Report from Calgary Iskut is a busy B.C. gold camp

If the constant clatter of helicopter rotor blades and the frequency of Otter aircraft landings are an indication of exploration activity, the Skyline area, flanking the Iskut River in northwestern British Columbia, is the busiest gold camp in the making in the province.

The reason for the aircraft movement, originating from Smithers, Terrace and neighboring Wrangell, Alaska, is to support about 300 geologists, geophysicists, prospectors and miners working out of 10 or more separate tent camps exploring for gold in an area of about 2,000 sq km.

Leading the search is Vancouver- based Skyline Exploration, which precipitated the rush to the Iskut and discovered the Reg gold deposit on Johnny Mountain, five kilometres south of the river and 300 km north of Prince Rupert.

Discovered in 1980, the Reg deposit along Stonehouse Creek has sparked a major exploration effort culminating in the discovery early in 1987 of a second gold deposit by the joint venture team of Cominco and Delaware Resources along Bronson Creek, five kilometres north of the Reg deposit.

The rush to the Iskut in 1987 by over 10 companies from Vancouver and Calgary has created a Klondike atmosphere in the area, long known as a mineralized terrain containing copper, lead, zinc, silver and molybdenum.

Reported new surface gold discoveries have been found by Inel Resources, Gulf International Minerals, Tungco Resources, Tanker Oil and Gas, Hector Resources, Western Canadian Mining Corp., Androne Resources and several other companies.

The Skyline story is a success tale related to one man who, in 1980, starting with a belief in an area, took a raw prospect comprising gold-bearing boulders, traced their source to outcropping showings and, by 1986, through drilling, uncovered their buried lode extensions.

Prospector-cum mining entrepreneur Reg Davis is the man who parlayed the prospecting rock-banging with Skyline Vice-president Bob Gifford to discover the Reg deposit. After 50,000 ft of diamond drilling and over 1,000 ft of underground excavations the two can look forward to their mine opening in early 1988. The Reg deposit will be Canada’s first new producing mine in 1988.

But mines are not easy to find nor to develop, especially in mountainous regions. Lacking road access, every piece of drill rod and T-bone steak has been transported to the site by helicopter or fixed- wing aircraft.

The Skyline project involves the employment of 130 workers ranging from geologists/geophysicists through undergound miners to construction workers. By Christmas, accommodations will be provided by a deluxe lodge to house 100 men.

Mill construction designed to treat up to 450 tons per day has commenced with start-up scheduled for the first quarter of 1988. Initially the mill will process 200 tons per day containing about 0.6 oz gold per ton. Ore reserves are estimated to be 938,000 tons grading 0.67 oz.

Gold recoveries from the mill are estimated to be 93%. Annual gold production will commence at 40,000 oz and will double to 80,000 oz once full production is achieved.

The development of the Iskut area and the adjoining Sulphurets gold camp, where an equal number of men and degree of success has been achieved, has created a number of issues common to B.C. and Alaska. The need is for land access through roads to connect the area to B.C.’s Highway 37 which traverses the central part of B.C. from Prince Rupert/Prince George to Whitehorse.

A road west from No 37 along the Iskut River, ringing the north end of Sulphurets and bisecting Skyline, could reach the Stikine River and the Pacific Ocean. The Alaskan city of Wrangell on Wrangell Island is only accessible by boat. If a road reached the mouth of the Iskut, Wrangell could look to access to the continent here rather than the long boat haul to Prince Rupert, Vancouver and Seattle.

All eyes will be on the Skyline area in the coming months with the anticipation of great and wonderful things pouring forth in the form of golden bricks. With this event will come diversified development sure to benefit British Columbia and the Panhandle parts of Alaska.

In an effort to tighten up the regulations on the creation and listings of the Junior Capital Pool Companies (the so-called nickel (5 cents ) companies) The Alberta Securities Commission has invoked new ground rules on share funding and distribution. The “nickels” have become “dimes.”

Minimum share price at the initial offering has been raised from 5 cents to 10 cents . (The Vancouver Stock Exchange requires that the initial offering be set at a minimum of 25 cents .)

Several new measures have been introduced to legitimatize jcps or to give them greater credibility. The philosophy behind jcps was to provide junior start-up companies with an enhanced opportunity to become listed on the Alberta Stock Exchange, thereby providing a viable and efficient mechanism to enable junior companies to raise further equity capital from the investing public.

It was recognized that the disclosure requirements are necessary for proper disclosure to limit abuse of irregularities the system was experiencing.

The flood of applicants to go public via the jcp route in the past year has inundated ase facilities. As of Oct 9, 197 new companies have been listed on the exchange, of which 125 are jcps. With a minimum $30,000 in cash contributed by the directors and promoters, in exchange for shares priced usually from 1 cents to 3 cents , a jcp becomes properly capitalized.

With no business plan other than the intent to seek opportunities in mining, oil and gas, etc., a jcp becomes a reality with the assistance of a broker who sells at least $50,000 worth of stock to a minumum 300 shareholders. With a 1,000-share board lot minimum, initial subscribers purchase from 2,000 to 20,000 shares at 10 cents , depending on the gross proceeds raised from the primary distribution ($50,000 minimum to usually a maximum $100,000).

Upon listing the nickels have appreciated from 100% to over 1,000% with the average somewhere in the 30 cents -40 cents range (600%-800%). New regulations pertaining to agency agreement with the sponsoring brokers require that brokers can only sell up to 50% of their optioned stock prior to the implementation of the companies’ major transaction.

The transaction, by definition, moves the jcp to the regular board by virtue of completing a venture in which a minimum of 25% of the issued stock is provided to a third party for properties, claims, leases, etc. (the major transaction).

Based on the demand for the “nickel-cum-dime” stocks by the investing public, the jcps will continue to be churned out by Calgary brokers, especially Yorkton Securities and McDermid St. Lawrence, who do more than 75% of these coin-priced moneymakers.

A slowdown in new issues in time is inevitable. The limit to how long and how many can be created and listed will be dictated by demand and the v ery important after- market — much like after-birth. Just how much breathing room is out there for everybody?