Archipelago Resources (LON:AR.) is an AIM listed mining company with licences to explore and produce gold in Indonesia, Vietnam and the Phillipines. Their flagship Toka Tindung project in Indonesia is set to move into first production in March 2011. It has been a long road for Archipelago since their flotation back in 2003 and we spoke with Colin Loosemore, CEO, last week to talk about the company's journey to date, the bull market in gold and their hopes for 2011 and beyond.
Could you introduce us to the background and history of Archipelago Resources and the gold mining projects you have in Indonesia, Vietnam and the Philippines?
The Company was formed in 2002 and we listed on AIM in September 2003. Our flagship project is the Toka Tindung Gold Project in North Sulawesi, Indonesia, but we also have some other exploration activities in northern Vietnam and also, to a lesser extent, the Philippines.
Our focus over the last few years has been developing Toka Tindung and we’re within a few months of getting that into production - we’re targeting first production by the end of March 2011. We will produce at an annual average rate for the first six years of the project life of 150,000 ounces per annum gold plus 250,000 ounces per annum silver. Mining started some months ago and the construction is near complete and so we look forward to changing from developer status to producer status early in 2011.
The open pit mining operation is straightforward and the processing operation simple carbon in leach (CIL), a very stock standard process and so we don’t see any risk attached to either the mining or the processing. Other than silver we don’t have any significant metal impurities to deal with in the process flow sheet.
Our production cost of US$442/oz is about one third of the current gold price and well below that of world average producers. By historical mining standards, that leaves a high surplus margin and makes for a very financially robust project. We are going to commit some of our surplus revenues to exploration with a view to maintaining and extending the mine life and a drilling programme has already commenced.
Will you be devoting the resulting cashflow primarily to your projects in the Indonesian…
