04.09.11 operational and dfs update
TRANSCRIPT
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ASXANNOUNCEMENT4SEPTEMBER2011
OPERATIONAL AND DFS UPDATEPOTENTIAL 22% LIFT IN ANNUAL AVERAGE GOLD PRODUCTION& 10% REDUCTION IN AVERAGE SITE CASH OPERATING COSTS
(INCL ROYALTIES)
TheBoardofSihayoGoldLimited(ASX:SIH)ispleasedtoprovideanOperationalandDefinitiveFeasibility
Study
(DFS)
update
for
its
75%
owned
Sihayo
Pungkut
Gold
Project
(SPGP)
in
North
Sumatra,Indonesia.
OperationalUpdateDrillingactivitiesattheSPGParesettoresumeinlateSeptember,followingtheendofthe
Ramahdanperiodandtheassociatedpublicholidays,withafocusonthefinalphaseofinfilldrilling
fortheSPGP. Aninfillprogrammeofapproximately3,000metersisrequiredtolikelyconvertthe
limitedamountofInferredResourcecontainedwithintheoverallJORCcompliantresourceintothe
higherIndicatedcategory. Theprogrammewillbeundertakenwithtwodiamonddrillrigsandgiven
therelativelyshallowdepthoftheplannedholesitisanticipatedthatthedrillingwillbecompleted
withinthreemonths.
Oncetheinfillprogrammeiscomplete,ongoingexplorationdrillingshalltargetpotentialnear
surfacemineralisationalongstrikefromtheexistingJORCResources,whichcouldpotentiallybe
includedintheearlyyearsofthecurrentproposedminescheduleasdescribedwithintheDFS.
Figure1belowshowstheSihayoandSambungResourcesandhighlightsthepotentialresource
extensionstothenorthwestandsoutheastoftheSihayodeposit.
GovernmentandCommunitymeetingsAspreviouslyreported,onSunday29thMay,agroupofdemonstrators,believedtobesupportedby
therepresentativesofillegalartisanalminersfromtheregion,arrivedandcausedsignificantdamage
toSihayosexplorationcamp.
Overthepastthreemonths,ourcompanyrelationsteamhasconductedoverfortymeetingswith
thekeySPGPstakeholdersincluding;localcommunitymembers,villageheads,religiousgroups,
NGOs,localandprovincialGovernmentrepresentatives,localandprovincialPoliceandArmy
commanders,thenewlyelectedBupatiofMandailingNatal,NorthSumatraandtheGovernorof
NorthSumatra. Themeetingshavebeenfocusedonensuringthatthefutureactivitiesofthe
Companyareconductedinasafeandsecureenvironmentwithouttheriskofanyfurtherunlawful
actsagainsttheCompany.
Aswithanyminingproject,ourrelationshipwiththelocalcommunityiscriticaltoourlongterm
operationalsuccess. Aspartofourongoingcommunityprogrammewearetaking15local
representativesonasitevisittoanewlycommissionedgoldmineinNorthSulawesi,Indonesiain
midSeptember,
to
show
them
first
hand
the
operational,
environmental
and
community
aspects
of
amineofsimilarsizetoourplannedSPGP.
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DefinitiveFeasibilityStudy(DFS)The
final
phase
of
the
DFS
work
related
to
the
overall
metallurgical
gold
recoveries
is
progressing
well. Over4,500additionalcyanideleachtestsarebeingcompleted(1,500completedtodate)
acrossthemultiplemineralisationtypesthatmakeuptheSihayoandSambungResourcesandthe
initialresultssuggestthatsomeimprovementinoverallprocessgoldrecoveriesmaybeachievable.
ItisanticipatedthatthemetallurgicalworkwillbecompletedbytheendofOctober.
Ongoingassessmentoftheoptimalplantcapacityhasindicatedthatanincreasefromthecurrent
1.25mtpacapacitytoarateof1.5mtpaiseconomicallypositive. TheCapexandOpexcomponents
ofanexpansionto1.5mtpahavebeencompletedtoDFSstandardandthekeysummaryresultsare
detailedinthetablebelow. Anadditionalscenarioofimprovedrecoveriesovertheinitialminelife
hasalsobeenincludedinthetable,however,itneedstobeemphasisedthatthisismerelyfor
indicativepurposesatthisstageandanyimprovementinoverallrecoverieswillbeconfirmedatthe
conclusionof
the
current
metallurgical
testwork
programme.
TheSambungResourcehasbeenincludedintheminingscheduleoftheexpanded1.5mtpa
throughputcase,however,itmustbenotedthattheSambungResourceiscurrentlyintheInferred
categoryandthereforewillrequireasuccessfulinfilldrillingprogrammetobringtheresourceupto
therequiredIndicatedcategoryforitsultimateinclusionintheDFSminingschedule.
KeyDFSparametersforthe1.25mtpaand1.5mtpacases 1.5mtpacasedelivers22%increaseinaverageannualgoldproductionand10%
decreaseinsitecashoperatingcosts(includingroyalties)comparedwith1.25mtpacase
SihayoPungkutGoldProject 1.25Mtpa 1.5Mtpa 1.5Mtpa*CapitalCost(precontingencyallowance) USDmill 80.4 87.1 87.1
Preproductionmining USDmill Nil 11.2 11.2
InitialMineLife years 7 7 7
LOMTotaloreprocessed** Mt 8.6 10.2 10.2
LOMAverage
anual
gold
production Oz 72,000
88,000
93,000
LOMSiteCashCosts(includingroyalties) US$/oz 752 678 639
LOMaveragegoldrecoveries % 71.5 71.5 75*
LOMaveragestripratio Waste:Ore 5.4:1 4:1 4:1
Note:1.5 Mtpa*scenarioassumealiftin LOMaveragegoldrecoveriesto75% fromthe basecase71.5%Note:LOMTotalore processedforthe 1.5 Mtpacaseincludes1.6 Mtcurrentlyclassifiedas InferredResourceNote:InferredResourcematerialcomprises16% ofthe forecasttotalore processedinthe 1.5 Mtpa case
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SambungJORCResourceRunge
Limited
completed
an
updated
JORC
Resource
report
for
the
Sambung
Resource
in
July
2011.
WhilsttherehasnotbeenanyadditionaldrillingsincethepreviousJORCReportcompletedin
January2007,Rungehaveusedthegreaterknowledgebaseobtainedduringthepreperationofthe
latestJORCReportfortheSihayoResourcetoassistinthecompletionofthenewSambungReport.
Insummary,thenewJORCreportsawanincreaseintheestimatedcontainedgoldfrom100,000oz
to123,200oz,adeclineintheaveragegradefrom2.6g/tAuto2.2g/tAuandarevisedcutoffgrade
of1.2g/tcomparedto1.5g/tpreviously. ThetablebelowdetailsthenewSambungJORCresource.
RegionalExplorationFortheentireperiodofthedisruptionatourmainproject,regionalexplorationworkatTambang
Tinggi,HutabargotJuluandHutaPungkut,includingdrillingatTambangTinggi,hascontinued
withoutissue. RefertoFigure2belowforthelocationofallprospects.
HutabargotJuluepithermalgoldprospectTheworkprogramhassignificantlyexpandedtheknownmineralisationpotentialoftheprospectto
the north, east andwest. The underlying geology, soil and rock chip geochemistry results are
containedinFigures35below.
Newmineralised vein systems have been discovered to the east (fault vein) and to the north
(Kaporasprospect). SoilandIPprogramswillbeextendedtothenorthwesttocovertheexpanding
anomalouszones.
TheKaporasEastsoilgoldanomalyisapproximately1x1kmsqandopenundercovertotheeast.
Theanomalyisconsistentwithabroadareaofmagnetitedestruction(alteration)andrepresentsa
highprioritytargetforbulktonnagegoldpotential.
TheKaporasWestsoilgoldanomalyisalsoapproximately1x1kmsqandisopentothenorthand
thewestandisconsistentwithamappedgranodioriteintrusive.
GoldmineralisationatHutabargotJulu ishosted inepithermalveinsandstructureswithinanorth
southtrending
belt
of
dacitic
volcanics.
The
mineralised
vein
systems
are
covered
to
the
south
by
postmineralacidic(daciterhyolite)flowsandpyroclasticsandtotheeastbyquaternaryalluvium.
SambungInferredMineralResourceEstimateType Tonnes Au Au Au
t g/t ounces cutoff
Oxide 313,000 2.3 22,900
Transitional 1,404,000 2.2 100,100
Fresh 4,000 2 200
Total 1,721,000 2.2 123,200 1.2g/t
Note1:Errorsmay occurdue toroundingNote2:SambungresourceJORCestimate completedbyRungeLimitedNote2:Competent person,RobWilliams
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Hutabargot Julu is a high priority for further exploration and potential discovery of both highgradelowtonnagegolddepositsandbulktonnagelowgradegolddepositsandislocatedonly8kmalongtrendfromtheSihayoandSambungResources.DrillingisexpectedtocommenceinlateSeptember.
TambangTinggigoldandcopper/goldDrillingofthemultiplenearsurfacegoldtargetsintheTambangTinggiRegionisnearingthe
completionofthefirstphase. Thesecondphaseofthedrillingprogrammewillbeaseriesofdeeper
holestestingthecopper/goldpotentialindicatedbytheresultsofholesTTDD011andTTDD008.
ConclusionWiththefinalphaseofinfilldrillingabouttocommenceatourmainprojectandconcurrentlyare
commencementof
drilling
at
the
highly
prospective
Hutabargot
Julu
epithermal
gold
prospect,
the
nextsixmonthsshouldprovetobeaveryexcitingperiodforourCompany.
Yoursfaithfully,
SIHAYOGOLDLIMITED
PaulWillisChiefExecutiveOfficer
4September2011
CompetentPersonsStatementsSihayoGoldLimited:Theinformationinthisreportthatrelatestoexploration,mineralresourcesororereservesisbasedoninformationcompiledbyMrGrahamPetersen(BSc.Geol)whoisafulltimeemployeeofPTSorikmasMining(75%ownedsubsidiaryofSihayoGold
Limited),andisaMemberoftheAusIMM.MrPetersenhassufficientexperiencewhichisrelevanttothestyleofmineralisationandtypeof
depositunderconsiderationandtotheactivitywhichheisundertakingtoqualifyasacompetentpersonasdescribedbythe2004Edition
oftheAustralasianCodeforReportingofExplorationResults,MineralResourcesandOreReserves.MrPetersenconsentstotheinclusion
inthisreportofthemattersbasedonhisinformationintheformandcontextinwhichitappears.
RungeLimited:TheinformationinthisreportthatrelatestoMineralResourcesatSihayoandSambung isbasedoninformationcompiledbyMrRobertWilliamsBSc,aMemberoftheAustralianInstituteofMiningandMetallurgy,whoisafulltimeemployeeofRungeLimitedandhassufficientexperiencewhichisrelevanttothestyleofmineralisationandtypeofdepositunderconsiderationandtotheactivity
whichheisundertakingtoqualifyasaCompetentPersonasdefinedinthe2004EditionoftheAustralasianCodeofReportingfor
ExplorationResults,MineralResourcesandOreReserves.MrWilliamsconsentstotheinclusioninthereportofthemattersbasedonhis
informationintheformandcontextinwhichitappears.
Modelling:BoththeSihayoandSambungdepositswereestimatedbyRungeLimitedusingOrdinaryKriginggradeinterpolation,
constrainedbymineralisationenvelopespreparedusinganominal0.5g/tgoldcutoffgrade.Inallcasesaminimumdownholeintercept
lengthof2mwasadopted.
TheblockdimensionsusedintheSihayomodelwere25mEWby10mNSby5mverticalwithsubcellsof6.25mby2.5mby1.25m,whilea
blockdimensionof20mEWby20mNSby5mverticalwithsubcellsof5mby5mby1.25mwasadoptedfortheSambungmodel.Statistical
analysisofthedepositdeterminedthatnohighgradecutswererequiredintheSihayoestimate,althougha25g/tAuhasbeenusedinthe
Sambungestimate.Bulkdensitywasassignedinthemodelbasedupontheresultsof4,629bulkdensitydeterminations.
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NoteAllstatementsinthisreport,otherthanstatementsofhistoricalfactsthataddressfuturetimings,activities,eventsanddevelopmentsthat
the
Company
expects,
are
forward
looking
statements.
Although
Sihayo
Gold
Limited,
its
subsidiaries,
officers
and
consultants
believe
the
expectations expressedinsuchforwardlookingstatementsarebasedonreasonableexpectations,investorsarecautionedthatsuch
statementsarenotguaranteesoffutureperformance andactualresultsordevelopmentsmaydiffermateriallyfromthoseintheforward
lookingstatements.Factorsthatcouldcauseactualresultstodiffermateriallyfromforwardlookingstatementsinclude,amongstother
thingscommodityprices,continuedavailabilityofcapitalandfinancing, timingandreceiptofenvironmentalandotherregulatory
approvals,andgeneraleconomic,marketorbusinessconditions.
Figure 1: SPGP mineralisation plan showing surface projection of Sihayo and SambungJORC resources
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Figure 2: Sihayo Pungkut Gold Project and prospect locations
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Figure 3: Hutabargot Julu underlying geology and Au rock chip geochemistry
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Figure 4: Hutabargot Julu gold soil geochemsitry
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Figure 5: Hutabargot Julu silver soil geochemistry