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UPDATE ON INDONESIA’S NEW MINING LAW AND ITS IMPLICATIONS FOR SOUTHERN ARC MINERALS

Vancouver, B.C.: As previously announced by Southern Arc Minerals on December 19, 2008, Indonesia enacted a new Mining Law on January 12, 2009. This effectively put an end to the Contract of Work regime pursuant to which the Company had been operating since 2004. Although CoW negotiations regarding Southern Arc's Taliwang property had reached a stage where the CoW manuscripts had been finalized and initialed by both negotiating team leaders, the enactment of the new Mining Law ended this process and replaced it with a permit licensing system.

In order for the law to take effect, the government will issue significant implementing regulations, which will be drafted with input from concerned industry parties. Both the Department of Energy and Mineral Resources (ESDM) minister and department senior staff have indicated that they have set a self-imposed goal of 3 to 4 months from when the new law was enacted to draft these regulations.

Where does the Company stand at present with respect to its Lombok and Taliwang properties?

At this time, Southern Arc is making the transition from the CoW application to the new permit licensing system. The Company is currently obtaining letters (Statements of Facts) from the West Nusa Tenggara governor (for the Lombok property) and the West Sumbawa regent (for the Taliwang property). The Company will submit the Statements of Fact along with the initialed Taliwang CoW manuscript to the ESDM in order to obtain confirmation from the ESDM that the Company's projects including West Lombok, Taliwang and the other KPs will transition automatically into a new mining business license (IUP) without the projects going to public tender.

With respect to the West Nusa Tenggara provincial land utilization regulation No. 11, which disrupted the CoW application process for the Lombok property, the regulation is currently in the process of being revised by the provincial government. If regulation No. 11 is revised, Southern Arc believes that the provincial government will be required to issue retroactive permits for an in-principle CoW approval, along with SIPP (Preliminary General Survey) license extensions to cover the 2006 to 2008 period.

Since the fourth quarter of 2008, the Company has reduced its exploration team to core members, with the main focus on resolving permitting issues, along with interpretation and numerical modeling of geological databases. Field camps are on care and maintenance, with only minimal logistical and security personnel.

Hamish Campbell
Vice President, Exploration
Southern Arc Minerals Inc.

Southern Arc Minerals Inc.
Suite 1500, Box 1078, 885 West Georgia Street, Vancouver, BC V6C 3E8 Canada
Telephone: (604) 676-5241 Fax: (604) 676-5246

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  • Address
  • HEAD OFFICE
  • Southern Arc Minerals Inc.
    Suite 650
    669 Howe St
    Vancouver, BC   Canada V6C 0B4
    Telephone: +1-778-725-1490
    Fax: +1-604-428-1124
  • INDONESIAN OFFICE
  • Graha Sentana Building, 4th Floor
    Jalan Buncit Raya No. 2
    Jakarta Selatan,12760   Indonesia
    Telephone: +62-21-7918-8612
    Fax: +62-21-7918-8613