Skyline boosts production, cuts costs by $55 (US) an oz

Skyline Gold (TSE) said production costs at its 100%-owned mine were reduced to$202 (US) per oz of gold and gold equivalents in its third quarter ended July 31 despite a further drop in gold prices during this time. Production costs averaged $257(US) in the previous quarter.

The production cost savings were evidenced in the company’s latest quarterly financial results. Skyline’s net loss was $347,000 or 4 cents per share, down sharply from the net loss of $1.13 million or 13 cents per share in the previous quarter. Cash flow from operations improved to $817,000 from $210,000 in the second quarter.

During the third quarter the air- accessed mine produced 12,167 oz gold, up from 11,174 oz in the previous quarter. The mine also turned out 19,832 oz silver and 361,631 lb copper during the period.

Skyline is now installing a re- grind mill to increase production capacity to 350 tons per day and gold recovery to 90%; a measure it expects will have a “substantial positive impact on cash flow.” Currently the mine is processing 308 tons per day and is achieving 85% recoveries. Ron Shon, chairman and chief executive officer, also noted that the company was successful in identifying additional reserves in an ore shoot of the Pickaxe vein. The results will be included in an updated reserve to be done later this year.

The $2-million exploration program is also credited with locating a new gold vein called the Homestake. Work was also done on the McFadden zone and on the newly discovered Windsock mineralization in the Sky Creek-Bronson area.

Skyline is negotiating a $9.6- million private placement in convertible redeemable debentures in order to increase working capital, increase mine capacity and to replace other higher-cost debt.

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