Guatemala approves EIS for Fenix

Vancouver – The Guatemalan Ministry of Environment has approved the environmental impact assessment (EIA) report for the Fenix project, a proposed ferro-nickel mine in the Lake Izabal region.

The mine project is held 89% by Skye Resources (SKR-V), which acquired an initial 70% stake from Inco (N-T, N-N) in late 2004. The company subsequently added to its interest by funding development costs and diluting its remaining partner, the government of Guatemala.

Inco spent US$238 million to build a mine and pyrometallurgical processing plant and related facilities at the lateritic nickel project in the 1970s. The complex operated from 1977 until 1980, when low nickel prices and high oil prices forced its closure. No mining has taken place since then.

Skye carried out a drill program and preliminary assessment of the project in the spring of 2005. Based on the findings, a feasibility study was initiated for an operation capable of producing 50 million lbs. per year of ferro-nickel using conventional smelting technology.

The company also developed and filed patent applications for a proprietary atmospheric nickel leaching process that was recently tested in a pilot-plant program in Canada. A final report for these tests is expected shortly.

The independent feasibility study is expected to be completed in the spring of 2006, and will be preceded by a revised resource estimate in the first quarter.

Government approval of the EIS is one of two conditions the company must meet before the Guatemalan Ministry of Mines can issue an exploitation license for the project. The other is a consultation process addressing requirements of international labor conventions for indigenous and tribal peoples. These consultations are under way.

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