Sabalong Project

Minerals: Copper, gold. Two epithermal systems, possible near-surface lithocap-related porphyry Cu mineralization
Location: central, southwest Sumbawa Island in Sumbawa Regency, Indonesia
Area: 9,950 ha (24,586 acres)
Status: Surface exploration, surveying, mapping
Ownership: 100% by Southern Arc, IUP granted to Southern Arc.

As a significant milestone for Southern Arc in advancing the Sabalong property, the company has entered into an option and joint venture agreement with Vale S.A. Vale is the second largest metals and mining company in the world and the largest private sector company in Latin America by market capitalization. To exercise its option, Vale must fully fund the advancement of the Sabalong property, through to and including the completion of a Bankable Feasibility study, at no cost to Southern Arc. For more details regarding this joint venture agreement see news release.

Epithermal Alteration & Mineralization Previously Identified by Newmont
Held previously by Newmont and later Rio Tinto Zinc, Sabalong is an excellent prospect for epithermal gold and silver mineralization. Newmont's exploration reported Ag-Au anomalous drainages from four contiguous catchment areas. Subsequent follow-up ground traverses indentified extensive hydrothermal alteration hosting high-sufidation epithermal quartz veins.

Newmont Work Confirmed by Rio Tinto
Newmont dropped Sabalong as part of the company's mandatory relinquishments, and the property was acquired later by Rio Tinto. Initial reconnaissance sampling by Rio Tinto reconfirmed Newmont's Au-Ag anomalous catchment areas, along with delineation of potential carbonate-replacement and base metal mineralization further to the east.

Rio Tinto Drilling
Additional prospect evaluation defined an area of 3 by 2 km of phyllic alteration assemblages, hosting zones of residual silica and enargite-bearing quartz veins typical of high-sulfidation epithermal systems. Subsequent diamond drilling (reported by Dalimunth and Stevadji, 1998) produced an encouraging intersection of 32 m at 3.5 g/t Au from drill hole SL-18. Rio Tinto subsequently relinquished the property as a condition of its Contract of Work.

Acquired by Southern Arc in 2007
Southern Arc acquired Sabalong in April 2007 by way of an exploration license or KP. Subsequently, on December 17, 2009, Southern Arc was awarded an IUP by the regent of Sumbawa.

Following up on Rio Tinto's Work
Starting in July 2007, Southern Arc's survey and surface prospecting crews carried out a semi-detailed prospect evaluation of epithermal prospects delineated by Rio Tinto's work. This work continued into early May the following year and included a detailed regional BLEG sampling program, alteration mapping, and rock chip and channel sampling. Southern Arc has identified two epithermal systems and related alteration assemblages that are suggestive of near-surface lithocap-related porphyry Cu mineralization.

Upon forming the joint venture with Vale, Southern Arc resumed its field programs in late December 2010. Currently, exploration activities comprise detailed geological mapping. A ground-magnetic survey was competed in late February over the Lito, Toyang and Gempang Budi prospects with interpretation of acquired data showing three anomalous zones indicating inferred near-surface magnetic bodies. This is being followed by an induced polarization survey over these magnetic anomalies. See the Sabalong Project Activities page.

Sabalong is located in Nusa Tenggara Barat Province on Sumbawa Island, approximately 22 km SSE of the administrative city of Sumbawa Besar and 70 km northeast of Newmont’s world-class Batu Hijau porphyry copper-gold mine.