Indonesian drilling encourages Southern Arc (March 19, 2007)

Vancouver — Scout drilling by Southern Arc Minerals (SA-V, SOACF-O) at its West Lombok property on Lombok Island, Indonesia, is indicating a number of exten-sively gold-mineralized breccia vein systems.

The Pelangan prospect is situated at the northwest end of a mineralized and altered structural corridor that also contains copper-gold porphyry and epithermal targets being evaluated by the company.

Drilling has hit a number of mineralized structural breccias (MSBs) or zones within a 3 by 2-km area. On the southern portion of Pelangan, a dozen holes cut significant gold-silver values in the Raja zone. Results include the following:

* hole RDG04 intersected 9.5 metres (from 8.4 metres down-hole depth) grading 6.2 grams gold per tonne and 41 grams silver, including a 3.05-metre interval of 14.2 grams gold and 61 grams silver, and was followed by an interval of lower-grade mineralization;

* hole RDG05 cut 22.95 metres (from 10 metres) averaging 4.1 grams gold and 17 grams silver with a 2.25-metre portion assaying 14.6 grams gold and 10 grams silver, plus a 1-metre interval running 21.4 grams gold and 23 grams silver; and

* hole RDG07 returned 11.3 metres (from 5.1 metres depth) of 2.8 grams gold and 22 grams silver followed by 19.75 metres (from 35.15 metres) grading 4.6 grams gold and 28 grams silver, including a 3.9-metre section of 13.5 grams gold and 22 grams silver.

The Raja zone is a 1.7-km-long linear brecciated quartz vein system, aligned along a north-northwest mineralized trend, that exhibits a “pinch and swell” characteristic at surface and is up to 20 metres wide. Drilling on its central and southern sections confirms gold mineralization over 600 metres of strike with a pair of holes collared in the northern extension recently intersecting quartz and sulphide-rich zones.

Several drill holes on the Tanjung-Jati MSB vein system returned significant gold mineralization, including TDG02, which cut 10.5 metres (from 32.85 metres) grading 13.4 grams gold, including a 2.3-metre interval of 47.9 grams gold.

Additionally, nine of 15 holes on the Kayu Putih zone, located in the northern portion of the Pelangan prospect, cut gold, with hole KDG004 returning 11.4 metres (from 2 metres) of 9.6 grams gold and 47 grams silver, including a 1-metre high-grade section running 71 grams gold and 182 grams silver.

In all, Southern Arc has identified several sub-parallel breccia vein systems at Pelangan that remain open to the south and east.

The company’s West Lombok land package consists of about 185 sq. km on the island’s southwest peninsula. Southern Arc holds its Lombok properties under an option agreement giving it rights to acquire an effective 90% interest in any contract of work (COW). The project area was expanded in early 2006 upon acquisition of a COW relinquished by Newmont Mining’s (NMC-T, NEM-N) subsidiary PT Newmont Nusa Tenggara, which retains a 2% net smelter return royalty.

Southern Arc is one of few Canadian-listed junior explorers to venture back into Indonesia since the Bre-X Minerals fiasco of 1997. Following its mid-2005 initial public offering of $2 million, the company has raised an additional $4.5 million for exploration of its eight project areas in the islands of Lombok, Sumbawa and Flores.

New mining legislation is reportedly being drafted by the Indonesian government, with the company keeping a sharp eye on developments.

Shares of Southern Arc surged as much as 79% following the release of the drilling results to touch 42 apiece before settling to close at the 35-level on strong volume. The company posts a $16-million market cap based on its 46.4 million shares outstanding and 52-week trading range of 20-75.