It paid 2 mln usd to purchase "put options" for a third of its current gold reserves, equivalent to 300,000 ounces, at the Toka Tindung mine in Indonesia.
Of these options, about 250,000 oz will expire on April 2006 and until such time will provide a guaranteed floor price of 460 usd per oz.
The options for the remaining 50,000 oz will end in various dates over the first two years of production and will ensure that output will be sold for at least 440 usd per oz.
Toka Tindung is believed to contain 1.75 mln oz in potential resources, of which at least 900,000 will initially be mineable by open pit.
It is expected to annually produce an average of 160,000 oz for the initial five years of the current six-year mine life commencing in late-2006.
"The put options provide considerable protection against the effects of a substantial fall in the gold price, one of the largest variables affecting a metal mining project like Toka Tindung and thereby constitute insurance to revenues necessary to support the debt financing for the project," the group said in a statement.
Archipelago in May secured a 35 mln usd loan from NM Rothschild & Sons to finance the Indonesian project.
Gold prices broke through the critical 500 usd-barrier and are currently trading at over 506 usd per oz, a 23-year high.
Analysts are still upbeat on prices, owing to worries over US inflation and strong demand from the retail market, particularly in the Far East.
mbe/joy
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