Under the terms of the October 2010 option and joint venture agreement, Vale can earn a 75% interest in the East Elang property by advancing the property to bankable feasibility study, with a minimum Phase 1 expenditure of US$1.2 million within one year from the date on which Southern Arc receives a Ministry of Forestry Pinjam Pakai permit for the property.
Other properties
Southern Arc is actively pursuing a number of acquisition and partnership opportunities, both within Indonesia and in other countries, with the objective of adding value for shareholders by expanding the Company's project portfolio.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2012
During the six-month period ended December 31, 2012, the Company had a loss of $5,929,570 compared to loss of $1,855,119 for the comparable period ended December 31, 2011. Significant fluctuations incurred in the following categories:
a. Share-based compensation of $228,353 (2011: $554,918) decreased as a result of fewer share options granted 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 risk-free interest rate.b. Consulting fees of $nil (2011: $41,493) decreased as no consultants were engaged during the period.c. Foreign exchange loss of $63,947 was realized during the period ended December 31, 2012 (2011: $392,113 gain) primarily due to the effect the fluctuation of the $US/$CAD exchange rate had on the Canadian equivalent of the Company's holdings and transactions in its US$ bank balance and US$ payables balance.d. Management fees increased to $419,500 compared to $282,000 in 2011 and are discussed in detail in the Related Parties section.e. Office and miscellaneous expenses decreased to $431,890 (2011: $573,231) as a result of lower levels of corporate activities.f. Professional fees of $169,505 (2011: $221,268) decreased as a result of lower corporate legal activity during the period.g. Travel expenses of $23,502 (2011: $104,674) decreased as a result of reduced executive travel during the period.h. Interest income of $97,234 was realized during the six-month period ended December 31, 2012 (2011: $147,017).i. During the six-month period ended December 31, 2012, the Company invested $4,078,112 cash (2011: $6,747,557) on exploration properties and $nil on property, plant and equipment (2011: $196,592).j. During the six-month period ended December 31, 2012, the Company wrote down the value of the Sabalong property to $nil and recognized a $1,192,789 impairment provision.k. During the six-month period ended December 31, 2012, the Company recognized a $3,348,260 impairment provision against its book value of the Taliwang property.l. In 2012 the company recorded an impairment loss of $7,086 on equipment. Under other items in 2011, the Company recorded its share of the equity loss of Nickel Oil & Gas of $52,289 and recorded an impairment charge related to Nickel of $305,582.
SUMMARY OF QUARTERLY RESULTS
---------------------------------------------------------------------------- December 31, September 30, June 30, March 31, 2012 2012 2012 2012----------------------------------------------------------------------------Total assets $ 54,333,738 $ 60,321,920 $ 60,884,512 $ 62,872,227Exploration properties 35,612,324 38,808,405 37,430,624 35,680,748Working capital 17,208,413 19,027,865 21,035,112 22,901,030Net loss (5,172,518) (757,053) (1,184,372) (1,272,920)Basic and diluted loss per share (0.05) (0.01) (0.01) (0.01)----------------------------------------------------------------------------
