The mining sector has made a very significant contribution to the Indonesian economy over the past several decades and will continue to do so for decades to come. According to a Fraser Institute survey, Indonesia is ranked amongst the top six countries in the world in terms of geological prospectivity. Indonesia is the seventh largest producer of both gold and coal in the world and the second-largest gold producer in Asia.
Following the 10-year exodus of junior mining companies from Indonesia after the 1997 Asian economic crisis, Southern Arc's management saw a unique window of opportunity. Acting quickly with a regionally-experienced team, Southern Arc became the first Canadian junior exploration company since 1997 to return to Indonesia and established a portfolio of exploration properties on Indonesia's Lombok and Sumbawa islands.
Indonesia hosts numerous large mineral deposits, including Newmont's Batu Hijau copper-gold mine and Freeport's giant Grasberg copper-gold mine. Grasberg produced 1.22 billion pounds of copper and1.79 million ounces of gold in 2010, making it the world's largest gold mine and third largest copper mine. Newmont's Batu Hijau mine produced 542 million pounds of copper and 737,000 ounces of gold in 2010, providing jobs for around 7,000 people who work directly for the mine or for contractors retained by Newmont to operate at the mine site. The Batu Hijau mine is a significant contributor to the local and national economy in Indonesia. Newmont has also reported plans to develop its Elang copper-gold porphyry deposit which is reported to contain 25 million ounces of gold and 16 billion pounds copper (Newmont press release February 2011). East Elang is located 63 km east of the Batu Hijau mine and adjoins Southern Arc's East Elang property.
With decades of experience in Indonesian exploration and mining, Southern Arc's management and directors provide an outstanding blend of experience and expertise to advance the company's exploration and business objectives. Southern Arc's management and directors bring a track record of achievements in international exploration, development, mining, engineering, company management, finance, acquisitions and administration.
Retaining Upside, Reducing Costs
In December 2012 Southern Arc's Board of Directors made a decision to diversify the Company's portfolio by investing in high-quality projects outside of Indonesia. As part of that strategy, in August 2013 Southern Arc purchased a 26% interest in Eagle Hill Exploration, which owns the high-grade Windfall Lake Gold Project in Quebec, Canada. Southern Arc also retained two of its Indonesian projects to provide continued upside exposure to Indonesia's mineral prospectivity, while seeking joint venture partners to fund advancement of the projects, thereby protecting Southern Arc's treasury.
At its West Lombok project, Southern Arc has joint ventured with an Indonesian company that will assume the costs associated with advancing the project to small-scale mining. 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.
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