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Southern Arc is offering this online Q&A to allow for an interactive discussion regarding Southern Arc's properties and business plan. Of course you can still reach us by phone (604-676-5241) and email (info@southernarcminerals.com), but this Q&A allows for a more public discussion, since many shareholders have the same questions. I won't always have answers right away, but I'll find the information as quickly as I can.

So please check back frequently, and don't be shy about posting your questions! If you prefer to remain anonymous, you can post your question using the name Shareholder.

We look forward to "speaking" with you soon!

Regards,

John Proust
Chairman & CEO
Southern Arc Minerals

Comments/Questions:
Posted by: Robin Answered by: Rhylin Bailie
Posted date: 7/19/2016 1:25:30 PM

How will the transaction with Skyridge affect Southern arc shareholders? Will they be given Japan Gold shares?

Southern Arc is selling its Japanese subsidiary to Sky Ridge Resources in exchange for approximately 49% of Sky Ridge Resources, on a fully diluted basis. Upon closing of the transaction, Sky Ridge Resources will change its name to Japan Gold Corp., and Southern Arc will be the largest shareholder of Japan Gold Corp.

The shares in Japan Gold Corp. will be an investment held by Southern Arc, and managed by Southern Arc for the benefit of Southern Arc shareholders.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 5/29/2016 12:35:43 PM

Could you give us some status on the progress in Japan?
Our Japan applications are moving smoothly through the review process. We look forward to being able to start drilling once we've got formal authorization. In the interim, Andrew Rowe and his team are doing a great deal of surface exploration, identifying old mine workings and outcrops and pinpointing exactly where we want to drill.
Posted by: Stuart Answered by: Rhylin Bailie
Posted date: 5/28/2016 10:08:49 PM

What's the status with PTG application to convert the exploration permit for West Lombok into an exploitation permit. Is this still progressing?
Yes, our Indonesian partner is still working at converting the West Lombok permit. We'll provide an update as soon as there is something material to report.
Posted by: martyn scriven Answered by: Rhylin Bailie
Posted date: 4/29/2016 3:58:05 AM

How many shares and options do we currently hold in Oban Mining?
As per our Q3-2016 financials and MD&A, as at March 31, 2016 we had 2,475,000 Oban common shares and 31,293,195 Oban warrants.
Posted by: Shareholder Answered by: Rhylin
Posted date: 10/1/2015 4:46:08 PM

Why is Southern Arc looking at Japan? I'm not aware of any junior companies exploring there.
No juniors exploring in Japan is exactly why we went there. It has a long history of mining with some very high-grade and substantial mines and there are known mineral deposits that have not been explored. No recent exploration means we get first mover advantage and can pick up the ground that we think is best. And if we find something, we’re the first junior to attract the attention of the majors and give them an entry point into a new prospective region.
Posted by: Stuart Answered by: Rhylin
Posted date: 9/30/2015 8:20:31 PM

Can you provide a brief update as to the status of the development permit application on West Lombok. In a few more months it will be almost be almost a year since the process started.
There is no new information about West Lombok. The Indonesian partner is making progress, but at this point there is nothing material to report.
Posted by: Bill Mathews Answered by: Rhylin Bailie
Posted date: 9/25/2015 7:22:28 PM

Why is Southern Arc doing a 10 to 1 reverse stock split, with only a little over 100,000,000 shares outstanding? Most companies don't even think about a stock reversal until the outstanding shares pass 200 million.
In this market, new shareholders won't even look at penny stocks. We needed to do something to get the share price up so that we can attract new investors and new business opportunities, and also enhance the Company's ability to bring in new capital when we are ready to advance the exploration licenses in Japan.
Posted by: Larry C Answered by: Rhylin Bailie
Posted date: 1/1/2015 10:58:44 AM

With your announcement Dec 31 that SOACF will no longer trade on OTC, what happens to SOACF shares? Can I still trade them?

Southern Arc has delisted from the OTCQX International Marketplace but the SOACF shares still trade on the OTCQX Pink Sheets. The only difference between the Pink Sheets market and the OTCQX International is the reporting obligations. With the OTCQX International listing, we file all of our press releases, technical reports and financials on the OTCQX to allow shareholders to easily access them. With a Pink Sheets listing we don't have the ability to file any documents, so investors will have to come to our website or to SEDAR to get that kind of information.

Posted by: ray desmarais Answered by: Rhylin Bailie
Posted date: 8/8/2014 4:46:17 PM

Rhylin, if memory serves me correctly, the license for West Lombok expires in 2016. What is SA's plan B if nobody shows any interest in buying or partnering at the project?

You are correct, the current term of the license expires in January 2016. We have had a great deal of interest from companies interested in being either a funding partner to advance the project, or negotiating an outright sale of the project. The reason it's taking so long is because we need to do extensive due diligence from our side to ensure that we're entering into a transaction that is fair and the best deal for Southern Arc shareholders. And of course due diligence needs to occur on the other side of the transaction as well. With the level of interest that we've had, I think it's fair to say that management is very confident that we will be able to execute a transaction that will be to the benefit of Southern Arc shareholders, well before the IUP expires.

Posted by: ERIC ANDERSON Answered by: Rhylin Bailie
Posted date: 6/23/2014 9:35:45 PM

What are management's thoughts on the possibility that Indonesia could relax the divestiture and smelter policy after the elections to improve foreign investment in the mining sector?

Unfortunately, we do not expect to see any significant change to policy in the near term. Both Presidential candidates have made a key stand on "Indonesia's resources for Indonesia" during their campaigning (and specifically the smelting issue) and it will likely take some time to realize there is an issue, let alone address the issue. When the dust settles some time after the election, the new government will have to look at the loss of revenue from royalties and timid investors and realize that foreign companies bring the funds and expertise required to properly develop cash revenue via mining. At that time there may be some rethinking of smelter regulations and divestiture rules. But there is no way of predicting when that will happen.

Posted by: eric anderson Answered by: Rhylin Bailie
Posted date: 6/23/2014 9:21:24 PM

What is the latest on the sale of Taliwang and West Lombok? Are the potential buyers focused on going ahead with production or drilling to determine/expand the resource? Will SA retain some percentage of WL or a smelter royalty?

The Taliwang sale is still proceeding as planned. To date the buyers have paid three installments for a total of $700,000 of the $1.6 million purchase price. Presumably no exploration activity will commence until they have completed their purchase of the property.

With regard to West Lombok, we are continuing to look for a partner that is interested in funding exploration and development of the property, or even an outright sale of the property. I expect we would retain a royalty if we go for an outright sale, but of course all of that would be negotiated as appropriate. We are certainly making progress with our objective of divesting West Lombok, but there is nothing official to report at this time.

Posted by: DVST8 Answered by: Rhylin Bailie
Posted date: 6/9/2014 10:52:18 AM

Why do we have 1/4 million of expenditures in Indonesia for doing nothing?

We are still required to carry out minimal activities in Indonesia to keep our IUP active. We are doing some field work, and we maintain a camp with minimal staff. Camp costs include fuel, vehicle, communications, security, field office, etc. We've cut costs as much as we can, but we do need to maintain some sort of presence at the sites.

Posted by: Large shareholder Answered by: Shareholder
Posted date: 5/26/2014 11:44:44 PM

Rhylin, what's the current status re: the effort to divest West Lombok? There are many rumours circulating about the role of the government and its attempts to nationalize resources hampering our efforts to divest. thanks,
The idiosyncrasies of exploring and operating in Indonesia have certainly reduced the number of North American mining companies that are interested in the property. Many other companies, however, are very comfortable working in Indonesia. We've seen interest mostly from companies out of China, the Philippines, the Asia-Pacific region, and Indonesia itself.
Posted by: Investor Answered by: Rhylin Bailie
Posted date: 5/22/2014 5:31:21 PM

Is it safe to say that there is a lack of interest in the Indonesian properties at this point?
There has actually been a great deal of interest in the Indonesian properties, which is partly why it's taking so long to solidify a deal. Each expression of interest involves extensive due diligence on both sides, with the potential buyer/partner looking at the property in great detail, and Southern Arc's team looking at the potential buyer/partner in great detail. These things take time. The most important thing is picking the deal that will add the most value for Southern Arc shareholders.
Posted by: Anon Answered by: Rhylin Bailie
Posted date: 2/6/2014 4:45:44 PM

In terms of preserving SA treasury, now that John, Rhylin, etc. spend some of their time working for Eagle Hill, is Eagle Hill contributing to their salary packages ?
Yes, our salaries are split between the companies we work for. Likewise, with Eagle Hill now working out of the Southern Arc office, the office lease and other administrative costs are also shared with Eagle Hill.
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 11/14/2013 12:19:02 PM

Are we selling our value proposition to new and current shareholders? Why do our properties represent no value to the investing public?

In today's market, both investors and analysts are incredibly risk averse. West Lombok is certainly compelling from a geology perspective and with the resource identified to date, but the uncertainty in Indonesia overrides the potential in today's market. We certainly continue to reach out to new and existing investors, and to mining analysts, at every opportunity. Doing full-scale investor relations, with conferences and road shows and advertising campaigns, however, just wouldn't be a good use of shareholder funds because it is unlikely to have a significant impact.

The best way for us to add value right now is to: 1) conserve our treasury, since that's an asset that many of our peers do not have; 2) continue to look for ways to leverage our Lombok property, either with a funding partner or outright sale (which would further bolster our treasury); 3) work with the Eagle Hill team to advance the Windfall Lake property; and 4) continue to look for opportunities to acquire or invest in high-quality projects in stable jurisdictions.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 11/14/2013 12:09:38 PM

Is Qatar Mining a possible source of financing should Southern Arc find another Eagle Hill type opportunity?
This is a question that I can't answer. I can't put words in Qatar Mining's mouth regarding their intentions going forward, and I can't put words in John's mouth about whether he would even approach Qatar Mining should a situation like this occur. 
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 11/14/2013 12:05:29 PM

Why did Mr. Al-Shahwani resign from the Board?
Qatar Mining remains committed to its investment in Southern Arc. Khalid Al-Obaidli now represents Qatar Mining as a director. Mohammed Al-Shahwani represents Qatar Mining as an investor. It's basically a separation of church and state, for lack of a better term. Mr. Al-Obaidli and Mr. Al-Shahwani can ask questions of Southern Arc and make decisions about Southern Arc independently.
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 11/14/2013 12:03:53 PM

What will John and Mike do at Eagle Hill once you find a permanent CEO?
John and Mike will remain on the Board as Eagle Hill directors. Mike will certainly take an active role as a technical advisor. John will be more focused on strategic partnerships, positioning the company in the market and any future funding requirements.
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 11/14/2013 12:02:39 PM

During the investor update you mentioned that you were still looking for new properties. What jurisdictions are you looking at?
We're looking for properties worldwide, but only in jurisdictions that are considered to be politically and fiscally stable, and supportive of mining. We're looking mostly in Europe, Asia and North America. We're looking at properties that are fairly advanced, although if we found a compelling grassroots property in an area that had been overlooked, and therefore we could get really good value for the property, we might consider it.
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 10/29/2013 5:43:10 PM

Does the $8 million working capital that the company has now includes the $3.5 million sale from Taliwang?
Yes. We've got about $4.5 million in the bank and then the anticipated US$3.5 million from the Taliwang sale.
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 10/29/2013 5:11:03 PM

The MDA this quarter didn't mention anything about looking for a West Lombok partner. Is that off the books?
We are still looking for a partner for West Lombok. I'm not sure how that bit of information got pulled from the MDA. It must have been removed as part of other unrelated edits.
Posted by: don grant Answered by: Rhylin Bailie
Posted date: 10/29/2013 1:48:37 PM

Could you offer some explanation of the write downs. Does SA still own the permits? Are we giving up on Indonesia?
The write-down is a reflection of accounting requirements, not management's view of the property. Under IFRS rules we are required to review the valuation of our assets on a regular basis. Historically we have carried West Lombok on the books based on the amount of money spent at the property. But when the market is giving us zero valuation for the property, clearly the actual valuation of the asset has changed. While we recognize that the valuation has decreased as a result of prolonged market weakness, it's impossible to say exactly how much the property is worth without putting a price tag on it. In the absence of a clear benchmark to value the property, management took the most conservative approach which is to write the property down to zero. This does not mean that we think it is worth zero. We still think it is a very promising property. But we can't point to any other number that can be independently supported.
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 10/10/2013 3:32:43 AM

How much cash does the company have currently?
At October 29, 2013 the Company had approximately $8 million in working capital.
Posted by: ray desmarais Answered by: Rhylin Bailie
Posted date: 10/1/2013 2:23:19 PM

There has been discussion that the Indonesian Mining Ministry would likely reduce the onerus requirment related to the 10 year divestiture law. Is SA aware of any moves in that direction or any hints of a schedule that might exist?

Earlier this year there was quite a bit of discussion about changes to the divestiture law, but nothing concrete has come out of that. That's one of the idiosyncrasies of working in Indonesia, and also why we don't jump up and down every time we hear about a potential change to regulations - you never know what the actual letter of the law will look like until it's implemented. There have actually been rumors recently of increased restriction on foreign ownership of newly converted PMA companies carrying on activities under an IUP, and changes to how much a listing on the Indonesian Stock Exchange can satisfy the 51% divestiture requirement. Again, none of these things impact Southern Arc right now, partly because none of our PMA companies are "newly converted" and also because we're not in production, and the 51% divestiture rule is after 10 years of production. But all of these potential changes cast further shadows on the country and make it even harder for Southern Arc and other companies to get good value for their properties. It's a shame, because Indonesia is so incredibly rich from a mineral perspective, and mining companies could bring so much value to the local communities, but these new rules or rumors of rules push companies away.

Posted by: Potential Investor Answered by: Rhylin Bailie
Posted date: 9/28/2013 8:03:27 AM

The current market conditions are being blamed for the almost all-time low in SA share price. Are there contingency plans if a partner or further investment is not found to fund progression of the company's properties?
At East Elang we have a no-cost joint venture with Vale, so the only property that will cost us any money is West Lombok. And the good news is that Southern Arc has money in the bank. We've got about $5 million in the bank after the investment in Eagle Hill. That capital would allow us to do quite a bit of exploration at West Lombok, if the Board decides to do that, and would last even longer if we decide to just hunker down and wait out these market conditions. The problem we're facing is that in these markets, investors are very risk adverse and projects outside of the comfort zones of North America and parts of Asia and Europe are getting severely discounted. Putting significant dollars into West Lombok at this time will advance the property, but will likely have very little impact on share valuation. To this end, we are actively looking for a partner for West Lombok with the objective of using someone else's money to advance that project. But the various regulation changes that the Indonesian government has made or is talking about are making that search difficult too, since the major mining companies are "taking a stance" and not investing more money in Indonesia, in the hope that the government will soften the new rules. We're certainly caught in a tough spot, and the frustration for investors is that this isn't the first time Southern Arc has been caught in a tough spot! I can tell you that Southern Arc has a very dedicated management team that is actively looking for ways to add value for investors. The Eagle Hill investment was part of that strategy, and we continue to look for ways to add value, both at West Lombok and outside of Indonesia.
Posted by: ray desmarais Answered by: Rhylin Bailie
Posted date: 9/24/2013 9:45:30 AM

Is there a drop-dead date by which West Lombok has to be developed to avoid losing the rights to the property? What steps has SA taken to protect its rights to West Lombok given the current absence of a deal?
The West Lombok IUP is valid to January 2016 and can be extended beyond that, with government approval. The key thing to protect our rights to the West Lombok property is to maintain activity at site. While we are not actively drilling right now, we have maintained a low-level of exploration activity to ensure we are protecting our interests in the property.
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 9/12/2013 12:14:13 AM

What is the next plan for West Lombok property?

We are actively looking for a partner for West Lombok. We are still doing some low key activities at the property to protect our investment, but we are not actively drilling at the time. Now that we've taken the property to resource definition, we'd like to find a partner to fund the next steps. Southern Arc's treasury is one of its greatest assets, and what allowed us to make the investment in Eagle Hill. Unfortunately, in current market conditions with nervous investors and very low tolerance for risk, West Lombok gets almost no valuation. We all know how prospective Indonesia is, but until the market turns around and people are willing to start looking outside of regions that are perceived to be "lower risk," we're just not going to see the valuation that West Lombok deserves. So we're better to advance that property with someone else's money and preserve our treasury.

Posted by: don Answered by: Rhylin Bailie
Posted date: 9/11/2013 10:10:29 AM

Could you outline current company activities? Are the drills turning in Indonesia or Quebec? Are there plans in place for this fall for drilling?

Yes, the rigs are turning at the Windfall Lake Property in Quebec! Eagle Hill started drilling on September 12 and plans to drill 25,000 metres by year-end. You can download Eagle Hill's corporate presentation here and read more about the exploration program and the property.

At West Lombok there are some low-key activities underway but we are not actively drilling. In the current market, where investors are not willing to take on any projects with perceived "geopolitical risk," we're just not going to see the valuations that West Lombok deserves. We're actively looking for a partner to fund the next steps of development, so that we can protect our treasury. Our treasury is one of our key assets and is what allowed us to make the strategic investment in Eagle Hill, which has already nearly doubled in value!

Posted by: Investor Answered by: Rhylin Bailie
Posted date: 9/5/2013 12:44:32 PM

Why in the SRK recommendations are there no directions for Selodong? The largest part of the 43-101 is there but SRK does not feel more exploration is warranted in that area of the property?

The SRK recommendations are partly based on advancing the property, but also based on what fits with Southern Arc's objectives. We all know that the porphyries have great potential, but drilling for porphyries is expensive. Southern Arc has always said that it wants to find a senior partner to advance the porphyry potential. SRK recommended logical next steps to advance the property and add value, without adding unreasonable risk from a capital perspective.

Posted by: Investor Answered by: Rhylin Bailie
Posted date: 9/5/2013 12:40:22 PM

So September is here - what's the plan? Clearly there is absolutely zero interest in this company, what will you do to change that?

The entire resource sector is not seeing any love in the market. If you look at a stock chart for the indexes over the last 12 months, the TSX-V is down 28%, the Senior Gold Miners are down 52%, the Junior Gold Miners are down 55% and Southern Arc is down 65%. So yes, we're down more than our peers, but that's the additional penalty we get for working in Indonesia. We the geopolitical risk discount. It's tough out there for everybody, and until this market turns around there's not much we can do. We have the advantage of having money in the bank, and now we've diversified our portfolio with our investment in Eagle Hill. In markets like this, the only projects that get value are high-quality in projects in stable jurisdictions, and we found a gem with Windfall Lake. Until things turn around, we will continue to protect our investment in Indonesia while looking for a partner, and we'll focus our efforts on advancing Eagle Hill. Adding value for Eagle Hill is good for Southern Arc shareholders too, with our 26% interest.

Posted by: Eric Anderson Answered by: Rhylin Bailie
Posted date: 9/2/2013 4:24:39 AM

1. Can you advise the latest update on the sale of the Taliwang property to Coke Resources. If not able to meet the purchase requirements of the sale is there any optional plans for the property that SA is considering? 2. Has there been any further news on East Elang or is exploration on this property effectively on hold for the long term? 3. Can you update us on the progress on seeking a partner to joint venture the Lombok property?

Coke Resources is still working on their IPO but like everybody in this market, they're finding it difficult to find the financing. So we've extended the timeline for the sale of Taliwang. I'm not sure what the new deadline is. But we're comfortable that it will go ahead.

No changes at East Elang. We are still partnered with Vale, still doing low-key community engagement work, but we will not actively explore on that property until we can get it reclassified and get the appropriate permits.

We are still actively looking for a partner at West Lombok, but we can't say anything until we get across the finish line. We are doing some low-key activity at site to protect our investment, but we don't have any more drilling planned for now.

Posted by: Tom Williams Answered by: Rhylin Bailie
Posted date: 8/28/2013 5:08:19 PM

By my calculations, Eagle Hill will be down to about $2mil by the year end after the $5mil drilling program has been completed. Can you share with us what plans the board have in order to raise further capital.

Southern Arc and Dundee collectively invested $12 million in Eagle Hill. $5 million went to Noront to acquire their 25% interest, $5 million is going into drilling, geophysics and the resource update, and we also had to settled unpaid invoices. All of that is cleaned up now, so we've got a clean slate, exploration is underway, and it's full speed ahead to advance the project. But you are correct that we will need to raise additional capital. A flow-through raise is very likely. There are also nearly 90 million warrants that are in the money and could bring additional capital to Eagle Hill if exercised. We will keep the market updated on our plans, but for now we've got enough money to execute the drill program and our corporate obligations.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 7/31/2013 7:56:07 PM

Could you comment on why at this low price we don't see any insider/management buying at the open market? Insider buying will definitely bring more confidence for shareholders.

What should give investors confidence is the fact that management has not sold one single share in Southern Arc. We appreciate that investors love it when management is buying shares, but we cannot comment on WHY management is or is not buying shares. Management's decision to buy or sell shares is based on a myriad of reasons, both personal and corporate.

The corporate reason that would generally prevent management from buying would be a black-out. Black-outs are confidential and cannot be disclosed. In a dynamic company like Southern Arc, where we are actively looking for opportunities to acquire new properties or forge new partnerships, we often find ourselves in the situation of having a potentially important transaction on the front burner, which means we really shouldn't be trading stock or undertaking any significant marketing campaigns, even if we're not formally blacked out.

The personal reasons are clearly not for public consumption. Perhaps the executives in question are short on cash because they're trying to pay down their mortgage, or they're caring for ailing parents, or they've got an unemployed spouse, or they're putting their kid through university, or their investment portfolios have been hit as hard as everybody else's and they don't have a lot of extra cash to invest. Perhaps they are already significant shareholders of Southern Arc and recognize the need to diversify their portfolio, just like every other investor. Whatever the personal reasons behind their decision to buy or sell stock, the reasons are personal and therefore not something that should be discussed with investors.

Posted by: David Truong Answered by: Rhylin Bailie
Posted date: 7/25/2013 1:24:01 AM

Why don't we just take over Eagle Hill?

We didn't want to spend all of our treasury on a new property, which would have effectively forced us to abandon our other properties. We still believe in the West Lombok and East Elang properties, and want to see them advance. And of course we want to keep a cushion our treasury to ensure we can continue to run the company effectively and maintain some financial flexibility.

Entering into an equal partnership with Dundee to advance the Windfall Lake Project is an elegant solution to our diversification strategy. We have found a high-grade, advanced resource stage project that can be rapidly advanced with more drilling and technical work. Eagle Hill has some strong geologists that will work well with Southern Arc's technical team. And Dundee is an excellent partner from both a financial and technical perspective.

Should the time come that we exercise our warrants, Southern Arc will actually have a controlling interest in Eagle Hill, with slightly higher ownership than Dundee. We look forward to the results of the shareholder meeting on August 14, and hope that shareholders will vote in favour of this strategic investment.

Posted by: Bll Mathews Answered by: Rhylin Bailie
Posted date: 7/17/2013 2:10:44 PM

When do we expect to hear of some kind of deal made regarding the West Lombok property. I can't believe you gave away 1/2 of Southern Arc's treasury without having a deal in hand for West Lombok. We have been waiting since 2007 for shareholder value to take place regarding West Lombok, and now it seems to have taken a back seat to Southern Arc's new interest. We have been told for years now West Lombok is/was the flagship property that was going to pay off for Southern Arc Shareholders. Where is

Thank you for your question. I know that shareholders have been waiting patiently for Southern Arc's share price to go up, and instead we've seen it go down, due partly to some setbacks at the property and in Indonesia and partly due to general market conditions. Unfortunately, in the current market, almost nothing that junior mining companies do can elicit a positive response. A quick glance at stock charts shows that since the beginning of 2013 the S&P/TSX Venture Index is down 26%, the Gold Miners Index is down 41%, and the Junior Gold Miners Index is down 49%. The fact that Southern is slightly underperforming its peers, and down 56% for the year, represents the discount that is applied to our stock for the "geopolitical risk factor" of operating in Indonesia.

We still believe in the West Lombok property and believe it holds great potential. And we still hope to advance the property, but it makes more sense at this point to advance it with a partner than on our own. The market is currently giving us no value at all for West Lombok. Again, that is partly a reflection of the market's negative view on junior gold mining stocks in general, but also reflects concern over the geopolitical risk in Indonesia. If we can find a partner to help fund development and also share the risk, that would definitely be seen as a positive by the market and would be positive for Southern Arc as a company, since it would allow us to conserve our treasury, which is one of our key assets in today's market.

As you know, we have been actively looking for a partner since the end of December. During that time we have continued to advance West Lombok and have made a lot of progress this year, with good drilling results from Bising and Tibu Serai and the significant milestone of completing our first 43-101 resource estimate. Concurrently, we have been looking for new properties that will diversify our portfolio. We believe we've found the perfect project with Windfall Lake, and look forward to the shareholder meeting on August 14 when shareholders will vote yes/no for the investment. Having a high-grade North American project will open doors that would otherwise remain shut with just an Indonesian project to talk about. Having both the 43-101 estimate and the North American project will give me two more arrows in our quiver when targeting investors.

We will certainly continue to keep shareholders updated with our plans regarding West Lombok. And we plan to rapidly advance the Windfall Lake project - once we have shareholder approval - to add value for our shareholders. This market will turn around eventually, and when it does Southern Arc should stand out from its peers as a company with cash in the bank, high-quality projects and a dedicated, experienced management team.

We appreciate your patience during what has been a number of difficult years for junior gold companies. Hopefully the market will turn around soon and we'll start to see the results of our efforts.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 7/15/2013 1:27:13 PM

It looks like the release of the 43-101 did not bring interest to SA. What is the plan to promote the company?

Completion of the 43-101 resource estimate for the West Lombok property is an important milestone for Southern Arc. Unfortunately, in the current market, almost nothing that junior mining companies do can elicit a positive response. A quick glance at stock charts shows that since the beginning of 2013 the S&P/TSX Venture Index is down 29%, the Gold Miners Index is down 49%, and the Junior Gold Miners Index is down 55%. The fact that Southern is slightly underperforming its peers, and down 60% for the year, represents the discount that is applied to our stock for the "geopolitical risk factor" of operating in Indonesia. 

Which is precisely why we announced a diversification strategy and started looking for quality, advanced gold projects in parts of the world that fetch a premium rather than a discount. We believe we've found the perfect project with Windfall Lake, and look forward to the shareholder meeting in August when shareholders will vote yes/no for the investment.

Once we've got shareholder approval I will be aggressively marketing Southern Arc in both Canada and the United States, with perhaps a trip to Europe, to reach both institutional and retail shareholders. I am waiting until we have the Windfall Lake project in our portfolio because a) I want to be able to talk about that project and b) having a high-grade North American project will open doors that would otherwise remain shut with just an Indonesian project to talk about. Many institutions will not even look at Indonesian projects. Still others will not look at a company that does not have a resource estimate. Having both the 43-101 estimate and the North American project will give me two more arrows in my quiver when targeting investors.

I'm waiting until September to hit the road because I want to maximize the value of these trips to ensure I am spending both time and money effectively. If we went on the road now we wouldn't be able to talk about Windfall Lake and half of the people I want to meet with would be on holiday, so we'd just have to go back to the same investment centres in the fall.

I think Southern Arc represents a compelling investment opportunity, and the addition of Windfall Lake will make it even stronger. I look forward to hitting the road in September and am confident that we'll be able to bring increased awareness and new shareholders to the stock.

Posted by: Tim Tremblay Answered by: Rhylin Bailie
Posted date: 6/29/2013 10:10:39 AM

With the investment in Eagle Hill, what timeline does the company believe it will take to get windfall into production? Also with Eagle Hill owning less than 50% of Windfall Lake who will run the company and make corporate decisions going forward?

Next steps with Eagle Hill will be continued exploration with the objective of expanding and upgrading the existing resource. It's too early to predict how soon, or if, the project could be advanced to production. We'd need enough drilling to have a measured and indicated resource, and would then undertake a feasibility study to determine the economics of building and operating a mine.

Should the investment be approved by Southern Arc and Eagle Hill shareholders, Southern Arc and Dundee Corporation will each own a 26.2% interest in Eagle Hill and will each appoint two Board members. Eagle Hill will also appoint two Board members. The go-forward plan for running the company will be determined by the Board and implemented by the executive and management team.

Posted by: eric anderson Answered by: Rhylin Bailie
Posted date: 5/19/2013 10:23:51 PM

I believe the president recently agreed to the extension of the forestry moratorium. Will this again delay the application to re-classify the primary forest at East Elang to production forest ?

The Indonesian government has extended the forestry moratorium to May 2015. This will not affect the West Lombok property, but may impact Southern Arc's East Elang project since the majority of the property is currently classified as primary forest and therefore subject to the moratorium. We are looking into the implications now and will report back to shareholders when we have more information.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 5/16/2013 10:15:33 AM

Share price has been disintegrated rapidly for the past 6 months. How much longer can we sustain as the s/p keeps on deteriorating even with $16 million in the bank. And is the company proactively working to protect investors with further price melt down?
This is certainly a tough time for junior companies, and for gold companies in particular. Since the beginning of 2013 the TSX Venture Index is off 23%, the Gold Miners Index is off 39% and the Junior Gold Miners Index is off 45%. So while it's terrible to see so much depreciation in Southern Arc's share price, we are certainly not alone. Companies that prevail in tough markets like this are the ones with real properties, a dedicated management team, and money in the bank. All of Southern Arc's executive and management team are still with the company and dedicated to its success. I think the drill results at West Lombok speak to its prospectivity, and hopefully the 43-101 resource estimate that we'll have mid-year will further underscore the potential of West Lombok. And unlike many of our peers, we are in the fortunate position of having money in the bank, so we have the ability to not only continue to advance West Lombok, but also to consider new opportunities that can bring near-term value to Southern Arc's shareholders. I know this is a difficult time, and it's heartbreaking to watch the share price erode as a result of market conditions. But we all know that the resource industry is cyclical, that things DO turn around, and companies with good properties, people and capital will still be here to enjoy the uptick when the market gets moving again.
Posted by: shareholder Answered by: Rhylin Bailie
Posted date: 5/7/2013 3:55:15 AM

Please confirm that the company is still on track to release its resource estimate by mid-2013 as announced. When can shareholders expect a progress report on drilling?
Yes, we are on track to publish a resource estimate by mid-2013, and will likely have Phase B drilling results out by the end of May.
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 4/15/2013 1:54:06 PM

Does the company have any plan of listing in Singapore or other Asian stock exchange to get exposure from Asian investors?

We do periodically review whether listing on another exchange would be advantageous, bringing enough capital and liquidity to warrant the additional listing fees and administrative expenses. At the moment, however, we are comfortable with our TSX-V and OTCQX listings.

Posted by: Thomas Williams Answered by: Rhylin Bailie
Posted date: 4/1/2013 5:26:44 AM

Some questions regarding the drilling at the 3 porphyry sites: 1) has the drilling commenced yet, 2) will the results be released as the holes are finalised or will they be released as a batch, 3) can you estimate when the 3 holes will be finished, 4) are there any plans to drill at any of the other porphyries in the near future?
Yes, drilling of the porphyries has commenced. I expect we'll release results as a batch, like we did with Bising and Tibu Serai, but at this point I do not have an estimate for when the holes will be finished. And at the moment we only plan to drill three porphyry targets. The exploration team will work with SRK to plan additional exploration as appropriate based on results and how the Company wants to allocate its funds.
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 3/27/2013 7:12:52 PM

Will the results from Tibu Serai be included in the NI 43-101 estimate?

At Tibu Serai (Mencanggah) we've only drilled seven holes so far and the holes are too widely spaced to include that target in the resource estimate. We have approval to drill additional holes, as announced on March 25, but at this point it's too early to say how much drilling would be required to include Tibu Serai in the resource estimate. How closely spaced the drilling needs to be is determined by both the type of deposit and the mineralization that you find. If you've got fairly consistent mineralization across all holes (which is what we're seeing at Bising), even fairly widely spaced holes may provide enough info for a resource estimate. But if the mineralization is less consistent, with areas of high-grade shoots surrounded by perhaps more consistent low-grade mineralization, like we've seen at Raja, we'll need to do more infill drilling to get a better handle on what's there (which is what we did at Raja with Phase 2).

Even if we don't have enough drilling to build a resource for a certain target, however, the drilling data does give us a sense of exploration upside and allows SRK to make recommendations about where we should conduct further exploration. So all of the drilling that we do at Tibu Serai will still be very valuable in the context of the technical report, just not in the estimate itself (more likely than not).

Posted by: don grant Answered by: Rhylin Bailie
Posted date: 3/25/2013 3:11:37 PM

What is a channel sample?

Rock sampling is a very important part of exploration and is subject to quality assurance and controls, just like drilling activity. As part of the process of geological mapping and evaluating mineral showings, samples of rock are collected in the field. A sample is collected from a location that is carefully marked on the map, and the sample is sent to an assay lab for analysis to determine the mineralized content.

A "grab sample" can be either a random sample or a sample of the best mineralization in a showing. Grab samples are used in the very early stages of exploration and demonstrate only that mineralization is present.

A "chip sample" is a composite sample collected by chipping rock fragments continuously along a width of rock exposure. The intent is to collect an equal volume of material along the length of the sample. Chip samples are used to determine the average grade of mineralization across the width of mineralization zone.

A "channel sample" is a continuous sample of rock collected by cutting into a rock face and removing an equal volume of rock along the length of the sample. It is usually done with a rock saw. If collected properly, these samples can provide information about the grade of mineralization that is accurate enough to be used in resource estimates.

"Stripping" and "trenching" is used to remove the overburden to expose the underlying rock to allow for sampling. Stripping involves removing the overburden to expose the underlying mineralized zone, and trenching involves digging or blasting down into the rock to expose a vertical face of mineralization that can be examined.

Posted by: Ray Desmarais Answered by: Rhylin Bailie
Posted date: 3/15/2013 7:59:32 PM

Why has the drill program been scaled back so significantly? Wouldn't you want to allocate the necessary drills to rapidly get establish a significant resource?

One of Southern Arc's most important assets right now is our cash. We definitely want to continue to advance West Lombok since it is a very exciting property from an exploration perspective. But we need to do significantly more work at West Lombok before we can hope to see significant market revaluation, as outlined in my response to the "why are you potentially spending money on other properties" on March 13. So we have decided to take a more staged approach to exploration at West Lombok, doing enough drilling now to table a preliminary resource estimate and then continuing to advance the property as appropriate based on recommendations by SRK and our exploration team, and as approved by the Board. And parallel to that, we will look at opportunities with other properties that could bring nearer-term revaluation opportunities to our shareholders. We're sort of playing both sides of the field here, ensuring that we protect our investment at West Lombok and continue to advance the property, while seeing if we can take advantage of current market conditions and find an exciting new opportunity that would have been out of our reach a few years ago when the markets were stronger. And it's possible that diversifying our portfolio with a project that's in a region with less perceived geopolitical risk could potentially add value immediately by opening the door to new investors. Compelling as West Lombok is, with both epithermal gold and underlying copper-gold porphyries, the reality is that some investors will only look at projects in North America, Europe, etc.

Posted by: ray desmarais Answered by: Rhylin Bailie
Posted date: 3/13/2013 9:41:38 PM

The drilling program has been scaled back to only three drills, while fixed costs are much higher than they used to be. How does allocating less money to drilling and more to fixed costs add shareholder value?

We do not have a specific "fixed cost" section in our financial statements, since this is not required disclosure, so I can't determine exactly what you are lumping into fixed costs when comparing different quarters. I did a quick analysis of current costs compared to costs when we drilling aggressively in 2011, and if you pull non-cash costs (share-based compensation, depreciation, foreign exchange gain/loss) out of the total, the expenditures that remain are related to overhead and pubco costs and are actually significantly lower now than they were in 2011. There was a substantial non-cash cost in the last quarter associated with property write-downs (Taliwang and Sabalong), so that skews the numbers significantly compared to previous statements. But our overhead expenses (office expenses, management fees, professional and consulting fees, travel) were $200,000 less in December 2012 compared to December 2011, and our pubco fees (investor relations, transfer agent and filing fees) were $90,000 less than at December 2011. We have signifcantly reduced our Indonesian staff and consultants, but it's hard to pinpoint the exact cost savings on our financial statements because their time would have been charged to consultants, management, office and exploration depending on their roles.

The teams in both Indonesia and Vancouver have been working hard to reduce expenditures so that we can conserve our treasury. We have obligations as a publicly-listed company that we need to comply with, so we do need to maintain our core pubco functions. And likewise in Indonesia we must keep enough people on staff to ensure that we are covering all of our quality assurance / quality control obligations with regard to drilling and also meeting our social and environmental responsibilities. But we've cut back expenses significantly and continue to review our budgets to see if there are other areas where we can cut costs, to ensure that the money we're putting into the ground is adding the most value.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 3/13/2013 6:44:32 PM

Why are you planning to potentially spend money acquiring or partnering in new properties rather than saving it to explore and develop West Lombok?

Clearly in today's market, having $16 million (at end of Feb 2013) in the bank gives Southern Arc a significant advantage over many of its peers. Being well capitalized gives us the ability to continue advancing West Lombok while also having the financial flexibility to consider other opportunities that could bring near-term valuation for Southern Arc's shareholders.

West Lombok is very exciting from an exploration perspective, and certainly good drill results should have a positive impact on the stock price. But we would need to do significantly more drilling, engineering, environmental and economic analysis before we could advance that property to the point of deciding whether to proceed to construction and production. And we would definitely need more than $16 million to advance the property to production. Should the time come where we decide it's appropriate to build a mine at West Lombok, we would have to use other people's money, either through a joint venture or other mechanisms, do to that. Companies rarely think about having enough money in the treasury to develop a mine. They focus on taking the project to the stage that financing can be arranged. As Mike Andrews mentioned on the investor update call on March 4, the traditional method for mine development finance is a mixture of debt and equity. First the company produces a bankable feasibility study to show that the project can support the costs of a third-party financing, and then the remainder is raised with equity. So there's certainly dilution to shareholders at that point, but hte value is added because the company is becoming a producer, bringing both cash flow and higher market valuation.

So we are looking at opportunities to put some of our $16 million to work at projects that offer closer revaluation opportunities for our shareholders. And there are LOTS of opportunities out there because companies are desperate for cash. We saw many companies at PDAC that have a resource, have a PEA, and need the $ to complete a feasibility study. Or in some cases they already have the feasibility and need some capital to advance to production. If we can put our dollars to work to quickly advance a project to a revaluation stage (having a PEA or feasibility in hand is a significant milestone that often triggers market revaluation), or to bring production to the company, that would be a significant value add to our shareholders. Another option is to find a property where there's an existing resource, and funding an aggressive exploration program could quickly add ounces and bring value to the project, and Southern Arc as part owner.

As John mentioned during the Q&A on March 4, we have to spend our money very judiciously. We've got to make sure that if we're going to embark in a different direction, that we have a clear strategy for how our dollars are going to achieve a result. So we're not going to jump into anything quickly. We're doing a lot of due diligence and weighing our options and will make decisions as appropriate, both at West Lombok and with other opportunities.

Posted by: P. MacNEIL Answered by: Rhylin Bailie
Posted date: 3/13/2013 9:57:35 AM

What is SRK's cut off date for drill holes to be included in the NI 43-101 resource estimate scheduled to be released in mid-2013?
SRK was engaged at the end of 2011 and worked with Southern Arc's exploration team to plan the current exploration program with the objective of collecting enough drilling data to complete a preliminary resource estimate for the property. All drilling data gets sent to SRK as soon as it has been received and reviewed by Southern Arc's team, and the two teams are in constant communication and working together to plan next steps at the property. SRK is constantly updating their model for the property to include new information. We am getting lots of questions about whether Phase 2 drilling at Tibu Serai (if recommended and if approved) could be included in the resource estimate and we cannot answer that question yet. It depends on what the Phase 1 results are, whether Phase 2 is recommended and approved, and what style of mineralization we see at that target.
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 3/11/2013 6:56:04 PM

Why aren't you doing more drilling at Pelangan? Do you have enough information to include Pelangan in the 43-101?

We had already completed both Phase 1 and Phase 2 drilling at Pelangan and had enough information to calculate a preliminary NI 43-101 compliant resource estimate for that portion of the West Lombok property. In the Mencanggah prospect we'd completed Phase 1 drilling of the Waterfall target and had just started at Bising when we stopped drilling at the end of 2011, but needed to test additional areas at Bising and do some infill drilling to collect enough data for the 43-101 estimate. We should have enough information, with the drilling completed to date, to include both the Raja and Bising targets in the 43-101 reports, and perhaps other areas in Pelangan and Mencanggah.

At Tibu Serai (Mencanggah) we've only drilled seven holes so far and the holes are too widely spaced to include that target in the resource estimate. Depending on results the exploration team may ask the Board to approve additional drilling, but at this point it's too early to say how much drilling would be required to include Tibu Serai in the resource estimate. How closely spaced the drilling needs to be is determined by both the type of deposit and the mineralization that you find. If you've got fairly consistent mineralization across all holes (which is what we're seeing at Bising), even fairly widely spaced holes may provide enough info for a resource estimate. But if the mineralization is less consistent, with areas of high-grade shoots surrounded by perhaps more consistent low-grade mineralization, like we've seen at Raja, we'll need to do more infill drilling to get a better handle on what's there (which is what we did at Raja with Phase 2).

Even if we don't have enough drilling to build a resource for a certain target, however, the drilling data does give us a sense of exploration upside and allows SRK to make recommendations about where we should conduct further exploration.

Posted by: Brad Mitchell Answered by: Rhylin Bailie
Posted date: 2/19/2013 4:09:36 PM

How much cash does Southern Arc have remaining?
At the end of February we had approximately $16 million in our treasury, which certainly puts Southern Arc at a distinct advantage compared to many of the junior mining companies who are struggling to keep the lights on. At PDAC there were numerous companies with less than $500,000 in the bank.
Posted by: w. mckeown Answered by: Rhylin Bailie
Posted date: 2/12/2013 10:54:33 AM

How is the drilling going?

Drilling on West Lombok is proceeding well. We have finished the Bising holes and moved the rigs to Tibu Serai, and we expect to have the Bising assay results back and press released by the end of February. As mentioned in the December press release and investor webcast, we are focused right now on epithermal gold mineralization in the Mencanggah prospect. We're drilling Phase A holes at Bising and Tibu Serai. Once that program is complete the Board of Directors will review results and determine our next step for exploration.

Posted by: O. D. Garcia Answered by: Rhylin Bailie
Posted date: 1/28/2013 3:19:47 PM

Retail investors, in general, get their stock tips from newsletters, websites and friends, not from big mining conferences. What could SA do to promote the stock through newsletters and websites? The QA on the website was a great idea, but how many non-investors know about it? How about a Facebook page?

Southern Arc does have both a Facebook page http://www.facebook.com/pages/Southern-Arc-Minerals/140623802684990 and a Twitter account (@SouthernArc). We also have partnerships with four companies with a retail focus to help spread the word and drive traffic to the website: Proactive Investors, Al Korelin, Even Keel Media and The Gold Report. Their coverage always gets picked up by Google so I know that it's effective, plus they are all in the top ten list of companies driving traffic to our website.

Unfortunately there's very little value that these partnerships can add unless Southern Arc is generating news. Last year we kept a very low profile. Promoting the stock without being able to provide any guidance on when people could expect drill results would have made us look like the "pump and dump" junior mining companies out there. Southern Arc is a real company with real properties and a very experienced, dedicated management team. We need to be very careful with our partnerships to ensure that we are always portraying the company in the right light. Now that we are actively drilling again our outreach and marketing program is ramping up, and we are considering new partnerships that can add value and spread the story.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 1/24/2013 10:06:23 PM

When can we expect drilling results to start being issued, and how frequently is this expected to occur up until the issuance of the 43-101?
We should have first results from drilling at Bising by the end of February, and I would expect we'll issue results approximately once per month after that. Rather than releasing results three or four holes at a time we're going to release them in batches: all of Bising, all of Tibu Serai, etc.
Posted by: Eric Anderson Answered by: Rhylin Bailie
Posted date: 1/16/2013 2:58:03 PM

1. Will Hamish's experience and influence not be an issue when applying for the East Elang and renewing the West Lombok forestry permits? 2. Can you share this year's marketing strategy? 3. Junior mining companies' share prices had a terrible 2012. What's in store for junior mining companies in 2013 and beyond?

1 - Andrew Rowe was Hamish's second-in-command for years and has all of the knowledge and relationships that he needs to lead the company in Indonesia, from both an exploration and permitting standpoint. Andrew of course also has the support of Mike Andrews and our team of advisors and directors, all of whom have great expertise and knowledge of the Indonesian permitting and regulatory regime.

2 - Get out and tell the story. As always, the objective is to visit the major investor centres for one-on-one meetings with institutional investors, and to also have a broker lunch or dinner in each centre to reach the retail crowd. I'll also be attending more conferences than I normally would so that we can increase visibility. The first conference is this month in Vancouver. Ourmarket cap is still too small for many of the institutions so retail investors will certainly be the driving force for the next little while, but the scale of the property and the drilling results to date do tell a compelling opportunity for the funds that are smaller or have a long-term strategy. Even if the institution itself can't take a position, my theory is that every fund manager is also a retail investor him/herself and has an untold number of friends and colleagues who also invest, so the meeting is never wasted. I'm also ramping up our online presence with a new website and more outreach with third-party groups, and once the drill results are in I'll start reaching out to analysts.

3 - Sorry, but I don't have a crystal ball. General sentiment is that the market is starting to turn around. The key driver for Southern Arc will be maintaining a continuous drilling program and getting good results.

Posted by: Eric Anderson Answered by: Rhylin Bailie
Posted date: 1/10/2013 9:15:44 PM

1. Will the assay results from the 279 rock chip samples that were to be sent for assaying on receipt of the Pinjam Pakai be published anytime soon? 2. Are there plans for drilling at Raja prior to release of the N 43-101 or will this depend on the results from Bising and Tibu Serai? 3. I assume that there are some rigs on standby in West Lombok, ready to be deployed. Is there any plans to deploy them or will this depend on phase A results?

1 - We do not publish assay results from rock chip samples. The results of the samples guide our exploration strategy, but are not material enough to warrant public dissemination.

2 - At the moment the drill program is focused only on Bising and Tibu Serai in the Mencanggah prospect. We had prepared a drill program for Raja that may be implemented in the future, but for now we're focused on Mencanggah. The logic behind that decision is that we have already done a great deal of drilling at the Pelangan prospect. We did not complete Phase A drilling at Bising, however, and that has always been our first priority for when drilling recommenced. At Tibu Serai we haven't done any drilling yet, but rock chip samples in that area have returned the highest grades on the property. Drilling in these two areas will provide valuable information for both the NI 43-101 resource estimate and to guide future exploration plans.

3 - We do have other rigs available, but at the moment three rigs are considered adequate.

Posted by: Stuart Answered by: Rhylin Bailie
Posted date: 1/8/2013 9:59:40 PM

How is the phase A drilling progressing? On plan, behind plan, ahead of plan?

Drilling at West Lombok is proceeding as expected. We will finish up the holes at Bising, then move the rigs over to Tibu Serai. When we've got results from Bising we'll release them as a group, followed by results from Tibu Serai, and then an announcement of the go-forward plan after the Board has had a chance to review the drill results and the proposed drill program that our exploration team presents. Still on track to have an NI 43-101 resource estimate for portions of the property by mid-year.

Posted by: Eric Anderson Answered by: Rhylin Bailie
Posted date: 12/15/2012 12:31:40 AM

Three rigs are being mobilized for the epithermal drilling, where previously it was 6 rigs and more phase A holes. Is it planned to utilize the remaining 3 rigs on the JV'd porphyry targets?

The Company has decided to resume drilling at West Lombok (yay!) but using a more measured approach than what was announced on November 20. We are mobilizing three rigs rather than six and at the moment have committed to drilling Phase A holes at Bising and Tibu Serai (17 holes for approx 2,500 metres). When those are complete the Board will review the results and the exploration team will propose the next drill program, and we'll move forward from there as appropriate. At the moment, as discussed during the investor update on December 13, all exploration is focused on the epithermal targets.

Your question mentions "the JV'd porphyry targets." It's important to note that we do not currently have a JV partner for the porphyry targets. The Board is considering the potential of finding a JV to advance the porphyry targets, but for now Southern Arc does not have a partner and is drilling only the epithermal targets.

Posted by: Ken Bowen Answered by: Rhylin Bailie
Posted date: 12/13/2012 5:26:48 PM

After listening to the webcast I was surprised that there was no mention of Hamish exiting the company. Since he has been such an integral part of the exploration team since day one, I assume most shareholders would like an explanation of why he left.

Andrew Rowe has been managing the properties and exploration strategy for quite some time while Hamish played more of a strategic role in terms of managing relationships in country. Hamish led the charge for all of the major issues that Southern Arc has overcome these past few years. He's been through the purda, the transition of the COW to the IUP, and now the Pinjam Pakai, and he's got the battle scars to prove it. He got the company to the major milestone of receiving the Pinjam Pakai, and now he's moving on. It would not be appropriate for the Company to comment further on Hamish's personal choices.

Posted by: Stuart Answered by: Rhylin Bailie
Posted date: 12/5/2012 8:28:13 AM

How often do the board members get together via web-conference, phone or otherwise in between official AGM type meetings to discuss the ongoing affairs of the company?
Southern Arc's entire Board of Directors meets at least quarterly via conference call and meets in person at least once a year, generally in advance of the AGM. Smaller groups of the Board meet far more frequently to discuss various topics, generally by phone but sometimes in person depending on travel schedules. John Proust and Mike Andrews speak almost daily, often with the involvement of other members of the executive team.
Posted by: ray desmarais Answered by: Rhylin Bailie
Posted date: 11/27/2012 1:02:17 PM

Recently announced changes to Indonesian Mining laws raise the spectre of further delays in mining activities for SA. Has SA counsel evaluated the effect those changes might have on Lombok?

The Indonesian Constitutional Court recently issued a decision that has the effect of partially amending certain provisions of the Mining Law relating to the determination of which geographical areas are open for mining activities in Indonesia. The 2009 Mining Law called for the Central Government to determine which areas of Indonesia would be designated mining areas, allow mining business licenses (IUPs) to be granted to mining companies. The recent decision effectively puts this right of determination in the hands of the Regional Governments rather than the Central Government.

Advice received from counsel indicates that this decision relates solely to the granting of new concessions and will not affect mining companies with existing IUPs. Given that Southern Arc holds IUPs for all four of its properties, we do not expect this to affect or delay any of the projects in our portfolio.

Posted by: don grant Answered by: Rhylin Bailie
Posted date: 11/27/2012 11:04:23 AM

Is there any information available regarding the strategic review that's underway?

We have clearly had many questions this week regarding the decision to delay the previously announced drill program at West Lombok while the Board of Directors undertakes a strategic review of Southern Arc's properties and go-forward plan.

We had the drilling program designed well in advance of receiving the Pinjam Pakai for West Lombok. When we received the Pinjam Pakai we were very excited to be proceeding with the work program that we'd been planning for nearly a year, and we made the "full speed ahead" announcement. Then on Thursday and Friday the Board met for strategy sessions and realized that they want to take a step back and reconfirm our long-term strategy for the company, and for the West Lombok property.

West Lombok is in a good position now. We've done enough studies and exploration to show that the property is prospective for both epithermal gold and copper-gold porphyries, we've got the IUP, and now we've got the Pinjam Pakai to allow drilling to proceed throughout the property. But there have been a number of developments in Indonesia recently, including changes to the tenure system, changes to the mining laws, how long it took to get the Pinjam Pakai, and a variety of issues that both our peer companies and the senior mining companies have had. With $18 million in the bank and a milestone permit received for our flagship property, now is the right time to take a step back, consider all of the options available to us, and reconfirm our long-term strategy for the company and the property.

As soon as the Board made the decision to take a step back and conduct this strategic review, they realized that they needed to put the drill program on hold until they had completed the review and confirmed their long-term plans for the property. Not drilling at Lombok, particularly on the back of Tuesday's announcement that we had the Pinjam Pakai and were planning to resume drilling, would be a significant event for the company. We didn't want anybody trading the stock thinking that drilling was going to be starting up right away, thus the decision was made to halt the stock.

In the context of advancing West Lombok to the significant milestone of receiving the Pinjam Pakai permit, but with the backdrop of all of the developments in Indonesia over the past year, the Board wants to give themselves time to determine the best course of action. We are in the fortunate situation of having significant cash in the bank and significant assets. We need to look at strategic alternatives and determine how best to use those assets going forward to create shareholder value.

Posted by: Denis Rozon Answered by: Rhylin Bailie
Posted date: 11/20/2012 5:31:36 PM

In the November 20, 2012 news release, a statement is made that the Pinjam Pakai forestry permit for its West Lombok property provide the authority for to allowing Southern Arc to resume full-scale exploration activities on the West Lombok property for a period of 2 years. Will the process of renewing the permit be as onerous as obtaining the current Pinjam Pakai?
We did discuss this as a potential question, when we were planning the November 20 webcast, and the Indonesian team said that the renewal is fairly straight forward but we will nonetheless apply well in advance. It is simply the renewal of an existing permit, and therefore a very different process than deciding whether to issue a permit for the first time, which is the step we've just completed. One would assume that all of the due diligence about whether the land should be used for mineral exploration and development would have been completed when issuing the Pinjam Pakai, and that as long as we have conducted ourselves responsibly, added value for local communities and continued to advance the property, that we would be allowed to proceed. I will have to check with Hamish regarding the specifics of renewing the permit, and will update this answer once I have that information.
Posted by: ray desmarais Answered by: Rhylin Bailie
Posted date: 11/20/2012 5:03:09 PM

Does Southern Arc have a plan in place to promote the company to funds and analysts now that the permit has been received?
Absolutely. Now that we're drilling on West Lombok again Southern Arc presents, I believe, a very compelling investment opportunity. We've got an experienced team. We've got money in the bank. We've got a property with enormous scale that's prospective for both epithermal gold and porphyry copper-gold. We've completed enough drilling to show that West Lombok has got great potential, and now we're actively drilling and advancing toward the important step of completing an NI 43-101 resource estimate. This is the perfect time to be introducing the company to investors. We won't be hitting the road between now and year-end, but we'll be developing a marketing strategy that we'll execute in the new year. As always, the plan will be to visit the major investment centres to meet one-on-one with institutions and funds. In each city we'll have a dinner or lunch for brokers and high-net-worth retail investors. And we will very selectively attend investor conferences.
Posted by: ray desmarais Answered by: Rhylin Bailie
Posted date: 9/4/2012 4:24:09 PM

There have been some recent observations made that insiders are not buying even at these low prices. An explanation might be worthwhile.

Insider buying/selling activity is publicly accessible through SEDI (www.sedi.ca). While I am more than happy to comment on whether insiders are trading the stock, I cannot comment on WHY they may or may not be trading the stock. The decision to trade a stock is based on a myriad of personal and business reasons. The personal reasons are nobody's business, in my opinion. And the business reasons cannot be publicly discussed for the same reason I cannot comment on market rumours and unusual market activity.

Last year Southern Arc implemented a disclosure policy which states, among other things, that the Company does not comment on market rumors and does not comment on trading activity unless asked to do so by the stock exchange. Human nature being what it is, when asked a question I want to be as honest and forthright as possible. But when talking about insider trading activity, saying "I'm not sure why they're buying/selling stock" is a very different statement than "we're not allowed to buy/sell stock right now" or even "no comment." If the company is in a blackout because material information is about to be disclosed, the blackout itself is material because knowledge of the blackout would signal the market that something is going on, either good or bad. Since I can't talk about the business reasons behind trading activity, and I'm not willing to talk about the personal reasons, there's really nothing I can say when faced with that question except "no comment." And my answer must always be consistent to ensure I am not accidentally giving investors insight into non-public information.

Posted by: Eric Anderson Answered by: Rhylin Bailie
Posted date: 8/7/2012 8:28:05 PM

Can you provide an estimate as to when Southern Arc Management expect 1. Commence a drilling program at Taliwang 2. Obtain the forestry permit and commence exploration at East Elang 3. Is Southern Arc capable of exploring on Sabalong, Taliwang, East Elang and Lombok at the same time or is the focus only on Sabalong and Lombok in the next year ?

At the moment our exploration efforts are focused on Lombok and Sabalong. We are currently drilling on Sabalong with a drill program of up to 2,000 metres focused on the Toyang quartz vein system, where previous exploration revealged encouraging gold intersections. At Lombok we are continuing with surface mapping activities while awaiting the Pinjam Pakai permit, which will allow us to resume drilling of our primary targets.

We do not plan to do any exploration at East Elang until we have received the Pinjam Pakai permit. The areas that we want to explore at East Elang are classified as protected forest, which means that open-pit mining would not be allowed. We have applied to have the property reclassified as production forest, which would allow for both open-pit and underground mining, with the appropriate permits. While the property is considered highly prospective due to its location (directly adjacent to Newmont's Elang deposit) and results from aerial surveys, exploration of this property has been deferred pending reclassification of the property's forestry status. Application has been made to the Regency authorities for suspension (back-dated for two years) of the IUP license until the reclassification process has been completed, ensuring that Southern Arc has adequate time to evaluate the property once exploration commences. Southern Arc has an option and joint venture with Vale to advance the East Elang property.

We do not have any detailed exploration plans for Taliwang at the moment.

Posted by: Eric Anderson Answered by: Rhylin Bailie
Posted date: 8/7/2012 8:21:24 PM

If the forestry permit was issued today how long would it take to get back to drilling with 10 rigs or more on West Lombok ?

Southern Arc has made arrangements to ensure that it can get both its drill rigs and its drilling staff back on site very quickly when we are in a position to resume our drill program. To reduce Southern Arc's burn rate during this quiet period, earlier this year we seconded many of our rigs and personnel to other companies in the region, but with the understanding that they will return to Southern Arc when we are ready to ramp back up again. 

Posted by: Monte Brown Answered by: Rhylin Bailie
Posted date: 8/2/2012 4:30:52 PM

Why have there been such big jumps, both up and down, in the share price recently?

When trading volume is low, each individual trade can significantly move the stock price. If someone puts in an order to buy at market and the only sell order is 5 cents above the current trading price, the buy will get filled and the stock will jump up 5 cents. The same can happen when someone puts in a market sell order and the only buy order is below the current trading price.

We have certainly seen some big jumps lately, and I've been getting lots of calls asking if there is anything going on that could be influencing the stock price. Last year Southern Arc implemented a disclosure policy which states, among other things, that the Company does not comment on market rumors, and does not comment on unusual trading activity unless asked to do so by the stock exchange. Not commenting on market rumors means that when we get the question "are you aware of anything that could be affecting the stock" we have to say "no comment.” Human nature being what it is, if there's nothing going on our inclination is to say "there's nothing going on" because we want to be as honest and forthright as possible. But "there's nothing going on" is a very different statement than "no comment". We wouldn't be comfortable saying "there's nothing going on" if we're actually working on a press release to announce something, and the difference in our response would be very telling. Imagine if someone called or wrote every single week and asked if there's anything going on that could be affecting the stock price, and one week we say "there's nothing going on" and the next week we say "no comment." That's a pretty clear answer to the question. So, difficult as it is, our policy must be to respond with "no comment" when people ask if there's anything going on behind the scenes that's influencing the stock price.

Posted by: Brad Mitchell Answered by: Rhylin Bailie
Posted date: 7/27/2012 2:04:49 PM

I am questioning the future survival of Southern Arc Minerals and would like to know the level of confidence over there. Given the various delays over the years, it seems obvious that once SA's cash runs out this company will be in trouble.

Unlike many of our peers, Southern Arc is in the fortunate position of having $26 million in cash (at Q3-2012) and no debt. We have taken steps to significantly reduce expenditures and conserve our treasury to ensure we remain well funded to execute our exploration strategy. Our approach has been to proceed cautiously until we have the proper approvals in hand and believe this is the proper course of action to protect our assets and maximize shareholder value.We recognize that this waiting period is frustrating for shareholders and appreciate their patience. We are working hard to advance the Pinjam Pakai (borrow-to-use) Forestry application at West Lombok, our exploration team continues with surface mapping and sampling at West Lombok and has initiated a drill campaign at Sabalong, we continue to review other opportunities and properties that could add value for shareholders, and we continue to build relationships with regulators and our community partners. We are working hard to advance the properties and prepare them for exploration, and believe we are in a stronger position than many of our peers to weather these challenging markets.

Posted by: ray desmarais Answered by: Rhylin Bailie
Posted date: 7/27/2012 9:17:28 AM

Rhylin, recent events surrounding Intrepid Mining's interests in Indonesia mining raise more questions about exploring in this country. It seems a minor partner (indonesian) is allowed to close operations and effectively takeover the interests in indonesia. Is SA in any way vulnerable to a similar action that has affected Intrepid?

We are following the developments regarding Intrepid with keen interest. From our perspective, this appears to be a commercial dispute regarding title to a property and the terms of a joint venture agreement.This is an unfortunate situation but it can and does happen throughout the world and is not specific to Indonesia. Based upon Intrepid's news releases regarding this situation, it appears that Intrepid was operating under a management agreement with their Indonesian partners with the understanding that the partners would ultimately transfer shares to Intrepid upon reaching agreed-upon benchmarks. It seems that Intrepid has met its contractual obligations pursuant to its joint venture agreement regarding the Tujuh Bukit property, yet Intrepid's local partner PT IMN has suspended operations on the project.We do not know what PT IMN's position is since it is not a public company and has no obligation to disclose information regarding the property.

In Southern Arc's case, we hold the interest in our properties through Indonesian subsidiaries, and the subsidiaries hold the mining licenses. Southern Arc holds majority ownership in all of the subsidiaries that hold the IUPs for our properties. Southern Arc has 100% ownership of its Sabalong and East Elang properties (Vale can earn 75% of East Elang by funding exploration through to bankable feasibility study) and 90% ownership of its West Lombok and Taliwang properties. The other 10% at those properties is held by the local government under a Cooperation Agreement, not by an Indonesian individual or corporation.

Posted by: don grant Answered by: Rhylin Bailie
Posted date: 7/25/2012 11:30:52 AM

Do we need forestry permits for the sabalong project?

On the Sabalong property our exploration targets are all in areas with no forestry designation, so we do not need a forestry permit to explore.

Posted by: Paul MacNEil Answered by: Rhylin Bailie
Posted date: 6/7/2012 12:59:50 PM

Your press release said "To conserve its treasury Southern Arc has reduced its in-country technical team. While some employees were laid off, a number of technical personnel were seconded to other exploration groups in the area to ensure Southern Arc has the technical capacity to resume exploration activities upon issuance of the Pinjam Pakai permit." Has Southern Arc seconded any of their six drilling rigs to other exploration groups?

The rigs have also been seconded, but Southern Arc has ensured its ability to regain both the rigs and personnel required to resume exploration at West Lombok as appropriate, upon receipt of the Pinjam Pakai permit.

Posted by: don grant Answered by: Rhylin Bailie
Posted date: 5/29/2012 5:51:09 PM

When can we expect drills to start turning?

As discussed in Southern Arc's third quarter MDA, Southern Arc has completed its current drill program at West Lombok and does not plan to resume drilling until the Pinjam Pakai permit is received. Permitting is progressing as expected, and we will continue to update the market of any material events that occur at the property.

In the meantime, we are focused on maintaining strong relationships with our community partners and local governments and are continuing to evaluate new opportunities that fit our exploration and business model and could bring value to Southern Arc's shareholders.

Posted by: James Answered by: Rhylin Bailie
Posted date: 5/26/2012 7:12:18 PM

Now that the paper work has been completed for Taliwang, how does SA intend to proceed?

In May Southern Arc announced the completion of a Cooperation Agreement with the West Sumbawa Regency, ensuring collaboration and support as the Taliwang project advances. Under the terms of the agreement, Southern Arc has granted the West Sumbawa Regency a 10% free-carry equity interest in the project. Also on May 17, Southern Arc announced that it has simplified the ownership structure and increased its interest in the Taliwang project from 85% to 90% by acquiring additional shares in PT Indotan Sumbawa Barat, the subsidiary that holds the IUP to explore the Taliwang project.

We believe the Taliwang project is highly prospective, but at this point have not finalized our exploration plans. We are evaluating a number of options and will keep the market updated of any material events or decisions.

 

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 5/24/2012 11:02:57 PM

Can you provide a status update about the West Lombok Forestry permit application and inform shareholders if processing is proceeding on schedule, consistent with your expectations?

Yes, the West Lombok forestry application process is proceeding as expected. We'll provide an update to the market when any material event occurs.

Posted by: ray desmarais Answered by: Rhylin Bailie
Posted date: 5/18/2012 3:12:22 PM

The recent NR announcing increased ownership of properties by SA sounds like good news. My question is: does the cooperation agreement with the Sumbawa regency include any interest by other firms in the property through a JV? Also I would like clarification of the current status of permits required to proceed with the Taliwang property.

Yes, we were pleased to be able to increase our interest in both the West Lombok and Taliwang properties by acquiring the 5% interest of our Indonesian partner. As a result, Southern Arc now owns 90% of both properties, with the remaining 10% held by the local governments.

Even more exciting is the news that we have finalized a Cooperation Agreement with the West Sumbawa Regency Government, ensuring collaboration and support for Taliwang as the project advances. We now have Cooperation Agreements in place with the local regencies for both West Lombok and Taliwang. Having the local regencies as equity partners creates a synergistic and mutually beneficial relationship, ensuring government support and long-term benefits for local communities as the projects advance. With regard to your question about a JV interest, the property ownerships have been simplified so that Southern Arc owns 90% and the local regency owns 10%. There are no other ownership interests in the properties.

With regard to permitting for Taliwang, the IUP was issued in July 2010. There was a previous forestry permit granted for the property that is in the process of being extended. But in reality, the forestry permit is not an important factor at Taliwang because the areas of interest for exploration are classified as "no forest designation" which means we do not need a forestry permit to explore there. At Taliwang, 3.7% of the property is designated Conservation Forest, 10.9% is Protected Forest, 29.7% is Production Forest and 55.7% has no forest designation. Our primary focus area is within the 55.7% with no forest designation.

Posted by: daryl Answered by: Rhylin Bailie
Posted date: 3/23/2012 10:49:36 AM

The recent news release that the government wants 51 per cent Indonesian ownership phased in after 10 years of production has me worried. Can can you clear this up for me?

In early March the Indonesian government announced a change to regulations that would require foreign-invested mining concession (IUP) companies to ensure that Indonesian participants own at least 20% of the shares in the IUP company by the 5th anniversary of the start of production, and then the foreign shareholders must continue to divest a certain % each year until reaching 51% Indonesian ownership by the 10th anniversary of the start of production.

At this point Southern Arc is not overly concerned about this regulation for a number of reasons. First, it's only just been announced and history shows that the actual implementation process can be vastly different from the original regulation announcement. So we need to wait and see how it all plays out. Second, this ownership requirement has been a reality in Indonesia for a very long time and many projects have operated very profitably under these regulations. In 2011 Newmont divested the final 7% of its Batu Hijau project to meet its local ownership requirements, and received nearly $250 million in compensation. The Indonesian ownership requirement was changed to 20% at year 5 of production when the new mining laws were enacted in 2009, but for whatever reason the government has chosen to go back to the 51% after 10 years of production rule.

Third, all of our projects are still at the exploration stage, so the "10th anniversary date of production" trigger is not something that will affect Southern Arc for quite some time. Fourth, Southern Arc already has 15% Indonesian ownership at both Lombok and Taliwang. Fifth, all of our research and that of peer companies indicates that floating the Indonesian subsidiary on the Indonesian stock exchange is considered adequate for local ownership, so that gives us another option to fulfill the ownership requirement as opposed to actually selling an interest in the property.

Finally, it is very important to note that should the foreign company choose to outright sell an interest in the project to an Indonesian partner (rather than going the stock exchange route), the company receives fair market value for each divestment. It is not a gift or government expropriation. The company is fairly compensated, as demonstrated by Newmont divesting the final 7% of its Batu Hijau project for close to $250 million.

Posted by: ray desmarais Answered by: Rhylin Bailie
Posted date: 3/8/2012 11:04:48 PM

During the march 4 meeting amidst the discussion of the procedures around the forestry permit, John spoke of the Pertek. Will SA announce the issuance of the Pertek on its website when it happens? It might signal the beginning of the end of this forestry pain.

We would not normally discuss the regulatory process in such detail, but John walked through the details of the permitting process because we've had so many questions about the process. We will not be providing regular updates on the website, because the step-by-step process in itself is not material. If any material change occurs, we will announce it. The good news, as discussed at the March 4 meeting, is that Southern Arc has received its "Clean & Clear" designation, which was the main source of the bottleneck. Issuance of the Clean & Clear has cleared the path for issuance of the Pinjam/Pakai borrow/use permit, which is issued by the Ministry of Forestry.

We cannot provide a clear timeline for when we'll get the Pinjam/Pakai. It's in the government's hands now and in my experience, the permitting process in ANY country does not follow a prescribed timeline. But we are very confident that we have done everything that we need to do and that the final stage is just a procedural rubber stamping of documents. We have completed all of the necessary documentation, provided all of the necessary third-party reviews and recommendations, and we have a very good reputation in-country as a company that is operating responsibly from an environmental perspective and also bringing benefits to local communities through employment, education, drilling water wells, bringing health benefits, etc.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 3/8/2012 9:48:03 PM

As you mentioned SA has 31 million in cash. Without any source of revenue coming in, how long do you think before we use up the fund?

Southern Arc is in a very comfortable financial position. Very few junior mining companies have $31 million in cash, and no debt. Our current exploration burn rate is approximately $500,000 per month. That will obviously increase once we're able to resume full-scale exploration, but even when we had 8 rigs running our burn rate was only approximately $1.2 million per month. So we're in good shape.

Posted by: ray desmarais Answered by: Rhylin Bailie
Posted date: 3/7/2012 4:52:20 PM

Indonesia on feb 21 signed into law new rules for mining companies to give up 51% of mining profits after 10 years. Why was this not discussed in the recent march 4 meeting? Did this prompt Newcrest to walk away from the Taliwang JV?

On February 21, the Indonesian government announced amendments to Government Regulation 23/2010 regarding Indonesian participation in foreign-invested mining concession (IUP) companies. The media summaries of the new regulations have been quite varied, so I will attempt to clarify the new regulations.

Historically, foreign-owned mining concessions had to divest a substantial share of the project to Indonesian participants. (I believe that number was also 51%, but I'd have to double check to be certain.) When the new mining regulations were put in place in 2009, replacing the CoWs with IUPs, etc. the Indonesian ownership obligation was changed to 20% by year five of production. Now the government has amended that regulation to require that foreign-invested IUP companies must ensure that Indonesian participants own at least 20% of the shares in the IUP company by the 5th anniversary of the start of production, and then the foreign shareholders must continue to divest a certain % each year until reaching 51% Indonesian ownership by the 10th anniversary of the start of production.

It is important to note that the IUP company receives fair market value for each divestment. It is not a gift or government expropriation. The company is fairly compensated.

Southern Arc already has 15% Indonesian ownership at both Lombok and Taliwang. And all of our projects are still at the exploration stage, so the "10th anniversary date of production" trigger is not something that will affect Southern Arc for quite some time.

We did not discuss these regulation amendments at the shareholder meeting on March 4 because we had not yet received the regulation translations and an analysis of the changes from our Indonesian advisors. Southern Arc's policy is to refrain from public comment until we know exactly what we're dealing with. If the question had been asked, however, I'm sure Mike or John would have been more than willing to address it.

As far as we were aware, Newcrest's decision had nothing to do with the change in Indonesian mining regulations.

Posted by: Jon gilliott Answered by: Rhylin Bailie
Posted date: 3/2/2012 10:13:29 PM

What is the expected impact now that Newcrest are no longer proceeding with the Taliwang Property agreement ?

The Taliwang property is prospective for copper-gold porphyries. There is certainly additional potential for gold mineralization, but the porphyries are the focus. Since porphyry mineralization tends to be deeper than near-surface epithermal mineralization, and therefore more expensive to drill, Southern Arc's strategy is to joint venture properties with a porphyry focus, which is why we had entered into the JV process with Newcrest.

Management is reviewing our options at Taliwang and will decide whether we want to find a new JV partner, explore the property on our own, or leave Taliwang alone for a while as we focus on other things. Southern Arc is in the fortunate position of being well funded, with approximately $31 million in cash (at Q2-2012), so we certainly have more options available to us than some of our peers who have less capital.

Posted by: don grant Answered by: Rhylin Bailie
Posted date: 2/13/2012 5:10:26 PM

From the February 9 press release, could you explain what is meant by "based on the results of the study, Southern Arc has initiated a program to drill test the priority porphyry copper-gold targets"?

In Q4-2011, Southern Arc completed an airborne magnetic and radiometric survey of the West Lombok property with the objective of defining both near-surface and buried copper-gold porphyry targets. The results of that study were reviewed and interpreted along with the results of the geological and geochemical data that we've collected over the years from our mapping program. Dr. Steve Garwin, Southern Arc's Senior Technical Advisor, interpreted and modeled all of this data and completed a porphyry prospectivity study (announced in February 9 press release). The study has identified 17 porphyry targets that warrant further exploration. As a result, we have started drilling porphyry targets in the Selodong prospect, to the southeast of the property. We had done some drilling at Selodong in 2007/2008, with some very good results. I can't link them all here, but if you look back at the 2007/2008 press releases you'll can read about those results, or you can look at the highlights in the Appendix of our corporate presentation. Once we get our Pinjum/Pakai forestry permit, we will continue exploring porphyry targets in other areas of the property. The map at the end of the February 9 press release shows the locations of the 17 porphyry targets.

Posted by: stephen barry Answered by: Rhylin Bailie
Posted date: 2/9/2012 9:43:53 PM

Where are the Sabalong Vale J/V drill results promised by Jan 31, 2012?

I'm not sure that we ever said January 31 for Sabalong results. The December 29 exploration update said "early Q1." In any case, we will release the results of Sabalong Phase 1 exploration when Phase 1 is deemed complete. At the moment Phase 1 exploration is ongoing, even though Vale has exceeded their minimum spend commitment, because there are additional things that Vale and Southern Arc want to look at. We will release the Sabalong results as soon as Phase 1 exploration is complete.

Posted by: Anonymous Answered by: Rhylin Bailie
Posted date: 2/8/2012 11:16:59 AM

Has the company decided to drill another hole in the Selodong porphyry? How long will this hole be? Is the company trying to extend the boundaries of the porphyry?

Yes, we are currently drilling copper-gold porphyry targets at Selodong. Since these holes are for porphyry targets, they'll be deeper than our epithermal target holes, probably in the 400-700m range, depending on the results that we see as the hole progresses. At the moment we are drilling targets in the southeast of the property, and also have at least one target to the northeast of the property, as identified in the porphyry prospectivity study (see Feb 9 news release). I'm not sure how many holes are planned altogether. The exlporation team will provide more information about our porphyry exploration program at the March investor session.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 2/5/2012 11:06:52 AM

With the current drilling completed at Pelangan in first quarter this year, does Southern Arc has enough drill data to complete the NI 43-101 for Pelangan only?

As a result of the decision to refocus our drilling program to targets outside of areas designated as Production Forest, Southern Arc is currently reviewing its options regarding the NI 43-101 estimates. We will provide more information about our NI 43-101 plans during the Investor Session on March 4.

Posted by: Michael Keaton Answered by: Rhylin Bailie
Posted date: 2/1/2012 2:40:39 PM

Once we receive the required forestry permits, are there any plans to bring additional drills to our properties in the short-term? Realizing that results will dictate rig requirements moving forward, was just curious if additional drills when we resume full scale drilling again would help make up lost time on the initial 43-101?

We currently have a total of ten rigs on site, two of which are drillign targets on NW Pelangan. The rest are at Selodong camp and ready to be deployed as soon as we get the forestry permit. The drilling crew is also eager to get back to work. Whether we want to get even more rigs to site is something that will be considered once we've resumed full-scale exploration.

Posted by: John te Raa Answered by: Rhylin Bailie
Posted date: 1/27/2012 11:50:20 AM

Rhylin, I posted a question in December related to the work of SRK Consulting that apparently you didn''t get. Now that the MoF issue has come up it has changed the timelines I understand that. However I would still like feedback from you on the following. Did SRK give SA an indication as to the amount of infill drilling required at the various Pelangan targets to provide a NI 43-101 compliant tonnage? How many weeks(month?) does SRK need to provide a NI 43-101 compliant report from the cut-of

The drill spacing required to produce a resource estimate depends on the type of deposit, so there is no single answer to that question. The more drilling we do, the more clarity we get on the mineralized zones and controlling geological structures, and that information informs the next steps in our drill program. 

Infill drilling is generally used to upgrade an existing resource estimate to a higher category (inferred to indicated, indicated to measured). The more closely spaced the holes, the greater the certainty of the continuity of mineralization between the holes.

We are sending all of our drilling data to SRK on a regular basis so that they can review it and start building resource models. We will work closely with their consultants as exploration proceeds to ensure that our drilling program is proceeding as required, and that a resource estimate can be completed quickly once we all agree that we have enough information to complete the estimate and technical report.

Posted by: don grant Answered by: Rhylin Bailie
Posted date: 1/23/2012 1:16:33 PM

Could you please give us a summation of current drilling activity on the various properties?
We currently have two rigs drilling the Jati and Tanjung targets on Pelangan. The other rigs are safely stored and ready to jump into action as soon as we get the green light. We also have one rig drilling potential porphyry targets on Sabalong, our JV with Vale.
Posted by: Ken Bowen Answered by: Rhylin Bailie
Posted date: 1/23/2012 12:18:23 PM

1. Are the Forestry Permits issued for each IUP general area or are they broken up into sub sections? 2. What is the reason for the dismal lack of insider buying at these ridicously low prices? If Mike Andrews found fit to buy blocks in the 90''s why is he nor any other management or directors buying it in the 40''s. This is fast becoming the elephant in the living room.

Each of the properties is divided into areas with diferent types of forestry designation, as outlined on property maps in the Appendix of our corporate presentation. While the IUP (mining permit) has a number of forestry classifications within it, a single forestry permit is issued for the entire area but with different guidelines for each area based on the relevant forestry designation. In the case of West Lombok, we have only applied for a permit to allow for exploration activities in the areas designated Production Forest. We do not consider the areas within Protected Forest to be prospective geologically, so did not apply for a permit for those areas. And of course we do not need a permit for areas with no forestry designation.

With regard to insider buying, I cannot comment on how and when members of our team choose to buy stock.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 1/20/2012 2:39:37 PM

When do you expect a resolution to the MOF permit for West Lombok? What has SA done since the MOF announcement to secure the MOF permit?

Our Indonesian team is working hard to secure the MOF permit. The team is working closely with Indonesian regulators and authorities and our in-country contacts to help advance the permit application through the appropriate channels. Unfortunately, there is no clear timeline that we can provide. Thankfully, there are other targets that we can focus on in the interim, and we are still able to advance both Lombok and our other properties as we work to secure the MOF permit. We will issue a press release when there is any material change to report.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 1/20/2012 2:38:02 PM

Is management aware of any material and adverse change in activity affecting Southern Arc that would explain the noticeable surge in shares sold on the open market over the past several days. Who is behind the selling and what is the reason for the high volume and drop in share price?

This is a really tough question to answer, and one that is frequently asked. Southern Arc is closely followed through investor chat groups and if there is any change in trading volume or any movement – up or down – with the share price, the rumors start to fly. It's for this precise reason that we have instituted a disclosure policy that the Company does not comment on market rumors, and does not comment on unusual trading activity unless asked to do so by the stock exchange. Not commenting on market rumors means that when we get the question "are you aware of anything that could be affecting the stock” we have to say "no comment.” Human nature being what it is, if there's nothing going on our inclination is to say "there's nothing going on.” But this is a very different statement than "no comment”. We wouldn't be comfortable saying "there's nothing going on” if we're actually working on a press release to announce something. So the difference in our response would be very telling. Imagine if someone called or wrote every single week and asked if there's anything going on that could be affecting the stock price, and one week we say "there's nothing going on” and the next week we say "no comment”. That's a pretty clear answer to the question. So difficult as it is, because we really want to be able to answer people's questions and be as forthcoming as possible, our policy must be "no comment” when people ask if there's anything going on behind the scenes.

We also frequently get questions about who is selling our shares and why, and is someone manipulating the stock. Another question that's impossible to answer. We certainly keep an eye on the trading volume, and we're interested in which firms are buying and trading the stock. But it's difficult to know with certainty who's behind the trades, and people have a right to trade our stock to meet their investment objectives. That's what it means to be a publicly traded stock. We are here to answer questions about the company and to provide insight into our corporate objectives, progress and business model, but we cannot influence people's decision to buy, hold or sell the stock. In this market, where so many stocks are down significantly from where they were a year ago and trading volumes are low, some investors likely jump on any opportunity to sell into liquidity. Others are looking for a bargain and are picking up on weakness. Looking at Southern Arc's trading patterns, there's a fairly strong correlation between corporate news and trading volume. There are certainly a few anomalous days here and there, but generally the trading volume increases on the day news comes out and for a couple of days afterwards. We released drilling results on January 18 – and drilling results are important news for an exploration-stage company – and the trading volume has increased accordingly. The fact that the share price has decreased since the news came out is certainly disappointing, but our stock price – like all publicly traded companies – is influenced by factors well beyond corporate news.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 11/30/2011 7:54:41 PM

Southern Arc has lost 50% of its share value this year while so many others are way up. Why is this?

Year-to-date Southern Arc is down about 50%, the TSX-Venture Index is down 30% and the Gold Junior Miners Index is down 25%. So we've underperformed our peers, but everybody is down for the year. The markets have been rough for everybody this year as a result of the global macroeconomic picture, concerns over European debt, etc. The extra pressure on Southern Arc's stock is presumably the result of the security issues that we had in August. I am confident that churning out drill results every few weeks will prove that we've resolved those issues and remove the overhang from security concerns.

November 30 was a particularly rough day for Southern Arc compared to the market. I think people were hoping that the first drill results from Mencanggah would be earth-shattering and when they weren't, there was general disappointment. Once they get over the initial disappointment, however, most people understand that one press release does not define a company. We have had excellent drill results before, and excellent surface samples in this area, and these are only the first few holes out of what will ultimately be hundreds. So while today's results were not as good as people had hoped, there are many more results to come.

More importantly, we have now been drilling for six weeks with no security issues at all, and our team is confident that we'll soon be able to spread out again and drill more than one target at a time, which will allow us to focus our efforts in areas where we see really good results rather than having to drill out one area before we move on. Remember as well that these holes are testing for the strike and depth of the epithermal gold mineralization. We haven't even started drilling the porphyry targets on Mencanggah - that will be next year.

There are very few junior mining companies out there with 10 rigs drilling 6000 meters a month, and even fewer that are fully funded. We're in good shape and advancing smoothly now through a very aggressive exploration program so that we can achieve the important corporate milestone of completing our first resource estimates in the first half of 2012.

Posted by: John te Raa Answered by: Rhylin Bailie
Posted date: 11/30/2011 12:56:58 PM

Rhylin, Now that drill results are starting to come in, will Southern Arc make Corebox available on the website? That will make it a lot easier to visualize the results.
I'm looking at Corebox as part of the website redesign, and it's certainly something I want to incorporate longer-term. But my guess - and this is just a guess - is that we don't have enough holes into the deposit yet to make Corebox useful. You need to have completed quite a bit of drilling before you can start to accurately model the deposit underground. But I'm definitely looking into it.
Posted by: Steve Answered by: Rhylin Bailie
Posted date: 11/24/2011 10:39:11 PM

I have reviewed the “drilling location maps” on the SA website which use the term “open” at the bottom of the page on Pelangan drill location/results. What is meant by the term “open”?

It means open at depth, which means that we have yet to find the bottom of the mineralization in the areas that we're drilling. If you drill a hole down to 200 metres and you find 50 metres of mineralization between 100-150 meters and nothing below 150 meters, you may conclude that mineralization ends at 150 m or you may decide to drill deeper still and see what you find. The course of action would depend on your geological model for the deposit. At Lombok we have found that we often drill through mineralization, then through a dry patch, and then through mineralization again. So we do not feel that we have found the bottom of the mineralization.

Some ore bodies are so extensive that they're mined as an open-pit first, and then underground as phase 2 to get the deeper mineralization.

You'll also hear the term "open along strike." That means that the outer limits of mineralization have yet to be found on the horizontal plane (open at depth would be the vertical plane). "Step-out" drilling goes out along strike, often at intervals of say 100m between holes, to see if the drill holes encounter mineralization. You keep drilling farther and farther out until you drill one hole that does not encounter any mineralization. You'd probably drill another hole beyond that, and if you still didn't find anything, you may assume that you'd reach the outer limits of the mineralization and that deposit would no longer be "open along strike" in that direction.

Of course, finding one or two holes with no mineralization doesn't mean you give up! Every hole helps to add information to the database that is used to build a geological model of the deposit and focus the exploration effort. Maybe you just need to move a few meters in one direction, or maybe there's another ore body sitting below the one you were looking for. Finding a significant ore body certainly requires extensive geological experience to recognize the potential, interpret the models, etc., but there's always a little bit of luck at play as well...

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 11/22/2011 10:47:22 PM

1. We are now in late November. Can we expect drill reults from Mencanggah this week ? 2. Will Sabalong drilling results be released per hole as they are tested or at the end of the drilling project ? 3. The agreement with Newcrest has not been finalized because we are still negotiating the agreement with the local Indonesian government for their 10% interest in the Taliwang property. Is this in the advanced stages of negiotation or could it drag on for months/years ?

Rigs are churning away on Mencanggah and I expect we'll be able to put the results out soon. I'm trying to get the guys on a schedule so we put the results out every three weeks, or every 10 holes - whatever makes sense - but on a regular schedule. As an exploration-stage company, drilling newsflow is key to our story.

I expect we'll put out Sabalong results in a batch toward the end of January. We've only got one rig over there and they're deep holes, down to 700 meters, so it takes longer to drill each hole but it would look kind of silly to put results out one hole at a time.

 

Posted by: Bill Mathews Answered by: Rhylin Bailie
Posted date: 11/18/2011 2:02:58 AM

HI Rhylin, Are we going to get the drill results for each hole on Sabalong individually or are we going to have to wait until mid January or later to find out how that project is doing? Could you tell us how many holes have been completed to date on Menchanggah and sent to the lab.

I expect Sabalong results will go out as a group toward the end of January. As mentioned in another Q&A, we've only got one rig there and they're deep holes, so it takes longer to drill each hole and get the entire group done, but we'd look silly releasing one hole at a time.

With regard to progress at Mencanggah, I understand that historically the company had provided regular updates on where the drills were located, how many meters had been drilled, when the assays had been sent to the lab, etc. Significant discussion internally and with our legal counsel, however, has concluded that all drilling activity is material to Southern Arc, as an exploration-stage company, and we can therefore only provide updates on drilling progress once the information has been disseminated in a press release.

Indeed, we are implementing a number of new disclosure and corporate governance policies. Southern Arc is evolving into a bigger company and with that comes increased scrutiny regarding disclosure and corporate governance. We want to take the company to the next level, and tighter disclosure guidelines are part of that process.

Posted by: Stuart Answered by: Rhylin Bailie
Posted date: 11/17/2011 1:46:11 PM

Rhylin, can you provide an update as to how many drills are currently active at Mencanggah and Sabalong, as well as the arrival status of additional rigs? Thanks,
Seven rigs turning at Mencanggah, ten by end of November. Only one rig at Sabalong and we'll stick with one for now. We're just drilling an initial campaign of four holes there, so one rig is adequate to get that done by mid-January.
Posted by: shareholder Answered by: Rhylin Bailie
Posted date: 11/10/2011 5:34:57 PM

A few questions: 1)What , if any , is the difference between a Heads of agreement and a joint venture agreement? 2) Is there any progress being made on either Taliwang or East Elang that would indicate that something may happen on either one before the next decade? 3)Is anything happening with Nickel Oil & Gas or is that a dead issue?

Many thanks for your questions. 1. The agreement with Newcrest has not been finalized because we are still negotiating the agreement with the local Indonesian government for their 10% interest in the Taliwang property. So while the terms of the partnership with Newcrest have been agreed to, it's considered a "heads of agreement" until it's finalized and becomes a JV agreement. 2. We've been doing some low-key surface exploration at Taliwang this year but will probably not start drilling until the JV agreement has been finalized. Newcrest is most interested in the Semoan-Raboya target, which has indications of a porphyry beneath a high-sulphidation lithocap. East Elang is one of two projects that is JVd with Vale. We may start to do some surface exploration later this year or early next year, but for now Vale and Southern Arc are focused on the Sabalong property, where we started drilling porphyry targets in October. 3. There is fairly extensive discussion about Nickel Oil & Gas in the year-end documents. In the financial statements refer to section 3 on page 13. In the MDA you'll find Nickel Oil & Gas on pages 10 and 13.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 11/4/2011 10:21:06 AM

In your opinion what would be required for Southern Arc''s stock to be at least $4 by the time of the 43-101 is released? That''s approx. a $420MM market cap.

What is required for Southern Arc's stock to get to $4? Advancing the properties, strong drill results, social stability at the properties, investors that understand our business strategy and the underlying value of the properties. Will that happen between now and next year when the 43-101s are released? I have no idea.

This is one of those questions that it's impossible to answer. Partly because I don't have a crystal ball (if I did I wouldn't be working for a living!). But mostly because it would be completely inappropriate for me to speculate on what our share price will be at any given point in time. Our share price is influenced by many factors that are completely out of our control, including the prevailing gold price and general market sentiment. What we CAN control is how we conduct ourselves as a company, how we communicate the Southern Arc story to the market, and how we execute our business strategy. Our primary purpose with all three of those activities is to build shareholder value.

We are implementing a number of new disclosure and corporate governance policies to underscore both internally with employees and contractors and externally to the market that Southern Arc conducts itself with integrity and upholds the highest standards of corporate governance and professionalism.

I am in the middle of an aggressive marketing strategy that includes one-on-one meetings with potential institutional investors, meetings with analysts and their sales desks, group presentations to brokers and retail investors, and agreements with new contractors to market the company online and with their contacts. All of that is done with the intention of bringing more eyes to the stock, which will hopefully translate into more investors and increased liquidity. 

And it's a fantastic time to be introducing people to Southern Arc for the first time because a) the stock offers a compelling entry point compared to the two 2011 financings at $1.60 and $1.70 and b) there are so many important milestones coming up in the next 6-9 months. As an exploration-stage company, every single drill results press release is a potential catalyst for the stock. And with exploration underway at both West Lombok and Sabalong, we will have consistent drill results newsflow between now and mid-2012. The resource estimates in Q2-2012 should also be a significant catalyst for the stock, providing third-party verification of the potential gold in the ground as well as the exploration upside at West Lombok. There are many investors and analysts that won't even look at companies until they have a resource estimate under their belt. And of course work at the other properties and any other news that demonstrates that Southern Arc is continuing to build both its team and its portfolio of projects should also be positive for the stock.

I believe the next 6-9 months are pivotal for Southern Arc, with consistent drilling newsflow as we advance toward the important milestone of resource definition. Where will our stock be at the end of that time? I have no idea. But I know the entire team is working hard to advance the company and build shareholder value.

Posted by: John te Raa Answered by: Rhylin Bailie
Posted date: 11/1/2011 1:37:48 PM

Rhylin, you said........ one more coming to site as soon as it finishes up a water bore at a local village... Is this water bore part of Southern Arc''s socialisation program?
Yes, that's correct. And I believe that the rig has now returned to Mencanggah. Mike expects we'll be drillign 6,000 meters a month by the end of November. It will be great to have consistent drilling news flow! Drill results are the life blood of an exploration-stage company, as you know.
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 10/26/2011 12:39:22 AM

Has there been anymore unrest at any of the drill sites since drilling resumed. Thank you.

Apologies for the delay in posting a response. Mike and I have been doing the rounds in Vancouver to meet with analysts and investors, so I've been largely out of the office the last two days.

With regard to current activities, drilling is going very well at Mencanggah and I hope to have results from the first batch of core by mid-November. We've got five rigs actively drilling, one more coming to site as soon as it finishes up a water bore at a local village, and Mike expects we'll have nine rigs actively drilling by the end of November. We started drilling at Sabalong last week and are getting settled at that property, since it's the first time we've drilled there. We have one rig on site, which will be adequate to complete this first round of drilling. It will certainly be exciting to have drill results flowing from not one but two properties over the coming months!

With respect to your question about unrest, there are always going to be local political and social challenges working in a developing country like Indonesia. That's why it's so important that the Southern Arc team has decades of experience living and working in Indonesia. We've got senior execs who speak the language and understand the cultural and political nuances of working in Indonesia, and they are supported by Southern Arc's directors and advisors who again have the experience and the relationships that we need to be successful. We do not comment on our day-to-day operations unless something occurs, either positive or negative, that is material to our shareholders. If a situation arises that is clearly material, we prepare and disseminate a news release that describes the events as soon as we have the information necessary to do so. Indeed, as part of the new disclosure policy that we are implementing (we are taking a number of steps to strengthen our disclosure, hence the new fact sheet and PPT and a website redesign that's underway), we have decided that we will no longer comment at all on the various rumors and speculation that surface regularly on the bullboards and in other venues. Otherwise just responding to rumors could be a full-time job!

Posted by: Pat Dufour Answered by: Rhylin Bailie
Posted date: 10/22/2011 2:05:39 PM

Hi Rhylin, As for the new website in development, I recommend that it would be good to have a section on community involvement that would have pictures and details of how the company is giving back and earning the respect of the locals. In a country where there has been isolated protests and issues it would definately reassure investors that the company does in fact have the full support of the community especially with what has happened in the last few months. The longs know the company ha
Community engagement, photos, etc. will definitely be part of the new design. You're right that Southern Arc is involved with a number of very positive community projects and charitable initiatives. While that is just the right way to do business and an obligation, in my opinion, of every public company, it certainly also helps to build community support. Thanks for the feedback!
Posted by: Bill Mathews Answered by: Rhylin Bailie
Posted date: 10/20/2011 2:23:34 AM

Rhylin, Have you posted a spread sheet for the Menchanggah holes now being drilled? I can't find it on the website. Thanks for you time.
Page 3 and 4 of the Drill Location Maps on the home page refer to Mencanggah drilling. It shows all of the holes they plan to drill as part of the current campaign. I know we're focused at the Waterfall target right now, but I'm not sure which specific holes they're drilling.
Posted by: christian p Answered by: Rhylin Bailie
Posted date: 10/10/2011 4:03:21 AM

I am a long sufferring shareholder and blieve the recent share price drop has a lot to do with uncertainty surrounding drilling activities and lack of published result. The company has said drilling in Lombok will resume in earnest by September end but there has been no information since. Why the radio silence? Any updates?
Hopefully you've seen today's press release announcing that drilling has resumed! But if you want some colour on why drilling was delayed past September, please read through the rest of the Q&A, since I've published a few answers to different versions of this question. Thanks!
Posted by: ERIC ANDERSON Answered by: Rhylin Bailie
Posted date: 10/5/2011 11:50:57 PM

In your reply to Stuart you stated that the MPB are there at the request of the authorities and therefore require written authorization before proceeding with the long-term security plan of moving local miners off the prospect. I assume that this means that the problem of illegal mining on Southern Arc Properties has been allowed to continue over the past weeks ? If this is the case then i would expect a major confrontation to take place when the illegal miners are removed from SA''s properties

I don't think they're expecting problems. They're just making sure that they're prepared. There's a big difference, in my mind. You take bug repellent with you when you go camping, but you hope you don't need to use it. With regard to the illegal mining, we want to be good neighbors. We don't want to be the aggressor. My understanding of the plan is that we'll clear any illegal miners off an area that we're focused on, but not worry about them too much in areas where we're not working. As long as they're not causing us problems, we won't cause them problems. If we find something significant, however, we'll keep them off because clearly we don't want all of our mineralization walking away! The hope is that eventually they'll realize that they can make far more money and be safer working with us than mining on their own, since we're using modern mining techniques and have safety standards, and they'll choose to come and work at the project as an employee or contractor.

Posted by: Stuart Joynson
Posted date: 10/3/2011 12:23:43 PM

Rhylin, you stated: My understanding is that we have verbal authorization to proceed but are waiting for written authorization from the authorities for the MPB to establish a perimeter around our first target site. Even though we have tenure, is waiting for the Provincial Govt to approve the MPB to establish a perimeter now the new process going forward? Also, if SA has been given authorization to drill, how then does SA risk testing patience and violating respect? Who authorized SA and for what activities was SA authorized to undertake?

My understanding of the situation is as follows.

1. After the security issue in August, the authorities (I believe it was the Regency and Provincial authorities working together) called in the Mobilized Police Brigade to provide security in the field and at our camps. After arrests were made, there was a demonstration at the police station when locals tried to demand that the individuals be released. The police held their ground, which sent a very clear message that law and order will prevail on Lombok. But obviously the demonstration at the police station took things to a new level, since demonstrators had now acted out against the police themselves, not just against a foreign investor. While it was hugely positive from a law-and-order perspective that the police held their ground, the intricacy of the situation increased after the police station issue because the various levels of authority need to protect not only Southern Arc's rights, but also that of the local and provincial police. So the number of officials that were involved and watching the situation increased, which means that more people need to be consulted before we proceed. Everybody is working together to make sure that we can proceed without further incident. So that's the consultation issue.

2. With regard to authorization to establish the perimeter, while we're footing the MPB bill (which is incredibly cost effective - one of the perks of working in Indonesia), the MPB are there are the request of the authorities and therefore require written authorization before proceeding with the long-term security plan of moving local miners off the prospect and establishing a perimeter around the site on which we want to drill. I believe we have now received that authorization, and we will issue a press release as soon as activities are underway.


Posted by: Pat
Posted date: 9/30/2011 12:44:58 PM

Hi Rhylin, I would like to thank you for setting up the webcast and what you have done so far. I really like this Q&A concept and really hope that it remains permanent. I feel that this is a valuable tool for shareholders to freely ask questions and also see the answers to what others have asked. Most importantly, it may prevent you from repetitively answering the same questions thus making better use of your time to execute your detailed IR strategy. Thanks

Thanks for the positive feedback! I also like this online format. Kind of like our own little Southern Arc bullboard. I think I will carry on past September 30. As part of my website redesign, I'm reviewing a number of options that will allow us to have more online interaction with shareholders. And did you know that we also have a Twitter and Facebook page? We don't have a huge following yet, but it's growing. Some people think that social media isn't appropriate for IR, but I think it's incredibly to have that public interaction, to demonstrate that we're willing to answer any question in the public domain, just as we would if we were on the podium at a live presentation.


Posted by: Pat Answered by: Rhylin Bailie
Posted date: 9/30/2011 12:29:09 PM

We all know that the porphyry is what holds the most potential and could create tremendous shareholder value if/when found. We know the geology is textbook and the probability of finding one is good. Why will it only be drilled in the new year and why doesn''t it have a higher priority?

Oh my goodness, I just wrote the longest answer to this question but my internet connection failed and it was all lost! Let's see if I can be as eloquent the second time round. It was a very long answer, so bear with me...

Certainly a big porphyry deposit is the ultimate prize that we're looking for. When discussing West Lombok with people who are new to Southern Arc, I describe the epithermal Au-Ag mineralization as "literally the tip of the iceberg." Recall that Mike said we have a two-pronged exploration strategy at West Lombok. Aggressively drill the epithermal Au-Ag targets with the objective of completing two NI 43-101 estimates to underpin the value of the company, while continuing to explore for the big porphyry prize. But those exploration strategies are concurrent. One is not being advanced at the exclusion of the other.

We know the epithermal Au-Ag mineralization is there. We've shown that with surface sampling, channel sampling and drill results to date. But without an independent assessment of the ounces in the ground, and the potential to continue to find more ounces, it's very difficult for the market to decide how much this company is worth. Completing the 43-101 estimates will be a major milestone for Southern Arc because the market, investors and analysts will have "official" confirmation of the potential of the property, as well as the exploration upside, and will be able to start building their models and ascribing both near-term and long-term valuation targets.

We also know there's very good potential for a porhyry deposit, as demonstrated through sampling of surface alterations as well as the airborne survey, plus the porphyry mineralization to the south at Selodong. But drilling for a buried porphyry is deeper, takes longer, is more expensive and is more "risky" from a financial perspective, since an underfunded company could blow its treasury searching for an elusive porphyry. That's actually why we joint ventured the Sumbawa properties. Our partners are spending their $ searching for the porphyry targets. If they don't find what they're looking for, we retain 100% of the property at no cost but have the benefit of the exploration information collected on their bill, and we can continue to explore if appropriate. But if they do find something significant, then fantastic, we own 25% of what could be the next Batu Hijau! (Forward-looking statement, obviously, simply to demonstrate what we're hoping to find).

Mike's strategy at West Lombok is to aggressively explore the epithermal Au-Ag mineralization to complete NI 43-101 resource estimates and allow the market to start building "per ounce" valuations for Southern Arc. At the same time we'll continue to advance our exploration for the prize of a significant porphyry deposit.

Posted by: James Giesbrecht
Posted date: 9/30/2011 11:38:54 AM

The company often reminds investors that they are an exploration company and are always on the lookout for additional prospective properties. Given the resources that SA currently requires to further three JV properties and a potential district on Lombok, is SA comfortable that they have sufficient resources available to them should they actually acquire another property? Also, would SA look outside of Indonesia or are they only focused on properties in Indonesia?

At the moment we are focused on properties in Indonesia, but if you know John Proust and the rest of the team, you'll know that they are always looking for a promising acquisition or partnership that can add shareholder value. With regard to resources, our JV partners are funding all exploration expenditures at the three Sumbawa properties through to bankable feasibility. So Southern Arc's only funding obligations are for West Lombok, and with $36M in the bank, we are well funded to carry out our exploration program for quite some time. We've got a very strong in-country team, with I believe 18 geologists and a full slate of support staff and new people literally applying every day (the resumes often come to me through the info box). The geologic potential of Indonesia is well known, and I am very confident that should Southern Arc expand its portfolio of projects and require additional manpower, we would be able to fill those positions with very qualified managers, geologists and support staff. We have also been adding to the team for our existing projects, with the recent additions of Peter Cranfield as Project Manager and Lieutenant Colonel Lalu Darma Setiawan as Security Coordinator.


Posted by: Bill Mathews Answered by: Rhylin Bailie
Posted date: 9/28/2011 2:16:29 PM

A month ago we were told drill rigs would start drilling by mid September. Then at the meeting, we were told, first week of October. It was also indicated there has bee 3 drill rigs at the site for some time now. Why are the 3 rigs not drilling at the present time? Why do we have to wait until we have 5 rigs on site? Thank you for your response to this question.

The issue is not the number of rigs. We've got the rigs, we've got the security team, and we're ready to go. But we are proceeding with respect and with caution, and we want to make sure that all relevant authorities have been consulted and everybody is on the same page before we resume exploration at Mencanggah. The August incident was taken very seriously by Southern Arc, and also by the regional, provincial and even national authorities. So we have been working closely with all levels of in-country authorities to ensure that everybody is comfortable with the local situation and our exploration plans. Remember that the Mobilized Police Brigade were actually called in at the request of the government. My understanding is that we have verbal authorization to proceed but are waiting for written authorization from the authorities for the MPB to establish a perimeter around our first target site. Apparently the authorities have been tied up with the opening of a new International Airport, and I'm sure we all know that it's better for long-term relationships to demonstrate patience and respect, rather than trying to push your agenda through. I do know that Hamish is working very hard to get us up and running as soon as possible.

And in the grand scheme of things, what's important is that we plan and proceed in a manner that ensures our ability to explore at West Lombok without further disruption and with the support of all levels of government and authority. So if a few extra days are required to ensure long-term success, it's important to take that time.

Posted by: Kevin Dunn
Posted date: 9/25/2011 5:35:19 AM

Hi, I have owned stock for 4-5 years and like many shareholders think there might be 4-5 mines eventually and Sa might be a $15-30 stock in 10 years. However i am hoping that within 2 more years enough progress will be made so that SA is a $5-7 stock. Is it possible that a rich enough area can be isolated to achieve a production decision on maybe only 20% of Lombok and drilling can continue as production cap-ex moves forward?

Obviously I can't comment on share price, but your question about whether we could make a production decision on part of the property comes up quite frequently. And this is what happens at most mineral projects. Companies find enough ore to warrant moving forward with production, and then they continue to explore to either extend the mine life or increase throughput. It's not unusual to see reserves double or even triple as the company gets in there and starts mining. And with today's metal prices, companies are putting old mines back into production. They're even re-processing tailings! If you listened to Mike's comments during the webcast, you'll find that he's excited about the potential of the epithermal gold mineralization at West Lombok, but the big prize that our geologists are looking for is a significant porphry copper-gold deposit. So we've certainly got a two-pronged exploration strategy, and I suppose that could ultimately translate into a two-pronged production strategy as well, depending on what we find.


Posted by: John te Raa
Posted date: 9/23/2011 10:17:29 AM

Rhylin, congratulations on putting this webcast together. I just listened to it. Its very good. Not quite the same as being there. Just a comment on the 30,000 meters of drilling covering 35%. This is 35% of the original 21 km or roughly 7km. The company has added over 9 km of targets to the original 21 km and aren''t finished yet as I understand it.

Yes, that's correct. Mike estimated that the 30,000 meters of drilling we expect to complete as part of our Phase 2 exploratoin program will only test approximately 35% of the 21km of mineralized structural breccias that we've identified so far. And that was a rough estimate that he came up with during the webcast. Our exploration focus right now is to test the strike length of mineralization and also the depth of the high-grade shoots, so that we can complete NI 43-101 estimates for both Pelangan and Mencanggah in the first half of 2012. Then we'll start with infill drilling and additional exploration to continue to clarify the potential of this property. We have also added more than 9km of structural breccias through mapping and surveying, but we have not completed the geochemical analyses to determine the extent of mineralization in these new structures. We've got more than enough to keep us going for now. Any additional discoveries are upside!


Posted by: Brad Mitchell Answered by: Rhylin Bailie
Posted date: 9/22/2011 9:35:27 PM

It is often said that 9 out of 10 precious metals explorers ultimately fail, and their share prices go to zero. First of all, do you believe that common wisdom? And secondly, do you believe SA is (relative to other junior explorers) less risky for potential shareholders, equally risky, or more risky. And lastly, do you feel SA can realistically create shareholder value going forward when global economic conditions and extreme market volatiliy appear to be becoming the norm?

I have certainly heard - and seen - that a great number of exploration-stage companies fail, generally from a lack of experience (don't know where to drill) or a lack of financing (can't afford to drill anymore). Fortunately, Southern Arc has a great supply of both! We are well financed, we have an incredibly experienced team, and we are exploring in what is considered one of the most geologically prospective areas in the world. And I believe the exploration work (21km cumulative strike of mineralized structural breccias!) and drill results so far (I can't cherry pick results here or I'd get offside with 43-101, but you can see the Phase 2 drill results at this link) speak for themselves.

With regard to global economics and market volatility, these are not things that we can control. Certainly people who are much smarter than I believe that gold will continue to strengthen, which bodes well for gold companies. And I believe that consistent newsflow with drill results from West Lombok and exploration activities at the other properties should support our stock price in what is clearly a volatile market. We can't control the markets. But we can control how we conduct ourselves as a company, how we advance the properties, and how we communicate the Southern Arc story to the investment community. And we're working hard on all of those fronts with the ultimate objective of building shareholder value and a premier mining company.

Posted by: Eric Anderson Answered by: Rhylin Bailie
Posted date: 9/22/2011 9:09:41 PM

1. What is the back of a envelope estimated inferred resource at Pelangan and Mencanggah (IE between 2,000,000 - 10,000,000 Oz) ? 2. Estimated date when we will be drilling on all three Sumbawa properties ? 3. Is it a real possibility that a major will make a takeover offer following release of the resource estimate and if accepted would the Sumbawa properties be part of the deal (would the new owner be interested in these properties on a JV basis).

Hi Eric. While I appreciate that you have posted these questions, unfortunately there aren't any clear answers at this point in time. Obviously I can't make any "back of the envelope" estimates of the resource estimate for Pelangan and Mencanggah. We think the West Lombok property has huge potential, and our primary objective is to get as much drilling completed as possible in the next nine months so we can complete two NI 43-101 resource estimates by mid-2012. Having resource estimates completed will underpin the value of that property, and then we can continue with exploration to hopefully further expand the resource base and provide additional clarity on what we've got at West Lombok. I often get asked if having 43-101 resource estimates will be the catalyst for a takeover bid, which again is something that I don't speculate about. Joint ventures, mergers and acquisitions are part of the mining business, but we'll cross that bridge if we come to it.

With regard to drilling on Sumbawa, we'll be drilling at Sabalong in Q4-2011, we'll start mapping and surface exploration at East Elang this year as well, and Newcrest has already identified some target areas to drill at Taliwang. But the only firm date I have for Sumbawa drilling is the first three holes planned for Sabalong in Q4.

Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 9/22/2011 3:33:30 PM

Do you have plans to do a 43-101 estimate for Selodong? And Phase 3 drilling at Pelangan and Mencanggah?
Right now we're focused on getting enough drilling done to complete a National Instrument 43-101 compliant resource estimate for both of those prospects. But as Mike mentioned today, this 30,000 meters of drilling will cover maybe 35% of what we've identified so far, and even then the spacing is fairly wide so I expect it will only be an inferred resource. Then we'll want to get in there and do additional strike and depth testing, and also infill drilling to convert inferred resources to the measured and indicated category. We also plan to get back into Selodong for more drilling sometime next year, and I expect ultimately a 43-101 estimate for that prospect as well. This is a big mineralized district, and we have a lot of work to do to advance the property toward the ultimate goal of a construction/production district. But we're well on our way and it will be very exciting to see the drill results rolling out over the next nine months as we work toward those two 43-101 estimates and can finally start quanitifying what we've got in the ground.
Posted by: Shareholder Answered by: Rhylin Bailie
Posted date: 9/22/2011 3:32:15 PM

Can you expand on the depth of political support from all levels, including provincial and the regency?
Indonesia has a long history and culture of mining and the mineral exploration industry provides numerous economic and social benefits to the Indonesian people. Southern Arc employs about 400 local people at its West Lombok property and seeks to hire locally at all projects, and we also have numerous social programs in place to support local communities. All of this translates to very strong support for mineral develpment, and for Southern Arc's projects, from all levels of government. In addition, Southern Arc's in-country team and the individuals on our Board of Directors and Board of Advisors have worked in Indonesia for decades and have an extensive network of Indonesian contacts and relationships, which will certainly be avantageous as the projects advance. Southern Arc was also proactive in offering 10% of the West Lombok project to the local Regency government, which means the government and the local communities have a vested interest in ensuring the project advances toward resource definition and a construction/production decision.
Posted by: Shareholder
Posted date: 9/22/2011 3:31:11 PM

If for some reason drilling at Lombok is further delayed, will you shift your focus to Bising or Tibu Serai?

Hamish and Mike are confident that the drills will be turning soon at Mencanggah, and our primary focus right now is getting enough drilling done at Mencanggah and Pelangan that we can complete two 43-101 estimates to underpin the value of this property. We'll issue a news release as soon as the bits are turning.


Posted by: Shareholder
Posted date: 9/22/2011 3:25:47 PM

What is the new security group costing the company, or is the government paying for it?

I don't know the exact number at the moment, but it will certainly be included in our financial statements. I do know that working in Indonesia is incredibly cost-effective, and local labour and security costs a fraction of what it would in North America.


Posted by: Shareholder
Posted date: 9/22/2011 3:24:31 PM

What is the company's new investor relations strategy? How are you going to spread this story to new investors?

I think the drill results will tell the story on their own. My job is to make sure people are listening. I've spent the last couple of months putting together new investor materials so that when we're meeting these groups for the first time - and for many of them it is literally the first time they've heard about Southern Arc - we've got focused, polished materials that tell a compelling story. Mike Andrews and I had a fantastic trip to Vail, Colorado last week for the Precious Metals Summit and had a very positive response from the groups we met with. The geology speaks for itself, really. My IR strategy is to plan meetings with insitutional investors in each major investment center, and while I'm there I try to also have a broker dinner or luncheon. That way I'm reaching the institutional crowd with focused one-on-one meetings, but I'm also reaching the retail crowd through broker outreach. I'm not a big fan of retail conferences, since they're very costly and there is very little in-depth interaction with investors. My exception to that rule is if the presentation slot is webcast. I like webcasts because they offer broader reach, since people who weren't actually in the room can still watch the presentation and, the most important part in my opinion, see how management reacts during the Q&A. I'm also slowing building a social media presence. I know, I can hear you laughing, and I used to laugh at social media myself a year or so ago. But it's actually got amazing reach, once you build an audience, and again it's all about transparency and accessibility and a willingness to interact with people and answer tough questions in a public forum. Just like we're doing here!


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