Archipelago raises GBP30.6m to finance Sulawesi gold project

UK firm Archipelago Resources Plc announced on Friday the successful placing of new ordinary shares to institutional investors to raise ?30.6 million to support development of its Toka Tindung gold project in North Sumatra.

The Placing was oversubscribed which the Company takes as a positive indication of support for the Company and the Toka Tindung Project. It is the Board's objective to achieve production by the fourth quarter of 2010, the Company said.

The proceeds of the Placing are estimated to provide up to approximately 80% of the funds required to complete construction of the Project. As a result of the interest shown in the Placing by investors and the apparent costs of financing the Project via debt, the Company proposes to raise the estimated balance of construction costs of approximately ?7 million together with any working capital by way of a combination of:-1) A placing to high net worth investors in relation to the Company's proposed listing on the ASX; and 2) A further placing to institutions.

?Following the successful completion of the Placing, whilst the vast majority of the proceeds of the Placing will be applied to bringing the Project to production, it is the Board's intention to commence exploration at the Project in the latter half of 2010. It should be noted that apart from a small and successful program of deep drilling previously reported in January 2007 and a very successful initial grade control drilling program reported in May 2009, there has been no exploration drilling at Toka Tindung for over a decade given the Company's focus on development of existing resources,? the Company said

The Toka Tindung Gold Project has a resource of 1.75M ozs of gold equivalent, of which at least 1.1M ozs will initially be mineable by open pit. When in operation, the Project will produce at an average annualised production rate of 160,000 ounces of gold equivalent per annum for at least 6 years together with an additional 2 years processing lower grade stockpiles. The Company's pits are currently designed at a very conservative US$600/oz gold price and as a result the Company is confident that with further exploration and sustained gold prices it will be able to substantially extend the life of the Project.

Archipelago is a mining company listed on the AIM market of the London Stock Exchange. (alex)