Companies: AR.   

Colin Loosemore, managing director of AIM-quoted gold prospector Archipelago Resources, says the company may reduce the size of its current £16 million funding for its 1.75 million-oz Toku Tindung gold project in Indonesia and possibly shave the price from the 40p equivalent at which some of the money has been raised in the USA. Robert Tyerman reports.

Archipelago has lost none of its enthusiasm for Toka Tindung, in Indonesia's Sulawesi region, which Loosemore argues could start producing gold at an annual rate of 160,000 oz by mid-2006 and generate revenues of £13 million a year if the gold price stays north of $420 an ounce. But Loosemore says investors have lately become more cautious about this sector, which he hopes is simply a sign of temporary institutional indigestion after a spate of AIM mining floats.

He says '£8 million would be OK' for Archipelago to go ahead with Toku Tindung, having recently been offered £18 million debt finance from a group of banks. The company is also looking at prospects in the Philippines and Vietnam, where the mining regime has been liberalised.

Floated in 2003 at 23.5p, Archipelago's shares reached 41p before easing back to today's 37.5p, where Loosemore says the prospective price/earnings ratio is a mere three. They have speculative possibilities, closely geared to the gold price.