West Lombok Project

Minerals: Copper, gold, silver
Location: Southwest Lombok Island, Indonesia
Area: 10,088 ha (24,928 acres), with elevations ranging from sea level to 478 m.
Status: Exploration Drilling
Ownership: 85% equity position held by Southern Arc, 10% held by the West Lombok Regency and 5% held by PT. Puri Permata Mega. IUP granted.

An outstanding property, the West Lombok property covers a 13-km long, northwest trending structural corridor of mineralization and alteration. Between 1985 and 1996 Newmont Mines established the presence of epithermal and porphyry mineralization on a district-scale basis. Activities ceased in 1996 because of Newmont’s focus on development of the Batu Hijau porphyry Cu-Au deposit on Sumbawa. This is a mineral belt within which are located at least three prospect areas (see prospect map):

1. Pelangan Epithermal Gold Prospect (Scout drilling on epithermal vein structures completed and second phase and infill drilling under way since late March 2011)
2. Mencanggah Epithermal/Porphyry District (Shallow Phase 1 drilling on extensive epithermal vein structures starting, to be followed immediately by Phase 2 drilling)
3. Selodong Intrusive Complex (Phase 1 drilling completed in September 2008; further drilling planned in 2011)

These prospects have been targeted for porphyry intrusions and related mineral systems, including porphyry copper-gold, high sulfidation gold-copper and mesothermal to epithermal gold deposits. The West Lombok property also includes the former Block 1 property, acquired from Newmont in a separate transaction. An aggressive drilling program is planned for the West Lombok property in 2011, including at least 30,000 m of drilling using 8 drilling rigs, with the first five mobilized on site and drilling at Pelangan since the end of March and the other three rigs at Mencanggah about to start drilling.

Southern Arc acquired a large tract of land covering most of southern Lombok Island, including the West Lombok property, after Newmont was obliged to relinquish the ground except for its Block 1 property to the Indonesian government and focus on developing the Batu Hijau copper-gold mine on the nearby island of Sumbawa. In August 2005, Newmont was subsequently obliged to further relinquish the Block 1 property, which Southern Arc at the same time acquired from Newmont. Southern Arc then started detailed surface exploration activities and diamond drilling on West Lombok in May 2006. Prior to 2011, the company had completed a total of 21,933 meters of drilling on the property.

As part of its continuing CSR and support for the local communities' initiatives, Southern Arc relinquished 8,377 ha from within the original property concurrently with the granting of the West Lombok IUP in January 2011 in order for these less mineralized areas to be designated as "People's Mining Areas" for exploitation by the local communities through formal artisan mining activities. This relinquishment does not negatively impact on the prospects for economic large-scale mining on the key, very prospective areas held by the company on West Lombok. 

1. Pelangan Epithermal Gold Prospect - Significant Gold-Silver Mineralization
The Pelangan Epithermal Gold prospect is located on the northwest end of the West Lombok property (see Prospect Map). Southern Arc carried out extensive exploration activities on Pelangan through 2006 and into 2007, including surface mapping, ground CSAMT surveying and shallow Phase 1 diamond drilling, which identified extensive, structurally controlled, epithermal gold-bearing breccia zones over an area of 3 km by 2 km. Five major zones of mineralization include large and complex quartz vein and breccia systems: the Kayu Putih, Raja, Ratu, Tanjung-Jati and Lala veins. These comprise an aggregate strike length of approximately 4.6 km. Ongoing detailed geological mapping is identifying extensions to known mineralization as well as new areas of mineralization.

The shallow, 50-hole Phase 1 drilling program intersected significant gold-silver mineralization with encouraging results, confirming continuous zones of Au-Ag epithermal mineralization up to 900 m long and a bonanza gold episode. This drilling program of shallow holes was designed to test four structurally-controlled, gold mineralized breccia zones or vein systems. A hitherto unknown fifth vein, the Lala Vein, was discovered by Southern Arc, however drilling has not been carried out on it yet.

Phase 2 drilling, targeting depth extensions of better intersections for high-grade ore shoot development, commenced on selected vein targets in late August 2008. After a temporary hiatus, while permitting issues were resolved, Phase 2 and infill drilling of at least 15,000 m resumed at Pelangan in late March 2011, with the aim to fast-track to a NI 43-101 compliant resource estimate within 12 months. For a detailed review of the history, geology and exploration activities on Pelangan, please see the Pelangan Gold Prospect Activities page.

Phase 2 drilling includes aggressive drilling of "bonanza-style", high-grade ore shoots. The encouraging results from the first 14 holes of the Phase 2 drilling support the concept of increasing gold grade with depth in Central Raja and continue to confirm the existence of high-grade ore shoots within the system, in particular a bonanza gold grade of 37.7 g/t Au over a 6.15 m intercept in hole PLD007. The results from the drilling program confirm continuity of mineralization along the structure and at depth, and illustrate the pinch and swell geometry of this style of epithermal mineralization. The program also seeks to identify similar high-grade lode features elsewhere along the Raja target vein. About 1,500 m of scout drilling is also planned on other MSB structures on the Pelangan prospect together with preliminary metallurgical and geotechnical test work on the property.

Concurrently, detailed DGPS mapping is underway at Pelangan to define further new MSB occurrences and target areas. Extensive new MSB structures have been identified and mapped.

2. Mencanggah Epithermal District
The Mencanggah Epithermal District lies roughly at the centre of the structural corridor (see Prospect Map). Surface prospecting and mapping have identified more than 16 km of epithermal Au-Ag mineralization overprinting advanced-argillic alteration and silica ledges (approximately 5 km by 5 km), along with the inferred presence of potential copper-gold porphyry style targets under the advanced argillic capping. Five major epithermal breccia targets, including Tebu Serai, Bising, Telekur, Talat Talat and Mahoni-Gunayang, have been sampled and mapped in preparation for an upcoming drilling program.

At Mencanggah, the surface mapping and sampling of auriferous MSBs, which have an aggregate strike length in excess of 16 km, have already identified a number of high priority drill-ready targets. About 9,500 m of combined Phase 1 and Phase 2 drilling of the defined targets is getting under way. Detailed DGPS surface mapping will also be carried out in the area between Mencanggah North and Pelangan South, with ground IP/resistivity surveys to be conducted where warranted.. The information gained from the drilling, together with spectral analysis of surface rock alteration will also assist in the targeting of lithocap-related porphyry Cu-Au targets below the advanced argillic capping.

Together, the Pelangan and Mencanggah prospects host an already proven aggregate strike length of more than 20 km of mineralized epithermal breccias, with individual bodies ranging in thickness from 2 to 30 m, strike length of 1,000 m, and vertical extent of greater than 300 m.

3. Selodong Intrusive Complex - 14 Porphyry Targets Identified
An exceptional gold-rich copper prospect, the Selodong Intrusive Complex (SIC) hosts 14 porphyry copper-gold targets with associated peripheral epithermal gold-silver mineralization. Newmont (the previous owner) had drill-tested six of the targets with shallow drill holes and nine more targets were subsequently identified by Southern Arc. The company tested seven of the 14 targets with a 30-hole Phase 1 deeper drilling program during 2007 to 2008 and identified a high-grade porphyry intrusive phase that returned ore-grade intervals including 166.2 m @ 0.52% Cu and 0.85 g/t Au. Independent 3-D geophysical modeling has confirmed the potential for significant depth and size of all 14 targets. The porphyry complex lies at the southeast end of the structural corridor of mineralization and alteration.

Phase 1 Drilling at Selodong
Southern Arc started drill testing each of the porphyry targets at Selodong in April 2007. The focus of this program was to establish the size, geometry and potential grade of mineralization as definition drilling. This drilling work was completed in September 2008. See our news releases and the Selodong Intrusive Complex synopsis for a description and results from the program.

Although Southern Arc had planned to drill-test all of the 14 porphyry bodies (see targets map), it focused on six key targets: Montong Botek, Blongas I, Blongas II, Kekalik, Belikat and Kedaro.

Drilling in the Montong Botek and Blongas II targets produced outstanding results over a number of very long interecepts: see SIC Drilling & Assay Statistics Summary.

Modeling from magnetic survey data and numerical modeling from the drilling results suggests that the Montong Botek and Blongas II porphyries could coalesce at depth.

For a detailed review of the SIC history, geology and current exploration activities, please see our Selodong Intrusive Complex activities page or the less detailed SIC Synopsis page.

Ongoing work will seek to identify and drill test defined targets and more of the high-grade intrusive phase with about 3,500 m of drilling. Ground IP/resistivity surveys will be carried out where warranted, completmented with spectral analyses of surface rock alteration.

The Block 1 Agreement

The Block 1, previously held and explored extensively by Newmont, adjoined Southern Arc’s Lombok property.  Although Newmont was aware of significant mineralization in the Block 1, its Batu Hijau project was further advanced and therefore Block 1 was put on hold while the new mine on the adjacent Sumbawa Island was developed and brought into production. As the Block I property was not being advanced, Newmont was obliged to relinquish it, in accordance with the requirements of its Contract of Work. Through an agreement with Newmont, Southern Arc acquired the Block 1 property on west Lombok Island contemporaneously as the property was relinquished by Newmont in an expansion of the company’s Lombok property.

Newmont provided Southern Arc with all historic Block 1 exploration data, including all drilling data and core. In consideration for the exploration data, Southern Arc granted to Newmont:

• a 2 percent net smelter royalty; and
• the right of first refusal to joint venture with Southern Arc in the exploitation of any mineable resources only on the former Block 1.

Permitting and Issuing of IUP

The Lombok SIPP was granted on December 4, 2002. Relevant SIPP extensions and expansions to the property area were granted until February 15, 2006, when the CoW application came into conflict with an unconstitutional provincial land utilization regulation (West Nusa Tenggara provincial land utilization regulation No. 11/2006, also referred to as 'the Perda'). The contentious land utilization regulation was revsied as a new provincial spatial plan, or the RAPERDA No. 3/2010. With this enactment of the RAPERDA, the West Lombok Project now lies within areas zoned for mining activities. This new regulation cleared the path for Southern Arc to be issued an IUP for its West Lombok property, as all prior restrictions to mining activities on the property were effectively removed.

West Lombok Infrastructure and Facilities

The property is approximately a 1.5 hour drive from the provincial capital of Mataram over a paved road. Mataram is serviced by a modern airport. A new, international airport is currently being constructed in central Lombok and is expected to open soon. The island can also be easily reached by ferry from Bali and elsewhere in Indonesia. A network of logging and local government roads provides good access throughout the property.

Southern Arc's operations on the West Lombok property have been based in the community of Pelangan, on the southwestern peninsula of the island. Pelangan has good infrastructure and provides an ideal base from which to carry out exploration activities on the property, particularly on the epithermal vein and porphyry prospects.  A semi-permanent base camp for drilling operations on the SIC was also constructed near the village of Selodong, complete with core facilities and supporting infrastructure with the capacity to house up to 100 personnel. In preparation for the current resumption of exploration activities at West Lombok, Southern Arc re-opened the Selodong field camp in late February 2010, after purchasing the land on which it is situated.