Archipelago Resources PLC : Q1 Production Result

24 April 2013

AIM: AR.

Archipelago Resources plc

("Archipelago" or "the Company")

Q1 2013 Production Result

Archipelago is pleased to announce its production results for the Toka Tindung Mine in North Sulawesi, Indonesia for the quarter ended 31 March 2013 ("Q1 2013"). 

HIGHLIGHTS

·      Achieved production of 31,575 Au Eq oz for Q1 2013. 

·      Maintains FY 2013 production guidance of between 140,000 and 155,000 Au Eq oz at a cash cost of between $620 and $680 per Au oz (net of Ag credits and royalties). 

·      Appoints Mr Charles Knight as General Manager - Operations. 

COMMENT

Commenting on the result, Marcus Engelbrecht, Managing Director and CEO, said:

"Building on the achievements of 2012, I am pleased to report production of 31,575 Au Eq oz for the first 3 months of operations during 2013.  This is in line with our yearly production profile, which is historically weighted to the latter quarters of the year.  On behalf of the Board, I would also like to welcome Mr Charles Knight as General Manager - Operations." 

DETAILS

Production Update

For Q1 2013, Archipelago recorded production of 31,575 Au Eq oz (compared to 32,189 Au Eq oz for Q1 2012).  Provided below is a summary of production results for Q1 2013 against Q1 2012: 

1For Q1 2013, the Company produced 30,618 Au oz and 53,477 Ag oz corresponding to 31,575 Au Eq oz (calculated by dividing (i) Ag oz production, by (ii) the Q1 realised Au:Ag price ratio of 56:1). 

The average head grade for Au Eq oz was 2.71 g/t for Q1 2013 (compared to 2.44 g/t for Q1 2012). 

Production at Archipelago's Toka Tindung Mine is subject to seasonal variation, with adverse weather patterns having most impact during the first three months of the calendar year.  In this regard, significant rainfall was reported across the North Sulawesi region during Q1 2013, with a total of 1,324.5mm of rain being recorded at the site over the period (which was circa 20% higher than for Q1 2012). 

Despite these challenging weather conditions, Archipelago maintained production levels substantially in line with output reported for Q1 2012.  This was largely due to the Company continuing to source higher grade ore from the Kopra and Pajajaran deposits (in addition to the on-going blending of ore recovered from the main Toka pit). 

For Q1 2013, the processing plant operated slightly below nameplate capacity on a quarter by quarter basis, primarily due to the metallurgical nature of ore from the southern deposits.  The Company expects recovery rates to improve, with the recently installed oxygen plant expected to have a positive impact on recovery rates for the remainder of the year. 

Overall, the Toka Tindung Mine operated broadly in line with mine planning for Q1 2013 and remains on track to achieve full year production targets.  Archipelago expects production to continue to build during the course of the year, as drier weather conditions prevail; especially during the second half of 2013.  In this regard, the Company is maintaining FY 2013 production guidance of 140,000 to 155,000 Au Eq oz.  Full year cash cost guidance is also maintained at between $620 and $680 per Au oz (net of Ag credits and royalties).

Management Update

Archipelago has restructured the senior management roles at the Toka Tindung Mine in line with the anticipated production ramp up during 2013.  The positions of Chief Operating Officer and Operations Manager have been combined into a new role of General Manager - Operations.  Mr Les Kwasik, formerly Chief Operating Officer, has left the Company to pursue other ventures. 

Archipelago is pleased to announce the appointment of Mr Charles Knight as General Manager - Operations.  Mr Knight has over 35 years' experience in senior management roles across the resources and industrial sectors. 

Prior to joining Archipelago, Mr Knight was an executive director with 333 Consulting, where he was responsible for overseeing a range of productivity improvement initiatives in the mining industry; working on projects for Newcrest Mining,  Straits Resources, Resolute Mining, Iluka Resources and OceanaGold (amongst others).  In addition to his resource industry credentials, Mr Knight also has extensive South East Asian managerial experience, having held senior roles in Indonesia, Singapore and Malaysia. 

FURTHER INFORMATION

ABOUT ARCHIPELAGO

Archipelago is a producing mining company listed on the AIM market of the London Stock Exchange.  Archipelago's vision is to grow into a respected and regionally dominant mid-cap gold producer, managing a portfolio of gold mines and delivering significant value and returns for our shareholders.  Archipelago's principal activities are gold mining and exploration in Indonesia (as the 95% owner of the producing Toka Tindung Gold Mine in North Sulawesi, Indonesia).