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ARCHIPELAGO RESOURCES Plc

ISSUE

of

LETTERS  OF  INTENT

to

PT  McCONNELL DOWELL  INDONESIA

regarding

CONSTRUCTION

of

PROCESSING PLANT

at the

TOKA TINDUNG GOLD PROJECT

Archipelago Resources Plc is pleased to announce that letters of intent ("Letters of Intent") have been signed with PT McConnell Dowell Indonesia regarding construction activities at the Company's 85% owned Toka Tindung Gold Project ("Project") in North Sulawesi Indonesia.

The Letters of Intent will lead to contracts in relation to the following construction activities:-

• Mechanical Refurbishment (regarding processing plant previously acquired from El Tambo in Chile);

      2.   Concrete, Structural, Mechanical and Piping;

 

      3.   Electrical and Instrumentation;

 

      4.   Project Management.

The mechanical refurbishment team has already mobilised to site and commenced work in the Company's mechanical, sand blasting and paint respray workshops.  Mobilisation of teams for the remaining activities will take place in coming weeks and months.  Remaining longer lead time items have been ordered and some remaining fabrication work reactivated.  

All of these activities are consistent with the Company's construction schedule targeting first production by early 4th quarter 2010.

All construction related activities are currently being financed by way of working capital, however in recent weeks the Company has been working closely with a number of banks interested in providing project finance and so the Company expects to announce the mandating of selected banks in coming weeks.

The Toka Tindung Gold Project has a resource of 1.75M ozs of gold equivalent, of which at least 1.1m ozs will initially be mineable by open pit. When in operation the project will produce at an average annualised production rate of 160,000 ounces of gold equivalent per annum for at least 6 years together with an additional 2 years processing lower grade stockpiles. The Company's pits are currently designed at a very conservative US$550/oz gold price and as a result the Company is confident that with further exploration and sustained gold prices it will be able to substantially extend the life of the Project.

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

 

Richard Chase, Ambrian Partners Ltd

Tel:    020-7776-6461

 

Ron Marshman / John Greenhalgh, Lothbury Financial

Tel:    020-7011-9411

 

Gerry Beaney / Fiona Kindness, Grant Thornton Corporate Finance

Tel:     020 7383 5100

 

www.archipelagoresources.com.au

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