Guatemala

[Ed Monton]

Skye Resources Inc. Enters into Agreement with Inco
limited for Guatemalan Nickel Concessions

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Sept. 30, 2004) - Skye
Resources Inc. ("Skye") announced today that it has entered into a
definitive agreement with Inco Limited ("Inco") pursuant to which Skye
will, subject to completion of certain conditions, acquire Inco's 70%
interest in Exploraciones y Explotaciones Mineras Izabal S.A.
("Exmibal"), a Guatemalan company which holds certain rights to nickel
concessions in eastern Guatemala, and owns a pyrometallurgical nickel
processing plant and related facilities which have been closed for over
20 years. The Government of Guatemala owns 30% of Exmibal.

Upon an initial closing, Skye will acquire Inco's 70% interest in
Exmibal, and issue Inco such number of Skye common shares and warrants
which will result in Inco holding 13.93% of the issued and outstanding
Skye common shares and warrants. Skye will, during a 5-year option
period, evaluate the technical and economic feasibility of Exmibal
developing a nickel mining and processing project covering its nickel
concessions. If Skye exercises the option to proceed with such a
project, a subsequent closing will occur where Skye will pay Inco U.S.
$3.5 million and issue additional common shares as outlined below (the
"Additional Consideration") and Inco will transfer certain surface
rights it holds through affiliates in Guatemala to Skye. The Additional
Consideration would be payable once Skye has fulfilled a number of
conditions during the option period, including the preparation of a
feasibility study, and the completion of financings to raise an
aggregate of Cdn $20 million (less the proceeds from the exercise of
Skye's currently outstanding warrants). The number of shares to be
issued to Inco as Additional Consideration will be the number that would
have been required to increase Inco's shareholding in Skye to 17.5%
based upon Skye having completed such Cdn. $20 million in financings.
Inco will also have the right to receive certain payments based on the
tonnages of ore mined from the concessions and, if a ferro-nickel plant
is operated, will receive certain payments on any ferro-nickel produced
based on a net smelter return formula. Inco has agreed to market any
finished nickel products, and will have certain rights to refine any
intermediate nickel products of Exmibal. If certain conditions are not
met by Skye during the option period or Skye elects not to exercise its
option to proceed with a project, Inco will have the right to reacquire
its interest in Exmibal.

Since entering into a letter of intent with Inco in late 2003, Skye has
made significant progress in developing an atmospheric sulfuric acid
leach process to treat Exmibal's ore. A provisional U.S. patent has been
filed, and extensive laboratory testing has been undertaken at SGS
Lakefield Research. Under the definitive agreement with Inco, Skye has
granted Inco the right to use at its own facilities any process
developed by Skye for use at Exmibal. A scoping study to evaluate the
application of Skye's hydrometallurgical process at Exmibal and compare
it with pyrometallurgical alternatives is currently expected to be
completed in early 2005.

Certain of the nickel concessions held by Exmibal have an initial term
expiring in 2005. Exmibal has filed an application to renew these
concessions or receive updated concessions. Such renewal or receipt of
updated concessions on terms satisfactory to Inco and Skye is one of the
conditions to be met for an initial closing, which closing is currently
expected to be held in mid-December 2004.

This News Release may contain forward-looking statements including, but
not limited to, comments regarding the timing and content of upcoming
work programs, geological interpretations, receipt of property titles,
potential mineral recovery processes, and other related matters.
Forward-looking statements address future events and conditions and
therefore involve inherent risks and uncertainties. The Exmibal project
is at an early stage and all estimates and projections are based on
limited, and possibly incomplete, data. More work is required before the
mineralization and the project's economic aspects can be confidently
modelled. Actual results may differ materially from those currently
anticipated. No representation or prediction is intended as to the
results of future work, nor can there be any promise that the estimates
and projections herein will be sustained in future work or that the
project will otherwise prove to be economic.

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FOR FURTHER INFORMATION PLEASE CONTACT:
Skye Resources Inc.
Ian Austin
Chief Executive Officer
[phone]
[phone] (FAX)
Website: www.skyeresources.com
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.