Overview

Projects Overview

Toka Tindung Gold Project
The Toka Tindung Gold Project is the Company’s principal asset and comprises a system of epithermal veins containing a resource of 1.75m ounces of gold defined by 158 kms of drilling of which 0.9m ounces will initially be mineable by open pit.

The project, was acquired from Aurora Gold in February 2002 and Archipelago was floated on the London AIM market in September 2003. The project is located approximately 35kms east north east of Manado, the provincial capital of North Sulawesi. Title to the Toka Tindung Gold Project is via two Contracts of Work covering 400kms² of well mineralised and only partially explored ground in addition to the defined resource.

The Company holds an 85% interest in the project but is entitled to the benefit of 100% of proceeds until such time as debts owing by the free carried parties are repaid in full. A syndicated loan facility of US$42.5m together with a US$4.0m cost overrun facility, by Investec Bank (Australia) Limited.

The Company has acquired little used and very good quality processing plant from Barrick’s El Tambo project in Chile and construction is already well advanced at site. Production is scheduled to commence in mid 2009 at an average rate of approximately 160,000 oz of gold equivalent per annum for the first 6 years of an initial 8 year mine life.

Preliminary indications from the financial model reviewed by prospective project financiers, indicates that at a gold price of US$600/oz the project has an after tax NPV of US$160m, a before tax IRR of 107% and EBITDA of US$51m per annum.

Other Projects
Archipelago also holds an exploration licence together with applications for two additional exploration licences in northern Vietnam, a well mineralised country that has to date received little attention from western exploration companies and current exploration technology.

The approved licence covers the old Pac Lang Gold Mine comprising a group of gold mineralised quartz veins initially exploited by the French early in the last century which became the site of a major gold rush in 1990-91 following discovery of a large high grade quartz vein. At least 15 gold mineralised mesothermal quartz veins generally less than 2m wide have been identified with a combined outcropping and inferred strike length of 3,300m.

The two applications cover the Cam Thuy – Ba Thuoc gold district located on the Ma River fault system, a structure parallel to the major Red River suture, a fault structure which hosts several known areas of gold – copper mineralisation in Vietnam and southern China. The main targets covered by the licence applications are two large fold structures within clastic and calcareous sediments which are considered prospective for large gold deposits of the Carlin and possibly Telfer style. Outcropping gold mineralisation and substantial unsourced occurrences of alluvial gold occur within the Company’s application areas.

The licence applications have been lodged in the name of Archipelago Resources and the Vietnam National Minerals Corporation (VIMICO), an entity authorised by the Vietnamese Government to assist with foreign investment within Vietnam’s resource industry.

Archipelago also had the right to acquire 100% of the Corplex projects in the gold-copper rich Surigao peninsula of NE Mindanao, Philippines, host to the high-grade Boyongan copper-gold porphyry discovered by Philex Mining and Anglo American.