Guatemala

[Tackler]

Skye SKR exclusivity period for Inco concessions extended

2004-06-29 19:01 ET - News Release

Also News Release (C-N) Inco Ltd

Mr. Ian Austin of Skye Resources reports

SKYE AND INCO AGREE TO EXTEND EXCLUSIVITY PERIOD FOR FINALIZATION OF DEFINITIVE AGREEMENTS FOR GUATEMALAN CONCESSIONS

Further to Inco Ltd.'s news release of March 30, 2004, has agreed to extend the exclusivity period it granted to Skye to enter into definitive agreements covering the acquisition by Skye of Inco's rights to certain Guatemalan nickel concessions and related assets. The exclusivity period, which was to have expired on June 30, 2004, has now been extended to Sept. 30, 2004.

The concessions are held by Exploraciones y Explotaciones Mineras Izabal, S.A. (Exmibal), a 70-per-cent-owned subsidiary of Inco in which the government of Guatemala has a 30-per-cent interest as a shareholder. Inco and Skye have been negotiating the definitive agreements covering Skye's acquisition of Inco's 70-per-cent shareholding in Exmibal. However, Inco and Skye do not expect to execute these agreements until discussions with the government of Guatemala concerning certain issues it had raised with respect to the development of the concessions are concluded to the satisfaction of the government of Guatemala, Inco and Skye. Accordingly, Inco has agreed to extend the exclusivity period while these discussions continue.

Inco and Skye have presented to the government of Guatemala a program to accelerate the resumption of production from the concessions. This program incorporates Skye's development plans for the concessions and Skye's commitments to the government in respect of its 30-per-cent shareholding in Exmibal. The government of Guatemala, Inco and Skye are all seeking ways to ensure that the development of the concessions meets the requirements of the government of Guatemala, satisfies the needs of surrounding communities and achieves high environmental standards.

Skye has continued to make good progress in developing the hydrometallurgical process which would treat both the saprolite and the limonite ores from the concessions. Phase 2 of its test program, which will commence shortly and last for about three months, will seek to optimize the design of the process and develop data for the design of a continuous pilot plant.