SIHAYO GOLD LIMITED For personal use only
ASX Announcement | 17 February 2022 |
Project Update and Launch of Strategic Review Process
Highlights:
- Updated economics for the Sihayo Starter Project following Optimisation Studies, culminating in the 2022 Feasibility Study Update
- 2022 Feasibility Study Update incorporates:
- Updated mine plans and Ore Reserve statement o Updated site layout and infrastructure design o Updated operating and capital cost estimates
- Company looking to expedite high pH (caustic) pre-leaching opportunity and exploration targets at Sihayo underground and Hutabargot Julu, which have the potential to significantly enhance the economics of the Sihayo Starter Project
- Appointed CLSA as adviser to run a Strategic Review process with the aim of introducing a funding partner or transaction to maximise shareholder value
Sihayo Gold Limited (ASX:SIH - "Sihayo" or the "Company") is pleased to provide an update on the Company's operational and corporate activities in North Sumatra, Indonesia, with reference to recent detailed releases by the Company:
- "Sihayo Exploration Update" released on 25 January 2022
- "Significant Results from High pH Leaching Test Work" released on 31 January 2022
Sihayo's Executive Chairman, Colin Moorhead commented on the Company's updates:
"We remain excited by the potential of the Sihayo Starter Project and the broader Sihayo- Pungkut 7th Generation Contract of Work. The Project Optimisation Studies have resulted in a much more robust project design and identified further upside opportunities which the Company is aggressively pursuing. In particular, test work to date supports our view that the caustic leaching opportunity has the potential to significantly transform the Sihayo Starter Project through higher metallurgical recoveries from existing Ore Reserves and potential conversion of known high grade Mineral Resources below the pit previously thought to be largely refractory.
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Furthermore, the exploration across the Contract of Work continues to be promising. The latest results from the Sihorbo South target in the Hutabargot Julu prospect are highly encouraging. On a gold-equivalent basis, these results show the potential for additional high- grade plant feed to be mined within trucking distance of the proposed Sihayo Starter Project plant site. This has the potential to deliver additional value for the Sihayo Starter Project.
Sihayo is now at a critical phase as the Company looks to fund the development of the Sihayo Starter Project. The company now has a robust and materially de-risked project design and has commenced a strategic review process with the aim of attracting a funding partner to develop the project. This process may have a range of outcomes, including but not limited to a change of control transaction and/or an Indonesian listing. Sihayo's Board and Management will seek to maximise shareholder value through this process."
Feasibility Study Update
Background
Over the course of 2021 and 2022 to date, the Company has completed considerable work improving the technical definition of the Sihayo Starter Project (the "Project") and to de-risk its implementation through a series of work streams ("2022 Feasibility Study Update" or "2022 FSU"). This involved:
- Review of the geometallurgical model and its use for mine planning
- Development of a revised pit design and tactical mine schedules
- Updated design of processing plant consistent with the needs of the tactical mine schedule and geometallurgical parameters of the orebody
- Updated Tailings Storage Facility ("TSF") compliant with international standards and suitable for submission to the Indonesian Dam Safety Committee
- Development of the operational strategy
- Advancing the environmental and community strategy
- Developing a site-wide water balance model
- Updated project layout to de-risk construction and operating activities
- Re-estimationof operational and capital costs
As a result of the 2022 FSU, Mineral Resources and Ore Reserves statements have been updated.
Key findings
The Project Economics were assessed using a USD1,700/oz gold price and 5% discount rate. A summary of the key outputs for the 2022 FSU are shown in Table 1.
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Table 1: Summary of 2022 FSU Outputs (USD1,700/oz gold price, 5% discount rate)
Metric | Unit | Value | ||||||
Life-of-Mine ("LOM") tonnes processed | Mt | 12.1 | ||||||
LOM strip ratio | waste:ore | 4.6x | ||||||
Average gold head grade | g/t Au | 2.00 | ||||||
Contained gold ounces processed | koz | 774 | ||||||
Average metallurgical recoveries | % | 71.2% | ||||||
Total gold produced | koz | 551 | ||||||
Total site operating costs (incl. royalties) | USD/t | 36.3 | ||||||
Upfront capital expenditure1 | USD million | 173 | ||||||
All-In Sustaining Cost ("AISC") | USD/oz | 956 | ||||||
Pre-tax LOM cash flow | USD million | 156 | ||||||
Post-tax LOM cash flow | USD million | 120 | ||||||
Net Present Value ("NPV") | USD million | 50 | ||||||
Internal Rate of Return ("IRR") | % | 10.1% | ||||||
Payback period | years | 4.75 | ||||||
Geological Model and Mineral Resources
The Mineral Resource estimate for the Sihayo and Sambung deposits has been updated to reflect consolidation of the results from the 2019 infill drilling program at Sihayo and a comprehensive revision of the geology and mineralisation models for both deposits. In particular, the geological model used in the 2020 DFS was updated to reflect metallurgical domains that are now in line with the mine and processing scheduling and inform the stockpiling and blending requirements for the operations. Furthermore, the cut-off grade for the Mineral Resource estimate was revised down from 0.6 g/t Au to 0.4 g/t Au in response to economic analysis used for the Ore Reserve estimate, which showed 0.4 g/t Au was a suitable cut-off for economic material in the deposits.
Table 2 shows the Mineral Resource estimate prepared by Spiers Geological Consulting ("SGC").
1 Upfront capital expenditure does not include contingency, mobile fleet (which may be leased or contracted), pre- stripping, pre-production operating costs and working capital required. Full breakdown of Upfront capital expenditure and upfront capital required shown in Table 6.
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Table 2: Mineral Resource estimate for Sihayo and Sambung deposits reported at 0.4 g/t Au cutoff
Deposit | Category | Tonnes (kt) | Grade Au (g/t) | Au (koz) | ||||||||||
Sihayo | Measured | 5,391 | 2.11 | 366 | ||||||||||
Indicated | 12,611 | 1.79 | 726 | |||||||||||
Inferred | 6,798 | 1.5 | 335 | |||||||||||
Subtotal | 24,800 | 1.8 | 1,427 | |||||||||||
Sambung | Measured | 1,793 | 1.42 | 82 | ||||||||||
Indicated | 911 | 1.55 | 45 | |||||||||||
Inferred | 269 | 1.3 | 11 | |||||||||||
Subtotal | 2,973 | 1.4 | 138 | |||||||||||
Total | Measured | 7,184 | 1.94 | 448 | ||||||||||
Indicated | 13,522 | 1.77 | 771 | |||||||||||
Inferred | 7,067 | 1.5 | 346 | |||||||||||
Total | 27,773 | 1.8 | 1,565 | |||||||||||
Notes: | ||||||||||||||
Figures may not sum due to rounding | ||||||||||||||
Significant figures do not imply an added level of precision | ||||||||||||||
Mine Plan and Ore Reserve Estimate
Using the updated geological model developed by SGC and updated economic inputs, AMC Consultants Pty Ltd ("AMC") has completed pit optimisations, mine designs and detailed tactical scheduling for the Sihayo and Sambung deposits.
The updated Ore Reserve estimate is shown in Table 3.
Table 3: Updated Ore Reserves estimate for Sihayo and Sambung deposits
Proved | Probable | Total | ||||||||||||||||||||||||||
Deposit | ||||||||||||||||||||||||||||
Tonnes | Gold | Gold | Tonnes | Gold | Gold | Tonnes | Gold | Gold | ||||||||||||||||||||
(kt) | (g/t) | (koz) | (kt) | (g/t) | (koz) | (kt) | (g/t) | (koz) | ||||||||||||||||||||
Sihayo | 4,360 | 2.15 | 301 | 5,510 | 1.99 | 352 | 9,870 | 2.06 | 653 | |||||||||||||||||||
Sambung | 1,069 | 1.72 | 59 | 565 | 1.57 | 29 | 1,634 | 1.67 | 88 | |||||||||||||||||||
Total | 5,429 | 2.07 | 360 | 6,075 | 1.95 | 381 | 11,504 | 2.00 | 741 | |||||||||||||||||||
The revised Ore Reserve estimate is based on a seven-year open pit operation, producing approximately 551 koz of gold from 774 koz contained gold over the LOM. This mine plan includes 33 koz of gold from the Inferred Mineral Resource classification. In the revised mine plan, the throughput rate has increased from an average of 1.6 Mtpa in the 2020 DFS to
1.9 Mtpa in the 2022 FSU due to an increase in mill size. This has resulted in the mine life decreasing from 8.5 years to 6.5 years. Comparison of the 2022 FSU to the 2020 DFS mine plan is presented in Table 4.
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Table 4: Comparison of 2022 FSU mine plan versus 2020 DFS mine plan
Metric | Unit | 2022 FSU | 2020 DFS | ||||||||
Total material movement | Mt | 67.2 | 73.5 | ||||||||
Total tonnes processed | Mt | 12.1 | 13.7 | ||||||||
LOM strip ratio | waste:ore | 4.6x | 4.4x | ||||||||
Average gold head grade | g/t Au | 2.00 | 2.04 | ||||||||
Mine life | years | 6.5 | 8.5 | ||||||||
Average annual throughput | Mtpa | 1.9 | 1.6 | ||||||||
Contained gold processed | koz | 774 | 895 | ||||||||
Average metallurgical recoveries | % | 71.2% | 70.8% | ||||||||
Total gold produced | koz | 551 | 638 | ||||||||
Figure 1 and Figure 2 show the 2022 FSU mining and production profiles.
(kt) | 14,000 | 3.0 | (g/t) | |||||
mined | 12,000 | 2.5 | grade | |||||
Tonnes | 10,000 | 2.0 | Gold | |||||
8,000 | ||||||||
1.5 | ||||||||
6,000 | ||||||||
4,000 | 1.0 | |||||||
2,000 | 0.5 | |||||||
- | - | |||||||
1 | 2 | 3 | 4 | 5 | 6 | 7 | ||
Waste Mined | Plant feed | Gold grade | Year | |||||
Figure 1: Mining profile underpinning the 2022 FSU
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Sihayo Gold Limited published this content on 16 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 February 2022 22:22:14 UTC.
