Indonesia-focused explorer Southern Arc Minerals (CVE:SA) late Tuesday announced financial results for its third quarter that ended March 31, along with an update on exploration activities at its portfolio of projects.
Over the last three months, the company completed a number of significant milestones, including increasing its ownership to 90 per cent in its West Lombok and Taliwang projects in Indonesia through the acquisition of additional shares in its subsidiary PT Indotan Lombok Barat Bangkit, from its Indonesian partner, PT Permata Puri Mega (PT PPM).
In consideration for transferring its five per cent interest in both the West Lombok and Taliwang projects, PT PPM received US$1.5 million and 2.25 million Southern Arc shares, subject to approval.
The key West Lombok project covers a 13 by 7 kilometre structural corridor of mineralization and alteration hosting porphyry copper-gold, high-sulfidation gold-copper and epithermal gold deposits.
Two of the prospects on the property host a combined proven strike length of more than 26 kilometres of mineralized epithermal breccias, with individual bodies ranging in thickness from 2 to 66 metres, with a strike length of up to 1,000 metres and a vertical extent of greater than 300 metres.
The company said it has completed drilling at the West Lombok project pending issuance of a forestry permit known as a Pinjam Pakai (borrow to use) permit, with 3,501.5 metres of drilling completed to date this year.
Around 1.1 per cent of the West Lombok property is designated protected forest, 55.1 per cent is designated production forest, and 43.8 per cent has no forestry designation.
In late 2011, Southern Arc decided to focus its near-term drilling activities on targets within areas without forestry designation.
So far this year, Southern Arc completed 14 holes on areas in the northwest section of the property, focused on epithermal gold mineralization, and two holes in the southeast section of the property, focused on porphyry copper-gold mineralization.
The company said it does not plan to resume drilling until the Pinjam Pakai permit is received. Mapping and sampling at the West Lombok project is ongoing, with 472.5 line kilometres completed so far this year.
In early 2012, Southern Arc initiated an exploration program to drill porphyry targets located in the south of the property in areas without forestry designation, and will continue to test the other targets when the company receives the Pinjam Pakai permit and is able to resume full-scale exploration.
Also earlier this year, the Belikat and Blongas East targets of the Selodong prospect, where previous exploration returned significant porphyry-grade intersections, were tested by two drill holes totaling 974.0 metres.
Exploration activities on West Lombok in 2011 and the first quarter of 2012 focused on phase 2 exploration at the Pelangan prospect and phase 1 exploration at the Mencanggah prospect of West Lombok.
Initial activities on Mencanggah focused on the Waterfall target, where Southern Arc completed 27 holes for a total of 6,634 metres of drilling, with 17 of the 27 holes encountering gold mineralization.
The company also drilled eight holes on the Bising target of the Selodong prospect, for a total of 2,286 metres, all of which encountered mineralization. Bising remains a high-priority drilling target when Southern Arc is able to resume full scale activities, it said.Surface mapping has continued on the West Lombok property and the team has to date identified 18.5 km of mineralized structural breccias the Mencanggah prospect with an additional 1.3 kilometres of epithermal structural breccias.
Geochemical testing is ongoing to determine mineralization, with 8.0 kilometres of mineralized structural breccias on the Pelangan prospect and an additional 1.7 kilometres of epithermal structural breccias.
The company reported “encouraging assay results” of over 5.0 grams per tonne (g/t) gold from continuous rock chip channels collected across the strike of mineralized structural breccias have been received from a number of Pelangan and Mencanggah prospect localities.
In early April, the company released an update on exploration activities at West Lombok, highlighting Drill hole SLD031, the first to test new porphyry targets generated by an aeromagnetic survey.
Hole SLD031 returned 83.0 metres at 0.33 g/t gold and 0.08 percent copper from 285 metres, including 43.5 metres at 0.41 g/t gold and 0.08 percent copper from 306 metres, and 14.0 metres at 0.60 g/t gold and 0.12 percent copper.
Southern Arc has engaged SRK Consulting (Canada) to complete an NI 43-101 technical report for the property.
Completion of the technical report requires more exploration and drilling data, and the timing of the report is contingent on Southern Arc's ability to resume full-scale exploration.
The company said it will provide additional guidance on the timing of this report as more information becomes available.
During the quarter, Southern Arc also completed drilling of a third hole at its Sabalong project in the Sumbawa Island in Sumbawa Regency, Indonesia, targeting copper-gold porphyry mineralization, with results pending.
The Sabalong property is being advanced in partnership with Vale, with Southern Arc as the operator of the property. Southern Arc said results will be released when phase 1 exploration is deemed complete, at which point Vale has the option to carry on to phase 2 and complete US$2 million of funding within two years.
Geomapping along with geochemical and geophysical surveying activities at the Sabalong property have defined a number of potential porphyry intrusive targets.
Although no significant assay results were returned, the company said the geology and wallrock alteration recognized in the drill core provided sufficient encouragement to drill a third hole targeting potential porphyry copper-gold mineralization below a lithocap.
At the Taliwang property, Southern Arc said it completed a cooperation agreement with the West Sumbawa Regency Government, ensuring collaboration as the project advances.
The Taliwang property covers 31,200 hectares prospective for gold, silver and copper mineralization. Under the terms of the agreement, Southern Arc granted the West Sumbawa Regency a 10 per cent free-carry equity interest in the project.
Results from outcrop sampling of jasperoid ledges by Southern Arc has returned numerous channel samples in excess of 5 g/t gold and 50 g/t silver to a maximum grade of 216 g/t gold and 330 g/t silver over 3 metres.
The company said prospecting culminated in a seven-hole scout drilling program (413.6 metres) testing subsurface extensions of the known surface Au-Ag jasperoid mineralization.
Hole J3DH-01 reported an intercept of 2 metres at 1.93 g/t Au and 11 g/t Ag, but the bulk of the area and western extensions have yet to be drill-tested.
During the quarter, Southern Arc terminated an agreement with Newcrest Mining (ASX:NCM) for the Taliwang project, whereby Newcrest could have earned a 63.75 per cent interest in the project.
Meanwhile, the company said the East Elang property copper-gold property in the southwest Sumbawa Island is “highly prospective” due to its location and results from aerial surveys.
Exploration of this property has been deferred pending reclassification of the property's forestry status.
The East Elang property is included in the Vale option and joint venture agreement, where Vale can earn a 75 per cent interest in both the Sabalong and East Elang properties by advancing either property to bankable feasibility study.
During the quarter that ended March 31, the company posted a net loss of $1.27 million, or one cent per share, compared to a loss of $1.81 million in the same period last year. Working capital totaled $22.9 million at the end of its latest fiscal quarter.
Southern Arc finished the quarter with assets totalling $62.87 million.
Southern Arc is a Canadian mineral exploration company, whose portfolio includes four epithermal gold and copper-gold porphyry exploration projects on the Lombok and Sumbawa islands in Indonesia, three of which are being advanced in partnership with major mining companies Vale and Newcrest.
Southern Arc’s key exploration property is its West Lombok project, with several gold-rich copper porphyry and epithermal gold vein prospects.
The company’s shares were down -3.23 per cent early Wednesday, trading at 30 cents.