Southern Arc First Quarter Financial Results and Projects Update
- $18.0 million in working capital
- Pinjam Pakai Ministry of Forestry permit received for West Lombok property
- Board of Directors conducting a strategic review of the Company’s properties and corporate strategy
|September 30, 2012||June 30, 2012|
|Basic and diluted loss per share
EXPLORATION UPDATE AND OUTLOOK
The Company’s Board of Directors is conducting a strategic review of all of the Company’s properties in Indonesia and has delayed further exploration pending completion of this review, which is expected to be completed by December 14, 2012.West Lombok Property (Lombok Island)
During calendar 2012, prior to receipt of the Pinjam Pakai permit, Southern Arc drilled a total of 3,501.5 metres in areas with no forestry designation that did not require Ministry of Forestry approval, completing 14 drill holes in the northwest section of the property focused on epithermal gold mineralization and two holes in the southeast section of the property focused on porphyry copper-gold mineralization. Surface mapping and channel sampling continued on the West Lombok property throughout the year. Encouraging assay results from continuous rock chip channels collected across the strike of mineralized structural breccias have been received from a number of Pelangan and Mencanggah prospect localities.
Sabalong Property (Sumbawa Island)
Southern Arc is the operator of the Sabalong property, which has until recently been advanced with a wholly-owned subsidiary of Vale under an option and joint venture agreement. In July 2012, the Company and Vale announced that they had completed Phase 1 exploration work on the Sabalong property. Southern Arc and Vale completed three diamond drill holes at the Sabalong property (totaling 1,811 metres) to test potential porphyry intrusive targets that had been defined by geophysical surveys. Drilling intersected weakly altered intrusions and volcanics with no significant porphyry copper mineralization. With Phase 1 exploration complete, Vale elected not to proceed to Phase 2 and withdrew from the Sabalong project.
East Elang Property (Sumbawa Island)
The East Elang property is located adjacent to Newmont’s Elang copper-gold deposit. Aerial photography and lithographical studies suggest that the Elang mineralized structure extends onto Southern Arc’s East Elang property. While the property is considered highly prospective due to its location and results from aerial surveys, exploration of this property has been deferred pending reclassification of the property’s forestry status. Application has been made to the Regency authorities for suspension (back-dated for two years) of the mining business license (“IUP”) license until the reclassification process has been completed, ensuring that Southern Arc and Vale have adequate time to evaluate the property once exploration commences.
Taliwang Property (Sumbawa Island)
Located adjacent to Newmont’s world-class Batu Hijau copper-gold mine, the Taliwang property covers 31,200 hectares prospective for gold, silver and copper mineralization. Exploration to date has identified a gold-silver bearing epithermal vein system in which 56 drill holes have confirmed both lateral and vertical persistence of the mineralized structures, near-surface porphyry copper-gold targets with associated surface high-sulphidation epithermal signatures, and sedimentary gold-hosted targets. Surface exploration activities during 2011 focused on detailed lithological and alteration mapping of epithermal and porphyry prospect areas, as well as clay spectral analysis studies.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2012
During the three-month period ended September 30, 2012, the Company had a loss of $757,053 compared to a loss of $285,270 for the three-month period ended September 30, 2011. Significant fluctuations occurred in the following categories:
- Share-based compensation of $93,491 (2011: $98,270) decreased due to lower calculated cost for options granted during the period. Share-based compensation expense is accounted for at fair value as determined by the Black-Scholes Option Pricing Model using estimates that are believed to approximate the volatility of the trading price of the Company’s stock, the expected lives of awards of stock-based compensation, the fair value of the Company’s stock and the risk-free interest rate.
- Consulting fees of $nil (2011: $36,963) decreased due to a lower level of exploration activity; more consultants were engaged during the previous period.
- Foreign exchange loss of $128,524 was realized during the three-month period ended September 30, 2012 (2011: $341,642 gain) primarily due to the effect the fluctuation of the US$/CDN$ exchange rate had on the Canadian equivalent of the Company’s holdings and transactions in its US$ bank balance and US$ payables balance.
- Management fees increased to $216,000 compared to $141,000 in 2011 and are discussed in detail in the Related Parties section.
- Professional fees of $47,977 (2011: $66,778) decreased due to lower corporate activity in the period.
- Travel expenses of $nil (2011: $48,700) decreased as a result of a reduction in executive travel during the period.
- Interest income of $56,327 (2011: $91,339) decreased during the period as a result of lower cash balances.
- During the three-month period ended September 30, 2012, the Company invested $1,563,999 (2011: $3,322,226) on exploration properties and $nil on property, plant and equipment (2011: $82,281).
On behalf of the Board of
Southern Arc Minerals Inc.
Chairman & CEO, Director
About Southern Arc
Southern Arc Contact
Vice President, Communications & Investor Relations
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