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Friday, October 16, 2009

Apollo Gold Corp - Undervalued and Unappreciated, for now!

100 KG Fine Gold Canadian DollarImage by Talie via Flickr

In our previous article : The argument for Gold, we first updated you on Gold's value in this market, and the hidden gem that is Apollo Gold, and it's Black Fox and Grey Fox Mines near Timmons Ontario. The story just got a little more interesting today!

Apollo Gold announced today, the assay results of 7 holes (out of 29 drilled) during it's drilling program in August at it's Grey Fox site and those results are excellent! We are still awaiting the results of the other 21 holes which should be released near the end of October.

This reinforces my reasoning for increasing my holdings through Sept and Oct and I believe there is more good news to come. Gold Analysts from The Gold Report had this company at a strong buy before the drilling at "Grey Fox" even began, with a minimum target price between $1 and $2.79 (it is currently trading at .58) Those estimates were solely based on Apollo's new production at it's "Black Fox" Mine (approx 40,000 oz) since June and did not even consider the drilling at Grey Fox nor Apollo's recent acquisition of the 3.5 km "Pike River" property which straddles these two diamonds in the rough since it started drilling core at Grey Fox.

I expect those estimates to be greatly revised upwards over the next few months and into the 2010 Q1 reports. Here are those initial Assay results from Apollo Gold.

Apollo Gold Corp - (TSX: APG / NYSE Amex: AGT).

PS: I would like to address a comment about gold investments by the venerable oracle of Omaha, Warren Buffett who said: " Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their heads"

Gold has, in fact, great utility! Gold is the best conductor of electricity on the planet. If it were not for the high price (and high utility value) every household would have gold electrical wires instead of copper. Every electrician out there knows this simple fact.

Gold is used in Medicine, Dentistry, Industry, aeronautics, space flight, electronics, computers and food production not to mention the massive international jewelry trade and as a hedge against devaluing currencies.

With the new discoveries for gold tipping in the nano manufacturing of future solar panels enabling 100,000 times more electrical conductivity, and other gold applications in nanomanufacturing, anyone who believes that Gold has no utility, is not paying attention!

Currently, The Chinese Government is buying gold, and telling it's citizens to do the same. The Hong Kong government is actually in the process of moving it's gold reserves from London Banks, to it's own territory. In places as far flung as Istanbul Turkey, and Indonesia, people are buying up gold as a store of value against what the world perceives as a quickly weakening U.S. dollar. Gold has a 6,000-year history of preserving value against fiat currencies like the greenback.

Having regard to the above, I believe that, 2,000 oz gold is the "low end" of what is coming in 2010 and I believe that Apollo Gold is severely undervalued.

Update Oct 23rd - Apollo Gold signed an agreement with Elkhorn minerals to sell it's interest in the Montana Tunnels for $9 Million. This is another clear indication that Apollo Gold is clearing it's slate to concentrate on it's Grey Fox and Black Fox properties near Timmons Ontario which may be the largest pure gold discovery in the past 30 years.

Analyst Reports on Apollo Gold:(Which don't include the Grey Fox Drill Results)

1. . . .We continue to recommend the shares of Apollo Gold Corp. with a SECTOR OUTPERFORM rating."
-KERRY SMITH, HAYWOOD SECURITIES (10/16/09)

2. "We have left our assumptions for 2010 unchanged, resulting in no effect on our $1.00 target price and SECTOR OUTPERFORM rating" for Apollo Gold.

-
-TARA HASSAN, M PARTNERS (09/30/09)

3..."Apollo Gold is very much a strong buy, an aggressive buy".

-Jay Taylor - J. Taylor gold Letter.


Update: Nov 2nd 2009 Reuters reports six more drill assay results from Apollo Gold!


Update: March 2010 Apollo Gold swallows Linear gold

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