First Nickel Inc.

First Nickel Inc.

January 16, 2008 08:52 ET

First Nickel Reports 289% Increase in Indicated Resources at the Lockerby Mine

Investor Update Conference call at 2:00 pm ET today

TORONTO, ONTARIO--(Marketwire - Jan. 16, 2008) - First Nickel Inc. (TSX:FNI) is pleased to report an updated mineral resource estimate for its Lockerby Mine in Sudbury.

First Nickel has estimated a NI 43-101 compliant Mineral Resource that contains Indicated Resources of 2.89 million tonnes grading 1.78% Ni, 1.23% Cu and 0.07% Co, from the 65 to 72 levels, and Inferred Resources of 0.38 million tonnes grading 1.37% Ni, 1.05% Cu and 0.05% Co, below the 72 Level. A 1.0% nickel equivalent cut-off grade was used for this resource estimate. The resource estimate does not include the 64 Level, which was part of the March 2007 resource estimate and is currently being mined.

This upgraded resource estimate equates to a total of 113 million pounds of contained nickel in the Indicated Resource Category for the Lockerby Depth Zone and represents a net increase of 68 million pounds as compared to those previously reported in March 2007.

"The potential of the Lockerby Depth Zone has expanded significantly with an increase of the Indicated Resources by 289% above the March 2007 Resource Estimate. We are gratified that, when compared to the Indicated Resources at the time of purchase of the Lockerby Mine in 2005, we have increased the Indicated Resources more than ten-fold in less than 3 years." stated William Anderson, President and CEO. "Based on this new Resource Estimate, the Lockerby Mine currently has in excess of 100 million pounds of contained nickel in the Indicated Resource category which should allow First Nickel to plan for mine expansion and increased production."

Using this estimate, First Nickel expects to complete a new life of mine study this quarter that will include engineering and economic comparisons of shaft extension options and mine design. It is anticipated that such infrastructure improvements, based on the new resource model, will yield increased output, better productivity, reduced costs and will extend the mine life by 8 years or more.

Mineral Resource Estimate

The Mineral Resource model was prepared by the FNI Technical Team. The model and modelling procedures have been reviewed by Scott Wilson Roscoe Postle Associates Inc. (Scott Wilson RPA), an independent, geological and mining consulting firm. In Scott Wilson RPA's opinion the mineral resource modeling and the Mineral Resource estimation, conform to NI 43-101 standards. In Scott Wilson RPA's opinion, the density of drilling and continuity of mineralization is sufficient to classify the estimated resources between the 65 and 72 levels on the Lockerby Depth Zone as Indicated Mineral Resources and below the 72 Levels on the Lockerby Depth Zone and the previously reported Lockerby East Zone as Inferred Mineral Resources. This resource estimate will form a portion of a more comprehensive Technical Report being prepared by Scott Wilson RPA.

The total Indicated Mineral Resource estimate is tabulated as follows:

Classification Tonnes Ni% Cu% Co%
Depth Zone 2,890 1.78 1.23 0.07
Total Indicated 2,890 1.78 1.23 0.07

Depth Zone (1) 380 1.37 1.05 0.05
East Zone (2) 470 1.86 0.67 0.04
Total Inferred 850 1.64 0.84 0.04

1. 1.0% nickel equivalent (NiEq) cut-off grade used for Lockerby Depth
Resource Estimate (NiEq equals Ni grade + (0.32 X Cu grade) +
(0.53 X Co grade));

2. A 1.2% nickel equivalent (NiEq) cut-off grade was used for Lockerby
East Resource Estimate where 16,254 tonnes have been produced from the
Lockerby East Zone since the publication of the Resource Estimate in
March 2007 (NiEq equals Ni grade + (0.32 X Cu grade) +
(0.53 X Co grade));

3. Mineral resources which are not mineral reserves do not have
demonstrated economic viability. The estimate of mineral resources
may be materially affected by environmental, permitting, legal,
taxation, sociopolitical, marketing, or other relevant issues;

4. The quantity and grade of reported inferred resources in this
estimation are conceptual in nature and there has been insufficient
exploration to define these inferred resources as an indicated or
measured mineral resource and it is uncertain if further exploration
will result in upgrading them to an indicated or measured mineral
resource category.

To view a graph of the Lockerby Mine: Resource Estimates for 2005, 2007 and 2008, please visit the following link:

A total of 164 First Nickel drill holes comprising 32,453 metres of diamond drill core and 5,096 assay samples have been used for the Lockerby Depth Resource Estimate. The Mineral Resource estimate for the Lockerby Mine was derived from block models created with Datamine(C) software, applying industry standard resource modelling procedures. Grade was interpolated into the blocks using Ordinary Kriging, and results were compared to that derived from Inverse Distance Squared weighting (ID2). Multiple iterations of the model were completed with varying input criteria and compared for accuracy and reproducibility. A cut-off value of 1.0% NiEq was selected as a base case for the Lockerby Depth model.

First Nickel's diamond drill program was carried out under the supervision of First Nickel's Chief Mine Geologist, Stephen Conquer, P.Geo. and First Nickel's Sudbury Exploration Manager, Phil Vicker, P.Geo., "qualified persons" as defined by National Instrument 43-101. The Mineral Resource modelling was carried out under the supervision of First Nickel's Sudbury Exploration Manager, Phil Vicker, PGeo, a "qualified person" as defined by National Instrument 43-101. The independent audit of the Mineral Resource estimate was completed by Richard Routledge, M.Sc. PGeo. of Scott Wilson Roscoe Postle Associates, a "qualified person" as defined by National Instrument 43-101. The information in this release was prepared under the direction of Paul Davis, PGeo, Vice President of Exploration for First Nickel Inc., a "qualified person" as defined by National Instrument 43-101. First Nickel Inc. follows a rigorous QA/QC protocol on all of its exploration projects.

First Quarter Events

"We anticipate that, during the first quarter of 2008, First Nickel will make a number of other announcements on our projects," said Bill Anderson. These include:

- West Graham exploration results

- Lockerby Main Zone exploration results

- Lockerby Life of Mine and Shaft Extension Study

- Decision on Premier Ridge development

- Raglan Hills property exploration results

- Guidance on 2008 anticipated Lockerby production

Conference Call

Investors and analysts are invited to participate in a conference call at 2:00 pm (ET) January 16th at which management will discuss the Lockerby Resource Update, followed by a question and answer session.

To join the call, please dial in at approximately 1:50pm

Local 416-695-6272 / toll free 866-852-2121

A replay will be available until January 23, 2007, and may be accessed by dialing: 416-695-5800 / 800-408-3053 pass code: 3248587

First Nickel is a Canadian mining and exploration company. Its current activities are primarily focused on the Sudbury Basin in northern Ontario, the location of the company's producing property (the Lockerby Mine) and four of its exploration properties. First Nickel also has two exploration properties in the Timmins region of northern Ontario. First Nickel's shares are traded on the TSX under the symbol FNI.

This news release may contain forward-looking statements, which are subject to certain risks, uncertainties and assumptions. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such forward-looking statements are made as at the date of this news release, and the company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.

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