##### Table of Contents



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 June 30, 2005
 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
  Yukon Territory, Canada
(State or Other Jurisdiction of
Incorporation or Organization)
    
    Not Applicable
(I.R.S. Employer Identification No.)
 5655 South Yosemite St., Suite 200
Greenwood Village, Colorado 80111-3220
 (720) 886-9656
  þ o
  þ o




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TABLE OF CONTENTS
 PagePART I FINANCIAL INFORMATION
    
    
    2ITEM 1. FINANCIAL STATEMENTS
    
    
    2ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
    
    
    2Consolidated Balance Sheets  As of June 30, 2005 and as of December 31, 2004
    
    
    3Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2005 and 2004
    
    
    4Consolidated Statements of Shareholders Equity for the Year Ended
December 31, 2004 and the Six Month Period ended June 30, 2005
    
    
    5Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2005 and 2004
    
    
    6Notes to Financial Statements
    
    
    7ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
    
    
    24ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    35ITEM 4. CONTROLS AND PROCEDURES
    
    
    35PART II OTHER INFORMATION
    
    
    37ITEM 1. LEGAL PROCEEDINGS
    
    
    37ITEM 2. UNREGISTERED SALES OF EQUITY IN SECURITIES AND USE OF PROCEEDS
    
    
    37ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    37ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    37ITEM 5. OTHER INFORMATION
    
    
    37ITEM 6. EXHIBITS
    
    
    37Subscription for SharesRegistration Rights AgreementSubscription DetailsCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO and CFO Pursuant to Section 906
  STATEMENTS REGARDING FORWARD LOOKING INFORMATION
 Private
Securities Litigation Reform Act of 1995
 
    
    estimate of selling price and possible sale of our Nevada Assets;
 
    
    production and production costs;
 
    
    cash operating costs;
 
    
    total cash costs;
 
    
    grade;
 
    
    remediation efforts;
 
    
    exploration;
 
    
    development;
 
    
    cash flows;
 
    
    future financing;
 
    
    expenditures;
 
    
    estimates of environmental liabilities;
 
    
    cash balances;
 
    
    our belief that certain deficiencies in our internal control and procedures have been remediated;
 
    
    our ability to fund our working capital and capital expenditures; and
 
    
    factors impacting our results of operations.
  ACCOUNTING PRINCIPLES, REPORTING CURRENCY AND OTHER INFORMATION
  1




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NON-GAAP FINANCIAL INFORMATION
      
 PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
  2




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APOLLO GOLD CORPORATION
 
 CONSOLIDATED BALANCE SHEETS  (In thousands of United States Dollars)  (Unaudited)
 June 30,
    
    December 31,2005
    
    2004(Restated -Note 3(b))AssetsCurrentCash and cash equivalents
    
    $
    4,876
    
    
    $
    6,886Accounts receivable
    
    
    1,870
    
    
    
    2,963Prepaids
    
    
    115
    
    
    
    109Inventories
    
    
    1,736
    
    
    
    2,192Current assets held for sale (Note 4)
    
    
    8,084
    
    
    
    10,510Total Current Assets
    
    
    16,681
    
    
    
    22,660Property, plant and equipment
    
    
    39,747
    
    
    
    37,599Restricted certificate of deposit
    
    
    5,171
    
    
    
    4,371Deferred financing costs
    
    
    1,037
    
    
    
    901Non-current assets held for sale (Note 4)
    
    
    27,414
    
    
    
    32,104Total Assets
    
    $
    90,050
    
    
    $
    97,635LiabilitiesCurrentAccounts payable
    
    $
    5,303
    
    
    $
    5,942Accrued liabilities
    
    
    2,469
    
    
    
    1,860Notes payable
    
    
    538
    
    
    
    789Property and mining taxes payable
    
    
    1,196
    
    
    
    1,070Current liabilities held for sale (Note 4)
    
    
    3,786
    
    
    
    8,224Total Current Liabilities
    
    
    13,292
    
    
    
    17,885Notes payable and long-term liability
    
    
    110
    
    
    
    423Convertible debentures
    
    
    6,146
    
    
    
    5,538Accrued site closure costs
    
    
    12,147
    
    
    
    11,753Non-current liabilities held for sale (Note 4)
    
    
    14,913
    
    
    
    14,815Total Liabilities
    
    
    46,608
    
    
    
    50,414Continuing operations (Note 1)Shareholders EquityShare capital (Note 5)
    
    
    148,078
    
    
    
    141,795Issuable common shares
    
    
    231
    
    
    
    231Equity component of convertible debentures
    
    
    1,809
    
    
    
    1,815Note warrants
    
    
    781
    
    
    
    781Contributed surplus
    
    
    10,318
    
    
    
    9,627Deficit
    
    
    (117,775
    )
    
    
    (107,028
    )Total Shareholders Equity
    
    
    43,442
    
    
    
    47,221Total Liabilities and Shareholders Equity
    
    $
    90,050
    
    
    $
    97,635
  3




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APOLLO GOLD CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of United States Dollars, except for share and per
share amounts)
(Unaudited)
 Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Restated -
    
    
    
    
    
    (Restated -Notes 3(b) and 7)
    
    
    
    
    
    Notes 3(b) and 7)RevenueRevenue from sale of minerals
    
    $
    10,581
    
    
    $
    6,525
    
    
    $
    22,913
    
    
    $
    18,149Operating ExpensesDirect operating costs
    
    
    12,622
    
    
    
    13,472
    
    
    
    26,111
    
    
    
    27,188Depreciation and amortization
    
    
    614
    
    
    
    630
    
    
    
    1,334
    
    
    
    1,233General and administrative expenses
    
    
    1,216
    
    
    
    1,508
    
    
    
    2,866
    
    
    
    3,238Stock-based compensation
    
    
    152
    
    
    
    72
    
    
    
    354
    
    
    
    99Accretion expense  accrued site closure costs
    
    
    197
    
    
    
    40
    
    
    
    394
    
    
    
    81Exploration and business development
    
    
    318
    
    
    
    120
    
    
    
    558
    
    
    
    25915,119
    
    
    
    15,842
    
    
    
    31,617
    
    
    
    32,098Operating (Loss)
    
    
    (4,538
    )
    
    
    (9,317
    )
    
    
    (8,704
    )
    
    
    (13,949
    )Other Income (Expenses)Interest income
    
    
    69
    
    
    
    103
    
    
    
    173
    
    
    
    251Interest expense
    
    
    (485
    )
    
    
    (39
    )
    
    
    (1,193
    )
    
    
    (83
    )Gain on sale of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    1,365
    
    
    
    Foreign exchange loss and other
    
    
    (7
    )
    
    
    (300
    )
    
    
    (33
    )
    
    
    (488
    )(Loss) from continuing operations
    
    
    (4,961
    )
    
    
    (9,553
    )
    
    
    (8,392
    )
    
    
    (14,269
    )(Loss) income from discontinued operations
(Note 4)
    
    
    (1,538
    )
    
    
    648
    
    
    
    (2,355
    )
    
    
    232Net (loss) for the period
    
    $
    (6,499
    )
    
    $
    (8,905
    )
    
    $
    (10,747
    )
    
    $
    (14,037
    )Basic and diluted net (loss) per share from:Continuing operations
    
    $
    (0.05
    )
    
    $
    (0.12
    )
    
    $
    (0.09
    )
    
    $
    (0.18
    )Discontinued operations
    
    
    (0.02
    )
    
    
    0.01
    
    
    
    (0.02
    )
    
    
    0.00$
    (0.07
    )
    
    $
    (0.11
    )
    
    $
    (0.11
    )
    
    $
    (0.18
    )Weighted average number of shares outstanding
    
    
    98,777,880
    
    
    
    79,482,734
    
    
    
    96,828,366
    
    
    
    77,068,637
  4




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APOLLO GOLD CORPORATION
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(In thousands of United States Dollars)
(Unaudited)
 EquityComponentShare Capital
    
    Issuable
    
    ofNumber of
    
    
    
    
    
    Common
    
    Convertible
    
    Note
    
    ContributedShares
    
    Amount
    
    Shares
    
    Debentures
    
    Warrant
    
    Surplus
    
    Deficit
    
    TotalBalance, December
31, 2003
    
    
    73,539,790
    
    
    $
    120,881
    
    
    $
    231
    
    
    $
    
    
    
    $
    
    
    
    $
    12,766
    
    
    $
    (51,988
    )
    
    $
    81,890Cumulative effect of
change in accounting
policy (Note
3(b))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,033
    )
    
    
    (24,033
    )Adjusted balance,
December 31, 2003
    
    
    73,539,790
    
    
    
    120,881
    
    
    
    231
    
    
    
    
    
    
    
    
    
    
    
    12,766
    
    
    
    (76,021
    )
    
    
    57,857Units issued for cash
    
    
    8,299,999
    
    
    
    4,873
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    622
    
    
    
    
    
    
    
    5,495Conversion of special
warrants
    
    
    2,326,666
    
    
    
    1,449
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    1,499Flow-through common
shares
    
    
    714,283
    
    
    
    515
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    515Warrants exercised
    
    
    5,399,848
    
    
    
    12,695
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,083
    )
    
    
    
    
    
    
    8,612Options exercised
    
    
    399,054
    
    
    
    966
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (647
    )
    
    
    
    
    
    
    319Shares reacquired and
cancelled
    
    
    (20,500
    )
    
    
    (48
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48
    )Shares issued for
Huizopa interest
    
    
    48,978
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88Shares issued for 2003
share-based
compensation
    
    
    265,000
    
    
    
    376
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (376
    )
    
    
    
    
    
    
    Bridge loan
compensation warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    275
    
    
    
    
    
    
    
    275Equity component of
convertible debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,815
    
    
    
    
    
    
    
    63
    
    
    
    
    
    
    
    1,878Note warrant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    781
    
    
    
    27
    
    
    
    
    
    
    
    808Debenture compensation
warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    163
    
    
    
    
    
    
    
    163Stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    767
    
    
    
    
    
    
    
    767Net loss (Note 3(b))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,007
    )
    
    
    (31,007
    )Balance, December 31,
2004
    
    
    90,973,118
    
    
    
    141,795
    
    
    
    231
    
    
    
    1,815
    
    
    
    781
    
    
    
    9,627
    
    
    
    (107,028
    )
    
    
    47,221Unit issued for cash
    
    
    4,199,998
    
    
    
    2,567
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    194
    
    
    
    
    
    
    
    2,761Shares issued for
Huizopa interest
restructuring
    
    
    1,000,000
    
    
    
    410
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    410Shares issued for cash
    
    
    10,000,000
    
    
    
    3,183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,183Conversion of
convertible debentures
    
    
    33,333
    
    
    
    23
    
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17Engagement
fee shares and
warrants
    
    
    350,000
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    143
    
    
    
    
    
    
    
    243Stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    354
    
    
    
    
    
    
    
    354Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,747
    )
    
    
    (10,747
    )Balance, June 30, 2005
    
    
    106,556,449

    
    
    $
    148,078
    
    
    $
    231
    
    
    $
    1,809
    
    
    $
    781
    
    
    $
    10,318
    
    
    $
    (117,775
    )
    
    $
    43,442
  5




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APOLLO GOLD CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS  (In thousands of United States Dollars)  (Unaudited)
 Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Restated -
    
    
    
    
    
    (Restated -Note 7)
    
    
    
    
    
    Note 7)Operating Activities of Continuing OperationsLoss from continuing operations for the period
    
    $
    (4,961
    )
    
    $
    (9,553
    )
    
    $
    (8,392
    )
    
    $
    (14,269
    )Items not affecting cash
Depreciation and amortization
    
    
    614
    
    
    
    630
    
    
    
    1,334
    
    
    
    1,233Amortization of deferred financing costs
    
    
    79
    
    
    
    
    
    
    
    159
    
    
    
    Stock-based compensation
    
    
    152
    
    
    
    72
    
    
    
    354
    
    
    
    99Accretion expense  accrued site closure costs
    
    
    197
    
    
    
    40
    
    
    
    394
    
    
    
    81Accretion expense  convertible debentures
    
    
    474
    
    
    
    
    
    
    
    1,159
    
    
    
    Gain on sale of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    (1,365
    )
    
    
    Net change in non-cash operating working
capital items
    
    
    551
    
    
    
    1,344
    
    
    
    1,639
    
    
    
    1,432(2,894
    )
    
    
    (7,467
    )
    
    
    (4,718
    )
    
    
    (11,424
    )Investing Activities of Continuing OperationsProperty, plant and equipment expenditures
    
    
    (1,658
    )
    
    
    (4,871
    )
    
    
    (3,699
    )
    
    
    (7,295
    )Short-term investments
    
    
    
    
    
    
    466
    
    
    
    
    
    
    
    (1,591
    )Proceeds from disposal of property, plant and
equipment
    
    
    1,991
    
    
    
    
    
    
    
    1,991
    
    
    
    Restricted certificate of deposit and other assets
    
    
    (439
    )
    
    
    (236
    )
    
    
    (851
    )
    
    
    (448
    )(106
    )
    
    
    (4,641
    )
    
    
    (2,559
    )
    
    
    (9,334
    )Financing Activities of Continuing OperationsProceeds on issuance of shares
    
    
    3,183
    
    
    
    299
    
    
    
    5,944
    
    
    
    8,860Convertible debentures interest paid
    
    
    (265
    )
    
    
    
    
    
    
    (530
    )
    
    
    Acquisition and cancellation of shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48
    )Payments of notes payable
    
    
    (328
    )
    
    
    (445
    )
    
    
    (564
    )
    
    
    (836
    )2,590
    
    
    
    (146
    )
    
    

    4,850
    
    
    
    7,976Net (decrease) in cash from continuing operations
    
    
    (410
    )
    
    
    (12,254
    )
    
    
    (2,427
    )
    
    
    (12,782
    )Net increase (decrease) in cash from discontinued
operations (Note 4)
    
    
    2,761
    
    
    
    (6,458
    )
    
    
    417
    
    
    
    (8,058
    )Cash and cash equivalents, beginning of period
    
    
    2,525
    
    
    
    23,704
    
    
    
    6,886
    
    
    
    25,832Cash and cash equivalents, end of period
    
    $
    4,876
    
    
    $
    4,992
    
    
    $
    4,876
    
    
    $
    4,992Supplemental Cash Flow Information:Interest paid
    
    $
    303
    
    
    $
    97
    
    
    $
    625
    
    
    $
    207
     6




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APOLLO GOLD CORPORATION
 
 Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 1.
    
    CONTINUING OPERATIONS
  2.
    
    NATURE OF OPERATIONS
    7




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APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
  3.
    
    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 9, 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,
2004,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, 2004.
   (b)
    
    On March 30, 2005, the Financial Accounting Standards Board (FASB) ratified
the consensus of the Emerging Issues Task Force (EITF) Issue 04-6 that stripping
costs incurred during the production phase of a mine are variable production costs that
should be included in the costs of the inventory produced during the period that the
stripping costs are incurred.
  4.
    
    ASSETS HELD FOR SALE
  8




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APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
   June 30, 2005
    
    Dec 31, 2004ASSETSCash and cash equivalents
    
    $
    (195
    )
    
    $
    61Broken ore on leach pad  current
    
    
    7,168
    
    
    
    8,960Other non-cash current assets
    
    
    1,111
    
    
    
    1,489Current assets held for sale
    
    
    8,084
    
    
    
    10,510Broken ore on leach pad  long-term
    
    
    4,817
    
    
    
    4,824Property, plant and equipment
    
    
    21,223
    
    
    
    20,945Restricted certificate of deposit
    
    
    5,938
    
    
    
    4,995Deferred loss on commodity contracts
(Note 7)
    
    
    
    
    
    
    1,340Less: impairment
    
    
    (4,564
    )
    
    
    Non-current assets held for sale
    
    
    27,414
    
    
    
    32,104Total assets held for sale
    
    
    35,498
    
    
    
    42,614LIABILITIESCurrent liabilities held for sale
    
    
    3,786
    
    
    
    8,224Notes payable
    
    
    
    
    
    
    376Accrued site closure costs
    
    
    14,913
    
    
    
    14,439Non-current liabilities held for sale
    
    
    14,913
    
    
    
    14,815Total liabilities held for sale
    
    
    18,699
    
    
    
    23,039Net assets held for sale
    
    $
    16,799
    
    
    $
    19,575
 9




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 4.
    
    ASSETS HELD FOR SALE (Continued)
 Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Revenue from sale of
minerals (Note 7)
    
    $
    4,733
    
    
    $
    6,751
    
    
    $
    8,095
    
    
    $
    15,106Direct operating costs
    
    
    4,059
    
    
    
    6,608
    
    
    
    7,893
    
    
    
    13,559Depreciation and amortization
    
    
    263
    
    
    
    652
    
    
    
    777
    
    
    
    1,369Accretion expense
    
    
    240
    
    
    
    306
    
    
    
    457
    
    
    
    610Royalty expenses
    
    
    78
    
    
    
    164
    
    
    
    166
    
    
    
    374Exploration and business
development
    
    
    189
    
    
    
    
    
    
    
    189
    
    
    
    Impairment
    
    
    4,564
    
    
    
    
    
    
    
    4,564
    
    
    
    9,393
    
    
    
    7,730
    
    
    
    14,046
    
    
    
    15,912Operating loss
    
    
    (4,660
    )
    
    
    (979
    )
    

    
    (5,951
    )
    
    
    (806
    )Interest expense
    
    
    (24
    )
    
    
    (58
    )
    
    
    (57
    )
    
    
    (124
    )Gain on sale of property,
plant and equipment
    
    
    3,146
    
    
    
    
    
    
    
    3,615
    
    
    
    Realized and unrealized gain
on commodity contracts (Note
7)
    
    
    
    
    
    
    1,685
    
    
    
    38
    
    
    
    1,162(Loss)
income from discontinued operations
    
    $
    (1,538
    )
    
    $
    648
    
    
    $
    (2,355
    )
    
    $
    232Net cash provided
by (used in) operating activities
    
    $
    1,476
    
    
    $
    (1,551
    )
    
    $
    486
    
    
    $
    (1,936
    )Net cash provided by (used
in) investing activities
    
    
    2,220
    
    
    
    (4,342
    )
    
    
    1,321
    
    
    
    (4,874
    )Net cash (used in)
financing activities
    
    
    (935
    )
    
    
    (565
    )
    
    
    (1,390
    )
    
    
    (1,248
    )Net cash inflow (outflow)
from discontinued operations
    
    $
    2,761
    
    
    $
    (6,458
    )
    
    $
    417
    
    
    $
    (8,058
    )
 5.
    
    SHARE CAPITAL
 (a)
    
    Shares issued in 2005
 (i)
    
    On January 7, 2005, the Company completed the second tranche of
a private placement of 4,199,998 units with a purchase price of $0.75 for net
proceeds of $2.8 million, net of expenses $0.3 million and fair value of
brokers compensation warrants of $0.2 million. Each unit is comprised of one
common share of the Company and 0.75 share purchase warrant, with each whole
share purchase warrant exercisable into one common share of the Company for two
years at an exercise price of $1.00 per share. In connection with the
first and second tranches, 1,250,000 broker compensation warrants
were issued. (See Note 5(b) for a description of the broker
compensation warrants.)
 10




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 5.
    
    SHARE CAPITAL (Continued)
 (ii)
    
    During the three months ended June 30, 2005, the Company
restructured its existing earn-in joint venture arrangement with Argonaut at
the Huizopa project in Mexico and issued 1,000,000 common shares to
Argonaut in consideration for such restructuring.
The shares issued were valued at $410,000 and recorded as property,
plant and equipment within the balance sheet. Following this restructuring, the Companys Mexican subsidiary owns Argonauts
former subsidiary which has a contractual interest in two of the concessions at
the project and the Company no longer has any earn-in requirement for the
project, although it will still be responsible for the underlying payments to
the landowner at the project, and the payments and performance or obligations
required to maintain those concessions.(iii)
    
    On June 3, 2005, the Company completed the issuance to Jipangu
Inc. (Jipangu) of 10,000,000 common shares at $0.32 (Cdn$0.40) per share for
proceeds of $3.2 million, net of expense of $32,000.(iv)
    
    The Company issued to BMO Nesbitt Burns Inc. (BMO) on June
30, 2005, as an engagement fee to act as a financial adviser to the Company
with respect to the sale of the Nevada Assets, 350,000 common shares of the
Company and 1,250,000 common share purchase warrants of the Company, with each
warrant immediately exercisable into one common share of the company at an
exercise price of Cdn$0.40 and an expiry date of June 30, 2007. In addition, the
Company has agreed to issue BMO 900,000 common shares of the Company upon
closing if the Company completes or agrees to complete the sale of the Nevada
Assets to Jipangu during the BMO engagement or within the following 12 months.
  11




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 5. SHARE CAPITAL (Continued)
 (b)
    
    Warrants
  Number of
    
    Exercise
    
    ExpiryWarrants
    
    Shares
    
    Price
    
    Date653,277
    
    
    653,277
    
    
    $
    1.67
    
    
    September 26, 200563,969
    
    
    63,969
    
    
    
    1.67
    
    
    October 27, 20051,000,000
    
    
    1,000,000
    
    
    
    0.80
    
    
    October 19, 20061,400,133
    
    
    1,400,133
    
    
    
    0.80
    
    
    November 4, 20063,000,000
    
    
    3,000,000
    
    
    
    2.10
    
    
    December 23, 20066,224,999
    
    
    6,224,999
    
    
    
    1.00
    
    
    December 31, 20063,149,998
    
    
    3,149,998
    
    
    
    1.00
    
    
    January 7, 20071,250,000
    
    
    1,250,000
    
    
    
    0.33
    
    
    June 30, 20075,253,600
    
    
    5,253,600
    
    
    
    0.80
    
    
    November 4, 20071,396,000
    
    
    1,396,000
    
    
    
    0.80
    
    
    November 4, 200723,391,976
    
    
    23,391,976
  (c)
    
    Options
  Performance-basedFixed Stock Options
    
    Stock OptionsWeighted
    
    
    
    
    
    WeightedNumber of
    
    Average
    
    Number of
    
    AverageCommon
    
    Exercise
    
    Common
    
    ExerciseShares
    
    Price
    
    Shares
    
    PriceBalances, December 31, 2004
    
    
    2,196,300
    
    
    $
    2.10
    
    
    
    1,904,756
    
    
    $
    0.80Options granted
    
    
    2,639,700
    
    
    
    0.64
    
    
    
    
    
    
    
    Options cancelled
    
    
    (495,500
    )
    
    
    (1.62
    )
    
    
    
    
    
    
    Balances, June 30, 2005
    
    
    4,340,500
    
    
    $
    1.27
    
    
    
    1,904,756
    
    
    $
    0.80
 12




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 5.
    
    SHARE CAPITAL (Continued)
 (i)
    
    Fixed stock option plan
  Options Outstanding
    
    Options ExercisableWeightedWeighted
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    ExerciseNumber
    
    
    
    Exercise Price
    
    Number
    
    Price perOutstanding
    
    Expiry Date
    
    per Share
    
    Exercisable
    
    Share1,273,900
    
    
    February 18, 2013
    
    $
    2.24
    
    
    
    1,273,900
    
    
    $
    2.242,600
    
    
    March 28, 2013
    
    
    2.34
    
    
    
    2,600
    
    
    
    2.34100,000
    
    
    November 13, 2013
    
    
    1.67
    
    
    
    50,000
    
    
    
    1.67347,000
    
    
    March 10, 2014
    
    
    2.05
    
    
    
    173,500
    
    
    
    2.05111,800
    
    
    May 19, 2014
    
    
    1.44
    
    
    
    55,900
    
    
    
    1.4442,800
    
    
    August 10, 2014
    
    
    0.95
    
    
    
    
    
    
    
    1,200
    
    
    November 10, 2014
    
    
    0.60
    
    
    
    
    
    
    
    2,361,200
    
    
    March 10, 2015
    
    
    0.65
    
    
    
    
    
    
    
    100,000
    
    
    April 6, 2015
    
    
    0.39
    
    
    
    
    
    
    
    4,340,500
    
    
    
    
    $
    1.27
    
    
    
    1,555,900
    
    
    $
    2.17
 (ii)
    
    Performance-based stock option plan
  (d)
    
    Stock-based compensation
  Six months ended June 30,2005
    
    2004Risk free interest rate
    
    
    3.7
    %
    
    
    3.0
    %Dividend yield
    
    
    0
    %
    
    
    0
    %Volatility
    
    
    73
    %
    
    
    54
    %Expected life in years
    
    
    5
    
    
    
    5
 13




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 6.
    
    INCOME TAXES
  7.
    
    FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
 Commodity contracts
   Three months ended
    
    Six months endedJune 30, 2004
    
    June 30, 2004As reported
    
    As restated
    
    As reported
    
    As restatedStatement of OperationsRevenue from discontinued operations (Note 4)
    
    $
    6,580
    
    
    $
    6,751
    
    
    $
    15,035
    
    
    $
    15,106Realized and unrealized gain on commodity
contracts (Note 4)
    
    
    
    
    
    
    1,685
    
    
    
    
    
    
    
    1,162Net loss
    
    
    (10,761
    )
    
    
    (8,905
    )
    
    
    (15,270
    )
    
    
    (14,037
    )Deficit
    
    
    (91,291
    )
    
    
    (90,058
    )
    
    
    (91,291
    )
    
    
    (90,058
    )Basic and diluted loss per share
    
    
    (0.14
    )
    
    
    (0.11
    )
    
    
    (0.20
    )
    
    
    (0.18
    )
 
 14




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 8.
    
    SEGMENTED INFORMATION
   Montana
    
    
    
    
    
    CorporateTunnels
    
    Black Fox
    
    and Other
    
    TotalCash and cash equivalents
    
    $
    26
    
    
    $
    57
    
    
    $
    4,793
    
    
    $
    4,876Other non-cash current assets
    
    
    3,617
    
    
    
    83
    
    
    
    21
    
    
    
    3,7213,643
    
    
    
    140
    
    
    
    4,814
    
    
    
    8,597Property, plant and equipment
    
    
    15,433
    
    
    
    23,049
    
    
    
    1,265
    
    
    
    39,747Restricted certificate of deposit
    
    
    4,440
    
    
    
    551
    
    
    
    180
    
    
    
    5,171Deferred costs and losses
    
    
    
    
    
    
    
    
    
    
    1,037
    
    
    
    1,037Total assets of continuing operations
    
    $
    23,516
    
    
    $
    23,740
    
    
    $
    7,296
    
    
    $
    54,552Current liabilities
    
    $
    6,854
    
    
    $
    364
    
    
    $
    2,288
    
    
    $
    9,506Notes payable and convertible debentures
    
    
    100
    
    
    
    
    
    
    
    6,156
    
    
    
    6,256Accrued site closure costs
    
    
    12,147
    
    
    
    
    
    
    
    
    
    
    
    12,147Total liabilities of continuing operations
    
    $
    19,101
    
    
    $
    364
    
    
    $
    8,444
    
    
    $
    27,909
  Montana
    
    
    
    
    
    CorporateTunnels
    
    Black Fox
    
    and Other
    
    TotalCash and cash equivalents
    
    $
    (260
    )
    
    $
    53
    
    
    $
    7,093
    
    
    $
    6,886Other non-cash current assets
    
    
    4,985
    
    
    
    151
    
    
    
    128
    
    
    
    5,2644,725
    
    
    
    204
    
    
    
    7,221
    
    
    
    12,150Property, plant and equipment
    
    
    17,239
    
    
    
    19,560
    
    
    
    800
    
    
    
    37,599Restricted certificate of deposit
    
    
    3,752
    
    
    
    562
    
    
    
    57
    
    
    
    4,371Deferred costs and losses
    
    
    
    
    
    
    
    
    
    
    901
    
    
    
    901Total assets of continuing operations
    
    $
    25,716
    
    
    $
    20,326
    
    
    $
    8,979
    
    
    $
    55,021Current liabilities
    
    $
    6,943
    
    
    $
    481
    
    
    $
    2,237
    
    
    $
    9,661Notes payable
    
    
    423
    
    
    
    
    
    
    
    5,538
    
    
    
    5,961Accrued site closure costs
    
    
    11,753
    
    
    
    
    
    
    
    
    
    
    
    11,753Total liabilities of continuing operations
    
    $
    19,119
    
    
    $
    481
    
    
    $
    7,775
    
    
    $
    27,375
 15




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 8.
    
    SEGMENTED INFORMATION (Continued)
  Three Months Ended June 30, 2005Montana
    
    
    
    
    
    CorporateTunnels
    
    Black Fox
    
    and Other
    
    TotalRevenue from sale of minerals
    
    $
    10,581
    
    
    $
    
    
    
    $
    
    
    
    $
    10,581Direct operating costs
    
    
    12,622
    
    
    
    
    
    
    
    
    
    
    
    12,622Depreciation and amortization
    
    
    582
    
    
    
    
    
    
    
    32
    
    
    
    614General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    1,216
    
    
    
    1,216Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    152
    
    
    
    152Accretion expense
    
    
    197
    
    
    
    
    
    
    
    
    
    
    
    197Exploration and business development
    
    
    
    
    
    
    
    
    
    
    318
    
    
    
    31813,401
    
    
    
    
    
    
    
    1,718
    
    
    
    15,119Operating loss
    
    
    (2,820
    )
    
    
    
    
    
    
    (1,718
    )
    
    
    (4,538
    )Interest income
    
    
    
    
    
    
    
    
    
    
    69
    
    
    
    69Interest expense
    
    
    (15
    )
    
    
    
    
    
    
    (470
    )
    
    
    (485
    )Foreign exchange loss and other
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    (7
    )Loss from continuing operations
    
    $
    (2,835
    )
    
    $
    
    
    
    $
    (2,126
    )
    
    $
    (4,961
    )Investing activitiesProperty, plant and equipment expenditures
    
    $
    60
    
    
    $
    1,519
    
    
    $
    489
    
    
    $
    2,068
 Six Months Ended June 30, 2005Montana
    
    
    
    
    
    CorporateTunnels
    
    Black Fox
    
    and Other
    
    TotalRevenue from sale of minerals
    
    $
    22,913
    
    
    $
    
    
    
    $
    
    
    
    $
    22,913Direct operating costs
    
    
    26,111
    
    
    
    
    
    
    
    
    
    
    
    26,111Depreciation and amortization
    
    
    1,270
    
    
    
    
    
    
    
    64
    
    
    
    1,334General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    2,866
    
    
    
    2,866Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    354
    
    
    
    354Accretion expense
    
    
    394
    
    
    
    
    
    
    
    
    
    
    
    394Exploration and business development
    
    
    
    
    
    
    
    
    
    
    558
    
    
    
    55827,775
    
    
    
    
    
    
    
    3,842
    
    
    
    31,617Operating loss
    
    
    (4,862
    )
    
    
    
    
    
    
    (3,842
    )
    
    
    (8,704
    )Interest income
    
    
    
    
    
    
    
    
    
    
    173
    
    
    
    173Interest expense
    
    
    (38
    )
    
    
    
    
    
    
    (1,155
    )
    
    
    (1,193
    )Gain on sale of property, plant and equipment
    
    
    1,365
    
    
    
    
    
    
    
    
    
    
    
    1,365Foreign exchange loss and other
    
    
    
    
    
    
    
    
    
    
    (33
    )
    
    
    (33
    )Loss from continuing operations
    
    $
    (3,535
    )
    
    $
    
    
    
    $
    (4,857
    )
    
    $
    (8,392
    )Investing activitiesProperty, plant and equipment expenditures
    
    $
    91
    
    
    $
    3,489
    
    
    $
    529
    
    
    $
    4,109
 16




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 8.
    
    SEGMENTED INFORMATION (Continued)
 Three Months Ended June 30, 2004 (Restated - Note 3(b))Montana
    
    
    
    
    
    CorporateTunnels
    
    Black Fox
    
    and Other
    
    TotalRevenue from sale of minerals
    
    $
    6,525
    
    
    $
    
    
    
    $
    
    
    
    $
    6,525Direct operating costs
    
    
    13,472
    
    
    
    
    
    
    
    
    
    
    
    13,472Depreciation and amortization
    
    
    601
    
    
    
    
    
    
    
    29
    
    
    
    630General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    1,508
    
    
    
    1,508Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    72
    
    
    
    72Accretion expense
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    40Exploration and business development
    
    
    
    
    
    
    
    
    
    
    120
    
    
    
    12014,113
    
    
    
    
    
    
    
    1,729
    
    
    
    15,842Operating income (loss)
    
    
    (7,588
    )
    
    
    
    
    
    
    (1,729
    )
    
    
    (9,317
    )Interest income
    
    
    
    
    
    
    
    
    
    
    103
    
    
    
    103Interest expense
    
    
    (39
    )
    
    
    
    
    
    
    
    
    
    
    (39
    )Foreign exchange loss and other
    
    
    
    
    
    
    
    
    
    
    (300
    )
    
    
    (300
    )Loss from continuing operations
    
    $
    (7,627
    )
    
    $
    
    
    
    $
    (1,926
    )
    
    $
    (9,553
    )Investing activitiesProperty, plant and equipment expenditures
    
    $
    412
    
    
    $
    4,242
    
    
    $
    233
    
    
    $
    4,887
 Six Months Ended June 30, 2004 (Restated - Note 3(b))Montana
    
    
    
    
    
    CorporateTunnels
    
    Black Fox
    
    and Other
    
    TotalRevenue from sale of minerals
    
    $
    18,149
    
    
    $
    
    
    
    $
    
    
    
    $
    18,149Direct operating costs
    
    
    27,188
    
    
    
    
    
    
    
    
    
    
    
    27,188Depreciation and amortization
    
    
    1,177
    
    
    
    
    
    
    
    56
    
    
    
    1,233General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    3,238
    
    
    
    3,238Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    99Accretion expense
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    81Exploration and business development
    
    
    
    
    
    
    
    
    
    
    259
    
    
    
    25928,446
    
    
    
    
    
    
    
    3,652
    
    
    
    32,098Operating income (loss)
    
    
    (10,297
    )
    
    
    
    
    
    
    (3,652
    )
    
    
    (13,949
    )Interest income
    
    
    
    
    
    
    
    
    
    
    251
    
    
    
    251Interest expense
    
    
    (83
    )
    
    
    
    
    
    
    
    
    
    
    (83
    )Foreign exchange loss and other
    
    
    
    
    
    
    
    
    
    
    (488
    )
    
    
    (488
    )Loss from continuing operations
    
    $
    (10,380
    )
    
    $
    
    
    
    $
    (3,889
    )
    
    $
    (14,269
    )Investing activitiesProperty, plant and equipment expenditures
    
    $
    762
    
    
    $
    6,249
    
    
    $
    300
    
    
    $
    7,311
 
 17




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 9.
    
    DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP
   Consolidated Balance Sheet
 Non-
    
    
    
    
    
    
    
    
    
    EquityCurrent
    
    
    
    
    
    
    
    
    
    Current
    
    
    
    
    
    
    
    
    
    ComponentAssets
    
    Property,
    
    
    
    
    
    Assets
    
    
    
    
    
    
    
    
    
    ofHeld For
    
    Plant and
    
    Deferred
    
    Held For
    
    Convertible
    
    Share
    
    Convertible
    
    ContributedSale
    
    Equipment
    
    Financing
    
    Sale
    
    Debentures
    
    Capital
    
    Debentures
    
    Surplus
    
    DeficitAs at June 30,
2005, Canadian GAAP
    
    $
    8,084
    
    
    $
    39,747
    
    
    $
    1,037
    
    
    $
    27,414
    
    
    $
    6,146
    
    
    $
    148,078
    
    
    $
    1,809
    
    
    $
    10,318
    
    
    $
    (117,775
    )Impairment of
property, plant and
equipment and
change in
depreciation (b)
    
    
    
    
    
    
    (4,550
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,550
    )Black Fox
development
costs (c)
    
    
    
    
    
    
    (17,536
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,536
    )Convertible
debenture (d)(i)
    
    
    
    
    
    
    
    
    
    
    288
    
    
    
    
    
    
    
    1,829
    
    
    
    (1
    )
    
    
    (1,809
    )
    
    
    123
    
    
    
    146Convertible
debenture (d)(ii)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,675
    
    
    
    (20,675
    )Flow-through common
shares (f)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (238
    )
    
    
    
    
    
    
    
    
    
    
    238Commencement of
operations at
Standard Mine (h)
    
    
    758
    
    
    
    
    
    
    
    
    
    
    
    (1,072
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (314
    )As at June 30,
2005, U.S. GAAP
    
    $
    8,842
    
    
    $
    17,661
    
    
    $
    1,325
    
    
    $
    26,342
    
    
    $
    7,975
    
    
    $
    147,839
    
    
    $
    
    
    
    $
    31,116
    
    
    $
    (160,466
    )
 Consolidated Balance Sheet
 EquityNon-
    
    
    
    
    
    
    
    
    
    ComponentProperty,
    
    
    
    
    
    Current
    
    
    
    
    
    
    
    
    
    ofPlant and
    
    Deferred
    
    Assets Held
    
    Convertible
    
    Share
    
    Convertible
    
    ContributedEquipment
    
    Financing
    
    For Sale
    
    Debentures
    
    Capital
    
    Debentures
    
    Surplus
    
    DeficitAs at December 31, 2004,
Canadian GAAP
    
    $
    37,599
    
    
    $
    901
    
    
    $
    32,104
    
    
    $
    5,538
    
    
    $
    141,795
    
    
    $
    1,815
    
    
    $
    9,627
    
    
    $
    (107,028
    )Impairment of property,
plant and equipment and
change in depreciation (b)
    
    
    (4,848
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,848
    )Black Fox development
costs (c)
    
    
    (14,048
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,048
    )Convertible debenture (d)(i)
    
    
    
    
    
    
    350
    
    
    
    
    
    
    
    2,321
    
    
    
    
    
    
    
    (1,815
    )
    
    
    123
    
    
    
    (279
    )Convertible debenture (d)(ii)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,675
    
    
    
    (20,675
    )Commodity contracts (e)
    
    
    
    
    
    
    
    
    
    
    (1,340
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,340
    )Flow-through common shares
(f)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (238
    )
    
    
    
    
    
    
    
    
    
    
    238As at December 31, 2004,
U.S. GAAP
    
    $
    18,703
    
    
    $
    1,251
    
    
    $
    30,764
    
    
    $
    7,859
    
    
    $
    141,557
    
    
    $
    
    
    
    $
    30,425
    
    
    $
    (147,980
    )
 18




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 9.
    
    DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP (Continued)
  For the three months ended June 30,2005
    
    2004(Restated - Notes3(b) and 9(e))(Loss) from continuing operations for the period
based on Canadian GAAP
    
    $
    (4,961
    )
    
    $
    (9,553
    )Change in depreciation of property, plant and equipment (b)
    
    
    136
    
    
    
    155Black Fox development costs (c)
    
    
    (1,518
    )
    
    
    (4,255
    )Convertible debenture ((d)(i))
    
    
    114
    
    
    
    (Loss) from continuing operations for the period based on
U.S. GAAP
    
    
    (6,229
    )
    
    
    (13,653
    )(Loss) income from discontinued operations for the period
based on Canadian GAAP
    
    
    (1,538
    )
    
    
    648Commodity contracts loss (e)
    
    
    335
    
    
    
    1,005(Loss) income from discontinued operations for the period
based on US GAAP
    
    
    (1,203
    )
    
    
    1,653Net loss for the period based on U.S. GAAP
    
    $
    (7,432
    )
    
    $
    (12,000
    )Comprehensive loss
    
    $
    (7,432
    )
    
    $
    (12,000
    )Basic and diluted loss (income) per share in accordance
with U.S. GAAP:Continuing operations
    
    $
    (0.07
    )
    
    $
    (0.17
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.02Net loss per share  U.S. GAAP basic and diluted
    
    $
    (0.08
    )
    
    $
    (0.15
    )
 19




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 9.
    
    DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP (Continued)
 For the six months ended June 30,2005
    
    2004(Restated - Notes3(b) and 9(e))(Loss) from continuing operations for the period
based on Canadian GAAP
    
    $
    (8,392
    )
    
    $
    (14,269
    )Cumulative effect of change in accounting policy (a)
    
    
    
    
    
    
    (1,508
    )Change in depreciation of property, plant and equipment (b)
    
    
    298
    
    
    
    297Black Fox development costs (c)
    
    
    (3,488
    )
    
    
    (6,250
    )Convertible debenture ((d)(i))
    
    
    425
    
    
    
    (Loss) from continuing operations for the period based on
U.S. GAAP
    
    
    (11,157
    )
    
    
    (21,730
    )(Loss) income from discontinued operations for the period
based on Canadian GAAP
    
    
    (2,355
    )
    
    
    232Commodity contracts loss (e)
    
    
    1,340
    
    
    
    2,010Standard Mine development costs (h)
    
    
    (314
    )
    
    
    (Loss) income from discontinued operations for the period
based on U.S. GAAP
    
    
    (1,329
    )
    
    
    2,242Net loss for the period based on U.S. GAAP
    
    $
    (12,486
    )
    
    $
    (19,488
    )Comprehensive loss
    
    $
    (12,486
    )
    
    $
    (19,488
    )Basic and diluted loss (income) per share in accordance
with U.S. GAAP:Continuing operations
    
    $
    (0.12
    )
    
    $
    (0.28
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.03Net loss per share  U.S. GAAP basic and diluted
    
    $
    (0.13
    )
    
    $
    (0.25
    )
 20




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 9.
    
    DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP (Continued)
 (a)
    
    Stock-based compensation
 Accounting for
Stock-Based Compensation  Transition and Disclosure. Accounting for Stock Issued to Employees
 (b)
    
    Impairment of property, plant and equipment
  (c)
    
    Black Fox Project
  (d)
    
    Convertible debenture
 (i)
    
    Under Canadian GAAP, the convertible debentures issued in
November 2004 were recorded as a compound financial instrument including
detachable note warrants. Under U.S. GAAP, the detachable note warrant is
similarly treated as an equity instrument with the remainder of the convertible
debentures treated as a liability. Further, under U.S. GAAP, the beneficial
conversion feature determined using the effective conversion price based on the
proceeds allocated to the convertible debenture in accordance with EITF 00-27,
Application of Issue No. 98-5 to Certain Convertible Instruments, is
allocated to contributed surplus. This discount on the debenture is recognized
as additional interest expense immediately as the debt is convertible at the
date of issuance. Canadian GAAP does not require the recognition of any
beneficial conversion feature.(ii)
    
    Under Canadian GAAP, the convertible debentures were recorded
as an equity instrument on issuance in March 2002. Under U.S. GAAP, on
issuance, the convertible debenture would have been recorded as a liability and
reclassified to equity only upon conversion. Further, under U.S. GAAP, the
beneficial conversion feature represented by the excess of the fair value of
the shares and warrants issuable on conversion of the debenture, measured on
the commitment
 21




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 9.
    
    DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP (Continued)
  (e)
    
    Non-current assets held for sale (Commodity contracts)
  (f)
    
    Flow-through common shares
   (g)
    
    Comprehensive income
 Reporting Comprehensive Income
 22




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##### Table of Contents



APOLLO GOLD CORPORATION
Notes to the Consolidated Financial Statements
Six month period ended June 30, 2005
(Stated in United States Dollars; tabular amounts in thousands,
except for share and per share amounts)
(Unaudited)
 
 9.
    
    DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP (Continued)
 (h)
    
    Commencement of operations at Standard Mine
  23




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 All Dollar amounts are expressed in United States Dollars
     2.1 RECONCILATION OF CASH OPERATING AND TOTAL PRODUCTION COSTS PER OUNCE
 Three months ended
    
    Six months endedJune 30,
    
    June 30,($ in thousands)
    
    2005
    
    2004
    
    2005
    
    2004(as restated)
    
    
    
    
    
    (as restated)Gold ounces sold
    
    
    12,324
    
    
    
    5,903
    
    
    
    24,969
    
    
    
    16,686Direct operating costs
    
    $
    12,622
    
    
    $
    13,472
    
    
    $
    26,111
    
    
    $
    27,188Less: Mining taxes, royalty expenses
    
    
    345
    
    
    
    238
    
    
    
    751
    
    
    
    614By-product credits
    
    
    5,346
    
    
    
    4,334
    
    
    
    12,351
    
    
    
    11,568Cash operating cost
    
    
    6,931
    
    
    
    8,900
    
    
    
    13,009
    
    
    
    15,006Cash operating cost per ounce
    
    $
    562
    
    
    $
    1,508
    
    
    $
    521
    
    
    $
    899Cash operating costs
    
    
    6,931
    
    
    
    8,900
    
    
    
    13,009
    
    
    
    15,006Add: Mining taxes, royalty expenses
    
    
    345
    
    
    
    238
    
    
    
    751
    
    
    
    614Total cash costs
    
    
    7,276
    
    
    
    9,138
    
    
    
    13,760
    
    
    
    15,620Total cash cost per ounce
    
    $
    590
    
    
    $
    1,548
    
    
    $
    551
    
    
    $
    936Total cash costs
    
    
    7,276
    
    
    
    9,138
    
    
    
    13,760
    
    
    
    15,620Add: Depreciation & amortization (operations
only)
    
    
    582
    
    
    
    601
    
    
    
    1,270
    
    
    
    1,177Total production costs
    
    
    7,858
    
    
    
    9,739
    
    
    
    15,030
    
    
    
    16,797Total production cost per ounce
    
    $
    638
    
    
    $
    1,650
    
    
    $
    602
    
    
    $
    1,007
  24




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##### Table of Contents



2.2 BACKGROUND AND RECENT DEVELOPMENTS
       Montana Tunnels Production & Metals Price Averages
 Six months ended
    
    Year ended
    
    Year endedJune 30,
    
    December 31,
    
    December 31,2005
    
    2004
    
    2003Production:Gold (ounces)
    
    
    24,969
    
    
    
    33,743
    
    
    
    44,124Silver (ounces)
    
    
    291,743
    
    
    
    970,751
    
    
    
    411,176Lead (pounds)
    
    
    5,883,678
    
    
    
    10,064,265
    
    
    
    10,843,184Zinc (pounds)
    
    
    12,398,385
    
    
    
    26,222,805
    
    
    
    21,792,452Average metal prices:Gold  London bullion mkt. ($/ounce)
    
    $
    427
    
    
    $
    409
    
    
    $
    364Silver  London bullion mkt. ($/ounce)
    
    $
    7.06
    
    
    $
    6.66
    
    
    $
    4.88Lead  LME ($/pound)
    
    $
    0.45
    
    
    $
    0.40
    
    
    $
    0.23Zinc  LME ($/pound)
    
    $
    0.59
    
    
    $
    0.48
    
    
    $
    0.38
  25




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##### Table of Contents





2.3 MATERIAL CHANGES IN RESULTS OF OPERATIONS


Three Months Ended June 30, 2005 Compared to the Three Months Ended June 30, 2004










26



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##### Table of Contents



2005
    
    2004Second Quarter
    
    Second Quarter(as restated)Tons mined
    
    
    3,993,151
    
    
    
    8,856,053Tons milled
    
    
    1,254,997
    
    
    
    1,157,512Gold grade oz/ton
    
    
    0.0135
    
    
    
    0.0086Zinc grade %
    
    
    0.34
    
    
    
    0.41Strip ratio
    
    
    3.1:1
    
    
    
    6.5:1Production payable:Gold ounces
    
    
    12,324
    
    
    
    5,903Silver ounces
    
    
    127,737
    
    
    
    224,911Lead pounds
    
    
    2,759,586
    
    
    
    1,723,835Zinc pounds
    
    
    5,977,956
    
    
    
    5,974,314Total cash costs per ounce
    
    $
    590
    
    
    $
    1,548Total production costs per ounce
    
    $
    638
    
    
    $
    1,650Total revenue ($millions)
    
    $
    10.6
    
    
    $
    6.5Capital expenditures ($millions)
    
    $
    0.1
    
    
    $
    0.1
   2.3.1 Operating Expenses and Costs
    27




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##### Table of Contents



2.3.2 Loss from Discontinued Operations
  2.3.3 Florida Canyon
   2005
    
    2004Second Quarter
    
    Second Quarter(as restated)Tons mined
    
    
    0
    
    
    
    6,477,132Gold production  ounces
    
    
    8,750
    
    
    
    18,442Silver production  ounces
    
    
    6,130
    
    
    
    17,160Total cash costs per ounce
    
    $
    345
    
    
    $
    361Total
production costs per ounce
    
    $
    392
    
    
    $
    397Total revenue ($ millions)
    
    $
    3.5
    
    
    $
    6.6Capital expenditures ($ millions)
    
    $
    0.0
    
    
    $
    0.2
  28




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##### Table of Contents



2.3.4 Standard Mine
   2005
    
    2004Second Quarter
    
    Second QuarterOre mined  tons
    
    
    1,239,513
    
    
    Not in productionWaste mined  tons
    
    
    1,517,795Total tons mined
    
    
    2,757,308Strip ratio
    
    
    1.22Grade of gold  ozs/ton
    
    
    0.0173Gold production  ounces
    
    
    5,937Silver production  ounces
    
    
    19,602Capital expenditures ($millions)
    
    $
    1.2
    
    
    $
    2.7
    2.4 SIX MONTHS ENDED JUNE 30, 2005 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2004
   29




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##### Table of Contents



2005
    
    2004Six Months
    
    Six Months(as restated)Tons mined
    
    
    9,388,974
    
    
    
    17,788,333Tons milled
    
    
    2,665,779
    
    
    
    2,266,101Production:Gold grade oz/ton
    
    
    0.013
    
    
    
    0.011Zinc grade %
    
    
    0.34
    
    
    
    0.50Gold ounces
    
    
    24,969
    
    
    
    16,686Silver ounces
    
    
    291,743
    
    
    
    343,669Lead pounds
    
    
    5,883,678
    
    
    
    4,867,228Zinc pounds
    
    
    12,398,385
    
    
    
    15,014,586Total cash costs per ounce
    
    $
    551
    
    
    $
    936Total production costs per ounce
    
    $
    602
    
    
    $
    1,007Total revenue ($millions)
    
    $
    22.9
    
    
    $
    18.1Capital expenditures ($millions)
    
    $
    0.1
    
    
    $
    0.8
   2.4.1 Costs
  30




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##### Table of Contents



2.4.2 Income (loss) from Discontinued Operations
  2.4.3 Florida Canyon
  31




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##### Table of Contents



2005
    
    2004Six Months
    
    Six Months(as restated)Tons mined
    
    
    960,292
    
    
    
    12,866,814Gold production  ounces
    
    
    18,596
    
    
    
    40,829Silver production  ounces
    
    
    12,529
    
    
    
    37,215Total cash costs per ounce
    
    $
    371
    
    
    $
    335Total production costs per ounce
    
    $
    420
    
    
    $
    369Total revenue ($ millions)
    
    $
    6.7
    
    
    $
    15.0Capital expenditures ($ millions)
    
    $
    0.0
    
    
    $
    0.4
   2.4.4 Standard Mine
   2005
    
    2004Six Months
    
    Six MonthsOre mined  tons
    
    
    2,013,185
    
    
    Not in productionWaste mined  tons
    
    
    2,756,834Total tons mined
    
    
    4,770,019Strip ratio
    
    
    1.37Grade of gold ozs/ton
    
    
    0.0169Gold production  ounces
    
    
    9,540Silver production  ounces
    
    
    10,072Capital expenditures ($ millions)
    
    $
    2.4
    
    
    $
    3.2
   32




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##### Table of Contents



3.0 MATERIAL CHANGES IN LIQUIDITY
       4.0 DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
  33




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##### Table of Contents



5.0 CRITICAL ACCOUNTING ESTIMATES AND POLICIES
    6.0 CONTRACTUAL OBLIGATIONS
  7.0 OFF BALANCE SHEET ARRANGEMENTS
  8.0 ENVIRONMENTAL
  34




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
  Interest Rate Risk
  Foreign Currency Exchange Rate Risk
  Commodity Price Risk
  
 ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   35




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##### Table of Contents



36




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##### Table of Contents



PART II OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY IN SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    BrokerVotes Against/
    
    
    Votes
    
    
    Non-Proposal
    
    Votes for
    
    
    Withheld
    
    
    Abstained
    
    
    Votes(i) Election of Managements Slate of Director:Robert W. Babensee
    
    
    41,209,311
    
    
    
    1,482,099
    
    
    
    
    
    
    
    Richard P. Graff
    
    
    41,209,129
    
    
    
    1,482,099
    
    
    
    
    
    
    
    G. Michael Hobart
    
    
    41,031,412
    
    
    
    1,482,099
    
    
    
    
    
    
    
    R. David Russell
    
    
    39,391,162
    
    
    
    1,482,099
    
    
    
    
    
    
    
    Charles E. Stott
    
    
    41,097,895
    
    
    
    1,482,099
    
    
    
    
    
    
    
    W.S. (Steve) Vaughan
    
    
    41,034,585
    
    
    
    1,482,099
    
    
    
    
    
    
    
    (ii) Ratification of Deloitte & Touche LLP:
    
    
    41,302,817
    
    
    
    224,561
    (1)
    
    
    
    
    
    
    (iii) Approval of Stock Option Incentive Plan, as amended:
    
    
    4,917,742
    
    
    
    12,896,996
    (1)
    
    
    
    
    
    
    
 
 (1)
    
    Based on the records of the Companys scrutineer for the meeting, this number may include votes abstained and/or broker non-votes. 
 ITEM 5. OTHER INFORMATION
  
 ITEM
6. EXHIBITS
 Exhibit No.
    
    Title of Exhibit4.1
    
    

Subscription
for Shares dated June 1, 2005, by and between Apollo Gold
Corporation and Jipangu Inc.4.2
    
    
    Registration
Rights Agreement dated June 1, 2005, by and between Apollo Gold
Corporation and Jipangu Inc.4.3
    
    
    Subscription
Details dated June 30, 2005, by and between Apollo Gold
Corporation and BMO Nesbitt Burns Inc.31.1
    
    
    Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act31.2
    
    
    Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act32.1
    
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act
 37




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##### Table of Contents



SIGNATURES
  APOLLO GOLD CORPORATIONDate: August 9, 2005
    
    /s/ R. David RussellR. David Russell, President and
Chief Executive OfficerDate: August 9, 2005
    
    /s/ Melvyn WilliamsMelvyn Williams,
Chief Financial Officer and Senior Vice
President Finance and Corporate Development
 38




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##### Table of Contents



Index to Exhibits
 Exhibit No.
    
    Title of Exhibit4.1
    
    

Subscription
for Shares dated June 1, 2005, by and between Apollo Gold
Corporation and Jipangu Inc.4.2
    
    
    Registration
Rights Agreement dated June 1, 2005, by and between Apollo Gold
Corporation and Jipangu Inc.4.3
    
    
    Subscription
Details dated June 30, 2005 by and between Apollo Gold
Corporation and BMO Nesbitt Burns Inc.31.1
    
    
    Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act31.2
    
    
    Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act32.1
    
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act