DEBENTURES
 
On February 23, 2007, the Company completed a private placement of $8.6 million aggregate principal amount of Series 2007-A convertible debentures (“2007 Debentures”). Each $1,000 of principal amount of 2007 Debentures included 2,000 common share purchase warrants (“2007 Debenture Warrants”) (Note 7(b)(i)). The 2007 Debentures mature on February 23, 2009 and bear interest at a rate of 12% per annum during the first year and 18% per annum during the second year, payable annually beginning on February 23, 2008.

The 2007 Debentures are convertible, at the option of the holder, at any time prior to maturity into common shares of the Company at a price of $0.50 per common share. The Company has the option to force conversion of the 2007 Debentures under certain circumstances. The Debentures are classified as a compound financial instrument for accounting purposes. The 2007 Debenture Warrants have an exercise price of $0.50 per common share and have a term of two years from the date of grant.
 
12


APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2007
(Stated in U.S. dollars; tabular amounts in thousands)
(Unaudited)
 
6.
CONVERTIBLE DEBENTURES (continued)
 
On the date of issuance of the 2007 Debentures, the gross proceeds of $8.6 million was allocated to the relative fair values of the Debentures ($3.2 million), the holder’s option to convert the principal balance into common shares ($2.7 million) (the “Conversion Option”), and the 2007 Debenture Warrants ($2.7 million). The $3.2 million fair value of the 2007 Debentures is classified as a liability, while the $5.4 million allocated to the Conversion Option and the 2007 Debenture Warrants is classified as separate components within shareholders’ equity.
 
Over the two-year term, the 2007 Debentures are accreted to their face value through a periodic charge to accretion expense with a corresponding credit to the liability component. The accretion expense is based on the effective interest method. For the three and nine months ended September 30, 2007, the Company recorded accretion expense of $0.7 and $1.4 million, respectively, related to the 2007 Debentures, which is included in interest expense.
 
In addition to the 2007 Debenture Warrants, the agents were granted 1,201,200 compensation warrants with substantially the same terms and conditions as the 2007 Debenture Warrants.
 
The Company incurred transaction costs of $1.3 million (including the fair value of the agents’ compensation warrants of $0.5 million). These costs were allocated to 2007 Debenture issuance costs of $0.5 million and to equity issuance costs of $0.8 million, based on their relative fair values of the debt and equity components. Financing costs associated with the issuance of the 2007 Debentures are expensed as incurred.
 
The fair values of the Conversion Option, the 2007 Debenture Warrants, and the compensation warrants were determined using the Black-Scholes option pricing model assuming no expected dividends, a volatility of the Company’s share price of 70%, an interest rate of 4.1%, and an expected life of two years.
 
Under the terms of the Registration Rights Agreements entered into by the Company in connection with the 2007 Debentures, the common shares underlying the 2007 Debentures and the 2007 Debenture Warrants are required to be registered for resale with the U.S. Securities and Exchange Commission (“SEC”). If the registration statement with respect to 50% of such shares was not declared effective by the SEC by May 25, 2007, the Company would be required to pay additional interest to the holders of the 2007 Debentures equal to 6% per annum. The Company did not meet the May 25, 2007 effectiveness deadline and as a result accrued additional interest of $55,000 for the period commencing May 25, 2007 through August 10, 2007, the date the effectiveness was approved by the SEC. Additionally, if the registration statement with respect to the remaining 50% of such shares was not declared effective by the SEC by August 22, 2007, the Company would be required to pay additional interest to the holders of the 2007 Debentures equal to 6% per annum until February 23, 2008 or until this condition is met. The Company did not meet the August 22, 2007 effectiveness deadline and as a result accrued additional interest of $28,000 for the period commencing August 22, 2007 through September 30, 2007.
 
 
13

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2007
(Stated in U.S. dollars; tabular amounts in thousands)
(Unaudited)
 
7.
SHARE CAPITAL
 
(a)
Shares issued in 2007
 
(i) On February 28, 2007, the Company issued 1,000,000 common shares of the Company at $0.54 per share in connection with the settlement of certain claims in relation to the Huizopa property.
 
(ii) On September 4, 2007, the Company issued 1,057,692 common shares of the Company at $0.50 per share in connection with acquiring rights to certain mineral claims at the Black Fox property.
 
(b)
Warrants
 
The following summarizes outstanding warrants as at September 30, 2007:
 
Date Issued
 
Number of Warrants
 
Number of Shares
 
Exercise Price
 
Expiry Date
 
           
Exercisable in US$
     
November 4, 2004
   
4,215,100
   
4,215,100
   
0.40
   
November 4, 2007
(1)
November 4, 2004
   
240,000
   
240,000
   
0.80
   
November 4, 2007
(2)
November 4, 2004
   
1,396,000
   
1,396,000
   
0.80
   
November 4, 2007
(2)
November 8, 2006
   
8,344,103
   
8,344,103
   
0.50
   
November 8, 2009
 
November 8, 2006
   
1,168,174
   
1,168,174
   
0.50
   
November 8, 2009
 
February 23, 2007
   
17,160,000
   
17,160,000
   
0.50
   
February 23, 2009
 
February 23, 2007
   
1,201,200
   
1,201,200
   
0.50
   
February 23, 2009
 
 
   
33,724,577
   
33,724,577
             
 
             
Exercisable in Cdn$
       
January 26, 2006
   
2,000,000
   
2,000,000
   
0.39
   
January 26, 2008
 
October 30, 2006
   
1,111,111
   
1,111,111
   
1.00 (3
)
 
October 30, 2008
(3)
     
3,111,111
   
3,111,111
   
     
36,835,688
   
36,835,688
   

(1)
3,735,100 of these warrants were exercised prior to expiration for proceeds of $1.5 million and the remaining 480,000 of these warrants expired unexercised on November 4, 2007.
(2)
These warrants expired unexercised on November 4, 2007.
(3)
The exercise price of these warrants increased to Cdn$1.15 on October 31, 2007.

In addition, in connection with the Company’s private placement to Canadian purchasers of 2,222,221 flow-through units on October 30, 2006, the Company issued 166,666 broker compensation warrants. Each broker compensation warrant is immediately exercisable at Cdn$0.45 for two years into one common share of the Company and one-half of one share purchase warrant, with each whole share purchase warrant exercisable into one common share of the Company at Cdn$1.00 per common share through October 30, 2007 and at Cdn$1.15 through October 30, 2008. The broker compensation warrants expire on October 30, 2008.
 
(c)
Options
 
A summary of information concerning outstanding stock options at September 30, 2007 is as follows:

14


APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2007
(Stated in U.S. dollars; tabular amounts in thousands)
(Unaudited)

7.
SHARE CAPITAL (continued)

   
Fixed Stock Options
 
Performance-based
Stock Options
 
   
Number of
Options
 
Weighted
Average
Exercise
Price
 
Number of
Options
 
Weighted
Average
Exercise
Price
 
Balances, December 31, 2006
   
3,052,900
 
$
1.06
   
1,230,852
 
$
0.80
 
Options granted
   
3,291,939
   
0.57
   
   
 
Options cancelled
   
(31,750
)
 
1.07
   
   
 
Options expired
   
   
   
(1,230,852
)
 
0.80
 
Balances, September 30, 2007
   
6,313,089
 
$
0.80
   
 
$
 

(i) Fixed stock option plan
 
The Company has a stock option plan that provides for the granting of options to directors, officers, employees and service providers of the Company. Typically, options vest over two years and have a 10-year contractual term, unless otherwise determined by the Company’s Board of Directors. The Company is authorized to issue a maximum of 12,139,686 fixed stock options. As at September 30, 2007, an aggregate of 5,826,597 fixed stock options were available for future grants of awards under the plan.
 
The following table summarizes information concerning outstanding and exercisable fixed stock options at September 30, 2007:
 
Options Outstanding
 
Options Exercisable
 
Number
Outstanding
 
Expiry Date
 
Weighted Average
Exercise
Price per Share
 
Weighted Average
Remaining Contractual Life
(in years)
 
Number
Exercisable
 
Weighted Average
Exercise
Price per Share
 
678,200
   
February 18, 2013
 
$
2.24
   
5.4
   
678,200
 
$
2.24
 
261,000
   
March 10, 2014
   
2.05
   
6.4
   
261,000
   
2.05
 
25,000
   
May 19, 2014
   
1.44
   
6.6
   
25,000
   
1.44
 
21,200
   
August 10, 2014
   
0.95
   
6.9
   
21,200
   
0.95
 
1,162,750
   
March 10, 2015
   
0.65
   
7.4
   
1,162,750
   
0.65
 
100,000
   
August 4, 2015
   
0.27
   
7.8
   
100,000
   
0.27
 
300,000
   
December 12, 2015
   
0.20
   
8.2
   
150,000
   
0.20
 
125,000
   
March 28, 2016
   
0.65
   
8.5
   
125,000
   
0.65
 
200,000
   
May 23, 2016
   
0.53
   
8.7
   
100,000
   
0.53
 
108,000
   
August 10, 2016
   
0.48
   
8.9
   
54,000
   
0.48
 
40,000
   
November 9, 2016
   
0.32
   
9.1
   
   
 
3,142,114
   
February 6, 2017
   
0.57
   
9.4
   
   
 
100,000
   
September 1, 2011
   
0.46
   
3.9
   
   
 
49,825
   
August 13, 2017
   
0.46
   
9.9
   
   
 
6,313,089
       
$
0.80
   
8.2
   
2,677,150
 
$
1.15
 
 
15


APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2007
(Stated in U.S. dollars; tabular amounts in thousands)
(Unaudited)

7.
SHARE CAPITAL (continued)

(ii) Performance-based stock option plan
 
The 1,230,852 performance-based stock options that were exercisable at $0.80 expired June 25, 2007.
 
(d)
Stock-based compensation
 
The fair value of each option granted is estimated at the time of grant using the Black-Scholes option pricing model with weighted average assumptions for grants as follows:

   
Nine months ended
September 30,
 
   
2007
 
2006
 
Risk free interest rate
   
4.1
%
 
4.2
%
Dividend yield
   
0
%
 
0
%
Volatility
   
71
%
 
89
%
Expected life in years
   
6
   
6
 
Weighted average grant-date fair value of stock options
 
$
0.37
 
$
0.41
 

(e)
Shareholder Rights Plan
 
On January 17, 2007, the Company adopted a Shareholder Rights Plan (the “Rights Plan”). The Rights Plan was adopted to ensure the fair treatment of shareholders in connection with any take-over bid for common shares of Apollo. The Rights Plan seeks to provide shareholders with adequate time to properly assess a take-over bid without undue pressure. It also is intended to provide the Board with more time to fully consider an unsolicited take-over bid and, if appropriate, to explore other alternatives to maximize shareholder value. The Rights Plan is not intended to prevent take-over bids that treat shareholders fairly.

The Rights Plan, adopted and effective in January 2007, was ratified by the shareholders at Apollo’s Annual Meeting of Shareholders held on May 16, 2007. The Rights Plan expires in January 2012.

8.
INTEREST EXPENSE
 
Interest expense consists of:
 
   
Three months ended
September 30,
 
Nine months ended
September 30,
 
   
2007
 
2006
 
2007
 
2006
 
Accretion on convertible debentures
 
$
1,063
 
$
271
 
$
2,534
 
$
775
 
Interest paid on convertible debentures
   
265
   
265
   
794
   
794
 
Amortization of deferred financing costs
   
   
80
   
   
237
 
Interest related to Montana Tunnels joint venture agreement (Note 4)
   
144
   
   
593
   
 
Capital leases and other
   
112
   
110
   
276
   
133
 
   
$
1,584
 
$
726
 
$
4,197
 
$
1,939
 
 
16


APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2007
(Stated in U.S. dollars; tabular amounts in thousands)
(Unaudited)

9.
EARNINGS PER SHARE
 
Basic earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated to reflect the dilutive effect of exercising outstanding warrants and stock options by applying the treasury stock method.
 
Earnings used in determining earnings per share from continuing operations are presented below for the three months ended September 30, 2007.
 
($ thousands, except per share amounts)
 
Net income
 
Shares
 
Per Share
 
Basic earnings per share
                   
Net income from continuing operations
 
$
2,117
   
143,922,308
 
$
0.01
 
Effect of dilutive securities: warrants
   
   
1,048,244
   
 
Effect of dilutive securities: stock options
   
   
231,453
   
 
Diluted earnings per share
                   
Net income from continuing operations
 
$
2,117
   
145,202,005
 
$
0.01
 

10.
INCOME TAXES
 
The Company recorded a $0.3 million recovery for income taxes for the period ended September 30, 2007 in connection with the flow-through units issued in October 2006. In addition, income tax expense for the period has been offset by a recovery of prior tax losses.

11.
LITIGATION AND CLAIMS
 
In May 2006, a purported class action lawsuit was filed in U.S. Federal Court Missoula Division of Montana by 14 former employees at the Montana Tunnels mine alleging (i) violations of the Worker Adjustment and Retraining Notification Act of 1988 (the “WARN Act”) and the Montana Wage Act and (ii) breach of contract. The allegations relate to the termination of the employees following the cessation of mining in October 2005. Specifically, the plaintiffs allege that the Company gave deficient WARN Act notice and are seeking damages for back pay and benefits. The Company believes that the resolution of this matter will not have a material impact on its financial statements.
 
12.
SUPPLEMENTAL CASH FLOW INFORMATION
 
(a)
Net changes in non-cash operating working capital items for the three and nine months ended September 30 are:
 
   
Three months ended
September 30,
 
Nine months ended
September 30,
 
   
2007
 
2006
 
2007
 
2006
 
Increase (decrease) in:
                         
Accounts receivable and other
 
$
23
 
$
(78
)
$
(1,576
)
$
2,382
 
Prepaids
   
39
   
(336
)
 
240
   
(17
)
Inventories
   
50
   
231
   
(815
)
 
375
 
 
17


APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2007
(Stated in U.S. dollars; tabular amounts in thousands)
(Unaudited)

12.
SUPPLEMENTAL CASH FLOW INFORMATION (continued)

   
Three months ended
September 30,
 
Nine months ended
September 30,
 
   
2007
 
2006
 
2007
 
2006
 
Increase (decrease) in:
                         
Accounts payable
   
791
   
118
   
1,197
   
(4,280
)
Accrued liabilities
   
(245
)
 
603
   
1,120
   
574
 
Property and mining taxes payable
   
139
   
(68
)
 
267
   
(277
)
   
$
797
 
$
470
 
$
433
 
$
(1,243
)

(b)
Components of cash and cash equivalents as of September 30, 2007 and 2006 are:
 
   
September 30,
2007
 
September 30,
2006
 
Cash
 
$
227
 
$
648
 
Short-term investments
   
6,410
   
1,330
 
Cash and cash equivalents
 
$
6,637
 
$
1,978
 

(c)
Non-cash transactions
 
During the three and nine months ended September 30, 2007, (i) Series 2007-A convertible debentures with a face value of $200,000 were converted and the Company recorded a reduction of $94,000 in convertible debentures and a corresponding increase in equity; (ii) property, plant and equipment totaling $527,000 was acquired via issuance of shares (Note 7(a)(ii)); and (iii) the Company financed a portion of its insurance program included in Prepaids by issuing a note payable of $653,000.
 
During the nine months ended September 30, 2007, property, plant and equipment totaling $325,000 was acquired via issuance of notes payable. Also, during the nine months ended September 30, 2007, the Company issued agent’s compensation warrants with a value of $294,000 for services rendered in connection with the issuance of the Series 2007-A convertible debentures (Note 6).
 
13.
SEGMENTED INFORMATION
 
Apollo operates the Montana Tunnels mine (a 50% joint venture effective December 31, 2006) in the United States and the Black Fox development project in Canada. The reportable segments have been determined at the level where decisions are made on the allocation of resources and capital and where performance is measured. The assets and liabilities of Montana Tunnels as at September 30, 2007 and December 31, 2006 below differ from the amounts for the Montana Tunnels joint venture in Note 4 due to the inclusion of assets and liabilities of Montana Tunnels Mining, Inc. not pertaining to the Montana Tunnels joint venture, which primarily relate to the Diamond Hill mine. The accounting policies for these segments are the same as those followed by the Company as a whole.
 
Amounts as at September 30, 2007 are as follows:

18


APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2007
(Stated in U.S. dollars; tabular amounts in thousands)
(Unaudited)

13.
SEGMENTED INFORMATION (continued)

   
Montana
Tunnels
 
Black
Fox
 
Corporate
and Other
 
Total
 
Cash and cash equivalents
 
$
759
 
$
14
 
$
5,864
 
$
6,637
 
Other non-cash current assets
   
3,366
   
134
   
993
   
4,493
 
     
4,125
   
148
   
6,857
   
11,130
 
Property, plant and equipment
   
7,563
   
33,793
   
3,128
   
44,484
 
Deferred stripping costs
   
4,427
   
   
   
4,427
 
Restricted certificates of deposit
   
5,449
   
648
   
   
6,097
 
Total assets
 
$
21,564
 
$
34,589
 
$
9,985
 
$
66,138
 
                           
Current liabilities and convertible debenture
 
$
3,960
 
$
244
 
$
11,934
 
$
16,138
 
Accrued long-term liabilities
   
   
   
133
   
133
 
Notes payable
   
168
   
27
   
   
195
 
Convertible debenture
   
   
   
4,676
   
4,676
 
Accrued site closure costs
   
7,140
   
396
   
   
7,536
 
Deferred gain
   
2,976
   
   
   
2,976
 
Total liabilities
 
$
14,244
 
$
667
 
$
16,743
 
$
31,654
 

Amounts as at December 31, 2006 are as follows:

   
Montana
Tunnels
 
Black
Fox
 
Corporate
and Other
 
Total
 
Cash and cash equivalents
 
$
(64
)
$
9
 
$
4,567
 
$
4,512
 
Other non-cash current assets
   
2,579
   
105
   
870
   
3,554
 
     
2,515
   
114
   
5,437
   
8,066
 
Property, plant and equipment
   
7,159
   
30,455
   
1,254
   
38,868
 
Restricted certificates of deposit
   
4,052
   
553
   
   
4,605
 
Deferred financing costs
   
   
   
265
   
265
 
Total assets
 
$
13,726
 
$
31,122
 
$
6,956
 
$
51,804
 
                           
Current liabilities
 
$
1,823
 
$
149
 
$
9,765
 
$
11,737
 
Notes payable and other long term liabilities
   
527
   
42
   
370
   
939
 
Accrued site closure costs
   
6,760
   
375
   
   
7,135
 
Deferred Gain
   
3,750
   
   
   
3,750
 
Total liabilities
 
$
12,860
 
$
566
 
$
10,135
 
$
23,561
 
 
19


APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2007
(Stated in U.S. dollars; tabular amounts in thousands)
(Unaudited)

13.
SEGMENTED INFORMATION (continued)

Amounts for the three and nine month periods ended September 30, 2007 and 2006, respectively, are as follows:
   
Three months ended September 30, 2007
 
   
Montana
Tunnels
 
Black Fox
 
Corporate
and Other
 
Total
 
Revenue from sale of minerals
 
$
11,863
 
$
 
$
 
$
11,863
 
Direct operating costs
   
7,285
   
   
   
7,285
 
Depreciation and amortization
   
351
   
   
26
   
377
 
General and administrative expenses
   
   
   
902
   
902
 
Accretion expense – accrued site closure costs
   
126
   
   
   
126
 
Amortization of deferred gain
   
(345
)
 
   
   
(345
)
Exploration and business development and other
   
   
   
291
   
291
 
     
7,417
   
   
1,219
   
8,636
 
Operating income (loss)
   
4,446
   
   
(1,219
)
 
3,227
 
Interest income
   
60
   
   
86
   
146
 
Interest expense
   
(199
)
 
   
(1,385
)
 
(1,584
)
Foreign exchange gain and other
   
   
   
33
   
33
 
Income (loss) from continuing operations before income taxes
 
$
4,307
 
$
 
$
(2,219
)
$
1,822
 
Investing activities
                         
Property, plant and equipment expenditures and deferred stripping expenditures
 
$
2,678
 
$
1,859
 
$
 
$
4,537
 


   
Nine months ended September 30, 2007
 
   
 
Montana
Tunnels 
 
Black Fox