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Archipelago Resource (AR.)

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Thursday 30 June, 2011

Archipelago Resource

Final Results for the Year Ended 31 December 2010

RNS Number : 5178J
Archipelago Resources PLC
30 June 2011
 



 

30 June 2011

 

ARCHIPELAGO RESOURCES PLC

("Archipelago" or "the Company")

(AIM: AR)

 

 

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

 

The Company today announces its annual audited results for the year ended 31 December 2010. Copies of the Annual Report will be posted to shareholders shortly and will also be made available on the Company's website: www.archipelagoresources.co.uk 

 

 

Further Info:          Colin Loosemore, Managing Director, Archipelago Resources Plc.

                                Tel:         61 8 9364 8301

 

                                Shaun Whyte, Ambrian Partners Ltd

                                Tel:         44 20 7634 4700

 

                                Bobby Morse / Katherine Sutton / James Strong Buchanan

                                Tel:         44 20 7466 5000

 

                                Gerry Beaney / Fiona Kindness / David Hignell, Grant Thornton Corporate Finance

                                Tel:         44 20 7383 5100

 

www.archipelagoresources.co.uk

 

Archipelago is a mining company listed on the AIM market of the London Stock Exchange.  The Company's principal activities are gold mining and exploration in Indonesia (as 95% owner of the producing Toka Tindung Gold Project in North Sulawesi, Indonesia), 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 (via entitlement to not less than an 80% interest in exploration company Corplex).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C H A I R M A N' S   S T A T E M E N T

 

 

2010 has been a year of decisive development progress for the Company involving the commencement of mining and construction of a processing plant at the Company's Toka Tindung Gold Project in North Sulawesi, Indonesia.  This resulted in the pouring of first gold on 1st April 2011.

 

The Company confidently looks forward to the ramping up of production in the third quarter of 2011 and the achievement of full production by fourth quarter 2011.  Once established as a low cost gold producer the Company's objective is to grow its production by exploration, acquisition and merger.

 

The Company maintains a clear focus on gold and silver with the goal of becoming an industry recognised gold producer.

 

 

 

 

 

 

Stephen Sulistyo

30th June 2011

 

 

 

                                                    

 

 

 

 



 

 

C H I E F  E X E C U T I V E  O F F I C E R' S  R E P O R T

 

 

Overview

 

I am pleased to report that the "good progress" described at the start of 2010 in last year's Annual Report continued for the remainder of the year.  To recap, the major events were: -

 

2nd March 2010 -    Reactivation of the Toka Tindung mining contract with Leighton Asia with the first mining equipment arriving on site on 18th April 2010.

 

14th April 2010 -      Acquisition of a further major stake in the Company by Rajawali by way of the purchase of additional shares from Baker Steel.

 

5th May 2010 -         Discovery of copper gold porphyry mineralisation by Medusa Mining on a tenement owned by a Philippine company Corplex Resources Incorporated.  Corplex has the right to a royalty and also the right to buy back up to a 30% interest in the tenement, and Archipelago in turn has the right to acquire not less than an 80% interest in Corplex.

 

8th October 2010 - Decision to relocate the management of the Company from Australia to Singapore with immediate effect due to proximity and access to Toka Tindung and other Company projects.

 

14th October 2010 -   Board changes to reflect the support of the major shareholder Rajawali, but maintain independence.

 

 

Consistent with the achievements of 2010, the good progress has continued in early 2011.  Specifically: -

 

11th January 2011 -    Acquisition of an additional 10% interest in the Toka Tindung Gold Project from the 15% Indonesian minority interest holders PT Austindo Nusantara Jaya and The Estate of Mr Julius Tahija taking the Company's total interest from 85% to 95%.  The remaining 5% interest was purchased by major shareholder Rajawali Corpora.

 

12th January 2011 -    US$55m loan facility obtained from a prominent Indonesian bank maturing 9 months from the initial facility's agreement date.  Upon maturity a second loan facility of US$55m will be available if required.

 

25th March 2011 -   US$15m working capital loan facility accepted, from a prominent international bank, together with an undertaking to enter into a gold and silver offtake agreement with the loan provider.

 

1st April 2011 -        First gold poured.

 

17th May 2011 -       Substantial new gold mineralisationreported in first release of exploration drilling results.

 

June 2011 -             Production ramp-up underway, with 80,000 ounces of gold equivalent now targeted for calendar year 2011.

 

 

 

 



 

 

 

Toka Tindung Gold Project

 

                                                                                                    

The company holds a 95% interest in the Toka Tindung Gold Project via its 95% ownership of Indonesian operating companies PT Meares Soputan Soputan Mining ("MSM") and PT Tambang Tondano Nusajaya ("TTN"), the holders of the Project Contracts of Work (CoW's).

 

In accordance with regulations, approval will be sought by both MSM and TTN from the Director General of the Department of Energy and Mineral Resources (ESDM) to enter the CoW Production Phase, when production from the respective CoW's reaches 70% of respective Project design capacity.  As previously reported, both CoW's operate in accordance with AMDAL's approved by both the Director General ESDM and also the Minister for the Environment.

 

 

The Company has gone to great lengths, particularly in relation to water management, to ensure that it will have minimal environmental impact in the most extreme weather conditions.  The Company is confident that its Project will have a major and very positive impact on employment and training opportunities for local people and the education, welfare and economic circumstances of their families and children.  The Company welcomes the opportunity to be able to assist local people to achieve these goals in this rural area of previously high unemployment and limited opportunity.

 

 

Corporate Funding

 

During the year, the Company completed placements amounting to GBP58.6m, which funds were used towards development of the Project.

 

Since the end of the year the Company has announced the securing of a US$55m project loan facility from an Indonesian bank and a US$15m working capital facility from a prominent international bank.

 

 

Construction Status

 

McConnell Dowell, the refurbishment and construction contractor continued construction activities throughout the year.

 

 

Production

 

On the 1st April 2011 the Company poured its first gold at the Toka Tindung Gold Project.  The Project will produce at an average annualised rate of 160,000 ounces of gold equivalent for the first 6 years of the initial 8½ year Project life, however given the Project's excellent exploration potential the Company is confident of substantially extending that initial mine life.

 

 

 

Benefits to National Stakeholders

 

The benefits of the Project to National stakeholders are substantial.  Specifically: -

 

Firstly the Nation of Indonesia will derive substantial revenue by way of direct and indirect taxation.

 

Secondly the Province, by way of royalty share and the indirect benefit of major employment and economic activity within its boundary.

 

Thirdly the Regencies, again by way of royalty share and the indirect benefit of major employment and economic activity within their boundaries.

 

Lastly and most importantly, the local community who are the direct beneficiaries of employment and training and their families and children of the benefits flowing to education and welfare and improved economic conditions generally.

 

 

Corporate Social Responsibility

 

The Company and its employees take professional pride in achieving world's best practice in all aspects of the Project's operations and in ensuring that the Project has minimal impact on the environment.

 

The Company has an active partnership with the surrounding communities and local government built on respect, openness and a commitment to ensure that benefits flow to local communities.

 

As well as direct community assistance, a major component of the Company's effort is the economic empowerment of local people by the nurturing of entrepreneurial spirit and support and encouragement of the development and growth of local business opportunities.

 

With access to Company interest free start-up capital, local entrepreneurs have achieved success on many fronts during the year.  Fishing and agricultural enterprises continue to dominate and value adding has been achieved with the local production of coconut oil.

 

The Company will continue to work closely with the 11 local communities to seek ever better ways to develop, including being ever watchful of how our activities and those of the community could adversely affect the environment.  The Company encourages local initiatives in combating the effects of climate change, no matter how minor the initiative may appear and applauds and actively participates in the many local government initiatives which promote environmental awareness within the local communities.

 

In 2010 the Company began placing greater emphasis on the role of women and the well being of young children within the local communities.  The continuation of Company supported womens micro-credit groups in two local villages is an example of local women displaying natural enterprise.  It is hoped that more of these groups can be formed during 2011 and onwards.

 

The Company provides free medicines for the medical centres of all local villages, as well as access to up to date health information from the Department of Health.  The Company also works hand in hand with the district medical centres in combating water-borne diseases such as malaria and dengue fever.

 

Also in 2010 direct assistance was provided to local infrastructure with the upgrading of existing roads and street lighting and drainage, education with the building of a new school and health with the provision of drinking water to several villages. 

 

 

In addition planning was completed towards the construction of five bridges over the next five years.  The construction of these bridges will enable farmers and their workers to access their land, which often becomes inaccessible during the wet season.  The bridges will also provide small business owners and primary producers faster access to their markets by shortening the distance, considerably from their villages to the points of sale for their goods.  Tourists will also enjoy fewer natural obstacles impeding access to the many distinctive cultural attractions which are to be found within the stakeholder areas.

 

In addition the Company actively supports local business by way of the use of local contractors and the purchase of fish and other produce from local suppliers.

 

With the commencement of production at the mine and exploration optimism, the Company's community department looks forward with confidence and enthusiasm to a long term relationship with the local communities and an even busier time in years to come.

 

 

 

Resignation & Appointment of Directors

 

On the 6th October 2010, founding director Mr Michael Arnett and Mr Patrick Alexander resigned as directors and were replaced by Messrs Eddy Porwanto and Graeme Duncan as Executive and Non Executive Directors respectively. 

 

On the 14th October 2010, Mr Stephen Sulistyo was appointed to the Board as a Non Executive Director and on the 23rd February 2011 elected as Chairman.

 

Indonesia

 

Toka Tindung Gold Project

 

The Project was acquired in February 2002 and has been the flagship project of the Company since it listed in September 2003.  It has a JORC compliant resource of 1.75m oz gold equivalent of which 1.1m oz will initially be mineable by means of five open pits.  Approximately US$278m has been expended on the Project to date by Archipelago and previous owners.

 

In February 2004 the Company acquired major items of a gold processing plant from Barrick Gold's El Tambo project in Chile.

 

Construction of the processing plant took place in 2010 and early 2011, leading to first gold production on 1st April 2011.  Upon reaching 70% of design production, application will be made to the Director General of the Department of Energy and Mineral Resources to approve the respective CoW's comprising the Project as being in Production status.

 

The Project has no committed hedging and none is currently contemplated, leaving the Company fully exposed to the gold price.  However as a requirement of the Company's project financing, uncommitted hedging of circa 100,000 ounces will be put in place by way of put options in due course.

 

Mining at Toka Tindung is currently from the Toka Tindung open pit only, but will be extended to include five open pits in total.  Ore will be processed through a centralised carbon in leach (CIL) plant.  The mineralogy of the Toka Tindung deposits is simple with indicated gold recoveries of approximately 94%.  Production for 2011 is targeted to be 80,000 ounces of gold equivalent rising to 160,000 ounces in the second year of production.  Average annual production for the first 6 years of the Project life will be 160,000 oz gold equivalent per annum.  The Company is confident that the excellent exploration potential already demonstrated to exist at Toka Tindung will lead to a project life well in excess of the current 8½ years.

 

 

 

The first exploration at Toka Tindung since 1998 was that undertaken by the Company in late 2006 and reported in January 2007.  Five holes were drilled beneath the southern end of the proposed Toka Tindung open pit from where first production has now commenced.  Two of these holes intersected ore grade gold mineralisation, namely 12m @ 9.7g/t and 20m @ 3g/t, confirming the Company's view that there is great potential for discovery of much more gold at Toka Tindung.

 

The Company has committed to a major exploration drilling program for which US$30m of expenditure has been budgeted over the next two years.  The program commenced at the Toka Tindung Pit in December 2010 and an experienced exploration team has been employed to manage the 4 drill rigs now in operation.  Drilling to date has focussed on gold bearing quartz veins known to extend north of the current pit boundary.  In addition drilling has tested mineralisation to the east of the Toka pit and has commenced testing extensions of mineralization known to exist peripheral to all of the southern deposits at Toka Tindung.

 

To date assay results have been received and released for parts of the Toka North, Toka East and Toka Pit areas and the better results are summarised in the following tables.

 

To date assay results have been received and released for parts of the Toka North, Toka East and Toka Pit areas and the better results are summarised below and in the following tables.

 

At Toka North, mineralization has now been confirmed to extend for at least a further 500m to the north of the Toka Tindung open pit and generally takes the form of large widths of low grade mineralization.  Of the 44 holes reported from this location, 18 contain low grade intersections of greater than 20 metres width ranging up to a maximum of 44 metres, while a further two holes each contain two intersections of greater than 20 metres in width.  

 

Hole TNRC019             44m @ 1.34 g/t gold from 70 to 140 metres

 

At Toka East, similar large widths of low grade mineralization have also been identified, including two intersections of 93 metres and 51 metres width in the same drill hole.  Some high grade mineralization was also intersected.  

 

Hole TITO022              93m @ 1.17 g/t gold from 15 to 108 metres; and

                                                51m @ 1.17 g/t gold from 118 to 169 metres

 

Hole TITO013A            2m @ 12.3 g/t gold from 64 to 66 metres; and

                                                2m @ 15.4 g/t gold from 80 to 82 metres

 

Hole TITO015              4m @ 10.4 g/t gold from 6 to 10 metres

 

At Toka Pit, drilling has also identified low grade intersections up to 76 metres in width as well as higher grade mineralization up to 18 grams per tonne gold commencing at surface. 

 

Hole TOPI041              76m @ 1.03 g/t gold from 36 to 112 metres

 

Hole TOPI026              6m @ 18.2 g/t gold from 0 to 6 metres

 

Hole TOPI020              6m @ 14.9 g/t gold from 13 to 19 metres

 

These initial results are all considered very encouraging in relation to the Company's objective of extending the project life.  Drilling is continuing with 4 rigs and following the anticipated announcement of further drilling results in coming months, a resource and reserve re estimation is proposed for the second half of 2011.

 

More information about these drilling programs and assay results can be found in the Company's Announcement dated 17th May 2011.

 

 

The best intersections are as follow: -

 

Toka North

 

 



           Drill Intersection






Hole

No.


From

(m)

To

(m)

  Length

   


  Gold

 


Silver

(g/t)


 

TNRC002


  42

  71

  29

m

@

1.21

g/t

3.5


inc

  65

  67

    2

m

@

8.94

g/t

26.0



  77

111

  34

m

@

     2.01

g/t

9.9


inc

  90

  94

    4

m

@

     9.42

g/t

38.3


 

TNRC003


  70

  81

  11

m

@

     1.45

g/t

4.6



  87

126

  39

m

@

     1.64

g/t

2.3


inc

105

110

    5

m

@

     4.22

g/t

5.0


and

124

125

    1

m

@

     8.91

g/t

3.0


TNRC005

 


  99

128

  29

m

@

     1.01

g/t

1.3



174

197

   23

m

@

     1.03

g/t

0.7


TNRC006


  98

140

   42

m

@

     1.01

g/t

1.7


TNRC009A


  98

135

   37

m

@

     1.01

g/t

1.8


TNRC010


102

132

   30

m

@

     1.09

g/t

1.4


TNRC013


  68

  78

   10

m

@

     1.54

g/t

4.4


TNRC014


  97

122

   25

m

@

     1.04

g/t

2.7


TNRC016


  28

  45

  17

m

@

     1.30

g/t

3.4


TNRC018


105

135

   30

m

@

     1.03

g/t

1.4


TNRC019


  70

114

  44

m

@

     1.34

g/t

1.7


inc

112

114

   2

m

@

   10.0

g/t

6.5


TNRC020


  40

  73

  33

m

@

     1.08

g/t

4.2


inc

  59

  65

    6

m

@

     2.71

g/t

10.0



  80

  91

  11

m

@

     1.34

g/t

1.4


TNRC020A


  40

  69

  29

m

@

     0.99

g/t

4.1



157

174

  17

m

@

     1.09

g/t

2.1


TNRC022


  68

  92

  24

m

@

     1.62

g/t

2.8


inc

  75

  80

    5

m

@

     4.43

g/t

8.8


TNRC023


121

131

  10

m

@

     2.09

g/t

1.2


TNRC025


  60

  91

  31

m

@

     1.01

g/t

3.1


TNRC027


  77

  91

  14

m

@

     1.03

g/t

3.3


TNRC030


  46

  56

  10

m

@

     1.10

g/t

5.4



  85

110

  25

m

@

     1.09

g/t

1.9


TNRC030A


  44

  54

  10

m

@

     1.36

g/t

5.0



  99

101

    2

m

@

     3.56

g/t

1.3


TNRC033


  67

  76

    9

m

@

     1.35

g/t

1.5



165

178

   13

m

@

     1.07

g/t

0.8


inc

173

174

    1

m

@

     8.06

g/t

3.0


TNRC035


  65

  96

  31

m

@

     1.07

g/t

1.8


TNRC036


  90

104

  14

m

@

     1.00

g/t

2.9


TNRC037


  69

105

  36

m

@

     1.07

g/t

2.9


TNRC038


123

137

  14

m

@

     1.27

g/t

1.9


TNRC038A


131

143

  12

m

@

     1.12

g/t

0.7


TNRC043


  64

100

  36

m

@

     1.01

g/t

3.6


TNRC043A


  72

  90

  18

m

@

     1.06

g/t

2.7


TNRC045


  68

  84

  16

m

@

     1.03

g/t

2.2


TNRC045A


  70

104

  34

m

@

     1.09

g/t

1.5



120

134

  14

m

@

     1.05

g/t

1.3


TNRC047


  82

  93

  11

m

@

     1.14

g/t

1.5


TNRC050


  81

  98

  17

m

@

     1.53

g/t

3.3


 



 

 

 

Toka East

 

 



           Drill Intersection





Hole

No.


From

(m)

To

(m)

  Length

   


  Gold

 


Silver

(g/t)

TITO002


  60

  64

      4

m

@

4.03

g/t

3.4

TITO010


  60

  71

    11

m

@

     2.12

g/t

1.3

inc

  61

  64

      3

m

@

     5.86

g/t

2.8

TITO013A


  64

  68

      4

m

@

6.68

g/t

2.4

inc

  64

  66

      2

m

@

    12.3

g/t

4.3


  78

  83

      5

m

@

     6.84

g/t

3.6

inc

  80

  82

      2

m

@

    15.4

g/t

7.5

TITO014


    2

   5

      3

m

@

6.73

g/t

7.7


  65

  68

      3

m

@

4.53

g/t

3.8


  89

109

    20

m

@

1.25

g/t

1.2

TITO015


    3

  11

      8

m

@

6.73

g/t

31.8

inc

    6

  10

      4

m

@

   10.4

g/t

46.0

TITO016


   75

  85

    10

m

@

1.37

g/t

0.8

inc

   83

  84

      1

m

@

     8.33

g/t

2.0

TITO022


   15

108

    93

m

@

1.17

g/t

3.2

inc

   63

  69

      6

m

@

     3.02

g/t

6.7


118

169

    51

m

@

     1.17

g/t

0.8

inc

157

159

      2

m

@

     6.98

g/t

2.5

TITO023


   54

  63

      9

m

@

     2.12

g/t

1.8

TITO024


   88

  89

      1

m

@

    24.8

g/t

7.0

TITO031


   99

100

      1

m

@

      8.56

g/t

2.0

TITO036


   62

  72

    10

m

@

      2.08

g/t

2.4


   77

  83

      6

m

@

      2.21

g/t

3.0

 

 

 

Toka Pit

 

 



           Drill Intersection





Hole

No.


From

(m)

To

(m)

  Length

   


  Gold

 


Silver

(g/t)

TOPI020


  12

  24

  12

m

@

      7.71

g/t

3.5

inc

  13

  19

    6

m

@

    14.9

g/t

5.2

TOPI026


    0

  10

  10

m

@

    11.7

g/t

3.1

inc

    0

    6

    6

m

@

    18.2

g/t

4.8

TOPI035


    1

    5

    4

m

@

      4.95

g/t

1.1

TOPI040


  82

105

  23

m

@

 2.20

g/t

0.9

inc

  85

  89

    4

m

@

      4.93

g/t

2.8

and

  94

  97

    3

m

@

      4.29

g/t

0.5

TOPI041


  36

112

  76

m

@

      1.03

g/t

2.7

inc

  88

  90

    2

m

@

      6.49

g/t

5.0

TOPI051


  90

101

  11

m

@

      1.80

g/t

2.2

inc

  96

  99

    3

m

@

      4.22

g/t

1.0

 

 

For further information on these intersections, refer Announcement 17th May 2011 available on the Company's website.

 

 

The information in this announcement that relates to drilling results has been approved for release by Mr John Colin Loosemore, B.Sc. (Hons). M.SC., D.I.C., FAusAIMM, who has consented to the inclusion of the material in the form and context in which it appears.  Mr Loosemore is the Managing Director of Archipelago Resources Plc and has over 30 years experience in the mineral industry including the evaluation of exploration data, mineral resources and ore reserves.

 

 

 

 

 

Base Case Financial Model

 

The Company's base case financial model for the Toka Tindung Gold Project is as follows:-

 

Resource *

1.7m oz Au

Initial Mine Life

8.5 years

Throughput (year 2 onwards)

1.7m t/yr

Production  (calendar year 2011)

80,000 oz AuEq

Production (average - years 1 - 6 inc)

160,000 oz AuEq/yr

Total ounces recovered (inc low grade)

1,104,000 oz AuEq

Net Present Value (7.5% discount before tax)

US$570m

Cash Operating Cost (average - years 1.6 inc, less royalty)

US$487/oz

Annual EBITDA (average - years 1 - 6 inc)

US$114m

at a Gold Price of

US$1,250/oz

and an Oil Price of

US$100/barrel



* (Refer Summary of Mineral Inventory and Resources Table p.17)

 


This base case financial model assumes: -

 

1.               An initial processing rate of 1.5m tonnes per annum increasing to 1.7m tonnes per annum in year 2 onwards.

 

2.               Electricity is generated by an on-site diesel power station.  However a longer term objective is to utilise electricity from a Provincial power grid which now passes within a few kilometres of the mine site, while maintaining the current power station for back-up power.

 

Operations Team

 

The Company has a small team of site based qualified and highly experienced professionals with a track record of operating gold projects similar to Toka Tindung in South East Asia.  Currently the team includes:-

 

Mr David Morrison - Chief Operating Officer,

Mr Dean Pontin - Operations Manager,

 

Mr Clinton Bennett - Processing Manager,

Mr Graeme Fleming - Exploration Manager,

Mr David Hockey - Commercial Manager,

Mr Peter Johnson - Community Services and Security Manager,

Mr Vern Langdale - Mining Manager,

Mr Terkelin Purba - External Relations Manager,

Mr Felix Subama - Finance Manager,

Mrs Debra Watson - Occupational Health Safety & Environment Manager,

Mr Achmad Yani Esbe - Administration Manager.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vietnam

 

Pac Lang Gold Project

 

The Company maintains a 65% interest in the Pac Lang gold exploration project and is working in cooperation with two Vietnamese partners; Minerals Corporation ("VIMICO") - an affiliate of national minerals company Vietnam National Coal - Minerals Industries Group ("Vinacomin") and provincial mining company Bac Kan Mineral Joint - Stock Company, who together hold the remaining 35% interest. An initial exploration licence was granted to the parties in September 2007 for a two year period, and a 2 year extension was granted on 25 May 2010 with a term lasting until 30 August 2011. A further extension of the existing exploration license or application for a new exploration license will be contemplated based on results of ongoing exploration.

 

The Pac Lang gold mineralized system is located about 160km north of Hanoi in Bac Kan province. Quartz veins have developed in sheared Triassic metasediments with gold mineralization present in both veins and shears. Alluvial gold is reported to have been mined downstream of the Pac Lang area by the Chinese over 1,000 years ago. Bedrock gold has been exploited by French and then Vietnamese miners since discovery of high grade mineralization in the early 1900's.

 

Throughout 2010 and into 2011 the Company's exploration team has continued to expand its understanding of the geology and mineralized system present at Pac Lang. Exploration continued throughout the year with activities including: surface and underground bedrock mapping and sampling, investigation of historic underground workings, trenching, geodetic surveying and two diamond drilling programs.  Results are being compiled and will be reported upon completion.

 

One of the characteristics of the Pac Lang gold mineralized system is that gold is unevenly distributed and frequently occurs as coarse blebs within quartz veins and their immediate wall rock margins.  This characteristic is common in many gold mining districts but it can present challenges regarding definition of continuity and grade in narrow mineralized zones. Recent exploration work has confirmed several large mineralized shears, up to tens of metres thick containing quartz veins of variable thickness. These shear zones have been targeted by the Company in the two diamond drilling campaigns as they hold the greatest opportunity for hosting an economically viable gold deposit.

 

 

Cam Thuy - Ba Thuoc Gold Project

 

In 2006, the Company together with VIMICO prepared and lodged two applications for gold exploration licenses (ELA) in the Cam Thuy - Ba Thuoc gold district in Thanh Hoa province in northern Vietnam. The project area is located along the Ma River fault system, located south of, and parallel to, the Red River suture (fault) zone which hosts several significant area of gold-copper mineralization in northern Vietnam and southern China.

 

The main target covered by the two ELAs is a package of clastic and calcareous sediments folded into two large anticline structures which are considered prospective for structurally-controlled "Carlin" style replacement deposits and also possible stratigraphic-controlled "Telfer" style gold mineralization. Known bedrock gold mineralization and substantial unsourced occurrences of alluvial gold are present in the Company's application areas.  Commencement of exploration is still pending approval of the applications.

 

 

 

 

 

Philippines

 

The Company has the right to acquire not less than an 80% interest in Corplex Resources Inc ("Corplex"), a Philippine registered company.  Corplex holds a number of applications for Exploration Permits (EP) and Mineral Production and Sharing Agreements (MPSA) within the copper and gold rich Surigao peninsular and southern extensions in north east Mindanao, which host the Boyongan copper gold porphyry and the Sienna and CoO gold deposits.  The tenement applications together with some approved tenements, cover a number of areas of historic gold workings and copper mineralisation.

 

A number of these tenements and tenement applications in the vicinity of Medusa Mining's CoO gold mine are the subject of Memoranda of Agreement with Medusa giving Medusa the right to acquire a 100% interest in the tenements subject to a gross royalty and/or buy-back rights.  One of these tenements is APSA X11-0077 in which Corplex is entitled to a 4% gross royalty on ore production and in the event of a major discovery and completion of a Scoping Study demonstrating a 5 year mine life, the right to buy-back a 30% contributing interest with a further right to elect that such interest can dilute to a 15% interest free carried to commencement of production, at which time Medusa is obliged to provide a loan to Corplex to fund its 15% interest. 

 

On the 5th May 2010 Medusa announced that it had discovered outcropping porphyry gold copper mineralisation at a prospect called Usa within APSA XIII-0077, which reconnaissance outcrop sampling had demonstrated to extend over an area of not less than approximately 500m x 500m.  Usa is located adjacent to the west side of the Barobo Fault corridor, a structure known to contain a number of gold prospects which Medusa considers prospective for intrusion and structurally controlled styles of copper and gold mineralisation.  Limestone and calcareous sediments are locally intruded by multiple phases by dacite, diorite, andesite and porphyry.

 

Rock chip samples at Usa range up to 0.59% copper and 0.42 g/t gold.   Both Medusa and Archipelago are very encouraged by this discovery and the potential for it to be of economic significance.  A large grid based soil sampling program designed to delineate the extent of the gold and copper mineralisation commenced in May 2011.

 

 

Corporate

 

Since admission to AIM at a price of 20p/share in September 2003, the Company's shares have traded as high as 66.7p/share.  The Company has 569,197,635 shares in issue at the date of this Report.

 

 

Appreciation

 

The Board acknowledges the hard work of our dedicated staff and their persistence in achieving the progress and outcomes reported above during 2010 and 2011.

 

Lastly we wish to thank all shareholders for their support and ongoing participation as the management strives to grow the Company's stature as a South East Asian gold producer. 

 

 

 

J.C. Loosemore

Managing Director

 

30th June 2011



 

ASSET SUMMARY

 

 

 Minerals & Ore

 

Project

Contract

Of

Work

Holder

 

Interest

(%)

 

Status

Licence

Expiry

Date

Licence

Area

(ha)

 

Comments

 

 

 

 

 

Toka Tindung Gold Project,

Indonesia

 

 

PT.

Meares

Soputan

Mining

Archipelago Resources Plc (indirect)

 

Rajawali Corpora

95%

 

 

 

5%

Construction

 

 

 

 

30 years from commencement of Production.

 

 

8,959

Production (as defined by ESDM) scheduled to commence in second half of 2011

 

 

PT. Tambang

Tondano

Nusajaya

Archipelago Resources Plc (indirect)

 

Rajawali Corpora

95%

 

 

 

5%

Construction

and

Exploration

 

 

 

 

 

30 years from commencement of Production.

 

 

30,250

Production (as defined by ESDM) scheduled to commence in second half of 2011

 

 

 

 

SUMMARY OF MINERAL INVENTORY AND RESOURCES

TOKA TINDUNG GOLD PROJECT

 

 

Minerals & Ore

 


Gross

Net Attributable (95%)

Operator

 


Tonnes

Grade Au

(g/t)

Grade Ag (g/t)

Contained Metal (Gold)

(ozs)

Contained Metal (Silver)

(ozs)

Tonnes

Grade Au (g/t)

Grade Ag (g/t)

Contained Metal (Gold)

(ozs)

Contained Metal (Silver)

(ozs)


 

Mineral Inventory












 

Run of Mine Grade

7,200,000

3.9

9

900,000

2,100,000

6,800,000

3.9

9

850,000

2,000,000

 

MSM & TTN

 

Low Grade

380,000

1.2

3

15,000

36,000

360,000

1.2

3

14,000

34,000

 

Total

7,600,000

3.7

9

920,000

2,100,000

7,200,000

3.7

9

870,000

2,000,000

 

Mineral Resources












 

Measured

2,200,000

3.6

8

250,000

560,000

2,100,000

3.6

8

240,000

530,000

 

MSM & TTN

 

Indicated

11,000,000

3.2

8

1,100,000

2,800,000

10,400,000

3.2

8

1,000,000

2,700,000

 

Inferred

2,200,000

4.3

8

310,000

570,000

2,100,000

4.3

8

290,000

540,000

 

Total

15,000,000

3.4

8

1,700,000

4,000,000

14,000,000

3.4

8

1,600,000

3,800,000

 

 

 

Mineral Inventory: MRT   (Ref. Competent Persons Report  p.47)

Run of Mine Grade                cut-off   1.37 - 1.45g/t Au

 






Low Grade                             cut-off  1.12 - 1.16g/t Au

 

Resources:

Aurora et.al. & Snowden   (Ref. Competent Persons Report  p.38)  (Determined in accordance with JORC)







Notes:

"Operator" is the name of the company that operates the asset.





"Gross" are 100% of the mineral inventory and/or resources attributable to the licence; while "Net attributable" are those attributable to the Company's ownership interest of the Project  (amended to reflect the purchase of a 10% additional interest in 2010).

 



 


"Reserves" will be determined by the Company following commencement of production, utilising additional 2010 drilling data and operating costs and metal prices relevant at the time of determination.

 

 

The information in this announcement that relates to mineral reserves and resources has been approved for release by Mr John Colin Loosemore, B.Sc. (Hons). M.SC., D.I.C., FAusAIMM, who has consented to the inclusion of the material in the form and context in which it appears.  Mr Loosemore is the Managing Director of Archipelago Resources Plc and has over 30 years experience in the mineral industry including the evaluation of exploration data, mineral resources and ore reserves.  The resource information has been compiled by MRT, Aurora et al and Snowden with reference to the JORC Code and is reported in the Competent Persons Report prepared by Snowden for inclusion in the Company's Admission Document dated September 2003.

 

 

           


GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2010

 


Year ended

Year ended


31 December

31 December


2010

2009


US$

US$







REVENUE

-

                    -




Cost of sales

                    -

                    -




GROSS PROFIT

-

                    -




Other Income

228,220

-

Administrative expenses

(10,071,703)

(1,946,517)

Other expenses

(2,618,560)

(659,517)

Gain on available for sale

Financial assets

51,434

 

102,803

 

Finance costs

(5,071)

(52,709)




LOSS BEFORE TAX

 

(12,415,680)

(2,555,940)




Taxation

(847,107)

-




LOSS FOR THE YEAR

(11,568,573)

(2,555,940)




OTHER COMPREHENSIVE INCOME



Employee benefit

(48,360)

-

 

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(11,616,933)

(2,555,940)




ATTRIBUTABLE TO:



Non Controlling Interests

                    16,726

                    -




LOSS FOR THE FINANCIAL YEAR ATTRIBUTABLE TO OWNERS OF PARENT COMPANY

(11,600,207)

(2,555,940)




EARNINGS PER SHARE






Basic earnings per share (cents per share)

(0.024)

(0.008)




 

There were no recognised gains or losses other than those shown above.  All the Group's activities consist of continuing operations.



 STATEMENTS OF FINANCIAL POSITION

At December 2010



Group


Company


31 December 2010

31 December 2009

31 December 2010

31 December 2009


US$

US$

US$

US$

NON- CURRENT ASSETS





Deferred tax asset

849,077

-

-

-

Property, plant and equipment

117,877,121

55,270,717

-

-

Development, exploration and evaluation

53,847,457

33,356,361

-

-

Prepaid borrowing costs

-

196,219

-

82,050

Investments

939,362

476,350

1,189,386

738,208

Other receivables

-

-

179,746,149

-


173,513,017

89,299,647

180,935,535

820,258

CURRENT ASSETS





Inventories

4,253,077

434,221

-

-

Trade and other receivables

7,402,542

1,324,418

1,621,057

975,328

Cash and cash equivalents

24,184,237

12,556,121

17,040,994

11,368,966


35,839,856

14,314,760

18,662,051

12,344,294





      

TOTAL ASSETS

209,352,873

103,614,407

199,597,586

13,164,552





      

EQUITY AND LIABILITIES




      

Share capital

9,373,180

6,576,877

9,373,180

6,576,877

Share premium

208,333,081

118,692,796

208,333,081

118,692,796

Other reserves

10,044,712

3,824,631

10,030,496

4,029,145

Retained earnings

(39,734,149)

(28,133,942)

(29,854,545)

(116,317,483)

Non-Controlling Interest

(16,726)

-

-

-


188,000,098

100,960,362

197,882,212

12,981,335

NON-CURRENT LIABILITIES




      

Payables

-

-

1,387,364

-

Provisions

8,152,429

716,560

-

-


8,152,429

716,560

1,387,364

-

CURRENT LIABILITIES





Trade and other payables

13,200,346

1,937,485

328,010

183,217


13,200,346

1,937,485

328,010

183,217



     


     

TOTAL EQUITY AND LIABILITIES

209,352,873

103,614,407

199,597,586

13,164,552






 

 

These financial statements were authorised for issue and approved by the Board of Directors on 30th June 2011, and signed on its behalf by:

 

 

J C Loosemore          

Registered No. 4425340                                                   

Managing Director                                                            

 

STATEMENTS OF CHANGES IN EQUITY

For the year ended 31 December 2010

 


Share

Share

Other

Non

Retained

Total


capital

premium

Reserves

Controlling

Interest

Earnings

Equity


US$

US$

US$

US$

US$

US$

 

Group














Balance at 31 December 2008

3,697,515

91,419,762

3,617,572

-

(25,578,002)

73,156,847








Changes in equity for 2009







Total comprehensive income for 2009

-

-

-

-

(2,555,940)

(2,555,940)

Shares issued

2,879,362

27,332,534

-

-

-

30,211,896

Share issue costs

-

(59,500)

-

-

-

(59,500)

Share based payments

-

-

207,059

-

-

207,059

Balance at 31 December 2009

6,576,877

118,692,796

3,824,631

-

(28,133,942)

100,960,362








Changes in equity for 2010







Total comprehensive income for 2010

-

-

-

(16,726)

(11,600,207)

(11,616,933)

Shares issued

2,796,303

90,753,069

-

-

-

93,549,372

Share issue costs

-

(1,112,784)

-

-

-

(1,112,784)

Share based payments

-

-

6,220,081

-

-

6,220,081

Balance at 31 December 2010

9,373,180

208,333,081

10,044,712

(16,726)

(39,734,149)

188,000,098

 

Company














Balance at 31 December 2008

3,697,515

91,419,762

4,144,848


(104,581,013)

(5,318,888)








Changes in equity for 2009







Total comprehensive income for 2009

-

-

-

-

(11,736,470)

(11,736,470)

Shares issued

2,879,362

27,332,534

-

-

-

30,211,896

Share issue costs

-

(59,500)

-

-

-

(59,500)

Share based payments

-

-

(115,703)

-

-

(115,703)

Balance at 31 December 2009

6,576,877

118,692,796

4,029,145

-

(116,317,483)

12,981,335








Changes in equity for 2010







Total comprehensive income for 2010

-

-

-

-

86,462,938

86,462,938

Shares issued

2,796,303

90,753,069

-

-

-

93,549,372

Share issue costs

-

(1,112,784)

-

-

-

(1,112,784)

Share based payments

-

-

6,001,351

-

-

6,001,351

Balance at 31 December 2010

9,373,180

208,333,081

10,030,496

-

(29,854,545)

197,882,212

 

 

STATEMENTS OF CASH FLOW

For the year ended 31 December 2010








Group


Company







31 December

31 December

31 December

31 December


2010

2009

2010

2009


US$

US$

US$

US$






CASH FLOWS FROM OPERATING ACTIVITIES

(5,810,603)

(2,831,986)

(2,376,652)

(2,422,442)






CASH FLOWS FROM INVESTING ACTIVITIES





Payments for property, plant and equipment

(52,079,023)

(2,842,579)

-

-

Proceeds from sale of property, plant and equipment

-

67

-

-

  Proceeds from sale of investment

166,801

(6,521,297)

166,801

-

  Payments for development, exploration and evaluation expenditure

(21,421,590)

(302,455)

(1,028,460)

(800,810)

  Consideration on sale of Archipelago Metals Ltd

-

-    

-

(302,455)

  Payment to acquire additional shares in Archipelago Metals Ltd

(591,219)

-

(591,219)

-

NET CASH USED IN INVESTING ACTIVITIES

(73,925,031)

(9,666,264)

(1,452,878)

(1,103,265)






CASH FLOWS FROM FINANCING ACTIVITIES





Proceeds from borrowings

-

-

-

-

Issue of ordinary share capital

93,549,371

30,211,896

93,549,371

30,211,896

Repayment of borrowings

-

(6,500,000)

-

(6,500,000)

Capital raising costs

(1,112,784)

(59,500)

(1,112,784)

(59,500)

Prepaid borrowing costs

(506,137)

(433,128)

(427,556)

 

549,802

Share options expense capitalised

-

308,780


-

Loans to subsidiaries

-

-

(81,758,555)

(10,180,521)

NET CASH GENERATED FROM FINANCING ACTVITIES

91,930,450

23,528,048

10,250,476

14,021,677






Effect of change in exchange rates on cash and cash equivalents

(566,700)

(137,586)

(748,918)

(1,225)

NET INCREASE/ (DECREASE)  IN CASH AND CASH EQUIVALENTS

11,628,116

10,892,212

5,672,028

10,494,745






CASH AND CASH EQUIVALENTS AT START OF PERIOD

12,556,121

1,663,909

11,368,966

874,221

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

24,184,237

12,556,121

17,040,994

11,368,966


 


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