Socialization & CSR

Recognizing that mining activities often have profound impacts on the communities living on and around mineral property areas, which might lead to disruption or breakdown of existing socio-economic activities and of social, cultural and traditional values, Southern Arc strives to minimise or mitigate any negative impacts its activities might have on the environment and on the lives and livelihoods of people within the communities in which it operates.

Follow-up socialization meetings were held during January 2007 with local villagers and government officials to discuss the Southern Arc's activities at the J3 and J6 prospects on the Taliwang Property. Earlier, two socialization meetings had been held in the middle of December 2006, also with local villagers and government officials, at Jereweh to discuss Southern Arcs's activities at those two prospects. Discussions were very lively through the participation of local NGOs and youth groups. At the end of the three meetings the overwhelming majority of participants supported the company's exploration plans in the Jereweh area.

Previously, socialization programs had been held at Dalam Village on December 15, 2005 and on December 29, 2005 at the Lemonga Hamlet for the purpose of introducing to and discussing with local officials and villagers the company's second phase drilling program, which was completed around mid-2006.

Southern Arc is conscious of the fact that the company's long-term success at both the global and at the community levels depends on creating value within the communities it operates. This in turn provides added value for our shareholders. From the day that Southern Arc starts exploration in a particular geographic location, the company's success is tied to its ability to operate in a manner that improves the lives of the people in the surrounding communities, in a safe and socially and environmentally responsible manner.

By maintaining high standards for protecting human health and the environment, and working in cooperation with the company's host communities in Indonesia, Southern Arc endeavors to create sustainable, long-term economic and social opportunities. Among the company's goals is to be recognized by the communities as well as by the central, regional and local governments as the premier mining company for the exploration and the development of new projects in Indonesia.

Keen to establish good working relations with members of the local community, we encourage the participation of the community as an important stakeholder and the discussion of matters of concern either through the local government or directly with community leaders and members through socialization meetings and other activities. Socialization meetings with local government and communities related to exploration activities on the Taliwang property are being carried out by Southern Arc liaison personnel on a continuing basis.

Furthermore, Southern Arc endeavours to employ as many people from the local communities as is feasible in order to provide local economic opportunities and return a share of the company's benefits, as well as to better understand local geological, mineral, and social and cultural issues. The latter is especially important as it allows us to develop a local operations strategy that permits Southern Arc to:

• develop and use systems to identify and manage risks, and provide accurate information to support effective decision making;
• train exploration and development staff and local people and provide the resources to meet our social responsibility objectives and targets;
• respect the Universal Declaration of Human Rights in its business operations;
• respect the social, economic and cultural rights of the local community;
• adopt policies and standards and operating practices that ensure ongoing social, environmental, and operations improvements;
• wherever appropriate and feasible, set operating standards that exceed the requirements of the local laws and regulations;
• assess our performance against our goals, policies and standards.
• demand leadership in social responsibility from all of Southern Arc's staff;
• seek to share our success by partnering with stakeholders in appropriate community development programs for the benefit of all stakeholders and shareholders;
• consult stakeholders in matters that affect them; and
• strive to communicate our performance in an accurate, transparent and timely manner;

Where feasible, Southern Arc seeks to maximize employment, training and even business opportunities for members of local communities, using fair, open and transparent selection processes carried out with the cooperation of community leaders. Through our operations and development of projects we are committed to contributing to community projects that are identified using community need analysis. We will also proactively identify opportunities to leverage community development projects and empower other sectors through partnerships.

Southern Arc recognizes that the actions and conduct of every one of its employees and contractors are the basis on which stakeholders will evaluate the company's commitment to achieving the highest standards of social and environmental responsibility.