VANCOUVER – After more than 40,000 metres of drilling, Southern Arc Minerals (TSXV: SA) has calculated an initial resource for its West Lombok property in Indonesia that supports the company’s plan to develop a multi-pit gold mine at the site.
The West Lombok property on Lombok Island covers a 13-km long corridor of hydrothermal alteration. Exploration efforts by Southern Arc and earlier by Newmont Mining (TSX: NMC; NYSE: NEM) outlined three gold and gold-silver prospects along the corridor: the Pelangan epithermal gold zone at the north end of the corridor, the Mencanggah epithermal-porphyry gold-copper zone in the middle, and the Selodong intrusive gold-copper zone to the south.
Each zone generated several targets and now Southern Arc has defined resources at four of those target areas. In the Pelangan zone the Raja deposit is home to 2.9 million inferred tonnes grading 2.63 grams gold per tonne and 14 grams silver per tonne. At Mencanggah, which lies roughly 5 km to the southeast, two targets have now advanced to deposit status: Tibu Serai is home to 977,000 inferred tonnes grading 1.36 grams gold while Bising hosts 6.9 million inferred tonnes averaging 0.88 gram gold.
Another few kilometres to the southeast is the Selodong zone, home to the largest resource defined at West Lombok to date. Selodong now offers 66.8 million inferred tonnes grading 0.43 gram gold and 0.27% copper.
Together, the deposits contain just over 2 million ounces of gold. All four resources were constrained within open-pit shells.
“This maiden resource estimate for West Lombok confirms Southern Arc’s model for a multi-pit project,” said Mike Andrews, Southern Arc president and CEO in a statement.
Epithermal gold mineralization at West Lombok occurs within steeply dipping, tabular, silica-rich bodies associated with advanced argillic alteration. Porphyry mineralization is associated with outcropping centres of diorite-hosted stockwork.
SRK Consulting, which authored the resource estimate, noted in its report that the property still offers good exploration upside.
“The West Lombok property hosts at least four separate mineral deposits within a 10-km strike length,” SRK writes. “Both epithermal gold and porphyry copper-gold deposits have been identified and a large portion of the property still remains to be explored in detail. All deposits identified so far are still open along strike and at depth and further drilling could discover additional mineralization, especially at Raja where the possibility of finding additional mineralization that could be amenable to underground mining seems very good.”
Newmont explored West Lombok between 1985 and 1996, but extensive rainforest cover at the time hid the full extent of mineralization. In the late 1990s, after Newmont had shifted its attention to developing its Batu Hijau mine, the property was clear-cut by Indonesian forestry companies.
Southern Arc picked the property up in 2005, in a deal that gave the company access to all of Newmont’s drill cores and data. In exchange Newmont retained a 2% net smelter return royalty on the property, which Southern Arc can buy at any time for $1 million.
West Lombok is Southern Arc’s flagship property, but the company is also advancing the East Elang property in partnership with Vale (NYSE: VALE). Vale is earning a 75% stake in the property by sole funding all project costs through to the completion of a feasibility study. East Elang is immediately adjacent to Newmont’s large Elang copper-gold deposit and geophysical data suggests the structures controlling mineralization at Elang may extend onto East Elang.
Southern Arc added another holding to its portfolio in late June when the company acquired a 26.2% stake in Eagle Hill Exploration (TSXV: EAG) for $7.3 million. Eagle Hill is advancing the Windfall Lake gold project in Quebec.
“Windfall Lake is exactly the type of property we’ve been looking for: an advanced-resource-definition-stage gold project located in a region recognized internationally as a prolific, mining-friendly jurisdiction,” Andrews said. “Windfall Lake presents Southern Arc with the opportunity to acquire a significant position in a high-quality gold project with good potential for expansion and revaluation.”
Southern Arc gained half a penny on the West Lombok resource estimate to close to 12¢. The company has a 52-week trading range of 10¢ to 46¢ and 109 million shares outstanding.