Update on Lombok Contract of Work Application Status
News Release No. 07-04
Southern Arc Minerals Inc. (TSX Venture: SA, the "Company") announces an update on the status of its Lombok property following a recent site visit by the Company's management.
The Contract of Work
The Lombok property is located in the southern part of Lombok Island, Indonesia and originally comprised an area covering approximately 56,670 hectares. The Lombok property is the subject of a Contract of Work application ("CoW") that has been lodged by the Company with the Indonesia Central Government Department of Mines and Energy. Consequently, the Department of Mines and Energy granted the Company an in-principal CoW approval on July 21, 1998. In January 2006 the Company incorporated an adjoining block (called "Block 1"), into its CoW application area, that had been previously explored by Newmont (see news release No. 06-02 dated January 11, 2006). The current CoW application area now encompasses an area of 67,343 hectares.
The Company has the right assuming all mandatory regulatory requirements have been fulfilled, to continue to proceed with its CoW application by commencing formal CoW negotiations with the Indonesian Government (including both central and regional authorities). The Company has met its application requirements and has at the request of the Indonesian Government submitted draft CoW manuscripts to the relevant authorites on the 6th February 2006. The Indonesian Government is in the process of appointing the negotiating team representing central, provincial and regency authorities to complete the CoW process.
The Company understands that the Indonesian Government is currently drafting a new Mining Law as it relates to mining activities in Indonesia. We will provide updates with regard to the new Mining Law as more information becomes available.
The Preliminary General Survey Permits
During the CoW application process, the Company has undertaken regional and prospect evaluation programs on the property on the basis of Preliminary General Survey permits ("SIPPs") issued by the West Nusa Tenggara Provincial Department of Mines and Energy. These have culminated in several scout diamond drilling programs. A SIPP is a temporary permit or license that entitles the Company to conduct exploration work on its Lombok property for a period of 12 months as part of its CoW application. An extension of a SIPP may be granted by the government but the Company is required to apply for an extension prior to the expiry date of the SIPP.
The Company's most recent SIPP expired on February 15, 2006, and an extension application was filed in January 2006 to extend the SIPP for a further 12 month period. Previous Company experience has been that the SIPP approval may take up to 6 months following the expiry of the previous SIPP license. In the case of the current SIPP extension, the process has been much slower than anticipated, primarily as a result of the requirement to obtain approval from three levels of government, those at regency, provincial and central levels of government.
The issue has been compounded through the introduction by the Provincial Governor of a local land utilization regulation to restrict future mining activity on Lombok (a "Perda") but the Perda is still at an early stage in the government approval process and is uncertain in regard to the status of preexisting SIPPS and CoW applications. This regulation receives input from the central government and requires endorsement from the provincial legislative body before it is enacted. The Company has been advised that an endorsement of the Perda by the other levels of government has not yet been provided and that both levels of government have requested the inclusion of an addendum to clarify the regulation and to honour pre-existing licenses including CoW applications. The Company expects these issues to soon be resolved and is of the view that its SIPP and CoW will be grandfathered in respect of the Lombok Property.
In the last few weeks, the Company's management has met with a number of senior Indonesian officials at all levels of government and has received strong support and encouragement from regency, central and provincial government authorities in respect of its extension application and the status of its security of tenure over the Lombok property.
The Company has also sought advice from the Jakarta law firm of Hadiputranto, Hadinoto & Partners (the representative office of Baker & Mackenzie) on the status of and the security of its tenure over the Lombok property. Based on these discussions, the Company is confident that it will receive the necessary extensions and confident of its security of tenure. As a result of these discussions, the Company and has requested that the Jakarta laboratory, Intertek Testing Services (Bonder Clegg), finalize the assay results from recent scout diamond drilling programs. These results are being released concurrently with this news release.
The Company will be applying for a further SIPP extension for the period February 2007 to February 2008 and anticipates it will be processed at the same time that the current SIPP application is resolved. However, there is a possibility that approval of the extension may be further delayed, or that such extension may not be granted. In parallel to the SIPP renewal process the CoW negotiations will be ongoing.
On behalf of the Board of
Southern Arc Minerals Inc.
President and CEO
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 Website: www.southernarcminerals.com
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