News - PEASep 23, 2010 9:02:00 AM
VANCOUVER, BRITISH COLUMBIA, Sep 23, 2010 (MARKETWIRE via COMTEX News Network) --
Skyline Gold Corporation (TSX VENTURE: SK) ('the Company') is pleased to announce the results of an update of the Preliminary Assessment ('PA') technical report on its Bronson Slope deposit in north western British Columbia's 'golden triangle'. The Bronson deposit is located approximately 500 meters from the historic Snip Gold Mine that produced 1.03 million ounces of gold with an average recovery of 24.5 grams/tonne gold through 1999.
The new PA technical report is prepared by Moose Mountain Technical Services ('MMTS') and updates a PA prepared by Leighton Asia Ltd. ('Leighton'), a division of The Leighton Group. The Leighton PA was previously released by the Company in February 2009.
The report provides an update of the economic analysis of the deposit and includes a mine plan and project cost estimate showing positive economics and a basis for further advancement of the project.
Project Economics
The PA projects a 38 year life-of-mine ('LOM') with production of 1.757 million oz. of gold, 383.624 million pounds of copper, 6.8 million ounces of silver and 9.66 million tonnes of high purity magnetite powder. Economic evaluation of the Project is based on a pre-tax financial model. For the project as defined in this update of a 38 year LOM project with 191 million tonnes of mill feed, the financial results using base case inputs as above are:
Internal Rate of Return 21.5% NPV (7.5% discount rate) CAD 330.2 million Initial Capital CAD 257.6 million Pay Back Period 3.8 operating years (from mill start up) NPV (0% discount rate) CAD 1.406 billion
The project economic model utilizes base case LOM average metal prices of (USD) $950/oz. gold, $2.50/lb. copper, $15/oz. silver, $90/tonne (FOB Bronson Slope) for high purity magnetite powder and an exchange rate of 0.90 USD/CAD.
The production of high purity magnetite powder uses data from the N.I. 43-101 compliant magnetite resource that the Company announced in January 2010. The Bronson Slope mine is projected to produce this magnetite powder to meet specifications required for specialty applications including cleaning of metallurgical coal using a dense media separation process.
The financial model base case initial capital cost of CAD 257.6 million (USD 231.8 million) includes contingencies and sustaining capital of CAD 38.5 million (USD 34.7 million) over the life of project. No allowance is made for working capital, salvage value or reclamation and closure costs in the financial model.
David Jensen, P.Eng., President of Skyline Gold comments: "These excellent results are very encouraging for Skyline Gold and provide a positive assessment of the potential for development of an economic project at Bronson Slope. We look forward to continuing to develop this core asset toward production as well as exploring our increasing tenure position in the Iskut region with a goal of expanding Skyline's Iskut gold resources as initial high grade and further mill feed for the existing project."
----------Original Message Posted 9/23/2010 1:24:16 AM----------
to buy Skyline. I think they are wrong. I think the game has changed. It's obvious. "We" all know that. But there is an ocean of "they" that are now slowly finding out. And they have a lot of money.
The deposit probably contains somewhere near 5 million ounces but of course we won't be able to actually mine all of it. There's also some 700 million pounds of copper, at least.
We should be able to extract 40-50% of the gold and 25% of the copper. So lets use 2 million ounces of gold and 150 million pounds of copper.
If the PEA shows an IRR somewhere north of 15-18% then we should be valued at
$40/ounce of gold and 20cents/pound of copper "in the ground" NOW! You don't have to have a PHD in Math to see why the execs from Brett Resources are involved. These guys are coming and they're coming hard. The game has changed.
I've had dozens of people say to me "Yeah I think you're right. I'll just wait till it pulls back."
WTF! Are they nuts? It's like being offered a free limo at the airport and you say "Nah, I'll wait for the stretch."
When you see comments like "the deposit is only accessible by air" it becomes easier to understand how it can remain so cheap. 25km to power and major roads equates in cost to approximately 12 weeks of production out of a 20 year mine life. My God. How many deposits of 2 million ounces has it's own runway already built?
The metrics above are conservative but we still get $110 million/130 million shares or 85 cents per share. Without including silver(16 million ounces),moly (38 million pounds), magnetite (10 million tonnes), hydro assets, or bluesky on new properties and highgrade drilling.
By the way. My broker has given me consistent advice on SK... "Wait for it to pullback."
I say from where? 85 cents? Do your own dd.