UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): October 19, 2009
APOLLO
GOLD CORPORATION
(Exact
name of registrant as specified in its charter)
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Yukon
Territory,
Canada
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1-31593
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Not
Applicable
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(State
or other jurisdiction of incorporation or organization)
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(Commission
File
Number)
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(I.R.S.
Employer
Identification
Number)
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5655
South Yosemite Street, Suite 200
Greenwood
Village, Colorado
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80111-3220
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (720) 886-9656
No
Change
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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ITEM
1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On September 30, 2009, Apollo Gold
Corporation (the “Company”) entered into a letter of intent with Elkhorn
Goldfields Inc. (“Elkhorn Goldfields”) pursuant to which Elkhorn Goldfields
agreed to purchase all of the outstanding capital stock of Montana Tunnels
Mining, Inc., an indirect wholly owned subsidiary of the Company (“Montana
Tunnels”). Montana Tunnels is the owner of the Montana Tunnels open
pit mine and mill (a 50/50 joint venture with Elkhorn Tunnels LLC (“Elkhorn
Tunnels”), an affiliate of Elkhorn Goldfields), the Diamond Hill mine and mill
and assets ancillary thereto. The Montana Tunnels mine has been on
care and maintenance since May 1, 2009.
The letter of intent provides for
staged cash payments in the aggregate amount of US$5 million payable over a
seven month period, of which a non-refundable deposit of $250,000 was received
by the Company on or about October 19, 2009. Pursuant to the terms of
the letter of intent, payment of this initial non-refundable deposit of $250,000
rendered the letter of intent binding on the parties (subject to the ability of
the Company to terminate the letter of intent if Elkhorn Goldfields fails to
timely make any payment required under the letter of intent, as described
below). The payment schedule also provides for two additional
non-refundable payments of $250,000 payable on November 25, 2009 and December
25, 2009 (the “Non-Refundable Payments”), followed by three separate payments of
$250,000 payable on January 25, 2010, February 25, 2010, and March 25, 2010, a
payment of $1,500,000 payable on April 30, 2010 and a payment of $2,000,000
payable on May 31, 2010 (collectively, including the Non-Refundable Payments,
the “Cash Purchase Price”). The letter of intent provides that any
missed scheduled payment will result in the termination of the letter of intent
(unless otherwise negotiated) and retention by the Company of the Non-Refundable
Payments. In addition to the Cash Purchase Price, an additional
amount of up to US$4 million is payable through a 4% net smelter royalty (“NSR”)
with payments commencing coincident with Elkhorn Goldfields’ start of production
and to be paid from production until such time as a total of US$4 million is
paid thereunder. Upon full payment of the Cash Purchase Price, the
capital stock of Montana Tunnels will be conveyed to Elkhorn Goldfields, subject
to the NSR. In addition, the Company and Elkhorn Goldfields have
agreed that, during the next 18 months, they will review other property owned by
Montana Tunnels (outside of the current open pit operations and any expansions
of the open pit, including the “M Pit”) for future exploration possibilities and
that, at the Company’s option, the parties may form a joint venture to pursue
such exploration possibilities.
On October 21, 2009, the parties
entered into a side letter agreement to clarify certain portions of the letter
of intent. The side letter included agreements between the parties
that (i) in light of the existing joint venture relationship between the Company
and Elkhorn Tunnels at the Montana Tunnels mine, no further due diligence was
required by Elkhorn Goldfields in respect of the Montana Tunnels open pit
operation, (ii) future payments made pursuant to the terms of the letter of
intent must be made in the form of a wire transfer, which transfers must be
received by 5:00 p.m. (Denver time) on the applicable due date and (iii) in the
event the letter of intent or the definitive agreement between the parties is
terminated due to a default, the existing joint venture agreement between the
Company and Elkhorn Tunnels with respect to the Montana Tunnels mine will remain
in full force.
Based on the foregoing, the parties
have agreed to move forward with the preparation of definitive transaction
documents to finalize the transaction.
The foregoing descriptions of the
letter of intent and the side letter agreement between the Company and Elkhorn
Goldfields are qualified in their entirety by reference to the Letter of Intent
dated September 30, 2009 and the Side Letter Agreement dated October 21, 2009, a
copy of which are attached to this Current Report on Form 8-K as Exhibits 10.1
and 10.2, respectively, and incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND
EXHIBITS
(d) Exhibits
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10.1
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Letter
of Intent dated September 30, 2009, between Apollo Gold Corporation and
Elkhorn Goldfields Inc.
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10.2
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Side
Letter Agreement dated October 21, 2009, between Apollo Gold Corporation
and Elkhorn Goldfields Inc.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: October
23, 2009
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By:
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/s/
Melvyn Williams
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Melvyn
Williams
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EXHIBIT
INDEX
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Exhibit
Number
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Description
of Document
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10.1
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Letter
of Intent dated September 30, 2009, between Apollo Gold Corporation and
Elkhorn Goldfields Inc.
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10.2
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Side
Letter Agreement dated October 21, 2009, between Apollo Gold Corporation
and Elkhorn Goldfields
Inc.
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