Continental Nickel Limited

Continental Nickel Limited

May 25, 2011 16:15 ET

Continental Advises of a New Malachite Showing Identified by Illegal Mining on a Regional License at Nachingwea Project, Tanzania

TORONTO, ONTARIO--(Marketwire - May 25, 2011) -Continental Nickel Limited (TSX VENTURE:CNI) ("Continental" or "CNI" or the "Company") wishes to announce that it has received information confirming the existence of a new malachite showing that has been identified by small scale illegal mining activity on one of its remote regional licenses on the Nachingwea Project. The exploration significance of the new showing is not understood at this time. The mining activities currently underway are small in scale and constitute illegal extraction occurring on one of the Company's granted licenses. The project is a 75:25 Joint Venture between CNI and IMX Resources Limited ("IMX") of Australia.

The Ntaka Hill camp was re-opened in early May and the Company's field crew arrived on site on May 11th to begin preparations for the 2011 exploration program. Shortly after arrival, a local villager informed the Company that illegal mining may be occurring on the one of the Company's remote regional licenses. A site visit has been made by the Company's senior project geologist and has confirmed the location and existence of small scale illegal mining activities occurring on one of the Company's granted licenses at a location approximately 23km northeast of Ntaka Hill. The target of these activities is malachite mineralization which is hosted in ultramafic rock and graphitic gneisses and has visual similarities to the copper oxide mineralization found at surface and overlying the J Zone at Ntaka Hill. Samples from the new showing have not yet been sent for analysis and no analytical laboratory data is available at this time. Extraction of malachite bearing rocks from this site is on a small scale thus far.

The Company has worked with government officials previously in successfully stopping such illegal mining activities on its licenses and is confident that it will be able to do so in this case. Once the area is properly secured, the Company will make a detailed assessment and follow-up of this interesting new mineral occurrence and will report results as they become available.

Qualified Persons

Patricia Tirschmann, P. Geo., Vice President, Exploration for the Company, is the designated Qualified Person (within the meaning of National Instrument 43-101) responsible for the technical information contained within this news release. The technical information in this release is based on information (including GPS locations, a written report and photographs) compiled by the Company's senior project geologist under the supervision of Ms. Tirschmann.

About Continental Nickel

Continental Nickel Limited is focused on the exploration, discovery and development of nickel sulphide deposits in geologically prospective, but under-explored regions globally. The Company's key asset is its 75% interest in the Nachingwea project in Tanzania, where NI 43-101 compliant Mineral Resources (Measured and Indicated) have defined 60,900 tonnes of contained nickel, and an additional 131,000 tonnes of contained nickel in Inferred Mineral Resources. The project is a 75:25 exploration joint venture between the Company and IMX Resources Limited ("IMX") of Australia.

The Company also has an option to joint venture on the St. Stephen project in New Brunswick, Canada where the 2010 diamond drill program discovered new Ni-Cu sulphide zones.

Continental Nickel Limited has 39,126,508 shares issued and outstanding (46,559,914 on a fully-diluted basis) and trades on the TSX Venture Exchange under the symbol CNI. The Company remains well-funded with currently over C$8.7 million in the treasury as at March 31, 2011.

On behalf of Continental Nickel Limited

John Nitschke, Chairman and Acting CEO

CAUTIONARY STATEMENT: No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. This News Release includes certain "forward-looking statements". All statements other than statements of historical fact included in this release including, without limitation, statements regarding potential mineralization, potential or estimated metal recoveries, resources and reserves, exploration results, future plans and objectives of Continental Nickel Limited, are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Continental Nickel Limited's expectations are the risks detailed herein and from time to time in the filings made by Continental Nickel Limited with securities regulators.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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