Jereweh Prospect

The Jereweh Prospect is situated in the southern extremity of Southern Arc's Taliwang property (see various maps on Jereweh Prospect maps page), and is located approximately 12 km north of Newmont's world-class Batu Hijau porphyry gold-copper mine. A number of anomalies form the Jereweh Prospect, with J3 to date being the most examined. J3 was discovered by Newmont during first-pass regional exploration in 1987, and was targeted during subsequent geochemical and geophysical programs. Au-Ag mineralization was identified from a contact zone of a shallow westward dipping silicified limestone and an altered volcaniclastic sediment unit.

Detailed geological and mineral work and exploration activities by Southern Arc at the Jereweh Prospect started in late October 2006, with the evaluation of historical Jereweh anomalies (J3, J4 and J6) in the southern part of the property. This was followed with a short scout diamond drilling program at its J3 Prospect that commenced at the beginning of May 2007.

Jereweh J3 Prospect Scout Drilling

Scout drilling on the Jereweh J3 prospect was completed in May 2007. Based on the low tenor of the Au-Ag assays returned from the jasperoid drill intersections, the contract Antero drill rig was demobilized from the site on June 5. Subsequently, the field camp was demobilized and all drill pads and access roads were rehabilitated and restored to their former state. Routine socialization programs at the regional government and village levels continue.

Previous Activities

Southern Arc completed its field activities up to the end of May 2007 on the Jereweh J3 prospect. A total of seven shallow holes (J3DH-01 to J3DH-07) totaling 413.6 m were drilled at inclinations of -45 degrees to -75 degrees, to a maximum depth of 79.40 metres. The holes were targeted to test subsurface extensions of the known surface Au-Ag jasperoid mineralization.

All but one drill hole intersected a shallow, westward-dipping jasperoid layer of variable thickness (intercepts of 0.20 m to 5.55 m), hosted by a volcano-sedimentary sequence of andesitic tuff, lavas, fossiliferous limestones and marls. No definitive sub-vertical structural feeder zones were identified.

Final assay results were received from the independent ITS laboratory in Jakarta. Aside from an intersection in drill hole J3DH-01 of 2.0 m at 1.93 g/t Au and 11 g/t Ag from 7.2 to 9.2 m, no other intersections of significant Au-Ag mineralization were reported.

Geological mapping and outcrop channel sampling had been started in October 2006 at the overall Jereweh prospect over three anomalies (J3, J4 and J6). This preliminary work continued during the following months into the first quarter of 2007, with the emphasis on trying to define the extent of surface mineralization.

Southern Arc personnel established a survey grid over the area of interest, and excavated a number of trenches to check the continuity and dip of the Hitam Manis jasperoid and its wall rock relationships. Additional trenches delineated other jasperoid ledges to the southeast. An area of approximately 60,000 m² as of April 2007 was outlined as containing the bulk of the jasperoid outcrops and the trench exposures (see Hitam Manis Significant Surface Au/Ag Geochemistry map on Jereweh maps page).

Other activities during the first quarter of 2007 on the J3 prospect incorporated the establishment of a grid of 21,000 line km, detailed geologic mapping, 74 m of trenching and a large channel sampling program.

The focus of this work, in particular, was at the "Hitam Manis" (HM) zone. The results of surface mapping and outcrop sampling (both manual and diamond rock sawing) by SA were detailed in news releases NR 07-02 and NR 07-09, dated February 07, 2007 and April 18, 2007, respectively. Outcrop sampling of jasperoid ledges, which were outlined over an area of 60,000 m², returned numerous intersections in excess of +5.0 g/t Au/+50 g/t Ag to a maximum tenor of 216.0 g/t Au/330 g/t Ag over 3.0 metres. See below for more detail.

An orientation IP ground survey over the area of interest defined geophysical signatures suggestive of subsurface lateral extensions of known jasperoid surface mineralization. Modeling has suggested that these subsurface bodies are flat-lying, with lesser north-south structural feeder zones postulated in the eastern grid area. Further to the west, similar geophysical signatures have been noted in areas of subcropping jasperoid and extensive talus scree fields.

Consequently, the program of seven shallow scout diamond drill holes was carried out during May 2007 to test subsurface extensions of the known surface jasperoid mineralization. In some instances holes were scissored to test for potential footwall mineralization, as well as to confirm the geometry of the jasperoid body. The program was completed by the end of May with cores then delivered to the laboratory for assaying (results reported above in news release no. 07-16, dated June 7, 2007).

Results from channel samples taken previous to the drilling program from the northern area of the HM zone during the first quarter of 2007 had included:

5.0m (3.6 m) @ 6.78 g/t Au & 123 g/t Ag 5.0m (3.6 m) @ 1.31 g/t Au & 13 g/t Ag
2.3m (1.6 m) @ 3.14 g/t Au & 44 g/t Ag 4.9m (3.4 m) @ 18.09 g/t Au & 39 g/t Ag
5.3m (3.8 m) @ 1.3 g/t Au & 6 g/t Ag

(True thickness of the mineralised bed is shown in brackets)

The four best contiguous diagonal sections resulted in a weighted average of 7.93 g/t Au and 57 g/t Ag over a rock face averaging 3.5 m high and approximately 12 m wide.

A portable diamond rock saw was used to take representative channel samples of the extremely hard jasperoid surfaces. Most of the channel samples were cut diagonally across the mineralised jasperoid bed in order to sample across both the full thickness of the unit and include prominent mineralized, sub-vertical fracture sets. Some of the previously reported high grade samples were re-sampled in this manner. Locations of the channel samples are shown on the Hitam Manis Significant Surface Au/Ag Geochemistry map on the Jereweh maps page of this web site.

In the same area, selected diagonal cuts and composite samples were taken along the face of a NW trending fault trace and returned high grade channel samples of 4.0m @ 139.6 g/t Au & 93 g/t Ag, and 3.0m @ 58.4 g/t Au & 136 g/t Ag. A composite sample of eight contiguous diagonal cuts averaged 10.47 g/t Au & 54g/t Ag over a vertical face with dimensions 1.75 m high and 14.0 m long. While Southern Arc is comfortable with these assay results this does not adequately infer the level of mineralization in the third dimension of these higher grade zones without subsurface (drill) samples.

Additional channel sampling of a NE to N curving jasperoid ledge (3m high by 120m long) situated approximately 350 m southeast from the zone of higher grades resulted in surface intersections of:

1.0m (0.7m) @ 3.12 g/t Au & 18 g/t Ag 2.0m (1.4m) @ 2.57 g/t Au & 182 g/t Ag
2.0m (1.4m) @ 2.52 g/t Au & 18 g/t Ag 3.5m (2.5m) @ 2.43 g/t Au & 35 g/t Ag
2.0m (1.4m) @ 2.36 g/t Au & 171 g/t Ag 1.5m (1.1m) @ 2.36 g/t Au & 5 g/t Ag

(True thickness of the mineralised bed is shown in brackets)

The J3 Prospect geological and geochemical signatures indicated the potential for carbonate replacement Au-Ag mineralization, with a model of steeply-dipping fault/fracture structures channeling Au-Ag rich hydrothermal fluids into flat-lying receptive carbonate horizons.

Further geologic mapping and trenching was carried out away from this central area, particularly towards the south and west where the down dip continuation of the mineralised horizon was considered likely to occur. An orientation dipole-dipole IP survey was carried out while the scout diamond drill program for the HM zone was being developed.

Trenching

Trenching over three selected sections (TR-01 to T-03) encountered altered andesitic pyroclastics in the first trench, while the other two trenches had to be abandoned because of the presence of large jasperoid boulders in deep soil. Three trenches were  completed during February into March 2007 (TR-04 to TR-06 --> see map on Jereweh maps page). All of the trenches were designed primarily to determine the bedding continuity and dip of the flat lying extension to the high grade "Hitam Manis" jasperoid zone, along with uncovering potential structural feeder zones.

Geological Mapping and Sampling

The jasperoidal outcrops seem restricted to the center of a curvilinear, possibly synclinal basin, which appears to plunge shallowly towards the south in the gridded area, then abruptly plunges westward to the J6 Prospect. The basinal sequence appears to consist of andesitic lavas overlain by locally finely bedded, fine to medium grained andesitic pyroclastics and epiclastics, which are capped by bedded bioclastic limestones (see Jereweh maps page). The mineralized jasperoid occupies the contact area between the latter two units, as well as steeply dipping structural zones in the Hitam Manis area. Moreover, jasperoid float was noted in streams draining the higher altitude NW area beyond the survey grid.

Alteration appears predominantly influenced by lithology, with propylitic alteration usually affecting the lava units, phyllic to argillic alteration restricted to the pyroclastic/epiclastic unit, and silicification to the receptive capping limestone unit. Locally sparse silicified volcanics were noted adjacent to the steeply dipping structural zones at Hitam Manis. A broad zonation was also apparent from the low temperature silica alteration through argillic to phyllic/propylitic alteration towards the west, and possibly extending through to the J6 Prospect. Whether this represents a single phase or is the result of overprinting remains to be determined.

Auriferous quartz-pyrite-base metal veins, veinlets and stockworks are commonly distributed within the phyllic altered sequences to the west of the grid area, but remain too sparse to constitute a bulk tonnage target on their own. They are possibly remnant feeders to the jasperoid mineralization, and commonly occupy NW, N and NE structures of apparently limited strike length. Sulfide mineralization within the jasperoid is far too fine-grained to discern, but the presence of oxides and sulfosalts (notably limonite, hematite, jarosite and scorodite) on weathered outcrop surfaces suggested there could be an appreciable percentage.

The dominant mineralizing structures appear to be conjugate NW and NE faults/fractures, vividly expressed as strong orthogonal fracturing in surface jasperoid exposures as shown in the figure below.

Subsidiary north-trending fractures are also present, but appear more important in controlling quartz-base metal veins and veinlets in the phyllic alteration to the northwest. East-trending linear features are traceable as topographical features on the macro-scale, and might exist as a result of restricted basin development. Jasperoid material crops out extensively on ridge tops to the west and up to 80m above the level of the valley floor, and this might reflect block-faulting and/or multiple layering, or simply through-going jasperoid-filled structural zones.

Ground Geophysics

A re-interpretation of historical Newmont ground magnetics revealed a high magnetic signature in the form of the curvilinear basinal axis, representing outcropping propylitized andesitic lava along the east and southern fringes. A discreet central zone of high magnetics (400m by 500m) underlies the southwest portion of the grid area and could possibly represent a buried intrusive heat source responsible for the widespread alteration (seen as magnetic lows). A fringing chargeability anomaly and a broader resistivity anomaly lie further to the northeast. An IP/resistivity ground survey was considered as the critical tool for the surface evaluation of the prospect area.

Multi-element ICP scan results from jasperoid samples (n=21) confirmed a Au-Ag-Mo±As±Sb signature, typical of carbonate-replacement mineralization styles. Element correlations also appeared more or less similar with Au/Ag correlating well with Pb, Sb, and Mo.

Previously, during the preliminary orientation surveys on the J3 anomaly by SA personnel in November and December 2006 the historical Newmont discovery outcrop (6.75 g/t Au over 2.7 metres) known as Hitam Manis was located again. Initial outcrop channel sampling and mapping of the main silicified zone (interpreted as jasperoid ledges) and peripheral alteration envelope, reported significant high grade Au-Ag intersections. From 14 rock samples submitted, six samples assayed >1.0 g/t Au, including 216.0 g/t Au & 330 g/t Ag over 3.0 metres, 64.0 g/t Au & 52 g/t Ag over 3.0 metres and 10.40 g/t Au & 50 g/t Ag over 3.3 metres, respectively (see Jereweh maps page).

Immediately south of Hitam Manis, a possible fault offset of similar jasperoidal material returned a value of 33.6 g/t Au & 17 g/t Ag over 2.5m. Assay results from additional surface rock chip sampling peripheral to Hitam Manis confirmed the widespread Au anomalism previously defined by Newmont. Significant rock chip values including 10.1 g/t Au and 14.3 g/t Au were reported as far as 720m northwest and 635m west of Hitam Manis respectively, while a substantial area immediately west of Hitam Manis displayed low level Au anomalism in jasperoidal outcrop and subcrop. Mapping noted the presence of several small to large pods of jasperoid outcrop and subcrop up to 2,500 m west of Hitam Manis. These zones coincided with historical Newmont Au-As-Sb soil anomalies.

Earlier, in 1997, Newmont undertook ground geophysical surveys including IP/resistivity and magnetics over the area of interest. Newmont since provided their survey data and relevant findings to Southern Arc, which then fast-tracked advancement of the anomaly/prospect.

J3 Anomaly

The J3 anomaly occupies an extensive topographically undulating area underlain by a generally shallow-dipping sequence of chlorite-altered Miocene andesitic flows and pyroclastics with intercalated limestone, and calcareous sediments and tuffs.

Historical Newmont literature reported "...anomalous precious metal geochemistry from rock chip sampling of a 300m length of structurally controlled silicification, trending 3150m, with minor "vuggy quartz" veining hosted by calcareous siltstone. The silicified structure was noted as traceable up to 500m, obtaining a maximum width of 10m, and enveloped by argillic alteration. Of 15 rock chips collected over 300m of the structure, 8 samples returned Au values >1.0ppm, with a high of 12ppm Au and 121ppm Ag.

"Ground geophysical surveys including ground magnetics and IP-resistivity were undertaken over the area. Magnetic lows corresponded to clay-silica altered rocks and limestones. Magnetic highs coincide with fresh and weakly altered volcanics that probably bound the limits of mineralization to the east and west of the anomaly. A broad resistivity high response was noted and interpreted as a difference in subsurface quartz vein density that might indicate stronger veining at Bedening.

"Previous grid soil sampling resulted in weak Pb-Zn-Cu geochemistry was interpreted to correspond to narrow base metal veins mapped in the area. Localized Au-As-Sb-Mo anomalism occurs to the NW, interpreted to be the strike extension of the mineralized structure. The sub-vertical structure was thought to hold only limited tonnage potential and no drilling was attempted here..."

From mapping it was apparent that the silicification is largely confined within a shallow dipping basal limestone unit overlying dominantly argillic altered andesite.

However, the persistent strike of the silicified zone does argue for some degree of structural control (feeder?) as well. The silicified limestone rarely reaches a thickness of 3m as a flat-lying ledge, but the original true thickness could not be determined because of the effects of surface erosion. Near the northern end of the zone, an exposure of approximately 15m length across the strike of the structure was sampled.

The silicified limestone (loosely termed "jasperoid") was described as "...black to grey coloured, massive fine-grained sucrose textured quartz with very-fine grained sulfides, subsequently cut by irregular small to medium veinlets of white translucent crystalline quartz. This latter stage quartz also forms drusy vughs/linings, and has a component of breccia matrixes. Much of the "brecciation" noted is most likely primary in nature, as auto-brecciation features are commonly observed in basal limestone horizons

J4 Anomaly

Geological mapping and sampling at the J4 anomaly indicates that the area is largely underlain by dacitic to andesitic pyroclastic and volcaniclastic lithologies (polymict breccia, calcareous and non-calcareous sandy tuffs) and platform limestones (see the Jereweh J4 Anomaly Geology and Alteration map). Interfingering of lithologies is commonly observed. Extensive deposits of Recent alluvium and coastal sediments blanket these lithologies to the east, west and north.

Looking SE, the J3 main silicified zone, approximately midway along its length where it transects Brang Bedening, revealing aspects of both structural and lithological controls on the jasperoid body.

Looking SW, the most northerly exposure of the J3 main silicified zone as sampled to the end of November 2006. Lithological control is evident as a shallow dipping resistant jasperoid layer overlying intensely argillized andesitic volcanics. The geologist is straddling an apparent fault zone possibly truncating or relocating the mineralization at this point. Behind the geologist, dips noticeably steepen towards the north.

Intense argillic alteration assemblages (kaol/clay-sil-qtz±ser±py) with subordinate silicification ± quartz vein/veinlets were noted within polymict breccias in the central area. Cockade to colloform textured quartz veins (maximum thickness 3.7 metres) and stockwork, with minor sulfides and secondary barite were mapped in fracture/breccia zones within northern and southern limestone units.

Northeast and northwest trending faults expressed as fault breccias and associated slickensides were noted in the southeast and northwest parts of the anomaly area. Within these breccias zones, argillic-silicic alteration envelopes narrow, quartz-sulfide veins and stockwork.

Large amounts of talus scree and stream bedload of replacement style silicification and vein quartz-sulfide were mapped in the central parts of the anomaly.

J6 Anomaly

Mapping reveals that the area is largely underlain by andesite lava flows and volcaniclastics (polymict breccia, laminated fine tuff, and sandy-silty tuff), capped by shallow marine limestones (see the Jereweh J6 Anomaly Geology and Alteration map). NW, NE with minor NS and EW trending structures mostly evident from aerial photos, Landsat and Radarsat images are the main structural pattern in the area. These same structures are observed in the field as vein, faults and shear zones. ENE faults and lesser NE and NW structures are found locally associated with a hydrothermal breccia. The breccia locally exhibits multiple brecciation events with clay-silica as dominant matrix or breccia fills.

Historical gold grades are commonly associated with argillic-silicic alteration enveloping narrow, localized and high angle vein-fracture and hydrothermal breccias. Gold occurs in complex of quartz-pyrite-sphalerite-galena-chalcopyrite mineral suites with accessories of clay, barite(?) and calcite. Pervasive clay (illite/smectite) and quartz argillic suites are notable to be most frequently controlled by vein and fracture density where haloes of replacement style argillic-silicic alteration increase in intensity progressively towards sheeted and stockwork vein structures.

Weak to moderate and low temperature propylitic assemblage of chlorite + magnetite occurs as envelope and grade outward from geochemically anomalous clay altered volcanic and volcaniclastic rocks.

Geological mapping and sampling during October 2006 at the Jereweh prospect revealed that the area is largely underlain by andesite lava flows and volcaniclastics (polymict breccia, laminated fine tuff, and sandy-silty tuff), capped by shallow marine limestones (see Jereweh Geology & Alteration Map). NW, NE with minor NS and EW trending structures, mostly evident from aerial photos, Landsat and Radarsat images, are the main structural pattern in the area. These same structures are observed in the field as vein, faults and shear zones. ENE faults and lesser NE and NW structures are found locally associated with a hydrothermal breccia. The breccia locally exhibits multiple brecciation events with clay-silica as dominant matrix or breccia fills.

Historical gold grades are commonly associated with argillic-silicic alteration enveloping narrow, localized and high angle vein-fracture and hydrothermal breccias. Gold occurs in complex of quartz-pyrite-sphalerite-galena-chalcopyrite mineral suites with accessories of clay, barite(?) and calcite. Pervasive clay (illite/smectite) and quartz argillic suites are notable to be most frequently controlled by vein and fracture density where haloes of replacement style argillic-silicic alteration increase in intensity progressively towards sheeted and stockwork vein structures.

Weak to moderate and low temperature propylitic assemblage of chlorite + magnetite occurs as envelope and grade outward from geochemically anomalous clay altered volcanic and volcaniclastic rocks.