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ANNOUNCEMENT

ARCHIPELAGO  RESOURCES  PLC

US$13.7M PLACING

at

9.0  PENCE  PER  SHARE

to

BAKER STEEL  INVESTMENT  FUNDS

Archipelago Resources Plc ('Archipelago' or the 'Company') is pleased to announce that it has issued 104.87m shares to institutional investment funds managed by Baker Steel Capital Managers LLP ('Baker Steel') at a price of 9.0 pence per share raising US$13.7m approximately ('the Subscription'), following termination of the funding arrangements with Aurum Fund on 23 February 2009 (details of which were announced by the Company on 26 November 2008).

Archipelago is delighted with this support from one of its long term significant shareholders. Of the US$13.7m approximately raised from the Subscription, US$6.7m approximately will be used to repay funds drawn and interest owing under the Aurum Loan Facility, with the balance to be used as working capital.  

Following the Subscription, Baker Steel's funds interest in shares will increase by 34.3% to approximately 40.6% in the issued capital of the Company which will now total 306,019,334 shares.  Application has been made for admission of the new shares to trading on AIM, with admission expected to take place on 3rd March 2009.  On the basis that the central place of management and control of the Company is outside the United Kingdom, Channel Islands and/or the Isle of Man, the UK Takeover Panel has confirmed that the Company is not subject to the City Code.

Archipelago has also granted Baker Steel the right to subscribe for additional shares at a price of 12 pence per share ('the Option') until 23 August 2009, such that the number of shares acquired is the lesser of 85m or that number of shares necessary to take the combined shareholding of the Baker Steel managed funds to 51% of the enlarged issued capital of the Company post exercise of the Option.  

If Baker Steel elects to exercise the Option, then such investment is anticipated to raise an additional US$11.3m approximately which will be available for the project development cost of the Company's 85% owned Toka Tindung Gold Project ('the Project'), currently estimated to total US$65m.

A recent review and update of the Project's Feasibility Study indicates a cash production cost of US$328 per ounce, which at today's gold price of close to US$1,000 per ounce leaves a substantial annual operating surplus based on the Company's projected initial 6 year average annual production rate of 160,000 ounces per annum.  The Project has received Construction approval from the Indonesian Government but currently still lacks the support of the Governor of North Sulawesi.

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 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).

 

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

Tel:    00-618-9364-8301

 

Ron Marshman / John Greenhalgh, Lothbury Financial

Tel:    020-7011-9411

 

Gerry Beaney / Fiona Kindness, Grant Thornton UK LLP

Tel:     020 7383 5100

 

www.archipelagoresources.com.au

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