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AGT News Apollo Gold Announces Entry into Joint Venture at Its Montana Tunnels Mine

The JV Agreement calls for Elkhorn to earn up to a 50% interest in the Mine by contributing $13 million over a five-month period, starting with initial payments totaling $1 million required to be contributed not later than two weeks after signing. The monies will be used to remediate the east wall instability problems encountered at the Mine during September and early October 2005, which led to the suspension of mining on October 21, 2005. Highlights of the JV Agreement are:

-- Elkhorn is entitled to earn a 50% interest in the Mine when it has made its full contribution of $13 million.

-- Montana Tunnels Mining, Inc., a wholly owned subsidiary of Apollo ("MTMI"), will be the operator of the Mine. A separate oversight management team consisting of two designees from each of MTMI and Elkhorn will oversee monthly planning and operations.

-- If Elkhorn contributes at least $5,000,000 but fails to make its full contribution, then it will receive a 3% interest in the Mine for each $1 million contributed.

-- If Elkhorn fails to contribute at least $5,000,000, then any lesser contribution will be converted to a promissory note equal to the amount actually contributed, plus interest, payable only out of future positive cash flows from the Mine or in the event the Mine is sold or otherwise financed.

-- When (i) the Mine becomes cash positive and (ii) Elkhorn has contributed the full $13,000,000, then (a) Elkhorn will be entitled to first recover interest on that amount and (b) Elkhorn will receive 65% and Apollo 35% of the free cash flow from the Mine until such time as Elkhorn has recovered $13 million. At that time, Apollo would become entitled to 60% and Elkhorn 40% of the free cash flow, until both parties have received an equal amount. Thereafter, the sharing would revert to 50/50.

David Russell, President and CEO of Apollo, said: "I am very happy that we were able to attract a joint venture partner such as Elkhorn and believe that its contribution will bring the mine back into production and produce a positive cash flow in 2007 thus allowing our shareholders the opportunity to participate in the prevailing high metal price environment. We intend to commence recruitment at the Mine immediately, starting with equipment operators, maintenance personnel and taking into account training and maintenance requirements. The remediation plan calls for the unloading of 5 million tons from the upper benches of the east wall of the Mine to mitigate rock fall hazards by reducing slope deformation and rock mass degradation in the weak rock units exposed along the upper east wall. The plan also calls for a new, wider haul ramp to reduce the potential for haul ramp instability along the east wall. In addition, we plan to take the opportunity to remove 2.5 million tons of waste from the pit bottom, and we expect that the mill will commence production of lead-gold and zinc-gold concentrates in January 2007. The entry into the JV Agreement completes the Company's previously announced intention to pursue a disposition of the Mine."

Since the Mine entered production in 1987 it has produced 1,500,000 ounces of gold, 28,000,000 ounces of silver, 390 million pounds of lead and over 1 billion pounds of zinc. The following is the most recent information on reserves at the Mine as reported in Apollo's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2005: 33.241 million tons of ore with gold grades of 0.016 ounces per ton; silver grades of 0.212 ounces per ton; lead grades of 0.185% and zinc grades of 0.596% for total gold reserve ounces of 535,900.

In addition to the JV Agreement, Apollo entered into two other agreements with Elkhorn Goldfields Inc. ("EGI"), an affiliate of Elkhorn. The first agreement is an option agreement pursuant to which EGI was granted an option to purchase Apollo's Diamond Hill mine for $0.8 million. The option has an exercise term of two years. The underground Diamond Hill gold mine is situated 28 miles southeast of Helena, Montana, and has been on care and maintenance since 2000.

The second agreement is a custom milling agreement pursuant to which EGI will have the right to have MTMI process the ore from EGI's Elkhorn mine, located 20 miles to the south of Montana Tunnels mine, through the 1,000 ton per day Diamond Hill mill which is situated within the Montana Tunnels mill complex. The custom milling agreement also gives EGI a two-year option to purchase the Diamond Hill mill for $1 million.

Elkhorn and EGI are affiliates of Calim, a Colorado-based private equity firm. Calim Managing Director Patrick Imeson stated: "We are very pleased to consummate this relationship with gold/agt.html'>gold/agt.html'>gold/agt.html'>Apollo Gold and Montana Tunnels. We believe the Mine to be a great asset with capable management and operational capability. As we move forward into production at our Elkhorn mine we expect that the synergies resulting from these agreements will realize additional returns for our investors. This agreement fits in well with our strategy of searching out niches where we can develop undervalued opportunities that larger players in an industry have overlooked or are unable to exploit."

gold/agt.html'>gold/agt.html'>gold/agt.html'>Apollo Gold Corporation

Apollo is a gold mining and exploration company with a mine as described above as the Montana Tunnels Mine, the Black Fox advanced stage development project in Ontario, Canada, and the Huizopa Project, an early stage exploration project in the Sierra Madre Gold Belt in Chihuahua, Mexico.

Calim Private Equity, LLC

Colorado-based Calim Private Equity LLC focuses on investment and company development opportunities created by new technologies, expanding markets or underdeveloped assets.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by the use of words such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "continue," or the negative of such terms, or other comparable terminology. All statements regarding planned remediation activities, financial contributions by Elkhorn future intentions, the ability of the Company to effectively remediate the east wall instability problems affecting the Montana Tunnels Mine, to otherwise successfully effect the remediation program for the Montana Tunnels Mine, to bring the Mine back into production in 2007 and generate positive cash flow, and statements respecting reserves with respect or relating to the Montana Tunnels Mine are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from these forward-looking statements include: additional operational and remediation problems at the Montana Tunnels Mine, the failure of Elkhorn to make the expected contributions under the JV agreement, unexpected changes in business and economic conditions, political or economic instability, significant decreases in gold, zinc or lead prices, changes in interest and currency rates, local and community impacts and issues, labor accidents, environmental risks and other factors disclosed under the heading "Risk Factors" in Apollo's most recent annual report on Form 10-K filed with the United States Securities and Exchange Commission and elsewhere in Apollo's documents filed from time to time with the Toronto Stock Exchange, The American Stock Exchange, The United States Securities and Exchange Commission and other regulatory authorities. All forward-looking statements included in this press release are based on information available to Apollo on the date hereof. Apollo assumes no obligation to update any forward-looking statements.