West Lombok Geology

The island of Lombok is located in the central part of the tectonically active, east-west trending Sunda-Banda magmatic arc that marks the convergence of three major tectonic plates. Strong conjugate systems of northwest (NW) and northeast (NE) faults are the dominant structural feature at both local and regional scales. On the basis of structural features in the Batu Hijau Mine district in the adjoining Sumbawa Island and in other Lombok localities, NW trending structures are more readily observed than NE fabrics.

The presence of both high sulfidation and low sulfidation vein outcrop and hill talus in the southwest areas of Lombok, along with good prospectivity in the Pelangan prospect area (see West Lombok maps page), suggests that the West Lombok property has significant potential for hybrid high-low sulfidation systems or structurally controlled, high sulfidation gold-rich copper porphyry systems.

Previous structural studies by Newmont (PT NNT) of regional mineralized districts suggest that three main structural grains, northwest, north-south and north-east trends, are related to gold and copper mineralization in the region. "NNE to NE trends (extensional or synthetic faults) form the mineralized corridors hosting porphyry Cu-Au mineralization, whilst later through-going NW trending faults are interpreted as late-stage or post-porphyry. Late-stage epithermal veins and post mineral dykes are developed along the northwest and north-south trending faults..." (Clode, 2002).

Southern Arc flew a helimag survey over the property in the spring of 2005.

Historical Exploration Activity and Interpreted Geology:

Initial drainage sampling by PT NNT throughout the property outlined 11 contiguous streams with anomalous Au-Ag, ±Cu and ±As geochemistry covering an area of approximately 50 km². Newmont's exploration activities up to 1998 focused on the delineation of both precious metal and porphyry copper style mineralization resulting in the definition and partial drill testing of a number of prospect areas. No exploration activity had been carried out on the Block 1 area since 1998 up to until Southern Arc acquired it from Newmont as part of its expansion of the West Lombok property.

Newmont's exploration of the Block 1 area confirmed copper porphyry style mineralization with enhanced gold grades in the Selodong area, high sulfidation epithermal gold mineralization in the Mencanggah area as well as other complex epithermal vein targets in the Pelangan area.

The Selodong area comprises andesitic and rhyodacitic volcanic rocks, intruded by Cu-Au mineralized porphyry stocks overprinted by hypogene acid-sulfate alteration with associated Cu-Au veining and brecciation. Mapping and petrology defined a 3 km by 7 km zone of alteration with propylitic and phyllic assemblages. Surface rock chip and float samples returned elevated copper values (up to 0.4% Cu), anomalous Mo (up to 400 g/t Mo) and gold grades commonly in excess of 0.4 g/t Au. Trenching reported values as high as 0.88 g/t Au and 0.20% Cu. Mineralization is commonly developed as pyrite-chalcopyrite±covellite±bornite-molybdenite-magnetite sheeted quartz veins, stockworks and disseminations. At least 15 separate geochemical and alteration anomalies, with supporting ground geophysical anomalies, were identified within the Selodong area and further drilling by Southern Arc has confirmed gold and copper porphyry of encouraging grades.

Within the Mencanggah area, reconnaissance identified widespread NW and NS trending high sulfidation epithermal quartz veins up to 10 m wide. Regional aeromagnetic and radiometric surveying confirmed conjugate NW to NE structural trends, consistent with mapped alteration and Au-Cu-As soil geochemistry at prospect scale. Sampling returned up to 250 g/t Au in channel samples from the Bising area and 11 g/t Au in rock from the Waterfall area. The recognition of weakly altered and veined intrusive lithologies led PT NNT to interpret this high level alteration suite to possibly represent a silica cap over a concealed Cu-Au porphyry target. At least five separate drainage gold anomalies with extensive siliceous boulder float and coinciding favorable structural loci warrant follow-up work. A number of other aeromagnetic and soil anomalies also require further evaluation.

The Pelangan area was first identified as a number of low-order Au drainage anomalies W and NW of Mencanggah. Subsequent follow-up work defined a series of three NE trending, en-echelon quartz vein systems (Kayu Putih, Tanjung and Simba) associated with acid-sulfate rock alteration, cutting an extensive sequence of argillic and propylitic altered volcanics. Detailed petrology and fluid inclusion studies indicate gold mineralization and alteration facies diagnostic of high sulfidation epithermal mineralization.

Historically, before Southern Arc started activities on the Pelangan prospect, a maximum of 235 g/t Au and 1,280 g/t Ag in rock chip was returned from a central zone of a broad Au-As soil anomalism developed within the Kayu Putih vein system exposed for approximately 800 m.

Follow up costeaning returned maximum gold grades of: 9m @ 9.76 g/t Au and 2m @ 25.9 g/t Au. Two scout diamond holes, totaling 166.2 m, were drilled to test the subsurface continuity of mineralization. Selected intervals from these drillholes are shown in the following table:

At Tanjung, soil sampling identified discrete Au-As anomalies that were coincident with higher grade gold zones within the vein system. Mapped veins and hydrothermal breccias attain widths of up to 3 m, with apparent near vertical dips. Follow up costeaning returned significant gold grades of 5m @ 5.11 g/t Au, 8m @ 1.80 g/t Au, 4m @ 1.98 g/t Au and 2m @ 9.28 g/t Au.

At Simba, a maximum of 325 g/t Au and 0.18% Cu in rock chip samples was returned from a zone of hydrothermal brecciation and associated gold soil anomalies within a vein system exposed for approximately 1,400 m. Rock sampling also returned encouraging values of 50 m grading >1.0 g/t Au. Ground magnetic and VLF-R surveys have confirmed the extent of mapped silicification.

Follow up costeaning returned significant gold grades of 7m @ 15.9 g/t Au, 8m @ 10.7 g/t Au and 8m @ 13.4 g/t Au. Nine scout diamond holes, totaling 923.45 m, were drilled to test the subsurface continuity of mineralization. Selected drill hole intersections for the Simba prospect are tabulated below:

The above values and ore grades were previously reported by Newmont.

Based on initial Southern Arc evaluations by the Company' personnel and discussions with current and former PT NNT staff, it appears that a number of previous scout drill holes at Pelangan were perhaps drilled parallel to the dip of veining. This, along with the tenor and extent of veining, together with the limited amount of drilling, suggests to Southern Arc the potential for the development of high-grade Au-Ag vein drill targets, with successful drilling results on such targets subsequently being oriented orthogonal to the Newmont drill holes.  See the Pelangan Gold Prospect activities page for a more detailed discussion.

In addition, a number of multi-element stream anomalies (Gili Genting, Lendang Bile, Lendang Luar and Batu Kidung) were identified by Southern Arc Minerals from regional drainage sampling in 2004. Rock float includes both low sulfidation vein material and argillic to phyllic altered volcanics and intrusives that have assayed up to 1.34 ppm Au and 0.24% Cu. All of these anomalies warrant further follow up work.