East Elang Project Socialization & CSR

Recognizing that mining activities can 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 level depends on creating value within the communities 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 socially and environmentally responsible manner.

 
Kusyono, Southern Arc's government relations officer, and Sumbawa Regency staff undertaking company socialization activities at Ropang village prior to the start of exploration activities at East Elang.

An initial socialization program consisting of meetings with local government officials, village heads and elders, NGOs, religious leaders, and others was undertaken in May 2006 as part of the preliminary general survey program of the granted East Elang area.

Time was spent to undertake the socialization program at East Elang, following preliminary meetings with the regent and associated staff at the regency administrative capital. The rationale for the activity is that it is the first part of a on-going educational and co-involvement program whereby the company is in discussions with local government officials, village heads and elders, NGOs, religious leaders, and others in explaining the activities of the company, the difference between exploration and exploitation (a common mistake), the Contract of Work system, etc. This is particularly important in this era of regional autonomy, with the company establishing a bond/relationship with the local community and in the short term making it easier for the company to undertake field activities unhindered by misconceptions in the local community and in government.

At each of the meetings company personnel supported by a representative of the Provincial Mines Department office spent two to three hours talking to 40 to 50 interested parties. Questions asked by the local people have included:

• The issue of exploitation and related social development of local people.
• Health and safety issues relating to working with the Company.
• Wages and benefits in working with the Company.
• Land compensation relating to the Company's exploration activities.
• Status of previous exploration licenses.
• When will the Company commence field exploration activities?

Overall, the feedback from the meetings have been very encouraging, which bodes well for the company's exploration activities. Early in 2008 the vice president of exploration spent a day traveling to the villages of Ropang and Lawin to check on access to the property, and subsequent socialization meetings with local officials, village heads and other interested local parties were completed in April 2008.

 
Local community leaders, NGOs, youth and religious groups, and interested parties from the Ropang Sub-district attending East Elang socialization meetings.

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 the 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 East Elang 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 analyses. 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.