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    ARCHIPELAGO RESOURCES PLC

  (AIM: AR .)

JUNE 11, 2009

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008

The Company today announces its annual results for the year ended 31 December 2008. The annual report and accounts will be posted to shareholders in the week commencing 15 June 2009 and, pursuant to AIM Rule 20, will be made available on the Company's website, http://www.archipelagoresources.com.au/ shortly.  

HIGHLIGHTS

GOOD START TO 2009 WITH EQUITY INVESTMENT

BY MAJOR SHAREHOLDER BAKER STEEL 

• CEO Optimistic On Early Resumption Of Talks To Enable Toka Tindung To Proceed 

• Project Will Bring Very Positive Employment And Economic Benefits To Region

• Company Seeking Corporate Involvement Of Prominent Indonesian Investor

After a challenging year in 2008 with continued frustration over development of its 85% owned Toka Tindung Gold Project in Indonesia, Mr Colin Loosemore, CEO of Archipelago Resources Plc (AIM:AR.), says that 2009 has started well with an equity investment by major shareholder Baker Steel. This has enabled the Company to retire all of its debt and provided it with adequate working capital.

In the Annual Report for the year ended December 31, 2008 he comments:

'With the passing of the World Ocean Conference in North Sulawesi in May, it is hoped that discussions will soon commence between the Central Government authorities responsible for administering the Toka Tindung Contracts of Work and the Governor of North Sulawesi aimed at allowing development of the project to proceed'

Although the Provincial Governor has no basis for concern or authority relating to due process, to date he has opposed development of the project even though Provincial Government representatives were part of the AMDAL (environmental) Assessment Commission's technical teams that reviewed the Toka Tindung AMDAL in 2006 and found it acceptable. In particular, the Commission rejected all of the purported environmental and social concerns raised by the Governor at that time.

'We are confident that Toka Tindung, which is demonstrably environmentally sound, will have a very positive impact on the prevailing unemployment and economic circumstances in North Sulawesi, and we continue to seek to convince the Governor of the project's merits.

'Whilst it will be difficult to raise loan finance to complete development until there is unanimous political support, a number of banks have expressed interest in financing the project. This situation is very frustrating, not only for the Company, but also for the Central Government authorities as it is denying employment opportunities and economic benefit to local people, the Province and the Nation.'

In particular, the local community will be the major beneficiaries of the project, in terms of royalties, employment and resultant economic growth in an area of low income, high unemployment and limited opportunity for training and betterment. 'The local community's strong support for the project is therefore not surprising.'

In order to build on existing National Government relations, Archipelago is seeking the corporate involvement of a prominent Indonesian investor as it believes this would be positive for both the Company and the Toka Tindung project.

Provided unanimous political support and project financing are secured by the third quarter of 2009, production at Toka Tindung would be expected to commence in the second half of 2010, at an average annualised rate of 160,000oz gold equivalent for the first six years of the initial 8½ year project life. 

Whilst the delay to project development has added to the overall development costs, there has been a strong rise in the gold price during this period and the Company has not been required to enter into any forward sales contracts, a standard requirement for financing most new gold projects. In addition, the cancellation and postponement of many new mining projects around the world has reduced demand for construction material and skilled labour. As a result, Archipelago may achieve some savings in construction and pre-production costs at Toka Tindung which are currently estimated to be US$65m.

ENCOURAGING RECENT DRILLING RESULTS

Last month, Archipelago announced the results of a shallow, close-spaced drilling programme at Toka Tindung over a portion of the deposit where mining will commence. The drilling returned 116 gold intersections, the best of which was 14m grading 39.2g/t, extending from surface. 

Several other holes returned higher grades (2m @ 168.7g/t.; 2m @ 103.5g/t) or widths (15m @ 26.5g/t; 16m @5.1g/t), and the average for the 116 intersections was 8.7g/t gold over 6m. Some 16% of the intersections are greater than 10m in width, and 29% grade better than 10g/t gold. In addition, 42% of the intersections, including the best one, finished in mineralisation. The results are regarded as very encouraging since they demonstrate that the high-grade mineralisation, previously defined in deeper drilling, extends to surface. 

Commenting on the Company's activities in Vietnam, Mr Loosemore says that mapping and sampling of over 40km of underground workings has been completed at its 65% owned Pac Lang Gold Project in Vietnam. This has confirmed the mineralised system to be very large and has given the Company a good understanding of the controls to mineralisation.

Further Information:    

 

        Colin Loosemore, Managing Director, Archipelago Resources Plc.                             Tel: 00-618-9364-8301

        Gerry Beaney/Fiona Kindness, Grant Thornton Corporate Finance.                        Tel: 020-7385-5100

        Ron Marshman/John Greenhalgh/Michael Padley, Lothbury Financial.                   Tel: 020-7011-9411

        http://www.archipelagoresources.com.au/                                              AR. Share Code

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. 

ARCHIPELAGO RESOURCES PLC

GROUP Income statement 

		Year ended	Year ended
		31 December	31 December
		2008	2007
		US$	US$
REVENUE		-	-
Cost of sales		-	-
GROSS PROFIT		-	-
Administrative expenses		(9,917,448)	(4,243,955)
OPERATING LOSS		(9,917,448)	(4,243,955)
Gain on sale of assets		12,410	2,145
Finance costs		(355,094)	(408,030)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION		(10,260,132)	(4,649,840)
Taxation		-	-
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION		(10,260,132)	(4,649,840)
Minority interests		-	-
LOSS FOR THE FINANCIAL YEAR ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY
		(10,260,132)	(4,649,840)
RETAINED LOSS FOR THE YEAR		(10,260,132)	(4,649,840)
Loss per share		(0.053)	(0.031)

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

  ARCHIPELAGO RESOURCES PLC

BALANCE SHEETS

		Group		Company
		31 December	31 December	31 December	31 December
		2008	2007	2008	2007
		US$	US$	US$	US$
NON- CURRENT ASSETS
Property, plant and equipment		52,435,386	48,487,077	-	-
Development, exploration and evaluation		27,635,874	21,719,142	-	725,976
Prepaid borrowing costs		207,635	3,242,370	207,635	260,975
Investments		373,355	1,612,091	605,447	1,933,548
		80,652,250	75,060,680	813,082	2,920,499
CURRENT ASSETS
Inventories		253,003	132,182	-	-
Trade and other receivables		490,765	1,673,608	27,613	63,773
Cash and cash equivalents		1,663,909	8,379,749	874,221	7,766,774
		2,407,677	10,185,539	901,834	7,830,547
TOTAL ASSETS		83,059,927	85,246,219	1,714,916	10,751,046
EQUITY AND LIABILITIES
Share capital		3,697,515	3,334,800	3,697,515	3,334,800
Share premium account		91,419,762	82,975,590	91,419,762	82,975,590
Other reserves		3,617,572	1,655,242	4,144,848	2,182,518
Profit and loss account		(25,578,002)	(15,317,870)	(104,581,013)	(87,155,380)
		73,156,847	72,647,762	(5,318,888)	1,337,528
NON-CURRENT LIABILITIES
Payables		-	8,892,744	-	8,892,934
		-	8,892,744	-	8,892,934
CURRENT LIABILITIES
Trade and other payables		9,302,398	3,346,457	7,033,804	520,584
Provisions		600,682	359,256	-	-
		9,903,080	3,705,713	7,033,804	520,584
TOTAL EQUITY AND LIABILITIES		83,059,927	85,246,219	1,714,916	10,751,046

  ARCHIPELAGO RESOURCES PLC

STATEMENTS OF CHANGES IN EQUITY

	Share	Share	Other	Profit and
	capital	premium	reserves	loss account	Total
	US$	US$	US$	US$	US$
GROUP
Balance at 31 December 2006	2,415,077	63,285,911	1,406,970	(10,701,290)	56,406,668
Changes in equity for 2007
Loss for the year	-	-	-	(4,649,840)	(4,649,840)
Shares issued	919,723	20,271,343	-	-	21,191,066
Share issue costs	-	(581,664)	-	-	(581,664)
Share based payments	-	-	248,272	33,260	281,532
Balance at 31 December 2007	3,334,800	82,975,590	1,655,242	(15,317,870)	72,647,762
Changes in equity for 2008
Loss for the year	-	-	-	(10,260,132)	(10,260,132)
Shares issued	362,715	8,705,134	-	-	9,067,849
Share issue costs	-	(260,962)	-	-	(260,962)
Share based payments	-	-	1,962,330	-	1,962,330
Balance at 31 December 2008	3,697,515	91,419,762	3,617,572	(25,578,002)	73,156,847
COMPANY
Balance at 31 December 2006	2,415,077	63,285,911	1,934,246	(58,628,329)	9,006,905
Changes in equity for 2007
Loss for the year	-	-	-	(28,560,311)	(28,560,311)
Shares issued	919,723	20,271,343	-	-	21,191,066
Share issue costs	-	(581,664)	-	-	(581,664)
Share based payments	-	-	248,272	33,260	281,532
Balance at 31 December 2007	3,334,800	82,975,590	2,182,518	(87,155,380)	1,337,528
Changes in equity for 2008
Loss for the year	-	-	-	(17,425,633)	(17,425,633)
Shares issued	362,715	8,705,134	-	-	9,067,849
Share issue costs	-	(260,962)	-	-	(260,962)
Share based payments	-	-	1,962,330	-	1,962,330
Balance at 31 December 2008	3,697,515	91,419,762	4,144,848	(104,581,013)	(5,318,888)

  

ARCHIPELAGO RESOURCES PLC

CASH FLOW STATEMENTS 

		Group		Company
		31 December	31 December	31 December	31 December
		2008	2007	2008	2007
		US$	US$	US$	US$
NET CASH OUTFLOW FROM OPERATING ACTIVITIES		(2,282,144)	(5,817,766)	(1,131,757)	(1,033,527)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to acquire property, plant and equipment		(4,135,709)	(11,085,040)	-	-
Proceeds from sale of property, plant and equipment		12,410	-	-	-
Payments for development, exploration and evaluation expenditure		(6,974,356)	(10,412,826)	(1,071,110)	(1,200,726)
Consideration on sale of Archipelago Metals Ltd		828,712	-	828,712	-
Loans to Archipelago Metals Ltd		(145,092)	(191)	(145,282)
NET CASH USED IN INVESTING ACTIVITIES		(10,414,035)	(21,498,057)	(387,680)	(1,200,726)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings		6,500,000	10,000,000	6,500,000	10,000,000
Issue of ordinary share capital		9,329,817	21,404,481	9,329,817	21,404,481
Repayment of borrowings		(8,000,000)	(2,000,000)	(8,000,000)	(2,000,000)
Capital raising costs		(522,929)	(581,665)	(522,929)	(581,665)
Prepaid borrowing costs		(558,512)	(2,502,223)	(458,306)	(1,120,422)
Loans to subsidiaries		-	-	(11,631,602)	(25,406,687)
NET CASH FROM/ (USED IN) FINANCING ACTVITIES		6,748,376	26,320,593	(4,783,020)	2,295,707
Effect of change in exchange rates on cash and cash equivalents		(768,037)	(541,976)	(590,096)	(205,620)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(6,715,840)	(1,537,206)	(6,892,553)	(144,166)
CASH AND CASH EQUIVALENTS AT START OF PERIOD		8,379,749	9,916,957	7,766,774	7,910,942
CASH AND CASH EQUIVALENTS AT END OF PERIOD		1,663,909	8,379,749	874,221	7,766,774

ENDFR SFLSUSSUSEEM