Skyline still struggling at Johnny Mountain mine

Despite substantial increases in throughput and gold recoveries, Skyline Gold (TSE) has yet to achieve commercial production at its wholly owned Johnny Mountain gold mine in the Iskut River district of northwestern British Columbia. The company reported a net loss of $1.25 million for its first quarter ended Jan. 31, compared with a loss of $920,000 in the same quarter of the preceding fiscal year. Chairman Ron Shon said this “unfavorable performance” was the result of lower grades being milled and higher depreciation and amortization charges.

A total of 30,973 tons were processed during the period, a 53% increase over the tonnage milled in the comparable quarter last year. Gold recovery improved to 87% from 81% in the same period, and recovery has exceeded 90% since late December when additional grinding capacity was integrated into the mill circuit.

Gold production, however, increased only 10% to 11,449 oz. in the first quarter from 10,406 oz. in the same quarter a year earlier. Shon noted that the lower grade of ore supplied to the mill was the result of a limited number of faces available for mining. The company has made the development of more stopes a priority in order to improve this situation.

Cash operating costs per ounce of gold equivalent are reported as US$283, compared with US$318 per oz. in the comparable quarter of the prior year.

Skyline is planning a $2.5- million exploration program for the summer season that will include follow-up drilling of three main targets identified in the 1989 summer program. It is also continuing negotiations with the British Columbia government for an access road into the Iskut River camp.