Minerals: Gold, silver, base metals
Location: West coast of Sumbawa Island, Indonesia, in Taliwang Regency, West Sumbawa Regency
Area: 31,204 ha
Status: Exploration drilling
Ownership: 85% equity position held by Southern Arc, 10% held by the West Sumbawa Regency and 5% held by PT. Puri Permata Mega. IUP granted.

Although the Taliwang property, the subject of Southern Arc exploration activities since 2005, hosts a number of prospects, Southern Arc has focused on three main targets: Lemonga, Jereweh and Semoan-Raboya (see prospects map). The company has also carried out preliminary scout drilling on the Ramit Cu-Au porphyry prospect. Taliwang is located in an excellent and prospective location, about 15 km to the north of Newmont's world-class Batu Hijau porphyry copper-gold mine, hosting proven secondary NNE to NE- and SW-trending mineralized structures.

1. Lemonga Epithermal Vein System
The Lemonga prospect is a low-sulfidation epithermal gold-silver-bearing quartz vein system over which surface mapping by Southern Arc has confirmed argillic alteration dominant within a hydrothermal upflow area approximately 1 km east-west by 1.5 km north-south. Five auriferous quartz vein targets, named Amy, Betty, Cici, Dessy and Evi, have been identified within the alteration zone. The best exposed vein, the Amy vein, has a mapped strike extent of at least 950 m and true widths of 4 m to 15 m, reflecting the pinch-and-swell vein geometry. Exploration drilling by the company, consisting of two phases of shallow drilling (7,154.25 m in 56 holes), has confirmed both lateral and vertical persistence of the mineralized structures. Combined evidence from drilling, petrological studies and CSAMT signatures suggests that a substantial portion of the epithermal vein system remains largely untested and that there is a good possibility for gold grades to increase with depth to a point well below the current drilling levels.

Highlights of final assay results and geochemistry for the Phase 2 drilling program are described in more detail in the Lemonga Prospect Activities page.

2. Jereweh J3 Prospect
Geological field activities during the first half of 2007 focused on continued surface evaluation and scout drilling of the historical Jereweh J3 Prospect on the southern part of the Taliwang property. The J3 prospect comprises Au-Ag plus base metal mineralization associated with jasperoid along the contact zone of a flat-lying silicified limestone and altered volcaniclastic sediment unit. Newmont's previous channel sampling froma  mineralized 2.7-m thick limestone bed averaged 6.75 g/t Au and 61 g/t Ag. This anomalous outcrop is situated on the eastern edge of a 1.8 km by 1.3 km zone of widespread anomalous Au soil geochemistry.

The most significant anomaly within this zone comprises a 700 m by 200 m NW-trending zone of greater than 50 ppb Au in soil. This is interpreted as an erosional window through unaltered limestone cover re-exposing the mineralized limestone and volcanic contact. Moderate base metal, As, Sb and Mo soil anomalies as well as IP and resistivity anomalies are associated with elevated gold soil geochemistry throughout the area.

Outcrop sampling of jasperoid ledges by Southern Arc returned numerous channel smaples in excess of 5 g/t Au and 50 g/t Ag to a maximum grade of 216 g/t Au and 330 g/t Ag over 3 m. Prospecting culminated in a seven-hole scout drilling program (413.6 m) testing subsurface extensions of the known surface Au-Ag jasperoid mineralization. Hole J3DH-01 reported an intercept of 2 m @ 1.93 g/t Au/11 g/t Ag, but the bulk of the area and western extensions have yet to be drill-tested.

 See Jereweh Prospect Activities page for a more detailed discussion.

3. Semoan-Reboya Prospect
Surface prospecting at the Semoan-Reboya areas identified two structurally-controlled, high sulfidation epithermal vein prospects, linked to a depper, inferred porphyry Cu-Au mineralized intrusive (Ramit prospect). NNE-tending vuggy silica± hematite (pyrite) altered zones up to 15 m wide and 500 m in length have returned anomalous rock values up to 4.93 g/t Au. These are enveloped by quartz-alunite± kaolinite altered volcanics and breccias forming a distinct cap, which merge into argillic and propylitic alteration assemblages. This geological setting is analogous to other structurally-controlled high sulfidation systems such as the Nena (Papua New Guinea) and Lepanto (Philippines) deposits.

See Semoan-Reboya Activities page.

4. Ramit Prospect
See Ramit Prospect Activities page.

Contract of Work and IUP
Southern Arc started negotiations with the Indonesian government for its first Contract of Work (CoW) for the Taliwang property.  The first meeting was held between the joint government team and the company in the administrative city of Taliwang on April 28, 2008. See News Release No. 08-07 for more details. Subsequently, four other meetings were held in Jakarta, Mataram, Surabaya and Bali to iron out the terms presented in the draft CoW document that had been submitted previously by the company. An agreement was reached in principle between the Company and the central, provinical and regency governments on all CoW terms.  The CoW negotiations regarding Southern Arc's Taliwang property had reached a stage where the CoW manuscripts had been finalized and initialled by both negotiating team leaders.

Subsequently, on January 12, 2009 Indonesia enacted a new mining law. This effectively put an end to the Contract of Work regime pursuant to which Southern Arc had been operating since 2004. The enactment of the new mining law ended this process and replaced it with a permit licensing system wherein IUPs (mining business licenses) are granted to carry out exploration and mining activities).

In order for the law to take effect, the government has been issuing significant implementing regulations, drafted with input from all concerned industry parties. Most of these implementing regulations have been completed and enacted, with two left outstanding. Southern Arc then went through the process to transition from the CoW application to the new permit licensing system, which also included negotiations and discussions with the West Sumabawa Regency to explain the benefits to the local government and the people to have an equity position in the Taliwang property. This also involved setting up a relevant PMA (foreign investment) company named.

Southern Arc was subsequently granted an IUP for the Taliwang property. Issued by the regent of West Sumbawa, this IUP is comprised of two stages, with potential extensions. Over a period of 6 years the exploration stage permits the company to pursue exploration activities through to the conclusion of a feasibility study. Upon conclusion of the exploration stage, the IUP automatically converts to a second stage, permitting the company to carry out commercial production on this property for a minimum of 20 years, with the potential for two subsequent 10-year extension periods.

With the issuing of the IUP, Southern Arc holds an 85% equity position in the Taliwang property with the remaining interest held by the West Sumbawa Regency (10%) and by the local company PT. Puri Permata Mega (5%). The West Sumbawa Regency interest is free-carried throughout the life of the project and is non-dilutable. The company feels strongly that having the local regency as an equity partner creates a synergistic and mutually bebenificial environment for the advancement of the property. The company's interest in the property is aligned with that of the regency and vice versa. As the first of its kind in Indonesia (that is, where the local government is a direct beneficial owner), and several months in the making, this bold, new relationship will ensure the local community will receive benefits directly from Southern Arc' successes in Taliwang.

Local Infrastructure
Taliwang is easily accessible over paved roads from either Sumbawa Besa, where there is a domestic airport, or from Lombok Island via a ferry terminal that traverses the Alas Strait at Poto Tano. The Batu Hijau mine, lcated close by, can also be reached from Taliwang by paved road. Most of the property is accessible by roads although some of the areas within the prospects can only be reached by foot tracks to minimize environmental impacts in the area. The town of Taliwang hosts Southern Arc’s exploration activities on the property.