Archipelago gets standby loan for N. Sulawesi gold project

London Stock Exchange-listed miner Archipelago Resources plc announced on Tuesday that it has reached agreement with RMB Resources to make available additional subordinated loan facilities if required, for its North Sulawesi gold prject.

Under the deal, RMB would provide US$10 million Standby Facility - primarily intended to provide additional pre-production funding for the Toka Tindung Gold Project in the event of breakdowns, acts of God and other unforeseen events, particularly during commissioning.

In addition, as a result of delay to the issue of environmental approval necessary to commence mining and processing operations and to drawdown on the previously announced syndicated project finance facility arranged by Investec Bank, RMB is providing $10 million Bridging Facility which will disburse up to 6 months working capital until Approval and the drawdown of Project Finance Facility.

Loan funds drawn under this Bridging Facility will be repaid by way of first drawdown of the Project Finance Facility.

Furthermore as a result of improved project economics resulting from recent higher gold prices, the Project Finance Facility providers have agreed to increase the Project Finance Facility from $42.5 million to $46.7 million.

The facilities, if drawn, would be imposed commercial interest rate plus option and conversion right.

The Toka Tindung gold project has a resource of 1.75 million ounces (ozs) of gold equivalent, of which at least 900,000 ozs will initially be mineable by open pit. The project is targeted to produce 160,000 ozs per annum for an initial 6 year mine life.

The company said delays in environmental approval has caused production commencement to be delayed from 2006 to late 2007. (alex)