ASX-listed Indonesian gold developer Sihayo Gold has produced encouraging metallurgical test work results that point to a potential increase in the all-important gold recovery rates at its namesake Sihayo “starter” gold project in North Sumatra. The Brisbane-based company says average recoveries in its latest test work show an improvement of up to 25 per cent via the use of caustic pre-leaching on the various refractory ore types at Sihayo.
The metallurgical test work forms part of the optimisation studies on the starter project development currently being undertaken by Sihayo Gold, who hopes to complete the studies during the December quarter this year.
A higher average recovery rate is seen by the company as potentially a key opportunity to significantly boost the already robust project economics of the proposed gold mining and processing operation given the rate has been tipped in its definitive feasibility study to come in at around 71 per cent.
Sihayo Gold Executive Chairman Colin Moorhead said: “The latest met test work results provide further encouragement that recoveries can be improved at the Sihayo starter project using high pH pre-leaching.”
The company says that generally metallurgical recoveries within Sihayo’s oxide ore are relatively uniform and consistently greater than 80 per cent and mostly above 90 per cent.
However, within the more refractory transitional and fresh ore material, recoveries are highly variable and can range from below 10 per cent right up to 90 per cent.
The lower recoveries are due to the gold deposition being very fine – less than 5 microns – and a portion of it being locked in refractory sulphides.
Sihayo Gold is currently investigating ways to lift metallurgical recoveries in both transitional and fresh ores and plans to carry out further test work and processing design analysis including further assessment of the cost and benefits of implementing high pH leaching into the processing plant design.
The company’s definitive feasibility study released in mid-2020 shows the starter project development generating total EBITDA of US$744 million over an initial forecast life of mine of eight years or an annual average of US$93 million a year based on a gold price of US$1,890 an ounce.
The study also provides an EBITDA of US$630 million or an average of US$78.7 million a year assuming a base case gold price scenario of US$1,700 an ounce.
Sihayo Gold management says being able to achieve a better metallurgical recovery rate than the 71 per cent estimated in the definitive feasibility study has the “potential to add considerable value” to the Sihayo starter project through increased gold production across the mine life.
The company’s latest published initial life of mine gold production estimate for Sihayo stands at a total of 635,000 ounces or about 79,000 ounces per annum.
Sihayo Gold says its processing plant design is likely to take in about four to eight extra tanks for the pre-leach stage and will also require an expansion of the caustic soda mixing and distribution system.
Whilst the evaluation work is still preliminary, the company says indications are that the additional capital needed for changes to the processing plant design looks to be minimal compared with the total project capital cost.
According to Sihayo Gold management, the additional revenue from higher gold production would support the increase in processing costs arising from the addition of caustic reagents, which would be partially offset by savings in cyanide consumption.
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