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Southern Arc closes sale of Taliwang project amid challenging market conditions

Published: 01:25 25 Jul 2014 AEST

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Southern Arc Minerals (CVE:SA) (OTCQX:SOACF) has closed the sale of its 90 percent stake in the Taliwang project in Indonesia, with shares rising more than 11 percent on the back of the news.

The company told investors that it closed the sale of its 90 percent share in the Indonesian company that owns the project to a "prominent Indonesian businessman" for US$1.0 million. 

Southern Arc was also granted a 5 percent net smelter royalty, with the buyer having the option to buy back 3 percent of the royalty by paying the company US$3.0 million.

The businessman must also pay Southern Arc 40 percent of gross revenue generated from the project, after payment of the net smelter royalty, until the total amount of such payments equals US$750,000. Alternatively, the buyer has the option of making a one-time payment of US$600,000 before January 12, 2015, Southern Arc said.

"We are pleased to have completed the Taliwang sale 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 project," said chairman and CEO John Proust. 

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 has 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 also owns a stake in Eagle Hill Exploration, which is developing the Windfall Lake gold project in Quebec. 

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