Guatemala

[Tackler]

Skye exercises Fenix interest option

2007-03-06 15:05 MT - News Release

Mr. Ian Austin reports

SKYE RESOURCES EXERCISES FENIX OPTION

Skye Resources Inc. has exercised its option to make unconditional its 2004 acquisition of the CVRD Inco Ltd. (Inco) interest in the Fenix nickel laterite project in Guatemala. As consideration, Skye has delivered to Inco 1,746,463 Skye shares and $3.5-million (U.S.).

"The formal exercise of the option is an important step in the development of the world-class Fenix project," said Ian Austin, president and chief executive officer, Skye Resources. "Our project development team is advancing the engineering while simultaneously we are moving forward with our financing plan so that we can act quickly once we receive the environmental approvals from the Guatemalan government."

Inco has advised Skye that it has also exercised 250,000 Skye share purchase warrants at a price of $5.75. Following Skye's exercise of the option and Inco's warrant exercise, Inco holds 5,615,714 Skye shares representing approximately 13 per cent of the outstanding shares in Skye.

Inco has advised Skye that it will exercise its right to nominate a director to the Skye board at Skye's annual meeting.

In 2004, Skye acquired Inco's shares in the Guatemalan company (CGN) that owns the Fenix project, with the acquisition being conditional upon Skye satisfying a number of conditions, culminating in the completion of the feasibility study, which was announced late in 2006. Skye now owns 92.4 per cent of CGN.