Unassociated Document


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

FORM 10-Q

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

For the quarterly period ended September 30, 2009

OR

£           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
 
(I.R.S. Employer Identification No.)
incorporation or organization)
  
 

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 R       No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes £       No £

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

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

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

At November 9, 2009, there were 263,950,927 common shares of Apollo Gold Corporation outstanding.
 


 
 

 

TABLE OF CONTENTS
 
 
Page
 
 
4
   
FINANCIAL STATEMENTS (Unaudited)
4
     
 
5
 
6
 
7
 
8
 
9
     
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
37
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
44
CONTROLS AND PROCEDURES
45
   
46
     
LEGAL PROCEEDINGS
46
RISK FACTORS
46
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
47
DEFAULTS UPON SENIOR SECURITIES
47
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
47
OTHER INFORMATION
47
EXHIBITS
47
   
49
     
 
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 expenditures, 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:
 
 
2

 

 
·
plans for the development of and production at the Black Fox project including, without limitation, the timing of the development of the underground mine at Black Fox, the commissioning of the new conveyor, the recommissioning of the high pressure screen system and the expansion of the tailing dam water management system;
 
·
estimates of future production at Black Fox;
 
·
our ability to reschedule quarterly principal payments under the Black Fox project finance facility;
 
·
our ability to meet our repayment obligations under the Black Fox project finance facility;
 
·
plans for and our ability to finance exploration at our Huizopa, Grey Fox, and Pike River properties;
 
·
our ability to repay the convertible debentures issued to RAB Special Situations (Master) Fund Limited (“RAB”) due February 23, 2010;
 
·
future financing of projects;
 
·
completion of the sale of Montana Tunnels Mining, Inc.;
 
·
liquidity to support operations and debt repayment;
 
·
the establishment and estimates of mineral reserves and resources;
 
·
daily production, mineral recovery rates and mill throughput rates;
 
·
total production costs;
 
·
cash operating costs;
 
·
total cash costs;
 
·
grade of ore mined and milled from Black Fox and cash flows derived therefrom;
 
·
anticipated expenditures for development, exploration, and corporate overhead;
 
·
timing and issue of permits, including permits necessary to conduct phase II of open pit mining at Black Fox;
 
·
expansion plans for existing properties;
 
·
estimates of closure costs and reclamation 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, including the recent significant changes in global financial and capital markets; significant increases or decreases in gold and zinc prices; changes in interest and currency exchange rates including the LIBOR rate; timing and amount of production; unanticipated changes in grade of ore; unanticipated recovery or production problems; changes in operating costs; operational problems at our mining properties; metallurgy, processing, access, availability of materials, equipment, supplies and water; determination of reserves; costs and timing of development of new reserves; results of current and future exploration and development activities; results of current and future exploration activities; results of 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 at reasonable rates or at all; and the factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2008 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.  Except as required by securities law, 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, 2008 included in our Annual Report on Form 10-K.  Certain prior period figures have been reclassified to conform to the current period presentation.  In particular, (1) the assets and liabilities of Montana Tunnels Mining, Inc, (“MTMI”) as of December 31, 2008 and the results of MTMI’s operations and cash flows for the three and nine months ended September 30, 2008 have been reclassified as discontinued operations and (2) for the three and nine months ended September 30, 2008, $1.6 million and $3.5 million, respectively, that were presented as cash inflows from investing activities have been reclassified to operating activities in connection with proceeds from the sale of derivative contracts.
 
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
 
In this Quarterly Report on Form 10-Q, Apollo uses the terms “cash operating costs,” “total cash costs” and “total production costs,” each of which are considered non-GAAP financial measures as defined in the United States Securities and Exchange Commission Regulation S-K Item 10 and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.  These terms are used by management to assess performance of individual operations and to compare Apollo’s performance to other gold producers.
 
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.
 
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 and accretion on accrued site closure costs.
 
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
 
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, 2008 filed with the Securities and Exchange Commission on March 27, 2009.
 
 
4

 

APOLLO GOLD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
(Unaudited)
 
   
September 30,
2009
   
December 31,
 2008
 
ASSETS
     
CURRENT
     
Cash and cash equivalents
  $ 4,499     $ 3,085  
Restricted cash
    4,209       10,000  
Accounts receivable and other
    1,313       1,974  
Derivative instruments (Note 5)
    1,579       552  
Prepaids
    1,123       435  
Inventories (Note 6)
    8,658        
Current assets of discontinued operations (Note 4)
    1,301       5,437  
Total current assets
    22,682       21,483  
Derivative instruments (Note 5)
    4,765        
Long-term investments (Note 7)
    1,093       1,081  
Property, plant and equipment
    135,634       88,226  
Restricted certificates of deposit
    14,533       3,821  
Other long-term assets
    116       103  
Non-current assets of discontinued operations (Note 4)
    14,552       16,916  
TOTAL ASSETS
  $ 193,375     $ 131,630  
LIABILITIES
               
CURRENT
               
Accounts payable
  $ 11,010     $ 12,607  
Accrued liabilities
    2,246       640  
Derivative instruments (Note 5)
    8,559        
Current portion of debt (Note 8(a))
    25,798       19,435  
Convertible debentures
    4,475       3,356  
Current liabilities of discontinued operations (Note 4)
    1,145       4,376  
Total current liabilities
    53,233       40,414  
Accrued long-term liabilities
    337       316  
Derivative instruments (Note 5)
    22,471        
Debt (Note 8(a))
    41,852       968  
Convertible debentures
          4,571  
Accrued site closure costs
    5,096       1,398  
Future income tax liability
    427       447  
Non-current liabilities of discontinued operations (Note 4)
    9,708       9,761  
TOTAL LIABILITIES
    133,124       57,875  
                 
Continuing operations (Note 1)
               
Commitments and contingencies (Note 11)
               
SHAREHOLDERS’ EQUITY
               
Share capital (Note 10)
    202,363       188,927  
Equity component of convertible debentures
    584       1,987  
Debenture note warrants
          2,234  
Contributed surplus
    35,855       21,683  
Deficit
    (178,551 )     (141,076 )
TOTAL SHAREHOLDERS’ EQUITY
    60,251       73,755  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 193,375     $ 131,630  

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
September 30,
   
Nine months ended
September 30,
 
   
2009
   
2008
   
2009
   
2008
 
Revenue from sale of minerals
  $ 19,131     $     $ 23,840     $  
Operating expenses
                               
Direct operating costs
    11,420             13,454        
Depreciation and amortization
    3,207       26       4,466       80  
General and administrative expenses
    1,084       826       3,112       2,914  
Accretion expense – accrued site closure costs
    147             216        
Exploration and business development
    550       754       1,079       2,511  
      16,408       1,606       22,327       5,505  
Operating income (loss)
    2,723       (1,606 )     1,513       (5,505 )
Other income (expenses)
                               
Interest income
    57       62       135       181  
Interest expense (Note 11)
    (3,094 )     (1,098 )     (5,505 )     (3,053 )
Debt transaction costs (Note 8(a) and (c))
          (70 )     (1,821 )     (70 )
Loss on modification of debentures (Note 9)
                (1,969 )      
Realized (losses) gains on derivative contracts
    (1,435 )     1,556       (1,559 )     3,506  
Unrealized losses on derivative contracts
    (10,196 )     (763 )     (25,238 )     (1,496 )
Foreign exchange gain (loss) and other
    226       (283 )     565       (508 )
 Loss from continuing operations before income taxes
    (11,719 )     (2,202 )     (33,879 )     (6,945 )
Income taxes (Note 12)
          (32 )     189       (95 )
Loss from continuing operations
    (11,719 )     (2,234 )     (33,690 )     (7,040 )
(Loss) income from discontinued operations (Note 4)
    (2,269 )     2,782       (3,785 )     9,913  
Net (loss) income and comprehensive income (loss) for the period
  $ (13,988 )   $ 548     $ (37,475 )   $ 2,873  
                                 
Loss per share from continuing operations
                               
Basic and diluted
  $ (0.04 )   $ (0.01 )   $ (0.14 )   $ (0.04 )
                                 
Net (loss) earnings per share
                               
Basic and diluted (Note 10)
  $ (0.05 )   $ 0.00     $ (0.16 )   $ 0.02  
                                 
Weighted-average number of shares outstanding
                               
Basic
    257,165       199,748       239,455       173,374  
Diluted (Note 10)
    257,165       199,914       239,455       175,052  

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)
 
   
Number of
Shares
   
Share
Capital
   
Equity
Component
of
Convertible
Debentures
   
Debenture
Note
Warrants
   
Contributed
Surplus
   
Deficit
   
Total
 
                                           
Balance, December 31, 2007
   
156,248
   
$
166,424
   
$
2,238
   
$
2,292
   
$
14,591
   
$
(142,672
)
 
$
42,873
 
Shares issued for services
   
650
     
351
     
     
     
     
     
351
 
Units issued for cash and related compensation warrants
   
40,806
     
14,885
     
     
     
3,247
     
     
18,132
 
Flow-through shares issued for cash and related compensation warrants
   
20,000
     
8,028
     
     
     
104
     
     
8,132
 
Warrants issued for services
   
     
     
     
     
2,907
     
     
2,907
 
Warrants exercised
   
3,272
     
1,463
     
     
(58
)
   
(1
)
   
     
1,404
 
Conversion of debentures
   
1,884
     
834
     
(251
)
   
     
     
     
583
 
Income tax benefits renounced in connection with issuance of flow-through shares
   
     
(3,058
)
   
     
     
     
     
(3,058
)
Stock-based compensation
   
     
     
     
     
835
     
     
835
 
Net income and comprehensive income
   
     
     
     
     
     
1,596
     
1,596
 
Balance, December 31, 2008
   
222,860
     
188,927
     
1,987
     
2,234
     
21,683
     
(141,076
)
   
73,755
 
                                                         
Shares issued for services (Note 10(a)(ii and iii))
   
5,173
     
1,553
     
     
     
     
     
1,553
 
Shares issued in settlement of interest (Note 9)
   
2,445
     
772
     
     
     
     
     
772
 
Warrants issued for services (Notes 8(a) and 10(a)(ii and iii))
   
     
     
     
     
9,089
     
     
9,089
 
Warrants exercised (Note 10(a)(i))
   
4,833
     
851
     
     
     
     
     
851
 
Shares issued for cash and related compensation warrants (Note 10(a)(iv))
   
26,111
     
10,449
     
     
     
294
     
     
10,743
 
Expiration of note warrants
   
     
     
     
(2,234
)
   
2,234
     
     
 
Redemption of debentures
   
     
     
(1,987
)
   
     
1,987
     
     
 
Equity component of convertible debentures (Note 9)
   
     
     
584
     
     
     
     
584
 
Income tax benefits renounced in connection with issuance of flow-through shares
   
     
(189
)
   
     
     
     
     
(189
)
Stock-based compensation
   
     
     
     
     
568
     
     
568
 
Net loss and comprehensive loss
   
     
     
     
     
     
(37,475
)
   
(37,475
)
Balance, September 30, 2009
   
261,422
   
$
202,363
   
$
584
   
$
   
$
35,855
   
$
(178,551
)
 
$
60,251
 
 
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,
 
   
2009
   
2008
   
2009
   
2008
 
Operating activities
                       
Net (loss) income for the period
  $ (13,988 )   $ 548     $ (37,475 )   $ 2,873  
Loss (income) from discontinued operations for the period
    2,269       (2,782 )     3,785       (9,913 )
Items not affecting cash:
                               
Depreciation and amortization
    3,208       26       4,466       80  
Stock-based compensation
    212       225       568       607  
Shares and warrants issued for services and payment of interest
                4,020        
Accretion expense – accrued site closure costs
    147             216        
Interest expense – amortization of debt discount
    1,158             1,627        
Interest expense – accretion of convertible debentures
    337       1,017       1,619       2,787  
Interest paid on convertible debentures
                (567 )     (1,016 )
Unrealized losses on derivative instruments
    10,196       763       25,238       1,496  
Foreign exchange (gain) loss and other
    (397 )     392       (708 )     605  
Income taxes
                (189 )      
Net change in non-cash operating working capital items (Note 12)
    4,349       (769 )     1,878       (1,282 )
Discontinued operations
    389       1,396       1,334       10,013  
Net cash provided by operating activities
    7,880       816       5,812       6,250  
                                 
Investing activities
                               
Property, plant and equipment expenditures
    (14,114 )     (22,718 )     (54,560 )     (26,184 )
Restricted certificate of deposit and other assets
    812       (382 )     (3,252 )     (1,958 )
Discontinued operations
    (5 )     (911 )     (14 )     (2,272 )
Net cash used in investing activities
    (13,307 )     (24,011 )     (57,826 )     (30,414 )
                                 
Financing activities
                               
Proceeds on issuance of shares and warrants
    10,742       25,611       10,742       25,611  
Proceeds from exercise of warrants
                851       1,404  
Proceeds from debt
          5,150       66,534       6,105  
Payments of debt
    (550 )     (2,076 )     (23,047 )     (7,456 )
Discontinued operations
    (634 )     1,026       (1,175 )     662  
Net cash provided by financing activities
    9,558       29,711       53,905       26,326  
                                 
Effect of exchange rate changes on cash and cash equivalents
    (568 )     (379 )     (477 )     (423 )
                                 
Net increase in cash and cash equivalents
    3,563       6,137       1,414       1,739  
Cash and cash equivalents, beginning of period
    936       148       3,085       4,546  
Cash and cash equivalents, end of period (Note 12)
  $ 4,499     $ 6,285     $ 4,499     $ 6,285  
                                 
SUPPLEMENTAL CASH FLOW INFORMATION
                               
Interest paid
  $ 1,619     $ 90     $ 4,094     $ 1,592  
Income taxes paid
  $ 10     $ 63     $ 35     $ 63  
 
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, 2009
(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 and cash flow generated by the Montana Tunnels joint venture (Note 4) and the Black Fox mine.  The Company’s ability to continue as a going concern is dependent on its ability to continue to issue debt and/or equity securities, and/or continue to generate cash flow from the Black Fox mine.  Currently, the Company is in discussions with the Banks under the Project Facility (See Note 8(a)) regarding rescheduling the quarterly repayment installments to better reflect the expected cash flows from production at Black Fox over the term of the loan.
 
As of September 30, 2009, the Company has a working capital deficiency of $30.6 million and an accumulated deficit of $178.6 million.  In addition, as at September 30, 2009, the Company held cash and cash equivalents of $4.5 million and had current debt obligations of $30.3 million consisting of (1) the current portion of the project financing facility of $23.4 million due in quarterly installments beginning on December 31, 2009 (Note 8(a)), (2) the outstanding principal of the Series 2007-A convertible debentures of $4.5 million due in February 2010 (Note 9), and (3) $2.4 million for other current debt.  Additionally, as of September 30, 2009, the Company has committed to make capital expenditures of approximately $1.2 million for the continued development of Black Fox (Note 14(a)).  Based on the current cash balance, the projected cash flows from Black Fox and assuming the successful rescheduling of the quarterly installment payments of the Project Facility, the Company expects to have sufficient funds to (1) meet its current debt obligations (after debt rescheduling), (2) fund the capital commitments for the development of Black Fox, and (3) fund corporate expenditures.

If the Company is unable to generate sufficient cash flow from Black Fox, unable to reschedule the quarterly installment payments under the Project Facility 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 byproduct metals, as well as related activities including the exploration and development of potential mining properties and acquisition of mining claims.  Apollo owns Black Fox, an open pit mine and mill located near Matheson in the Province of Ontario, Canada (“Black Fox”).  Mining of ores at Black Fox began in March 2009, milling operations commenced in April 2009, and commercial production commenced in late May 2009.  Exploration properties adjacent to the Black Fox mine include the Grey Fox and Pike River properties.
 
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
 
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 18, 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, 2008, except as disclosed in (a) 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, 2008.

 
9

 
 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2009
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
3. 
SIGNIFICANT ACCOUNTING POLICIES (continued)
 
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 prior period figures have been reclassified to conform to the current period presentation.  In particular, (1) the assets and liabilities of Montana Tunnels Mining, Inc, (“MTMI”) as of December 31, 2008 and the results of MTMI’s operations and cash flows for the three and nine months ended September 30, 2008 have been reclassified as discontinued operations and (2) for the three and nine months ended September 30, 2008, $1.6 million and $3.5 million, respectively, that were presented as cash inflows from investing activities have been reclassified to operating activities in connection with proceeds from the sale of derivative contracts.
 
(a)
Changes in accounting policies
 
Effective January 1, 2009, the Company adopted Handbook Section 3064, Goodwill and Intangible Assets, which replaces Section 3062, and establishes revised standards for recognition, measurement, presentation and disclosure of goodwill and intangible assets.  Concurrent with the introduction of this standard, the CICA restricted the application of EIC 27, Revenues and Expenditures in the Pre-operating Period (“EIC 27”).  The adoption of Section 3064 on January 1, 2009, did not have a material impact on the Company’s financial condition or operating results.

In January 2009, the CICA issued EIC-173, Credit Risk and the Fair Value of Financial Assets and Financial Liabilities, which requires the Company to consider its own credit risk as well as the credit risk of its counterparty when determining the fair value of financial assets and liabilities, including derivative instruments.  The accounting treatments provided in EIC-173 have been applied in the preparation of these financial statements and as required have been applied retrospectively without restatement of prior periods.  The adoption of this standard did not have a material impact on the valuation of financial assets or liabilities.

4.
DISCONTINUED OPERATIONS (MONTANA TUNNELS)
 
During the third quarter of 2009, the Company adopted a plan to dispose of Montana Tunnels Mining, Inc., a previously reportable segment, which includes the Montana Tunnels and Diamond Hill mines.  The Montana Tunnels mine, a 50% joint venture (“Montana Tunnels”), is an open pit mine and mill that produced gold dore and lead-gold and zinc-gold concentrates, located in the State of Montana.  Montana Tunnels was placed under care and maintenance on April 30, 2009.  The Diamond Hill mine, also located in the State of Montana, is currently under care and maintenance.  On September 30, 2009, the Company signed a letter of intent to sell MTMI to the current 50% joint venture partner, Elkhorn Goldfields, Inc., for cash of $5.0 million, payable in installments through May 2010, and a 4% net smelter royalty on future production at Montana Tunnels up to a maximum of $4.0 million.  The consummation of the sale is subject to negotiation of definitive documents relating to the sale and payment of the $5.0 million cash purchase price.  As of September 30, 2009, the Company recorded an impairment of $1.6 million on the net assets of MTMI.
 
The following tables present summarized financial information related to discontinued operations:

 
10

 
 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2009
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
4. 
DISCONTINUED OPERATIONS (MONTANA TUNNELS) (continued)

 
September 30,
2009
   
December 31,
 2008
 
ASSETS
               
Cash and cash equivalents
  $ 428     $ 12  
Other non-cash current assets
    873       5,425  
Current assets of discontinued operations
    1,301       5,437  
Property, plant and equipment
    7,062       7,655  
Deferred stripping costs
          1,052  
Restricted certificates of deposit and other
    9,080       8,209  
Less:  Impairment
    (1,590 )      
Non-current assets of discontinued operations
    14,552       16,916  
Total assets of discontinued operations
    15,853       22,353  
LIABILITIES
               
Current liabilities of discontinued operations
    1,145       4,376  
Debt and other long-term liabilities
          44  
Accrued site closure costs
    9,708       9,165  
Deferred gain
          552  
Non-current liabilities of discontinued operations
    9,708       9,761  
Total liabilities of discontinued operations
    10,853       14,137  
Net assets of discontinued operations
  $ 5,000     $ 8,216  

   
Three months ended
September 30,
   
Nine months ended
September 30,
 
   
2009
   
2008
   
2009
   
2008
 
                         
Revenue from sale of minerals
  $     $ 12,764     $ 10,219     $ 38,685  
Direct operating costs
    381       9,978       11,794       28,508  
Depreciation and amortization
    115       380       584       1,085  
Accretion expense – accrued site closure costs
    181       177       543       532  
Amortization of deferred gain
          (560 )     (552 )     (1,484 )
Impairment
    1,590             1,590        
      2,267       9,975       13,959       28,641  
Operating (loss) income
    (2,267 )     2,789       (3,740 )     10,044  
Interest income
          38       7       128  
Interest expense
    (2 )     (45 )     (52 )     (259 )
(Loss) income from discontinued operations
  $ (2,269 )   $ 2,782     $ (3,785 )   $ 9,913  
                                 
(Loss) earnings per share from discontinued operations
                               
Basic and diluted
  $ (0.01 )   $ 0.01     $ (0.01 )   $ (0.06 )

 
11

 
 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2009
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
5.
DERIVATIVE INSTRUMENTS
 
Fair value of derivative instruments consists of:
 
   
September 30, 2009
   
December 31, 2008
 
   
Cost
Basis
   
Unrealized
Gain (Loss)
   
Fair
Value
   
Cost
Basis
   
Unrealized
Gain (Loss)
   
Fair Value
 
Assets
                                   
Canadian dollar purchase contracts (Note 8(b))
  $     $ 6,344     $ 6,344     $     $     $  
Gold, silver and lead contracts
                            552       552  
Less:  Current portion
          (1,579 )     (1,579 )           (552 )     (552 )
Long-term portion
  $     $ 4,765     $ 4,765     $     $     $  
Liabilities
                                               
Gold forward sales contracts (Note 8(b))
  $     $ (31,030 )   $ (31,030 )   $     $     $  
Less:  Current portion
          8,559       8,559                    
Long-term portion
  $     $ (22,471 )   $ (22,471 )   $     $     $  

On February 20, 2009, the Company entered into a $70.0 million project financing agreement (the “Project Facility”) with two banks (the “Banks”) relating to Black Fox (Note 8(a)).  As required by the terms of the Project Facility, the Company entered into a derivative program covering a portion of the Company’s forecasted gold sales and forecasted Canadian dollar operating costs, with the Banks acting as counterparties.

The original derivative program included gold forward sales of 250,430 ounces, representing approximately 60% of the Company’s forecasted sales beginning in May 2009 and continuing over the four year term of the Project Facility.  The weighted average price of the sales program is $876 per ounce of gold.  During the nine months ended September 30, 2009, the Company realized a $2.4 million loss on the settlement of gold futures contracts covering 29,123 ounces of gold.

The original foreign exchange derivative program was for the Canadian dollar equivalent of $58 million over a period covering the four year term of the Project Facility which began April 2009.  The program represents approximately 30% of the Company’s forecasted Canadian dollar operating costs beginning in May 2009 and continuing over the four year term of the Facility.  The weighted average exchange rate for the program is Cdn$1.21 per $1.  During the nine months ended September 30, 2009, the Company realized gains of $0.4 million for the settlement of the Canadian dollar equivalent of $5.3 million foreign exchange contracts.

Settlements of the remaining gold forward sales contracts and Canadian dollar foreign exchange contracts as of September 30, 2009 are as follows (table not in thousands):

   
Gold Forward Sales Contracts
   
Canadian Dollar Foreign Exchange Contracts
 
Year of Settlement
 
Gold Ounces
   
Average Contract
Price Per Ounce
   
Pay US Dollars
 (Millions)
   
Exchange Rate
(Cdn$/USD)
   
Purchase
Canadian Dollars
 (Millions)
 
2009
    24,509     $ 876     $ 2.8     $ 1.21     $ 3.4  
2010
    54,261     $ 876     $ 13.4     $ 1.21     $ 16.3  
2011
    54,704     $ 876     $ 16.1     $ 1.21     $ 19.5  
2012
    73,458     $ 876     $ 16.3     $ 1.21     $ 19.7  
2013
    14,523     $ 876     $ 4.1     $ 1.21     $ 4.9  
      221,455             $ 52.7             $ 63.8  
 
 
12

 
 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2009
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
5. 
DERIVATIVE INSTRUMENTS (continued)

The Company did not apply hedge accounting to these transactions.  As a result, the Company accounts for these derivative instruments as investments and records the changes in unrealized gains and losses in the consolidated statement of operations each period.  The fair value of these derivatives is recorded as an asset or liability at each balance sheet date as follows:

   
Asset Derivatives
   
Liability Derivatives
 
   
September 30, 2009
   
December 31, 2008
   
September 30, 2009
   
December 31, 2008
 
Derivatives not designated
as hedging instruments:
 
Balance
Sheet
Location
   
Fair
Value
   
Balance
Sheet
Location
   
Fair
Value
   
Balance
Sheet
Location
   
Fair
Value
   
Balance
Sheet
Location
   
Fair
Value
 
Gold forward contracts
   
n/a
    $    
Derivative instruments
    $ 54    
Derivative instruments
    $ 31,030      
n/a
    $  
Silver forward contracts
   
n/a
         
Derivative instruments
      139      
n/a
           
n/a
       
Lead forward contracts
   
n/a
         
Derivative instruments
      359      
n/a
           
n/a
       
Canadian dollar foreign exchange contracts
 
Derivative instruments
      6,344      
n/a
           
n/a
           
n/a
       
Total derivatives
          $ 6,344             $ 552             $ 31,030             $  
 
6.
INVENTORIES
 
Inventories consist of:
   
September 30,
2009
   
December 31,
 2008
 
Doré inventory
  $ 2,851        
In-circuit gold inventory
    3,607        
Stockpiled ore inventory
    1,933        
Materials and supplies
    267        
    $ 8,658     $  

Other information related to inventories is:
 
   
Three months ended
September 30,
   
Nine months ended
September 30,
 
   
2009
   
2008
   
2009
   
2008
 
Inventories recognized as an expense in direct operating costs
  $ 11,420     $     $ 13,454     $  
Expenses related to the write down of the carrying value of inventories to net realizable value
    530             530        

7.
LONG-TERM INVESTMENTS
 
The Company acquired auction rate securities (“ARS”) in 2007, which are recorded in long-term investments, with a face value of $1.5 million.  The Company has recorded an other than temporary impairment on its ARS, within foreign exchange gain and other in the consolidated statement of operations, representing a loss of $0.01 million for the nine months ended September 30, 2009, and losses of $0.1 million and $0.3 million for the three and nine months ended September 30, 2008, respectively.  As such, no amounts have been recorded in other comprehensive income.  The adjusted cost basis and fair value of ARS at September 30, 2009 and December 31, 2008 are $1.1 million and $1.1 million, respectively.  See Note 16(g).  The ARS are pledged as collateral for a $0.9 million margin loan.
 
13

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2009
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
8.
BLACK FOX PROJECT FINANCING FACILITY
 
(a)
Financing Agreement
 
On February 20, 2009, the Company entered into a $70.0 million project financing agreement (the “Project Facility”) with two banks (the “Banks”) relating to Black Fox.  By June 2, 2009, the Company had borrowed the total amount of the $70.0 million available under the Project Facility.  On February 23, 2009, the Company used $15.0 million of the proceeds from the Project Facility to repay the $15.0 million bridge facility entered into on December 10, 2008 (the “Bridge Facility”) and has utilized the remaining $55.0 million to complete the development of Black Fox and to provide for certain agreed corporate expenditures.

The terms of the Project Facility include:  (i) a commitment by the Banks to lend to the Company up to $70.0 million available for drawdown between February 20, 2009 and June 30, 2009; (ii) interest on the outstanding principal amount accruing at a rate equal to the London interbank offered rate (“LIBOR”) plus 7% per annum and payable in monthly installments commencing March 31, 2009 (currently the LIBOR rate is the one-month rate but the LIBOR rate used may be monthly, quarterly or such other period as may be agreed to by the Banks and the Company); (iii) scheduled repayment of the principal amount in unequal quarterly amounts originally scheduled to commence September 30, 2009 (see paragraph below for discussion regarding rescheduling of quarterly payments) with the final repayment no later than March 31, 2013; and (iv) an arrangement fee of $3.5 million, which was paid by the Company to the Banks in cash on February 23, 2009.  The average monthly LIBOR rate charged to the Company during the three and nine months ended September 30, 2009 was 0.3% and 0.4%, respectively.

Borrowings under the Project Facility are secured by substantially all of the Company’s assets, including the Black Fox Project, and the common stock of its subsidiaries.  The Project Facility contains various financial and operational covenants that impose limitations on the Company which include, among other requirements, the following:  maintenance of certain financial coverage ratios and minimum project ore reserves, satisfaction of a minimum tangible net worth test, and the operation of Black Fox in compliance with an agreed cash flow budgeting and operational model.  In addition, the Black Fox Project is subject to a completion test that must be satisfied by March 31, 2010.  As at September 30, 2009, the Company was in compliance with the various financial covenants of the Project Facility. However, as a result of lower than planned gold production, during the third quarter of 2009 a “review event” as defined in the Project Facility was triggered.  The occurrence of a review event allows the Banks to review the Project Facility and determine if they wish to continue with the Project Facility.  On September 28, 2009, the Banks agreed to defer (i) the first scheduled repayment of $9,300,000 due on September 30, 2009 under the Project Facility and (ii) the requirement to fund the associated debt service reserve account also due on September 30, 2009, which, in accordance with the terms of the Project Facility, requires a reserve amount equal to, at all times after initial funding, the greater of $5,000,000 or the aggregate repayment amount due on the next repayment date.  This deferral will enable the Banks and the Company to complete an ongoing technical review of the Black Fox project with the objective of rescheduling the quarterly repayment installments under the Project Facility.  If the Company is not able to satisfactorily reschedule the quarterly repayment installments, then the payment of $9,300,000 and the reserve account funding obligation, each originally due on September 30, 2009, must be satisfied on the earlier to occur of (i) the completion of the Bank’s technical review process of the Black Fox mine and (ii) December 31, 2009.

 
14

 
 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2009
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
8. 
BLACK FOX PROJECT FACILITY (continued)
 
In consideration for providing the financing, the Banks were issued an aggregate of 34,836,111 warrants (“Banks’ Compensation Warrants”) at an exercise price of $0.201 (Cdn$0.252) per share (subject to anti-dilution adjustments) that expire on February 20, 2013.  The Banks’ Compensation Warrants are in addition to the 42,614,254 common share purchase warrants issued to the Banks in connection with the Bridge Facility.  The Banks’ Compensation Warrants were assigned a fair value of $7.4 million, using an option pricing model with the following assumptions:  no dividends are paid, a volatility of the Company’s share price of 81%, an expected life of the warrants of four years, and an annual risk-free rate of 1.9%.

The Company recorded a $10.9 million discount on the Project Facility, comprised of the $3.5 million arrangement fee and the $7.4 million fair value of the Banks’ Compensation Warrants, which discount will be accreted over the life of the loan using the effective interest method and charged to interest expense.  The accreted interest from the date of loan origination through May 24, 2009 (the date on which Black Fox entered commercial production) was capitalized to Black Fox.  Additionally, the Company recorded $0.6 million of debt transaction costs that were expensed immediately.

The drawn amounts on the Project Facility as of September 30, 2009 are repayable by the Company as shown in the table below.  Amounts due on the Project Facility are included within current and long-term portion of debt, which balance includes notes payable, leases payable and other debt, as follows:

2009
  $ 15,300 (1) 
2010
    13,800  
2011
    10,200  
2012
    24,500  
2013
    6,200  
Principle balance of Project Facility
    70,000  
Less unamortized debt discount
    (8,577 )
Total of project facility included within debt on the balance sheet
    61,423  
Less current portion
    (23,374 )
Long-term portion
  $ 38,049  
(1) See above for discussion of potential rescheduling of quarterly payments.

(b)
Additional Debt Transaction Costs Resulting from the Project Facility
 
Under the terms of a previously existing engagement letter between the Company and a certain financial advisory services firm (the “Firm”) pursuant to which the Firm agreed to provide financial advisory services to the Company, the Project Facility constituted an “alternative transaction” that required the Company to compensate the Firm by issuing to it 2,172,840 common shares and 2,567,901 common share purchase warrants exercisable for a two year period at an exercise price of $0.205 (Cdn$0.256).  In addition, the Company was required to compensate the Firm for related financial advisory services by issuing to it 1,000,000 common shares of the Company.  The Company recorded debt transaction costs of $1.2 million comprised of $0.8 million for the common shares issued to the Firm and $0.4 million for the warrants issued to the Firm.  The warrants were assigned a fair value of $0.4 million, using an option pricing model with the following assumptions:  no dividends are paid, a volatility of the Company’s share price of 80%, an expected life of the warrants of two years, and an annual risk-free rate of 1.2%.
 
15

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2009
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
9.
CONVERTIBLE DEBENTURES
 
On February 19, 2009, the Company reached an agreement with the largest holder (the “Large Holder”) of its Series 2007-A convertible debentures (the “2007 Debentures”) to extend the maturity date of the $4.3 million principal amount of the 2007 Debentures held by the Large Holder from February 23, 2009 to February 23, 2010 (the “Extended Debentures”).

The Large Holder owned $4.3 million principal amount of the 2007 Debentures as of December 31, 2008 and February 23, 2009 (on which $0.8 million of interest was accrued as of February 23, 2009) and 8,580,000 of warrants issued in connection with the 2007 Debentures (the “2007 Debenture Warrants).  The Company and the Large Holder also agreed that the Company shall have the option to repay on February 23, 2009 the $0.8 million of accrued interest on the Large Holder’s 2007 Debentures in either common shares of the Company or cash.  On February 23, 2009, the Company repaid the $0.8 million of accrued interest on the large Holder’s 2007 Debentures by issuing 2,444,765 common shares of the Company.  In consideration for the foregoing, the Company agreed to (i) issue 2,000,000 common shares of the Company to the Large Holder on February 23, 2009 (the “Large Holder Shares”), (ii) extend the expiration date of the 8,580,000 2007 Debenture Warrants issued to the Large Holder to March 4, 2010 (the “Large Holder Warrants”) and (iii) reduce the exercise price of the Large Holder Warrants from $0.50 to $0.25.

The terms and conditions of the $3.1 million aggregate principal amount of 2007 Debentures and 2007 Debenture Warrants not owned by the Large Holder were not amended and remained unchanged and principal and $0.6 million interest were repaid in cash on February 23, 2009.

The Company recorded a loss on modification of convertible debentures of $2.0 million comprised of $0.6 million for the Large Holder Shares, $1.3 million for the Large Holder Warrants and $0.1 million for administrative costs.  The Large Holder Warrants were assigned a fair value of $1.3 million, using an option pricing model with the following assumptions:  no dividends are paid, a volatility of the Company’s share price of 97%, an expected life of the warrants of one year, and an annual risk-free rate of 1.2%.

The Extended Debentures bear interest at a rate of 18% per annum and are convertible into common shares of the Company at $0.50 per common share.  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 Extended Debentures are classified as a compound financial instrument for accounting purposes.

On the date of extension of the Extended Debentures, the $4.3 million principal was allocated to the relative fair values of the Debentures ($3.7 million) and the holder’s option to convert the principal balance into common shares ($0.6 million) (the “Conversion Option”).  The $3.7 million fair value of the Extended Debentures is classified as a liability, while the $0.6 million allocated to the Conversion Option is classified as a separate component within shareholders’ equity.

Over their one-year term, the Extended 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, 2009, the Company recorded accretion expense of $0.3 million and $0.7 million, respectively, related to the Extended Debentures, which is included in interest expense.
 
16

 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2009
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
10.
SHARE CAPITAL
 
(a)
Shares issued in 2009
 
(i)           For the nine months ended September 30, 2009, there were 4,833,332 shares issued upon exercise of warrants for proceeds of $0.9 million.  Each warrant exercised had an exercise price of $0.176.
 
(ii)           On February 20, 2009, the Company issued to a Firm (see Note 8(b)) 3,172,840 common shares of the Company and 2,567,901 common share purchase warrants exercisable for a two year period at an exercise price of $0.204 (Cdn$0.256) for services rendered.
 
(iii)           On February 23, 2009, the Company issued 2,444,765 common shares of the Company for payment of the $0.8 million of accrued interest on the Large Holder’s 2007 Debentures (see Note 9).  In addition, the Company issued 2,000,000 common shares of the Company in consideration for extending the 2007 Debentures and extended the expiration date of 8,580,000 warrants from February 23, 2009 to March 4, 2010 and reduced the exercise price of these warrants from $0.50 to $0.25.
 
(iv)           On July 15, 2009, the Company completed a private placement of 12,221,640 common shares at Cdn$0.45 per share and 13,889,390 flow-through common shares at Cdn$0.54 per share for net proceeds of $10.7 million (Cdn$12.0 million) after cash issuance costs of $0.9 million.  The Company intends to use the proceeds from the sale of the flow-through common shares to fund exploration expenses at its Black Fox mine and its Grey Fox property.  Further, the Company intends to use the proceeds from the sale of the common shares for working capital and general corporate purposes.  In connection with the private placement the Company issued 1,566,662 compensation warrants to purchase common shares of the Company at an exercise price of Cdn$0.45 per share that expire on July 15, 2011.  The compensation warrants were assigned a fair value of $0.3 million, using an option pricing model with the following assumptions: no dividends are paid, a volatility of the Company’s share price of 80%, an expected life of the warrants of two years, and an annual risk-free rate of 1.2%.
 
(b)
Warrants
 
A summary of information concerning outstanding warrants at September 30, 2009 is as follows:
 
   
Number of Warrants
and Shares Issuable
upon Exercise
 
Balance, December 31, 2008
    91,277,374  
Warrants issued
    38,970,674  
Warrants exercised
    (4,833,333 )
Warrants expired
    (9,725,927 )
Balance, September 30, 2009
    115,688,788  

The following table summarizes outstanding warrants as at September 30, 2009:

 
17

 
 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2009
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
10. 
SHARE CAPITAL (continued)

Date Issued
 
Number of Warrants
and Shares Issuable
upon Exercise
   
Exercise Price
 
Expiry Date
         
Exercisable in US$
   
November 8, 2006
    2,677,436       0.176  
November 8, 2009 (1)
November 8, 2006
    1,168,174       0.50  
November 8, 2009 (2)
February 23, 2007
    8,580,000       0.25  
March 4, 2010
      12,425,610            
           
Exercisable in Cdn$
   
August 21, 2008
    1,020,000       0.50  
February 21, 2010
December 31, 2008
    255,000       0.30  
December 31, 2010
February 20, 2009
    2,567,901       0.256  
February 20, 2011
July 15, 2009
    1,566,662       0.45  
July 15, 2011
July 24, 2008
    20,403,250       0.65  
July 24, 2011
December 10, 2008
    42,614,254       0.221  
December 10, 2012
February 20, 2009
    34,836,111       0.252  
February 20, 2013
      103,263,178            
      115,688,788            
(1) 2,343,603 of these warrants were exercised prior to expiration and the remaining 333,833 expired unexercised.
(2) 185,100 of these warrants were exercised prior to expiration and the remaining 983,074 expired unexercised.

In addition, 2,448,390 units issued to placement agents on July 24, 2008 (the “Agents’ Units”) are outstanding.  Each Agents’ Unit is exercisable at Cdn$0.60 for four years into one common share of the Company and one- half of one warrant (the Agents’ Warrant), with each whole Agents’ Warrant exercisable into one common share of the Company at Cdn$0.78.  The Agent’s Units and Agents’ Warrants expire on July 24, 2012.
 
(c)
Options
 
A summary of information concerning outstanding fixed stock options at September 30, 2009 is as follows:
 
   
Number of
Common
Shares
   
Weighted
Average
Exercise
Price Per
Share
 
Balance, December 31, 2008
    8,281,309     $ 0.77  
Options granted
    3,731,807       0.34  
Options forfeited
    (401,745 )     0.53  
Balance, September 30, 2009
    11,611,371     $ 0.64  

The following table summarizes information concerning outstanding and exercisable stock options at September 30, 2009:
 

 
18

 
 
APOLLO GOLD CORPORATION
Notes to the Condensed Consolidated Financial Statements
Nine month period ended September 30, 2009
(Stated in U.S. dollars; tabular amounts in thousands except share and per share data)
(Unaudited)
 
10. 
SHARE CAPITAL (continued)
 
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       1.9       100,000     $ 0.46  
675,100
 
February 18, 2013
    2.24       3.4       675,100       2.24  
260,000
 
March 10, 2014
    2.05       4.4       260,000       2.05  
25,000
 
May 19, 2014
    1.44       4.6       25,000       1.44  
20,200
 
August 10, 2014
    0.95       4.9       20,200       0.95  
1,158,250
 
March 10, 2015
    0.65       5.4       1,158,250       0.65  
100,000
 
August 4, 2015
    0.27       5.8       100,000       0.27  
300,000
 
December 12, 2015
    0.20       6.2       300,000       0.20  
125,000
 
March 28, 2016
    0.65       6.5       125,000       0.65  
200,000
 
May 24, 2016
    0.53       6.7       200,000       0.53  
108,000
 
August 10, 2016
    0.48       6.9       108,000       0.48  
20,000
 
November 9, 2016
    0.32       7.1       20,000       0.32  
2,810,064
 
February 6, 2017
    0.57       7.4       2,810,064       0.57  
21,250
 
August 13, 2017
    0.46       7.9       21,250       0.46  
1,973,950
 
March 27, 2018
    0.66       8.5       986,975       0.66  
21,250
 
August 12, 2018
    0.37       8.9       10,625       0.37  
30,000
 
November 11, 2018
    0.15       9.1              
3,200,067
 
March 31, 2019
    0.32       9.5              
297,740
 
May 6, 2019
    0.45       9.6              
165,500
 
August 11, 2019
    0.44       9.9