Southern Arc Minerals (TSX VENTURE:SA)(OTCQX:SOACF) ("Southern Arc" or "the
Company") today announced the results of its third quarter ended March 31, 2013,
along with an update on its portfolio of projects. Details of the Company's
financial results are described in the unaudited condensed consolidated interim
financial statements and Management's Discussion and Analysis ("MD&A"), which
will be available on the Company's website at www.southernarcminerals.com and on
SEDAR at www.sedar.com. All amounts are in Canadian dollars unless otherwise
stated.
FINANCIAL SNAPSHOT
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March 31, 2013 June 30, 2012
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Total assets $ 53,939,440 $ 60,884,512
Exploration properties 37,212,907 37,430,624
Working capital 15,164,760 21,035,112
Comprehensive loss (6,457,199) (4,312,411)
Basic and diluted loss per share (0.06) (0.04)
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EXPLORATION UPDATE AND OUTLOOK
At the end of 2012 Southern Arc's Board of Directors conducted a strategic
review of the Company's projects and exploration strategy. The Board ranked the
Company's projects and considered the best strategy to protect and promote
shareholder value. On December 13, 2012, Southern Arc announced the Board's
decision to: proceed with drilling at the West Lombok project; retain the
Company's no-cost joint venture interest in the East Elang project; sell the
Taliwang project, subject to certain conditions; relinquish the Sabalong
project; and actively pursue new advanced-stage, gold-focused opportunities
within Indonesia and other countries. This narrowed focus enabled Southern Arc
to dedicate resources in the near-term to advancement of the West Lombok project
while retaining the financial flexibility to consider new opportunities.
Following the Board's decision, Southern Arc commenced exploration in the
Mencanggah prospect focused on epithermal gold-bearing structural breccias.
Since mid-December 2012, Southern Arc has drilled 14 holes at the Bising target
and 16 holes at the Tibu Serai target. With this phase of drilling complete,
Southern Arc now has enough data to complete a preliminary National Instrument
43-101 compliant resource estimate for portions of the property. Since December
2011, Southern Arc has worked closely with SRK Consulting (Canada) Inc. ("SRK"),
an internationally renowned, independent consulting service to major,
intermediate and junior mining and exploration companies. SRK helped to prepare
the drill program for epithermal gold targets within the Pelangan and Mencanggah
prospects and has been reviewing the data throughout the drilling process.
Southern Arc expects to have a technical report by mid-2013 that provides an
inferred resource estimate for the property incorporating epithermal-gold
mineralization from parts of the Raja target (Pelangan prospect), Bising and
Tibu Serai targets (Mencanggah prospect), as well as porphyry copper-gold
mineralization from the Selodong prospect. The report will also include SRK's
recommendations for additional drilling for both resource upgrade and expansion,
which will help to focus next steps for the project.
Recent results have demonstrated the prospectivity of the Mencanggah prospect,
and many targets with high-grade surface results remain untested at Mencanggah
and other parts of the property. While awaiting results of the resource
estimate, Southern Arc's exploration team will continue to work with SRK to plan
next steps at the property, which may include engineering and metallurgical
studies.
West Lombok Property (Lombok Island)
The West Lombok project covers a 13-km long by 7-km wide structural corridor of
mineralization and alteration hosting porphyry copper-gold and epithermal gold
deposits. The two main epithermal prospects on the property, Pelangan and
Mencanggah, cover broad areas of 4 km by 5 km and 6.5 km by 4.5 km,
respectively, that host numerous structurally-controlled silica ledges variably
overprinted by high-grade quartz veins and breccias. Individual tabular ledge
bodies range 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. Southern Arc has
completed 26,477 metres of drilling to date on epithermal gold mineralization in
the Pelangan and Mencanggah prospects, confirming broad zones of low-grade
mineralization throughout the property, high-grade events typical of epithermal
boiling zones and several high-grade shoots. At the Selodong porphyry
copper-gold intrusive complex in the southeastern end of the property, Southern
Arc has completed 20,046 metres of drilling to date with the majority of drill
holes intersecting broad zones of significant copper-gold mineralization. In
2011, the Company completed an airborne geophysical survey of the West Lombok
project at 50-metre spacings to define both near-surface and buried copper-gold
porphyry targets. Industry experts including Dr. Steve Garwin, Southern Arc's
Senior Technical Advisor, modelled and interpreted the results of the survey in
conjunction with the Company's geological and geochemistry database, and
identified 17 porphyry targets on the property. A number of these targets have
already had a limited amount of drill testing and demonstrated zones hosting
high-grade gold-rich porphyry copper mineralization, supporting the outcome of
the prospectivity analysis.
On November 20, 2012, Southern Arc announced that the forestry permit required
to conduct drilling on the property, known as a Pinjam Pakai (borrow to use)
permit, had been received. On December 13, 2012, Southern Arc announced that it
was commencing drilling at West Lombok, with a near-term focus on epithermal
gold-bearing structural breccias in the Mencanggah prospect. Southern Arc
mobilized three drill rigs to the Bising target and initiated a Phase 2 drill
program to infill and expand the zones of mineralization adjacent to wide
mineralized intercepts identified with Phase 1 drilling. Southern Arc completed
11 Phase 2 holes at Bising (1,375.6 metres, Table 1). Based on those results,
the Company drilled three additional holes (423.0 metres, Table 1) to test an
inferred plunge to higher-grade mineralization and infill in a 200-metre wide
gap between previous drill holes MCG031 and MCG032 to test for continuity of
mineralization.
The extensive width (up to 66 metres width in surface outcrop) of the main
Bising epithermal body is inferred to result from the intersection of geological
structures: a major west-northwest trending fault intersected by several
north-northwest trending faults, the latter of which form the dominant gold
mineralized trend in the West Lombok district. Phase 2 drilling at the Bising
target has demonstrated the consistency and width of mineralization in the area,
with a large proportion of the drill holes intersecting wide intervals averaging
greater than 1 g/t gold mineralization. Particularly encouraging is the result
from MCG057, which confirmed continuity between other wide greater than 1 g/t
gold intervals intersected to the west (MCG030, 041, 042, 028) and east (MCG032)
of this location.
Highlight Phase 2 drilling intercepts from the Bising target include:
MCG041 66.8 m @ 0.66 g/t gold and 2.4 g/t silver from 20.0 m
including 22.9 m @ 1.16 g/t gold and 2.7 g/t silver from 22.0 m
MCG042 53.2 m @ 1.04 g/t gold and 1.4 g/t silver from 16.0 m
including 1.0 m @ 9.67 g/t gold and 0.8 g/t silver from 32.2 m
and 0.30 m @ 10.2 g/t gold and 61.3 g/t silver from 46.3 m
MCG043 42.4 m @ 0.51 g/t gold and 1.1 g/t silver from 20.7 m
including 10.1 m @ 1.0 g/t gold and 1.9 g/t silver from 39.0 m
MCG044 58.15 m @ 0.61 g/t gold from 87.85 m
including 11.0 m @ 1.3 g/t gold from 104.6 m
and 7.5 m @ 1.1 g/t gold from 123.0 m
MCG056 41.40 m @ 0.69 g/t gold and 1.4 g/t silver from 97.50 m
including 13.70 m @ 0.94 g/t gold and 0.9 g/t silver from 105.00 m
MCG057 52.70 m @ 0.68 g/t gold and 2.3 g/t silver from 7.55 m
including 27.15 m @ 1.00 g/t gold and 3.4 g/t silver from 28.40 m
MCG059 34.15 m @ 0.52 g/t gold and 1.1 g/t silver from 94.85 m
17.35 m @ 0.78 g/t gold and 1.7 g/t silver from 111.65 m
In 2013 Southern Arc also commenced Phase 1 drilling at the Tibu Serai target in
the Mencanggah prospect, where surface channel samples have returned the
highest-grade mineralization on the property to date. Tibu Serai comprises a 2
km by 2 km area at the northern end of the Mencanggah prospect and hosts
numerous northwest and north-northwest trending linear gold mineralized
structures. The majority of these well-exposed mineralized zones have been
systematically channel sampled and have returned numerous highly gold-anomalous
intervals. Highlight channel samples include 7.1 m @ 53.53 g/t gold, 2.25 m @
12.13 g/t gold, 0.6 m @ 69.0 g/t gold and 2.0 m @ 9.8 g/t gold. Southern Arc
initially drilled seven widely spaced shallow holes (1,124.2 metres, Table 3)
targeting down-dip extensions from high-grade surface channel samples. The
results confirmed the down-dip continuity of mineralization below surface but
tested only a fraction of the strike of the mineralized breccias at Tibu Serai.
Drillhole MCG055 was particularly encouraging, as this mineralization lies
adjacent to an inferred major cross-cutting structural break evidenced from the
magnetic survey data and mapped outcrop patterns. Southern Arc's exploration
team believes this major structural break may be influencing higher gold grades
in its proximity, and drilled nine further holes (1,273.0 metres, Table 3) to
test extensions of this high-grade intercept. Eight of the holes successfully
encountered mineralization, demonstrating continuity of mineralization along
strike and at depth. Results showed localized development of high-grade shoot
zones which remain open and will require further drilling to quantify, and also
gave strong encouragement for drill testing of numerous other untested
high-grade surface anomalies within Mencanggah and Pelangan. Highlight
intercepts from Phase 1 drilling at the Tibu Serai target include:
MCG055 24.8 m @ 4.27 g/t gold and 0.6 g/t silver from 48.6 m
including 0.5 m @ 71.0 g/t gold and 1.9 g/t silver from 49.4 m
and 5.4 m @ 9.44 g/t gold and 1.3 g/t silver from 67.2 m
including 0.55 m @ 71.0 g/t gold and 6.8 g/t silver from 71.75 m
MCG050 10.77 m @ 1.01 g/t gold and 4.0 g/t silver from 100.23 m
including 2.15 m @ 3.87 g/t gold and 17.0 g/t silver from 108.85 m
including 0.5 m @ 15.0 g/t gold and 67.4 g/t silver from 110.5 m
MCG051 8.7 m @ 1.56 g/t gold and 0.71 g/t silver from 114.7 m
including 3.5 m @ 3.33 g/t gold and 1.0 g/t silver from 119.9 m
8.85 m @ 0.74 g/t gold and 0.4 g/t silver from 136.45 m
MCG049 12.1 m @ 1.07 g/t gold and 1.2 g/t silver from 31.3 m
including 4.2 m @ 2.17 g/t gold and 1.7 g/t silver from 34.65 m
3.3 m @ 1.21 g/t gold and 1.2 g/t silver from 78.7 m
MCG058 0.70 m @ 13.50 g/t gold and 2.3 g/t silver from 3.20 m
18.70 m @ 2.46 g/t gold and 0.4 g/t silver from 58.80 m
including 6.90 m @ 5.65 g/t gold and 0.5 g/t silver from 70.60 m
including 1.10 m @ 31.97 g/t gold and 1.9 g/t silver from 76.40 m
MCG060 22.50 m @ 1.60 g/t gold and 1.5 g/t silver from 60.30 m
including 5.10 m @ 5.29 g/t gold and 5.3 g/t silver from 76.70 m
MCG067 4.50 m @ 7.79 g/t gold and 0.7 g/t silver from 70.60 m
including 0.60 m @ 16.60 g/t gold and 1.6 g/t silver from 70.60 m
and 1.05 m @ 20.94 g/t gold and 1.0 g/t silver from 73.40 m
MCG061 26.30 m @ 1.22 g/t gold and 0.2 g/t silver form 96.50 m
including 8.00 m @ 3.21 g/t gold and 0.3 g/t silver from 114.80 m
including 0.90 m @ 11.20 g/t gold and 0.2 g/t silver from 117.60m
and 0.80 m @ 13.80 g/t gold and 0.7 g/t silver from 122.00 m
MCG062 3.95 m @ 3.55 g/t gold and 0.2 g/t silver from 21.65 m
including 0.80 m @ 11.70 g/t gold and 0.2 g/t silver from 23.90 m
In March 2013, Southern Arc also drilled two holes (1,197.7 m, Table 2) to test
deep porphyry targets beneath the Mencanggah lithocap. The holes were targeting
modeled magnetic geophysical anomalies underlying the Tibu Serai area. Neither
hole encountered significant porphyry-style mineralization, instead intersecting
magnetite rich diorite and volcanics, respectively. Southern Arc remains very
optimistic about porphyry copper exploration on the property. Areas in the
Selodong prospect where previous drilling encountered gold-rich high-grade
porphyry drill intersections have similar geophysical signatures to other
porphyry targets on the property. Porphyry deposits often occur in clusters, and
numerous porphyry targets remain to be drill tested beneath the lithocaps at
Mencanggah, Pelangan and Selodong.
East Elang Property (Sumbawa Island)
The East Elang property is located adjacent to Newmont's Elang-Dodo property,
which hosts a large copper-gold porphyry deposit. Aerial photography and
lithographical studies suggest that the Elang mineralized structure may extend
onto Southern Arc's East Elang property. While the property is considered highly
prospective due to its location and results from aerial surveys, exploration has
been deferred pending reclassification of the property's forestry status and
issuance of the appropriate permits.
Under the terms of the October 2010 option and joint venture agreement, the
property will be advanced in partnership with Vale, whereby Vale can earn a 75%
interest in the East Elang property by advancing the property to bankable
feasibility study with a minimum Phase 1 expenditure of US$1.2 million within
one year from the date on which Southern Arc receives a Ministry of Forestry
Pinjam Pakai permit for the property. Southern Arc has not yet applied for the
Pinjam Pakai permit because the majority of the East Elang property, including
the most prospective areas, is designated as primary forest and subject to a
moratorium on exploration and mining activities. In May 2013 the Indonesian
government extended the moratorium to May 2015. As a result, there can be only
very limited exploration activity on the property until either a
reclassification is granted or the moratorium is lifted. Southern Arc has
requested a reclassification of the property's forestry status and has also
applied for suspension (back-dated for two years) of the mining business license
("IUP") until the reclassification process has been completed, ensuring that
Southern Arc and Vale have adequate time to evaluate the property once
exploration commences. In the interim, Company field activities continue to
focus on CSR engagement at the village and sub-district levels.
Other properties
Southern Arc is actively pursuing a number of acquisition and partnership
opportunities, both within Indonesia and in other countries, with the objective
of adding value for shareholders by expanding the Company's project portfolio.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2013
During the nine-month period ended March 31, 2013, the Company had a loss of
$6,457,199 compared to loss of $3,128,038 for the nine-month period ended March
31, 2012. Significant fluctuations incurred in the following categories:
a. Share-based compensation of $294,060 (2012: $837,053) decreased as a
result of fewer share options granted during the period. Share-based
compensation expense is accounted for at fair value as determined by the
Black-Scholes Option Pricing Model using estimates that are believed to
approximate the volatility of the trading price of the Company's stock,
the expected lives of awards of share-based compensation, the fair value
of the Company's stock and risk-free interest rate.
b. Consulting fees of $nil (2012: $333,573) were paid as no consultants
were engaged during the period.
c. Foreign exchange gain of $6,718 was lower during the period ended March
31, 2013 (2012: $473,267 gain) primarily due to lower US$ balances and
reduced fluctuation of the US$/CDN$ exchange rate and the net effect on
the CDN$ equivalent of the Company's holdings and transactions in its
US$ bank balance and US$ payables balance.
d. Management fees decreased to $622,000 from $635,140 in 2012 and are
discussed in detail in the Related Parties section.
e. Office and miscellaneous expenses decreased to $595,455 (2012: $694.968)
as a result of lower levels of corporate activities.
f. Professional fees of $236,203 (2012: $434,670) decreased as a result of
lower corporate legal activity during the period.
g. Travel expenses of $40,749 (2012: $172,967) decreased as a result of
reduced executive travel during the period.
h. Interest income of $135,782 (2012: $217,710) decreased during period due
to lower cash balances.
i. The Company invested $5,586,044 cash (2012: $10,288,639) on exploration
properties and $2,445 on property, plant and equipment (2012: $206,090).
j. The Company wrote down the value of the Sabalong property to $nil and
recognized a $1,192,789 impairment provision.
k. The Company recognized a $3,348,260 impairment provision against its
book value of the Taliwang property.
l. In 2013 the Company recorded an impairment loss of $7,086 on equipment.
Under other items in 2012, the Company recorded its share of the equity
loss of Nickel of $52,289 and recorded an impairment charge related to
Nickel of $305,582.
SUMMARY OF QUARTERLY RESULTS
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March 31, December 31, September 30, June 30,
2013 2012 2012 2012
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Total assets $ 53,939,440 $ 54,333,738 $ 60,321,920 $ 60,884,512
Exploration
properties 37,212,907 35,612,324 38,808,405 37,430,624
Working capital 15,164,760 17,208,413 19,027,865 21,035,112
Net loss (527,628) (5,172,518) (757,053) (1,184,372)
Basic and diluted
loss per share (0.00) (0.05) (0.01) (0.01)
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March 31, December 31, September 30, June 30,
2012 2011 2011 2011
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Total assets $ 60,884,512 $ 61,274,365 $ 63,112,036 $ 62,706,114
Exploration
properties 37,430,624 29,634,073 26,345,975 22,796,908
Working capital 21,035,112 29,897,586 34,173,553 37,957,778
Net loss (1,272,920) (1,569,849) (285,270) (1,224,222)
Basic and diluted
loss per share (0.01) (0.01) (0.00) (0.01)
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Click here to view Drill Results Tables -
http://media3.marketwire.com/docs/sa530_T1-3.pdf.
On behalf of the Board of Southern Arc Minerals Inc.
John Proust, Chairman & CEO, Director
About Southern Arc
Southern Arc Minerals Inc. is a Canadian mineral exploration company focused on
gold and copper-gold exploration. The Company's key exploration property is its
West Lombok project, with several gold-rich copper porphyry and epithermal gold
vein prospects. Southern Arc is listed on the TSX Venture Exchange under the
symbol SA and on the OTCQX International under the symbol SOACF. More
information is available at www.southernarcminerals.com or by emailing
info@southernarcminerals.com.
Forward-looking Statements
This news release contains forward-looking statements relating to expected or
anticipated future events and operations, timing of projects and anticipated
results that are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties, such as general economic, market and business
conditions, the regulatory process and actions, technical issues, new
legislation, competitive and general economic factors and conditions, the
uncertainties resulting from potential delays or changes in plans, the
occurrence of unexpected events, and the company's capability to execute and
implement future plans. Actual results achieved may vary from the information
provided herein as a result of numerous known and unknown risks and
uncertainties and other factors. There is no representation by the company that
actual results achieved during the forecast period will be the same in whole or
in part as that forecast.
Qualified Person
The technical information in this document has been reviewed by Southern Arc's
Chief Geologist, Andrew Rowe, B. App. Sc. Geology, MAusIMM. Mr. Rowe has over 20
years of international mineral exploration experience throughout Southeast and
Central Asia and Australia. During this time he has held such positions as
Principal Geologist - Feasibility Studies, Senior Geologist and Consulting
Geologist. The technical information in this document has also been reviewed by
Southern Arc's President & Chief Operating Officer, Dr. Mike Andrews, PhD,
FAusIMM, who has sufficient experience relevant to the style of mineralization
under consideration and qualifies as a Qualified Person as defined by National
Instrument 43-101.
The drill program and sampling protocol is managed by Southern Arc under the
supervision of Andrew Rowe. The diamond drill holes are drilled at PQ, HQ and NQ
sizes depending on hole depth and core recovery to date has averaged better than
98.0%. Half core is cut by rock saw and is generally sampled using nominal
1-metre intervals; however, sample intervals are varied according to geological
contacts and have ranged between 0.2 to 2.5 metres in length. Three quality
control samples (one blank and two standards) are inserted into each batch of 40
samples. The half core samples are securely transported from the project site to
the Intertek Testing Services ("ITS") sample preparation laboratory in Sumbawa
Besar via private truck hired by Southern Arc. Sample pulps are then sent to the
ITS Jakarta laboratory by ITS. Gold is analysed by fire assay with AAS finish
and a four-acid digestion with ICP-MS finish is used to analyse a full suite of
elements including silver and base metals. ITS is one of the world's largest
product and commodity testing, inspection and certification organizations. The
Jakarta laboratory is ISO 17025 accredited and employs a Laboratory Information
Management System for sample tracking, quality control and reporting.
FOR FURTHER INFORMATION PLEASE CONTACT:
Southern Arc Minerals Inc.
Rhylin Bailie
Vice President, Communications & Investor Relations
604-676-5241
info@southernarcminerals.com
www.southernarcminerals.com
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