Skye Resources Inc.
TSX : SKR

Skye Resources Inc.

May 13, 2008 17:38 ET

Skye Provides Update on Fenix Project and Announces First Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 13, 2008) - Skye Resources Inc. ("Skye" or the "Company") (TSX:SKR) today released an update on its Fenix Project and its unaudited consolidated interim financial statements for the three months ended March 31, 2008.

First Quarter Activities and Project Update

Skye continues to explore alternatives to finance the development of the Fenix Ferro-Nickel Project in Guatemala, following the January announcement that it was temporarily deferring a proposed high yield debt financing.

"We are committed and determined to see this project developed as it is without a doubt the most advanced brownfield ferro-nickel project in the world. The Fenix Project is fully permitted, it has the support of the government and the people of Guatemala, it contains excellent geological resources and it is based on time proven technology," said Colin K. Benner, Skye's Chief Executive Officer.

During the first quarter, management focused on rescheduling construction activities and reviewing project alternatives. The Company is in discussion with vendors to hold the existing equipment orders open until late in the summer of 2008. Vendor engineering is continuing on all long lead time items and some fabrication has been completed. The Engineering Procurement and Construction Management contractor is maintaining a core team of key engineering personnel on the project and is continuing with detailed engineering, albeit at a reduced level. Skye intends to continue this level of engineering until the end of the summer.

While the original Fenix Project plan envisioned producing ferro-nickel in late 2009, it is possible that the project could be delayed by up to a year assuming the financing for the project is in place by the end of this summer.

2008 First Quarter Financial Results

(all amounts are in U.S. dollars unless otherwise indicated)

The Company is reporting a loss of $10,916,000 for the first quarter of 2008 (basic and diluted loss per share of $0.21) compared with a loss of $5,731,000 (basic and diluted loss per share of $0.14) for the three months ended March 31, 2007. The loss for the quarter is principally related to exploration and indirect development costs for Skye's Fenix Ferro-Nickel Project, general and administrative costs and non-cash stock-based compensation expense. In the quarter, the Company capitalized $25,820,000 of Fenix Project direct development costs (engineering, project management and procurement costs) bringing the total capitalized expenditures to date to $72,341,000.

Skye's unaudited consolidated interim financial statements and Management's Discussion and Analysis (MD&A) for the quarter ended March 31, 2008 will be filed on SEDAR and available for download at www.sedar.com.

About Skye

Skye is an international mining company focused on becoming a 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 2007 Skye received its environmental permits for the project, completed basic engineering and filed a Technical Report. Skye is preparing to initiate construction once financing is in place.

Cautionary Notice: This document 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. Forward-looking statements may include mineral reserve and resource estimates, commodity prices, estimates of future production, unit costs, construction schedules and construction cost estimates, costs of capital projects and timing of commencement of operations, and are based on current expectations and beliefs concerning future developments and their potential effects on Skye. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to failure to construct the mine facilities in the time frame and within estimated costs as planned; variations in capital and operating costs from estimated costs; unavailability of key personnel, skilled labor, supplies, equipment, machinery, parts, contractors and necessary components of Skye's project; variations in the grade and recovery of ore from estimated amounts; fluctuations in global demand, supply of and price for nickel; inability to obtain financing on commercially suitable terms; delays in obtaining or failures to obtain required governmental, environmental or other project permits, licenses or approvals; changes in tax or mining laws; failure to build and maintain good relationships with the local community; illegal land occupations; civil disturbances; changes in the regulatory environment; unforeseen geological, physical or meteorological conditions; natural disasters or industrial accidents; labor shortages or stoppages; industrial disputes; inflation; changes in exchange rates; political factors; fluctuations in power, fuel and other commodity prices; and other factors including those described under the heading "Risk Factors" in Skye's most recent Annual Information Form filed on Sedar. The forward-looking statements included in this document represent Skye's views as of the date of this document. 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 document. 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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