Skye Resources Inc.

Skye Resources Inc.

May 14, 2007 08:00 ET

Skye Resources Announces First Quarter Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 14, 2007) - Skye Resources Inc. ("Skye" or "the Company") (TSX:SKR) today released its unaudited consolidated interim financial statements for the three months ended March 31, 2007 reporting a loss of US$5,731,000 (basic and diluted loss per share of US$0.14) compared with a loss of US$7,061,000 (basic and diluted loss per share of US$0.27) for the three months ended March 31, 2006. The loss for the period is principally related to exploration and development costs for Skye's Fenix nickel laterite project in Guatemala and general and administrative costs and non-cash stock-based compensation expense. During the quarter the Company commenced capitalizing certain project development costs resulting in US$4,191,000 of expenditures being added to property, plant and equipment.

The Company changed its functional and reporting currency to the United States dollar effective January 1, 2007 so the results for the three months ended March 31, 2007 are now expressed in United States dollars. The comparative figures for the quarter ended March 31, 2006 and in the balance sheet as at December 31, 2006 are similarly expressed in United States dollars to conform with the presentation in the current period.

All of the Company's 2007-Warrants were exercised on or before the expiry date of March 24, 2007 and, as a consequence, the Company received US$16,279,000 (C$19,052,000) in the three months ended March 31, 2007. Shares outstanding on March 31, 2007 were 44,110,068.

Skye is now undertaking the basic engineering for the Fenix ferro-nickel project while it is negotiating the Engineering, Procurement and Construction Management ("EPCM") contract and obtaining environmental approvals and construction permits. It is also advancing its project financing arrangements and is aiming to place orders for critical path items and begin major construction activities on site in the third quarter with the objective of initiating production from the first line in late 2009.

In the feasibility study case, the second line will not start operation until a new solid fuel power plant is constructed. Skye is investigating the economic viability of accelerating this commissioning by bringing forward the completion of the second kiln and acquiring reciprocating engine generators to supply the power for the expanded plant. Reciprocating engines would be in operation before the solid fuel power plant could be completed but would require additional environmental approval.

The potential advantages of the accelerated start of commissioning of the second line is an increase in nickel production in the first three years of approximately 20 million pounds in aggregate from the feasibility study case and mitigation of the risk of delay in the availability of electricity from the solid fuel power plant as a result of lengthening delivery dates for key components of the power plant. The initial capital cost of the reciprocating engines would be significantly less than the cost of the solid fuel power plant which could reduce the financial requirements of the project and introduce the possibility of financing the solid fuel power plant out of project revenues.

The Company has continued to implement new initiatives designed to strengthen and extend community relations efforts and social development activities. Several key personnel were added to the Company's local team to ensure the transparency and reach of our communications program. Our focus, in partnership with government and non-government organizations, is to support the local community and move the region closer to solving lingering land issues.

Skye's unaudited consolidated interim financial statements and Management's Discussion and Analysis (MD&A) for the period ended March 31, 2007 will be filed on SEDAR and available for download at

Skye's Annual Meeting of its shareholders is scheduled for May 17, 2007.

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 in October 2006 received the results of a feasibility study for a ferro-nickel project at Fenix using proven conventional smelting technology.

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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