Sihayo in talk with EPCM to expand operation

By Romel S. Gurky

ASX-listed Sihayo Gold Limited has also held preliminary discussions with a large EPCM company looking to expand its area of operations to include Indonesia.

Whilst discussions are still at a very embryonic stage and there is no certainty of progression beyond this stage, this company has raised the possibility of providing a high proportion of the financing required to construct the project.

Potential availability of such project financing is an additional incentive to re-evaluate and optimize the assumptions in the original Feasibility Study, especially providing the opportunity to increase the throughput of the mill and plant.

The re-evaluation/optimization work would focus on:

a) Power Supply
The discussions with the local and regional power supply regulator indicate progress is being made to increase the grid power generating capacity in North Sumatra. Some preliminary site investigation work is required into the potential sizing, location and layout of infrastructure that may be required to provide grid power to the project. If grid power were to become available, the overall power cost of the project may be materially reduced.

b) Metallurgical Recovery
The company is to undertaking an investigation into alternative treatment strategies associated with near surface (regolith) ores and geo-metallurgy to understand opportunities to improve project economics.

c) Construction Capital and Consumables Prices
The company has been able to study the construction costs and operating costs of two other gold projects under construction and recently commissioned in Indonesia. The company would like to take the insights gained from studying these projects and apply them to the Sihayo/Sambung project.

There has also been a material and sustained reduction in the price of diesel fuel and other consumables since the completion of the Feasibility Study. The company would like to perform a detailed analysis of these lower prices to determine the overall impact on the Feasibility Study.

The Sihayo Pungkut Gold Project is located within a Generation VII Contract of Work (CoW) located in Northern Sumatra.

The Project has Mineral Resources of Measured, Indicated and Inferred containing 1.4M gold ounces reported in accordance with JORC 2012 within which is contained a combined Proved and Probable Ore Reserve of 554,000 gold ounces

Editing by Johannes Simbolon