Skye gets new Exmibal licences (December 14, 2004)

The Guatemalan government has issued new exploration licences covering the Niquegua mining concession, formerly held by Inco (N-T), to Vancouver-based Skye Resources (SKR-V).

Skye is acquiring Inco’s 70% interest in the former operating company, Exploraciones y Exploitaciones Mineras Izabal (Exmibal), and one of the conditions for closing was to obtain new licences over the property. That required a payment of about $800,000 to the national government and a further $160,000 to the local government to settle outstanding claims for royalty payments from the period Exmibal was in production. Exmibal produced about 15,000 tonnes nickel from laterite ore between 1977 and 1980.

Under the new licences, Exmibal has a three-year exploration period, extendable by up to four years. The licences can be converted to exploitation licences on the government’s approval, which would require an environmental impact study.

The national government would retain its 30% interest in Exmibal, and Inco would transfer its 70% to Skye in exchange for a 13.93% holding in Skye, including outstanding warrants. Skye then has a five-year option period to do feasibility studies and arrange a $20 million financing. If Skye opts to bring the project back into production, Inco receives US$3.5 million and enough additional shares to bring its interest in Skye, post-financing, to 17.5%.

Inco also retains a gross royalty based on mined tonnage, a net smelter return on any ferronickel production, and a takeoff agreement to market any production.

Hatch, consultants for Skye Resources, are working on a scoping study evaluating both a conventional ferronickel process similar to the original project and an atmospheric-pressure sulphuric acid leach process. The study is scheduled to be complete early in 2005.

If Skye’s atmospheric leach process proves usable, Inco has a licence to use it at its own plants.

A estimate released in September put Exmibal’s measured and indicated resource at 63.3 million tonnes of saprolite grading 1.84% nickel, with inferred resources of 57.5 million tonnes saprolite grading 1.66% nickel and 24.5 million tonnes limonite grading 1.31% nickel.