Skye Resources announces agreement with Guatemalan government

    TSX Symbol: SKR

    VANCOUVER, July 31 - Skye Resources Inc. ("Skye") today announced
that it has signed a letter of intent with the Government of Guatemala with
respect to the payment of additional royalties by Skye's Guatemalan
subsidiary, Compania Guatemalteca de Niquel S.A. (CGN), which owns the Fenix
ferronickel project.
    "It was our intention when we first purchased the Fenix property to
ensure lasting positive economic impacts for the country and the Izabal
region," said Ian Austin, President and CEO of Skye. "With the signing of this
letter of intent, the first of its kind in Guatemala, we have achieved that
objective and demonstrated the support that the Fenix project has received
from several levels of Government."
    The new royalty will be payable at the rate of 1.0% prior to project
payback, provided nickel prices average at least US$7.00 per lb. After project
payback, the royalty increases on a sliding scale, depending on nickel prices,
reaching a maximum of 4.0% if nickel prices hit US$22.00 per lb. If
legislation is passed at a future date that increases the Mining Law Royalty
beyond its current level, the additional royalty rate in a given quarter would
be reduced by the increase in the Mining Law Royalty rate. Under the letter of
intent, CGN will pay the royalty in addition to the existing 1.0% royalty
under the Guatemalan Mining Law. Following execution of a definitive agreement
within the next 30 days, the Government will retain the shares in CGN which it
currently owns, but will not invest additional funds to pay for the
construction of the project.
    The letter of intent was signed today in a ceremony in Guatemala City by
CGN and the Ministers of Finance, Energy and Mines, Economy, and the head of
the tax administration, in the presence of Guatemalan President Oscar Berger
Perdomo and Skye CEO Ian Austin.

    About Skye

    Skye is an international mining company focused on becoming a new
mid-tier nickel producer. Skye acquired the rights to its Guatemalan lateritic
nickel project (the Fenix project) in December 2004 and in October 2006
completed a feasibility study for a ferro-nickel project at Fenix using proven
conventional smelting technology. In June 2007 Skye received its environmental
permits for the project, and expects to initiate construction during the
second half of 2007 with initial production in late 2009.
www.skyeresources.com

    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: Andrew Grant, Vice President, Public Affairs,
Tel: (604) 602-9500, agrant@skyeresources.com; Martti Kangas, Investor
Relations, The Equicom Group, Tel: (416) 815-0700 x 243,
mkangas@equicomgroup.com; David Feick, Investor Relations, The Equicom Group,
Tel: (403) 538-4787, dfeick@equicomgroup.com

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