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11 Feb | Archipelago Resources

We’ve been bullish on gold since Buffet was, well, pretty old actually, and whilst our¬†spectacularly¬†speculative buy into Norseman Gold (123,211 shares at 3.26 pence) hasn’t exactly paid off – Norseman is down, but not yet out – we still have faith in the sector, as gold continues its holding pattern in the $1,600 to $1,800 an ounce band.

Archipelago Resources (AR..L) is a far less speculative investment prospect than Norseman.

Based out of Singapore, Archipelago is a growing mid-cap gold producer. Their key asset is the Toka Tindung Gold Mine, located in North Sulawesi, Indonesia, which currently has a nine-year mine life with an additional seven years of stockpile. They are also pursuing exploration initiatives in other parts of South East Asia.

Archipelago Resources passed all ten of our stock screens (see below) with flying colours adding some fundamental muscle to our initial feelings.




* We’re now using Stockopedia for our stock screening and fundamental analysis and without getting all soppy and emotional, these guys have an interface for displaying stock information – and creating your own stock screens (see above) – that will blow you away…but that’s a story for a whole other post. If you want to get in and check it out for yourself, Stockopedia is offering a 14 day free trial (drop in on some of their pre-programmed Guru screening strategies such as the Warren Buffett – Hagstrom Screen or the Naked Trader-esque Screen or the Piotroski High F-Score Screen to see what passes the screens of investments biggest names. T’rific stuff.)

Anyway, back to Archipelago Resources – it has got a PE rolling 1 year of only 5.35 and an incredibly tasty PEG ratio of 0.17. And whilst it’s not quite a FTSE 350 constituent it’s certainly knocking on the door, ranking in the top 450 companies on the LSE based on market capitalisation.

Here’s a couple of highlights from their production results for the Toka Tindung Mine in North Sulawesi, Indonesia for the year ended 31 December 2012:

  • Achieved FY 2012 production of 139,012 Au Eq oz at a cash cost of $635 per oz (net of silver credits), meeting both production and cash cost guidance set for the first full year of operations.
  • For the three months ended 31 December 2012 (“Q4 2012”), Archipelago set a quarterly production record of 42,302 Au Eq oz.

Whilst we’re yet to buy any Archipelago, it’s certainly been placed on the Investor Trader Radar. To delve a little further into happenings in Sulawesi, check out the Archipelago Resources website.

I’ll leave the final words to Marcus Engelbrecht, Managing Director and CEO of Archipelago Resources:

“The production result we achieved during 2012 is pleasing, particularly as this is Archipelago’s first year at full production. We not only delivered against our initial guidance on production, but did so at a cash cost well below that of many industry peers. This positive result is a testament to the quality of the Archipelago team, and I am confident that we can continue to meet our operational targets and sustain a superior performance at our Toka Tindung Mine into 2013.”