Unassociated Document


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

FORM 10-Q

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

For the quarterly period ended March 31, 2008

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 þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o
Accelerated Filer o 
Non-Accelerated Filer o (do not check if a smaller
reporting company)
Smaller Reporting Company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
 
At May 6, 2008, there were 160,975,757 common shares of Apollo Gold Corporation outstanding.
 


 


TABLE OF CONTENTS

     
Page
PART I
4
 
ITEM 1.
4
       
   
5
   
6
   
7
   
8
   
9
       
 
ITEM 2.
28
 
ITEM 3.
33
 
ITEM 4.
34
     
PART II
34
       
 
ITEM 1.
34
 
ITEM 2.
35
 
ITEM 3.
35
 
ITEM 4.
35
 
ITEM 5.
35
 
ITEM 6.
35
   
INDEX TO EXHIBITS
37
       
   
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:
 
 
·
operational results and cash flows from the Montana Tunnels mine;
 
 
·
the establishment and estimates of mineral reserves and resources;
 
2

 
 
·
production and production costs;
 
 
·
daily production and mill throughput rates;
 
 
·
cash operating costs;
 
 
·
total cash costs;
 
 
·
grade of ore mined and milled;
 
 
·
grade of concentrates produced;
 
 
·
anticipated expenditures for development, exploration, and corporate overhead;
 
 
·
timing and issue of permits;
 
 
·
expansion plans for existing properties;
 
 
·
plans for Black Fox and Huizopa;
 
 
·
estimates of closure costs;
 
 
·
future financing of Apollo projects;
 
 
·
liquidity;
 
 
·
estimates of environmental liabilities;
 
 
·
our ability to obtain financing to fund our estimated expenditure and capital requirements;
 
 
·
factors impacting our results of operations; and
 
 
·
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 recovery or production problems; changes in mining and milling costs; operational problems at our mining property; metallurgy, processing, access, 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 of 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, 2007 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, 2007 included in our Annual Report on Form 10-K. Certain classifications 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, 2007 filed with the Securities and Exchange Commission on March 25, 2008.
 
4


APOLLO GOLD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
(Unaudited)
 
   
March 31,
2008
 
December 31,
2007
 
ASSETS
   
CURRENT
   
Cash and cash equivalents
 
$
2,868
 
$
4,852
 
Derivative instruments (Note 5)
   
1,246
   
2,101
 
Restricted certificates of deposit
   
1,000
   
1,000
 
Accounts receivable and other
   
3,865
   
1,846
 
Prepaids
   
261
   
509
 
Inventories (Note 6)
   
4,086
   
2,169
 
Total current assets
   
13,326
   
12,477
 
Long-term investments (Note 5)
   
1,369
   
1,467
 
Property, plant and equipment
   
49,308
   
48,378
 
Deferred stripping costs
   
3,729
   
4,787
 
Restricted certificates of deposit
   
7,291
   
6,715
 
Other long-term assets
   
89
   
84
 
Future income tax assets
   
   
1,165
 
TOTAL ASSETS
 
$
75,112
 
$
75,073
 
               
LIABILITIES
             
CURRENT
             
Accounts payable
 
$
2,056
 
$
2,748
 
Accrued liabilities 
   
2,919
   
2,940
 
Property and mining taxes payable
   
1,110
   
957
 
Notes payable and other current debt
   
4,688
   
7,617
 
Convertible debentures
   
4,987
   
 
Total current liabilities
   
15,760
   
14,262
 
Accrued long-term liabilities
   
295
   
289
 
Notes payable
   
127
   
159
 
Convertible debentures
   
   
5,537
 
Accrued site closure costs
   
9,627
   
9,442
 
Deferred gain (Note 4)
   
1,956
   
2,511
 
TOTAL LIABILITIES
   
27,765
   
32,200
 
               
Continuing operations (Note 1)
Commitments and contingencies (Note 11)
             
               
SHAREHOLDERS’ EQUITY
             
Share capital (Note 7)
   
167,355
   
166,424
 
Equity component of convertible debentures
   
2,044
   
2,238
 
Note warrants
   
2,234
   
2,292
 
Contributed surplus
   
14,732
   
14,591
 
Deficit
   
(139,018
)
 
(142,672
)
TOTAL SHAREHOLDERS’ EQUITY
   
47,347
   
42,873
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
 
$
75,112
 
$
75,073
 
 
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)
(U.S. dollars and shares in thousands, except per share amounts)
(Unaudited)

   
Three months ended
March 31,
 
   
2008
 
2007
 
Revenue from sale of minerals
 
$
15,902
 
$
2,890
 
Operating expenses
             
Direct operating costs
   
9,061
   
3,063
 
Depreciation and amortization
   
404
   
250
 
General and administrative expenses
   
929
   
1,140
 
Accretion expense – accrued site closure costs
   
177
   
127
 
Amortization of deferred gain
   
(555
)
 
(71
)
Exploration and business development
   
756
   
1,552
 
     
10,772
   
6,061
 
Operating income (loss)
   
5,130
   
(3,171
)
Other income (expenses)
             
Interest income
   
126
   
188
 
Interest expense (Note 8)
   
(1,148
)
 
(1,145
)
Financing costs
   
   
(480
)
Realized gains on derivative contracts
   
518
   
 
Unrealized losses on derivative contracts
   
(855
)
 
 
Foreign exchange loss and other
   
(117
)
 
(39
)
Net income (loss) and comprehensive income (loss) for the period
 
$
3,654
 
$
(4,647
)
               
Basic and diluted net income (loss) per share
 
$
0.02
 
$
(0.03
)
               
Basic weighted-average number of shares outstanding
   
159,336
   
142,673
 
Diluted weighted-average number of shares outstanding
   
165,023
   
142,673
 
 
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
 
6


APOLLO GOLD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(U.S. dollars and shares in thousands)
(Unaudited)

    
Share Capital
 
Equity
Component
of 
                 
     
Number
of Shares
 
Amount
 
Convertible
Debentures
 
Note
Warrants
 
Contributed
Surplus
 
Deficit
 
Total
 
Balance January 1, 2007, as adjusted
   
142,282
 
$
159,029
 
$
1,809
 
$
1,062
 
$
11,166
 
$
(145,088
)
$
27,978
 
                                             
Shares issued for services
   
120
   
52
   
   
   
   
   
52
 
Shares issued for Huizopa settlement
   
1,000
   
540
   
   
   
   
   
540
 
Shares issued for Black Fox mineral rights
   
1,058
   
527
   
   
   
   
   
527
 
Flow-through shares issued for cash and related compensation warrants
   
7,455
   
3,857
   
   
   
58
   
   
3,915
 
Income tax benefits renounced to shareholders of flow–through units issued in 2006
   
   
(234
)
 
   
   
   
   
(234
)
Equity component of convertible debentures
   
   
   
2,292
   
   
   
   
2,292
 
Note warrants
   
   
   
   
2,292
   
   
   
2,292
 
Debenture compensation warrants
   
   
   
   
   
467
   
   
467
 
Note warrants exercised
   
3,933
   
2,506
   
   
(1,062
)
 
129
   
   
1,573
 
Conversion of debentures
   
400
   
147
   
(54
)
 
   
   
   
93
 
Redemption of debentures
   
   
   
(1,809
)
 
   
1,809
   
   
 
Stock-based compensation
   
   
   
   
   
962
   
   
962
 
Net income
   
   
   
   
   
   
2,416
   
2,416
 
Balance, December 31, 2007
   
156,248
   
166,424
   
2,238
   
2,292
   
14,591
   
(142,672
)
 
42,873
 
Warrants exercised
   
3,272
   
1,463
   
   
(58
)
 
(1
)
 
   
1,404
 
Conversion of debentures
   
1,456
   
633
   
(194
)
 
   
   
   
439
 
Income tax benefits renounced to shareholders of flow–through units issued in 2007
   
   
(1,165
)
 
   
   
   
   
(1,165
)
Stock-based compensation
   
   
   
   
   
142
   
   
142
 
Net income and comprehensive income
   
   
   
   
   
   
3,654
   
3,654
 
Balance, March 31, 2008
   
160,976
 
$
167,355
 
$
2,044
 
$
2,234
 
$
14,732
 
$
(139,018
)
$
47,347
 
 
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
March 31,
 
   
2008
 
2007
 
Operating activities
             
Net income (loss) for the period
 
$
3,654
 
$
(4,647
)
Items not affecting cash:
             
Depreciation and amortization
   
404
   
250
 
Amortization of deferred stripping costs
   
1,058
   
103
 
Financing costs
   
   
174
 
Stock–based compensation
   
142
   
198
 
Shares issued for services and settlement of claims
   
   
550
 
Accretion expense - accrued site closure costs
   
177
   
127
 
Accretion expense - convertible debentures
   
893
   
797
 
Interest paid on convertible debentures
   
(1,016
)
 
(265
)
Amortization of deferred gain
   
(555
)
 
(71
)
Net change in value of derivative instruments
   
337
   
 
Other
   
55
   
4
 
Net change in non-cash operating working capital items (Note 12)
   
(4,247
)
 
398
 
Net cash provided by (used in) operating activities
   
902
   
(2,382
)
               
Investing activities
             
Property, plant and equipment expenditures
   
(1,256
)
 
(2,875
)
Proceeds from settlement of derivative instruments
   
518
   
 
Deferred stripping costs
   
   
(2,252
)
Restricted certificates of deposit
   
(576
)
 
(393
)
Net cash used in investing activities
   
(1,314
)
 
(5,520
)
               
Financing activities
             
Proceeds on issuance of convertible debentures and note warrants, net
   
   
8,062
 
Proceeds from exercise of warrants
   
1,404
   
66
 
Proceeds from notes payable
   
   
1,250
 
Payments of notes payable
   
(2,962
)
 
(360
)
Notes receivable from Elkhorn Tunnels, LLC
   
   
1,865
 
Net cash (used in) provided by financing activities
   
(1,558
)
 
10,883
 
               
Effect of exchange rate changes on cash
   
(14
)
 
(4
)
               
Net (decrease) increase in cash and cash equivalents
   
(1,984
)
 
2,977
 
Cash and cash equivalents, beginning of period
   
4,852
   
4,512
 
Cash and cash equivalents, end of period
 
$
2,868
 
$
7,489
 
               
SUPPLEMENTAL CASH FLOW INFORMATION
             
Interest paid
 
$
1,388
 
$
335
 
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
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(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 also owns the Diamond Hill mine, which is also located in the State of 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 which own concessions at the Huizopa exploration project (the “Huizopa Project”), located in the Sierra Madres in Chihuahua, Mexico. The Huizopa Project is subject to an 80% Apollo/20% Mineras Coronado joint venture agreement.
 
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 15, 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, 2007, except as disclosed in (b) 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, 2007.
 
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.
 
9

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
3.
SIGNIFICANT ACCOUNTING POLICIES (continued)
 
(b)
Changes in accounting policies 
 
During the quarter, the Company adopted three new presentation and disclosure standards that were issued by the Canadian Institute of Chartered Accountants: Handbook Section 1535, Capital Disclosures (“Section 1535”), Handbook Section 3862, Financial Instruments – Disclosures (“Section 3862”) and Handbook Section 3863, Financial Instruments – Presentation (“Section 3863”). Section 1535 requires the disclosure of both qualitative and quantitative information that enables users of financial statements to evaluate (i) an entity’s objectives, policies and processes for managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any capital requirements; and (iv) if it has not complied, the consequences of such non-compliance. Sections 3862 and 3863 replace Handbook Section 3861, Financial Instruments - Disclosure and Presentation, revising and enhancing its disclosure requirements and carrying forward unchanged its presentation requirements for financial instruments. Sections 3862 and 3863 place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the entity manages those risks.

During the quarter, the Company adopted Handbook Section 3031 – Inventories, which replaces the former Section 3030 - Inventories. Section 3031 establishes standards for the measurement and disclosure of inventories, including the measurement of inventories at the lower of cost and net realizable value, consistent use of either first-in, first-out (FIFO) or weighted average cost formulas and the reversal of inventory write-downs previously recognized. The Company has applied the new standard prospectively. The adoption of Section 3031 on January 1, 2008, did not have a material impact on the Company’s financial condition or operating results.

4.
MONTANA TUNNELS JOINT VENTURE
 
On July 28, 2006, Apollo entered into a JV Agreement with Elkhorn in respect of the Montana Tunnels mine. Elkhorn contributed $13 million in return for a 50% interest in the Mine and Montana Tunnels Mining, Inc., a wholly owned subsidiary of Apollo (“MTMI”), contributed all of its assets and liabilities related to the Mine into the joint venture for a 50% interest in the Mine. Effective December 31, 2006, the Mine became a 50/50 joint venture. MTMI is the operator of the Mine. A separate committee consisting of two designees from each of MTMI and Elkhorn oversees the joint venture.
 
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 will 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 will 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 March 31, 2008, Elkhorn had received cash flow of $9.1 million from the joint venture and Apollo had received $7.4 million. These cash flows to Elkhorn and Apollo are included in net cash used in financing activities below but are eliminated in the consolidated cash flow.
 
10


APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
4.
MONTANA TUNNELS JOINT VENTURE (continued)
 
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 $0.6 million and $0.1 million for the three months ended March 31, 2008 and 2007, respectively.
 
Apollo’s 50% share of the assets and liabilities of the Montana Tunnels joint venture is as follows:
 
   
March 31,
2008
 
December 31,
2007
 
Cash and cash equivalents
 
$
314
 
$
306
 
Other non-cash current assets
   
6,604
   
3,190
 
     
6,918
   
3,496
 
Property, plant and equipment
   
8,939
   
9,167
 
Deferred stripping costs
   
3,729
   
4,787
 
Restricted certificates of deposit
   
6,033
   
5,435
 
Total assets
 
$
25,619
 
$
22,885
 
               
Current liabilities
 
$
3,887
 
$
3,573
 
Notes payable
   
121
   
145
 
Accrued site closure costs
   
8,479
   
8,314
 
Total liabilities
 
$
12,487
 
$
12,032
 

Apollo’s 50% share of the results of operations and cash flows of the Montana Tunnels joint venture for the three months ended March 31, 2008 and 2007 is as follows:

   
March 31,
2008
 
March 31,
2007
 
Revenue from sale of minerals
 
$
15,902
 
$
2,890
 
Direct operating costs
   
9,059
   
3,063
 
Depreciation and amortization
   
379
   
224
 
Accretion expense – accrued site closure costs
   
165
   
116
 
     
9,603
   
3,403
 
Operating income
   
6,299
   
(513
)
Interest income
   
52
   
45
 
Interest expense
   
(112
)
 
(348
)
Income from continuing operations
 
$
6,239
 
$
(816
)
               
Net cash provided by operating activities
 
$
4,824
 
$
966
 
Net cash used in investing activities
 
$
(677
)
$
(2,727
)
Net cash used in (provided by) financing activities
 
$
(4,139
)
$
1,884
 

Cash used in financing activities includes cash distributed to the joint venture partners, Apollo and Elkhorn. These cash flows eliminate upon consolidation.
 
11

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
5.
DERIVATIVE INSTRUMENTS AND LONG-TERM INVESTMENTS
 
Fair value of derivative instruments and long-term investments as of March 31, 2008 and December 31, 2007 consists of:
 
   
March 31, 2008
 
December 31, 2007
 
   
Cost
Basis
 
Unrealized
Gain
(Loss)
 
Fair
Value
 
Cost
Basis
 
Unrealized
Gain
(Loss)
 
Fair Value
 
Derivative financial instruments – lead and zinc contracts
 
$
 
$
1,246
 
$
1,246
 
$
 
$
2,101
 
$
2,101
 
Long-term investments: Auction rate securities
 
$
1,500
 
$
(131
)
$
1,369
 
$
1,500
 
$
(33
)
$
1,467
 

The Company has recorded an other than temporary impairment on its auction rate securities in the consolidated statement of operations of $98,000 during the three months ended March 31, 2008, and as such, no amounts have been recorded in other comprehensive income.

6.
INVENTORIES
 
Inventories consist of:
 
   
March 31,
2008
 
December 31,
2007
 
Concentrate inventory
 
$
1,072
 
$
341
 
Doré inventory
   
24
   
56
 
Stockpiled ore inventory
   
1,957
   
749
 
Materials and supplies
   
1,033
   
1,023
 
   
$
4,086
 
$
2,169
 
 
12

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
7.
SHARE CAPITAL
 
(a)
Shares issued in 2008
 
For the three months ended March 31, 2008, there were 3,271,834 shares issued upon exercise of warrants for proceeds of $1.4 million and 1,455,800 shares issued upon conversion of $0.7 million face value of February 2007 Series-A convertible debentures.
 
(b)
Warrants
 
The following table summarizes outstanding warrants as at March 31, 2008:
 
Date Issued
 
Number of Warrants 
and Shares Issuable 
upon Exercise
 
Exercise Price
 
Expiry Date
 
       
Exercisable in US$
     
November 8, 2006
   
7,510,769
 
0.50
  November 8, 2009  
November 8, 2006
   
1,168,174
 
0.50
  November 8, 2009  
February 23, 2007
   
16,732,000
 
0.50
  February 23, 2009  
February 23, 2007
   
1,201,200
 
0.50
  February 23, 2009  
     
26,612,143
           
 
        Exercisable in Cdn$        
October 30, 2006
   
1,111,111
 
Cdn$   1.15
  October 30, 2008  
March 31, 2008
   
5,250
 
Cdn$   1.15
  October 30, 2008  
October 31, 2007
   
372,727
 
Cdn$   0.55
  April 30, 2009  
     
1,489,088
             
     
28,101,231
             

In addition, 156,166 broker compensation warrants are outstanding which were issued on October 30, 2006. Each broker compensation warrant is 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$1.15 through October 30, 2008. The broker compensation warrants expire on October 30, 2008.
 
(c)
Options
 
The Company has a fixed stock option plan that provides for the granting of options to directors, officers, employees and service providers of the Company at a price based on the trading price of the Common Shares one trading day preceding the date of grant. 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 March 31, 2008, an aggregate of 3,788,270 fixed stock options were available for future grants of awards under the plan.
 
A summary of information concerning outstanding fixed stock options at March 31, 2008 is as follows:
 
13

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
7.
SHARE CAPITAL (continued)
 
   
Number of
Common
Shares
 
Weighted
Average
Exercise
Price Per
Share
 
Balance, December 31, 2007
   
6,227,503
 
$
0.81
 
Options granted
   
2,152,488
   
0.66
 
Options cancelled
   
(28,575
)
 
0.57
 
Options expired
   
   
 
Balance, March 31, 2008
   
8,351,416
 
$
0.77
 

 
The following table summarizes information concerning outstanding and exercisable fixed stock options at March 31, 2008:

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
 
100,000
   
September 1, 2011
 
$
0.46
   
3.4
   
50,000
 
$
0.46
 
678,200
   
February 18, 2013
   
2.24
   
4.9
   
678,200
   
2.24
 
260,000
   
March 10, 2014
   
2.05
   
5.9
   
260,000
   
2.05
 
25,000
   
May 19, 2014
   
1.44
   
6.1
   
25,000
   
1.44
 
21,200
   
August 10, 2014
   
0.95
   
6.4
   
21,200
   
0.95
 
1,162,000
   
March 10, 2015
   
0.65
   
6.9
   
1,162,000
   
0.65
 
100,000
   
August 4, 2015
   
0.27
   
7.3
   
100,000
   
0.27
 
300,000
   
December 12, 2015
   
0.20
   
7.7
   
300,000
   
0.20
 
125,000
   
March 28, 2016
   
0.65
   
8.0
   
125,000
   
0.65
 
200,000
   
May 23, 2016
   
0.53
   
8.2
   
100,000
   
0.53
 
108,000
   
August 10, 2016
   
0.48
   
8.4
   
54,000
   
0.48
 
40,000
   
November 9, 2016
   
0.32
   
8.6
   
20,000
   
0.32
 
3,029,703
   
February 6, 2017
   
0.57
   
8.9
   
1,514,852
   
0.57
 
49,825
   
May 23, 2017
   
0.46
   
9.4
   
-
   
-
 
2,152,488
   
March 27, 2018
   
0.66
   
10.0
   
-
   
-
 
8,351,416
       
$
0.77
   
8.3
   
4,410,252
 
$
0.91
 
 
(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:
 
   
March 31,
2008
 
March 31,
2007
 
Risk-free interest rate
   
2.9
%
 
4.0
%
Dividend yield
   
0
%
 
0
%
Volatility
   
61
%
 
71
%
Expected life in years
   
6
   
6
 
Weighted average grant-date fair value of stock options
 
$
0.39
 
$
0.37
 
 
14

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
8.
INTEREST EXPENSE
 
Interest expense consists of:
 
   
March 31,
2008
 
March 31,
2007
 
Accretion on convertible debentures
 
$
893
 
$
797
 
Interest related to Montana Tunnels joint venture agreement (Note 4)
   
79
   
278
 
Capital leases and other
   
176
   
70
 
   
$
1,148
 
$
1,145
 

9.
INCOME TAXES
 
The Company recorded no income tax expense for the three months ended March 31, 2008 since any taxable income will be offset by a recovery of prior tax losses. The Company did not record a recovery for income taxes for the period ended March 31, 2007 as the net loss carry forwards are fully offset by a valuation allowance.

10.
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 March 31, 2008.
 
 
 
Net Income
 
Shares
 
Per Share
 
Basic earnings per share
                   
Net income from continuing operations
 
$
3,654
   
159,335,903
 
$
0.02
 
Effect of dilutive securities: warrants
   
   
5,127,349
   
 
Effect of dilutive securities: stock options
   
   
559,341
   
 
Diluted earnings per share
                   
Net income from continuing operations
 
$
3,654
   
165,022,593
 
$
0.02
 

Diluted loss per share for the three months ended March 31, 2007 is not presented as there were no dilutive securities for that period.

Warrants and stock options to purchase 1.1 million, and 12.1 million shares of common stock at average exercise prices of $1.02 and $0.84 were outstanding as of March 31, 2008 and 2007, respectively, but were not included in the computation of diluted weighted average number of common shares because the strike prices of the warrants and stock options exceeded the price of the common stock. Other warrants and stock options to purchase 36.3 million common shares that were outstanding as of March 31, 2007 were not included in the computation of diluted weighted average common shares because their effect would have been anti-dilutive. Also, convertible debentures that were convertible at average conversion prices of $0.50 and $0.60 per share into 15.3 million and 28.8 million common shares that were outstanding at March 31, 2008 and 2007, respectively, were not included in the computation of diluted weighted average common shares because their effect would have been anti-dilutive.

15

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
11.
COMMITMENTS AND CONTINGENCIES
 
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. A negotiated settlement was tentatively reached between the Company and the plaintiffs and is expected to be finalized in 2008. 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 months ended March 31 are:
 
   
2008
 
2007
 
(Increase) decrease in:
             
Accounts receivable and other
 
$
(2,018
)
$
(661
)
Prepaids
   
244
   
29
 
Inventories
   
(1,918
)
 
(581
)
Increase (decrease) in:
             
Accounts payable
   
(692
)
 
779
 
Accrued liabilities
   
(16
)
 
895
 
Property and mining taxes payable
   
153
   
(63
)
   
$
(4,247
)
$
398
 

(b)
Components of cash and cash equivalents are:
 
   
March 31,
2008
 
March 31,
2007
 
Cash
 
$
1,142
 
$
261
 
Short-term investments
   
1,726
   
7,228
 
   
$
2,868
 
$
7,489
 

(c)
Non-cash transactions
 
During the three months ended March 31, 2008, Series 2007-A convertible debentures with a face value of $728,000 were converted and the Company recorded a reduction of $481,000 in convertible debentures and a corresponding increase in equity. Also, future income tax assets of $1,165,000 were transferred to share capital upon renouncement of expenditures in connection with a flow-through share offering completed in October 2007.
 
During the three months ended March 31, 2007, property, plant and equipment totaling $39,000 was acquired via issuance of a promissory note and 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.

16

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
13.
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
The Company examines the various financial instrument risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, currency risk, interest rate risk and commodity risk. Where material, these risks are reviewed and monitored by the Board of Directors.

(a)
Capital Risk Management
 
The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance. The Company’s overall strategy remains unchanged from 2007.

The capital structure of the Company consists of cash and cash equivalents, notes payable and other current debt, convertible debentures and equity attributable to common shareholders, comprising issued share capital, equity component of convertible debentures, note warrants, contributed surplus and deficit.

(b)
Credit Risk
 
Credit risk on financial instruments arises from the potential for counterparties to default on their obligations to the Company. The Company’s credit risk is limited to trade receivables in the ordinary course of business. The Company sells its metal production exclusively to large international organizations with strong credit ratings and the balance of trade receivables owed to the Company in the ordinary course of business is not significant. The carrying value of accounts receivable approximates fair value due to the relatively short periods to maturity on these instruments. Therefore, the Company is not exposed to significant credit risk and overall the Company’s credit risk has not changed significantly from the prior year.
 
The Company assesses quarterly whether there has been an impairment of the financial assets of the Company. Other than disclosed in Note 5, the Company has not recorded an impairment on any of the financial assets of the Company during the three month period ending March 31, 2008.
 
The Company’s maximum exposure to credit risk is represented by the carrying amount on the balance sheet, which has not changed significantly since year end. There are no material financial assets that the Company considers to be past due.
 
(c)
Liquidity Risk
 
Liquidity risk is the risk that the Company will not meet its financial obligations as they become due. The Company has a planning and budgeting process to monitor operating cash requirements including amounts projected for the existing capital expenditure program and plans for expansion, which are adjusted as input variables change. These variables include, but are not limited to, available bank lines, mineral production from existing operations, commodity prices, taxes and the availability of capital markets. As these variables change, liquidity risks may necessitate the need for the Company to conduct equity issues or obtain project debt financing.
 
17

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
13.
FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
 
    Trade payables and accrued liabilities are paid in the normal course of business typically according to their terms. The Company ensures that there are sufficient committed loan facilities to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents. At March 31, 2008, the Company is in compliance with its debt covenants. The Company’s overall liquidity risk has not changed significantly from the prior year.

(d)
Currency Risk
 
Financial instruments that impact the Company’s net income or other comprehensive income due to currency fluctuations include: Canadian dollar denominated cash and cash equivalents and accounts payable. As of March 31, 2008, the sensitivity of the Company’s net income due to changes in the exchange rate between the Canadian dollar and the United States dollar is an increase of $0.2 million in net income for a 10% increase in the Canadian dollar and a decrease in net income of $0.2 million in net income for a 10% decrease in the Canadian dollar.

(e)
Interest Rate Risk
 
The Company is exposed to interest rate risk on its outstanding borrowings and short-term investments. Currently, the Company’s outstanding borrowings consist of a credit facility with a balance of $4.1 million at March 31, 2008 and the Series 2007-A convertible debentures (“the Debentures”) which have an aggregate $7.7 million face value at March 31, 2008. The credit facility has a floating interest rate based on LIBOR plus 1.25% while the Debentures have a stated rate of 18% which increased from 12% on February 23, 2008 as part of the original terms. The Company monitors its exposure to interest rates and has not entered into any derivative contracts to manage this risk. The weighted average interest rate paid by the Company during the quarter on its outstanding borrowings was 11.6%.
 
For the three months ended March 31, 2008, a 1% increase or decrease in interest rates would have impacted the amount of interest expense recorded during the quarter by approximately $0.1 million.

(f)
Commodity Price Risk
 
The Company’s principal businesses include the sale of several commodities. Revenues, earnings and cash flows from the sale of gold, lead, zinc and silver are sensitive to changes in market prices, over which the Company has little or no control. The Company has the ability to address its price-related exposures through the limited use of options, future and forward contracts, but generally does not enter into such arrangements.
 
On October 15, 2007, in order to meet certain loan criteria of the credit facility mentioned in (e) above, the Company entered into certain option contracts to buy and sell 2,267 tonnes (approximately 5,000,000 lbs) of lead and 3,418 tonnes (approximately 7,500,000 lbs) of zinc which equates to approximately 65% and 40% respectively of Apollo's share of lead and zinc production from the Mine during the 12-month term of the facility. Approximately half of the contracts remain outstanding at March 31, 2008. The lead and zinc option contracts are in the form of a no premium collar (buy a put, sell a call) at the following prices: Lead - put $1.40 per lb, call $1.90 per lb.; Zinc - put $1.20 per lb, call $1.54 per lb. No gold or silver production was hedged.
 
18

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
13.
FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
 
(g)
Fair Value Estimation
 
The fair value of financial instruments that are not traded in an active market (such as derivative instruments) is determined using a Black-Scholes model based on assumptions that are supported by observable current market conditions. Changes in these assumptions to reasonably possible alternative assumptions would not significantly affect the Company’s results.

The carrying value less impairment provision, if necessary, of cash and cash equivalents, restricted certificates of deposit, long-term investments, trade receivables and trade payables approximate their fair values. In addition, as the interest rate on the Company’s credit facility is floating and has no unusual rights or terms, the carrying value approximates its fair value.

14.
SEGMENTED INFORMATION
 
Apollo operates the Montana Tunnels mine (a 50% joint venture) 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 segment information for Montana Tunnels assets and liabilities and the results of operations are reported under the proportionate consolidation method as a result of the JV Agreement (Note 4). The Montana Tunnels assets and liabilities and results of operations of the Montana Tunnels joint venture disclosed in Note 4 differ from the amounts below due to the inclusion of assets and liabilities and results of operations 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 March 31, 2008 are as follows:

   
Montana
Tunnels
 
Black
Fox
 
Corporate
and Other
 
Total
 
Cash and cash equivalents
 
$
314
 
$
18
 
$
2,536
 
$
2,868
 
Other non-cash current assets
   
6,625
   
95
   
3,738
   
10,458
 
     
6,939
   
113
   
6,274
   
13,326
 
Long-term investments
   
   
   
1,369
   
1,369
 
Property, plant and equipment
   
8,947
   
37,285
   
3,076
   
49,308
 
Deferred stripping costs
   
3,729
   
   
   
3,729
 
Restricted certificates of deposit
   
6,655
   
628
   
8
   
7,291
 
Other long-term assets
   
   
89
   
   
89
 
Total assets
 
$
26,270
 
$
38,115
 
$
10,727
 
$
75,112
 
                           
Current liabilities
 
$
3,896
 
$
473
 
$
11,391
 
$
15,760
 
Notes payable and other long-term liabilities
   
121
   
6
   
295
   
422
 
Accrued site closure costs
   
9,172
   
455
   
   
9,627
 
Deferred gain
   
1,956
   
   
   
1,956
 
Total liabilities
 
$
15,145
 
$
934
 
$
11,686
 
$
27,765
 
 
19

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
14.
SEGMENTED INFORMATION (continued)
 
Amounts at December 31, 2007 are as follows:

   
Montana
Tunnels
 
Black
Fox
 
Corporate
and Other
 
Total
 
Cash and cash equivalents
 
$
306
 
$
(39
)
$
4,585
 
$
4,852
 
Other non-cash current assets
   
3,206
   
171
   
4,248
   
7,625
 
     
3,512
   
132
   
8,833
   
12,477
 
Long-term investments
   
   
   
1,467
   
1,467
 
Property, plant and equipment
   
9,176
   
36,100
   
3,102
   
48,378
 
Deferred stripping costs
   
4,787
   
   
   
4,787
 
Restricted certificates of deposit
   
6,057
   
650
   
8
   
6,715
 
Other long-term assets
   
   
84
   
   
84
 
Future income tax assets
   
   
   
1,165
   
1,165
 
Total assets
 
$
23,532
 
$
36,966
 
$
14,575
 
$
75,073
 
                           
Current liabilities
 
$
3,580
 
$
688
 
$
9,994
 
$
14,262
 
Notes payable and other long-term liabilities
   
145
   
14
   
5,826
   
5,985
 
Accrued site closure costs
   
8,995
   
447
   
   
9,442
 
Deferred gain
   
2,511
   
   
   
2,511
 
Total liabilities
 
$
15,231
 
$
1,149
 
$
15,820
 
$
32,200
 

Amounts for the three months ended March 31, 2008 and 2007 are as follows:
 
   
Three months ended March 31, 2008
 
   
Montana
Tunnels
 
Black
Fox
 
Corporate
and Other
 
Total
 
Revenue from sale of minerals
 
$
15,902
 
$
 
$
 
$
15,902
 
Direct operating costs
   
9,061
   
   
   
9,061
 
Depreciation and amortization
   
378
   
   
26
   
404
 
General and administrative expenses
   
   
   
929
   
929
 
Accretion expense – accrued site closure costs
   
177
   
   
   
177
 
Amortization of deferred gain
   
(555
)
 
   
   
(555
)
Exploration and business development
   
   
25
   
731
   
756
 
     
9,061
   
25
   
1,686
   
10,772
 
Operating income (loss)
   
6,841
   
(25
)
 
(1,686
)
 
5,130
 
Interest income
   
52
   
   
74
   
126
 
Interest expense
   
(112
)
 
   
(1,036
)
 
(1,148
)
Realized gain on derivative contracts
   
   
   
518
   
518
 
Change in unrealized gains - derivative contracts
   
   
   
(855
)
 
(855
)
Foreign exchange loss and other
   
   
   
(117
)
 
(117
)
Income (loss) from operations
 
$
6,781
 
$
(25
)
$
(3,102
)
$
3,654
 
                           
Investing activities                          
Property, plant and equipment expenditures
 
$
80
 
$
1,176
 
$
 
$
1,256
 

20

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
14.
SEGMENTED INFORMATION (continued)
 
   
Three months ended March 31, 2007
 
   
Montana
Tunnels
 
Black
Fox
 
Corporate
and Other
 
Total
 
Revenue from sale of minerals
 
$
2,890
 
$
 
$
 
$
2,890
 
Direct operating costs
   
3,063
   
   
   
3,063
 
Depreciation and amortization
   
224
   
   
26
   
250
 
General and administrative expenses
   
   
   
1,140
   
1,140
 
Accretion expense – accrued site closure costs
   
127
   
   
   
127
 
Amortization of deferred gain
   
(71
)
 
   
   
(71
)
Exploration and business development and other
   
   
   
1,552
   
1,552
 
     
3,343
   
   
2,718
   
6,061
 
Operating loss
   
(453
)
 
   
(2,718
)
 
(3,171
)
Interest income
   
45
   
   
143
   
188
 
Interest expense
   
(348
)
 
   
(797
)
 
(1,145
)
Financing costs
   
   
   
(480
)
 
(480
)
Foreign exchange gain and other
   
   
   
(39
)
 
(39
)
Loss from operations
 
$
(756
)
$
 
$
(3,891
)
$
(4,647
)
Investing activities                           
Property, plant and equipment expenditures and deferred stripping expenditures
 
$
2,379
 
$
840
 
$
1,947
 
$
5,166
 
 
15.
DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP
 
The Company prepares its consolidated financial statements in accordance with Canadian GAAP. The following adjustments and/or additional disclosures would be required in order to present the financial statements in accordance with U.S. GAAP and with practices prescribed by the U.S. Securities and Exchange Commission at March 31, 2008 and December 31, 2007 and for the three months ended March 31, 2008 and 2007.
 
Material variances between financial statement items under Canadian GAAP and the amounts determined under U.S. GAAP are as follows:
 
21

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Three month period ended March 31, 2008
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
15.
DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP (continued)

   
Mar 31,
2008
 
Dec 31,
2007
 
Total assets in accordance with Canadian GAAP
 
$
75,112