Archipelago Resources PLC New corporate financing facility (6089F)

TIDMAR.

RNS Number : 6089F

Archipelago Resources PLC

28 May 2013

28 May 2013

AIM: AR.

Archipelago Resources plc

("Archipelago" or "the Company")

Archipelago announces new corporate financing facility

Archipelago is pleased to announce that group companies have entered a new corporate financing facility to provide up to US$160 million in funding.

HIGHLIGHTS

-- Archipelago subsidiaries have entered into a new corporate financing agreement ("Facility Agreement") with Standard Chartered Bank ("Standard Chartered") and PT Bank Permata TBK ("Permata").

-- Under the Facility Agreement, Archipelago can make initial drawdowns totalling up to US$100 million. Thereafter and subject to obtaining necessary approvals, Archipelago can also exercise an option to drawdown a further US$60 million.

-- Funds will be utilised for (i) refinancing existing indebtedness of US$43.5 million owed to Permata and Standard Bank, and (ii) general corporate purposes should Archipelago wish to make further drawdowns in the future.

-- The funding supports Archipelago's strong balance sheet (with reported cash and cash equivalents of US$51 million and gearing of 5% as of 31 December 2012), while also adding significant operational and strategic flexibility by providing a further source to finance growth initiatives.

-- Financial close is expected to occur over the coming month on completion of various conditions precedent.

-- In support of the Facility Agreement, Archipelago subsidiaries will also enter into a 5 year exclusive off-take arrangement with Standard Chartered.

COMMENT

Commenting on the refinance, Colin Sutherland, Chief Financial Officer, said:

"In addition to on-going support from Permata, Archipelago looks forward to building a relationship with Standard Chartered. Both banks have a track record in financing growth companies in South East Asia and evidence a strong commitment to working with Archipelago. Greater funding flexibility will support Archipelago's strong balance sheet and provides further foundation to pursue growth strategies."

DETAILS

Standard Chartered and Permata together with relevant Archipelago subsidiaries have entered into a new Facility Agreement to provide funding of up to US$160 million (with Archipelago able to drawdown on an initial tranche of US$100 million, plus holding an option to borrow a further US$60 million on meeting certain approval conditions).

Under the Facility Agreement, Archipelago will make an initial drawdown to refinance existing indebtedness of US$43.5 million owed to Permata and Standard Bank. Funds can also be drawn for general corporate purposes should Archipelago wish to make further borrowings in the future.

This funding will provide Archipelago with greater financing flexibility to support growth initiatives and strategies as these evolve (either organic or corporate in nature). The funding supports Archipelago's already strong balance sheet (with reported cash and cash equivalents of US$51 million and gearing of 5% as of 31 December 2012).

The Facility Agreement contains customary terms for a financing of this nature, including the following:

   --      competitive pricing plus standard commitment, arrangement and agency fees; 
   --      a 5 year term, with principal repayable in 6 monthly instalments over the period; 

-- standard representation, default and covenant provisions (including financial covenants developed in consultation between the parties and having regard to Archipelago's life of mine plan and financial model); and

   --      security in favour of the lenders as provided by relevant Archipelago subsidiaries. 

Archipelago is not obliged to enter into derivative contracts at financial close, but agrees to enter into potential hedging arrangements in the future for a portion of production, contingent on specified events occurring (being a material decline in gold prices, cash cost margins or production for a sustained period).

In support of the new Facility Agreement, Archipelago subsidiaries also undertake to enter a 5 year exclusive off-take arrangement with Standard Chartered to purchase the Company's gold production based on the prevailing spot price.

Financial close is expected to occur over the coming month on completion of various conditions precedent.

In negotiating this transaction, legal advice was provided by Herbert Smith Freehills to Archipelago; and by Baker McKenzie to the lenders.

FURTHER INFORMATION

 
 
   Archipelago Resources 
   plc 
   President - Corporate 
   Strategy                        +65 6535                        [phone] 
   Matthew Salthouse                   3419                               8000 
---------------------------  --------------  -------------------  ------------ 
                                               Canaccord Genuity 
                                                         Limited 
                                                    Joint Broker 
                                                    Andrew Chubb 
                                                     Christopher 
                                                         Fincken 
---------------------------  --------------  -------------------  ------------ 
 Grant Thornton Corporate 
  Finance 
  NOMAD 
  Gerry Beaney 
  Philip Secrett                [phone] 
  David Hignell                        5100 
---------------------------  --------------  -------------------  ------------ 
                                                 Liberum Capital 
   Buchanan                                              Limited 
   Corporate Communication                          Joint Broker 
   Bobby Morse                                 Michael Rawlinson 
   Gordon Poole                 [phone]          Christopher   [phone] 
   www.buchanan.uk.com                 5000             Kololian          2000 
---------------------------  --------------  -------------------  ------------ 
 

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). In 2013, Archipelago expects to produce between 140,000 and 155,000 Au Eq oz at a cash cost of between US$620 and US$680 per ounce (net of silver credits).

This information is provided by RNS

The company news service from the London Stock Exchange

END

MSCNKODBKBKBNPB