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Southern Arc Minerals finalizes sale of Taliwang project; working capital of nearly $5 mln

Last updated: 00:15 01 Mar 2014 AEDT, First published: 01:15 01 Mar 2014 AEDT

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Southern Arc Minerals (CVE:SA)(OTCQX:SOACF) says it has finalized an agreement for the sale of its majority interest in the Taliwang project in Indonesia, for US$1.6 million and a net smelter royalty. 

The news came as the company also announced its results for its fiscal second quarter, ending the period to December 31 with working capital of $5.2 million. As of February 27, the company had about $4.8 million in working capital, it said. 

The Taliwang project was sold to what Southern Arc called a "prominent Indonesian businessman", for US$1.6 million and the granting of a 5% net smelter royalty to the company. 

Under the terms of the agreement, the buyer has the option to repurchase 3% of the net smelter royalty by paying Southern Arc US$3 million. The purchaser has already paid Southern Arc US$400,000, and will pay the remaining US$1.2 million in four consecutive weekly installments of US$300,000. 

"We are very pleased to have entered into this agreement in today's challenging market conditions, particularly as the net smelter royalty and buy back terms still allow Southern Arc to participate in the development and future success of the Taliwang property," said chairman and CEO of Southern Arc, John Proust. 

"Sale of this non-core property will further bolster Southern Arc's treasury, giving us the financial flexibility to invest in new high-quality projects that will add value for Southern Arc shareholders."

Since releasing a resource estimate for its West Lombok property in Indonesia last July, the company has maintained a low level of activity as it seeks a funding partner and redirects its cash to acquiring new assets in stable regions as a way of building shareholder value more effectively.             

The company said that it is seeking a potential farm-in agreement, partnership or an outright sale of the West Lombok property, and is still continuing advanced discussions with a "number of companies" in this regard. 

"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," it said in its statement. 

Southern Arc also owns 25% of Eagle Hill Exploration (CVE:EAG), which owns the high-grade Windfall Lake gold project in Quebec, Canada, where a drill program was recently completed to expand the resource.

For the three months to December 31, Southern Arc reported a net loss of $3.2 million, down from $5.17 million a year earlier. The company said it wrote-off an additional $454,339 of exploration expenditures incurred on the West Lombok and Taliwang properties during the period, compared with $4.54 million in the 2012 period.

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