Archipelago signs N. Sulawesi gold project construction deal

UK miner Archipelago Resources Plc announced Wednesday that it has signed Letters of Intent (LoI) with PT McConnell Dowell Indonesia regarding the construction activities at its 85% owned Toka Tindung Gold Project in North Sulawesi.

The LoI will lead to contracts in relation to the following construction activities: 1) Mechanical Refurbishment (regarding processing plant previously acquired from El Tambo in Chile); 2) Concrete, structural, mechanical and piping; 3). Electrical and instrumentation and 4) Project management.

The mechanical refurbishment team has already mobilised to site and commenced work in the Company's mechanical, sand blasting and paint respray workshops. Mobilisation of teams for the remaining activities will take place in coming weeks and months. Remaining longer lead time items have been ordered and some remaining fabrication work reactivated.

All of these activities are consistent with the company's construction schedule targeting first production by early 4th quarter 2010, it said.

?All construction related activities are currently being financed by way of working capital, however in recent weeks the company has been working closely with a number of banks interested in providing project finance and so the company expects to announce the mandating of selected banks in coming weeks,? it added.

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.(denny)