Skyline proves positive economics for Bronson Slope

Vancouver – A preliminary economic assessment of Skyline Gold‘s (SK-V) Bronson Slope gold-copper-silver project in northern British Columbia says the deposit could support a profitable mine for almost 20 years.

Skyline has been working at Bronson Slope, which is right beside the historic Snip gold mine and 110 km northwest of Stewart, for almost 20 years. The company has an unfortunate tendency to complete Bronson Slope economic assessments in bad economic times – the last assessment came in 1997, right as the Bre-X scandal rocked the mining world.

Now a new assessment says a $237-million investment could develop an open pit mine at the porphyry deposit that would produce 62,600 oz. gold, 15.2 million lbs. copper, and 245,100 oz. silver each year for 18.4 years. The project carries a pre-tax net present value of $59.3 million, using a 7.5% discount, and delivers a 10% internal rate of return after tax. The $237 million in capital costs as well as $14 million in working capital would be paid back in just over 8 years.

Cash costs came in at US$428 per oz. gold, US$1.24 per lb. copper, and US$9.28 per oz. silver. When calculated as the net of copper and silver credits, the cash cost per oz. gold drops to US$232. Operating costs come in at $9.34 per tonne milled.

The study used life-of-mine average metal prices of US$700 per oz. gold, $2 per lb. copper, and $15 per oz. silver, and an exchange rate of US85¢ to the Canadian dollar.

Bronson Slope is home to 225 million measured and indicated tonnes grading 0.36 gram gold per tonne, 2.22 grams silver per tonne, 0.14% copper, and 0.0077% molybdenum. The study looked at an open pit operation at the site with in-pit crushing and an electrically-powered conveyor system descending roughly 500 metres from the pit to a 15,000-tonne-per-day copper flotation and gravity gold separation processing plant. A pipeline would carry tailings to the tailings facility.

In the preliminary study Skyline used a power cost of 5.5¢ per kilowatt hour, which assumes that the proposed northern transmission line along Highway 37 is built. In case it is not, Skyline has also submitted hydro licence applications in seven regional catchments. Preliminary studies indicate these sites could generate enough power for a Bronson Slope mine. Further technical studies and a feasibility study are now required.

At present access to the site is by air only; Skyline recently acquired a licence of occupation of a 1.7-km airstrip close to the deposit. Access roads reach to within 30 km of the site and the company has preliminary studies and cost estimates to extend a spur road off the Eskay Creek road to Bronson Slope.

Now Skyline plans to follow up on the recommendations from the technical report, which include optimizing the mine plan by concentrating early operations on a higher-grade resource as well as considering magnetite production. The company will then initiate a prefeasibility or feasibility study.

News of the PEA did little for Skyline’s share price, which currently sits at 6¢. The company has a 52-week trading range of 2.5¢ to 18¢ and has 79 million share outstanding (88 million fully diluted).