Skyline Gold Corporation
TSX VENTURE : SK

Skyline Gold Corporation

January 28, 2010 09:50 ET

Skyline Gold Announces Positive Results in First Bronson Slope Magnetite Resource Estimate

RICHMOND, BRITISH COLUMBIA--(Marketwire - Jan. 28, 2010) - Skyline Gold Corporation ("the Company") (TSX VENTURE:SK), a company engaged in the exploration and development of its Bronson Slope gold project in north western British Columbia's 'Golden Triangle', is pleased to announce that it has received a National Instrument (N.I.) 43-101 compliant magnetite resource estimate technical report for the Bronson Slope project. The report, in combination with the results from metallurgical testing carried out in 2008 under the direction of Dr. Bern Klein of B.C. Mining Research of Vancouver, indicates the potential to add magnetite as a significant increase in metal production in addition to gold, copper, and silver production from the proposed milling facility at Bronson Slope.

The Bronson Slope Preliminary Economic Analysis ("PEA") completed by Leighton Asia in February 2009 using metal prices of USD 700 per ounce for gold, USD 2.00 per pound for copper, and USD 15.00 per ounce for silver yielded estimated average after-tax cash flow of CAD 30,830,000 per annum for a 5 million tonne per annum mine plan (CAD 6.17 per tonne of mill feed) over the first 10 full years of production and an estimated 10% after-tax internal rate of return over the life of project. The Company will be updating the PEA to incorporate magnetite production as a by-product into the project's economic evaluation.

In accordance with TSX disclosure requirements, on a stand-alone production basis and assuming that magnetite is the only mineral produced at Bronson Slope, assuming a cut-off grade of 7% magnetite by weight the Bronson Slope Measured and Indicated magnetite resource is 100,640,000 tonnes grading 8.8% magnetite for a total Measured and Indicated estimate of 8,900,000 tonnes of contained magnetite. It is reasonably expected that, on a by-product production basis, the magnetite economic cut-off grade would be lower and the magnetite resource estimate at lower cut-off grades is shown in the table below.

The technical report identifies the potential to further increase the magnetite resource with drilling to the west of and beneath the currently delineated resource where mineralization remains open.

The magnetite product generated from the proposed Bronson Slope milling facility flotation tailings will meet the specification required by the coal industry for the production of clean coal using magnetite for the dense media separation ("DMS") cleaning process. The only Canadian producer of bulk DMS-grade magnetite is a tailings reprocessing operation at a former copper mine near Merritt B.C. Canadian coal producers contacted by the Company have expressed concerns that this magnetite producer, having reprocessed most of the available tailings, has a limited remaining life. When that DMS magnetite production facility closes, the coal mines in Western Canada will be without a local supplier. Since transportation charges constitute a significant portion of the delivered price of DMS-grade magnetite, alternative sources of supply from other countries will be considerably more expensive.

U.S. coal mines currently source their DMS magnetite for coal cleaning offshore from producers located in Peru, Chile and Sweden. Development of the Bronson Slope deposit to production will position the Company as a strategic magnetite supplier to the North American coal industry. With completion of the 27 km access road to Bronson Slope, the planned mine's magnetite production can be trucked to the Canadian National Railway line between Prince Rupert and Prince George for rail transport to coal mines in eastern British Columbia, Alberta and elsewhere.

BC Mining Research's ("BCMR's") 2008 magnetite report included a marketing study noting a British Columbia coal producer was sourcing magnetite for $210 per tonne, including delivery cost, from the tailings reprocessing facility near Merritt. The metallurgical analysis of Bronson slope drill core included in the BCMR report also indicates that magnetite recoveries up to 95% can be achieved from the Bronson mill tailings. A conventional magnetic separation process can be used to recover the magnetite from the tailings generated after processing the Bronson Slope sulphide ores to recover gold, copper and silver.

The following table provides the Measured and Indicated resource estimate for magnetite contained in the Bronson Slope deposit using various magnetite weight content cut-offs:

MEASURED PLUS INDICATED MAGNETITE RESOURCE
Magnetite Cut-off (weight %) Tonnes greater than Cut-off (tonnes) Grade greater than Cut-off Magnetite (%) Contained Magnetite (tonnes)
1.00 179,960,000 6.74 12,130,000
2.00 163,160,000 7.28 11,880,000
3.00 151,400,000 7.66 11,600,000
4.00 143,170,000 7.90 11,310,000
5.00 131,840,000 8.19 10,800,000
6.00 118,220,000 8.50 10,050,000
7.00 100,640,000 8.84 8,900,000
8.00 72,680,000 9.34 6,790,000
9.00 42,880,000 9.92 4,250,000
10.00 15,960,000 10.73 1,710,000

Skyline Gold's president, David Jensen P.Eng., comments, "These excellent results achieved by the magnetite sampling and resource development program have the potential to have a significant positive impact on our plans for the Bronson Slope mine. The addition of magnetite to the Bronson Slope resource would generate substantial additional revenues to the planned Bronson Slope mine."

The Bronson Slope magnetite resource estimate was completed by sampling Bronson Slope drill core and historical drill core pulps totalling 7,521 metres. A total of 1,957 separate core samples were analyzed using the Davis Tube method to determine the total magnetite grade of each sample. The bulk of the magnetite mineralization is contained within the Quartz-Magnetite zone of the Bronson Slope deposit although in some cases higher grades of magnetite extend more than 100 metres from the Quartz Magnetite zone into the adjacent Upper Sedimentary sequence and Porphyry zones of the deposit.

The core sampling, laboratory testing, and magnetite resource development program was completed under its $255,000 budget. The full Magnetite Mineral Resource technical report will be released on www.SEDAR.com within 45 days.

Note: Mineral resources that are not mineral reserves do not have demonstrated economic viability.

This news release was reviewed by Qualified Persons Al Burgoyne, P.Eng., M.Sc., Arnd Burgert, P.Geo., and Gary Giroux P.Eng., MASc. for technical accuracy.

ON BEHALF OF THE BOARD OF DIRECTORS

SKYLINE GOLD CORPORATION

David Jensen, P.Eng., President

Cautionary Statement

Statements in this release may be viewed as forward-looking statements. Such statements involve risks and uncertainties that could cause actual results to differ materially from those projected. There are no assurances the Company can fulfill such forward-looking statements and the Company undertakes no obligation to update statements. Such forward-looking statements are only predictions; actual events or results may differ materially as a result of risks facing the Company, some of which are beyond the Company's control.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Skyline Gold Corporation
    David Jensen, P.Eng.
    President
    604.270.3878
    604.270.3858 (FAX)
    www.skylinegold.com