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Southern Arc On The Hunt For Resources At West Lombok In Indonesia

Southern Arc (CVE:SA) (OTCQX:SOACF) is a Canadian gold explorer focused on developing four properties in Indonesia that include the West Lombok Project on the island of Lombok, and the Sabalong, Taliwang and East Elang Projects on the island of Sumbawa. These projects contain a mix of epithermal gold and copper-gold porphyry targets that are all located at the southern end of Indonesia's arc of islands from which the company derived its name.

Indonesia is ranked by the Fraser Institute of Canada as the being among the top six countries in the world for geological prospectivity. The island chain forms part of the Pacific ring of fire that hosts 75% of the world's volcanoes and is highly endowed with mineral resources that include the world's largest reserve of gold and copper at Grasberg, which is operated by Freeport McMoRan (NYSE:FCX) and hosts 38.5 million ounces of gold and 35.6 billion pounds of copper.

Newmont Mining (NYSE:NEM) is also mining the massive Batu Hijau porphyry copper and gold resource containing 17.2 million ounces of gold and 14.1 billion pounds of copper that is located immediately to the south of Southern Arc's Taliwang Project; and the Elang resource containing 25 million ounces of gold and 16 billion pounds of copper that is located immediately to the west of Southern Arc's East Elang Project, and nearby Sabalong Project.

The company's flagship West Lombok Project is 85% owned by Southern Arc, 10% by the Indonesian Government and 5% by a local partner, and encompasses a 13 kilometer by 7 kilometer structural corridor that is covered by deforested grassland and hosts both epithermal gold and copper-gold porphyry deposits that were identified by Newmont in an earlier exploration program.

Southern Arc is actively exploring West Lombok after identifying 21 kilometers cumulative strike of mineralized structural breccia or "MSB" that trend from the northwest to southeast of the property, with three main prospects: Pelangan, Mencanggah and Selodong.

The Pelangan Prospect carries outcropping gold and silver quartz vein MSB mineralization with a cumulative strike of 5 kilometers. A phase one drilling program has been completed and included highlights of 10 meters at 13.4 g/t Au, and 17 meters at 5.73 g/t Au. A phase two drilling program for 7,014 meters included the best hole drilled to date on the property with 17.4 meters at 19.4 g/t Au.

Drilling in 2012 will test for mineralization along strike and at depth, and will further test a number of high-grade shoots that have been identified. An additional 4.6 kilometers of epithermal structural breccias have been identified for geochemical testing and potentially further exploration.

The Mencanggah Prospect carries epithermal gold and silver quartz vein MSB with a cumulative strike length of 16 kilometers, with the potential for buried copper-gold porphyries. The company has collected more than 2,500 rock saw samples, including 7 meters at 53.3 g/t Au, 5 meters at 12.2 g/t Au and 66 meters at 1.1 g/t Au.

Southern Arc commenced phase one drilling of Mencanggah at the Waterfall target, completing 6,634 meters over 27 drill holes and intersected a high grade boiling zone in MCG006 at a depth of 122.35 meters with 1.6 meters grading 11 g/t Au and 2.6 g/t Ag. Drilling of eight holes was also completed at the Bising target in an area where channel samples included 7.1 meters at 53.5 g/t Au, and 5.0 meters at 12.2 g/t Au.

SRK Consulting has been retained to complete an NI 43-101 compliant resource estimate for both prospect areas.

The Selodong prospect carries widespread porphyry copper and gold values that were identified within 14 porphyry targets. Seven of these targets were drilled in the phase one program for a total of 17,859 meters that included highlights of 166 meters of 0.52% Cu and 0.85 g/t Au, and 102 meters at 0.50% Cu and 1.05 g/t Au.

The company has slowed its exploration program while awaiting a resolution of permitting issues related to exploration and development work completed within areas designated Production Forest. In the interim, the company is concentrating on drilling in the northwest section of the project area at the Jati and Tanjung targets, which cover a strike of 1,500 meters and are located to the northwest of the Pelangan prospect.

The Sabalong Project is a 25/75% Joint Venture with Vale S.A. (NYSE: Vale), which must fund exploration up to bankable feasibility to secure its majority interest. Ground geophysics surveys have identified two high sulphidation epithermal systems that are currently being drilled. Vale has committed to minimum exploration expenditure in phase one of $1 million, and may commit $2 million in phase two if results warrant a further exploration effort.

Vale is also funding the exploration of the East Elang Project up to bankable feasibility for a similar 25/75% equity split. Aerial photography and lithographical studies suggest that the 25 million ounce resource being developed at Newmont's Elang project may potentially continue into the East Elang property. Southern Arc hopes to commence surface exploration activities in 2012.

The Taliwang Project covers 31,200 hectares, and is located to the north of Batu Hijau and has been Joint Ventured with Newcrest (ASX:NCM), which will host exploration expenditures of up to US$50 million to secure a 63.75% majority interest. A 56-hole drilling program has already confirmed the presence of a 1 kilometer by 1.5 kilometer gold and silver epithermal vein system, and additional exploration has identified near surface porphyry copper and gold values along with sedimentary gold hosted targets across the property.

The management team includes John Proust, who serves as Chairman and Chief Executive Officer and was one of the original founders of the company. Mike Andrews serves as President and Chief Operating Officer, and is a geologist with 30 years exploration experience in Australia and Indonesia, and led the team that discovered the Way Linggo gold and silver mine in Sumatra. Hamish Campbell serves as Executive Vice President and is a geologist with 25 years experience in Indonesia, with Freeport McMoRan and Ashton Mining.

The company has working capital of $34.1 million. Directors, management and insiders control 23% of the outstanding shares.