The Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Definition Standards for Mineral Resources and Mineral Reserves (2005) require that there be "reasonable prospects for economic extraction" and selection of appropriate cut-off grades for mineral resource estimates. To determine the quantities of material offering "reasonable prospects for economic extraction" by open pit, SRK used a Whittle pit optimizer and reasonable mining assumptions to evaluate the proportions of the block models that could be reasonably expected to be mined. Only these blocks were included in the stated resource estimate.
The drill results database used to estimate the West Lombok Project mineral resources was audited by SRK. SRK is of the opinion that the current drilling information is sufficiently reliable to interpret with confidence the boundaries for epithermal gold and porphyry copper mineralization and that the assay data are sufficiently reliable to support mineral resource estimation.
West Lombok Mineral District
Southern Arc's property is centred on the West Lombok Mineral Belt, a 13 km long by 7 km wide northwest trending zone that has been shown to host extensive development of linear structures hosting epithermal gold mineralization and exposed and blind porphyritic intermediate intrusives with associated porphyry-style copper-gold mineralization.
Epithermal Gold Mineralization
Epithermal gold mineralization occurs within the West Lombok Property as linear, steeply-dipping, tabular silica-rich bodies that are associated with advanced-argillic alteration of the host Tertiary volcanic rocks. The field term mineralized structural breccia ("MSB") has been applied by Southern Arc geologists to describe the property's style of mineralization. Two main centres of such gold mineralization have been defined: the Pelangan and Mencanggah prospects. The breccia bodies at Pelangan can be up to 30 metres wide and can extend more than 1,000 metres along strike. At Mencanggah, the breccia bodies are up to 100 metres wide and form zones in which some of the breccia bodies extend more than 1,000 metres along strike. Drilling has shown that the down-dip of these breccias extends beyond 300 metres in depth. In total more than 30 km of aggregate strike length of MSBs have been mapped in West Lombok.
Close-spaced drilling of the MSBs to depths of 300 metres has been undertaken at only four locations within the Pelangan and Mencanggah prospects. Three of these locations - Raja, Bising and Tibu Serai - showed continuity of mineralization adequate to yield Inferred Resource estimates. Figure 1 shows the locations of the resources defined to date as well as the full extent of MSBs outcropping within the West Lombok Mineral Belt.
Porphyry Copper-Gold Mineralization
Within the West Lombok Mineral Belt a number of outcropping centres of diorite hosted stockwork porphyry-type copper-gold mineralization have been identified, and numerous "blind" targets have also been defined. Figure 2 highlights the 23 porphyry copper-gold targets generated by airborne geophysics, structural interpretation, geochemistry and alteration mapping during Southern Arc's prospectivity analysis (refer to Southern Arc news release dated February 9, 2012).
Moderate to high prospectivity porphyry targets have been identified at Montong Botek, Blongas, Mahoni, Belikat and Makam Kedaro in the Selodong prospect; at Bising and Telekur in the Mencanggah prospect; and beneath Batu Sendi and Lala in the Pelangan prospect. A number of the targets have already had a limited amount of drill testing; however, most of the drilling has been focused on the Montong Botek and Blongas targets, which host the copper-gold resource reported here.
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