Archipelago Resources (AIM: AR.) took another step in towards financing the development of its 85% owned Toka Tindung Gold Project in Indonesia today.
The company announced that it had entered into an agreement with Abacus Capital Limited, an Asian Investment Fund to provide a US$7.5 million loan facility and potentially equity funding.
Archipelago said it would use the loan to pay out its current US$5m RMB loan facility and secondly to provide US$2.5m for working capital.
Abacus also has the right to purchase up to 104.87 million shares at 12 pence per share, injecting up to US$21.5 million into Archipelago. The placing is available for 4 months, and is subject to conditions, including the need for Archipelago to secure financing for the development of the Toka Tindung Gold Project. Assuming financing is secured in the near term, the mine is anticipated to move into production in late 2009, and produce at an annual rate of 160,000 ounces. Capex for the mine is expected to be around US$60-70 million.
"Abacus proposes to assist the Company to obtain the Financing and has already received a preliminary term sheet from a prospective financier and expression of interest from others," the company stated.
"Archipelago is encouraged by Abacus's support for the Company and its Project in the current market and looks forward to working with Abacus to obtain its objective of development of the Project."