Well, the "riot" has well and truly settled down in East...

Well, the "riot" has well and truly settled down in East Sumbawa, with the protesters never even approaching the Bima project. I hear that many of the "protesters" were paid (as can be the norm in Indonesia), but that almost all of the locals are in strong support of the Bima project as it is likely to vastly improve local employment and infrastructure. My understanding is that the social disturbances may have delayed drilling by approximately one week.

I had been wondering why the majors weren't dumping, but i guess they realised from the beginning that this riot was inconsequential.

This week long delay is irrelevant not only by virtue of it's length, but by the steady stream of upcoming results from recently gathered samples and geophysical logs. Hell, even if the locals were against the project and tied themselves to the gates (so to speak), the company would be able to simply move the rig to Trenggalek and drill there first (the current plan is to drill Trenggalek immediately after Bima).

Anyway, I'll share my research into the company for anyone interested.

At the moment the bulk-tonnage Bima is the focus. The real interest here is at depth, though surface trenching has produced the following results:

Bima
- 86m @ 2.78g/t Au
- 22m @ 2.15g/t Au
- 12m @ 3.44g/t Au
- 12m @ 24.8g/t Au
- 3m @ 64.0g/t Au

The key to the Bima projects is not just the bulk tonnage gold potential, but the likely copper-gold porphyry body that underlies the previous trenching. Geochemical signatures match the massive Tujuh Bukit Cu-Au project and the monster Elang Cu-Au project (both to the West), and I expect further geochemical, geophysical and IP analysis to verify the current model that suggests ARX may have rights over a major Cu-Au system.

There has been a constant and successful stream of results from the surface and they have all demonstrated a project with serious Au potential - if the results can be extended at depth during the upcoming drilling program then ARX will be significantly re-rated. If however they do strike the massive Cu-Au porphyry system (as current modeling suggests they may), then I need not attempt to explain the effect on the share price.

Drilling is planned to commence this quarter, or within the first week or two of next quarter. Due to the significant cash reserves, it has been mentioned that two rigs may be deployed simultaneously.

Trenggalek represents further upside as an epithermal vein system with multiple targets. The recent 5,000 drilling program produced the following highlights from 10km of strike and veins up to 10m-15m wide:

- 9.6m @ 4.5g/t Au and 8g/t Ag (inc. 2.0m @ 7.2g/t Au and 13g/t Ag)
- 6.6m @ 4.9g/t Au and 149g/t Ag (inc. 1.9m @ 11.3g/t Au and 293g/t Ag)
- 27.0m @ 0.49g/t Au and 1,900g/t Cu
- 13.7m @ 3.2g/t Au and 60g/t Ag

The gold mineralisation is open in all directions and at depth, and less than 20% of each vein system has been tested.

To further solidify ARX's investment profile, they have a 20% free carried stake in the Aisasjur project with Anglo American. Situated in Grasberg Belt, the project is highly prospective for Cu-Au, having already intersected a Cu-Au porphyry system with similarities to the neighboring Grasberg project (one of the largest Cu-Au projects in the world). The Cu-Au system is overlain by 700m of Au mineralisation and Anglo have recently committed to recommence drilling and bring the project towards resource definition. This could be a monster project if it is even 10% the size of Grasberg, so the upside is real.

Dealing with the financials of the company, they have an enviable cash position of approximately $10.9m and a fully diluted market capitalisation (including all unlisted options) of 855,048,582 securities for $32.49m @ 3.8c. This represents an enterprise value of $21.59m for a company that won't need to tap the capital markets until late 2012 or 2013.

This valuation is too low and upcoming results will see this re-rate quickly as management ramp up exploration activities on several fronts and move towards construction and production.

Cheers

Tawny