Skye Resources Inc.

Skye Resources Inc.

March 16, 2005 20:02 ET

Skye Provides Details of Inco Share Ownership


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: SKYE RESOURCES INC.

TSX VENTURE SYMBOL: SKR

MARCH 16, 2005 - 20:02 ET

Skye Provides Details of Inco Share Ownership

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 16, 2005) - Skye
Resources Inc. (TSX VENTURE:SKR)

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES.

Skye Resources Inc. ("Skye") is pleased to announce that Inco Limited
("Inco"), an insider of the Company because of its share ownership, has
advised that it will be participating in Skye's previously announced
financing to raise gross proceeds of approximately $32 million.
Completion of the financing is subject to the approval of the TSX
Venture Exchange. Further details of the financing are set forth in the
press releases of the Company dated March 7 and March 9, 2005.

Inco has advised that it will acquire 500,000 units in the financing.
Each unit will consist of one common share and one-half of one common
share purchase warrant (each whole such warrant, a "Warrant"). Each
Warrant will entitle the holder thereof to acquire one additional common
share of Skye at a price of $5.75 for a period of two years from the
date of issuance. No commission or fee is payable to the underwriters in
the financing in connection with Inco's purchase. All of the securities
issuable in the financing are subject to restrictions on resale for a
period of four months from closing.

As of March 14, 2005, Inco, held an aggregate of 1,888,101 common shares
of Skye, representing approximately 12.3% of the issued and outstanding
shares of Skye (or 11.1% on a fully diluted basis). Assuming no other
change in such holdings, it is expected that Inco will hold an aggregate
of 2,388,101 common shares and 250,000 share purchase warrants of Skye
following the closing of the financing, representing approximately 10.3%
of the issued and outstanding shares of Skye (and approximately 9.2% on
a fully diluted basis).

In addition Inco will receive approximately 1,750,000 Skye common shares
when Skye satisfies all of the conditions set out in its agreement with
Inco and elects to exercise its option to finalise the acquisition of
the Fenix property. Taking these shares into consideration, Inco's
ownership on a fully diluted basis would be increased to approximately
14.4%, assuming no change in Inco's post-closing holdings as set forth
above.

The financing is being completed to fund further development of Skye's
Fenix nickel project in Guatemala, including a feasibility study, an
environmental impact study and exploration and for general corporate
purposes. The financing was approved by the board of directors of Skye
at a directors' meeting on March 7, 2005. The financing is exempt from
the formal valuation and minority shareholder approval requirements of
applicable securities laws as, at the time the financing was agreed to,
neither the fair market value of the aggregate number of securities
(including common shares issuable upon the exercise of Warrants) to be
issued to Inco pursuant to the financing, nor the fair market value of
the consideration therefor, exceeded 25% of Skye's market
capitalization. Full details of the participation of Inco in the
financing are being disseminated less than 21 days in advance of the
closing of the transaction as such details were not previously available
to Skye.


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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Skye Resources Inc.
    Ian G. Austin
    Chief Executive Officer
    (604) 602-7534
    (604) 682-3941 (FAX)
    www.skyeresources.com
    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the accuracy or adequacy of this release.