Q&A

Q1: What do the local Mayan people say and feel about this mining project? Are they supportive? What are their concerns?

A1: The majority of the citizens of El Estor and the surrounding community are very supportive of the Fenix Project and has welcomed the community engagement undertaken so far. They are also very excited by the current and future benefits Raxche will provide. There is a minority, particularly those in rural communities, who, because of historic circumstances relating to land tenure, view development with concern. Understanding and satisfying their needs is part of our ongoing work at the Project.

The Mayor of El Estor released a statement in the local paper on September 30, 2005 declaring the community’s support for the Project and the sustainable development it will bring to the region. Highlights of the statement include:

• The people believe they can preserve their culture and heritage while improving their economic and educational well being
• They believe responsible mining will protect their air and water resources while regenerating forests and creating employment
• They demand the Government of Guatemala give total support to the mining project
• September 30th of each year be declared as the “Day of El Estor Dignity and Support to National and Foreign Investment in Our Municipality”.

Read the full Mayor’s Declaration of Support.

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Q2: Have there been any local demonstrations against this project?

A2: There were two demonstrations in September 2005. The first was an anti-mining demonstration organized by the Defensoria Q’eqchi, an El Estor based NGO, who demanded that CGN’s licences be revoked. According to media reports, 300-400 people attended this meeting from a wide area of Izabal and Alta Verapaz with very limited local representation.

The second was a pro-mining demonstration organized by the Mayor of El Estor who demanded that the government support mining and that the church and NGO’s’ refrain from interfering with the Project. The El Estor demonstration involved more than 4,000 people (according to media reports) representing all the Q’eqchi communities.

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Q3: What is Skye Resources’ policy on dealing with demonstrations?

A3: We believe that peaceful demonstrations reflect the principles of democracy, especially in a country where people have been concerned about freedom of speech and association for many years, and are realizing the power their voices carry. However, although we believe that dissent can be a constructive force, we actively support its expression in open and transparent dialogue rather than in any form of demonstration - be it positive or negative.

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Q4: How exactly will the local Mayan people benefit from the Fenix Project?

A4: Local people living in and around the communities surrounding the Project will benefit substantially in numerous ways, from direct employment and job training at the mine, to spin off service industries created by the mine’s presence in the community, and to local programs designed to encourage, assist and support sustainable community development in the region.

Sustainable community development encompasses improvement of health, education, infrastructure and socio-economic conditions in a manner assuring long term viability, while protecting the environment and preserving the cultural heritage and values of the region’s indigenous population.

The Fenix Project can provide an economic boost to the region, helping people identify opportunities to find a job or start a business and build a better life for their families. In addition, through organizations such as Raxche it can help the community plan and organize its social development.

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Q5: What are you doing to protect the environment in El Estor and the surrounding community?

A5: Skye Resources believes that environmental stewardship is a cornerstone to developing a world-class mining facility in El Estor.

A Social Environmental Assessment (SEA) is being conducted by a team of Guatemalan and international experts. The SEA involves detailed research on the current state of the environment in areas the Project may affect, including studies on water and air quality, flora and fauna.

The SEA assesses how the project might affect these aspects of the environment and presents strategies to avoid or minimize adverse impacts.

These strategies will then be implemented into an environmental management program. The program will consist of wide ranging initiatives, including:

• A system to ensure all environmental laws and regulations are being practiced and carried out
• Environmental site audits and monitoring programs conducted on a regular basis
• Environmental awareness programs for employees and the community
• Implementation of conservation techniques and programs - such as water, recycling and reclaiming land to restore it to productive alternate land uses

• The establishment of an Environmental Monitoring Committee comprising of local community members.

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Q6: What about Corporate Responsibility? How will you protect the Human Rights of the local Mayan people?

A6: At Skye Resources we believe that, with proper consultation, planning, project execution and operation, mineral resources can be developed in an environmentally responsible manner to the mutual benefit of: the members of the communities in which we operate, the Governmental jurisdictions by whose laws we are governed, our suppliers and customers, our employees and shareholders.

We further believe that, irrespective of the rights bestowed upon Skye Resources by law, our success depends upon the support of the communities that host our operations.

We are committed to ensuring, to the limit of our abilities, that these beliefs are upheld and the benefits to all stakeholders are realized. We will:

• Undertake meaningful consultation with all local communities
• Work constructively with communities, NGO’s and the Government of Guatemala
• Ensure the safety and health of our employees and the broader community
• Provide opportunities for local people to achieve their full potential
• Support fundamental Human Rights
• Strive to be leaders in the protection of the Environment

We will seek opportunities to share our success by:

• Working with communities to contribute to their social infrastructure
• Developing partnerships that focus on creating sustainable value

For a more comprehensive overview, please read our our Social and Environmental Policy Statement.

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Q7: If INCO had Exploitation Licences when you acquired the property in 2004, why did Skye Resources request Exploration Licences instead? Why not just start-up mining operations again?

A7: In applying for and in receiving these new Exploration licences, CGN renounced its historical Exploitation Concession rights. Those rights were to expire in the third quarter 2005, but were renewable.

Through relinquishing the Mining Rights under the Old Law and seeking Exploration Rights under the New Law, Skye Resources is pursuing the Fenix Project in a manner supported by the Government and on a basis that would provide time for the conduct of new environmental studies and consultations by the government prior to being granted new Exploitation licences.

In determining the area of the new exploration licences to be requested, all “Protected Areas” (as defined under Guatemalan law), were excluded; this gave up a significant area (SEXA) to the NE and a smaller area to the SW of the Niquegua Norte, which overlapped the Boca de Polochic (a protected area).

Furthermore, Skye Resources agreed to pay certain disputed Royalties from the period 1978 -1980: C$800,000 to the Government of Guatemala, and C$120,000 to the Municipality of El Estor.

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Q8: Exactly where is the mine site located? How large of an area does it cover? How much of it do you intend to mine?

A8: The project site is located in the municipality of El Estor on the western shore of Lake Izabal in the eastern region of Guatemala, approximately 170 km northeast of Guatemala City and approximately 70 km from the Caribbean coast.

All mining areas are located within the Fenix Exploitation Licence, granted by the Ministry of Energy and Mines in April 2006. As shown in the figure below, the approved Exploitation Licence covers an area of almost 248 square kilometers; however the approved areas for exploitation, or project area, are much smaller than the whole licence area.