Southern Arc Second Quarter Financial Results and Projects Update
February 28 2014 - 6:30AM
Marketwired Canada
Southern Arc Minerals (TSX VENTURE:SA)(OTCQX:SOACF) ("Southern Arc" or "the
Company") today announced the results of its second quarter ended December 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.
Southern Arc will host an investor session and webcast
Sunday, March 2 from 6-8pm EST
Royal York Hotel, Toronto - Territories Room
Webcast at www.southernarcminerals.com
RSVP to info@southernarcminerals.com to attend in person
FINANCIAL SNAPSHOT
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December 31, 2013 June 30, 2013
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Total assets $ 13,412,252 $ 18,192,286
Exploration properties 102,068 102,068
Working capital 5,207,824 16,060,362
Comprehensive loss (4,752,718) (41,945,170)
Basic and diluted loss per share (0.04) (0.38)
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At February 27, 2014, Southern Arc had approximately $4.8 million in working
capital.
RECENT DEVELOPMENTS
Indonesian Properties
Since releasing a resource estimate for the West Lombok project in July 2013,
Southern Arc has maintained low-level activities at West Lombok while continuing
to advance discussions with a number of companies for a potential farm-in,
partnership or outright sale of the property. While Southern Arc believes the
West Lombok project holds great potential, the Company has determined that it
can more effectively build shareholder value by identifying a funding partner
for West Lombok and redirecting the Company's treasury to high-quality projects
in stable jurisdictions. Southern Arc remains confident that it will find a
suitable arrangement, and is working diligently to conclude a transaction that
will bring value to the Company.
During the quarter, Southern Arc renegotiated the purchase and sale agreement
for its Taliwang property whereby an individual (the "Purchaser") will purchase
Taliwang in exchange for US$1,600,000 and the granting of a 5% net smelter
royalty to Southern Arc. The Purchaser has the option to buy back 3% of the net
smelter royalty by paying Southern Arc US$3,000,000. The Purchaser has made two
payments to Southern Arc totaling US$400,000 and will pay Southern Arc an
additional US$1,200,000 in four consecutive weekly installments of US$300,000.
Eagle Hill Investment
On August 14, 2013, Southern Arc and Dundee Corporation (TSX:DC.A) invested a
total of $12 million into Eagle Hill Exploration Corporation ("Eagle Hill") (TSX
VENTURE:EAG)(OTCQX:EHECF), which was used partially to fund an aggressive drill
program at Eagle Hill's Windfall Lake Gold Project. From September to December
2013 Eagle Hill drilled a total of 28,232 metres in 68 drillholes (including one
extension and six wedges) with the objective of expanding the known mineral
resource. The drill program was focused in three areas: testing a large,
sparsely drilled anomaly to the southwest of the Main Zone, drilling lateral
extensions of known gold lenses within the Main Zone, and testing the extension
of mineralization at depth below the non-mineralized monzonite intrusion ("Red
Dog"). Eagle Hill also completed a hole-to-hole Induced Polarization ("IP")
survey to identify anomalies below Red Dog, and the first surface IP survey in
the south part of the property where surface exploration had identified
NE-trending lineaments similar to the Main Zone. The drill program successfully
achieved Eagle Hill's objective of proving that mineralized zones continue
beyond the current limit of the known Windfall Lake resource to the southwest
and below the Red Dog sill, leaving the deposit open for expansion. All drill
results have been released and are available on SEDAR at www.sedar.com and on
Eagle Hill's website at www.eaglehillexploration.com.
On December 30, 2013, Eagle Hill completed a private placement to third parties
which resulted in a decrease in the Company's equity interest in Eagle Hill from
26.14% to 24.90%.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2013
During the three months ended December 31, 2013, the Company had a net loss of
$3,234,969 compared to a loss of $5,172,518 for the three months ended December
31, 2012. Significant fluctuations occurred in the following categories:
a. Negative share-based compensation of $12,476 (2012: expenses of
$134,862) was due a reversal of previously recognized share-based
compensation for unvested options cancelled 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 the risk-free
interest rate.
b. Foreign exchange gain of $54,335 was lower during the three months ended
December 31, 2013 (2012: $64,577) primarily due to lower US$ cash
balances and the net effect fluctuation of the US$/CDN$ exchange rate
had on the CDN$ equivalent of the Company's holdings in its US$ bank
balance and its US$ payables balance.
c. Management fees increased to $296,700 compared to $203,500 in 2012 and
are discussed in detail in the Related Parties section.
d. Travel expenses of $30,737 (2012: $23,502) increased as a result of
higher level of executive travel during the period.
e. Interest income of $12,202 (2012: $40,907) decreased during the period
as a result of lower cash balances.
f. The Company wrote-off an additional $454,339 (2012: $4,541,049) of
exploration expenditures incurred on the West Lombok and Taliwang
properties during the period.
g. Transfer and filing fees of $44,017 (2012: $25,635) were higher due to
the increased timing of regulatory filing fees billed to the Company
during the three months ended December 31, 2013.
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 is advancing two properties in
Indonesia: West Lombok, a resource-stage property with several gold-rich copper
porphyry and epithermal gold vein prospects, and East Elang, a grassroots
exploration property that will be advanced in partnership with Vale
International SA. Southern Arc also owns 25% of Eagle Hill Exploration, which
owns the high-grade Windfall Lake Gold Project in Quebec, Canada. More
information is available at www.southernarcminerals.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as such
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Forward-looking Statements
This news release contains forward-looking statements relating to expected or
anticipated future events 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, 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.
Qualified Person
The technical information in this document related to Southern Arc's Indonesian
properties has been reviewed by Southern Arc's Executive Vice President, 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 West Lombok
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 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.
The technical information in this document related to the Windfall Lake property
has been reviewed by Eagle Hill's Vice President Exploration, Jean-Philippe
Desrochers, PhD, PGeo, 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 Eagle Hill under the supervision of Jean-Philippe Desrochers. The
diamond drill holes are drilled at NQ sizes and core recovery to date has
averaged better than 95.0%. Half core is cut by rock saw and is generally
sampled using nominal 1-metre intervals; however, sample intervals vary
according to geological contacts and have ranged between 0.3 to 1.5 metres in
length. Two quality control samples (one blank and one certified reference
material) are inserted into each batch of 20 samples. All assays were performed
by ALS Chemex Laboratory Group, in Val d'Or, Quebec. The half core samples are
securely transported from the project site to the ALS Chemex laboratory by Eagle
Hill personnel. Gold analyses reported in this release were performed by
standard fire assay using a 50-gram charge with atomic absorption finish and a
gravimetric finish for assays greater than 10 grams per tonne and by metallic
sieve method for samples containing significant amounts of pyrite or visible
gold. In addition, an Aqua regia digestion with ICP-AES finish is used to
analyse a full suite of elements including silver and base metals.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Southern Arc Minerals
Rhylin Bailie
Vice President, Communications & Investor Relations
604-676-5241
info@southernarcminerals.com
www.southernarcminerals.com
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