A unique window of opportunity
Following the 10-year exodus of junior mining companies from Indonesia after the 1997 Asian economic crisis, Southern Arc 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 has established an outstanding portfolio of exploration properties on Indonesia’s Lombok and Sumbawa islands. The company is now advancing a number of key projects, all overseen by top technical management and advisors, in a region with proven world-class mineral endowment.
Exceptional expertise
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. The company's has assembled a team of people with solid, broadly-based technical expertise from finance to discovery to development and mineral production.
A proven mineral environment
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 in 2009, 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. The mining industry accounted for 10.8% of Indonesia's GDP in 2009, with minerals and related products contributing one-fifth of the country's total exports. Minerals and related products represented 19% of Indonesia’s total exports, with gold being the largest revenue earner.
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 and 1.79 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 oz 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, located 63 km east of the Batu Hijau mine and adjoining Southern Arc's East Elang property, which is reported to contain 25 million ounces of gold and 16 billion pounds copper (Newmont press release February 2011).
Strategy and objectives
Southern Arc's key exploration region is the renowned Sunda-Banda magmatic arc stretching across the islands of southern Indonesia. Employing a systematic approach to the evaluation of mineral targets, particularly on the islands of Sumatra, Java, Lombok, and Sumbawa, the company's goal is to become the premier mineral exploration and development company in Indonesia. The company's goals include continuing to drill-test its projects with the aim of defining resources; using competitive advantages to aggressively target and acquire additional gold and precious metal assets; and creating shareholder value by delivering strong exploration results and sound, regionally-grounded business practices.
Southern Arc remains committed to growth through well-conceived and well-executed exploration and project advancement programs and acquisition strategies. Therefore, in what is a significant milestone for the company, Southern Arc entered into an agreement with Vale S.A. to advance its Sabalong and East Elang properties, whereby Vale is funding all project expenditures through to completion of a bankable feasibility study. In similarly significant milestone, Southern Arc entered into an agreement with Newcrest Mining Ltd. to advance the company's Taliwang property. Under the agreement, Newcrest is funding all project expenditures to a maximum of US$50 million or to a completed feasibility study, whichever occurs first. Under the agreements, Southern Arc remains the operator at all three of these projects.
Well capitalized
Southern Arc raised significant capital in 2011 to fund its exploration objective through to approximately the end of 2013, based on current plans. In February, Southern Arc raised $28 million through an equity offering at $1.60. Subsequently, the Company completed another $18 million equity financing in June 2011 with Tadeen Cyprus Holdings Ltd., a subsidiary of Qatar Mining Company, a company established by the State of Qatar, whereby Tadeen purchased a 9.99% interest in Southern Arc at $1.70. Tadeen Cyprus requested and was granted the right to maintain a 9.99% interest in the Company, and the CEO of Qatar Mining Company was subsequently voted onto Southern Arc’s Board of Directors.
Last Updated: December 13, 2011
