Skye Resources Inc.

Skye Resources Inc.

July 31, 2007 12:56 ET

Skye Resources Announces Agreement With Guatemalan Government

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 31, 2007) - Skye Resources Inc. ("Skye") today announced that it has signed a letter of intent with the Government of Guatemala with respect to the payment of additional royalties by Skye's Guatemalan subsidiary, Compania Guatemalteca de Niquel S.A. (CGN), which owns the Fenix ferronickel project.

"It was our intention when we first purchased the Fenix property to ensure lasting positive economic impacts for the country and the Izabal region," said Ian Austin, President and CEO of Skye. "With the signing of this letter of intent, the first of its kind in Guatemala, we have achieved that objective and demonstrated the support that the Fenix project has received from several levels of Government."

The new royalty will be payable at the rate of 1.0% prior to project payback, provided nickel prices average at least US$7.00 per lb. After project payback, the royalty increases on a sliding scale, depending on nickel prices, reaching a maximum of 4.0% if nickel prices hit US$22.00 per lb. If legislation is passed at a future date that increases the Mining Law Royalty beyond its current level, the additional royalty rate in a given quarter would be reduced by the increase in the Mining Law Royalty rate. Under the letter of intent, CGN will pay the royalty in addition to the existing 1.0% royalty under the Guatemalan Mining Law. Following execution of a definitive agreement within the next 30 days, the Government will retain the shares in CGN which it currently owns, but will not invest additional funds to pay for the construction of the project.

The letter of intent was signed today in a ceremony in Guatemala City by CGN and the Ministers of Finance, Energy and Mines, Economy, and the head of the tax administration, in the presence of Guatemalan President Oscar Berger Perdomo and Skye CEO Ian Austin.

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 second half of 2007 with initial production in late 2009.

Cautionary Notices:

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 this 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.

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