SKN Resources Ltd.

SKN Resources Ltd.

February 28, 2005 21:54 ET

SKN Resources Ltd.: Letter Agreement Signed to Acquire High Grade Liu-Hei Silver-Gold Project, Gansu Province, China


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: SKN RESOURCES LTD.

TSX VENTURE SYMBOL: SRL

FEBRUARY 28, 2005 - 21:54 ET

SKN Resources Ltd.: Letter Agreement Signed to Acquire
High Grade Liu-Hei Silver-Gold Project, Gansu
Province, China

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Feb. 28, 2005) - SKN
Resources Ltd. ("SKN") (TSX VENTURE:SRL) is pleased to announce that a
wholly owned subsidiary of SKN has entered into a letter agreement with
a Gansu Provincial Governmental exploration company to acquire a 70%
interest in the high grade Liu-Hei silver-gold project, located in Gansu
Province, Northwest China by making certain cash payment and investment
over three years after a Sino-foreign joint venture company is
established. SKN is pleased with the timing of this acquisition, which
builds on the completion of the legal procedures and significant
exploration progress on SKN's high grade Ying Silver project, where a
US$5 million exploration and development program is underway, readying
the project for production upon issuance of the mining permits. This
acquisition substantially enhances SKN's ability to expand its silver
and precious metal resources in China.

The Liu-Hei Project is comprised of three exploration permits covering
77.12 square kilometers (km), and is easily accessible by road about 150
km southeast of Lanzhou, the capital city of Gansu Province.
Geologically, the Project area is situated in the southern margin of the
Northern China Craton and in the west extension of the Qinling Mountain
Belt, which is one of the largest silver, gold, lead, and zinc producing
belts in China. SKN's high grade Ying Silver Project which is also
located in the Qinling Belt, is about 1000 km east of Liu-Hei project.

The area is underlain by late Proterozoic metamorphosed mafic volcanic
rocks and carbonates, and Paleozoic intermediate-mafic volcanics and
sediments, which have been intruded by Messozoic granitic stocks. The
host rocks for the silver-gold mineralization are mainly late
Proterozoic quartz schists, plagioclase amphibole schist, limestones,
and marbles. Two regional scale, east-west trending, ductile shear zones
being 10 km apart, cut through the project area. The hydrothermal-style
silver(Ag)-gold(Au)-lead(Pb) mineralization appears to be controlled by
east-west, north-east and north-south trending secondary shear zones.

Southern Permitting Area

In the south part of the Liu-Hei Project, within two permits covering
41.95 km2 ("southern permit area"), 7 mineralization zones, containing
over 14 silver-gold-lead mineralized brittle shear zones or sheeted
veins with dipping angles from 30 to 50 degrees have been identified
through mapping, trenching, tunneling and limited drilling on the basis
of silver-gold-lead soil geochemical anomalies and old workings. Near
vertical drill holes completed by our Chinese partner on the I-1, VI-2,
VII-1, and VIII-3 veins have all intercepted mineralization. The VI
zone, containing 5 near parallel veins dipping about 45 to 50 degrees to
the southeast, is one of the most promising targets. The three
dimensional features of the veins, based on tunnel, trench and drill
exploration are summarized as follows:



Veins length (m) width (m) down-dip depth (m)
I-1 2,200 0.40-4.03 320 (drill hole intercept)
II-1 1,400 0.40-1.0
III-1 1,600 0.30-0.91
III-2 1,200 0.42-1.22
IV-1 400 0.75-1.17
VI-1 3,000 0.30-1.5
VI-2 greater 0.42-2.78 200 (drill hole intercept)
than 600
VI-4 300 0.50-2.65
VI-5 1,000 0.40-2.43
VI-6 100 0.40-2.20
VII-1 greater 0.40-1.76 150 (drill hole intercept)
than 1,000
VIII-1 300
VIII-2 250
VIII-3 greater 0.40-4.30 160 (drill hole intercept)
than 700


Assay results for some of the veins provided by Chinese government
Bureau reports are listed in the following table, which are believed to
be reliable. The best drill hole intercept is reported at 5.81 meter
interval grading 10.69 grams/tonne (g/t) Au, 227.4 g/t Ag, and 1.97% Pb
or silver equivalent grade ("Ag Equiv.") of 912.6 g/t or 29.34 ounces/t
("oz/t").



--------------------------------------------------------------------
Ag Ag
Tunnel/ Equiv. Equiv.
Trench/ Width Ag Au Pb (i) (i)
Veins Drill Hole (m) (g/t) (g/t) % (g/t) (oz/t)
--------------------------------------------------------------------
I-1 Tunnel LD5 0.6 310.0 11.6 15.42 1,072.0 34.45
Tunnel PD4-1 1.7 125.2 10.93 823.2 26.47
Drill Hole ZK 1-1 5.81 227.4 10.69 1.97 912.6 29.34
Tunnel PD176 0.64 413.2 10.41 6.93 1,087.0 34.96
Tunnel D2006 0.62 161.6 8.48 703.0 22.60
Trench TC148 0.61 120.4 5.86 3 499.0 16.03
Trench TC136 0.17 162.2 12.9 2.2 989.0 31.79
Tunnel LD58-1 0.42 209.5 15.8 9.93 1,232.0 39.60
Tunnel LD52-1 0.54 164.5 24.6 7.76 1,746.0 56.12
Trench TC42-1 0.9 210.0 10.92 10.5 921.0 29.63
Trench TC28-1 0.4 194.8 31.93 9.99 2,247.0 72.23
Tunnel PD8-1 0.13 285.0 7.88 13.55 806.0 25.93
Trench BT19 0.54 133.4 6.25 1.67 535.0 17.19
Trench TC35-1 0.21 376.0 2.73 13.89 569.0 18.30
--------------------------------------------------------------------
VI-1 Trench TC38-1 1.11 586.0 7.18 1,044.0 33.58
Tunnel LD 54 0.85 80.0 1.99 0.2 215.4 6.95
Trench YK16-1 0.91 109.5 1.81 225.1 7.26
Trench TC0-1 0.91 89.6 2.16 227.5 7.34
Tunnel PD11-2 0.62 9.7 4.24 280.4 9.05
--------------------------------------------------------------------
VI-2 Trench TC35-2 1.33 687.2 8.41 1,224.0 39.36
Trench BT75-1 0.99 182.9 23.42 6.1 1,687.0 54.23
Trench TC101-1 0.75 798.0 5.74 32.62 1,209.0 38.86
Tunnel PD125-1 0.68 199.9 21.26 3.21 1,562.0 50.21
Trench TC147 0.42 734.0 7.82 1,233.0 39.65
Tunnel PD157 2.99 246.5 8.02 2.94 762.7 24.52
Tunnel CK149-1 2.53 694.9 12.54 19.35 1,522.0 48.93
Drill Hole ZK155-1 2.23 189.8 3.19 1.98 396.0 12.74
--------------------------------------------------------------------
VI-3 Tunnel PD157 1.84 44.7 6.14 0.58 461.0 14.87
--------------------------------------------------------------------
VI-4 Tunnel PD157 1.45 23.1 1.91 0.8 178.6 5.76
Trench TC1015 2.62 163.0 3.71 9.12 412.0 13.25
--------------------------------------------------------------------
VI-5 TC133-2 2.43 107.0 5.51 6.6 468.0 15.04
--------------------------------------------------------------------
VI-6 TC1015 2.2 149.0 6.7 3.25 581.0 18.69
--------------------------------------------------------------------
VII-1 Tunnel LD335 0.96 90.0 5.7 1.3 508.5 16.40
Tunnel QD305 0.35 405.0 5.0 2.56 831.7 26.83
Drill Hole ZK335-2 1.35 315.0 3.17 0.33 531.3 17.14
Tunnel PD305-2 1.13 324.0 6.25 3.4 865.7 27.93
--------------------------------------------------------------------
VIII-2 PD1053 0.47 340.0 12.05 5.58 1,117.0 35.91
TC1069 1.86 244.0 7.44 7.81 729.0 23.44
--------------------------------------------------------------------
VIII-3 TC1009 3.37 499.4 3.87 12.06 763.0 24.53
TC1027 1.51 334.0 5.34 0.43 676.0 21.72
TC1031 3.45 271.8 13.01 8.22 1,113.0 35.80
--------------------------------------------------------------------
(i) Silver equivalent grade is calculated on the basis of US$6.5/oz
Ag, US$415/oz Au, and US$0.40/lb for Pb.


Vein III-1 has average grades of 355.88 g/t for Ag, 9.2 g/t for Au, and
7.5% for Pb at an average width of 0.8 m. Vein III-2 has average grades
of 118.04 g/t for Ag, 8.79 g/t for Au, and 3.94% at an average width of
0.83 m.

The following table lists the results from samples taken from the
Liu-Hei Project by SKN President, Myles Gao, P. Geo. during two recent
site visits. Mr. Gao is SKN's Qualified Person on the project.



--------------------------------------------------------------------
Ag Ag
Mineralized Tunnel/ Width Ag Au Pb Equiv. Equiv.
Veins Trench (m) (g/t) (g/t) % (g/t) (oz/t)
--------------------------------------------------------------------
VI-2 Tunnel PD157 0.2 1690.0 3.35 14.110 1923 61.83
--------------------------------------------------------------------
VI-4 Tunnel PD157 1.1 221.0 4.40 2.660 506 16.25
--------------------------------------------------------------------
VIII-3 Trench TC1009 1.0 26.5 3.80 0.240 269 8.66
--------------------------------------------------------------------
Trench TC1027 0.6 65.5 4.60 0.430 360 11.57
--------------------------------------------------------------------
Tunnel PD10391 1.04 12.8 1.85 0.670 132 4.24
--------------------------------------------------------------------


Check assaying was done by No. 7 Laboratory of Gansu Bureau of Geology
and Mineral Resources in Lanzhou, Gansu Province, China.

Northern Permitting Area

The Northern Permitting Area, covering the north ductile shear zone,
contains one 35 km2 exploration permit. Nine soil silver, lead and gold
geochemical anomalies have been identified and four broad lead-silver
mineralization zones have also been mapped out, but only tested by very
limited trench work.

The acquisition is subject to completion of due diligence, including
additional field visits and further confirmation of the data supplied by
the Chinese partner, an independent review of the project to conform to
National Instrument 43-101, signing of a final joint venture contract
and regulatory approvals.

Statements in this press release other than purely historical
information, including statements relating to the Company's future plans
and objectives or expected results, constitute forward-looking
statements. Forward-looking statements are based on numerous assumptions
and are subject to all of the risks and uncertainties inherent in the
Company's business, including risks inherent in mineral exploration and
development. As a result, actual results may vary materially from those
described in the forward-looking statements.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    SKN Resources Ltd.
    Rui Feng
    Chairman & CEO
    (604) 669-9397
    (604) 669-9387 (FAX)
    info@sknresources.com
    www.sknresources.com
    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy or this release.