INDONESIAN STRATEGY

ARC EXPLORATION'S INDONESIAN STRATEGY

Arc Exploration's Indonesian growth strategy is founded on:

• Bringing the Cibaliung Gold Project (Arc Exploration 95%) into production in 2008 with construction now well advanced. Arc Exploration is in the process of raising funds to continue the development of the Cibaliung Gold Project. The project is based on annual production of 70,000 ounces initially. Exploration is ongoing and increases in resources could increase the size of the project to at least 100,000 ounces per annum.

• Utilising Arc Exploration's Indonesian relationships and expertise to explore epithermal gold systems for new deposits, initially on Java. Arc Exploration's participation in the joint venture (95% ARX) for the Pekalongan KP and Trenggalek KP heralds an expansion in exploration activity in Indonesia that is expected to generate new project opportunities for the Company in the future.

• Arc Exploration has a Strategic Alliance with Anglo American Group to explore for large copper/gold porphyry deposits in the Province of West Papua in Indonesia. Together with Anglo, Arc Exploration believes that these areas are highly prospective for large copper gold porphyry deposits and the Alliance has the potential to add very significant value to Austindo - and work has now commenced in this regard.