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Southern Arc Gains 100% Of Sabalong Property After Vale Withdraws, More Drilling Begins

Southern Arc Minerals (CVE:SA) (OTCQX:SOACF) provided Thursday an update on activities at its Sabalong property in Indonesia, where it has now gained a 100 per cent interest following Vale's decision to withdraw from their partnership at the site.

The two companies completed three diamond drill holes at the property to test potential porphry targets that had been defined by geological surveys, which intersected "weakly altered intrusions and volcanics with no significant porphyry copper mineralization", Southern Arc said.

With phase 1 exploration complete, Vale decided not to proceed to phase 2 and has withdrawn from the Sabalong project, the company added.

Southern Arc, with a 100 per cent economic interest, is now proceeding with a drill program to test epithermal gold vein targets in the Toyang prospect as defined by historical exploration work done by Newmont, Rio Tinto Zinc and the company itself.

Earlier this week, the company said it started a drill program of up to 2,000 metres to test the upper parts of the Toyang quartz vein system. The Toyang prospect comprises a 2.5 plus kilometre northeast trending structural zone with three main mineralized zones including the Gempang Budi, Olat Toyang and Labangkang targets.

Shallow scout drilling by Rio Tinto in 1997 reported "encouraging drill intersections", Southern Arc said, including 8 metres at 11.50 grams per tonne (g/t) gold, 32 metres at 3.50 g/t gold and 28 metres at 1.49 g/t gold.

These drill intersections all lie within a 1.0 kilometre long, greater than 0.1 g/t gold soil anomaly as defined by Rio Tinto grid soil sampling, the miner said.

"While management does not have all of the information required to confirm the QA/QC process for the RTZ [Rio Tinto Zinc] 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, it insisted, with surface channel sampling results including 4 metres at 7.23 g/t gold, 4 metres at 6.79 g/t gold and 10 metres at 5.91 g/t gold.

Meanwhile, Vale remains a partner at the East Elang project, in which Vale can earn a 75 per cent interest by advancing the property to bankable feasibility study, with a minium phase 1 expense of US$1.2 million within one year from the date on which Southern Arc gets a permit from the Minister of Forestry.

Southern Arc was granted a mining business license for East Elang in December 2009, but exploration has been deferred at the site pending reclassification of the property's forestry status.

Application has been made to the regency authorities for suspension of the mining license until the reclassification process has been completed, ensuring that both partners have enough time to evaluate the property once exploration begins, they said.

Shares of Southern Arc last traded at 24 cents on the TSX Venture Exchange.

The Canadian mineral exploration company's portfolio includes four exploration projects with epithermal gold and copper -gold porphyry prospects on the Lombok and Sumbawa islands in Indonesia. Its key exploration property is its West Lombok project, with several gold-rich copper porphyry and epithermal gold vein prospects.