Southern Arc provides update for Sabalong project

By Peni Pedriawan

Southern Arc Minerals provided an update on activities at its Sabalong property in a statement issued on July 19 as follows.

Southern Arc and Vale S.A. (?Vale?) completed three diamond drill holes at the Sabalong property (totaling 1,811 meters) to test potential porphyry intrusive targets that had been defined by geophysical surveys. Drilling intersected weakly altered intrusions and volcanics with no significant porphyry copper mineralization. With Phase 1 exploration complete, Vale has elected not to proceed to Phase 2 and has withdrawn from the Sabalong project.

Southern Arc now holds a 100% economic interest in the Sabalong project and is proceeding with a drill program to test epithermal gold vein targets in the Toyang prospect as defined by historical Newmont (1986?92), Rio Tinto Zinc (?RTZ?) (1993?98) and Company (2007?present) exploration work.

On July 16 the company commenced a drill program of up to 2,000 meters to test the upper parts of the Toyang quartz vein system. The Toyang prospect comprises a 2.5+ km northeast trending structural zone with three main mineralized zones including the Gempang Budi, Olat Toyang and Labangkang targets. Mineralization comprises areas of strong argillic and advanced argillic altered volcanics hosting low-sulfidation auriferous quartz veining and breccia zones up to 20m wide. Shallow scout drilling by RTZ in 1997 reported encouraging drill intersections including 8m @ 11.50 g/t Au (SL22), 32m @ 3.50 g/t Au (SL18) and 28m @ 1.49 g/t Au (SL28) (Figure 1). These drill intersections all lie within a 1.0 km long >0.1 g/t gold soil anomaly as defined by RTZ grid soil sampling. While management does not have all of the information required to confirm the QA/QC process for the RTZ drilling, Southern Arc believes the RTZ drill intersections are indicative of the potential in the area. More recent surface channel sampling by Southern Arc has confirmed the levels of mineralization discovered by RTZ, with surface channel sampling results including 4m @ 7.23 g/t Au, 4m @ 6.79 g/t Au and 10m @ 5.91 g/t Au.

Vale remains a committed partner at the East Elang project. Under the terms of the October 2010 Option and Joint Venture Agreement, Vale can earn a 75% interest in the East Elang property by advancing the property to bankable feasibility study, with a minimum Phase 1 expenditure of US$1.2 million within one year from the date on which Southern Arc receives a Minister of Forestry Pinjam Pakai permit for the property. Southern Arc was granted a mining business license (IUP) for East Elang in December 2009. While the property is considered highly prospective due to its location and results from aerial surveys, exploration of the East Elang 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 and Vale have adequate time to evaluate the property once exploration commences.

Editing Reiner Simanjuntak