Skye Resources Inc.
TSX : SKR

Skye Resources Inc.

June 07, 2007 16:00 ET

Skye Resources Receives Environmental Permits for Fenix Project

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 7, 2007) - Skye Resources Inc. ("Skye") announces that its Guatemalan subsidiary, Compania Guatemalteca de Niquel, S.A. (CGN), has received formal written approvals from the Guatemalan Ministry of Environment and Natural Resources (MARN) for the four component environmental impact assessments (EIAs) relating to the processing plant and related activities at its Fenix ferro-nickel project. Approval of the EIA for mining activities was received from MARN in January 2006.

"This represents an essential milestone for the project and keeps us on track to initiate construction activities later this year, with the target of being in production in the second half of 2009," said Ian Austin, President & CEO of Skye.

Basic engineering for the project is 50% complete, and site clean-up is underway. Negotiation of the Engineering, Procurement and Construction Management ("EPCM") contract is nearing completion. Skye expects to approach the credit rating agencies shortly, consistent with completing its debt financing in the third quarter.

Skye is considering accelerating the commissioning of the second line at the Fenix project, by sourcing additional power supply during ramp-up in order to increase nickel production in the early years of operation. To achieve this Skye is assessing the viability of acquiring reciprocating engine generators to provide the needed power and is also in advanced negotiations for a power purchase agreement (PPA) to obtain the power over the Guatemalan grid. Both of these alternatives would require additional environmental approvals, and the PPA alternative also would require confirmation of technical viability, and the successful completion of a binding PPA with the supplier of power. Skye will make a determination how to proceed once these issues are resolved.

If Skye is able to arrange for power supply from generators or under a PPA, the solid fuel power plant included in the October 2006 feasibility study could be deferred and financed out of project cash flows. While the deferral of the solid fuel power plant would increase operating costs it would reduce the immediate financing requirement for the project (including working capital, cost overrun facilities and interest during construction) from approximately US$1.1 billion to approximately US$800 million if a PPA is concluded. The use of generators would increase the financing requirement above US$800 million but it would still be less than US$1.1 billion. In either case Skye's financial advisors have indicated that over 60% of the financing requirements can be funded through senior debt.

About Skye

Skye is an international mining company focused on becoming a new mid-tier nickel producer, which 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.

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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