Southern Arc Up After Typo Corrected

A typo on a press release outlining recent drill results on Southern Arc Minerals’ (SA-V, SOACF-O) West Lombok copper-gold property, in Indonesia, delayed an enthusiastic market reaction to news of a long mineralized intersection.

Southern Arc shares nearly doubled in the days following May 10, when the company issued flawed drill results from its Selodong target, but the stock closed just a penny higher that day.

Instead, the operator of the website www.321gold.com is taking the credit for the stock’s activity on the TSX Venture Exchange.

Bob Moriarty noticed the error and followed up with a column on his website titled, “Southern Arc strikes gold and nobody noticed.”

On May 14, Southern Arc shares jumped 41.5% on trading volume of nearly 4.4 million shares to $1.50. The share price rose to $1.06 from 78 on May 11, when the column and the correction came out.

Moriarty claims 98% of the market response was due to his column, not to the clarifying press release that he advised Southern Arc to issue.

“No one reads press releases anyway,” Moriarty says.

The actual outcome for Southern Arc’s first drill hole within the Selodong Intrusive Complex at West Lombok was a 442.2-metre intersection averaging 0.28% copper and 0.42 gram gold per tonne.

The hole was 476 metres deep and the intersection was between 33.8 metres and 476 metres.

In the first press release, Southern Arc reported that the intersection averaged “0.28% copper and 0.42 gram gold per tonne from 442.0 metres (33.8 to 476 metres).”

The word “from” should have read “for.”

Moriarty, whose website gets between 50,000 and 80,000 hits a day, says the flawed press release is a perfect example of how companies can be punished for making something simple confusing.

“Their stock was down ten per cent on Thursday (May 10) before recovering when a few people read (the release) a little more carefully,” Moriarty says.

Southern Arc also reported a 166.2-metre high-grade sulphide zone averaging 0.52% copper and 0.85 gram gold per tonne, including 105 metres grading 0.6% copper and 1.04 grams gold. The interval started at 33.8 metres depth.

The hole was drilled northeast at -65 with the goal of extending mineralization previously intersected by Newmont Mining (NMC-T, NEM-N), which explored the property in the past.

The company intersected a non-mineralized late-stage dyke for the first 33.8 metres, followed by a high-grade copper-gold mineralization hosted in an early phase of mineralized quartz-diorite.

Another problem with the press release is that it wasn’t clear on which property the hole was drilled. It was described as the first hole on the Selodong Intrusive Complex — information about which can only be found after perusing each of Southern Arc’s project descriptions.

Moriarty says the first press release was confusing even if Southern Arc hadn’t used the wrong word.

“It’s not clear where it was or what it was,” he says. “And it was a company-making hole.”

West Lombok is 18.4 sq. km and located along the southwest peninsula of Lombok Island, Indonesia. Southern Arc acquired the property in late 2005 after Newmont let it go. Newmont did nearly 8,000 metres worth of diamond drilling in the Selodong area during the 1990s. According to Newmont’s historical results, 35 of 52 drill holes intersected intervals of copper-gold mineralized diorite-porphyry and volcanics.

Southern Arc began drilling Selodong in April and used Newmont’s historical results in its drill plan.

The company began its exploration program for West Lombok in May 2006. There are three other prospect areas on the property, which are complex vein systems: the Pelangan, Simba and Bisin prospects.