Arc updates Indonesian exploration activities

The following is an edited excerpt from Arc Exploration Limited on Indonesia projects, taken from June 2011 quarterly report released on Monday.

Trenggalek Project, East Java (ARX ? 95%)
The Company operates a joint venture with P.T. Sumber Mineral Nusantara, which holds the Trenggalek Exploration IUP license covering an area of 30,044 ha (~300 km2) in the Southern Mountains of East Java.

Trenggalek is located about 180 km west of Intrepid?s Tujuh Bukit Project, where an inferred resource of 990 Mt at 0.4% copper and 0.45 g/t gold was recently announced by Intrepid in the Tumpangpitu porphyry copper-gold zone. Both Trenggalek and Tujuh Bukit lie on the same segment of the Sunda-Banda magmatic arc.

This highly prospective terrane is underlain by Early Miocene to Pliocene intermediate-felsic volcanic and volcaniclastic rocks, fossiliferous limestone and high-level intrusions. Targets identified at Trenggalek include gold-silver-rich low- to intermediate-sulphidation epithermal veins, stockwork and breccias, some of which may be related to deeper porphyry copper-gold targets.

An initial 5,000m/45-hole scout diamond drilling programme undertaken last year demonstrated that Trenggalek represents a substantial epithermal vein field hosting multiple targets and produced significant gold intersections in the principal vein targets (Sentul, Buluroto and Kojan), including some locally high-grade gold intercepts including 2m at 17.2 g/t gold within 9.6m at 4.5 g/t gold in TRDD04.

The main exploration activity undertaken at Trenggalek during the quarter was diamond drilling using two man-portable drill rigs.

DRILLING

A total of 1,429 m of diamond drilling was completed in eight holes (TRDD046 ? TRDD053) during the quarter starting in May at the Suruh, Timahan and Kojan prospects.

Suruh
Two holes drilled at Suruh (TRDD046 & TRDD047) tested the eastern side of a geophysical anomaly characterized by coincident zones of high chargeability and resistivity and a magnetic high.

Both holes intersected low-grade gold mineralisation in thinly quartz veined and strongly clay-pyrite altered volcaniclastic rocks, adjacent to a weakly altered, andesite porphyry intrusion. Down-hole intersections included 4 m at 0.55 g/t gold from 65 m in TRDD046 and 16.8 m at 0.18 g/t gold from 77 m in TRDD047. The true-width of these mineralised intersections is uncertain.

These initial drilling results have confirmed the presence of low-grade gold beneath the eastern portion of an extensive, gold-arsenic-antimony anomalous, silicified breccia capping. The strongest part of the high chargeability and resistivity anomaly lies beneath silicified breccias on the western side of the prospect. This is also associated with a magnetic low, which may indicate a large alteration system. This will be drill-tested in the next quarter.

Timahan
Four holes drilled at Timahan (TRDD048, TRDD050, TRD052 and TRDD053) have tested two linear zones of surface gold mineralization hosted in quartz stockworked, silicified limestone (?jasperoid?) on the eastern side of the prospect. Shallow trenching over these two zones produced 28 m at 0.29 g/t gold and 13 m at 0.74 g/t gold in continuous-chip samples taken across the silicified outcrops.

TRDD050 and TRDD052 are located about 250 m apart along the Macan Zone and returned down-hole intercepts of 1.5 m at 0.18 g/t gold from 72.5 m and 10.25 m at 0.21 g/t gold from 13.25 m, respectively.

TRDD050, the northern of these two holes, drilled into weakly altered volcaniclastic rocks beneath a shallow colluvium of silicified limestone boulders. TRDD052 intersected a 10-15 m thick quartz-stockworked, silicified limestone (?jasperoid?) caprock underlain by weakly altered, interbedded limestone and volcaniclastic rocks. The shallow gold-mineralised intersection in this hole is probably flat-lying.

TRDD048 and TRDD053 are located about 500 m apart along the Genteng Zone. TRDD048 returned down-hole intercepts of 5.3 m at 0.15 g/t gold from 55.8 m and 6.5 m at 0.17 g/t gold from 64.3 m. TRDD053 returned a down-hole intercept of 13 m at 0.23 g/t gold from 4.6 m.

TRDD048, the northern of these two holes, drilled into strongly altered volcaniclastic rocks hosting a narrow bed of silicified limestone, beneath a shallow colluvium of silicified limestone boulders. The hole ended in intensely clay-pyrite altered volcaniclastic rocks. TRDD053 intersected a 10-15 m thick quartz-stockworked, silicified limestone (?jasperoid?) caprock underlain by weakly altered volcaniclastic rocks. The shallow gold-mineralised intersection in this hole is probably flat-lying.

These initial holes confirm the presence of low-grade gold mineralization with coincident arsenic and antimony anomalism in silicified limestone (?jasperoid?) on the eastern side of Timahan. The holes tested only a small part of the large 4 km2 silica capping and may indicate a halo of low-grade mineralization adjacent to higher grade feeder structures in the upper levels of an epithermal gold system.

Mapping and trenching are planned to investigate gold-soil anomalies highlighted on the southern and western sides of the prospect in the next quarter

Kojan
Two holes drilled at Kojan (TRDD049 and TRDD051) have tested the very southern end of the Kenong Vein. These holes are located, respectively, about 50 m further down-dip of and along strike from TRDD035, which returned a strong down-hole intersection of 1.9 m at 11.28 g/t gold & 293 g/t silver.

TRDD049 returned down-hole intercepts of 1.1 m at 1.39 g/t gold & 40 g/t silver from 104.2 m and 2.65 m at 0.43 g/t gold & 27 g/t silver from 161.3 m. TRDD051 returned a down-hole intercept of 6.5 m at 0.17 g/t gold and 1 g/t silver from 126.0 m.

These latest drilling results indicate the Kenong Vein has pinched at its southern extremity and potential for an ore shoot in this part of the vein structure has been downgraded.

Nine holes in total have now tested the Kenong Vein over about 250-300 m strike-length and to a vertical depth of up to 100 m. It has an average true-width of between 0.5 and 1.5 m along this vein segment and remains open at depth and to the north.

Kenong is part of a multiple vein system controlled by prominent NNW-trending structural lineaments that extend for at least several kilometres beyond the prospect area. Only a small part of this large vein system has been drill tested.

Areas of high-grade vein float to the north and east of Kojan will be evaluated by test-pitting in the next quarter to guide further drilling at this prospect.

Exploration expenditure at Trenggalek during the quarter totalled A$639,385.

Bima Project ? East Sumbawa (ARX ? 95%)
The Company operates another joint venture with P.T. Sumber Mineral Nusantara, the Bima Exploration IUP license covering an area of 24,980 hectares (~250 km2) in East Sumbawa, West Nusa Tenggara Province.

The Bima Project is located about 230 km east of Newmont?s Batu Hijau porphyry copper-gold deposit and lies on the same segment of the Sunda-Banda magmatic arc. This highly prospective terrane is underlain by Early Miocene to Pliocene intermediate-felsic volcanic and volcaniclastic rocks, fossiliferous limestone and high-level intrusions. Targets identified at Bima are gold and base metal-rich intermediate-sulphidation epithermal veins, disseminated gold in silicified limestone (?jasperoid?), and gold-rich high-sulphidation lithocaps, all of which may be related to deeper porphyry copper-gold targets.

Following civil disturbances in the Bima district resulting from protests by an anti-mining group in February, no exploration field activity was conducted by the Company during the quarter.

Instead, the Company?s focus over the quarter, supported by and in conjunction with Government Authorities, has been to meet with local communities to fully inform them about the Company?s proposed exploration activities so as to address any concerns they may have with a view to securing their continuing support.

This work progressed well during the quarter. Meetings are continuing and when the Company considers the environment is right to recommence field activities at Bima, it will do so with the initial objective being to commence further trenching and undertake scout diamond drilling on the Baku and Soro prospects at the earliest opportunity.

Exploration expenditure at Bima during the quarter totalled A$206,567. (end of edited excerpt)