SKY METALS LIMITED — Capital/Financing Update 2005

Jan 27, 2005

28 January 2005

The Manager Companies Australian Stock Exchange Limited 20 Bridge Street Sydney NSW 2000

(2 pages by email)

Dear Madam

RE: STRATIGRAPHIC & CORING PROGRAM COMPLETED CHEROKEE BASIN KANSAS USA

Planet Gas Limited advises that its wholly owned subsidiary. Planet Gas Resources LLC, has completed its final stratigraphic wells on its Skull Creek Project within the Cherokee Basin Kansas USA.

The stratigraphic drilling program was designed to confirm previous total coal isopach (thickness) mapping and assess the in-situ gas of each coal horizon prior to the commencement of development drilling programs.

The Ferguson Ranch 11-31 Core (SK 31-02 on the attached map) has been drilled to a depth of 914 metres (3,000 feet). Preliminary evaluation of the electric logs and gas detection run indicates approximately 5.2 metres (17 feet) of gassy coal and carbonaceous shale intersections being intercepted with highly encouraging initial field desorption values. This bore will be immediately steel cased and cemented in-place. The well will be production tested once the core desorption work has been completed. This well offsets the first bore. Ferguson Ranch 12-31 (SK 31-01 on the attached map), by approximately 400 metres (1,320 feet).

The Bannon Land & Cattle 6-23 (SK 23-01 on the attached map) has been drilled to a depth of 896 metres (2.687 feet). Preliminary evaluation of the electric logs and gas detection is encouraging and indicates approximately 4.3 metres (14 feet) of gassy coal and carbonaceous shale intersections within the Cherokee Formation which is the primary coalbed methane target horizon having been intercepted.

Two locations (SK 17-01 and SK 11-01 on the attached map) remain staked and approved but undrilled. These locations may be drilled in the future as conditions dictate.

For further information, contact Norman Seckold or Bruce Riederer on (61-2) 92475112.

Yours sincerely

Peter J. Nightingale Director

pjn2900