04.09.11 operational and dfs update

8/2/2019 04.09.11 Operational and Dfs Update

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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


6/9

Figure 2: Sihayo Pungkut Gold Project and prospect locations


7/9

Figure 3: Hutabargot Julu underlying geology and Au rock chip geochemistry


8/9

Figure 4: Hutabargot Julu gold soil geochemsitry


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Figure 5: Hutabargot Julu silver soil geochemistry

04.09.11 operational and dfs update

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