West Lombok Socialization and CSR

Recognizing that mining activities often have profound impacts on the communities living on and around mineral property areas, which might lead to disruption or breakdown of existing socio-economic activities and of social, cultural and traditional values, Southern Arc strives to minimise or mitigate any negative impacts its activities might have on the environment and on the lives and livelihoods of people within the communities it operates.

Southern Arc is conscious of the fact that the company's long-term success at both the global and at the community levels depends on creating value within the communities in which it operates. This in turn provides added value for our shareholders. From the day that Southern Arc starts exploration in a particular geographic location, the company's success is tied to its ability to operate in a manner that improves the lives of the people in the surrounding communities, in a safe and environmentally responsible manner.

In November 2006 five socialization meetings were held at village and sub-district levels in the Pelangan-Mencanggah-Selodong areas. As usual, both present and future company exploration activities were detailed to participants consisting of local government and village leaders, and representatives from religious, youth and NGO groups. The feedback from these meetings was all positive.

Previously, in early January 2006 Southern Arc had carried out socialization activities in the Pelangan area and in other communities within the area bounded by the ex-Newmont Block I area. The activities also involved discussions with leaders and members of the communities to address exploration activities that were subsequently started by Southern Arc within the Block I area. Employment of community members by Southern Arc to assist in the exploration activities was also addressed.

Tembowong Village water supply

As part of Southern Arc's CSR activities the company in the period July to August 2007 had an opportunity to complete the work of providing a piped water supply to the village of Tembowong.

During the drilling of hole QDG-04 at the Pelangan Gold Prospect, a strongly artesian aquifer was encountered, which forced the drillers to abandon the hole because the water pressure was too high to be able to force the coring barrel down the hole. The water column rose to a height of 0.5 metres above the hole collar.

It was the dry season (the period between monsoons) and the river nearby had dried up, with Tembowong villagers, mainly women and girls, having to walk many kilometres every day to fetch drinking and household water and for bathing. The water aquifer continued to surge above the drill collar and as a result the company decided to provide what would be a constant water supply to the village, no matter the season. The water from the aquifer passed tests carried out by local and provincial health authorities.

Community water supply system provided by Southern Arc to
the residents of Tembowong Hamlet, Pelangan.

After gaining permission in writing for an easement for the water line (1400 m in length) to pass across landowners' plots, the water was directed to public tap stands and a communal large, open storage tank. This frees up considerable precious time each day for girls to concentrate on their schooling instead of carrying water for the family, and adult women can similarly pursue other economic activities during time otherwise formerly used for carrying water. The water can also be used to irrigate household vegetable plots, thereby contributing to better family nutrition and perhaps produce excess vegetables, which can be sold at local markets for added family incomes.

Bunut Kantor Elementary School Renovations

During the first quarter of 2009 Southern Arc completed the renovations to the Bunut Kantor elementary school in the Mencanggah prospect area.  The Company also provided educational aids and supplies. The refurbished school has become operational again, with at least 50 students able to return to school and now being educated at the facility. See: More Bunut Kantor school renovation details

By maintaining high standards for protecting human health and the environment, and working in cooperation with the company's host communities in Indonesia, Southern Arc endeavors to create sustainable, long-term economic and social opportunities. Among the company's goals is to be recognized by the communities as well as central, regional and local governments as the premier mining company for the exploration and the development of new projects in Indonesia.

Keen to establish good working relations with members of the local community, we encourage the participation of the community as an important stakeholder and in the discussion of matters of concern either through the local government or directly with community leaders and members through socialization meetings and other activities. Socialization meetings with local government and communities related to exploration activities on the West Lombok property are being carried out by Southern Arc liaison personnel on a continuing basis.

Furthermore, Southern Arc endeavours to employ as many people from the local communities as is feasible in order to provide local economic opportunities and return a share of the company's benefits, as well as better understand local geological, mineral, and social and cultural issues. The latter is especially important as it allows us to develop a local operations strategy that permits Southern Arc to:

• develop and use systems to identify and manage risks, and provide accurate information to support effective decision making;
• train exploration and development staff and local people and provide the resources to meet our social responsibility objectives and targets;
• respect the Universal Declaration of Human Rights in its business operations;
• respect the social, economic and cultural rights of the local community;
• adopt policies and standards and operating practices that ensure ongoing social, environmental, and operations improvements;
• wherever appropriate and feasible, set operating standards that exceed the requirements of the local laws and regulations;
• assess our performance against our goals, policies and standards.
• demand leadership in social responsibility from all of Southern Arc's staff;
• seek to share our success by partnering with stakeholders in appropriate community development programs for the benefit of all stakeholders and shareholders;
• consult stakeholders in matters that affect them; and
• strive to communicate our performance in an accurate, transparent and timely manner;

Where feasible, Southern Arc seeks to maximize employment, training and even business opportunities for members of local communities, using fair, open and transparent selection processes carried out with the cooperation of community leaders. Through our operations and development of projects we are committed to contributing to community projects that are identified using community need analysis. We will also proactively identify opportunities to leverage community development projects and empower other sectors through partnerships.

Southern Arc recognizes that the actions and conduct of every one of its employees and contractors are the basis on which stakeholders will evaluate the company's commitment to achieving the highest standards of social and environmental responsibility.