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Tuesday, 30 October 2012
Southern Arc forges ahead with $21 mln of working capital on Indonesian projects
Southern Arc Minerals (CVE: SA) OTCQX: SOACF) ended its fiscal year for the 12 months ending in June with more than $21 million in working capital as it worked to advance its portfolio of projects in Indonesia.
The company recently assumed a 100 per cent interest in its Sabalong property in Indonesia following Vale's decision to withdraw from their partnership at the site. With phase 1 exploration complete, Vale decided not to proceed to phase 2 and withdrew from the Sabalong project.
Southern Arc proceeded to complete a shallow drill program at the property targeting gold mineralization for a total of 1,036 metres in six holes. It reported yesterday that the drilling failed to show any increase in grade or width with depth, and did not extend the mineralization laterally.
No follow up drilling has been planned at this time, with the company now considering future options for the property. The drill work by Southern Arc was done based on what it called "encouraging" historical surface and subsurface work at the property by Newmont, Rio Tinto Zinc, and the company itself.
Meanwhile, the miner continues to map and sample for epithermal gold targets at its West Lombok project - with 3,645 surface rock samples collected for the year so far.
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.
In late 2011, the company made the decision to focus its near-term drilling activities on targets within areas without forestry designation. Full scale exploration at the site will continue pending issuance of a forestry permit known as a Pinjam Pakai (borrow to use) permit.
It said Tuesday that this forestry permit application has advanced to the final stage of approval. The permitting process is complex and involves more than 200 regulatory steps at both regional and federal levels, Southern Arc noted.
The company is working closely with SRK Consulting to plan its drill programs and has prepared a detailed campaign for epithermal gold targets to be executed once the Pinjam Pakai permit is issued. The next phase of exploration will focus on infill drilling at the Pelangan and Mencanggah prospects in areas where the company has identified high-grade shoots and wide mineralized intercepts.
Southern Arc is also working to complete an NI 43-101 technical report for West Lombok, which requires further exploration and drilling data. The company said the timing of the report is dependent on its ability to resume full scale exploration activities.
In May, Southern Arc increased its interest in the project from 85 to 90 per cent through the acquisition of additional shares in PT Indotan Lombok Barat Bangkit, the subsidiary that holds the mining business license to explore the property.
At the company's East Elang project, Vale remains a partner and can earn a 75 per cent interest by advancing the property to bankable feasibility study, with a minium phase 1 expense of US$1.2 million within one year from the date on which Southern Arc gets a permit from the Minister of Forestry.
Southern Arc was granted a mining business license for East Elang in December 2009, but exploration has been deferred at the site pending reclassification of the property's forestry status. The East Elang property is located next to Newmont's Elang copper-gold deposit.
And at the Taliwang property, also located next to Newmont's Batu Hijau copper-gold mine, exploration so far has found a gold-silver bearing epithermal vein system in which 56 holes have confirmed mineralized structures and porphyry copper-gold targets, among other targets.
Earlier this year, Newmont terminated a deal to earn at 63.75 per cent interest in the project, as the heads of agreement lapsed between the two parties due to the fact that certain conditions could not be met within the required timeframe.
But in May, the company gained support from the West Sumbawa Regency for the development of the property, while Southern Arc also increased its interest in Taliwang to 90 per cent.
Meanwhile, the company continues to bulk up its management, recently appointing Hamish J Campbell to the company's board of directors. Campbell has fronted Southern Arc's exploration programs in Indonesia since the company’s inception, in the roles of vice president of exploration and executive vice president.
The Indonesia-focused explorer also announced the promotion of Andrew J Rowe to executive vice president. Rowe was the company's chief geologist.
In terms of financials, the company narrowed its losses, posting a comprehensive loss of $4.3 million for the 12 months ending June 30, compared to $6.6 million the prior year. On a per share basis, losses were down to 4 cents from 8 cents in the previous year.
During the year, Southern Arc said it invested $13.9 million on exploration properties and $205,090 on property, plant and equipment. This compares to $3.6 million and $241,455, a year ago, respectively.