Mr. Mike England reports

SKY GOLD CORP. DEFINES MULTIPLE HIGH-QUALITY TARGETS ON ITS SHEBANDOWAN NI-CU-CO-PGE PROPERTY IN NORTHWESTERN ONTARIO

Numerous high-quality targets have been defined by a recently completed VTEM (versatile time domain electromagnetic) airborne geophysical survey flown over Sky Gold Corp.'s Shebandowan nickel-copper-cobalt-platinum-group-element property. The property, comprising 5,894 hectares (includes Star Lake, KA, Greenwater Lake and Kekekuab Lake groups), is located 70 kilometres west of the city of Thunder Bay and five km southwest of the past-producing Shebandowan nickel-copper-cobalt-chromium-PGE mine, operated by Inco Ltd. during the period of 1970 to 1998. The Shebandowan mine is a world-class example of a primary magmatic nickel sulphide deposit, with produced tonnage and grade of 8.7 million tonnes at 2 per cent nickel, 1 per cent copper, three grams per tonne platinum plus palladium (cobalt and chrome grades unknown).

Mackenzie (Mac) Watson, technical adviser to Sky Gold, commented: "This is one of the best greenfield exploration projects that I have been associated with. The potential for discovery of both nickel and gold is very high."

VTEM survey results

The survey yielded both electromagnetic and magnetic data, important tools for the exploration and delineation of targets, in the search for magmatic Ni-Cu-Co-PGE deposits.

Interpretation of the VTEM data yielded over 70 target areas for follow-up. Compilation of the VTEM data with geological, geochemical and geophysical data in Sky's possession yielded eight high-priority target areas slated for immediate follow-up and subsequent diamond drilling. None of the high-priority targets have been evaluated by historic diamond drilling.

The targets ranked as high priority, comprise single conductors and conductor clusters, delineated over strike lengths ranging from 400 to 1,300 metres, and are graded as moderate to strong in intensity. Some of the conductors display a positive correlation with magnetic highs while others have weak to moderate magnetic expression.

Strongly supporting the geophysical targets is an extensive cluster of highly anomalous nickel, copper, chrome, platinum and palladium values in glacial till, delineated by an Ontario Geological Survey investigation in 2000. The most anomalous samples from the entire survey area occur on the Shebandowan property, featuring values of up to 345 parts per million nickel, 44 ppm cobalt, 398 ppm chrome, 4.15 parts per billion platinum and 4.13 ppb palladium. Several of the highly anomalous till sample sites are closely associated with the geophysical targets graded as high priority.

The geophysical targets and geochemical anomalies coincide with mafic and ultramafic rocks, including peridotite, pyroxenite and gabbro flows, and sill-like bodies -- the same rocks that host the adjoining Shebandowan Ni-Cu-Co-Cr-PGE mines to the immediate north.

Collectively, the VTEM targets, geochemical anomalies, and mafic and ultramafic rocks are closely related to the Tinto fault and related splays. The Tinto fault is a deep-seated structure situated at a major terrain boundary, separating rocks of the Shebandowan greenstone belt and younger intrusions to the south. Such a setting is identical to that of the Shebandowan Ni-Cu-Co-PGE mines situated on the Crayfish Creek fault, a crustal-scale fault situated on the north contact of the greenstone belt with younger intrusions. These deep-seated crustal-scale faults permitted mafic and ultramafic magmas and associated nickel-copper-cobalt-platinum group element mineralization to reach upper crustal levels to their eventual sites of deposition.

In addition to the Ni-Cu-Co-PGE potential of the property, there is excellent potential for the discovery of orogenic gold deposits as well. Historic geochemical work completed by Mingold in the 1990s delineated an area in the southwestern part of the property containing an elevated number of gold grains supplemented by anomalous geochemical assays in gold, at numerous sample sites (the Mingold Au anomaly). This anomaly is located proximal to the Tinto fault, enhancing the prospects for the occurrence of orogenic gold deposits to occur on the property.

Moving forward at Shebandowan

An integrated exploration program involving soil geochemistry, trenching and diamond drilling will commence on the Shebandowan property in the spring. Detailed soil geochemistry is warranted to more accurately define the highly anomalous Ni-Cu-Co-PGE response patterns obtained in the Ontario Geological Survey regional till survey. In such a survey, tills were collected on four-square-kilometre centres -- detailed sampling is required to accurately locate geochemical anomalies and their relationship with the high-priority VTEM targets. Additional till and soil sampling is also required at the site of the Mingold Au anomaly to further define its strength and extent.

Trenching will be performed where overburden conditions allow, to evaluate high-priority VTEM anomalies coincident with anomalous soil geochemistry underlain by mafic and ultramafic rocks. All high-priority targets are anticipated to be evaluated by diamond drilling this season.

Thunder Bay North district potential

Given the considerable number of nickel, copper and PGE mineral occurrences in the Thunder Bay North district, particularly the world-class past-producing Shebandowan nickel-copper-cobalt-PGE deposit, this district is clearly a premier place for exploring for this suite of metals.

In addition, the diverse favourable geological setting in the Thunder Bay North district presents many opportunities to make new discoveries and/or to assess older historic occurrences using modern metallogenic models and current exploration technology.

Qualified person

Sky Gold's disclosure of a technical or scientific nature in this news release has been reviewed and approved by Don Hoy, PGeo, who serves as a qualified person under the definition of National Instrument 43-101.

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