Shareholders applaud changes to Skyline board

The Davis’ were reported to be big sellers of Skyline shares before the meeting as was at least one large Vancouver brokerage firm. For every seller of course there’s a buyer and Pemberton Securities was reported to be on the buy side.

Ronald Shon, chairman and chief executive officer, chaired the meeting and candidly discussed Skyline’s prospects for the future. A successful real estate developer, Shon got involved with the company to shelter a relatively modest amount of money; at the moment Shon is believed to be Skyline’s largest individual shareholder with almost 1.6 million shares. (As one observer quipped at the annual meeting: “He liked it so much he bought the company”). Shon said his average cost was $11 per share and emphasized he wasn’t in it “to break even.”

He also discussed the company’s sharply reduced reserve inventory which now stands at 686,000 tons grading 0.57 oz gold. Pointing out that a “revised set of parameters” was used to calculate the reserve, Shon said the new estimate was required by the Toronto Stock Exchange and to satisfy potential buyers of the company. The reserve was prepared by David Robertson, a Toronto-based independent mining consultant who also happens to be on the board of Placer Dome.

Just over a year ago, Skyline announced a reserve inventory prepared by a Vancouver consulting group which totalled some 1,057,875 tons grading 0.644 oz gold in the measured, drill-indicated, and drill-inferred categories.

The latest reserve is broken down as follows: 56,000 tons grading 0.66 oz gold classified as broken ore; 49,000 tons averaging 0.93 oz classified as proven; 86,000 tons at 0.69 oz in the probable category; and 495,000 grading 0.5 oz classified as possible. The reserves are undiluted, uncut, and were calculated in October 1988. A 0.3 oz cutoff grade was used.

Shon argued that the sale of the company would enable Skyline to expand production at its Reg property to 400 tons per day which “would enhance shareholder values.”

The Reg claim group is contiguous to the Cominco/Delaware SNIP project for which a production decision is expected early this year. Cominco is said to be a top contender for Skyline but finds the $100 million price tag a bit expensive. It has been suggested that Cominco would like to move the Skyline mill down to SNIP and centralize operations there. Shon emphasized at the meeting that “it is our intention that all shareholders participate in any offer for the company.” Discussing the Skyline mining operation, Shon said December was its first profitable month “on a cash basis.” He said they needed 3,200 oz per month to break even and estimated production costs at $230 per oz for 5,000 oz of monthly production. Operating costs would be reduced by at least 20% with road access and power, he claimed.

Bill Price, vice-president and chief operating officer, said the Skyline mill was shut down for part of January because of a fuel shortage which was exacerbated by unusually cold weather. So the company managed to produce about half of its estimated 5,000 oz of gold production. In any event, Skyline expects to achieve that goal in about six weeks. December head grades were 0.6 oz gold and recoveries have fluctuated because of increased mill throughput. “We hope to achieve 90% recoveries in March with new equipment,” he said. Price said there could be an extension of the SNIP deposit onto their claim group.

]]>