Skye Resources Inc.

Skye Resources Inc.

October 09, 2007 15:20 ET

Skye Announces $65 Million Financing

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 9) -


Skye Resources Inc. ("Skye") (TSX:SKR) has entered into an agreement with a syndicate of underwriters led by TD Securities Inc. (the "Underwriters") pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 5,400,000 units ("Units") from Skye at a price of $12.10 per Unit for total gross proceeds of approximately $65 million. Each Unit is comprised of one common share and one-half of a common share purchase warrant of Skye with each whole warrant entitling the holder to purchase one common share of Skye at a price of $15.13 for a period of 15 months following closing of the offering. The Underwriters have also been granted an option (the "Over-Allotment Option"), exercisable for a period up to 30 days from closing, to purchase for sale up to an additional 15% of the issue. Closing is expected to occur on October 26, 2007.

The Underwriters will sell the Units in Canada in a public offering by way of a short form prospectus. The Units are also being offered for sale in the United States on a private placement basis pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended. The Units may also be offered for sale to qualified investors in certain jurisdictions outside Canada and the United States.

Pursuant to the terms of a Share Purchase Master Agreement between Skye and CVRD Inco Ltd. ("Inco"), Inco has the right to participate in the financing to maintain its current 12.61% equity interest in Skye. Inco must exercise this right within 24 hours after the announcement of this financing. Should Inco exercise in whole its right to participate in this financing (not including any rights pursuant to the Over-Allotment Option), the number of Units sold will increase by 779,059 Units for additional aggregate proceeds of approximately $9.4 million.

The net proceeds of this financing will be used by Skye to continue to advance the refurbishment and expansion of the Fenix ferro-nickel project in Guatemala, to fund ongoing exploration on the Fenix licenses, and for test work and engineering studies on the hydromet expansion at Fenix as well as for general corporate purposes.

The Fenix ferro-nickel project remains on schedule to achieve initial production in late 2009, as Skye continues to advance its plans to complete the financing of the project in early 2008, either through a capital markets transaction or an agreement with potential partners.

About Skye

Skye is an international mining company focused on becoming a new mid-tier nickel producer. Skye acquired the rights to its Guatemalan lateritic nickel project (the Fenix project) in December 2004 and in October 2006 completed a feasibility study for a ferro-nickel project at Fenix using proven conventional smelting technology. In June 2007 Skye received its environmental permits for the project, and expects to initiate construction during the first quarter of 2008 with initial production in late 2009.

Cautionary Notices:

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities mentioned herein in the United States. The securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable securities laws or an exemption from such registration is available.

This news release contains certain forward-looking statements that involve risks and uncertainties, such as statements of Skye's plans, objectives, strategies, expectations and intentions. The words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions, as they relate to Skye, or its management, are intended to identify such forward-looking statements. Many factors could cause Skye's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. The forward-looking statements included in this news release represent Skye's views as of the date of this news release. While Skye anticipates that subsequent events and developments may cause its views to change, it specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing its views as of any date subsequent to the date of the news release. All subsequent written and oral forward-looking statements attributable to Skye or persons acting on its behalf are expressly qualified in their entirety by this notice.

SEDAR: 00005296E

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