Southern Arc sells West Lombok property to Ancora, acquires Ancora shares

By Romel S. Gurky

TSX-listed Southern Arc Minerals Inc said it has completed the sale of the West Lombok Property in Lombok Island, West Nusa Tenggara Province, to IDX-listed PT Ancora Indonesia Resources Tbk in consideration for a US$2 million cash payment and the granting of a 3 percent net smelter return royalty (NSR).

The company said in a statement Tuesday that under the terms of the agreement, PT Ancora has the right to buy back the NSR from Southern Arc at any time by paying an additional $2 million.

Southern Arc said it has used the cash proceeds from the sale to acquire 100 million shares of PT Ancora (5.66 percent of PT Ancora's issued and outstanding) from third parties in a private transaction.

PT Ancora acquired all of the issued and outstanding shares of Southern Arc's Singaporean subsidiary Indotan Lombok Pte Ltd (IL). IL owns 90 percent of PT Indotan Lombok Barat Bangkit, an Indonesian company, which holds the exploration permit (IUP) for the Property which is located on Lombok Island in Indonesia. The Property covers a 13 kilometer long by 7 kilometer wide northwest trending structural corridor of mineralization and alteration hosting three main prospects: the Pelangan epithermal gold prospect, the Mencanggah epithermal/porphyry district, and the Selodong porphyry intrusive complex.

Chairman and CEO, John Proust, stated, "We are pleased to complete the sale of the West Lombok Property. This property divestiture is consistent with Southern Arc's revised business strategy, initiated at the end of 2012 to reduce the company's capital and political risks. Further to this strategy, the 5.66 percent interest in PT Ancora and the 3 percent NSR allow Southern Arc and its shareholders to maintain their exposure to the Property's upside potential."

Editing by Reiner Simanjuntak