Background and history of the Company
June 7, 2010
All things considered, a good place to start this story would be at the beginning. Southern Arc Minerals Inc. was incorporated in August 2004. The beginning, however, takes us back to two major incidents in 1997 and 1998. These were the 1997 financial crisis in Southeast Asia and the Bre-X scandal.
Back in 2003, a group led by Craig Dalziel of Vancouver tiptoed into post Bre-X Indonesia and started exploring. This Company, Sunda Mining Corporation, engaged a consulting geologist from New Zealand who had lived and worked in Indonesia then for two decades. Importantly, he held many close ties to people inside the ‘system’. He understood the ‘beast’. Married to an Indonesian woman, he was well acculturated to the prevailing environment and customs, and in a comfortable position to steer local operations. His name… Hamish Campbell.
Come 2004 and John Proust enters the picture. With a reputation for thinking outside of the box, and a long record of fundraising achievements, Proust created Southern Arc Minerals Inc. Taking over the Sunda Mining properties, SA went public a year later. Hamish Campbell stayed on, and to the present day, leads the exploration effort for Southern Arc. With this move, Southern Arc led the way back into Indonesian exploration using publicly raised capital.
The Company’s stated mission is to become the premier mineral exploration and development company in Indonesia. With a combination of first-mover advantage, several decades of collective geologic experience in Indonesia, cultural sensitivity, and a record of successful deal making, such a mission seems within reasonable reach. Targeting deposits with potential for 1 million+ ounces of gold, the Company’s strategy is to: identify and acquire existing exploration properties, exempt from the tendering process, and to advance these properties to a point where they can be carried forward by way of joint venture with a partner (read ‘major’) or to be wholly sold off. While the Company insists that it is an explorer only, I can see meaningful potential for it to morph into a hybrid operator, both exploring and producing. I have hopes for Director Mike Andrews to play a spearheading role in such a metamorphosis. SA has aggressively built a book of six highly prospective properties. These are in varied states of advancement. Since December 2009, five have been issued 26-year mining licenses (IUPs).
Shareholdings
There are 76,989,990 outstanding shares. Fully diluted shares total 81,414,990. For up-to-date figures, click here. Given that all options are priced well below current share price, fully diluted share figures should be used in all calculations. This stock is very tightly held. 18.6% is held by insiders (not counting spousal holdings). I can name 10 other individuals who collectively control/influence another 20%. This stock is very thinly traded, with the daily activity over the past three months at a little over 1/10th of 1% of outstanding shares. As a result, it is subject to easy share price movement up and down. When good news hits, then, the potential is meaningful for share price to fly in multiples. Same for bad news, to be fair.