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CANADA NICKEL COMMENCES LEGAL ACTION AGAINST DIAMONDEX RESOURCES LTD.

Southern Arc Minerals Inc. ("Southern Arc” or the "Company”) (TSX Venture: SA) provides the following update regarding Canada Nickel Corp. ("Canada Nickel”), a private company of which Southern Arc owns 43.6% (15.3 million shares).

On December 16, 2008 Canada Nickel commenced a legal action against Diamondex Resources Ltd. ("Diamondex”) in connection with its option agreement (the "Option Agreement”) on the James Bay Lowlands Nickel Project (the "Property”).

Canada Nickel alleges that it entered into the Option Agreement and made a $5 million option payment to Diamondex on the basis of representations that Diamondex had incurred $5 million dollars in historical exploration expenditures on the Property and that the $5 million payment was to reimburse Diamondex for those expenditures. Canada Nickel alleges that Diamondex's historical expenditures on the Property including acquisition costs were actually $3,538,768 and not $5 million as represented to Canada Nickel. Canada Nickel states that it has given notice of rescission of the Option Agreement and seeks the return of the $5 million option payment, together with $1.1 million in exploration expenditures paid under the Option Agreement.

On December 16, 2008 Diamondex provided notice to Canada Nickel that the failure to remit $2 million of further exploration expenditures previously requested by Diamondex within 30 days would result in the termination of the Option Agreement.

On Behalf of the Board of Southern Arc Minerals Inc.

David Stone
Director

For more information please contact:

Southern Arc Minerals Inc.
Telephone: (604) 676-5241 Fax: (604) 676-5246
Email: info@southernarcminerals.com
Website: http://southernarcminerals.com/

"The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.”

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