LoIs signed for Archipelago's Toka Tindung gold plant construction

·         Expected To Be Converted Into Full Contracts Shortly While Work Is Underway

·         Consistent With Company's Plans For Production Start-Up In Final Quarter 2010

·         Negotiations For Project Finance Well Advanced With Several Banks

Archipelago Resources Plc (AIM:AR.) says that it has signed Letters of Intent with PT McConnell Dowell Indonesia in respect of construction of the processing plant at the Company's 85% owned Toka Tindung Gold Project in North Sulawesi, Indonesia, that will lead to contracts for the following activities: 

• mechanical refurbishment regarding the processing plant previously acquired from the El Tambo mine in Chile;
• concrete, structural, mechanical and piping works
• electrical and instrumentation
• project management 

The mechanical refurbishment team is already on site and has commenced work in the mechanical, sand blasting and paint re-spray workshops.  Teams for the remaining activities will be mobilised over the coming weeks.  The outstanding longer lead time items have now been ordered, and some of the remaining fabrication work has been re-activated. 

This programme is consistent with Archipelago's construction schedule for Toka Tindung which  is targeting first gold production early in the final quarter of 2010. 

Whilst all construction-related activities are currently being financed by way of working capital, in recent weeks the Company has been working closely with a number of banks that are interested in providing project finance.  "We expect to announce the mandating of selected banks in the coming weeks", says managing director, Mr Colin Loosemore. 

The resumption of activities at Toka Tindung follows receipt at the beginning of last month of a Letter of Support for development of the project from the Provincial Government of North Sulawesi. 

The project has a resource of 1.75m ounces of gold equivalent, of which at least 1.1m ounces will initially be mined by open pit.  Toka Tindung will produce an annual average of 160,000 ounces of gold equivalent for at least 6 years, together with an additional 2 years of processing lower grade stockpiles. Pit designs are currently based on a very conservative gold price of US$550/oz.  As a result, Archipelago is confident that with further exploration and gold prices sustained at their current higher levels, it will be able to substantially extend the life of the Project. 

Archipelago's principal activities are gold mining and exploration in Indonesia (as 85% owner of the Toka Tindung Gold Project in Sulawesi), Vietnam (as majority party in the Pac Lang and Cam Thuy/Ba Thuoc joint ventures with VINACOMIN a Vietnamese Government mining company) and the Philippines (as option holder over a 100% interest in the Corplex tenements).