Sihayo Gold : Half Year Financial Statements 31 December 2021

For personal use only

SIHAYO GOLD LIMITED

ACN 009 241 374

HALF YEAR FINANCIAL STATEMENTS

31 DECEMBER 2021

For personal use only

SIHAYO GOLD LIMITED AND CONTROLLED ENTITIES

ACN 009 241 374

DIRECTORS' REPORT

FOR THE HALF YEAR ENDED 31 DECEMBER 2021

Your directors present their report on the consolidated entity consisting of Sihayo Gold Limited ("Sihayo Gold" or "the Company") (ASX: SIH) and the entities it controlled at the end of, or during the half-year ended 31 December 2021.

The following persons were directors and Chief Executive Officer of Sihayo Gold during the whole of the half-year and up to the date of this report:

Directors

Colin F Moorhead

Misha A Collins C.F.A

Gavin Caudle

Daryl Corp

Chief Financial Officer

Roderick Crowther C.F.A

Company Secretary

Susan Park

RESULT

The net operating loss for the half-year ended 31 December 2021 was $22,536,056 and for the half- year ended 31 December 2020 the loss was $3,793,179.

REVIEW OF OPERATIONS

During the half year ended 31 December 2021, the Company continued to focus on its exploration efforts across the Sihayo-Pungkut 7th Generation Contract of Work ("CoW") as well as advancing studies for the Sihayo Starter Project, which it holds through its 75% interest in PT Sorikmas Mining ("Sorikmas") (together the "Group").

Exploration

Sihayo's three-tiered exploration strategy across the CoW comprised near-mine exploration at the Sihayo Starter Project, follow-up targeted drilling campaigns at Hutabargot Julu and longer term target generation across the CoW.

The Sihayo near-mine exploration programs aim to identify additional shallow gold resources within trucking distance of the Sihayo Starter Project processing plant site. The prime exploration targets occur within the Sihayo gold belt which is comprised of two subparallel mineralised trends encompassing Sihayo-1/2 - Sambung - Hutabargot Julu and Sihayo-3/4/5.

A 22-hole, 2,048 m drilling program at the Sihayo-2 prospect was completed during the six months to 31 December 2021. The Sihayo-2 prospect lies on the open northwest strike of the Project and between 500 m and1,00 m distance from the Sihayo-1 gold deposit. The best results included 24.8 m at 1.09 g/t Au from 52.0 m and 8.0 m at 1.32 g/t Au from 96.0 m depth in SH2DD022; and 8.4 m at 2.56 g/t Au from 47.0 m and 9.8 m at 1.77 g/t Au from 77.0 m depth in SH2DD024 and 3 m at 4.69 g/t Au from 18.0 m, including 1 m at 9.72 g/t Au from 19.0 m. The mineralised rock is highly anomalous in arsenic, antimony and thallium, which are indicator elements for the sedimentary-rock hosted disseminated gold mineralisation contained in the nearby Sihayo-1 and Sambung gold deposits.

For personal use only

SIHAYO GOLD LIMITED AND CONTROLLED ENTITIES

ACN 009 241 374

DIRECTORS' REPORT

FOR THE HALF YEAR ENDED 31 DECEMBER 2021

The data from the drilling program at Sihayo-2 will be used to assess if there is economic mineralization that can be used as additional plant feed for the Sihayo Starter Project.

Following the completion of the 25-hole, 4,806 m phase 1 reconnaissance drilling program at Hutabargot Julu in April 2021, the company assessed and commenced drilling at follow-up targets on the prospect. This program produced multiple gold-silver intercepts in 21 of the 25 holes, confirming the potential for both bulk-tonnage stockwork epithermal gold-silver mineralization and locally higher-gradegold-silver vein targets in this large prospect area. Multiple follow-up targets were identified, with drilling commencing on the Sihorbo, Penatapan and Sihorbo South targets during the quarter.

At Sihorbo, an 8-hole 1,679 m program was completed in July 2021. In this program, narrow low-to- moderate grade gold-silver intercepts were returned. These results are interpreted to indicate that the artisanal mining in the area has exploited the remnants of the Sihorbo vein and that these holes have intersected the vein below the area of interest, downgrading the target.

A follow-up11-hole program was also completed at Penatapan. This targeted some previously untested vein structures being extensively worked by local miners on the western side of the prospect and "step- out drilling" along strike from strong mineralized intercepts returned in certain holes of the phase 1 Hutabargot Julu program. Multiple narrow low-to-moderate grade gold-silver intercepts were returned from holes drilled both deep beneath local workings on the western side of Penatapan and on the eastern side. The distribution of gold results projected to surface confirm the presence of large multidirectional structures up to 50 - 100 m wide crossing the prospect that are associated with broad haloes of +0.1 ppm Au mineralisation. Drill results returned to-date highlight a strong variability of gold and silver grades within the mineralised stockworks. Thicker zones of higher-grade mineralisation may be associated with secondary enrichment of gold and silver in limonite and manganese oxides in areas of deeper weathering across the prospect. The distribution of local gold workings and results achieved in this first scout drilling program at Penatapan indicate potential for a large mineralised system, much of which remains open in multiple directions. There is potential for low-stripping ratio, shallow oxide- gold ore at several locations across the prospect. Additional surface mapping is underway which will inform the next phase of drilling at the target.

Sihorbo South, located approximately 1.5 km south of Penatapan is an epithermal vein-stockwork system currently being mined by local artisanal miners. The Company completed a 13-hole,1,416-hole drilling program in 2012 - 2013. A 17-hole 2,321 m follow-up program was commenced in September 2021. Encouraging intercepts were returned in multiple holes which tested a 300 m strike-length to a depth of 100 - 150 m. These results indicated that significant grades and potential volume of mineralization remain below the local mine workings. There are locally strong variations in gold and silver grades and widths. The Sihorbo South system remains open at depth and to the south and remains largely untested bneath and surrounding the active artisanal gold workings. A follow up drilling program has since commenced at Sihorbo South to further understand the mineralized system and test for extensions to known mineralization.

The Company has also commenced a program to generate and prioritise additional drilling targets across the CoW. The first stage of this involved the reprocessing of historical geophysical and geochemical data to identify potential targets. The Company has since commenced surface sampling activities on the northeast corner of the south block of the CoW. This area features a complex zone of elevated regional magnetics associated diorite and granodiorite intrusions into volcanic and limestone basement rocks, which are partly overlain by dacitic volcanic cover rocks. Field work includes ground validation, prospecting and rock chip geochemical sampling, focused initially on the Tambang Tinggi area. Most of these selective grab samples represent dominantly thin crystalline quartz-sulphide veins hosted in silicified to propylitic-altered fine to medium grained, equigranular to porphyritic diorite.