Skyline Seeks to Form Joint Venture with Senior Mining Company

According to Skyline Chairman and CEO Ronald Shon, the recent search for a buyer of the company and its air-accessed British Columbia gold mine failed to turn up any “acceptable” bids.

Instead, Shon said Skyline has initiated discussions with certain senior mining companies that had earlier expressed an interest in pursuing a joint venture arrangement with the company.

While Shon won’t say who the potential partners are, many feel Cominco Ltd. (TSE) might be a contender as the company is at the feasibility stage with the adjacent Snip gold project, a 60/40 joint venture with Prime Resources (VSE).

“Formation of a joint venture structure is an attractive alternative to maximize shareholder value at this time through aggressive exploration and development of the companies properties,” Shon stated. All Skyline’s holdings are located in the Iskut River area, including the 300-ton-per-day Johnny Mountain mine officially opened on the Reg claims in Aug, 1988.

A government/industry study is now evaluating possible access routes into the region which, if realized, would lower Skyline’s mine operating costs and stimulate exploration on other high-potential areas on its 18,800-acre Reg claims. The property is reported to contain a number of defined anomalies and exploration targets distinct from the Stonehouse deposit, and there is also believed to good exploration potential on the Red Bluff and Red Bird claims contiguous to the Snip property. Shon confirmed that continued exploration of these targets would be an important part of any joint venture agreement.

Reaction by investors to Skyline’s plans was demonstrated in a sharp fall in the company’s share value. At press time the shares were trading between $6.50 and $7.00, down considerably from the near-$12 highs earlier this year and the $17 highs in 1988. In view of the mine’s start-up problems and recent down- grading of reserves, and with the benefit of hindsight, it’s apparent many investors now feel the exploration-oriented junior should have more seriously considered the traditional joint venture route to develop the mine.

Since taking control, however, Shon has strengthened the company by the addition of mining professionals, filling a void left by the resignation of former President Norman Anderson in 1987. Shon is a Vancouver real estate developer and early Skyline financial backer.

Skyline reports that mill modifications at Johnny Mountain are substantially completed. With weather conditions now back to normal, Shon said mill throughput has achieved the target of 300-tons- per-day with gold recovery approaching the target of 90%. The company’s production target is 5,000 oz of gold per month.

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