Sihayo Gold says it has strengthened its case to unearth a “bulk tonnage” gold deposit in Indonesia after its air core scout drilling campaign hit consistent lower grade gold in Sihayo’s attempts to open up a second major project area about 6km south-east of its existing 1.5m ounce gold resource at the Sihayo Starter Pit project. The company also says the Indonesian government has signed off on its DFS for the Sihayo Starter Pit project that is expected to churn out about $80m a year in EBITDA for at least 8 years.
Sihayo recently completed a 25-hole drilling campaign at its Hutabargot Julu prospect for 4,806 metres which previously delivered numerous significant gold hits including an impressive high-grade intercept of 9 metres going 8.36 grams per tonne gold and 9.3 g/t silver from just 8 metres depth.
New hits from the Hutabargot Julu prospect include 7.1m at 1.6 g/t gold and 15.7 g/t silver from 58.4m, 16m at 0.40 g/t gold and 40.3 g/t silver from surface, together with 8m at 0.53 g/t gold and 3.5 g/t silver from 34m in another hole.
Multiple gold-silver intercepts have been returned from four of the final six holes located on the western edge of a soil anomaly and to the south of the high-grade intercept previously reported.
Located on the Indonesian island of Sumatra, Sihayo’s project tenure covers over 66,000 hectares in what the company believes to be a world-class and under-explored geological setting prospective for major porphyry related gold, silver and base metal deposits.
The jewel in the crown at the project tenure is the Sihayo Starter Project that already boasts 1.5 million ounces of gold.
An estimated 8-year mine life has been projected to generate some US$1.2 billion in gross sales using a US$1,890 per ounce price of gold. Production of 635,000 ounces of gold is anticipated over the initial mine life, with operating costs of just US$632 per ounce. Capital costs are estimated at US$153 million with an NPV of US$268 million.
Sihayo is aiming to bring the project into production in 2023 with construction due to commence in the second half of this year. The company has now been given a boost in its endeavours with the Indonesian government formally providing the technical and economic approval for its DFS. Other works required prior to the commencement of construction are underway including environmental baseline studies and tailing storage facility designs.
Whilst the company continues to progress the Sihayo Starter Project mine plan, the rods continue to turn about 6km to the south-east where management is essentially pursuing two geological theories – a high grade smaller tonnage deposit at the Sihorbo Vein target and the bulk tonnage target to the east of Sihorbo at Hutabargot Julu.
The final results are now in from the company’s wide-spaced reconnaissance drilling campaign that targeted a large, 3.5km by 3km geochemical soil anomaly at Hutabargot Julu.
Management says it is onto a large mineralised hydrothermal alteration system beneath the extensive gold-soil geochemical anomaly at Hutabargot Julu that is about 80 km southeast of the large 7.6m-ounce Martabe gold-silver deposit within the same highly prospective magmatic arc segment in the Barisan Mountains of North Sumatra.
The company believes the drilling has intersected part of a large, mineralised vein system with bulk-tonnage potential. Active and inactive local mine workings surround the holes and significantly expand the bulk tonnage target potential, according to management.
Regional drilling is continuing with a 2,000-metre campaign having now commenced at the high-grade Sihorbo vein target located on the far western side of Hutabargot Julu.
Results from historical drilling at Sihorbo include bonanza grade hits of 1.2m at 204 g/t gold and 55 g/t silver, together with 5.3m at 17 g/t gold and 19 g/t silver from another hole. The program is expected to take between three to four months to complete.
The company is also looking to add ounces to the Sihayo Starter Project through a 20-hole drilling program for 2,000 metres at the near-mine Sihayo-2 prospect. A one-man portable rig has commenced drilling, targeting additional, low-strip ratio oxide gold mineralisation located within trucking distance to the proposed mine. The program is expected to be completed within four months.
Technical drilling for engineering purposes at the Sihayo Starter Project has also commenced.
Sihayo’s four-pronged strategy offers a bit of everything, steady-state gold production from the Sihayo Starter Project, some blue sky near mine potential around it, bulk-tonnage mining at Hutabargot Julu and an as yet unknown sugar hit potentially laced with grade at the Sihorbo vein target.
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By Matt Birney
