Third Quarter Report
Skyharbour Resources Ltd. (the "Company") has released its BC Form 51-901F Third Quarter Report containing unaudited financial statements in Canadian funds, prepared by management, for the nine-month period ended December 31, 2003 (the "Quarterly Report"). Pursuant to the requirements of National Instrument 54-102, this news release provides a summary of the information contained in the Quarterly Report. Concurrent with this news release, the Company has filed the Quarterly Report with the regulatory authorities through SEDAR (www.sedar.com).
General
The Company is primarily a junior exploration company with no revenues from mineral producing operations. Activities include the process of exploring its mineral properties, reviewing and subsequently acquiring potential new mineral properties and conducting exploration programs to determine whether these properties contain ore reserves that are economically recoverable. The recoverability of amounts shown for the mineral properties and related deferred exploration expenditures is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the exploration of the property, and upon future profitable production.
Results of Operations
The Company has not had any sources of revenue to date and has financed its activities substantially through equity financing. During the current nine-month period, the Company incurred a net loss of $832,477 as compared to $468,838 in the previous year. The increase in the year to date figure is primarily the result of the write off of the Grays Bay mineral property in the amount of $186,500 and related deferred exploration expenditures of $105,979. The Company incurred a net loss of $247,745 for the three-month period ended December 31, 2003, compared to $157,800 in the same period in the previous year. The Company has incurred net losses in each year since inception and as of December 31, 2003, has an accumulated deficit of $20,773,015.
The Company has a shareholders' equity of $1,797,471 and working capital of $447,977 at December 31, 2003, compared to that of a shareholders' equity of $1,249,704 and a working capital of $470,936 at March 31, 2003.
Liquidity and Capital Resources
The Company has historically met all cash requirements for operation by equity financing. Future funding needs of the Company are dependent upon the Company's continued ability to obtain equity and/or debt financing to meet its financial obligations and to pursue further exploration on its properties.
Significant Events
Private Placements
On November 5, 2003, the Company closed its 2,000,000 unit private placement. Each unit consists of one share and one share purchase warrant which entitles the holder to purchase an additional share of the Company at a price of $0.13 per share until October 27, 2005. In addition, the Company issued 10,000 common shares and paid the sum of $5,000 as compensation in connection with this private placement. The shares and any shares to be issued upon exercise of the warrants will be subject to a hold period and shall not trade until the expiry of February 27, 2004.
On November 21, 2003, the Company announced that it had negotiated a non-brokered private placement of 2,000,000 Flow-Through Units (the "Units") with Endeavour Flow-Through Limited Partnership 2003. The Units are being offered at a price of $0.15 per Unit. Each Unit will consist of one flow-through share and one share purchase warrant entitling the holder to purchase an additional flow-through share at a price of $0.16 for a period of one year. The Company will pay an 8% finder's fee payable in non flow-through units in respect of this private placement.
On November 24, 2003, the Company announced that it has negotiated a non-brokered private placement of 270,000 Flow-Through Units (the "Units"). The Units are being offered at a price of $0.15 per Unit. Each Unit will consist of one flow-through share and one share purchase warrant entitling the holder to purchase an additional flow-through share at a price of $0.18 for a period of one year. The Company will pay a finder's fee in respect of this private placement in accordance with applicable TSX policies.
Stock Options
On November 3, 2003, the Company also granted incentive stock options to certain of its directors and employees which entitles them to purchase up to an aggregate of 333,975 common shares of the Company at a purchase price of $0.12 per share for a period of two years, subject to TSX Venture Exchange acceptance.
On December 12, 2003, the Company also granted incentive stock options to purchase up to an aggregate of 554,875 shares of the Company at $0.18 per share, to certain of its employees and directors. The options will be exercisable for a period of two years.
Appointment and Resignation
On November 5, 2003, the Board of Directors of the Company announced that Mr. Derek A. S. Huston has resigned as Vice President of Corporate Communications. Mr. David Lorne Goldman of Toronto, Ontario has been appointed in his place.
On December 30, 2003, the Company announced that Mr. Carl D. Huston has consented to act as a director of the Company. Mr. Huston is a Professional Engineer and Professional Prospector with over 40 years of experience. Mr. Huston has been a self-employed geological consultant in the Red Lake area since 1980. Mr. Huston has also previously acted as a director of various exchange issuers. The Company reports that Mr. James D. Briscoe has resigned as a director of the Company.
Mineral Properties
Heyson & Byshe Township, Red Lake District, Ontario
On May 6, 2003, the Company and ITL Capital Corporation ("ITL") amended the terms of their Option Agreement dated May 14, 2002. The Company was granted an option by ITL to acquire a 51% interest in a total of fifteen mineral claim units located in Heyson and Byshe Townships, Red Lake District, Ontario (the "HB Claims").
Pursuant to the terms of the Option Agreement, the Company was to have completed a $150,000 work program on the HB Claims by April 30, 2003. The parties have agreed to amend the Option Agreement by extending the term of the work commitment to December 31, 2003. In consideration for granting the extension, the Company issued on June 19, 2003, ITL a total of 200,000 shares at a deemed price of $0.14 per share.
Phase 1 of the 2003 drill program on the Heyson property was completed in June 2003, and intersected several zones of gold mineralization on the "Sulley Creek Till Anomaly". Significant gold values (59.4 grams / ton over .4 meters) were encountered in H03 - #3. This intercept was in a vein within a 15-meter thick "hematite-epidote-silica" alteration zone in a quartz porphyry The hemitization (destruction of magnetite) has resulted in a distinct magnetic low over the geologically altered zone, and this data is now being used in identifying potential drill targets. Drilling in Phase 2, which was completed in September 2003, has identified significant widths of this favorable alteration along a strike length of 280 meters. Additional anomalous gold intercepts have been encountered within the alteration system.
Diamond drilling to date has tested only a small portion of the large "gold-in-till" anomaly that exists of the Heyson / Byshe property and has explained only a small part of the anomaly. The type and style of the mineralization encountered to date is encouraging but the head of the till anomaly is contained in a large system of more than 2 kilometers in length, and has shown very good anomalous gold numbers in the previous till sampling program.
The immediate 3-hole, 1,000 meter drill program will begin by testing the, continuity of the high-grade gold mineralization intersected to date on the "Sully Creek Zone". Significant gold values (59.4 grams gold per ton over .4 meters) were encountered in drill hole HO3-3. This intercept was in a vein within a 15 meter thick "hemitite-epidote-silica" highly altered zone of fracturing and brecciation. Drilling has identified significant widths of this style of alteration along a strike length of over 300 meters. This alteration assemblage is typicalof a number of past and present gold producing mines in the Canadian Archean. Skyharbour and ITL Capital are hopeful that the "Sully Creek Anomaly" and its previous gold intercepts can be expanded upon through their upcoming 2003/2004-winter drill program.
CD Claims, Dome Township, Red Lake District, Ontario
On May 12, 2003, the Company entered into an agreement with Carl D. Huston to purchase a 100% interest in and to 3 mineral claim blocks consisting of 4 units located in the Dome Township, Red Lake Mining District, Ontario, covering approximately 200 acres (the "CD Property"). The Company paid the sum of $1,500 and issued 20,000 common shares to Carl D. Huston as consideration for the CD Property.
Option Agreement with The Hunter Group
The Company issued 275,000 units on June 9, 2003, pursuant to an agreement dated February 28, 2002 between the Company and Hunter Exploration Group. Each unit consists of one share and one share purchase warrant. Each warrant entitles the holder to purchase an additional share of the Company at a price of $0.13 until May 30, 2004. The units were issued in connection with 23 prospecting permits located in the Coronation District, Nunavut.
Management decided to relinquish its option on the Property and will not be proceeding with any further exploration.
Dent, Agnew and Uchi Townships, Red Lake District, Kenora Mining Division, Ontario
On June 11, 2003, the Company amended an option agreement dated May 22, 2003 with Carl D. Huston wherein the Company had been granted an option to earn a 100% interest in and to 6 claim blocks consisting of 51 units located in the Dent, Agnew and Uchi Townships, Red Lake District, Kenora Mining Division, Ontario. Pursuant to the terms of the Option Agreement, the Company was to pay the sum of $5,000 and issue 20,000 shares on or before June 21, 2003. The Option Agreement has been amended such that the Company paid the sum of $1,500 and issued 50,000 shares.
Black Bear 11 Claims, Ontario
The Company issued 20,000 common shares pursuant to an Option Agreement dated April 24, 2002 between the Company and 1304850 Ontario Inc. on April 29, 2003. The shares were issued in connection with the Black Bear II Property comprised of 4 mineral claims consisting of 48 units located in Red Lake, Ontario.
On May 14, 2003, the Company began its spring/summer mineral exploration program on its Black Bear 11/Sidace Lake Project. An aggressive and detailed till sampling program commenced immediately followed by geochemical and geophysical programs. Previous airborne magnetic data is being digitized by the Company to aid in the interpretation of known geologic structures. The company has defined a number of iron carbonate alteration zones within the known existing mafic volcanic structures on the property. Recent geologic studies of the area suggest that the property is potentially underlain with the Balmar and Confederation Assemblage rock types.
Black Bear 11 Claims, Ontario (continued...)
On May 23, 2003, the Company and Consolidated Abaddon Resources Inc. ("Abaddon") (the "Joint Venture") entered into an agreement. The Company, on behalf of the Joint Venture, staked two additional claims, which are adjoining to, and now form part of, the Joint Venture's Black Bear 11 property (the "Black Bear 11 Property"). The two additional claims are subject to a 2% net smelter return royalty in favour of Perry English. The Joint Venture also wishes to undertake an exploration program on the Sidace Lake Property in the amount of $40,000. Pursuant to the terms of the agreement, Abaddon and the Company have agreed that Abaddon's share of the exploration expenditures ($20,000) and staking costs ($775) is satisfied by Abaddon issuing to the Company a total of 200,000 common shares at a deemed price of $0.12 per share and that upon such share issuance, Abaddon shall maintain an undivided 50% interest in the Joint Venture.
East Humlin, McKenzie Island, Dome and Fairlie Townships, Red Lake Area, Kenora Mining Division, Ontario
On April 15, 2003, the results received to date from the drilling carried out on its McKenzie Island Joint Venture with Cypress Development Corp. in the Red Lake District, Northwestern Ontario were released. Orko Gold has the right to earn a 60% interest in the property by spending $500,000 in exploration expenses in 2003. The program was designed to test geophysical and geochemical targets as defined from previous Skyharbour fieldwork. The Phase 1 diamond drill program included 8 drill holes located in the MacAndrew geological trend plus 5 additional drill holes located on the NMI zone, which are situated off the north shore of McKenzie Island. The drilling program consisting of 2,081.5 meters (6,828.3 feet) in 13 holes has now been completed.
Eight of the drill holes tested .5 kilometer of strike length along the MacAndrew trend. The gold values encountered here are generally associated with sheared and altered margins of a quartz diorite body that has intruded the Dome Stock. Numerous anomalous gold values have been encountered in this trend.
Results to date have indicated minor gold values in the system and that the area warrants additional exploration.
Hole:
M03-1 intersected .4 meters of 5.56 grams / ton gold
M03-6 intersected .2 meters of .82 grams / ton gold
M03-12 intersected .5 meters of .65 grams / ton gold
The geological setting is considered to be similar to that hosting the McKenzie Red Lake deposit on the east end of McKenzie Island.
The area off the north shore of McKenzie Island (NMI zone) was drilled with a total of 5 holes testing an area of indicated structural disturbance along the contact between the volcanic formations and sedimentary formations. These holes targeted structural zones interpreted from previous magnetic data. All of the structural zones encountered were confirmed as carbonate shear/breccia zones with associated anomalous gold values.
Hole M03-7 (NMI zone) intersected 1.3 meters of 1.89 grams / ton gold. This intercept was in an altered porphyritic zone flanking carbonate shearing and containing arsenopyrite in narrow quartz-chloritic veinlets.
East Humlin, McKenzie Island, Dome and Fairlie Townships, Red Lake Area, Kenora Mining Division, Ontario (continued...)
An overburden-drilling program has also been carried out on a portion of McKenzie Island and to the south in St. Paul's Bay area. The base of till was sampled at 133 sites with 2,990 feet of overburden drilling. Numerous elevated gold values were identified in tills from both areas. These anomalous gold values correspond well with the large till sampling program carried out by Skyharbour in 2002. Results to date from both the diamond drill program and the overburden drill program are continuing to be compiled. A Phase 2 program is anticipated to commence in the third quarter of 2003.
Gold assay samples were prepared and assayed by TSL Laboratories of Saskatoon, Saskatchewan, using industry standard fire assay geochemical and/or gravimetric methods. Standard samples were submitted with each sample batch. The McKenzie Island Phase 1 drill program was carried out and supervised by David Busch, PGeo, a qualified person.
On December 19, 2003, the Company announced that Orko Gold Corporation has provided notice that it will not be proceeding with its option to earn an interest in the McKenzie Island Property located in the Red Lake District, Northwestern Ontario.
A table including material sections from the fall 2003 drill program follows:
Hole No. From M. To M. Length M. Au gpt
B03-10 28 28.5 0.5 1.66
28.5 29 0.5 3.08
29 30.3 1.3 1.19
B03-11 258.2 258.5 0.3 0.69
347.3 347.7 0.4 13.68
B03-12 182.8 183.9 1.1 0.9
185.6 186.6 1.0 1.74
186.6 188.1 1.5 0.55
B03-13 166.2 167.6 1.4 0.69
173.4 174.9 1.5 3.44
174.9 175.9 1 1.62
NOTE: Assays over 1gr/ton determined by Total Metallic Assay
In addition to the above assays, holes 10 to 13 contained a number of wider anomalous gold intercepts where values of up to 500 parts per billion (.5grams) were also encountered. These gold intercepts may form or be Part of a larger mineralized system. There are still some additional samples of drill core in for assay that have not been processed at this time.
A phase 3-diamond drill program is now being planned for winter/spring 2004.
Baird Township, Red Lake Area, Kenora Mining Division, Ontario
On June 26, 2003, the Company announced that its spring (2003) drilling program has been completed. A total of 3,068 meters (10,062 feet) were drilled on the property. This drill program has been a collaboration with the Company (operator), Bayfield Ventures and Placer Dome (CLA) Ltd. (optionee). The program was designed to systematically section the property at 200-meter intervals. The drill program was intended to define the extent and character of previously identified gold mineralization, alteration, and structures. The drilling targeted a broad, known deformation zone interpreted from airborne geophysical data.
Skyharbour and Bayfield are very encouraged with the results received to date from the drilling program, which has confirmed the presence of gold mineralization within broad zones of quartz carbonate alteration. The quartz carbonate alteration system was significantly expanded by the Phase 1 drilling program. Gold values encountered in B03-9 were in an entirely new geological setting. This setting includes veins and veining in mafic / ultramafic flows and subvolcanics and is 400m west of any previously known gold values. The planar nature of gold bearing veins in this setting indicates a strong likelihood of lateral continuity.
This geological setting is interpreted as displaying many similarities to the known major gold deposits that have been developed in heart of the Red Lake gold belt. (Placer Dome's Campbell Mine and Goldcorp's Red Lake mine as examples). It is believed sufficient data was obtained from the current program to effectively target new and prospective settings for further drilling.
Placer Dome has provided the funding necessary for the drill program as part of an earn-in option agreement. (see news release March 21, 2003). Follow up exploration programs on the property will focus on further delineating the gold bearing zones and targeting higher-grade gold bearing shoots within these zones.
Gold assays were by metallic screen fire assays as carried out by TSL Laboratories Inc. of Saskatoon, Saskatchewan. Industry standards and blanks were incorporated into each sample batch to ensure quality control of the assaying. These results have been prepared under the direct supervision of Mr. David Busch, P Geo., who is designated a Qualified Person with the ability and authority to attest to the authenticity and validity of this data.
Skyharbour Resources Ltd. announces it has now completed its fall 2003 diamond drilling program on the Baird property that had commenced October 26, 2003. A total of 4 holes consisting of 2121 meters (6957 feet) were drilled in this Phase II Program. This property is jointly held by Skyharbour Resources Ltd. (50%) and Bayfield Ventures Corp. (50%) and is currently under option to Placer Dome, whereby, Placer will provide $800,000 for exploration by December 31/2004 to earn a 51% interest in the Baird Property. As stated, two phases of diamond drilling have now been carried out on the Baird property in 2003. The total footage drilled to date is 17,019 feet (5189 meters) and is contained in 13 drill hole locations. To date, all diamond drill exploration carried out on the Baird Project in 2003 has been financed by Placer Dome, as per the terms of the option agreement, with Skyharbour acting as the operator.
A larger drilling rig was moved on to the property in October to allow the company to drill deeper holes to depths of 2500 + feet. The fall 2003 drill program was planned to test an interpreted structural hinge (fold) area that was previously identified from the spring 2003 drill program. The target area is known to be intersected by structures containing associated alteration and gold values in the mafic/ultramafic rock types and is situated in a broad, known deformation zone that has been interpreted from previous geophysical data and diamond drilling.
Skyharbour, Bayfield, and Placer Dome are very encouraged with the results received to date from the latest round of drilling. The assaying has confirmed the presence of gold mineralization within a broad zone of quartz carbonate alteration. This quartz carbonate alteration system has been significantly expanded upon with this latest drill phase. The gold values encountered in the latest round of drilling (holes B03-10 -- B03-13) are interpreted to be in a new geological setting which includes veins and veining in mafic/ultramafic flows. This new setting is approximately 400 meters west of any previously known gold values encountered on the Baird property and this newly encountered geological sequence indicates the potential for lateral continuity with previously reported gold results.
This geological setting is interpreted as displaying many of the same features known to the major gold deposits that have been brought into production in the Red Lake gold belt (Placer Dome's Campbell Mine and Goldcorp's Red Lake mine). The property is located adjacent (on the north boundary) to Placer Dome's major diamond drill exploration program in progress on Claude Resources' Madsen property.
Subsequent Events
On February, 13, 2004, the Company granted incentive stock options to purchase up to an aggregate of 47,500 shares of the Company at $0.16 per share, to certain of its employees and directors. The options will be exercisable for a period of two years and are subject to regulatory approval.
On February 17, 2004, the Company issued 20,000 common shares in connection with the third tranche issuance under an Option Agreement dated January 15, 2002. Pursuant to the terms of the Option Agreement, the Company had been granted an option to acquire a 100% interest in and to the Tomato Lake Property located in McDonough Twp, Red Lake area, Kenora Mining Division, Ontario. The shares will be subject to a hold period and shall not trade before June 12, 2004.
ON BEHALF OF THE BOARD OF DIRECTORS
"Donald C. Huston"
__________________________________
DONALD C. HUSTON
Director/President
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of the content of this news release.