Document:

EXHIBIT  10.8

                                    SUBLEASE
                                    --------

THIS  SUBLEASE, made and entered into this 30 day of June, 2003, between Newport
Corporation,  a  Nevada  corporation  ("SUBLESSOR")  and  APA  Optics,  Inc.,  a
Minnesota  corporation  ("SUBLESSEE").

RECITALS:

     A.     A  lease  ("PRIME  LEASE")  dated  December  22,  1995, was made and
entered  into between Bass Lake Properties Partnership, L.L.P., as Landlord, and
Newport  Corporation,  as  Tenant,  and  whereas Bass Lake Properties Realty has
succeeded  to  interest of the Landlord pertaining to Premises described as 5480
Nathan  Lane, City of Plymouth, County of Hennepin, State of Minnesota and which
Prime  Lease  and  all  Amendments  are  attached  hereto  as  Exhibit  A.
                                                               ----------

     B.     The parties hereto desire that the Sublessor sublet to the Sublessee
and  that  the  Sublessee  take  from  the Sublessor the portion of the Premises
leased  under  the  Prime  Lease  containing approximately 37,020 square feet of
rentable  area  (hereinafter  referred  to  as the "Sublet Area") as depicted on
Exhibit  B,  attached  hereto  and  made  a  part  hereof.
----------

     NOW,  THEREFORE,  in  consideration  of  the  foregoing premises and of the
mutual  covenants  hereinafter  contained, but subject to the consent thereto by
Landlord,  the  Sublessor  does hereby sublet to the Sublessee and the Sublessee
does  hereby  rent  and  take  from  Sublessor,  the Sublet Area, subject to the
following  terms  and  conditions:

1.   Sublease  Term.  The term of this Sublease shall commence on that date (the
     --------------
     "Commencement  Date") which is the earlier of (a) September 1, 2003 and (b)
     the date Sublessee takes possession of the Sublet Area, and shall terminate
     June  30,  2006 (the "Sublease Term"). Sublessee may take possession of the
     Premises  at  any  time  after  approval  of  this Sublease by Landlord, at
     Sublessee's  option.  Without the further act or deed of the Landlord or of
     either  party hereto the term of this Sublease shall terminate and be of no
     further  force  or  effect  on  the  date  set  forth  above  and upon such
     termination  the Sublessee shall immediately vacate the Sublet Area leaving
     it  in  the condition which, under the terms of the Prime Lease, the Tenant
     thereunder  is  obligated  to  leave  the  same.

2.   Rent  and  Utilities.
     --------------------

     (a)  Gross  Rent.  The  Sublessee shall pay to the Sublessor Gross Rent for
          -----------
          the Sublet Area in the amount of Eighteen Thousand Twenty-Five Dollars
          ($18,025.00)  per  month  (the "Gross Rent"), in advance, on the first
          day  of  each  month  during the Sublease Term commencing September 1,
          2003, without deduction, abatement, set-off, prior notice or demand of
          any  kind.  Except as set forth in subparagraph 2(b) below, such Gross
          Rent  includes  all  taxes,  operating  expenses  and  common  area
          maintenance  charges  relating  to  the  Sublet  Area.

     (b)  Utilities.  From  and after the Commencement Date, the Sublessee shall
          be  responsible  for all costs of "Utilities" (as hereinafter defined)
          provided  to  or  used  by  the  Sublet  Area. As soon as practicable,
          Sublessee  shall  transfer  all  accounts  relating  to Utilities into
          Sublessee's name, and shall pay all costs of Utilities directly to the
          Utility  companies.  Sublessor  shall  cooperate  with  Sublessee  in
          effecting such transfer. Pending such transfer, Sublessee shall pay to
          Sublessee,  as additional rent, an amount equal to all Utility charges
          billed  directly  to  Sublessor.  As used herein, the term "Utilities"
          shall  mean  all  services  generally  considered  to  be  utilities,
          including  but  not  limited to electricity, gas, [water,] trash/waste
          disposal,  janitorial,  phone  service,  and  Internet  service.

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     (c)  Payment.  All  rent  shall be paid to the Sublessor at the address set
          -------
          forth  in  Paragraph  7 hereof or at such other address and/or to such
          other party as the Sublessor may from time to time elect by giving not
          less  than  ten  (10)  days  advance  written  notice  thereof  to the
          Sublessee.

3.   Use.  The  Sublessee  may use the Sublet Area for general office, warehouse
     ---
     and  light manufacturing purposes and for no other purposes whatsoever. The
     Sublessee  will  not  use  the Sublet Area or permit the Sublet Area or any
     part  of the Property of which it is a part, to be used in violation of (a)
     any  of  the  terms, covenants or conditions of the Prime Lease, or (b) any
     laws,  ordinances,  regulations  or  requirements  of  any  governmental or
     quasi-governmental  authority  having  jurisdiction  over  the Sublet Area.

4.   Prime  Lease.
     ------------

     (a)  Incorporation  of  Prime  Lease.  Except  as expressly provided to the
          -----------------------------
          contrary  herein,  all  of  the  terms,  covenants,  conditions,  and
          restrictions  of the Prime Lease (including Exhibits A and D through H
          thereto) are incorporated herein by this reference as though fully set
          forth at length. Sublessee takes the Sublet Area, and this Sublease is
          expressly  made,  subject  to all of the terms, covenants, conditions,
          and  restrictions  of  the  Prime  Lease.  Except  as modified by this
          Sublease,  Sublessee  shall  comply  with  and  be bound by all of the
          terms,  covenants, conditions, and restrictions contained in the Prime
          Lease,  and  shall  perform  all  of Sublessor's obligations under the
          Prime  Lease.  When  the context requires, each reference in the Prime
          Lease  to  Lessor  shall  be  deemed  to  refer to Sublessor, and each
          reference  therein to Lessee shall be deemed to refer to Sublessee. As
          between  Sublessor  and Sublessee, any inconsistency between the terms
          of the Prime Lease and the terms of this Sublease shall be governed by
          the terms of this Sublease. Sublessee acknowledges and represents that
          it  has  received  and reviewed the Prime Lease. If the Prime Lease is
          terminated,  this  Sublease  shall  terminate  simultaneously  and any
          unearned  rent  paid  in  advance  shall  be  refunded  to  Sublessee.
          Sublessee  shall be bound to Sublessor (in addition to Landlord) under
          the same terms and conditions of the Prime Lease as if the Prime Lease
          had  been  an instrument executed between Sublessor and Sublessee, but
          subject  to  the  terms  and  conditions  of  this  Sublease.

     (b)  Variations  from  Prime Lease. Sections 4, 5, 6, 9 and 25 of the Prime
          -----------------------------
          Lease,  Exhibit  E  to  the  Prime  Lease and Sections 1-5, 7 and 8 of
          Exhibit  H  to  the  Prime  Lease  shall  not  apply to this Sublease.

     (c)  Performance  Under  Prime  Lease.  Sublessor's  performance under this
          --------------------------------
          Sublease  shall  be  subject  to  the  following  provisions:

          (i)  Sublessee  recognizes  that  Sublessor  is  not  in a position to
               render  any  of the services or to perform any of the obligations
               required  of  the  Landlord  by  the  terms  of  the Prime Lease.
               Therefore,  notwithstanding anything to the contrary contained in
               this  Sublease, Sublessee agrees that performance by Sublessor of
               its obligations hereunder are conditional upon due performance by
               the  Landlord  of  its  corresponding obligations under the Prime
               Lease,  and  Sublessor  shall  not be liable to Sublessee for any
               default  of  the  Landlord under the Prime Lease. Sublessee shall
               not  have any claim against Sublessor by reason of the Landlord's
               failure  or  refusal  to comply with any of the provisions of the
               Prime  Lease  unless  such  failure  or  refusal  is  a result of
               Sublessor's  act or failure to act. This Sublease shall remain in
               full  force  and  effect  notwithstanding  Landlord's  failure or
               refusal to comply with any such provisions of the Prime Lease and
               Sublessee  shall  pay  rent  and  additional  rent  and all other
               charges  provided  for herein without any abatement, deduction or
               setoff whatsoever. Sublessee covenants and warrants that it fully
               understands and agrees to be subject to, and bound by, all of the
               covenants,  agreements,  terms,  provisions and conditions of the
               Prime  Lease,  except  as modified herein. Furthermore, Sublessee
               and  Sublessor  further  covenant not to take any action or do or
               perform  any act or fail to perform any act which would result in
               the failure or breach of any of the covenants, agreements, terms,
               provisions  or  conditions  of the Prime Lease on the part of the
               Lessee  thereunder.

          (ii) Whenever  the  consent  of  Landlord  shall  be  required  by, or
               Landlord  shall  fail to perform its obligations under, the Prime
               Lease, Sublessor agrees to use commercially reasonable efforts to
               obtain, at Sublessee's sole cost and expense, such consent and/or
               performance  on  behalf  of  Sublessee.

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          (iii)  To  its  actual knowledge, Sublessor represents and warrants to
               Sublessee  that  the Prime Lease is in full force and effect, and
               Sublessor  has  neither  given  nor  received a notice of default
               pursuant  to  the  Prime  Lease.

          (iv) Sublessor agrees not to terminate the Prime Lease voluntarily, or
               modify  the  Prime  Lease  in  a  manner  that  adversely affects
               Sublessee's  rights  under this Sublease. Sublessee and Sublessor
               shall  each refrain from any act or omission that would result in
               the  failure  or  breach  of  any of the covenants, provisions or
               conditions of the Prime Lease on the part of the Lessee under the
               Prime  Lease.

     (d)  Indemnity.  Sublessee shall indemnify and hold Sublessor harmless from
          ---------
          any  and  all  liability,  cost,  expense,  action  or claim of nature
          (including  defaults  under  Prime Lease) arising out of or related to
          Sublessee's  use  and  occupancy  of  the  Sublet  Area.

     (e)  Landlord's  Approval.  Landlord's  written consent to this Sublease in
          --------------------
          accordance with the terms of the Prime Lease is a condition subsequent
          to  the  validity  of  this  Sublease.

5.   Hazardous  Materials.
     --------------------

     (a)  The  term "Hazardous Material" as used in this Sublease shall mean any
          product,  substance,  chemical,  material  or  waste  whose  presence,
          nature,  quantity  and/or  intensity  of  existence, use, manufacture,
          disposal,  transportation,  spill, release or effect, either by itself
          or in combination with other materials expected to be on the premises,
          is  either:  (i) potentially injurious to the public health, safety or
          welfare, the environment, or the Property; (ii) regulated or monitored
          by  any  governmental  authority;  or  (iii)  a  basis  for  potential
          liability of Sublessor to any governmental agency or third party under
          any applicable statute or common law theory. Hazardous Materials shall
          include,  but  not  be  limited to, hydrocarbons, petroleum, gasoline,
          crude  oil  or  any  products or by-products thereof. "Reportable Use"
          shall  mean  (i)  the installation or use of any above or below-ground
          storage  tank(s),  (ii)  the  generation,  possession,  storage,  use,
          transportation,  or  disposal  of a Hazardous Material that requires a
          permit  from,  or with respect to which a report, notice, registration
          or  business  plan  is  required  to  be filled with, any governmental
          authority,  and  (iii)  the  presence in, on, over, under or about the
          Sublet  Area  of  Hazardous  Materials  with  respect  to  which  any
          applicable  laws require that a notice be given to persons entering or
          occupying  the  Sublet  Area  or  neighboring  properties.

     (b)  Sublessee shall not engage in any activity in or about the Sublet Area
          which  constitutes a Reportable Use of Hazardous Materials without the
          express  prior  written  consent  of  Sublessor.  Notwithstanding  the
          foregoing,  Sublessee may, without Sublessor's prior consent, but upon
          notice  to  Sublessor  and  in  compliance  with  all  applicable
          requirements,  use  any  ordinary  and  customary materials reasonably
          required to be used by Sublessee in the normal course of the permitted
          use,  so  long as such use is not a Reportable Use and does not expose
          the  Sublet  Area,  the  Property  or  neighboring  properties  to any
          meaningful  risk of contamination or damage or expose Sublessor to any
          liability  therefor.  Prior  to  bringing Hazardous Materials upon the
          Sublet Area or the Property, Sublessee shall submit a list of proposed
          Hazardous  Materials  to  the attention of Sublessor's Safety Officer.
          Sublessor  shall have a period of fifteen (15) days in which to review
          and  either  approve  or  disapprove  of  such  Hazardous  Materials.
          Sublessor  may  (but  without  any  obligation to do so) condition its
          consent  to any Reportable Use of any Hazardous Materials by Sublessee
          upon  Sublessee's  giving  Sublessor  such  additional  assurances  as
          Sublessor,  in  its  reasonable discretion, deems necessary to protect
          itself,  the public, the Sublet Area, the Property and the environment
          against  damage,  contamination  or  injury and/or liability therefor,
          including  but  not  limited  to  the  installation  (and, at Lessor's
          option,  removal  on  or  before  Sublease  expiration  or  earlier
          termination)  of  reasonably necessary protective modifications to the
          Sublet  Area  (such  as concrete encasements) and/or the deposit of an
          additional  Security  Deposit.

     (c)  If Sublessee knows, or has reasonable cause to believe, that Hazardous
          Materials  have  come  to be located in, on, under or about the Sublet
          Area  or  the  Property,  other  than  as  previously  consented to by
          Sublessor,  Sublessee  shall immediately give Sublessor written notice
          thereof,  together  with  a  copy  of  any  statement, report, notice,
          registration,  application,  permit,  business  plan,  license, claim,
          action,  or  proceeding  given  to, or received from, any governmental
          authority  or  private  party concerning the presence, spill, release,
          discharge of, or exposure to, such Hazardous Materials, including, but
          not  limited  to,  all  such  documents  as  may  be  involved

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          in  any  Reportable Use involving the Sublet Area. Sublessee shall not
          cause  or permit any Hazardous Materials to be spilled or released in,
          on,  under  or  about  the Sublet Area (including, without limitation,
          through  the  plumbing  or  sanitary  sewer  system).

     (d)  Sublessee  shall  indemnity,  protect,  defend and hold Sublessor, its
          agents, employees, lenders and ground lessor, if any, the Property and
          the  Sublet  Area,  harmless  from  and  against  any and all damages,
          liabilities,  judgments,  costs,  claims,  liens, expenses, penalties,
          loss of permits and attorneys' and consultants' fees arising out of or
          involving  any  Hazardous Materials brought onto the Sublet Area by or
          for  Sublessee  of  by  anyone  under Sublessee's control. Sublessee's
          obligations  under  this Article shall include, but not be limited to,
          the  effects of any contamination or injury to person, property or the
          environment  created  or  suffered  by  Sublessee,  and  the  cost  of
          investigation  (including  consultants'  and  attorneys'  fees  and
          testing),  removal, remediation, restoration and/or abatement thereof,
          or  of  any  contamination  therein  involved,  and  shall survive the
          expiration  or  earlier  termination of this Sublease. No termination,
          cancellation  or  release  agreement  entered  into  by  Sublessor and
          Sublessee  shall  release  Sublessee  from  its obligations under this
          Sublease  with  respect to Hazardous Materials, unless specifically so
          agreed  by  Sublessor  in  writing  at  the  time  of  such agreement.

     (e)  Sublessee  shall  be  solely responsible for instructing its employees
          with  respect  to  laws  relating  to  Hazardous Materials compliance.

     (f)  The  requirements of this paragraph are in addition to and not in lieu
          of  those  set  forth  in  the  Prime  Lease.

6.   Notices  to  Landlord.  The Sublessee will notify the Landlord forthwith in
     ---------------------
     the  event of any default that occurs under the provisions of this Sublease
     which  comes  to the attention of the Sublessee, such notice to be given to
     the  Landlord  by  United  States  Mail,  registered  or certified, postage
     prepaid,  at the address provided for Landlord in the preamble to the Prime
     Lease  or  as  such  other  address  as  Tenant  shall be advised to use by
     Landlord.

7.   Notices. Any notice provided for herein shall be deemed to be duly given if
     -------
     made  in  writing  and  delivered  in  person to an office of such party or
     mailed  by  first  class  registered  or  certified  mail, postage prepaid,
     addressed  as  follows:

          If  to  Sublessor:          Newport  Corporation
                                      C/O Vice President Finance and Treasurer
                                      1791  Deere  Avenue
                                      Irvine,  CA  92606

          If  to  Sublessee:          APA  Optics
                                      C/O  President
                                      5480  Nathan  Lane  N
                                      Plymouth,  MN  55447

     or  to such other address with respect to either party hereto as such party
     shall  notify  the  other  party hereto in writing. Any notice so given, if
     mailed as aforesaid, shall be deemed received the second (2nd) day after it
     is  deposited  in  the  United  States  Mail.

8.   Limitation  of  Liability. Neither Sublessor or Landlord shall be liable to
     -------------------------
     Sublessee,  or those claiming through or under Sublessee, for injury, death
     or  property  damage occurring in, on or about the Sublet Area to Sublessee
     or  an  employee,  customer or invitee of the Sublessee and Sublessee shall
     indemnify  Sublessor  and Landlord and hold them harmless from any claim or
     damage arising out of any injury, death or property damage occurring in, on
     or  about  the Sublet Area to Sublessee or an employee, customer or invitee
     of  the  Sublessee.

9.   Insurance.
     ---------

     (a)  Sublessee shall, at its expense, maintain general commercial liability
          insurance  during  the  term of this Sublease as required by the Prime
          Lease  (See Exhibit A, Article II) in one or more companies acceptable
          to Sublessor and Landlord, naming Sublessor, Landlord and Sublessee as
          insureds, in form and substance reasonably

                                       18
<PAGE>
          acceptable  to  Sublessor  and  Landlord  (such  insurance  to  insure
          performance  by  Sublessee  or  its  obligations  under  paragraph  10
          hereof), such insurance to be in those amounts as set forth under said
          Article of the Prime Lease. Such insurance shall not relieve Sublessee
          of  its  obligations  under  paragraph  8.  Such  insurance  shall
          specifically  insure  the  performance  by  Sublessee of the indemnity
          obligations  contained  in paragraph 8. If Sublessee fails to maintain
          the  insurance  required  to  be  obtained  by  Sublessee  under  this
          paragraph  and  as provided in the Prime Lease, Sublessor may, without
          any  obligation  to  do  so,  obtain  the same at Sublessee's expense.

     (b)  No  policy of insurance obtained by the Sublessee under the provisions
          of this paragraph 9 may be canceled or terminated except upon not less
          than  twenty  (20)  days written notice to Sublessor and Landlord, and
          each  policy  shall contain a provision to that effect that the rights
          of  the  Sublessor and Landlord thereunder will not be affected by any
          defense  which the insurer may have against the Sublessee or any other
          party.  True  and  correct  copies  of  each  policy of insurance, and
          renewals  thereof,  obtained  by the Sublessee under the provisions of
          this paragraph 9, forthwith after issuance thereof, shall be delivered
          to  the  Sublessor  and  to  Landlord.

     (c)  The  parties,  on  behalf  of  their  respective  insurance  companies
          insuring such losses, waive any right of subrogation that one may have
          against  the  other.

10.  Right  of  Entry.  The  Sublessor  and Landlord, their authorized agents or
     ----------------
     attorneys,  may  at  any reasonable time, enter the Sublet Area to inspect,
     make  repairs,  improvements  and/or  changes  in  the Sublet Area or other
     premises  in  the  Property  of  which  the  Sublet  Area  is a part as the
     Sublessor and/or Landlord may deem proper; and there shall be no diminution
     of  rent or liability on the part of the Sublessor or Landlord by reason of
     inconvenience,  annoyance,  or  injury  to  business.

11.  Default;  Remedies.
     ------------------

     (a)  If  the  Sublessee defaults in the observance or performance of any of
          the Sublessee's covenants, agreements or obligations hereunder wherein
          the  default  can  be  cured  by  the expenditure of money, either the
          Sublessor  or  Landlord  may,  but  without  obligations  and  without
          limiting  any  other  remedies  which  they may have by reason of such
          default,  cure  the  default, charge the cost thereof to the Sublessee
          and  the  Sublessee shall pay the same forthwith upon demand, together
          with  interest  thereon  at  the  highest permissible rate of interest
          allowed  under the usury statutes of the State of Minnesota or in case
          no  such  maximum rate of interest is provided, at the rate of 12% per
          annum.

     (b)  If  the  Sublessee shall default as defined in Article 26 of the Prime
          Lease,  in the payment of any installment of rent or in the observance
          or  performance  of  any  of  the Sublessee's covenants, agreements or
          obligations hereunder, or if any proceeding is commenced by or against
          the  Sublessee  for  the  purpose  of  subjecting  the  assets  of the
          Sublessee  to  any  law relating to bankruptcy or insolvency or for an
          appointment  of  a  receiver  of  Sublessee  or  of any of Sublessee's
          assets,  of  if  Sublessee  makes  a general assignment of Sublessee's
          assets  for  the  benefit  of  creditors, then, in any such event, the
          Sublessor  may,  without process, re-enter immediately into the Sublet
          Area and remove all persons and property therefrom, and at its option,
          nullify  and cancel this Sublease with respect to all future rights or
          the  Sublessee  and have, regain, repossess and enjoy the Sublet Area,
          anything  herein  to  the  contrary  notwithstanding. Sublessee hereby
          expressly  waives the service of any notice in writing of intention to
          re-enter as aforesaid, and also all right of restoration to possession
          of  the  Sublet  Area  after re-entry or after judgment for possession
          thereof.  In  the  case  of  any  such termination, the Sublessee will
          indemnify  the  Sublessor against all loss of rents and other damages,
          which it may incur by reason of such termination during the residue of
          the  term  of  this Sublease, and also against all attorney's fees and
          expenses  incurred  in  enforcing  any  of the terms of this Sublease.

     (c)  Neither Sublessee's interest in this Sublease, nor any interest herein
          of  Sublessee nor any estate hereby created in Sublessee shall pass to
          any  trustee  or  receiver or assignee for the benefit of creditors or
          otherwise  by  operation  of  law. In the event Sublessee shall become
          bankrupt  or  insolvent,  or make a transfer in fraud of creditors, or
          make an assignment for the benefit of creditors, or take or have taken
          against  Sublessee,  or any proceeding of any kind under the provision
          of  the  Federal  Bankruptcy  Code or under any other federal or state

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          insolvency, bankruptcy, reorganization or similar act or if a receiver
          or  trustee  is  appointed  for  a  substantial portion of Sublessee's
          assets, this Sublease shall immediately terminate and be of no further
          force  or  effect  whatsoever,  without  the necessity for any further
          action  by  Sublessor,  except that Sublessee shall not be relieved of
          obligations  which have accrued prior to the date of such termination.
          Upon  such  termination,  the  provisions  herein  relating  to  the
          expiration  or  earlier termination of this Sublease shall control and
          Sublessee shall immediately surrender the Sublet Area in the condition
          required  by  the provisions of this Sublease. Additionally, Sublessor
          shall  be  entitled  to all relief, including recovery of damages from
          Sublessee,  which  may from time to time be permitted, or recoverable,
          under  the  Federal  Bankruptcy  Code  or  any  other applicable laws.

     12.  Notwithstanding  anything  in  this  Sublease to the contrary, nothing
          herein  shall  relieve  any  of  the  Sublessor's  responsibilities to
          Landlord  and  said  responsibilities  derived  from  the  heretofore
          described  Prime  Lease.

13.  Assignment and Subleasing. The Sublessee shall not have the right to assign
     -------------------------
     this  Sublease  or  sublet  all  or any part of the Sublet Area without the
     prior  written  consent  of the Sublessor and of the Landlord which consent
     shall  not  be  unreasonably  withheld.

14.  Condition  of  Premises.  Sublessee  acknowledges  and  agrees  that,  as
     -----------------------
     consideration  for  the  reduced  rental  rate  being provided to Sublessee
     hereunder,  Sublessee  accepts  the  Sublet  Area in its "as-is" condition,
     without  Sublessor  providing  or  making any alterations, modifications or
     refurbishment.  Sublessee  has  made,  or  shall  make,  such  independent
     investigation  as  it  deems necessary or appropriate concerning the Sublet
     Area  and  the use thereof for Sublessee's intended purposes. Sublessor has
     not  made,  and does not make any representations, warranties or agreements
     as  to  any  matters  concerning  the Sublet Area or the physical condition
     thereof,  including,  but  not  limited to, square footage, compliance with
     existing  law,  utilities, present or future zoning, the purposes for which
     the  Sublet  Area  are  to  be  used,  environmental  condition, covenants,
     conditions  and restrictions, the heating, ventilating and air conditioning
     systems,  plumbing,  electrical  and  other  mechanical systems used in the
     operation  of the Sublet Area, roofs, walls and floors of the improvements,
     and  all  other  matters  which, in Sublessee's judgment, may bear upon the
     value  and suitability of the Sublet Area for Sublessee's purposes. Neither
     party is relying upon any statement or representation made by the other not
     embodied  in this Sublease. Except as expressly otherwise set forth in this
     Sublease, Sublessor hereby specifically disclaims any warranty, guaranty or
     representation,  oral  or  written,  past,  present or future, of, as to or
     concerning  (i)  the  nature  and  condition  of the Sublet Area, including
     environmental  conditions  or  the  presence  or  absence  of any Hazardous
     Materials, (ii) the suitability thereof for any and all activities and uses
     which  Sublessee  may elect to conduct thereon; and (iii) the compliance of
     the  Sublet  Area or its operation with any laws, ordinances or regulations
     of  any  government  or  other  body  (including  without  limitation,  the
     Americans  with  Disabilities  Act  ("ADA")).

15.  Security  Deposit.  Sublessee agrees to deposit with Sublessor, on the date
     -----------------
     hereof,  a Security Deposit in the amount of $18,025.00 which shall be held
     by  Sublessor,  without  interest,  as  security  for  the  performance  of
     Sublessee's  covenants  and  obligations  under  this  Sublease.  Upon  the
     occurrence if any event of default by Sublessee, Sublessor may from time to
     time  without  prejudice to any other remedy provided herein or provided by
     law,  apply  such Security Deposit to any arrears of rent or other payments
     due Sublessor under this Sublease, and any other damage, injury, expense or
     liability  caused  by  such  event of default without waiving such event of
     default  and  Sublessee  shall  pay  to  Sublessor  on demand the amount to
     implied  in order to restore the Security Deposit to its original amount of
     $18,025.00.  Although  the Security Deposit shall be deemed the property of
     the  Sublessor,  any  remaining  balance  of such Security Deposit shall be
     returned  by  Sublessor to Sublessee at such time after termination of this
     Sublease, that all of Sublessee's obligations under this Sublease have been
     fulfilled.

16.  Additional  Agreements  by Sublessor. The Sublessor acknowledges and agrees
     ------------------------------------
     to  the  following:

     (a)  It  has  the  right  to sublease the Sublet Area to Sublessee upon the
          terms  herein  stated;

     (b)  Subject  to the terms of this Sublease and the Prime Lease, Sublessee,
          upon  paying  the  rent  and all other charges herein provided for and
          observing and keeping the covenants, agreements, and condition of this
          Sublease  on  its  part to be kept, shall at all times during the term
          and  the  extension  term,  if  exercised, peaceably and quietly

                                       20
<PAGE>
          hold,  occupy  and  enjoy  the  Premises, without any disturbance from
          Sublessor  or from the Owner or from any person claiming through them.

     (c)  It  has  observed and kept and, subject to the terms of this Sublease,
          will  continue  to  observe  and  keep  all  covenants, agreements and
          conditions  of  the  Prime  Lease  and has paid the rent and all other
          charges  therein provided, and shall not modify or surrender the Prime
          Lease  without the prior written consent of Sublessee (which shall not
          be  unreasonably  withheld,  conditioned  or  delayed) so long as this
          Sublease  is  in  effect.

     (d)  It  shall provide to Sublessee copies of any and all notices Sublessor
          receives from the Owner, or any third party, regarding the Premises or
          the Lease as soon as reasonably practicable following receipt thereof.

     (e)  Sublessee  shall  have the option to terminate this Sublease Agreement
          in  the  event  Sublessor's  total  cash  equivalency  falls below one
          million  dollars  ($1,000,000).

17.  Use  of  Sublessor's Personal Property. During the Sublease Term, Sublessee
     shall  have  the  right  to  use  the  furniture, cubicles and phone system
     located  in the Sublet Area (the "Personal Property") at no charge. Exhibit
     B  contains  a  list of the Personal Property and outlines the areas of the
     Sublet  Area in which the Personal Property is located. Upon the expiration
     or earlier termination of this Sublease, Sublessee shall leave the Personal
     Property  in  the  Sublet Area in the same condition as on the date of this
     Sublease,  normal  wear  and tear excepted. Sublessee acknowledges that the
     Personal Property is being made available for Sublessee's use on an "as-is"
     basis,  without  any  warranty  whatsoever.  Sublessee  agrees  to protect,
     defend,  indemnify and hold Sublessor harmless from and against any and all
     liabilities,  claims,  expenses,  losses  and  damages,  including, without
     limitation,  reasonable attorneys' fees, costs and disbursements, resulting
     from  use  of  the  Personal  Property.

18.  Miscellaneous  Provisions.
     -------------------------

     a.   Waiver.  No  purported waiver by Sublessor of any default by Sublessee
          ------
          of any term, condition or covenant contained herein shall be deemed to
          be  a  waiver of such term, condition or covenant unless the waiver is
          in  writing and signed by Sublessor. No such waiver shall in any event
          be  deemed  a  waiver  of any subsequent default under the same or any
          other  term,  condition  or  covenant  contained  herein.  Sublessor's
          acceptance  of  rent or other charges following a default hereunder by
          Sublessee  shall  not  be  deemed  a  waiver of such default or of any
          earlier  default  by  Sublessee  of any term, condition or covenant of
          this  Sublease,  other  than  the  failure  of  Sublessee  to  pay the
          particular  rental so accepted, regardless of Sublessor's knowledge of
          such  default  at the time of such acceptance. The consent or approval
          by  Sublessor  to  or  of  any  act by Sublessee requiring Sublessor's
          consent  or  approval  shall not be deemed to waive the requirement of
          Sublessor's  consent  or  approval  to or of any subsequent or similar
          acts  by  Sublessee.

     (b)  Accord  and  Satisfaction.  No  payment  by  Sublessee  or  receipt by
          -------------------------
          Sublessor  of  a  lesser  amount  than  rent  and other charges herein
          stipulated shall be deemed to be other than on account of the earliest
          stipulated  rent  or  other  charge,  nor  shall  any  endorsement  or
          statement  on  any check or any letter accompanying a check or payment
          of  rent  or  other  charges  be  deemed  an  accord  or satisfaction.
          Sublessor  may  accept  such check or payment without charge or pursue
          any  other  remedy  in  this  Sublease.

     (c)  Entire  Agreement.  This  Sublease sets forth the entire understanding
          -----------------
          between  Sublessor  and  Sublessee  concerning  the  Sublet  Area  and
          incorporates  all  prior  negotiations and understandings. The parties
          hereto  agree  that  there  are  no  covenants,  promises, agreements,
          conditions  or  understandings,  either  oral  or  written, whatsoever
          between the parties hereto with respect to any subject covered by this
          Sublease  other than those set forth herein. No alteration, amendment,
          change or addition to this Sublease shall be binding upon Sublessor or
          Sublessee  unless  in  writing  and signed by the party to be charged.

     (d)  No  Partnership. Nothing contained in this Sublease shall be deemed or
          ---------------
          construed  by  the parties hereto or by any third person to create the
          relationship  of  principal  and  agent  or of partnership or of joint
          venture,  and  neither the method of computation of rent nor any other
          provision contained in this Sublease nor any act of the

                                       21
<PAGE>
          parties  hereto  shall  be  deemed  to create any relationship between
          Sublessor  and  Sublessee other than the relationship of Sublessor and
          Sublessee.

     (e)  Captions  and  Section  Numbers.  The  captions,  article numbers, and
          -------------------------------
          indices  appearing  in  this Sublease are inserted only as a matter of
          convenience.  They  do  not  define,  limit, construe, or describe the
          scope  or  intent  of  the  provisions  of  this  Sublease.

     (f)  Partial  Invalidity.  If  any  term,  covenant  or  condition  of this
          -------------------
          Sublease  or  the  application  thereof to any person or circumstances
          shall  be invalid or unenforceable, the remainder of this Sublease, or
          the  application  of  such  term,  covenant or condition to persons or
          circumstances  other  than  those as to which it is held invalid shall
          both  be  unaffected  thereby, and each term, covenant or condition of
          this  Sublease  shall  be  valid and be enforced to the fullest extent
          permitted  by  law.

     (g)  Authority.  Sublessee does hereby represent and warrant that Sublessee
          ---------
          is  duly  organized,  validly  existing and in good standing under the
          laws of the State in which it was organized and has all required power
          and  authority  to  own,  sublease,  hold  and  operate properties and
          conduct  business in the State of Minnesota, and concurrently with the
          execution  and  delivery  of  this Sublease, Sublessee shall submit to
          Sublessor  a  resolution  of  Sublessee's  directors (or shareholders)
          (certified  by Sublessee's secretary) confirming Sublessee's authority
          to  enter  into  this  Sublease.

     (h)  Governing  Law. This Sublease is deemed to have been made in the State
          --------------
          of  Minnesota,  and  its  interpretation,  its  construction  and  the
          remedies  for its enforcement or breach are to be applied pursuant to,
          and  in  accordance  with  the  laws  of  the  State  of Minnesota for
          contracts  made  and  to  be  performed  therein.

     (i)  Capitalized  Terms.  All terms spelled with initial capital letters in
          ------------------
          this  Sublease  that  are not expressly defined in this Sublease shall
          have  the  respective  meaning  given  such  terms in the Prime Lease.

     (j)  Counterparts.  This  Sublease  may be executed in facsimile and in any
          ------------
          number  of  counterparts,  each  of  which  shall  be  deemed to be an
          original  and  all of which together shall be deemed to be one and the
          same  instrument.

     (k)  Attorneys'  Fees.  If  any  dispute,  action,  lawsuit  or  proceeding
          ----------------
          relating  to  this Sublease, or any default thereunder, whether or not
          any  action,  lawsuit  or  proceeding is commenced, the non-prevailing
          party shall reimburse the prevailing party for its attorneys' fees and
          all fees, costs and expenses incurred in connection with such dispute,
          action,  lawsuit  or  proceeding,  including,  without limitation, any
          post-judgment  fees,  costs  or  expenses  incurred  on any appeal, in
          collection  of  any  judgment  or  in  appearing  in  any  bankruptcy
          proceeding.

     IN WITNESS WHEREOF, each of the parties hereto has caused their presence to
be  duly  executed  as  of  the  day  and  year  first  above  written.

SUBLESSOR:                                   SUBLESSEE:
Newport  Corporation                         APA  Optics,  Inc.

By:                                          By:
   ------------------------------               --------------------------------
   William  R.  Abbott,                         Anil  Jain,
   Vice President of Finance and Treasurer      President

                                       22
<PAGE>EXHIBIT 10.17

                 REVOLVING LOAN, GUARANTY AND SECURITY AGREEMENT

                                             June 25, 2003
Apollo  Gold,  Inc.
Denver  Executive  Offices
4601  DTC  Boulevard,  Suite  750
Denver  CO  80237-2571
USA

Apollo  Gold  Corporation
Denver  Executive  Offices
4601  DTC  Boulevard,  Suite  750
Denver  CO  80237-2571
USA

Montana  Tunnels  Mining,  Inc.
Denver  Executive  Offices
4601  DTC  Boulevard,  Suite  750
Denver  CO  80237-2571
USA

Florida  Canyon  Mining,  Inc.
Denver  Executive  Offices
4601  DTC  Boulevard,  Suite  750
Denver  CO  80237-2571
USA

Ladies and Gentlemen:

     This will confirm the terms and conditions on which Standard Bank London
Limited (the "Lender") is providing Apollo Gold, Inc., a Delaware corporation
              ------
(the "Borrower"), with a revolving loan facility.
      --------

     1.     INTERPRETATION.
            ---------------

     Section  1.01     Certain  Defined  Terms.  The following terms have the
                       -----------------------
meanings assigned to them below in this Section or in the provisions of this
Agreement referred to below (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):

     "Accounts" means, with respect to any Person, all present and future rights
      --------
of such Person to payment of a monetary obligation, whether or not earned by
performance, (i) for

<PAGE>
property that has been or is to be sold, leased, licensed, assigned or otherwise
disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of
insurance issued or to be issued, (iv) for a secondary obligation incurred or to
be incurred, (v) for energy provided or to be provided , (vi) for the use or
hire of a vessel under a charter or other contract, (vii) arising out of the use
of a credit or charge card or information contained on or for use with the card,
or (viii) as winnings in a lottery or other game of chance operated or sponsored
by a state, governmental unit of a state, or person licensed or authorized to
operate the game by a governmental unit. The term "Accounts" includes
                                                   --------
health-care insurance receivables.

     "Affiliate" means, with respect to a specified Person, another Person that
      ---------
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

     "Agreement" means this Revolving Loan, Guaranty and Security Agreement,
      ---------
together with all Exhibits and Schedules hereto, as originally executed, or if
amended or supplemented from time to time, as so amended or supplemented, which
Agreement constitutes an amendment to, and restatement of, the Initial
Agreement, it being the intention of the Parties that the Liens granted by the
Borrower and the Guarantors to the Lender under and in connection with the
Initial Agreement and the Mortgages and UCC financing statements of public
record perfecting such security interests recorded and filed in connection with
the Initial Agreement shall remain in full force and effect and shall secure the
Obligations arising under and in connection with this Agreement.

     "Applicable Law" means, with respect to any Person or matter, any
      --------------
supranational, national, federal, state, regional or local statute, law, rule,
treaty, convention, regulation, order, decree or other requirement relating to
such Person or matter and, where applicable, any interpretation thereof by any
Governmental Authority having jurisdiction with respect thereto or charged with
the administration or interpretation thereof (in each case, whether or not
having the force of law, but if not having the force of law, such statute, law,
etc. being of the type with which such Person would comply in the ordinary
course of business).

     "Approved Credit Quality" means a rating of at least A-1 (or any successor
      -----------------------
rating) by Standard & Poor's Rating Group, a division of McGraw Hill, Inc.
and/or P-1 (or any successor rating) by Moody's Investors Services, Inc.

     "Approved LOM Plan" means, with respect to an Eligible Project, a detailed
      -----------------
financial model (submitted by the Borrower in conjunction with the Technical
Consultant and approved in writing by the Lender) based upon the Reserves for
the Eligible Project, containing inter alia operational, economic, technical and
risk management data relating to the Eligible Project, Operating Expenditures,
Taxes, royalties and similar fees, Capital Expenditures, Exploration and
Development Expenses, and the sustaining capital necessary to maintain
non-project assets. An Approved LOM Plan shall include calculations of (a) the
Loan Life Ratio, the Mineral Reserve Life Ratio, and the Debt Service Cover
Ratio and (b) Cash Flow Available for Debt Service until the Project End Date.
As of the Closing Date, the only Approved LOM Plan is the base case model for
the Florida Canyon mine set out in Table 6.2 of Lender's Preliminary Due
Diligence Report of Apollo Gold Corporation's Montana Tunnels Mine, Montana and
Florida Canyon Mine, Nevada: Part II, Florida Canyon Mine. Each Approved LOM
Plan shall be modified and

                                      -2-
<PAGE>
updated pursuant to Section 8.13. For the avoidance of doubt, any reference to
an Approved LOM Plan with respect to an Eligible Project at any time shall be to
the Approved LOM Plan as in effect at such time.

     "Available Amount" means the amount, not to exceed $5,000,000 at any time,
      ----------------
specified by the Lender from time to time as the maximum principal amount that
the Lender is willing to have outstanding hereunder at such time. So long as no
Default or Event of Default exists, the Lender will specify on the first
Business Day of each quarter the Available Amount expected to be in effect
throughout such quarter based on, inter alia, each Approved LOM Plan, the actual
operating history of each Eligible Project and the then current gold market
calculated in accordance with Article VIII.

     "Borrower" has the meaning specified in the first paragraph of this
      --------
Agreement.

     "Borrower's Account" means account number 9350625659 of the Borrower with
      ------------------
Washington Mutual Bank, 601 West Main Street, Spokane, Washington 99201, ABA
Routing/Transit No. 1325070760, or such other bank account as the Borrower may
specify in a written notice to the Lender.

     "Business Day" means any day other than a Saturday, Sunday or legal holiday
      ------------
on which banks in New York, New York, and London, England, are open for the
conduct of a substantial part of their commercial banking business.

     "Capital Expenditures" means, with respect to any Person, to the extent
      --------------------
capitalized in accordance with GAAP, any expenditure for fixed assets, including
assets being constructed (whether or not completed), leasehold improvements,
capital leases, installment purchases of machinery and equipment, acquisitions
of real estate and other similar expenditures including (a) in the case of a
purchase, the entire purchase price, whether or not paid during the fiscal
period in question, (b) in the case of a capital lease, the related Capital
Lease Obligation, and (c) without duplication, Exploration and Development
Expenses and expenditures in or from any construction-in-progress account, but
excluding expenditures made with the proceeds of insurance to replace a damaged
or destroyed asset and expenditures made with the proceeds of the sale of an
asset, up to an amount not greater than the then-book value of such sold asset,
to replace such asset, all as determined in accordance with GAAP.

     "Capital Lease Obligations" means, with respect to any Person, the
      -------------------------
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

     "Cash Equivalents" (a) securities with maturities of 90 days or less from
      ----------------
the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof or the Canadian Government or any agency
thereof, (b) certificates of deposit and eurodollar time deposits with
maturities of 90 days or less from the date of acquisition and overnight bank
deposits of the Lender or of any commercial bank having capital and surplus in

                                      -3-
<PAGE>
excess of $500,000,000, (c) repurchase obligations of the Lender or of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than seven days with respect to securities issued or
fully guaranteed or insured by the United States Government or the Canadian
Government, (d) commercial paper of an American or Canadian issuer rated at
least Approved Credit Quality and in either case maturing within 90 days after
the day of acquisition, (e) securities with maturities of 90 days or less from
the date of acquisition issued or fully guaranteed by (i) any state,
commonwealth or territory of the United States, (ii) any province or territory
of Canada, (iii) by any political subdivision or taxing authority of any such
state, province, commonwealth or territory or by any foreign government, the
securities of which state, province, common wealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody's, (f) securities with maturities of 90
days or less from the date of acquisition backed by standby letters of credit
issued by the Lender or any commercial bank satisfying the requirements of
clause (b) of this definition or (g) shares of money market mutual or similar
funds which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition.

     "Cash Flow Available for Debt Service" means, with respect to any Person
      ------------------------------------
for any period, such Person's Net Income for the period plus, to the extent
deducted in determining such Net Income, any provision for deferred income
taxes, non-cash reclamation, depreciation, depletion and amortization expenses
and interest charges for such period minus Capital Expenditures in the ordinary
                                     -----
course of business and plus or minus, as applicable, working capital
                       ----    -----
adjustments.

     "Closing Date" means the date on which the conditions precedent set forth
      ------------
in Section 7 have been satisfied.

     "Collateral" has the meaning specified in Section 10.01.
      ----------

     "Commitment" means the obligation of the Lender to make advances to the
      ----------
Borrower hereunder from time to time in an aggregate principal amount of up to
the Available Amount at the time.

     "Commitment Termination Date" means June 30, 2005.
      ---------------------------

     "Compliance Determination Date" means the last day of each calendar
      -----------------------------
quarter, starting with September 30, 2003.

     "Control" means the possession, directly or indirectly, of the power to
      -------
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling", "Controlled", and "under common control with" have meanings
correlative thereto.

     "Covered Taxes" has the meaning specified in Section 4.03.
      -------------

     "Current Assets" means current assets determined in accordance with
      --------------
applicable GAAP, excluding cash and cash equivalents.

                                      -4-
<PAGE>
     "Current Liabilities" means current liabilities in accordance with
      -------------------
applicable GAAP, excluding Indebtedness for borrowed money.

     "Current Ratio" means, at any time, the ratio of (a) Current Assets of
      -------------
Apollo Gold Corporation to (b) Current Liabilities of Apollo Gold Corporation,
in each case as at such time.

     "Debt Service Cover Ratio" means, as of any Compliance Determination Date,
      ------------------------
the ratio of (a) Cash Flow Available for Debt Service of Florida Canyon (and, if
the Montana Tunnels mine is then an Eligible Project, of Montana Tunnels) for
the Measurement Period then ending to (b) the principal and accrued interest
required to be paid with respect to the Loans during such Measurement Period.

     "Default" means any event or condition that constitutes an Event of Default
      -------
or which upon notice, lapse of time or both would, unless cured or waived,
become an Event of Default.

     "Discount Rate" means, at any time, a rate per annum equal to the six month
      -------------
LIBOR Rate at such time plus 2.75%.

     "Dollars" and "$" means lawful money of the United States, unless otherwise
      -------
specified.

     "Eligible Project" (a) initially means the Florida Canyon mine and (b)
      ----------------
thereafter may also include Florida Canyon's Standard Mine and/or the Montana
Tunnel mine if and when the Lender approves such mine or mines as "Eligible
Project(s)" and approves LOM plan(s) with respect thereto.

     "Environmental Law" means, with respect to any Person, any and all
      -----------------
Applicable Law relating to injury to, or the protection of, real or personal
property or human health or the environment, including, without limitation, all
requirements pertaining to reporting, licensing, permitting, investigation,
remediation and removal of emissions, discharges, releases or threatened
releases of hazardous materials, chemical substances, pollutants or contaminants
whether solid, liquid or gaseous in nature, into the environment or relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of such hazardous materials, chemical substances,
pollutants or contaminants.

     "Equipment" means, with respect to any Person, all of such Person's
      ---------
tangible personal property together with any and all accessions, parts and
appurtenances thereto, whether presently owned or hereafter acquired by such
Person, other than Inventory or consumer goods.

     "Events of Default" has the meaning specified in Section 11.01.
      -----------------

     "Existing Hedging Arrangements" means each transaction in effect on the
      -----------------------------
Closing Date other than the Required Hedging Agreements under that certain
Master Agreement, dated as of November 20, 2002, between the Borrower and the
Lender, and the various supplements, amendments and addenda thereto, which
transactions are summarized in Schedule 3 attached hereto and incorporated
                               -----------
herein by this reference.

                                      -5-
<PAGE>
     "Exploration and Development Expenses" means, with respect to any Person,
      ------------------------------------
any expenditure for the exploration and development of mining assets, excluding
costs and expenditures associated with the exploitation of an Eligible Project.

     "External Debt" means, with respect to any Person, without duplication, (a)
      -------------
all obligations for borrowed money or other extensions of credit whether secured
or unsecured, absolute or contingent, including, without limitation, unmatured
reimbursement obligations with respect to letters of credit or guarantees issued
for the account of or on behalf of such Person, and all obligations representing
the deferred purchase price of property and services, other than accounts
payable arising in the ordinary course of business, (b) all obligations
evidenced by bonds, notes, debentures or other similar instruments, (c) all
obligations secured by any mortgage, pledge, security interest or other lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby shall have been assumed, and (d) that portion of all obligations
arising under capital leases that is required to be capitalized on the
consolidated balance sheet of such Person, provided, however, that External Debt
shall not include the obligations owing from the Borrower to any Guarantor, or
from any Guarantor to the Borrower.

     "Financial Officer" means, with respect to either the Borrower or the
      -----------------
Guarantor, the chief financial officer, principal accounting officer, treasurer
or controller, or other authorized representative whose primary responsibilities
extend to accounting matters of the Borrower or the Guarantor, as applicable.

     "Florida Canyon" means Florida Canyon Mining, Inc., a Delaware corporation.
      --------------

     "Forecast Period" means, as of any Compliance Determination Date, the
      ---------------
period consisting of all Measurement Periods following such Compliance
Determination Date to and including the Commitment Termination Date or, if
another date is specified in the calculation of any specific ratio, such other
date.

     "GAAP" means generally accepted accounting principles as in effect from
      ----
time to time in the United States or Canada, as applicable.

     "Gearing" means, as of any date of determination, the External Debt of
      -------
Apollo Gold Corporation divided by its Tangible Net Worth.

     "General Intangibles" means all personal property, including things in
      -------------------
action, other than Accounts, chattel paper, commercial tort claims, deposit
accounts, documents, goods, instruments, investment property, letter-of-credit
rights, letters of credit, money and oil, gas or other minerals before
extraction. General Intangibles include, without limitation, payment
intangibles, corporate or other business records, good will, inventions,
designs, software and other intellectual property, patents, trademarks and
applications therefor, trade names, trade styles, trade secrets, copyrights,
registrations, licenses, franchises, customer lists, tax refund claims and the
like, wherever located.

     "Governmental Authority" means the government of any nation, or any
      ----------------------
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or enforcement of any Applicable Law.

                                      -6-
<PAGE>
     "Guarantor" means each of (i) Apollo Gold Corporation, a Yukon Territory
      ---------
corporation, (ii) Montana Tunnels and (iii) Florida Canyon.

     "Hedging Agreements" means, collectively, currency exchange agreements,
      ------------------
commodity swaps, exchange or futures agreements, interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, commodity hedging
agreements, forward agreements, European style gold option agreements, and all
other agreements or arrangements designed to protect a Person against
fluctuations in interest rates, currency exchange rates or commodity prices.

     "Indemnitee" has the meaning specified in Section 13.03.
      ----------

     "Initial Agreement" means the Loan, Guaranty and Security Agreement among
      -----------------
the Parties dated as of November 20, 2002.

     "Initial Note" means the Note executed and delivered by Borrower in
      ------------
accordance with the Initial Agreement.

     "Interest Period" means, for each Loan, the period commencing on the date
      ---------------
such Loan is made and ending on the last day of the period selected by the
Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be one
month or three months, as the Borrower may, upon notice received by the Lender
not later than 11:00 a.m. (New York time) on the second Business Day prior to
the first day of such Interest Period, select; provided that:

     (a)     the  Borrower  may not select any Interest Period for any Loan
that ends after the Commitment Termination Date;

     (b)     whenever  the  last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day; provided that if
such extension would cause the last day of such Interest Period to occur in the
next succeeding calendar month, the last day of such Interest Period shall occur
on the next preceding Business Day; and

     (c)     whenever  the first day of any Interest Period occurs on a day
of an initial calendar month for which there is no numerically corresponding day
in the calendar month that succeeds such initial calendar month by the number of
months equal to the number of months in such Interest Period, such Interest
Period shall end on the last Business Day of such succeeding calendar month.

     "Inventory" means, with respect to any Person, any and all goods,
      ---------
merchandise and other personal property, including all metals and metal
concentrates, whether tangible or intangible, now owned or hereafter acquired by
such Person which are leased by such Person as lessor or held for sale, lease or
license to customers or are furnished or to be finished to customers under any
contract of service or consist of raw materials, work in process, supplies or
materials used or consumed in such Person's business.

                                      -7-
<PAGE>
     "Lender" has the meaning specified in the first paragraph of this
      ------
Agreement.

     "LIBOR Rate" means, for each Interest Period with respect to a Loan, the
      ----------
rate appearing on Page "LIBOR01" of the Reuter's Screen (or on any successor or
substitute page of such Reuter's Screen or, if none, the equivalent provided by
Bloomberg or any other Person providing rate quotations comparable to those
currently provided on such page of such Reuter's Screen, as determined by the
Lender from time to time for purposes of providing quotations of interest rates
applicable to U.S. dollar deposits in the London interbank market) at
approximately 11:00 a.m. (London time), on the Business Day prior to the
commencement of the Interest Period, as the rate for U.S. dollar deposits with a
maturity comparable to such Interest Period.

     "Lien"  means,  with respect to any asset, (a) any mortgage, deed of trust,
      ----
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset and (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset.

     "Loan" has the meaning specified in Section 2.01(b).
      ----

     "Loan Life Ratio" means, as of any Compliance Determination Date, the ratio
      ---------------
of (a) the Cash Flow Available for Debt Service of Florida Canyon (and, if the
Montana Tunnels mine is then an Eligible Project, of Montana Tunnels) for the
Forecast Period following such Compliance Determination Date to and including
the Commitment Termination Date (discounted back to such Compliance
Determination Date using the Discount Rate) to (b) the aggregate outstanding
principal balance of the Loans as of such Compliance Determination Date.

     "Material Adverse Effect" means a material adverse effect on (a) the
     ------------------------
business, condition (financial or otherwise), operations, performance,
properties, or prospects of the Borrower or any Guarantor, (b) the
enforceability of the Transaction Documents or the rights and remedies of the
Lender under the Transaction Documents or (c) the ability of the Borrower or any
Guarantor to pay and perform its obligations under this Agreement.

     "Measurement  Period" means a period of one calendar quarter commencing on
      -------------------
the first day of the quarter; provided, however, for any computation of a
financial ratio for the Measurement Period ending on the Commitment Termination
Date, such Measurement Period means the period commencing on the relevant start
date and ending on the Commitment Termination Date.

     "Mineral Reserve Life Ratio" means, as of any Compliance Determination
      --------------------------
Date, the ratio of (a) the Cash Flow Available for Debt Service of Florida
Canyon (and, if the Montana Tunnels mine is then an Eligible Project, of Montana
Tunnels) for the Forecast Period following such Compliance Determination Date to
and including the Project End Date of the Eligible Project then having the most
distant Project End Date (discounted back to such Compliance Determination Date
using the Discount Rate), to (b) the aggregate outstanding principal balance of
the Loans as at such Compliance Determination Date.

     "Mining Plan Assumptions" has the meaning specified in Section 8.13(a).
      -----------------------

                                      -8-
<PAGE>
     "Montana Tunnels" means Montana Tunnels Mining, Inc., a Delaware
      ---------------
corporation.

     "Mortgage" means (i) the Mortgage, Assignment of Rents, Security Agreement,
      --------
Fixture Filing and Financing Statement Covering As-Extracted Collateral executed
by Montana Tunnels in favor of the Lender and recorded in the office of the
Clerk and Recorder of Jefferson County, Montana, as Document No. 204187 on
November 29, 2002, as may be amended, from time to time, (ii) the Deed of Trust,
Assignment of Rents, Security Agreement, Fixture Filing and Financing Statement
covering as Extracted Collateral executed by Florida Canyon in favor of the
Lender and recorded in the Official Records of Pershing County, Nevada on
November 27, 2002 in Book 371, Pages 321 et seq., as may be amended, from time
to time, (iii) the Deed of Trust, Assignment of Rents, Security Agreement,
Fixture Filing and Financing Statement covering as Extracted Collateral executed
by Florida Canyon in favor of the Lender and recorded in the Official Records of
Humboldt County, Nevada on November 27, 2002 as Document No. 2002 6164, as may
be amended, from time to time, and (iv) any other real property mortgage, deed
of trust or other document or instrument in the appropriate form for recordation
in the applicable recording office in order to confirm, protect and perfect the
Lien granted hereunder on any portion of the "Collateral" that is Real Property.

     "Net Income" means, with respect to any Person for any period, means the
      ----------
net income (before extraordinary items and excluding net income of any business
entity (other than a subsidiary) in which such Person has an ownership interest
unless such net income shall have actually been received by such Person in the
form of cash distributions) of such Person and its subsidiaries determined on a
consolidated basis in accordance with GAAP.

     "Net Worth" means, as of any date of determination, the Consolidated
      ---------
stockholders' equity of Apollo Gold Corporation.

     "Note" has the meaning specified in Section 2.01(b).
      ----

     "Notice Of Advance" has the meaning specified in Section 2.02(a).
      -----------------

     "Obligations" has the meaning specified in Section 10.01.
      -----------

     "Operating Expenditures" means, with respect to any Person, for any
      ----------------------
applicable period, all production, mining, crushing, leaching, metallurgical
processing, laboratory, utility, milling, power, transport, refining,
Exploration and Development Expenses and similar operating and administrative
costs during such period.

     "Other Taxes" has the meaning specified in Section 4.04.
      -----------

     "Overdue Rate" has the meaning specified in Section 2.03(b).
      ------------

     "Party" means each of the Lender, the Borrower, and the Guarantors.
      -----

     "Payment Date" means the last day of each calendar quarter, commencing on
      ------------
_______, 2003.

     "Permitted Liens" means, collectively:
      ---------------

                                      -9-
<PAGE>
     (a)     carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue;

     (b)     Liens granted by this Agreement or the other Transaction Documents;

     (c)     Liens  imposed  by  any  Governmental  Authority  for  taxes,
assessments or charges not yet due or that are being contested in good faith and
by appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Borrower in accordance with GAAP;

     (d)     the Liens listed on Schedule 1 so long as the obligations secured
                                 ----------
thereby are not increased (except as indicated on Schedule 1) and are paid when
                                                  ----------
due; and

     (e)     such other Liens as may be consented to in writing by the Lender;

     (f)     provided that nothing in this definition shall in and of itself
cause the Collateral or the Obligations to be subordinated in priority to any
such Permitted Lien.

     "Person"  means any natural person, corporation, limited liability company,
      ------
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

     "Proceeds Account" has the meaning specified in Section 8.14.
      ----------------

     "Proceeds Account Bank" has the meaning specified in Section 8.14.
      ---------------------

     "Project End Date" means, with respect to any Eligible Project, the
      ----------------
projected end date of the life of such Eligible Project, as determined by the
Technical Consultant.

     "Real Property" means all rights and interests of Montana Tunnels or
      -------------
Florida Canyon in and to any real property described in the Mortgages, including
all ownership and leasehold interests in the real property and all patented and
unpatented mining claims described therein.

     "Recalculation Date" has the meaning specified in Section 8.13(a).
      ------------------

     "Related Parties" means, with respect to any specified Person, such
      ---------------
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.

     "Required Hedging Agreements" means the Existing Hedging Agreements,
      ---------------------------
together with such transaction agreements and confirmations thereunder as the
Lender in its sole discretion shall deem appropriate in connection with the
transactions contemplated hereby.

     "Reserves" means that part of the gold deposit at each Eligible Project
      --------
which, in accordance with guidelines promulgated by Canadian National
Instrument, could be economically and legally extracted or produced at any
relevant time of determination, subject to approval of the Technical Consultant.

                                      -10-
<PAGE>
     "Safeco" has the meaning specified in Section 10.05(h).
      ------

     "Senior Security Holders" has the meaning specified in Section 10.05.
      -----------------------

     "Tangible Net Worth" means, at any time, Net Worth minus the aggregate
      ------------------
amount of any intangible assets of Apollo Gold Corporation.

     "Taxes" means any present or future income, franchise, excise, stamp or
      -----
other taxes, fees, duties, withholdings or other charges of any nature imposed
by the any taxing authority of any jurisdiction.

     "Technical Consultant" means Mques Inc. and/or such other company as the
      --------------------
Borrower and the Lender may agree to from time to time.

     "Transaction Documents" or "Loan Documents" means, collectively, this
      ---------------------      --------------
Agreement, the Note, the Mortgages and the Required Hedging Agreements, together
with all agreements and instruments contemplated hereby or thereby and all
schedules, exhibits and annexes hereto or thereto, each as the same may from
time to time be modified or amended.

     "Uniform Commercial Code" and "UCC" means the Uniform Commercial Code as
      -------------------           ---
adopted and in effect in any applicable jurisdiction.

     "United States" means the United States of America.
      -------------

     Section  1.02     Other Definitional and Interpretive Provisions.
                       ----------------------------------------------

          (a)     All personal pronouns used in this Agreement, whether used in
the masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular.

          (b)     The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provisions of this Agreement.

          (c)     Titles and headings of Articles and Sections in this Agreement
are for convenience only, do not constitute part of this Agreement and neither
limit nor amplify the provisions of this Agreement; and all references in this
Agreement to Articles, Sections, Subsections, paragraphs, clauses, subclasses,
Schedules or Exhibits shall refer to the corresponding Article, Section,
Subsection, paragraph clause, subclause, Schedule or Exhibit of or attached to
this Agreement, unless specific reference is made to the articles, sections or
other subdivisions or divisions or schedule or exhibit to or in another document
or instrument.

          (d)     Each definition of a document in this Agreement shall include
such document as amended, modified, supplemented, restated, renewed or extended
from time to time.

          (e)     Except where specifically restricted, reference to a party
includes that party and its successors and assigns permitted hereunder.

                                      -11-
<PAGE>
          (f)     Unless otherwise specifically stated, whenever a time is
referred to in this Agreement, such time shall be the local time in the city in
which the office of the Lender for notice purposes is located.

          (g)     Any list in this Agreement of one or more items preceded by
the words "include" or "including" shall not be deemed limited to the stated
items but shall be deemed without limitation.

     Section 1.03     Accounting Terms; GAAP.  Except as otherwise expressly
                      ----------------------
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Lender that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Lender notifies the Borrower that the
Lender requests an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith. It is understood that the financial
statements and other financial data that the Borrower and the Guarantors are
required to deliver to the Lender from time to time in accordance with the
provisions of this Agreement may initially be prepared in local currency amounts
so long as all such amounts are converted to Dollars in accordance with standard
financial practice before delivery to the Lender.

     2.     THE  FACILITY
            -------------

     Section 2.01     Lender's Commitment.
                      -------------------

          (a)     The Lender agrees, on the terms and conditions hereinafter set
forth, to make advances to the Borrower from time to time on any Business Day
during the period from the Closing Date until the Commitment Termination Date in
an aggregate amount not to exceed the Available Amount at such time; provided,
that after giving effect to the making of any such advance, no Default or Event
of Default has occurred and is continuing.

          (b)     Each  amount so advanced and outstanding hereunder at any time
is herein sometimes referred to as a "Loan". The Loans shall be evidenced by
                                      ----
the Borrower's note (the "Note") substantially in the form of Exhibit A hereto
                          ----                                ---------
which Note constitutes an amendment to, and restatement of, the Initial Note, it
being the intention of the Parties that the Liens granted by the Borrower and
the Guarantors to the Lender under and in connection with the Initial Agreement
and the Mortgages and UCC financing statements of public record perfecting such
security interests recorded and filed in connection with the Initial Agreement
shall remain in full force and effect and shall secure the Obligations arising
under and in connection with the Note.

     Section 2.02     Advances.
                      --------

          (a)     Notice of Advance.  Each advance of a Loan shall be made on a
                  -----------------
Business Day, following notice given by the Borrower to the Lender not later
than 11:00 a.m. (New York time) at least two Business Days prior to the date of
the proposed advance. Each such notice (a

                                      -12-
<PAGE>
"Notice of Advance") shall be made in writing, in substantially the form of
------------------
Exhibit B, specifying therein (i) the requested date of such advance (which
---------
shall be a Business Day) and (ii) the requested amount of such advance. Each
Notice of Advance shall be irrevocable and binding on the Borrower.

          (b)     Minimum Amounts.  Each advance of a Loan shall be in an
                  ---------------
aggregate amount not less than $500,000 (or such lesser amount as may be
remaining available) and in an integral multiples of $100,000.

          (c)     Funding by Lender.  The Lender shall, before 11:00 a.m. (New
                  -----------------
York time) on the date of each advance, wire or deposit the proceeds of such
advance, in same day funds, to the Borrower's Account.

     Section 2.03     Interest.
                      --------

          (a)     Regular Interest.  Each Loan shall bear interest during each
                  ----------------
Interest Period for such Loan at a rate per annum equal to the LIBOR Rate for
such Interest Period plus 2.75%. All such interest shall be payable on each
                     ----
Payment Date.

          (b)     Default Interest.  The amount of all interest, principal, fees
                  ----------------
and other amounts not paid when due hereunder shall bear interest, to the
fullest extent permitted by Applicable Law, at a rate per annum equal to the
highest regular interest rate that would then otherwise be in effect with
respect to the Loans plus 2% (the "Overdue Rate").
                     ----          ------------

          (c)     Maximum Rate Permitted by Law.  No interest or fee to be paid
                  -----------------------------
hereunder shall be paid at a rate exceeding the maximum rate permitted by
Applicable Law. In the event that such interest or fee exceeds such maximum
rate, such interest or fees shall be reduced or refunded, as the case may be, so
as to be payable at the highest rate recoverable under Applicable Law.

          (d)     Computations.  All computations of interest in respect of the
                  ------------
Loans and of fees shall be made on the basis of a year of 360 days for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable. Each
determination by the Lender of an interest rate or fee hereunder or in the Note
made in accordance with the provisions of this Agreement or the Note shall be
conclusive and binding for all purposes, absent manifest error.

          (e)     Payments Due on Non-Business Days.  Unless otherwise specified
                  ---------------------------------
herein, whenever any payment with respect to the Loans or under any Transaction
Document shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next subsequent Business Day.

     Section  2.04     Principal.
                       ---------

          (a)     Amortization Schedule.  The Lender will specify the principal
                  ---------------------
amortization schedule for the Loans at the time of each advance thereof and may
adjust such amortization schedule from time to time. The amortization schedule
shall be set and adjusted so that on the basis of, inter alia, each Approved LOM
Plan, the actual operating history of each

                                      -13-
<PAGE>
Eligible Project and the then current gold market, the outstanding principal
amount of the Loans at any time will not exceed the amount expected to be
permitted at the time in order for the Borrower to remain in compliance with the
covenants set forth in Section 8.12. The entire outstanding principal amount of
each Loan, if not sooner due or payable, shall be due and payable on the
Commitment Termination Date.

          (b)     Optional Prepayments.  The Borrower may prepay the Loans in
                  --------------------
whole or in part (but, if in part, in an amount of not less than $250,000) any
time prior to the Commitment Termination Date upon three Business Days' prior
written notice to the Lender. Any such prepayment shall be without premium or
penalty but the Borrower shall reimburse the Lender for any breakage costs
incurred as a result of such prepayment. Any such prepayment shall be applied to
the mandatory amortization payments with respect to the Loans in the reverse
order of maturity. The Borrower may, in the Borrower's discretion, at any time
upon payment or prepayment of all of the Loans and other Obligations, surrender
the Commitment and terminate this Agreement by delivering written notice of such
surrender and termination to the Lender. The Lender shall, upon payment in full
of all Obligations, thereafter forthwith execute, deliver, file, and record, all
such quitclaim deeds, termination statements, and other instruments as may be
necessary to release all of the security interests granted under the Transaction
Documents of public record as may be reasonably requested by the Borrower or any
Guarantor.

          (c)     Mandatory Prepayment.  The Borrower shall prepay the Loans in
                  --------------------
a principal amount equal to 100% of the net proceeds received by the Borrower
from (i) any sale of the operating assets by the Borrower or any subsidiary or
(ii) the termination of the Existing Hedging Arrangements. Any such mandatory
prepayment shall be made on the Business Day on which the Borrower or any
subsidiary receives such proceeds and shall be made together with all accrued
and unpaid interest on the amount being prepaid and any breakage costs incurred
as the result of such prepayment. Any such prepayment shall be applied to the
mandatory amortization payments with respect to the Loans in the reverse order
of maturity.

     3.     FEES.
            -----

     Section 3.01     Commitment Fee.  The Borrower agrees to pay to the Lender
                      --------------
a commitment fee, which shall accrue at the rate of 0.50% per annum on the daily
amount of the unused Available Amount from time to time during the period from
the date of this Agreement to the Commitment Termination Date. The commitment
fee shall be payable in arrears on each Payment Date.

     Section 3.02     Arrangement Fee.  The Borrower shall pay to the Lender, on
                      ---------------
the Closing Date, a non-refundable arrangement fee in the amount of $75,000.

     Section 3.03     Management Fee.  The Borrower shall pay to the Lender, on
                      --------------
the Closing Date and on the one year anniversary of the Closing Date, a
non-refundable management fee in the amount of $35,000 per annum.

     4.     INCREASED  COSTS,  ILLEGALITY,  ETC.
            ------------------------------------

     Section 4.01     Increased Costs or Taxes.  In case any law, regulation,
                      ------------------------
treaty or official directive or the interpretation or application thereof by any
court or by any Governmental

                                      -14-
<PAGE>
Authority charged with the administration thereof or the compliance with any
guideline or request of any central bank or other Governmental Authority
(whether or not having the force of law):

          (a)     subjects the Lender to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by the Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of the Lender imposed by the United States or by any
state or foreign jurisdiction in which the Lender is organized or in which its
lending office is located), or

          (b)     imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of or loans by, the Lender (other than such
requirements to the extent that they are already in effect on the date hereof),
or

          (c)     imposes upon the Lender any other condition with respect to
its performance under this Agreement,

and the result of any of the foregoing is to increase the cost to the Lender,
reduce the income receivable by the Lender or impose any expense upon the Lender
with respect to the Loans, (i) the Lender shall notify the Borrower thereof and
(ii) the Lender will use its reasonable efforts to make, fund, or maintain the
Loans through another lending office or take such other reasonable steps so as
to avoid the consequences of such event or condition, provided that the Lender
determines, in its sole discretion, that it may do so consistent with the
Lender's internal policies and without being detrimental to the Lender. The
Borrower agrees to pay to the Lender the amount of such increase in cost,
reduction in income or additional expense as and when such cost, reduction or
expense is incurred or determined, upon presentation by the Lender of a
statement in the amount and setting forth the Lender's calculation thereof,
which statement shall be deemed true and correct absent manifest error.

     Section  4.02     Reduced Return.  If after the date hereof the Lender
                       --------------
determines that (i) the adoption of or change after the date hereof in any law,
rule, regulation or guideline regarding capital requirements for banks or bank
holding companies, or any change after the date hereof in the interpretation or
application thereof by any Governmental Authority charged with the
administration thereof, or (ii) compliance by the Lender or its parent bank
holding company with any guideline, request or directive of any such entity
after the date hereof regarding capital adequacy (whether or not having the
force of law), has the effect of reducing the return on the Lender's or such
holding company's capital as a consequence of the Lender's commitment to make
the Loans hereunder to a level below that which the Lender or such holding
company could have achieved but for such adoption, change or compliance (taking
into consideration the Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by the Lender to be material, then the
Lender shall notify the Borrower thereof. The Borrower agrees to pay to the
Lender the amount of such reduction of capital as and when such reduction is
determined, upon presentation by the Lender of a statement in the amount and
setting forth the Lender's calculation thereof, which statement shall be deemed
true and correct absent manifest error. In determining such amount, the Lender
may use any reasonable averaging and attribution methods.

                                      -15-
<PAGE>
     Section  4.03     Payments Free of Taxes.  Except as expressly otherwise
                       ----------------------
provided herein, any and all payments by the Borrower or any Guarantor hereunder
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, net income taxes that are imposed
by the United States and franchise taxes and net income taxes that are imposed
on the Lender by any state or foreign jurisdiction in which the Lender is
organized (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Covered Taxes").
                                                               -------------
If the Borrower shall be required by law to deduct any Covered Taxes from or in
respect of any sum payable hereunder to the Lender, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Lender receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower or the Guarantor, as applicable,
shall make such deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.

     Section  4.04     Other Taxes.  In addition, the Borrower agrees to pay any
                       -----------
present or future stamp or documentary taxes or similar levies that arise from
any payment made by it hereunder or from its execution, delivery or registration
of this Agreement (hereinafter referred to as "Other Taxes").
                                               ------------

     Section  4.05     Indemnification by Borrower.  The Borrower will indemnify
                       ---------------------------
the Lender for the full amount of Covered Taxes or Other Taxes (including any
Covered Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this Section) attributable to the Borrower or any Guarantor hereunder and
paid by the Lender and any liability (including penalties, additions to tax,
interest and reasonable expenses) arising therefrom or with respect thereto.

     5.     BORROWER'S  REPRESENTATIONS  AND  WARRANTIES.
            ---------------------------------------------

     The Borrower represents and warrants that:

          (a)     Organization,  etc.  The Borrower (i) is a corporation duly
                  ------------------
organized, validly existing and in good standing under the laws of the state of
Delaware; (ii) has all requisite power and authority and all necessary
franchises, licenses and permits to own and operate its properties and to carry
on its business as now conducted and as presently proposed to be conducted; and
(iii) is duly qualified, licensed and in good standing as a foreign corporation
in each jurisdiction in which the nature of the business transacted by it or of
the properties owned or leased by it is such as to require qualification and
licensing as a foreign corporation.

          (b)     Valid and Binding Agreement.  The Borrower has full power and
                  ---------------------------
legal right to execute, deliver and perform this Agreement and all other
Transaction Documents to which it is a party and has taken all corporate action
necessary thereto. This Agreement constitutes, and the Note when executed and
delivered by the Borrower will constitute, legal, valid and binding obligations
of the Borrower enforceable in accordance with their terms.

                                      -16-
<PAGE>
          (c)     Authority.  The transactions contemplated by the Transaction
                  ---------
Documents (i) do not require any consent or approval of, registration or filing
with, or any other action by, any Governmental Authority, except such as have
been obtained or made and are in full force and effect, (ii) will not violate
any Applicable Law or certificate of incorporation, partnership agreement,
limited liability company operating agreement, declaration of trust, the charter
or by-laws or other organizational or constitutional documents, as the case may
be, of the Borrower, or any order of any Governmental Authority, (iii) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon the Borrower or any of its subsidiaries, or any of their
respective assets, or give rise to a right thereunder to require any payment to
be made by any such Person, and (iv) will not result in the creation or
imposition of any Lien on any asset of the Borrower or any of its subsidiaries.

          (d)     Financial Statements.  The consolidated balance sheet of
                  --------------------
Apollo Gold Corporation (and, on request, of the Borrower) and its subsidiaries
as of December 31, 2002, and the related consolidated statements of income,
retained earnings and changes in financial position for such year, each as
restated, have been prepared in accordance with generally accepted accounting
principles consistently applied and fairly present the financial condition of
the Borrower and its subsidiaries as of such dates and the results of their
operations for such periods. Since March 31, 2003, there has been no change in
the financial condition, results of operations or business of Apollo Gold
Corporation and its subsidiaries that could reasonably be expected to have a
Material Adverse Effect, except as reflected in Schedule 4 to this Agreement.
                                                ----------

          (e)     Properties.  Each of the Borrower and its subsidiaries has
                  ----------
good and marketable title to all properties it purports to own, including all
properties reflected in the most recent balance sheet referred to in paragraph
(d) above (except as sold or disposed of in the ordinary course of business)
free from mortgages, security interests, liens or other encumbrances not
permitted by Section 8. Each of Montana Tunnels and Florida Canyon is a direct,
wholly-owned subsidiary of the Borrower, and the principal mining properties of
the Borrower and its subsidiaries are owned by Montana Tunnels and Florida
Canyon.

          (f)     Tax  Returns.  The Borrower has filed all tax returns required
                  ------------
to be filed by it and has paid all taxes shown to be due and payable on said tax
returns and all assessments and other governmental charges or levies made
against it. The Borrower does not know of any proposed tax deficiency,
assessment, charge or levy against it, the payment of which is not adequately
provided for on the books of the Borrower.

          (g)     Proceedings.  Except as disclosed in the notes to the
                  -----------
financial statements referred to in Section 5(d) above and except as disclosed
on Schedule 2 hereto, there are no actions, suits, proceedings or investigations
   ----------
pending, or to the knowledge of the Borrower, threatened, against or affecting
the Borrower, or any properties or rights of the Borrower, before any court,
arbitrator or administrative or governmental body which might reasonably
expected to have a Material Adverse Effect.

          (h)     Default.  No event has occurred and no condition exists which
                  -------
would, upon the execution and delivery of the Agreement and the Note, constitute
an Event of Default under this Agreement, and no event has occurred and no
condition exists which constitutes, or which with the passage of time or the
giving of notice or both would constitute, a default in the

                                      -17-
<PAGE>
payment of any obligation of the Borrower for borrowed money, or in the
performance of any covenant or condition under any mortgage, indenture, contract
or other instrument or under any order of any court, governmental authority,
arbitration board or tribunal, binding on the Borrower.

          (i)     Compliance.  The Borrower and each of its subsidiaries is in
                  ----------
compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property, including all Environmental Laws, and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

     6.     GUARANTORS' REPRESENTATIONS AND WARRANTIES.
            -------------------------------------------

     Section  6.01     Each Guarantor represents and warrants that:

          (a)     Organization, Etc.  Such Guarantor (i) is a corporation duly
                  -----------------
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation; (ii) has all requisite power and authority and
all necessary franchises, licenses and permits to own and operate its properties
and to carry on its business as now conducted and as presently proposed to be
conducted; and (iii) is duly qualified, licensed and in good standing as a
foreign corporation in each jurisdiction in which the nature of the business
transacted by it or of the properties owned or leased by it is such as to
require qualification and licensing as a foreign corporation.

          (b)     Valid and Binding Agreement.  Such Guarantor has full power
                  ---------------------------
and legal right to execute, deliver and perform this Agreement and those
Transaction Documents to which it is a party, and has taken all corporate action
necessary thereto. This Agreement and the applicable Transaction Documents
constitute the legal, valid and binding obligations of such Guarantor
enforceable in accordance with their terms.

          (c)     Authority.  The transactions contemplated by the Transaction
                  ---------
Documents (i) do not require any consent or approval of, registration or filing
with, or any other action by, any Governmental Authority, except such as have
been obtained or made and are in full force and effect, (ii) will not violate
any Applicable Law or certificate of incorporation, partnership agreement,
limited liability company operating agreement, declaration of trust, the charter
or by-laws or other organizational or constitutional documents, as the case may
be, of such Guarantor, or any order of any Governmental Authority, (iii) will
not violate or result in a default under any indenture, agreement or other
instrument binding upon such Guarantor or any of its subsidiaries, or any of
their respective assets, or give rise to a right thereunder to require any
payment to be made by any such Person, and (iv) will not result in the creation
or imposition of any Lien on any asset of such Guarantor, other than the Liens
and security interests created by the Transaction Documents.

          (d)     Tax Returns.  Except as disclosed on Schedule 1, such
                  -----------                          ----------
Guarantor has filed all tax returns required to be filed by it and has paid all
taxes shown to be due and payable on said tax returns and all assessments and
other governmental charges or levies made against it.

          (e)     Proceedings.  There are no actions, suits, proceedings or
                  -----------
investigations pending, or to the knowledge of such Guarantor, threatened,
against or affecting such Guarantor, or any properties or rights of such
Guarantor,

                                      -18-
<PAGE>
before any court, arbitrator or administrative or governmental body which might
adversely affect the business, operations, properties or financial position of
such Guarantor.

     Section  6.02     Apollo Gold Corporation.  Apollo Gold Corporation
                       -----------------------
represents and warrants that the consolidated balance sheet of it and its
subsidiaries as of March 31, 2003, and the related consolidated statements of
income, retained earnings and changes in financial position for such year, have
been prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the financial condition of it and its
subsidiaries as of such dates and the results of their operations for such
periods. Since March 31, 2003, there has been no change in the financial
condition, results of operations or business of Apollo Gold Corporation and its
subsidiaries that could reasonably be expected to have a Material Adverse
Effect, except as reflected in Schedule 4 to this Agreement.
                               ----------

     Section  6.03     Montana Tunnels and Florida Canyon.  Each of Montana
                       ----------------------------------
Tunnels and Florida Canyon represents and warrants that:

          (a)     Material Benefit.  It is a wholly-owned subsidiary of the
                  ----------------
Borrower and as such will materially and substantially benefit from the making
of the Loans to the Borrower hereunder.

          (b)     Principal Properties.  The property described in the Mortgage
                  --------------------
to which it is a party describes all of its material mining properties and all
related easements, rights and interests necessary for the operation thereof.

     7.     CONDITIONS  TO  LOANS.
            ----------------------

     Section  7.01     Closing Date Conditions.  The obligation of the Lender to
                       -----------------------
make the Loans is subject to the satisfaction of the following conditions
precedent on or before the Closing Date:

          (a)     Closing  Documents.  The Lender shall have received the
                  ------------------
following documents, each of which shall be satisfactory to the Lender in form
and substance:

               (i)     Authority  and  Approvals.  Certified copies of (A) the
                       -------------------------
resolutions of the Board of Directors or equivalent body of each of the Borrower
and each Guarantor authorizing and approving the Transaction Documents to which
it is a party, (B) documents evidencing any other necessary action (corporate,
partnership, or otherwise) in connection with the transactions contemplated
hereby, and (C) all governmental approvals and all third-party consents or
approvals, if any, with respect to such transactions.

               (ii)     Secretary's or Assistant Secretary's Certificates.  A
                        -------------------------------------------------
certificate of the Secretary or an Assistant Secretary or other appropriate
officer of each of the Borrower and each Guarantor certifying the names and true
signatures of the officers or other designated persons of the Borrower and each
Guarantor authorized to sign this Agreement, the other Transaction Documents and
the other documents and instruments to be delivered by the Borrower or such
Guarantor hereunder.

                                      -19-
<PAGE>
               (iii)     Opinion of Borrower's Counsel.  A favorable opinion of
                         -----------------------------
Donald W. Vagstad, General Counsel for the Borrower, covering such matters as
the Lender shall reasonably require (and the Borrower hereby instructs such
counsel to deliver such opinion to the Lender).

               (iv)     Opinion of Guarantor's Counsel.  A favorable opinion of
                        ------------------------------
Lackowicz & Shier, special counsel for the Guarantors, covering such matters as
the Lender shall reasonably require (and the Guarantors hereby instruct such
counsel to deliver such opinion to the Lender).

               (v)     Closing Certificate on behalf of the Borrower.  A
                       ---------------------------------------------
certificate of a Financial Officer of the Borrower to the effect that: (A) the
representations and warranties of the Borrower contained in this Agreement are
true and correct on and as of the date of such certificate, before and after
giving effect to the transactions contemplated hereby, as though made on and as
of such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date); and (B) no
event has occurred and is continuing that constitutes a Default.

               (vi)     Closing Certificates on behalf of the Guarantors.  A
                        ------------------------------------------------
certificate of a Financial Officer of each Guarantor to the effect that the
representations and warranties of such Guarantor contained in this Agreement are
true and correct on and as of the date of such certificate, before and after
giving effect to the transactions contemplated hereby, as though made on and as
of such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).

          (b)     Technical and Legal Due Diligence.  The Technical Consultant
                  ---------------------------------
and the Lender's special counsel shall have verified to the Lender's
satisfaction all matters with respect to the assets and operations of the
Borrower and the Guarantors and the transactions contemplated hereby, including
but not limited to the Approved LOM Plan with respect to the Florida Canyon mine
and the right of each of the Borrower and the Guarantors to execute and perform
the transactions contemplated hereby, as the Lender shall deem appropriate.

          (c)     Fees.  The Borrower shall have paid all accrued fees and
                  ----
expenses of the Lender (including the reasonable fees and expenses of special
counsel to the Lender and the reasonable fees and expenses of the Technical
Consultant) owed by the Borrower in connection with this Agreement.

          (d)     Delivery of Transaction Documents.  The Borrower and each
                  ---------------------------------
Guarantor shall have executed and delivered to the Lender, this Agreement and
the other Transaction Documents to which each is a party.

          (e)     Financing Statements; Mortgages; Search Reports; Insurance.
                  ----------------------------------------------------------
The Mortgages and all appropriate financing statements and other documents
necessary for the Lender to have a legal, valid and enforceable Lien on and
first-priority perfected security interest in the Collateral shall have been
duly executed by the Borrower, Montana Tunnels or Florida Canyon, as applicable,
and duly filed or recorded, as applicable, in all appropriate filing offices or
other locations. The Lender shall have received UCC and tax lien search reports
concerning

                                      -20-
<PAGE>
the results of searches of the appropriate filing offices for the Borrower,
Montana Tunnels and Florida Canyon in Washington, Delaware, Montana and Nevada
no more than 10 days prior to the Closing Date. The Lender shall have received
satisfactory evidence that such insurance as is required hereunder in respect of
all Collateral is in effect and the interest of the Lender as mortgagee, loss
payee and additional insured has been duly endorsed upon all instruments of
insurance issued in respect of such property.

          (f)     Compliance with all Laws.  Each of the Borrower and each
                  ------------------------
Guarantor, as applicable, shall be in compliance in all material respects with
all laws, contracts, agreements, instruments and all other documents to which it
is subject.

          (g)     Hedging.  The Borrower shall have entered into the Required
                  -------
Hedging Agreements with the Lender.

          (h)     Other  Items.  The Lender shall have received such other
                  ------------
approvals, opinions and documents relating to this Agreement and the
transactions contemplated hereby as the Lender may reasonably request.

     Section  7.02     Advance Date Conditions.  The obligation of the Lender to
                       -----------------------
make any Loan is subject to the following on the date of the proposed advance:

          (a)     Each  of  the representations and warranties set forth in this
Agreement shall be true and correct in all material respects, before and after
giving effect to the proposed Loan, as though made on and as of such date.

          (b)     No Default or Event of Default shall exist.

          (c)     The Lender shall have received the Notice of Advance required
by Section 2.02(a) at least two Business Days prior to the date of the proposed
Loan.

     8.     CERTAIN COVENANTS OF BORROWER AND GUARANTORS.
            --------------------------------------------

     Until the Commitment shall have expired or been terminated, and the entire
principal of and all interest on the Loans and all fees payable hereunder shall
have been paid in full, each of the Borrower and the Guarantors covenants and
agrees with the Lender that:

     Section  8.01     Financial Statements and Other Information.  The Borrower
                       ------------------------------------------
will furnish to the Lender:

          (a)     as  soon  as  available, and in any event within 30 days after
the end of each fiscal quarter, a copy of each of the Borrower's and the
Guarantor's financial report for such fiscal quarter, including a production
report, income statement, balance sheet, and statement of cash flows, prepaid in
conformity with GAAP and certified by the principal Financial Officer of the
Borrower or the Guarantor, as applicable.

          (b)     as  soon  as  available, and in any event within 60 days after
the end of each fiscal year of Apollo Gold Corporation (and, on request, of the
Borrower), copies of the consolidated statement of financial condition and
related consolidated statements of income

                                      -21-
<PAGE>
(loss), cash flows and shareholders' equity of (i) Apollo Gold Corporation and
its subsidiaries and (ii) each Guarantor and its subsidiaries, as of the end of
and for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by an opinion thereon of
independent certified public accountants acceptable to the Lender, which
opinions shall state that such financial statements present fairly, in all
material respects, the financial position of the companies being reported upon
and their results of operations and cash flows and have been prepared in
conformity with GAAP, and that the examination of such accountants in connection
with such financial statements has been made in accordance with generally
accepted auditing standards.

          (c)     not later than 30 days following the end of each calendar
quarter, a certificate of a Financial Officer of the Borrower substantially in
the form of Exhibit C (i) stating whether the Borrower was in compliance with
            ---------
the provisions of Sections 8.09 through 8.12 as of the immediately preceding
Compliance Determination Date, and (ii) setting forth calculations in reasonable
detail to demonstrate such compliance or non-compliance;

          (d)     concurrently with each delivery of financial statements under
paragraph (a) or (b) above, a certificate of a Financial Officer of the
Borrower, certifying as to whether a Default has occurred and, if so, specifying
the details thereof and any action taken or proposed to be taken with respect
thereto; and

          (e)     promptly following any request therefor, such other
information regarding the Borrower, or any of its Subsidiaries, or compliance
with the terms of this Agreement, as the Lender may reasonably request in
writing.

     Section  8.02     Notices of Material Events.  The Borrower will furnish to
                       --------------------------
the Lender prompt written notice of the following:

          (a)     the occurrence of any Default;

          (b)     the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or affecting the
Borrower or any of its subsidiaries that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect; and

          (c)     any other development (other than matters of a general
economic nature) that results in a Material Adverse Effect.

     Each notice delivered under this Section 8.02 shall be accompanied by a
statement of a Financial Officer reasonably describing the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.

     Section  8.03     Inspection.  Each of the Borrower and the Guarantors will
                       -----------
permit representatives of the Lender from time to time to visit and inspect any
of its or its subsidiaries' properties and examine and copy any of its or its
subsidiaries' books and records.

     Section  8.04     Business and Properties.  Each of the Borrower and the
                       -----------------------
Guarantors agrees as follows:

                                      -22-
<PAGE>
          (a)     Existence.  It will, and will cause each of its material
                  ---------
subsidiaries to, do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its legal existence and the rights, licenses,
permits, privileges and franchises material to the conduct of it business and
the transactions contemplated hereby. Nothing in this paragraph shall be deemed
to require the Borrower or any Guarantor to maintain the existence of the lapsed
former subsidiaries of International Pursuit Corporation, which Apollo Gold
Corporation has determined not to support or to revive as described in Schedule
                                                                       --------
2.
-

          (b)     Properties.  It will, and will cause each of its subsidiaries
                  ----------
to, maintain and preserve all of its properties that are used or useful in the
conduct of its business, including, without limitation, licenses, permits,
trademarks, trade names and other intellectual property, except where failure to
do so could not (either individually or in the aggregate) reasonably be expected
to have a Material Adverse Effect.

          (c)     Payment of Obligations.  It will, and will cause each of its
                  ----------------------
subsidiaries to, pay its obligations, including tax liabilities, that if not
paid could result in a Material Adverse Effect before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) it or its
subsidiary, as applicable, has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

          (d)     Maintenance of Insurance.  It shall, and shall cause its
                  ------------------------
subsidiaries to, insure and keep insured, with insurers and upon customary
terms, all of its property and assets customarily insured by companies carrying
on a similar business or owning or operating similar property and assets against
the customary risks and for the customary amounts, and shall provide the Lender,
when requested, with copies of all such insurance policies.

          (e)     Changes of Name or Places of Business. If it changes its name
                  -------------------------------------
or changes the location of its registered office, its chief executive office or
its principal place of business, it shall promptly notify the Lender in writing
of the details of same.

     Section  8.05     Use of Proceeds. The proceeds of the Loans will be used
                       ---------------
for general corporate purposes, including acquisitions, in compliance with all
applicable legal and regulatory requirements; provided that the Lender shall not
have any responsibility as to the application or use of any such proceeds.

     Section  8.06     Negative Pledge.  Neither the Borrower nor any Guarantor
                       ---------------
will permit any of its assets or the assets of any subsidiary to be subject to
any Lien, except Permitted Liens.

     Section  8.07     No Merger.  Without the prior written consent of the
                       ---------
Lender, it will not merge or consolidate with any other business organization
or, except in the ordinary course of its business and as expressly permitted by
this Agreement, sell, lease, transfer or otherwise dispose of any of its assets.

     Section 8.08     Required Hedging Agreements. The Borrower shall enter into
                      ---------------------------
and maintain the Required Hedging Agreements.

                                      -23-
<PAGE>
     Section 8.09     Net Worth.  Net Worth shall, at all times, be no less than
                      ---------
CDN$60,000,000.

     Section 8.10     Current Ratio. The Current Ratio shall, at all times, be
                       ------------
no less than 1.50:1.

     Section 8.11     Gearing.  Gearing shall, at all times, be no greater than
                       ------
35%.

     Section 8.12     Operating Covenants.  At each Compliance Determination
                      -------------------
Date:

          (a)     Loan Life Ratio.  The Loan Life Ratio, for the Forecast Period
                  ---------------
thereafter to and including the Commitment Termination Date, shall be not less
than 1.50:1.

          (b)     Mineral Reserve Ratio.  The Mineral Reserve Ratio, for the
                  ---------------------
Forecast Period thereafter to and including the Project End Date of the Eligible
Project having the most distant Project End Date, shall be not less than 2.00:1.

          (c)     Debt Service Coverage.  The Debt Service Cover Ratio for the
                  ---------------------
Measurement Period ending on such Compliance Determination Date shall be not
less than 1.25:1.

          (d)     Reserve Tail.  On the basis of the Approved LOM Plans then in
                  ------------
effect for each Eligible Project at such time, at least 30% of the proven and
probable Reserves for each Eligible Project will remain at the time the Loans
have been repaid in full in accordance with the Amortization Schedule then in
effect.

     Section 8.13     Recalculation of Approved LOM Plans.
                      -----------------------------------

          (a)     The Technical Consultant, based upon information and data
provided by Florida Canyon and/or Montana Tunnels, as appropriate, shall propose
changes in assumptions and data contained in the Approved LOM Plan with respect
to each Eligible Project (collectively, "Mining Plan Assumptions") in order to
                                         -----------------------
update such Approved LOM Plan, in a manner consistent with the reasonable,
prudent and efficient operation of such Eligible Project and non-producing
assets from time to time (including if the Lender shall have reasonably
determined that a material deterioration in the economics or operations of an
Eligible Project requires an update of the applicable Approved LOM Plan) and at
least on an annual basis, no later than on June 30 of each calendar year
commencing June 30, 2004. Each of the foregoing dates on which an Approved LOM
Plan is to be updated is referred to as a "Recalculation Date".
                                           -------------------

          (b)     Within 21 days after any Recalculation Date, the Borrower
shall deliver to the Lender a response as to the then current Mining Plan
Assumptions for each Approved LOM Plan. If the Borrower accepts all of the
Mining Plan Assumptions with respect to an Approved LOM Plan, then those Mining
Plan Assumptions shall be used for the purposes of modifying such Approved LOM
Plan. If the Borrower does not accept all of the Mining Plan Assumptions for any
Approved LOM Plan, the Technical Consultant and the Borrower shall consult for a
period of 21 days in an attempt to agree on Mining Plan Assumptions for a new
Approved LOM Plan. If, at the end of such 21-day period, no agreement on Mining
Plan Assumptions is reached, the Mining Plan Assumptions proposed by the
Technical Consultant, shall in the absence of demonstrable error or objection by
the Lender, control.

                                      -24-
<PAGE>
     Section  8.14     Proceeds Accounts.
                       -----------------

          (a)     Initial Account.  Florida Canyon shall maintain an account (a
                  ---------------
"Proceeds Account") with US Bank National Association, Reno, Nevada, or another
 ----------------
bank reasonably acceptable to the Lender (a "Proceeds Account Bank"), which
                                             ---------------------
Florida Canyon utilizes as its primary bank account for the receipt of proceeds
from sales of metal or metal concentrate by it. In connection with such Proceeds
Account, Florida Canyon and the Proceeds Account Bank shall enter into a control
agreement (within the meaning of the UCC), no later than July 15, 2003, pursuant
to which the Proceeds Account Bank shall agree that, upon notice from the Lender
to the Proceeds Account Bank that the Lender is exercising control over the
Proceeds Account, the Proceeds Account Bank thereafter will follow the
instructions of the Lender (and only the Lender) with respect to the Proceeds
Account and the application of all payments received therein.

          (b)     Subsequent Account.  Prior to such time, if ever, as the
                  ------------------
Montana Tunnels mine is approved by the Lender as an Eligible Project, Montana
Tunnels shall establish a Proceeds Account with a Proceeds Account Bank
acceptable to the Lender on the same terms and for the same purposes as
described in Section 8.14(a) and shall enter into a control agreement with
respect to such Proceeds Account in favor of the Lender.

     9.     GUARANTY.
            --------

          (a)     In consideration of the Lender's making the Loans to the
Borrower, each Guarantor hereby irrevocably and unconditionally guarantees the
punctual payment of all amounts due to the Lender under this Agreement, the
Note, the Hedging Agreement and the other Obligations. The foregoing guaranty is
a guaranty of the dueand punctual payment of the Obligations and not just the
collection thereof.

          (b)     The obligations of each Guarantor hereunder shall remain in
full force and effect without regard to, and shall not be discharged or rendered
unenforceable by, any circumstances (whether or not the Borrower or any
Guarantor shall have knowledge or notice thereof), including, without
limitation,

               (i)     any amendment to or modification of the terms of this
Agreement, the Note or any of the other Obligations,

               (ii)     any waiver, consent or indulgence by the Lender under or
in respect of the Note or under or in respect of this Agreement or any of the
other Obligations or any exercise or non-exercise by the Lender of any right,
power or privilege under or in respect hereof or thereof,

               (iii)    any limitation on liability of the Borrower on any of
its Obligations or the invalidity or unenforceability hereof or thereof, in
whole or in part, as to the Borrower or any other Guarantor,

               (iv)    the substitution, withdrawal or release of any of the
Collateral as security for any or all of the Obligations, or

                                      -25-
<PAGE>
               (v)     any bankruptcy, insolvency, reorganization, arrangement,
liquidation or similar proceeding with respect to the Borrower or any other
Guarantor.

          (c)     Each Guarantor unconditionally waives to the fullest extent
lawfully possible (i) notice of any of the matters referred to in paragraph (b)
above, (ii) any requirement of diligence, (iii) all defenses which may now or
hereafter exist by virtue of any statute of limitation, stay, valuation,
moratorium or similar law, except the sole defense of payment, and (iv) all
demands upon the Borrower or any Guarantor and all other formalities the
omission of any of which, or delay in performance of which, might, but for the
provisions of this paragraph, by rule of law or otherwise, constitute grounds
for relieving or discharging either the Borrower or any Guarantor in whole or in
part from its absolute and irrevocable obligations hereunder, it being the
intention of the Borrower and each Guarantor that its obligations shall not be
discharged except by performance and then only to the extent of such
performance.

     10.     SECURITY.
             --------

     Section 10.01     Grant.     To secure the payment of the principal of and
                       -----
interest on the Note and the Loans, and the performance by the Borrower and each
Guarantor of its respective obligations hereunder and under the Hedging
Agreements, and the payment and performance by the Borrower of all other amounts
and obligations that it may owe the Lender now or in the future (collectively,
the "Obligations"), each of the Borrower, Montana Tunnels and Florida Canyon
     -----------
hereby grants to the Lender a Lien on and security interest in all of its right,
title and interest in and to the following property (the "Collateral"):
                                                          ----------

          (a)     all of its now owned and hereafter acquired Inventory
(including, but not limited to all reprocessed goods), Accounts, fixtures,
goods, oil, gas and other minerals (both before and after extraction),
documents, instruments, chattel paper, cash, deposit accounts, investment
property (including, in the case of the Borrower, all of its stock in Montana
Tunnels and Florida Canyon), letter-of-credit rights, supporting obligations,
policies of insurance (casualty, liability, life, business interruption, etc.),
General Intangibles, Equipment, any and all rights to payment under the Hedging
Agreement and any and all of its property now or hereafter in the possession of
or pledged or assigned to Lender, and all products, replacements and proceeds
of, and accessions and additions to, any of the foregoing;

          (b)     in the case of Montana Tunnels, all of its interest in the
Montana Tunnels mine and all proceeds and accessions and additions related
thereto; and

          (c)     in the case of Florida Canyon, all of its interest in the
Florida Canyon mine and all proceeds and accessions and additions related
thereto.

     Section 10.02     Perfection.     The Borrower, Montana Tunnels and Florida
                       ----------
Canyon will, and the Lender may, from time to time execute (if required) and
file or record, at the cost and expense of the Borrower, all financing
statements, amendments or supplements thereto, continuation statements with
respect thereto and all other documents and instruments that may be necessary or
which the Lender may from time to time reasonably deem appropriate and request
(if the Lender chooses not to act on its own), in order to perfect, protect and
maintain the Lien on and security interests in the Collateral hereby granted,
including taking all action requested by

                                      -26-
<PAGE>
the Lender to record the Mortgages in the applicable recording offices. The
Borrower, Montana Tunnels and Florida Canyon will promptly deliver to the Lender
a copy of each such document or instrument filed or recorded by it and evidence
of its filing or recording in the manner required. The Borrower, Montana Tunnels
and Florida Canyon each further agrees that a carbon, photographic, photostatic
or other reproduction of this Security Agreement or of a financing statement is
sufficient as a financing statement. Any Mortgage executed and recorded pursuant
to this Section shall be in a form reasonably acceptable to the Lender and shall
contain such provisions and accord the Lender such rights and remedies with
respect to the Real Property subject thereto as is typical for similar
properties in the jurisdiction in which the Real Property is located.

     Section 10.03     Certain Covenants with Respect to Collateral.
                       --------------------------------------------

          (a)     Except as otherwise provided in this Agreement, none of the
Borrower, Montana Tunnels and Florida Canyon will sell or otherwise dispose of
all or any part of the Collateral without the written consent of the Lender
except: (i) each may sell or otherwise dispose of Inventory in the ordinary
course of its business; (ii) each may collect Accounts in the ordinary course of
its business; (iii) Florida Canyon may transfer all of its rights, titles and
interest in and to the assets comprising the Standard Gold exploration project
to Borrower's subsidiary Standard Gold Mining, Inc., free and clear of the Liens
arising under the Transaction Documents; and (iv) Apollo Gold Corporation may
transfer all of its rights, titles and interest in and to the assets comprising
the Black Fox exploration project to a subsidiary to be formed in due course
(proposed name, Black Fox Mining, Inc.) free and clear of the Liens arising
under the Transaction Documents.

          (b)     The Borrower, Montana Tunnels and Florida Canyon shall each
maintain at all times with respect to the Collateral owned by it insurance
against risks of fire, so-called extended coverage, sprinkler leakage, theft and
other risks customarily insured against by companies engaged in similar business
to that of the Borrower, Montana Tunnels or Florida Canyon, as applicable, in
amounts, containing such terms, in such form and for such periods as may be
satisfactory to the Lender, such insurance to be payable to the Lender as its
interest may appear. All policies of insurance shall provide for ten (10) days
written minimum cancellation notice to the Lender. In the event of failure to
provide and maintain insurance as herein provided, the Lender may, at its
option, provide such insurance and charge the amount thereof to the Borrower's
account. The Borrower shall furnish to the Lender certificates or other evidence
satisfactory to the Lender of compliance with the foregoing insurance
provisions.

          (c)     If  any Account shall be or become evidenced by any promissory
note  or  other  instrument, the Borrower, Montana Tunnels or Florida Canyon, as
applicable, will immediately pledge or cause to be pledged such note or
instrument to the Lender hereunder, duly endorsed in a manner satisfactory to
the Lender.

          (d)     All of the Collateral, whether owned by the Borrower, Montana
Tunnels or Florida Canyon, shall at all times remain subject to the security
interest created hereby and be available to secure all of the Obligations of the
Borrower and the Guarantors until released in accordance with the terms hereof,
and each agree that the Lender shall not be required to look

                                      -27-
<PAGE>
first to any portion of the Collateral owned by any one of them before looking
to the Collateral owned by or belonging to any other of them in order to satisfy
any of the Obligations.

     Section 10.04     Release of Security Interest.  The  security interest
                       ----------------------------
granted herein shall terminate upon payment in full of all of the Obligations.

     Section 10.05     Subordination to Certain Security Interests.  Anything to
                       -------------------------------------------
the contrary herein notwithstanding, the Lender hereby agrees for the benefit of
the creditors listed below in this Section 10.05 (the "Senior Security Holders")
                                                       -----------------------
that the Lender's security interests granted pursuant to the Transaction
Documents shall at all time be junior and subordinated to the security interests
of the following listed Senior Security Holders in the property indicated, and
covenants, to the extent reasonably required by such Senior Security Holders, to
furnish each such Senior Security Holder upon Borrower's request with a written
estoppel certificate or subordination agreement reflecting such subordination,
in form and content reasonably acceptable to Lender.

          (a)     the  security  interests of National Fire Insurance Company of
Hartford and or its affiliate Western Surety Company or their affiliates or
assignees in the cash deposits and investments held from time to time in the
"Trust Account" referred to in the CNA Bonding Documents ( as defined in
paragraph 4 of Schedule 1); provided, however, that no further deposits in
               ----------
excess of the "Monthly Deposit Amounts" or amounts deposited in order to obtain
an "Increase Rider" as provided for in the CNA Bonding Documents shall be made;

          (b)     the security interests of Washington Mutual Bank or its
affiliates or assignees in the cash deposits and investments held from time to
time as collateral for Washington Mutual Irrevocable Stand-by Letter of Credit
No. STB-1798 for the benefit of the United States Bureau of Land Management;
provided, however, that the amount of such deposits and investments shall not
exceed $4.5 million;

          (c)     the security interests of Washington Mutual Bank or its
affiliates or assignees in the cash deposits and investments held from time to
time as collateral for Washington Mutual Irrevocable Stand-by Letter of Credit
No. STB-1799 for the benefit of the United States Bureau of Land Management;
provided, however, that the amount of such deposits and investments shall not
exceed $250,000;

          (d)     the  Security Interests of the State of Montana, Department of
Environmental Quality under the assignment of the $631,600 deposit account with
US Bank National Association listed in paragraph 7 of Schedule 1;
                                                      -----------

          (e)     the Security Interests of the entities holding the remaining
items listed in the "Secured Portion" column in paragraph 7 of Schedule 1;
                                                               ----------
provided, however, that the amount of such collateral shall not exceed the
amounts so listed;

          (f)     the security interests of ATEL Cash Distribution Fund V, L.P.
or its affiliates or assignee and The CIT Group/Equipment Financing, Inc., or
its affiliates or assignees in certain of the equipment listed in paragraph 8 of
Schedule 1;
----------

          (g)     the security interests of Caterpillar Financial Services
Corporation or its affiliates or assignees in certain of the equipment listed in
paragraph 8 of Schedule 1;
               ----------

                                      -28-
<PAGE>
          (h)     if the Borrower and the Guarantors enter into a settlement
agreement with Safeco Insurance Company of America ("Safeco") providing for a
                                                     ------
term bonding agreement substantially under the terms and conditions set forth in
Safeco's April 23, 2003, response to Florida Canyon's March 21, 2003, letter
proposing terms and conditions for settlement, then the security interest of
Safeco in cash collateral delivered to Safeco or a trustee under such terms and
conditions; provided, however, that no deposits in excess of those required or
those necessary to obtain an increase rider as provided for in such terms and
conditions shall be made; and provided, further, that the cash collateral to be
deposited with Safeco pursuant to the proposed settlement if Safeco issues
additional bonding for Florida canyon: (i) shall not exceed 50% of the amount of
such increase in aggregate penal sum; (ii) shall not exceed $4,000,000 in the
aggregate; and (iii) shall be funded solely from either (A) transfer of all or
any portion of the $3,703, 149 in cash collateral currently held by Washington
Mutual Bank to secure its Letter of Credit No. STB-1798 with respect to the
Florida Canyon mine site or (B) additional cash not to exceed $296,852 obtained
from other sources; and provided, further, that the additional collateral
furnished to Safeco to secure the existing penal sum of Safeco's bonds shall not
exceed $2,500,000 (exclusive of investment proceeds and other accretions to
value while held by Safeco or a trustee) prior to the Commitment Termination the
amount of all such collateral (exclusive to accretions of value while held by
Safeco or a trustee) shall not exceed $7,000,000 (inclusive of cash collateral
described in Section 10.05(b) which may be transferred from Washington Mutual
Bank to Safeco upon substitution of a new Safeco-issued bond for the letter of
credit bonding referred to in Section 10.05(b));

          (i)     the security interests of the TD Canada Trust in the cash
collateral held to secure the irrevocable standby letter of credit described in
paragraph 7 of Schedule 1;
               ----------

          (j)     the security interest of NexCap Finance Corporation in the
rail car covers described in paragraph 10 of Schedule 1;
                                             ----------

          (k)     the security interests of the State of Montana, Department of
Environmental Quality, in the real property described in the Hardrock
Reclamation Property Bond described in paragraph 7 of Schedule 1; and
                                                      ----------

          (l)     the security interests or beneficial interests of the United
States in trust assets in an amount not to exceed $300,000 (exclusive of
investment proceeds and other accretions to value while held by the United
states or a trustee)to be deposited by Florida Canyon in compliance with BLM
requirements under that certain bond determination letter to be issued on or
about June 16, 2003, requiring Florida Canyon to deposit $300,000 to establish a
perpetual trust fund for the maintenance of post-closure evaporation ponds at
the Florida Canyon mine site.

     Section 10.06     Continuing Effectiveness of Release of Interests.
                       ------------------------------------------------
Anything to the contrary herein notwithstanding, the Transaction Documents are
not intended to create or to revive any security interest in favor of the Lender
in any of the real property described in the Release of Interests executed by
the Lender on May 6, 2003, and recorded in the office of the Clerk and Recorder
of Jefferson County, Montana, as Document No. 206371 on May 8, 2003, it being
the intention of the Parties that Montana Tunnels may sell, subject to Liens in
favor of third parties, or otherwise dispose of such property free and clear of
any Lien or rights of the Lender.

                                      -29-
<PAGE>
     Section 10.07     Donation Deed in Connection with Wickes Smelter Site.
                       ----------------------------------------------------
Anything to the contrary herein notwithstanding, the Transaction Documents are
not intended to create or to revive any security interest in favor of the Lender
in any of the real property described the in the draft Donation Deed delivered
to the Lender by facsimile transmission dated June 10, 2003, proposed to be
delivered by Montana Tunnels to the United States of America in connection with
the Wickes Smelter Site settlement described in Schedule 1 of this Agreement,
                                                ----------
and lender will promptly execute, acknowledge, and record quitclaim deeds in
favor of the United States releasing any interest the Lender may hold in such
property upon Montana Tunnel's request.

     11.     DEFAULT.
             -------

     Section 11.01     Events of Default.  Any of the following events shall be
                       -----------------
"Events of Default"  hereunder:
 -----------------

          (a)     the Borrower fails to make any payment of the principal of or
interest on the Note when due, or

          (b)     the Borrower or any Guarantor fails to perform any of its
other obligations under this Agreement or the Note or the Hedging Agreement or
any other Transaction Document, or

          (c)     any representation or warranty set forth herein proves to have
been untrue in any material respect as of the date hereof, or

          (d)     the Borrower or any Guarantor makes an assignment for the
benefit of creditors or is generally not paying its debts as they become due; or
a decree or order appointing a receiver, custodian or trustee for the Borrower
or any Guarantor or for substantially all the properties of the Borrower or any
Guarantor is entered; or the Borrower or any Guarantor commences a voluntary
case under any law relating to bankruptcy, insolvency, reorganization or other
relief of debtors or any proceeding of an involuntary nature is filed against
the Borrower or any Guarantor under any such law and is not dismissed within 30
days,

          (e)     the Borrower or any Guarantor permits any material final
judgment for the payment of money to be entered against it, or any execution or
similar process to be issued or levied against a substantial part of its
property, and such judgment, execution or other process remains outstanding for
more than 30 days or is not stayed within 30 days, or

          (f)     The Surety Bond issued by Safeco guaranteeing the costs of
reclaiming the Florida Canyon mine is determined by a court of competent
jurisdiction to have been validly terminated, revoked or cancelled, and Florida
Canyon fails to enter into a settlement agreement with Safeco or enter into a
substitute bond or indemnity covering such costs of reclamation, in both the
case of any such settlement agreement or any such substitute bond or indemnity,
in form and substance satisfactory to the Lender in its sole discretion.

     Section 11.02     Remedies.  If an Event of Default shall occur and be
                       --------
continuing, the Lender may exercise any right or remedy available to it at law,
including, without limitation, the right to take any or all of the following
actions:

                                      -30-
<PAGE>
          (a)     The Lender may declare, by written notice to the Borrower, the
entire unpaid principal amount of and accrued interest on the Note and the
Loans, together with any other of the Obligations, to be immediately due and
payable, provided that all Obligations shall immediately become due and payable
without declaration, notice or demand upon the occurrence of an Event of Default
specified in Section 11.01(d).

          (b)     The Lender may apply any deposits or property of the Borrower
or any Guarantor with the Lender to the Obligations, in such order and manner as
it shall choose.

          (c)     The Lender may exercise any or all of the rights and remedies
of a secured creditor under the Uniform Commercial Code or other Applicable Law.
If the Lender should be required by law to give any notice to the Borrower or
any Guarantor of the sale of any Collateral, the Borrower and the Guarantors
each agree that notice at least 10 days before the sale shall be reasonable.

          (d)     The Lender may notify customers or account debtors that the
Accounts have been assigned to it, collect them directly, charge the collection
costs and expenses to the Borrower's account and credit the net proceeds thereof
to such account. For such purpose, each of the Borrower, Montana Tunnels and
Florida Canyon appoints the Lender or any other person the Lender may designate
as its attorney with power to (i) endorse its name on any checks, notes,
acceptances, money orders, drafts or other forms of payment that may come into
the Lender's possession; (ii) sign its name on any invoice or bill of lading
relating to any Account, on drafts against customers, on schedules and
assignments of Accounts, on notices of assignment and other public records, on
verifications of Accounts and on notices to customers; (iii) notify the post
office authorities to change the address for delivery of its mail to an address
designated by the Lender; (iv) receive, open and dispose of all mail addresses
to it; and (v) send requests for verifications of Accounts to customers or
account debtors. Neither the Lender nor the attorney will be liable for any acts
or omissions nor for any error of judgment or mistake of fact of law. This
power, being coupled with an interest, is irrevocable so long as any Account
assigned to the Lender or in which it has a security interest remain unpaid or
until the Obligations have been duly satisfied. Alternatively, the Lender may
require the Borrower, Montana Tunnels and Florida Canyon, to make collection of
all Receivables for the Lender, receive all payments thereon as the Lender's
trustee and immediately deliver them to the Lender in their original form. Upon
collection of said items, the Lender will credit the net proceeds thereof to the
Obligations.

     Section 11.03     No Implied Waivers; Rights Cumulative.  No course of
                       -------------------------------------
dealing between the Borrower or any Guarantor and the Lender and no failure to
exercise or delay in exercising on the part of the Lender of any right, power or
privilege under the terms of this Agreement or any other Transaction Document or
under the terms of any other agreements, instruments or other documents between
the Lender or any Guarantor and the Borrower shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder or thereunder preclude any other or further exercise. The rights and
remedies provided herein or in any other agreement are cumulative and not
exclusive of or in derogation of any rights or remedies provided in any thereof,
by law or otherwise.

     12.     NOTICES, ETC.
             -------------

                                      -31-
<PAGE>
          (a)     All notices, consents and other communications provided for
hereunder shall be in writing (including telecopy communication) and mailed,
telecopied or delivered:

          (i)     if to the Borrower or any Guarantor, in care of :

                  Apollo Gold, Inc.
                  Denver Executive Offices
                  4601 DTC Boulevard, Suite 750
                  Denver CO  80237-2571

                  ATTENTION:  General Counsel

                  Telephone:    (720) 886-9656 (Ext. 13)
                  Facsimile:    (720) 482-0957

                  And

          (ii)    if to the Lender:

                  Standard Bank London Limited
                  Cannon Bridge House
                  25 Dowgate Hill
                  London EC4R 2SB
                  Telephone:    +044 0(20) 7815 4155
                  Fax:          +044 (0)20 7815 4032

                  Attention:    Inga Aryanova

                  with a copy to:

                  Standard Americas, Inc.
                  320 Park Avenue, 19th Floor
                  New York, New York  10022
                  Telephone:    (212) 407-5167
                  Fax:          (212) 407-5178
                  Attention:    Rob Doyle

or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties. All such notices and communications
shall be effective when received.

          (b)     Any notice, consent or other communication hereunder by the
Lender to the Borrower or any Guarantor shall, without more, be deemed given to
both the Borrower and each Guarantor. Any notice, consent or other communication
hereunder by either the Borrower or any Guarantor to the Lender shall, without
more, be deemed given by, and shall be binding upon, both the Borrower and each
Guarantor.

     13.     OTHER.
             -----

                                      -32-
<PAGE>
     Section  13.01     Amendments.  Neither this Agreement nor any provision
                        ----------
hereof may be amended or modified except pursuant to an agreement or agreements
in writing entered into by the Borrower and the Lender.

     Section 13.02     Costs and Expenses.  The Borrower agrees to pay on demand
                       ------------------
(i) all reasonable out-of-pocket expenses incurred by the Lender and its
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Lender and the costs and expenses of the technical due diligence
performed by the Technical Consultant, in connection with entering into the
credit facilities provided for herein and the preparation and negotiation of
this Agreement and the other Transaction Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
out-of-pocket costs and expenses of the Lender related to the administration of
the Loans and the transactions contemplated hereby, and (iii) all out-of-pocket
costs and expenses incurred by the Lender, including the fees, charges and
disbursements of any counsel for the Lender, in connection with the enforcement
or protection of its rights in connection with this Agreement and the other
Transaction Documents, including in connection with any workout, restructuring
or negotiations in respect thereof.

     Section 13.03     Indemnification by the Borrower.  The Borrower agrees to
                       -------------------------------
indemnify the Lender and each Related Party of the Lender (each such Person
being called an "Indemnitee") against, and hold each Indemnitee harmless from,
                 ----------
any and all losses, claims, damages, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of the Transactions or any
other transactions contemplated hereby or (ii) holding a lien on or security
interest in any or all of the Collateral or (iii) the Loan or the use of the
proceeds therefrom; provided that such indemnity shall not be available to the
extent that such losses, claims, damages, liabilities or related expenses
resulted from the gross negligence or willful misconduct of such Indemnitee.

     Section 13.04     Survival.  All covenants, agreements, representations and
                       --------
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the Lender and shall survive the
execution and delivery of this Agreement and the making of any Loans, regardless
of any investigation made by the Lender or on its behalf and notwithstanding
that the Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan, or any fee or any other amount payable under this
Agreement is outstanding and unpaid and so long as the Commitment has not
expired or been terminated. The provisions of Sections 4 and 13.03 shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Commitment or the termination of this Agreement or any
provision hereof.

     Section 13.05     Counterparts; Integration; Effectiveness.  This Agreement
                       ----------------------------------------
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which

                                      -33-
<PAGE>
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Agreement and the other Transaction Documents
constitute the entire contract between and among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Delivery
of an executed counterpart of a signature page to this Agreement by telecopy
shall be effective as delivery of a manually executed counterpart of this
Agreement.

     Section 13.06     Severability.  Any provision of this Agreement held to be
                       ------------
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

     Section 13.07     Right of Setoff.  If an Event of Default shall have
                       ---------------
occurred and be continuing, the Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by the Lender or any
banking Affiliate thereof to or for the credit or the account of the Borrower or
any Guarantor against any of and all the obligations of the Borrower or any
Guarantor now or hereafter existing under this Agreement or the Note,
irrespective of whether or not the Lender shall have made any demand under this
Agreement or the Note and although such obligations may be unmatured. The rights
of the Lender under this paragraph are in addition to any other rights and
remedies (including other rights of setoff) which the Lender may have.

     Section 13.08     Governing Law.  This Agreement shall be construed in
                       -------------
accordance with and governed by the law of the State of New York, except to the
extent that local law applies with respect to any of the Collateral.

     Section 13.09     Submission to Jurisdiction.  Each party to this Agreement
                       --------------------------
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of all federal and state courts located in the
State of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in the State of New York or, to the
extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Lender may otherwise have to bring any action or proceeding
relating to this Agreement against the Borrower or its properties in the courts
of any jurisdiction.

     Section 13.10     Waiver of Venue.  Each  party to this Agreement hereby
                       ---------------
irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement in any court referred to in Section 13.09. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

                                      -34-
<PAGE>
     Section 13.11     Service of Process.  Each party to this Agreement
                       ------------------
irrevocably consents to service of process in the manner provided for notices in
Section 12. Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

     WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
     --------------------
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.12.

                [Remainder of page blank, signatures to follow]

<PAGE>
                                               Sincerely yours,

                                               STANDARD BANK LONDON LIMITED

                                               By_______________________________
                                                 Name:
                                                 Title:

<PAGE>
Accepted and agreed to:

APOLLO GOLD, INC.

By______________________________
  Name:  R. David Russell
  Title:  Chief Executive Officer

APOLLO GOLD CORPORATION

By______________________________
  Name:  R. David Russell
  Title:  Chief Executive Officer

MONTANA TUNNELS MINING, INC.

By______________________________
  Name:  R. David Russell
  Title:  Chief Executive Officer

FLORIDA CANYON MINING, INC.

By______________________________
  Name:  R. David Russell
  Title:  Chief Executive Officer

<PAGE>
                                                                       EXHIBIT A

                                 PROMISSORY NOTE

                                                       _________  __,  2003

     For value received, APOLLO GOLD, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of Standard Bank London Limited
---------
(the "Lender") by wire transfer of immediately available funds the principal sum
      ------
of Five Million Dollars ($5,000,000) or the aggregate unpaid principal amount of
the Loans by the Lender to the Borrower pursuant to that certain Revolving Loan,
Guaranty and Security Agreement referred to below, whichever is less, on June
30, 2005 (the "Commitment Termination Date"). The Borrower will make payments
               ---------------------------
in reduction of such principal when and as provided in such Agreement and will
pay interest on the aggregate unpaid principal amount of each such Loan during
each Interest Period with respect thereto on each Payment Date at a rate per
annum equal to the LIBOR Rate for such Interest Period plus 2.75%. The Borrower
will pay on demand interest on any overdue principal and, to the extent
permitted by applicable law, on any overdue payment of interest at the Overdue
Rate.

     This Note is issued pursuant to the Revolving Loan, Guaranty and Security
Agreement dated as of __________, 2003, among the Borrower, the Lender and the
undersigned Guarantors and is entitled to the benefits and security provided
thereby. Reference is hereby made to said Agreement for provisions relating to
acceleration of the maturity hereof. Capitalized terms used in this Note but not
defined herein have the meanings ascribed to them in said Agreement.

     The Borrower and each Guarantor of this Note acknowledge that the loan
evidenced by this Note is a commercial transaction and waives its rights to any
notice or hearing under any applicable law, with respect to any prejudgment
remedy which the Lender or the holder may use.

     This Note and said Agreement are to be governed by and construed in
accordance with New York law.

                                             APOLLO GOLD, INC.

                                             By:
                                                --------------------------------
                                                  Name:
                                                  Title:

     Payment of the foregoing Note is unconditionally guaranteed by the
undersigned.

<PAGE>
                                             APOLLO GOLD CORPORATION

                                             By:
                                                --------------------------------
                                                  Name:
                                                  Title:

                                             MONTANA TUNNELS MINING, INC.

                                             By
                                                --------------------------------
                                                  Name:
                                                  Title:

                                             FLORIDA CANYON MINING, INC.

                                             By
                                                --------------------------------
                                                  Name:
                                                  Title:

<PAGE>
                                                                       EXHIBIT B

                          [Form of Notice of Advance]

                                NOTICE OF ADVANCE

                                                     [Date]

Standard Bank London Limited, as Lender
320 Park Avenue
19th Floor
New York, New York  10022

Attention:     Rob Doyle

Ladies and Gentlemen:

     The undersigned, APOLLO GOLD, INC. (the "Borrower"), refers to the
                                              --------
Revolving Loan, Guaranty and Security Agreement, dated as of _________________
(said agreement, as amended, supplemented or otherwise modified from time to
time, being the "Agreement"), between the Borrower and the Lender. The terms
                 ---------
defined in the Agreement are used herein as defined therein.

     The Borrower hereby requests an advance on a Loan under the Agreement (the
"Proposed Loan"), as follows:
 --------------

     1.   The Business Day of the Proposed Loan is ___________ __, _____.

     2.   The aggregate amount of the Proposed Loan is $___________.

     3.   The aggregate amount of the outstanding Loans (not including the
          Proposed Loan) outstanding is $_________.

     The Borrower hereby represents and warrants that:

     (a)  the representations and warranties contained in the Agreement are true
and correct on and as of the date of the Proposed Loan, before and after giving
effect to the Proposed Loan and to the application of the proceeds therefrom, as
though made on and as of such date (or, if any such representation or warranty
is expressly stated to have been made as of a specific date, as of such specific
date); and

_______________________________
     (1)     At least two (2) Business Days after date hereof.

     (2)     Insert an amount not less than $500,000 on in such lesser amount
as may be available and in an integral multiple of $100,000.

<PAGE>
     (b)  no event has occurred and is continuing, or would result from the
Proposed Loan or from the application of the proceeds therefrom, that
constitutes a Default or an Event of Default.

                                             Very  truly  yours,

                                             APOLLO  GOLD  CORPORATION

                                             By:
                                                --------------------------------
                                                  Name:
                                                  Title:

<PAGE>
                                                                      SCHEDULE 1

                                 PERMITTED LIENS

                            [Intentionally Deleted]

<PAGE>
                                                                      SCHEDULE 2

                      PROCEEDINGS AND POTENTIAL PROCEEDINGS

                            [Intentionally Deleted]

<PAGE>
                                                                      SCHEDULE 3

                           EXISTING HEDGING AGREEMENTS
                           ---------------------------

                            [Intentionally Deleted]

<PAGE>
                                                                      SCHEDULE 4

                          APOLLO GOLF AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                      FOR THE 6 MONTHS ENDING MAY 31, 2003

                            [Intentionally Deleted]

                                      2003
                                     ACTUAL

                            [Intentionally Deleted]

<PAGE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]