Southern Arc First Quarter Financial Results and Projects Update
27 Noviembre 2013 - 5:30AM
Marketwired Canada
Southern Arc Minerals (TSX VENTURE:SA)(OTCQX:SOACF) ("Southern Arc" or "the
Company") today announced the results of its first quarter ended September 30,
2013, along with an update on its portfolio of projects. Details of the
Company's financial results are described in the unaudited condensed
consolidated interim financial statements and Management's Discussion and
Analysis ("MD&A"), which will be available on the Company's website at
www.southernarcminerals.com and on SEDAR at www.sedar.com. All amounts are in
Canadian dollars unless otherwise stated.
FINANCIAL SNAPSHOT
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September 30, 2013 June 30, 2013
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Total assets $ 16,675,188 $ 18,192,286
Exploration properties 102,068 102,068
Working capital 8,146,387 16,060,362
Comprehensive loss (1,517,749) (41,945,170)
Basic and diluted loss per share (0.01) (0.38)
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At November 26, 2013, Southern Arc had approximately $7.6 million in working
capital.
RECENT DEVELOPMENTS
Indonesian Properties
Since releasing a resource estimate for the West Lombok project in July 2013,
Southern Arc has maintained low-level activities at West Lombok while continuing
to advance discussions with a number of companies for a potential farm-in,
partnership or outright sale of the property. While Southern Arc believes the
West Lombok project holds great potential, the Company has determined that it
can more effectively build shareholder value by identifying a funding partner
for West Lombok and redirecting the Company's treasury to high-quality projects
in stable jurisdictions. Southern Arc remains confident that it will find a
suitable arrangement, and is working diligently to conclude a transaction that
will bring value to the Company. With the backdrop of a challenging market and
significantly decreased valuations for junior mining companies, Southern Arc's
management determined that IFRS rules required the Company to write down the
West Lombok project, as disclosed in the Company's year-end financials.
During the quarter, Southern Arc renegotiated the purchase and sale agreement
for its Taliwang project whereby an individual will purchase Taliwang in
exchange for US$3,500,000, of which US$100,000 has been received as a
non-refundable deposit. The Taliwang property has been classified as an Asset
Held for Sale pending completion of this transaction, which remains contingent
on completion of due diligence and other requirements.
Vale remains committed to its option to earn an interest in the East Elang
property. The partners do not plan to commence exploration at East Elang until
the Indonesian forestry moratorium is lifted and the property can be
reclassified. In the interim, Southern Arc continues low-key community
engagement and has applied for a suspension of the mining business licence
(back-dated from the commencement of the forestry moratorium in May 2011) until
the reclassification process has been completed, ensuring that Southern Arc and
Vale have adequate time to evaluate the property once exploration commences.
Eagle Hill Investment
On August 14, 2013, the Company invested $7,324,050 (inclusive of a $865,000
deposit paid in June 2013) to acquire a 26.14% equity interest in Eagle Hill
(TSX VENTURE:EAG). As part of its investment, Southern Arc received 48,827,000
warrants entitling Southern Arc to acquire a further common share of Eagle Hill
at a price of $0.10 per share for a period of four years. Dundee Corporation
(TSX:DC.A) also participated in the private placement by investing $4,675,950 to
acquire an additional 62,346,000 shares and 31,173,000 warrants of Eagle Hill,
thereby increasing its ownership of Eagle Hill from 18.8% to 26.14%. The $12
million private placement allowed Eagle Hill to consolidate 100% ownership of
the Main Zone on the property, which hosts the majority of the gold deposit.
The $12 million private placement also funded an aggressive drill program. Three
rigs started drilling on September 12, 2013 with the expectation of drilling
25,000 metres by year-end 2013. The deposit is well defined from surface to a
depth of 500 metres, and remains open along strike and at depth. Eagle Hill
plans to expand the resource by testing a large, sparsely drilled anomaly to the
west of the Main Zone, drilling lateral extension of known gold lenses, and
testing the extension of mineralization at depth.
Eagle Hill released first results from the drill program on November 5 (see
Eagle Hill press release dated November 5, 2013), announcing the discovery of an
extension to mineralization and confirming the potential to extend the known
gold resource. The Company drilled three sections, stepping out 150, 300 and 500
metres along strike to the southwest of the Main Zone gold mineralization. Each
section intersected gold mineralization, with a number of high-grade gold
intervals and some wide mineralized intersections. These results support Eagle
Hill's hypothesis, based on geophysics of the area and limited previous
drilling, that mineralization continues to the southwest of the Main Zone. The
three diamond drill rigs have since been relocated to the Main Zone to focus on
expanding the strike length of the major resource lenses (the Zone 27, Caribou,
Mink and Mallard zones). In addition, a down-hole induced polarization
geophysics program is underway to identify possible depth extensions of gold
mineralized lenses below the Main Zone. Following completion of this program in
December 2013, Eagle Hill plans to release an updated resource estimate in early
2014.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2013
During the three months ended September 30, 2013, the Company had a net loss of
$1,517,749 compared to a loss of $757,053 for the three months ended September
30, 2012. Significant fluctuations occurred in the following categories:
a. Share-based compensation of $27,369 (2012: $93,491) decreased due to
lower calculated expense for options vested during the period. Share-
based compensation expense is accounted for at fair value as determined
by the Black-Scholes Option Pricing Model using estimates that are
believed to approximate the volatility of the trading price of the
Company's stock, the expected lives of awards of share-based
compensation, the fair value of the Company's stock and the risk-free
interest rate.
b. Foreign exchange loss of $61,476 was lower during the three months ended
September 30, 2013 (2012: $128,524) primarily due to lower US$ cash
balances and the net effect fluctuation of the US$/CDN$ exchange rate
had on the CDN$ equivalent of the Company's holdings in its US$ bank
balance and its US$ payables balance.
c. Management fees increased to $219,300 compared to $216,000 in 2012 and
are discussed in detail in the Related Parties section.
d. Professional fees of $71,035 (2012: $47,977) increased due to higher
level of corporate activity in the period.
e. Travel expenses of $11,538 (2012: $nil) increased as a result of higher
level of executive travel during the period.
f. Interest income of $31,594 (2012: $56,327) decreased during the period
as a result of lower cash balances.
g. The Company wrote-off $555,309 of exploration expenditures incurred on
the West Lombok and Sumbawa properties during the period.
On behalf of the Board of Southern Arc Minerals Inc.
John Proust, Chairman & CEO, Director
About Southern Arc
Southern Arc Minerals Inc. is a Canadian mineral exploration company focused on
gold and copper-gold exploration. The Company's key exploration property is its
West Lombok project, with several gold-rich copper porphyry and epithermal gold
vein prospects. Southern Arc is listed on the TSX Venture Exchange under the
symbol SA and on the OTCQX International under the symbol SOACF. More
information is available at www.southernarcminerals.com or by emailing
info@southernarcminerals.com.
Forward-looking Statements
This news release contains forward-looking statements relating to expected or
anticipated future events and operations, timing of projects and anticipated
results that are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties, such as general economic, market and business
conditions, the regulatory process and actions, technical issues, new
legislation, competitive and general economic factors and conditions, the
uncertainties resulting from potential delays or changes in plans, the
occurrence of unexpected events, and the company's capability to execute and
implement future plans. Actual results achieved may vary from the information
provided herein as a result of numerous known and unknown risks and
uncertainties and other factors. There is no representation by the company that
actual results achieved during the forecast period will be the same in whole or
in part as that forecast.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as such
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Qualified Person
The technical information in this document has been reviewed by Southern Arc's
Chief Geologist, Andrew Rowe, B. App. Sc. Geology, MAusIMM. Mr. Rowe has over 20
years of international mineral exploration experience throughout Southeast and
Central Asia and Australia. During this time he has held such positions as
Principal Geologist - Feasibility Studies, Senior Geologist and Consulting
Geologist. The technical information in this document has also been reviewed by
Southern Arc's President & Chief Operating Officer, Dr. Mike Andrews, PhD,
FAusIMM, who has sufficient experience relevant to the style of mineralization
under consideration and qualifies as a Qualified Person as defined by National
Instrument 43-101.
The drill program and sampling protocol is managed by Southern Arc under the
supervision of Andrew Rowe. The diamond drill holes are drilled at PQ, HQ and NQ
sizes depending on hole depth and core recovery to date has averaged better than
98.0%. Half core is cut by rock saw and is generally sampled using nominal
1-metre intervals; however, sample intervals are varied according to geological
contacts and have ranged between 0.2 to 2.5 metres in length. Three quality
control samples (one blank and two standards) are inserted into each batch of 40
samples. The half core samples are securely transported from the project site to
the Intertek Testing Services ("ITS") sample preparation laboratory in Sumbawa
Besar via private truck hired by Southern Arc. Sample pulps are then sent to the
ITS Jakarta laboratory by ITS. Gold is analysed by fire assay with AAS finish
and a four-acid digestion with ICP-MS finish is used to analyse a full suite of
elements including silver and base metals. ITS is one of the world's largest
product and commodity testing, inspection and certification organizations. The
Jakarta laboratory is ISO 17025 accredited and employs a Laboratory Information
Management System for sample tracking, quality control and reporting.
FOR FURTHER INFORMATION PLEASE CONTACT:
Southern Arc Minerals Inc.
Rhylin Bailie
Vice President, Communications & Investor Relations
604-676-5241 or North American toll-free: 1-888-676-5241
info@southernarcminerals.com
www.southernarcminerals.com
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