BUG LAKE AREA EXPLORATION:

The Bug Lake Area was selected as a priority target due to the abundance of mineralized showings and the exceptionally high-grade gold values found at numerous trenched showings. The strongly developed gold mineralization had been located in several trenches and Skyline undertook the evaluation of these trends in the 2011 exploration program.

Considerable effort has been placed into rehabilitating access to the targets in this area, as it is low lying and heavily vegetated.

Historically, the Bug Lake gold mineralization was not well understood. Excellent trench samples at surface were not always repeated in drill results. The style of historical exploration carried out at Bug Lake would typically have had the best surface showings drilled with pierce points targeting directly below the mineralization.

The mineralization at Bug Lake has been re-exposed at several historic showings and the trenches were mapped by Dr. Fedorowich this summer. His preliminary findings indicate that there is a complex relationship to the mineralization with at least two distinct orientations to the mineralization. One orientation is shallow-dipping to the south and the other is steeply-dipping to the north.

Once all of the exploration assays from the trenches are received, they will be closely reviewed in conjunction with Dr. Fedorowich's geological and structural mapping. The intention will be to determine the optimum approach to drill-testing the Bug Lake mineralization in the 2012 exploration programs. It is likely that drilling planned for this area will not target pierce points directly below the showings, but will target the intersection of the various mineralized trends.