Skyline Gold goes it alone with $2 million program

The company was seeking outside participation to help effect a turnaround at the 300-ton-per-day mine and to ease financial difficulties stemming from production shortfalls. The search for a buyer failed to turn up any acceptable bids, as did the more recent hunt for a joint venture partner. Skyline’s share price declined this year from a high of $11.87 to a recent low of $3.75.

“We are now redirecting our priority to aggressively exploring our substantial property holdings in the area,” said Ronald Shon, chairman and chief executive officer. Shon said the mine is now producing “up to expectations,” and figures detailing this are expected to be released within the next several weeks in the company’s quarterly report.

Meanwhile, Skyline has already started its new $2-million, 3-part program aimed at increasing ore reserves and assessing the development potential of the 18,800-acre Reg claims.

The first part of the program is aimed at increasing reserves in the vicinity of the mine site. It involves an estimated 32,800 ft of surface diamond drilling and a continuing underground drill program.

The surface drilling will assess the extension of the vein systems of the Stonehouse deposit along strike and at depth, while the underground work will be conducted primarily on the 16 and Discovery veins to define ore shoots for stope development. Underground drilling is also planned to further evaluate the nearby Pickaxe and Gold Rush veins.

The second part of the program is focused on the McFadden zone, an area of surface broken rock about 2,000 ft east of the existing mine workings where high grade gold mineralization was previously discovered. Surface sampling is now under way and will be followed by drilling to locate the source of the mineralization.

The third part of the program involves an extensive geophysical and geochemical program to the north of the existing mine site. Skyline’s objective is to evaluate the area between the Stonehouse deposit and the neighboring SNIP deposit being developed by Cominco Ltd. and Prime Resources. The company is also hoping to locate the possible extension of the SNIP deposit’s Twin zone on its property.

The work program, which includes grid development, line cutting, electromagnetic surveys, mapping and a geochemical sampling program, is already under way. An estimated 16,400 ft of drilling will begin in mid-August after the initial surface work.

Shon said the company would fund exploration work on the 16 and Discovery veins from internally generated cash flow, with the remainder of the program funded by flow-through share financing.

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