Southern Arc Minerals (CVE:SA) (OTCQX: SOACF) shares were up Thursday after reporting encouraging results from its West Lombok property in Indonesia, ahead of an upcoming resource estimate expected by the middle of this year.
The drilling results were from the Tibu Serai and the Bising targets at the Mencanggah prospect on the property, with 12 holes drilled altogether, for a total of 1,696 metres.
The company told investors Thursday that the results show the consistency of the wide mineralized body along the 500-metre strike of the Bising Hill target, as well as highlight the potential of higher grade zones at Tibu Serai. All drill results can be viewed on the company’s website atwww.southernarcminerals.com.
Southern Arc has now given all the drilling and exploration data collected so far from the West Lombok project to SRK Consulting, which is undertaking an NI 43-101 compliant resource report - expected by mid-2013.
The company said the upcoming resource report is expected to provide an inferred resource estimate for the property that includes epithermal gold mineralization from parts of the Pelangan prospect and the Mencanggah prospect, where the Bising and Tibu Serai targets are located, as well as porphyry copper-gold mineralization from the Selodong prospect.
The NI 43-101 report will also include SRK's recommendations for next steps at the project, including additional drilling for both resource upgrade and expansion.
"We have seen consistently strong drill results at the West Lombok property, and look forward to the results of the SRK report," said chairman and CEO of Southern Arc, John Proust, in the statement Thursday. "With West Lombok successfully advanced to this stage, Southern Arc may consider bringing a partner to the project to accelerate West Lombok's advancement while reducing financial exposure and risk to Southern Arc's shareholders."
The release of the drilling results came in hand with the company's quarterly financials, which were released in a separate statement. Total assets as at the end of the quarter were $53.9 million, with a working capital position of $15.16 million as of March 31. It posted a net loss of $6.5 million or 6 cents per share.
"Southern Arc's treasury is one of its key assets in what is undeniably a difficult capital market. While our share price has followed the general downward trend of most resource companies, having current working capital of approximately $14 million puts Southern Arc in a unique position among our peers and provides the financial flexibility to consider new opportunities that can bring near-term value to our shareholders," said Proust.
Indeed, at the end of last year, the company implemented a strategy to pursue advanced-stage gold projects in new jurisdictions, after conducting a strategic review of its assets. Its priority was to proceed with drilling at West Lombok, while retaining the "no-cost" joint venture interest in the East Elang property in Indonesia, which sits next to Newmont Mining's Elang-Dodo copper-gold asset. Southern Arc also decided to sell its Taliwang property and relinquish the Sabalong project, in an effort to focus its resources on West Lombok as well as new opportunities.
The West Lombok project covers a 13-km long by 7-km wide structural corridor of mineralization hosting porphyry copper-gold and epithermal gold deposits.
Shares of Southern Arc rose 12.5 per cent, or 1.5 cents, on Thursday, to trade at 13.5 cents as of mid-morning.
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