Archipelago secures funds to develop N. Sulawesi gold project

UK exploration firm Archipelago Resources Plc announced on Tuesday it had secured US13.7 million funds through placement of shares to institutional investment funds managed by Baker Steel Capital Managers LLP, following termination of the funding arrangements with Aurum Fund on 23 February 2009.

Of the $13.7 million raised from the subscription, $6.7 million will be used to repay funds drawn and interest owing under the Aurum Loan Facility, with the balance to be used as working capital.

Following the subscription, Baker Steel's funds interest in shares will increase by 34.3% to approximately 40.6% in the issued capital of the company.

Archipelago has also granted Baker Steel option until 23 August 2009 to increase stake at the company to 51 percent.

?If Baker Steel elects to exercise the Option, then such investment is anticipated to raise an additional $11.3 million approximately which will be available for the project development cost of the company's 85% owned Toka Tindung Gold Project, currently estimated to total $65 million,? the company said.

?A recent review and update of the Project's Feasibility Study indicates a cash production cost of $328 per ounce, which at today's gold price of close to $1,000 per ounce leaves a substantial annual operating surplus based on the Company's projected initial 6 year average annual production rate of 160,000 ounces per annum. The Project has received Construction approval from the Indonesian Government but currently still lacks the support of the Governor of North Sulawesi,? it added.(alex)