Skye Resources announces 2006 financial results

    TSX Symbol: SKR

    VANCOUVER, March 21 /CNW/ - Skye Resources Inc. ("Skye") (TSX:SKR) today
reported its audited consolidated financial results for the year ended
December 31, 2006. Skye reported a loss of $33,653,000 ($1.16 per share)
compared with a loss of $28,468,000 ($1.33 per share) for the year ended
December 31, 2005. The loss for the year is principally due to exploration and
development costs associated with Skye's Fenix project in Guatemala and
corporate and non-cash stock-based compensation expense.
    "In 2006 we achieved several milestones toward our goal of becoming a
mid-tier nickel producer," said Ian Austin, President and CEO. "In April,
Skye's Guatemalan subsidiary was granted an exploitation license for an
initial term of 25 years that allows mining to take place at the Fenix
project. In September, Skye received the Feasibility Study for the
ferro-nickel smelting project and the Preliminary Assessment for an expansion
project using hydrometallurgical processing. These studies support
management's view that Fenix is one of the world's best high grade nickel
deposits, capable of being brought into production in the near term, and so we
are continuing to aggressively advance the project with a view to being in
production in the latter part of 2009."
    The studies used a base case nickel price of US$5.00 a pound of nickel
and confirm robust economics. The proven and probable reserves classified in
the Feasibility Study are sufficient for a 30 year mine life for the
ferro-nickel smelting project. The ferro-nickel project and hydrometallurgical
project would each produce about 50 million pounds of nickel annually over
their first 20 years of operations.
    The Company's project finance advisor, Cutfield Freeman & Co., has
assessed the availability of debt financing for the development of Fenix
through detailed discussions with potential project lenders and investment
banks and, based on that review, they believe that over 60% of the total
funding requirements of about US$1.1 billion (including working capital, cost
overrun facilities and interest during construction) can be funded through
debt. Skye has engaged an investment bank to advance its debt financing with
the intent of raising the funds early in the third quarter of 2007. The
Company has also engaged Cutfield Freeman to investigate whether parties would
be willing to provide up to US$200 million of subordinated debt in exchange
for off-take rights.
    Since receiving the feasibility study, Skye has assembled its own project
development team, and has initiated basic engineering, with a view to being in
a position to place orders for long lead items around the middle of 2007. Site
clean-up has also commenced and dependant on receipt of environmental
approvals and financing, Skye anticipates being in a position to start the
full-scale refurbishment program in the third quarter of 2007. This should
allow initial production to start in the second half of 2009.
    During the fourth quarter ended December 31, 2006, Skye completed a
short-form prospectus offering for gross proceeds of C$80,087,500. Subsequent
to year end, the underwriters of the recently completed offering exercised
their over-allotment option to increase the total gross proceeds for the
offering to C$92,100,625. Proceeds from the financing are being used by Skye
to initiate the development of the Fenix Project; for exploration at Fenix and
other nickel properties; for further engineering studies on the hydromet
expansion at Fenix, including work on Skye's proprietary sulphation
atmospheric leaching process; and for general corporate purposes.
    As of December 31st, 2006 the company had cash and cash equivalents
totalling C$87.8 million compared to C$13.4 million at December 31, 2005.

    About Skye
    Skye is an international mining company focused on becoming a new
mid-tier nickel producer. The Company acquired the rights to its Guatemalan
lateritic nickel project (the Fenix project) in December 2004 and in September
2006 received the results of a feasibility study for a ferro-nickel project at
Fenix using proven conventional smelting technology.

    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. 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.

For further information:

For further information: PLEASE CONTACT: Ian G. Austin, President &
Chief Executive Officer, Tel.: (604) 602-9500; Martti Kangas, Investor
Relations, The Equicom Group, Tel: (416) 815-0700 x 243,; David Feick, Investor Relations, The Equicom Group,
Tel: (403) 538-4787,

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