Skye Resources Inc.

Skye Resources Inc.

January 30, 2008 07:59 ET

Skye Resources Defers Fenix Project Financing in View of Credit Market Conditions

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 30, 2008) - Skye Resources Inc. (Skye) (TSX:SKR) will defer its Fenix project financing until credit market conditions improve. Initial site development activities in Guatemala will be maintained, but the ramp-up of major construction work will be delayed.

"In light of the recent turmoil in the credit markets we have chosen what we believe is the most prudent course of action for our shareholders," said Ian Austin, Skye President and CEO. "The delay will be managed to preserve maximum value from the activities completed to date and position us to ramp back up as quickly as possible. Results from our ongoing financial and project work strengthen our belief that Fenix is one of the best brownfield nickel projects under development. We are confident that the project can be financed in more normal credit markets and we will monitor market conditions closely and be ready to act quickly once they improve."

Hatch Ltd. (Hatch), the engineering, procurement and construction management contractor for the project, will maintain the core engineering team and continue with engineering services to the extent that vendor information is available. Skye's core construction team in Guatemala will be maintained. Early works construction contracts that are underway will continue in order to be able to ramp-up construction quickly once financing is in place. Commencement of major construction works will be delayed and existing critical equipment contracts will be modified to defer material purchases and fabrication work, while continuing with vendor engineering where feasible. Over the next several months Skye and Hatch will generate a revised project timeline and associated costs.

David Huggins, Skye's Chief Operating Officer, has elected to continue in his COO role and will also return to the position of President of Skye's Guatemalan subsidiary, Compania Guatemalteca de Niquel S.A. (CGN). William Enrico, CGN's current President and Skye VP of Operations, is resigning to pursue other interests. Skye wishes to express its appreciation for William Enrico's contribution towards advancing the Fenix project.

About Skye

Skye is an international mining company focused on becoming a new 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 June 2007 Skye received its environmental permits for the project and is preparing to initiate construction.

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. Forward-looking statements may include statements relating to construction schedules and costs and credit market conditions 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 statements include, but are not limited to, failure to construct the Fenix project in the time frame and within estimated costs as currently planned; variations in capital and operating costs from estimated costs; unavailability of key personnel, skilled labor, supplies, equipment and contractors; fluctuations in global demand, supply and the price for nickel; inability to obtain additional financing on commercially suitable terms; failure to build and maintain good relationships with the local community; civil disturbances; changes in the regulatory and political environment; labor stoppage or disputes; inflation; exchange rates; and other factors described under the heading "Risk Factors" in Skye's most recent Annual Information Form filed on Sedar. 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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