Archipelago Resources Share Discussion Threads

[akjelly] 29/9/2011 07:04

Minesite article.September 28, 2011

Colin Loosemore Bids Farewell To Archipelago Resources, Ushering In A New Era Of Growing Gold Production And Potential Acquisitions
By Sally White

Colin Loosemore always said that when he had brought Archipelago Resources' major Indonesian gold mining project, Toka Tindung, successfully into production he would move on. He has, and he is. Last year the processing plant at Toka Tindung was constructed, and in April this year the first gold was produced. And so, at last month's annual general, meeting Colin said his farewells.

Archipelago's chairman Stephen Sulistyo offered the following valedictory in acknowledgement of Colin's achievements: "He has served as managing director of Archipelago for ten years and in that time has led the company in its transformation from a junior explorer to a significant gold producer. When Toka Tindung reaches full production in a few months' time it will be a testament to the hard work of Colin and his team."



Colin leaves behind him an Aim company built up from scratch and now boasting a market capitalization of around £425 million at the current share price of 74.5p. Along the way there have been highs and lows – a 3p low in 2008 and a 79p high hit earlier this summer. But the task having been done, he slipped out of the door quietly with no public fanfare what so ever and is starting again on a new development challenge (his forte) at Archipelago Metal. This is an unlisted Australian company spun out of Archipelago Resources, which is focused on non-gold projects. Currently the focus is a chromite project in Vietnam which is at the advanced feasibility study phase. No word is available on his plans here yet – he will re-appear, as ever, in his own time.



But he leaves behind high hopes for Archipelago Resources, and a company that looks to be in pretty good shape. Production is on track for approximately 80,000 ounces of gold equivalent this year, and the eventual annual output rate should then rise to 160,000 ounces, supported by a current resource base of 1.7 million ounces. Costs are likely to come in at just shy of US$500 per ounce over the first six years of the project's life.



Some investors believe that there is now a possibility Archipelago will be able to expand by acquiring other Indonesian gold projects. The company has strong local backing in the shape of Indonesian-based PT Rajawali Corporation, which owns a 53 per cent stake. Rajawali is an industrial conglomerate encompassing interests in transport, retail and telecommunications. It has no other gold investment as yet, although it has stakes in coal mining operations.



Of course, Archipelago has prepared well for the post-Loosemore era and has head-hunted a worthy replacement. The new chief executive is Marcus Englebrecht, a man who's spent 22 of his 51 years in the mining industry. Earlier in his career he was with BHP Billiton, as chief financial officer of the Diamonds and Speciality Products Group based in Melbourne. More recently, he held the position of chief financial officer of Canadian listed OceanaGold Corporation, also based in Melbourne. In 2009 he served as interim chief executive at OceanaGold.



"I have joined what I believe is one of the most exciting growth opportunities in gold mining", he says. "The Toka Tindung mine in Indonesia started gold production in April this year and one of the key focuses over the next few months is to increase this production to its nameplate capacity and produce at steady state. The other focus is to harness the significant upside of all of our assets, which are in some of the most prolific gold territories in the world, which we will do through one of the most aggressive exploration drilling campaigns in the history of the company."



To that end, mining has now commenced, as planned, at Pajajaran, the second open pit at Toka Tindung, to the south of the main Toka Tindung pit, while exploration drilling continues, focused on extensions to mineralisation around the planned open pits. Some initial difficulties with a clay-rich section of the orebody have now been overcome, and the company is on schedule to hit full production in the last quarter of this year.



There's plenty of room for manoeuvre in terms of working capital, too. The majority of the US$15 million working capital facility which was drawn down in March was unused at the last update, in July. The company has no committed hedging, but as a condition of its project finance facility it is obliged to hedge around 100,000 ounces by means of put options at a floor price of around US$900 per ounce. These will provide some downside protection without capping the upside.



There should be regular updates on the ongoing drilling, and on the progress of the production ramp up over the next few months. So, by the time the company hits its 160,000 ounce per year target, Colin's departure will already seem like old news. But by then, he may well be generating his own newsflow from his next venture. It'll be interesting to see.

[lfc4ever] 28/9/2011 08:22

yes, very positive update.
if they are saying now that they intend to be in full production by q4 that is likely to be achieved given that it is now near term.

there should be a re-rating. come on- a big push for col's £1 year end target!

[silverfern] 28/9/2011 06:52

Happy with this report - they would have to tell the market if the current projections for the year were not being met and they are being met. I particularly like the H&S data and the community benefits. THe mine is on track for its annual output and producition has increased every month since APril. $22m in the bank and the figure will only increase as there's $m being dug out of the ground every month

[boadicea] 26/9/2011 11:56

Even more surprising today. This is my only 'blue' miner!

[lfc4ever] 23/9/2011 07:59

surprising price movement this week.

[noirua] 12/9/2011 16:22

Held up very well on a bad down day for gold stocks. Market cap on the low side for a big mining gold stock.

[lfc4ever] 08/9/2011 14:21

creeping back up. £1 by xmas?

[boadicea] 04/9/2011 17:28

Noirua - I don't see any particular relevance of the chart over the timescale you have posted - i.e. starting from equivalence in Sept 2007.
During that time AR. has very recently undergone a change in status from explorer to producer that the others have not.
Centamin has had distinctly different local political turmoil.
Starting at Jan 2009 would produce a completely different perspective ..... and no less misleading.

[boadicea] 02/9/2011 17:27

There has been an imbalance in trades in favour of buys on several recent days which was accentuated today until the final large sell balanced them all off plus a bit more. It looks like a mm has been working that one over the week and one hopes there aren't too many more to come.
However it was no 'dump' and the seller was holding out for a reasonable price so appears to be in no great hurry.

We should be able to look forward to good progress when he dries up, based on the three fundamentals of rising production, resources and pog. The flag formation is intact and looking healthy.

[silverfern] 02/9/2011 15:47

some VERY LARGE transactions today

[djy007] 29/8/2011 16:47

Archipelago announces the retirement of Colin Loosemore, the Company's founding and long serving Chief Executive Officer and Managing Director, effective at the close of the Annual General Meeting on 3rd August 2011.
Mr Loosemore acquired the Toka Tindung Gold Project in North Sulawesi, Indonesia ("Toka Tindung" or "the Project") in 2002 and floated Archipelago on the AIM market in 2003. Mr Loosemore's persistence in leading a team during the last decade resulted in the construction of a processing plant at Toka Tindung in 2010 followed by commissioning and first production of gold in April 2011.
Mr. Loosemore will assume an executive role with Archipelago Metals Ltd, a currently unlisted Australian company spun out of Archipelago in early 2008 and of which Mr. Loosemore has been a director since inception. The two companies will continue a working relationship, with the Company focused on gold and Archipelago Metals focused on non gold projects, in particular an advanced feasibility stage chromite project in Vietnam.
Mr. Loosemore's replacement will be announced at Archipelago's Annual General Meeting on 3rd August and a statement will follow shortly afterwards.
Stephen Sulistyo, Chairman of Archipelago, commented:
"I would like to extend my sincere thanks to Colin. He has served as Managing Director of Archipelago for 10 years and in that time has lead the Company in its transformation from a junior explorer to a significant gold producer. When Toka Tindung reaches full production in a few months time it will be testament to the hard work of Colin and his team. We wish him similar success in his new role with Archipelago Metals."

[boadicea] 26/8/2011 11:33

That was a nice buying opportunity early today for anyone with spare cash.

[melody9999] 26/8/2011 11:21

what's going on? all of a sudden some chunks buys coming in and the MMs keen to move the share price north.

[lfc4ever] 26/8/2011 10:29

looking better today.

[lfc4ever] 26/8/2011 08:50

if the new pog is translated into ar. share price we could well hit colin's £1 target by the end of 2011. mkt still not fully woken up to ar.

[silverfern] 10/8/2011 08:34

After such a terrible week for the rest of my portfolio I am conforted by:
AR: 160k oz pa. Cash costs $US445 (based on $US85 per barrel oil!)
Oil is back below that level and gold now $100 higher than last month; just makes the profit figures more achievable and lowers even further the rposective p/e.

[boadicea] 08/8/2011 16:33

.... or possibly institutions (oeics, trusts etc) shuffling them between funds.
It's all in the price now and probably wasn't the main cause of today's drop.

Davegk - yes, we're still nicely up over the past month and stand in a very good position when junior gold miners return to favour - as they should.

[silverfern] 08/8/2011 16:25

I presume the trades just booked - over 5 million - are x-trades between brokers.

[davegk] 05/8/2011 17:50

The price has held up well these last 2 days - a sign of strength?

[smellyjim] 04/8/2011 09:16

nice breakout!

[snickerdog] 04/8/2011 09:15

I hope that all was above board with his retirement and that it was his choice. As far as share performance goes, I couldn't imagine why it would be otherwise.

Best wishes to Colin.

p.s. I wonder if he got his wish for a dividend to be paid?

[lfc4ever] 04/8/2011 07:27

strong volume early on this morning.