Southern Arc Minerals Inc. is a Canadian mineral exploration company focused on gold and copper-gold exploration. The Company owns an interest in the West Lombok project in Indonesia, a resource-stage property with several gold-rich copper porphyry and epithermal gold vein prospects. Southern Arc also holds an investment in Oban Mining Corporation, which is advancing the high-grade Windfall Lake Gold Project in Quebec, Canada, and has applied for 80 prospecting rights licenses in Northern Japan in an area with known gold occurrences and a history of mining. Southern Arc is listed on the TSX Venture Exchange under the symbol "SA".
Southern Arc's 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 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.
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. Southern Arc also holds a 3% NSR at the East Elang project, which is being advanced by an Indonesian individual.
Japan Exploration Licenses
Southern Arc has applied for 80 exploration licenses in Northern Japan, in an area of known gold occurrences. 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 was able to pinpoint areas that are very compelling from a geological perspective and applied for exploration licenses through its wholly-owned subsidiary Southern Arc Minerals Japan KK ("SAMJ”). SAMJ lodged 38 contiguous exploration applications in Northern Hokkaido targeting high-grade epithermal gold "Hishikari-type” deposits (see Southern Arc news release dated May 20, 2015). Subsequently, SAMJ lodged another 42 prospecting rights license applications throughout Hokkaido and Northern Honshu targeting other prospective epithermal gold areas and areas of gold-bearing advanced argillic alteration, which could indicate the presence of a porphyry mineral environment. The combined area under application by SAMJ currently comprises 27,153 hectares over eight target areas.
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.