Guatemala

[Tackler]

Inco acquires 500,000 shares of Skye Resources

2005-08-26 17:11 ET - News Release

See News Release (C-N) Inco Ltd


Mr. Steve Mitchell of Inco reports

INCO LIMITED INCREASES ITS INVESTMENT IN SKYE RESOURCES INC.

Inco Ltd. has acquired 500,000 common shares of Skye Resources Inc., increasing its holdings in Skye to 2,888,101 common shares and 250,000 warrants to acquire common shares, representing approximately 13.3 per cent of Skye's outstanding common shares (assuming exercise of the warrants held by Inco).

Inco acquired its original holdings of 2,388,101 common shares of Skye pursuant to a transaction, which closed on Dec. 15, 2004, whereby Skye acquired Inco's 70-per-cent indirect interest in its former Exmibal project in Guatemala. During a five-year option period, Skye will evaluate the technical and economic feasibility of developing this project. If Skye exercises its option to proceed with such a project, a subsequent closing will occur where it will pay Inco $3.5-million (U.S.) and issue additional common shares as outlined below, 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. 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 per cent based upon Skye having completed $20-million in one or more financings (excluding common share acquisitions from third parties). 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 the former Exmibal project.

The purchase was made through the TSX Venture Exchange for investment purposes. Inco may from time to time acquire additional shares, dispose of some or all of its shares, or continue to hold the shares in the normal course of its investment activities.