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SYH: TSX.V   $0.44 (-1.12%)
OTCQX: SYHBF  $0.32 (+0.63%)
SC1P: FRA   $0.28 (-2.22%)

News

Second Quarter Report

Dec 3, 2003

Skyharbour Resources Ltd. (the "Company") has released its BC Form 51-901F Second Quarter Report containing unaudited financial statements in Canadian funds, prepared by management, for the six-month period ended September 30, 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 six-month period, the Company incurred a net loss of $584,732 as compared to $311,038 in the same period 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 $147,697 for the three-month period ended September 30, 2003, compared to $145,829 in the same period in the previous year. The Company has incurred net losses in each year since inception and as of September 30, 2003, has an accumulated deficit of $20,525,270.

Liquidity and Capital Resources

The Company has a shareholders' equity of $1,344,872 and working capital of $447,977 at September 30, 2003 compared to that of a shareholders' equity of $1,249,704 and a working capital of $470,936 at March 31, 2003.

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 July 22, 2003, the Company closed its 2,500,000 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 $0.10 per share until July 16, 2005. In addition, the Company issued 43,750 Units and paid the sum of $4,875 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 November 16, 2003.

On July 31, 2003, the Company closed its 1,000,000 flow-through unit private placement. Each unit consists of one flow-through share and one share purchase warrant which entitles the holder to purchase an additional flow-through share of the Company at a price of $0.15 per share until July 28, 2005. The Company also issued Canaccord Capital Corporation 41,250 non-flow-through units and paid the sum of $5,362.50 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 November 28, 2003.

The Company also granted incentive stock options to certain of its directors and employees that entitles them to purchase 480,500 common shares of the Company at a purchase price of $0.13 per share to July 13, 2005.

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 a total of 200,000 shares on June 19, 2003 at a deemed price of $0.14 per share to ITL.

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 II Claims, Red Lake 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 II/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.

On May 23, 2003, the Company and Consolidated Abaddon Resources Inc. ("Abaddon") (collectively 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 II 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.

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.

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.

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.

Baird Township, Red Lake Area, Kenora Mining Division, Ontario

On June 26, 2003, the Company announced that its spring (2003) drilling program had 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 Corp. ("Bayfield") 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 the 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 dated 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.

Subsequent Events

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.

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

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.

Heyson & Byshe Township, Red Lake District, Ontario

The Heyson property represents one of the more attractive undeveloped potential resource areas in the Red Lake gold camp and is currently ready for a Phase 3 drilling program. A total of 2,018 meters of diamond drilling (13 holes) has been completed on the property, by Skyharbour, in 2003. The holes were drilled within the large Sully Creek "gold-in-till" anomaly as identified by an extensive 2002 till sampling program. A grid has been established on a portion of the property and a total field and vertical gradient survey has been completed over the head of the "gold-in-till" anomaly. Further analysis of the data obtained from this recent survey has helped to further delineate proposed drill targets for a Phase 3 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 typical of 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.

A total of 2,018 meters (6,620 feet) of diamond drilling has now been completed on Skyharbour Resources' and ITL Capitals' jointly held gold property in Red Lake, Ontario. 13 holes on the Heyson / Byshe project have been drilled on targets within a "large gold-in-till " anomaly that was identified in the 2002 work season. A 45 line kilometer grid was established on the property in the summer of 2003 with total field and vertical gradient magnetometer surveys completed over the head of the till anomaly.

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 "Sully 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 favourable alteration along a strike length of 280 meters. Additional anomalous gold intercepts have been encountered within the alteration system including a 2-meter intercept of anomalous gold values in H03 -12 which was collared 50 meters to the southeast of H03-3.

Diamond drilling to date has tested only a small portion of the large "gold-in-till" anomaly that exists on 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 typical of 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.

Baird Township, Red Lake Area, Kenora Mining Division, Ontario

A drill crew has been mobilized on to Skyharbour/Bayfield's jointly held Baird Property. This project is currently under option to Placer Dome, whereby Placer must spend $800,000 by Dec. 31, 2004 to earn 51% of the Baird Property. An initial round of drilling consisting of 9 holes and approximately 10,000 ft. was completed in the spring of 2003. As announced in September, the companies have agreed to proceed with a second round of drilling revised to approximately 7,500 ft. in total.

A larger drill rig has now been moved on to the Baird Property that has the capabilities of drilling to depths of 4,000+ feet to be able to complete the planned deeper hole(s) for this phase of the program. These holes are planned to test an interpreted structural hinge area (fold) that was identified from the Spring 2003 drill program. The target area is intersected by several structures with associated alteration and gold values in the mafic/ultramafic rocks. The geological setting here is considered highly prospective and has positive trace element signatures throughout the target area. It is interpreted as displaying many similarities to the known major gold deposits that have been developed throughout the heart of the Red Lake area.


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