Skyline suffers further loss with Johnny Mountain closed

A net loss of $4.6 million was reported by Skyline Gold (TSE) for 1991, compared with a loss of $46.1 million in 1990 which includes writedowns of $31.4 million for mining properties and $9.3 million for plant and equipment.

Skyline suspended operations at its Johnny Mountain gold mine in September, 1990, because of difficulty in maintaining a consistent level of feed into the mill and the inability to replace reserves as they were mined. Mining operations remained suspended in 1991, when the company sought to accelerate development of its property interests surrounding the Johnny Mountain mine in the Iskut River region of northwestern British Columbia. The company’s current land package encompasses about 21,900 acres. Skyline farmed out 1,800 acres adjacent to the Cominco-operated Snip gold mine to Placer Dome (TSE) in the summer of 1990. Recent exploration was focused on three target areas — the CE Contact massive sulphide formation, the gold-bearing Cottonwood structure and the Blu Grouse-Silver Dollar massive sulphide trend. Skyline said Placer will proceed with additional work on these targets this year.

Adrian Resources (TSE) optioned and explored the Sky Creek area in 1991, which led to the discovery of the SMC zone, a massive sulphide occurrence containing gold, silver, copper, lead and zinc. Skyline’s own efforts focused on the C3 zone and the Mike showing, and more work is planned for this year. Skyline has a serious working capital deficiency, long-term debt of about $27.8 million, and to continue as a going concern must receive support from its lenders. The company is currently investigating alternatives to enable repayment of bank debt of $2.5 million in June of this year. Skyline is currently in default with principal and interest payments on loans by a company controlled by a major shareholder. Waiver, however, has been received for all payments until November.