PERTH (miningweekly.com) – An updated feasibility study into Sihayo Gold’s starter project, in Indonesia, has estimated an up-front capital requirement of $173-million.

The starter project will process 12.1-million tonnes of ore to produce 551 000 oz of gold, at an all-in sustaining cost of $956/oz, and a mine life of six-and-a-half years based on an average yearly throughput rate of 1.9-million tonnes.

The updated studies estimated a net present value of $50-million and an internal rate of return of 10.1% for the starter project, with a pre-tax life-of-mine cash flow of $156-million and a post-tax, life-of-mine cash flow of $120-million.

“We remain excited by the potential of the Sihayo starter project and the broader Sihayo-Pungkut seventh 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,” said Sihayo executive chairperson Colin Moorhead.

“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.

“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.”

Moorhead said that the company was 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.”