Skye Resources Inc.

Skye Resources Inc.

March 20, 2008 15:02 ET

Skye Resources Provides Update on Fenix Project and Announces 2007 Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 20, 2008) - Skye Resources Inc. ("Skye" or "the Company") (TSX:SKR) today released an update on its Fenix project and its audited consolidated financial statements for the year ended December 31, 2007.

2007 Highlights

Skye achieved several important milestones in 2007, significantly advancing the Fenix ferro-nickel project:

- Met the option conditions in the master agreement with Vale Inco Limited to make unconditional the 2004 acquisition of 70% of Compania Guatemalteca de Niquel, S.A. ("CGN"), which owns the Fenix project.

- Received formal approvals from the Guatemalan Government of the environmental impact assessments for Fenix and the construction permit. All major permits required for the development of the ferro-nickel project are now in place.

- Signed a letter of intent with the Government of Guatemala in which CGN agreed to the payment of additional royalties on a sliding scale at prices above US$7.00 per pound of nickel. Skye increased its interest in CGN to approximately 98.2% as the Company met cash calls of CGN to fund Fenix project costs.

- Filed an updated technical report in September updating the feasibility study, including updated capital and operating costs based on the completion of basic engineering by Hatch Ltd. ("Hatch").

- Signed agreements for the supply of electrical power and construction of a new power transmission line for the Fenix project with Guatemalan subsidiaries of Duke Energy International LLC. Approval has been received from Guatemalan regulatory authorities for the interconnection of the Fenix project with the Guatemalan grid.

- Signed engineering, procurement and construction management contracts with Hatch. Detailed engineering commenced and orders for critical major equipment were placed.

- Renewed the Niquegua Montufar II exploration license for two years, to the end of 2009.

- Carried out an exploration program on Area 216 resulting in an increase in the measured and indicated mineral resources. Area 216 is in the region of the mineral reserves for the Fenix ferro-nickel project.

- Completed pilot plant testing of a high pressure acid leaching ("HPAL") process to treat limonite from the Fenix deposits early in 2008. The Company believes that this successful test work demonstrates the technical viability of recovering nickel and cobalt from Fenix limonite with a HPAL process.

2007 Financial Results (all amounts are in U.S. dollars unless otherwise indicated)

The Company is reporting a loss of $31,206,000 for the year (basic and diluted loss per share of $0.70) compared with a loss of $29,654,000 (basic and diluted loss per share of $1.02) for the year ended December 31, 2006. The loss for the year is principally due to exploration and indirect development costs (the costs of Skye's 98.2% owned Guatemalan subsidiary, CGN for the Fenix ferro-nickel project in Guatemala), general and administrative expense, project financing costs and non-cash stock-based compensation expense. In the year the Company capitalized $46,521,000 of Fenix ferro-nickel project direct development costs (engineering, project management team and other direct costs) and $25,187,000 of mineral properties (principally the cost of exercising the Fenix option in March, 2007 which completed the purchase of CGN shares).

Project Update

On January 30, 2008 Skye announced that it was deferring financing of the Fenix ferro-nickel project due to difficult credit market conditions. Hatch is continuing with detailed engineering and has arranged with the vendors of major equipment to defer placing sub-contracts and fabrication but to continue with engineering in support of Hatch's efforts. Hatch's construction management team remains at site to complete early works contracts that are underway. The Company's project management team is working with Hatch to assess the impact of this on the project schedule and capital cost and to develop a plan to retain the value of the work done to date. Skye remains confident that the project can be financed in more normal credit markets and will monitor the markets closely with the intention to act quickly once they improve. Skye is also pursuing other financing options for the Fenix ferro-nickel project.

At the end of the year, Skye had $107,000,000 of unrestricted cash, principally from the $78,117,000 gross proceeds, including the over-allotment option, received in the unit offering in October 2007. The Company intends to manage this cash to advance the detailed engineering and existing early works contracts and to maintain the corporate and project teams in North America and Guatemala.

On February 29, 2008 Skye announced the appointment of Colin K. Benner as its new Chief Executive Officer and Vice Chair effective March 1, 2008. Ian Austin, previously President and Chief Executive Officer, continues in his role as a director of the Company. Mr. Benner is an experienced mining executive and professional mining engineer with more than 40 years experience in the mining industry.

Skye's audited consolidated financial statements, Management Discussion and Analysis and Annual Information Form for the year ended December 31, 2007 will be filed on SEDAR and available at

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 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 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 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 currently 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; 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; labor shortages or stoppages; industrial disputes; inflation; changes in exchange rates; political factors; fluctuations in 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 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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