Southern Arc Minerals Inc. is a Canadian mineral exploration company focused on gold and copper-gold exploration. Southern Arc is advancing two joint venture projects in Indonesia and has applied for exploration licenses in Japan. In addition, the Company holds more than 6% of Oban Mining, a well-financed junior mining company that is advancing a high-grade gold project in Quebec, Canada. Southern Arc is listed on the TSX Venture Exchange under the symbol "SA".
Southern Arc's key exploration property is its West Lombok project, with several gold-rich copper porphyry and epithermal gold vein prospects. In December 2014 Southern Arc entered into a joint venture to advance the West Lombok project to small-scale production. PT Genesis Sumber Energi can earn a 25% interest in the project by completing an environmental impact study and a feasibility study for small-scale underground gold mines and processing plants. PT GSE must also convert the exploration permit into an exploitation permit, thereby securing tenure on the property for a further 20 years. PT GSE recently commissioned a similar mining venture at the Taliwang project, at which Southern Arc holds a 5% NSR.
The West Lombok property comprises a 13km long by 7km wide structural corridor of hydrothermal mineralization and alteration on Indonesia's Lombok Island. Previous exploration by Newmont Mining established the presence of epithermal and porphyry mineralization on a district scale with three large prospects: the Pelangan epithermal gold prospect, the Mencanggah epithermal/porphyry copper-gold district, and the Selodong intrusive copper-gold complex. Southern Arc has completed more than 40,000 metres of drilling to date on the property and published the first resource estimate for the West Lombok property in July 2013, with an inferred resource totaling 1.49 million ounces of gold, 1.82 million ounces of silver and 397.3 million pounds of copper from three open-pittable epithermal gold deposits and one porphyry copper deposit. Further details are available in the press release and technical report.
Southern Arc and Vale International S.A. are advancing the East Elang Project under an option and joint venture agreement whereby Vale can earn a 75% interest (Southern Arc retaining 25%) by funding all project expenditures through to completion of a bankable feasibility study. The East Elang property is located immediately adjacent to Newmont's Elang copper-gold deposit (25 Moz gold, 16 Blb copper). Airborne geophysics and lithographical studies suggest that structures controlling the Elang porphyry trend may extend onto Southern Arc’s East Elang property. While the project is certainly prospective based on its location, Southern Arc will not begin to explore at East Elang until the appropriate permits have been issued.
Japan Exploration Licenses
In May 2014 Southern Arc applied for 38 exploration licenses in Northern Japan, in an area of known gold occurrences. Further to its diversification strategy announced in December 2012, Southern Arc has been searching for resource exploration and investment opportunities in stable jurisdictions. Japan hosts one of the world’s highest grade gold mines, the Hishikari Mine, which has produced since 1985 with grades averaging 40 g/t gold. Despite a history of significant production, with many million-plus-ounce deposits with good gold and silver grades, the region is regarded as largely underexplored.
Based on a desktop review of historical gold production and Japan’s extensive geoscientific database, Southern Arc has applied for exploration licenses through its newly formed subsidiary, Southern Arc Minerals Japan Inc. ("SAMJ"). SAMJ has lodged 38 contiguous exploration applications in northern Hokkaido targeting high-grade epithermal gold deposits.
Oban Mining Investment
In August 2013 Southern Arc acquired a 26% interest in Eagle Hill Exploration, which was advancing the high-grade Windfall Lake gold project in Quebec, Canada. With gold grades averaging 8.42 g/t gold in the indicated category, Windfall Lake is one of Canada's highest-grade resource-stage gold projects, located in one of the world's best mining jurisdictions.
In August 2015 Eagle Hill was purchased by Oban Mining Corp. as part of a four-way merger with Oban Mining, Eagle Hill, Ryan Gold and Corona Gold. Oban offered Eagle Hill shareholders 10 Oban shares for each common share of Eagle Hill, providing a 258% premium to the 15-day VWAP. Additionally, each Eagle Hill shareholder would receive five common share purchase warrants of Oban per common shares of Eagle Hill owned. At completion of the deal, following a 20:1 Oban share consolidation, Southern Arc owned 6.8% of Oban Mining (13.3% on a fully diluted basis). Southern Arc is holding these shares for investment purposes, and may increase or decrease its beneficial ownership of Oban Mining as best serves Southern Arc's investment and business objectives.
Eagle Hill completed a Preliminary Economic Assessment for the Windfall Lake Gold Project in April 2015, outlining the design of a 1,200 tonne per day underground mine producing 106,200 ounces of payable gold annually for 7.8 years at an average total cash cost of $558/oz of gold (US$480/oz). At a base case gold price of US$1,200/oz the project has a pre-tax internal rate of return ("IRR”) of 23.6% and a pre-tax net present value discounted at 5% ("NPV5”) of $241.4 million. Initial project capital costs are estimated at $240.6 million.