Skye Resources Inc.
TSX VENTURE : SKR
TSX : SKR

Skye Resources Inc.

November 18, 2005 08:00 ET

Skye Increases Ownership in Fenix project

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 18, 2005) - Skye Resources Inc. (TSX VENTURE:SKR) today announced that its indirect ownership interest in the Fenix project has increased to approximately 89% as a result of its funding of all the costs associated with the project diluting the Government of Guatemala's proportional interest. Skye originally acquired a 70% interest from Inco Limited. The Company also provided an update on several aspects of the project.

"We believe that the increased ownership reflects Skye's contribution to bringing this world-class asset to value," said Ian Austin, President and CEO, Skye Resources. "Our team is making strong progress on all the key elements in our plan to bring Fenix back into production as soon as possible."

DRILL PROGRAM

Skye has completed about 1,000 holes aggregating 25,000 metres since the feasibility study drill program commenced in late April. It is expected that this drill program will require about 40,000 metres of drilling and, based on current drilling rates, it is expected to be completed in early 2006. When the results of this program are available, a revised resource estimate will be prepared for the deposits being drilled, along with the mine plan for inclusion in the feasibility study. This resource estimate is expected to be complete around the end of the first quarter of 2006.

EXPLOITATION LICENSE APPLICATION

An application has been made to convert a portion of one of the project's existing exploration licenses into a renewable 25 year exploitation license which would allow mining to resume at the project. The issuance of this license is dependant upon the approval by the Guatemalan Ministry of Environment of the environmental and social impact assessment which was filed in October. As part of this process, the Government through both the Ministry of the Environment and the Ministry of Mines will carry out consultations with local communities which would be potentially impacted by the project.

FEASIBILITY STUDY

The feasibility study for a 50 million pound ferro-nickel project using conventional smelting technology is scheduled for completion by the end of the second quarter of 2006. Led by Hatch Ltd., the study is examining the plan to refurbish the existing plant to initially produce 25 million pounds of nickel annually, then to expand to 50 million pounds a year. The feasibility study is considering an on-site 150 MW coal/petcoke fired power plant that, based on current petcoke prices, is expected to result in a power plant operating cost of less than US$35/MWh. Skye is also reviewing whether it would be preferable to enter into power purchase agreements, and has initiated a study to determine the practicality of having power delivered via the Guatemalan grid. Based on this, in the first quarter of 2006, it anticipates seeking expressions of interest from potential power suppliers.

About Skye

Skye is an international mining company focused on becoming a new mid-tier nickel producer. The Company acquired the rights to its Guatemalan lateritic nickel project (the Fenix project) in December 2004 and is currently undertaking a feasibility study for a 50 million pound per year ferro-nickel operation using proven conventional smelting technology.

Cautionary Notices:

This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, capital and other costs and credits, timing for and results of feasibility study and other programs, receipt of property titles, potential mineral recovery processes, and other related matters. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The Fenix Project is at an early stage and all estimates and projections are based on limited, and possibly incomplete, data. More work is required before the mineralization and the Project's economic aspects can be confidently modeled. Actual results may differ materially from those currently anticipated in this presentation. No representation or prediction is intended as to the results of future work, nor can there be any promise that the estimates and projections herein will be sustained in future work or that the Project will otherwise prove to be economic.

Inco Limited, the former 70% owner of the facilities and mineral rights that comprise the Fenix project, takes no responsibility for nor makes any representation or warranty of any kind relating to any of the estimates or any other information contained in this news release.

All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this notice.

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