Continental Nickel Limited
TSX VENTURE : CNI

Continental Nickel Limited

September 15, 2011 14:15 ET

Continental Nickel Confirms High Recoveries to High Grade Concentrates

TORONTO, ONTARIO--(Marketwire - Sept. 15, 2011) - Continental Nickel Limited (TSX VENTURE:CNI) ("CNI" or the "Company") is pleased to announce the production of high grade concentrates from the initial "sighter" flotation tests on composites from the various ore zones at the Ntaka Hill Nickel Project ("Ntaka Hill"). Highlights of the initial tests include concentrates containing between 16.7% Ni and 18.6% Ni at between 84.2% and 90.2% recovery from Sleeping Giant zone composites, 17.2% Ni at 88.1% recovery from M zone composite and 15.0% Ni at 88.1% recovery from H zone composite. The flotation tests were carried out by G & T Metallurgical Services Ltd, part of the ALS Group of companies, quality accredited under ISO 9000:2008.

For detailed results see Table 2.

Ntaka Hill is part of the 75:25 Nachingwea exploration joint venture property in southern Tanzania with IMX Resources Limited of Australia. Ntaka Hill has currently identified resources as outlined below in Table 1.

Table 1 – Ntaka Hill Resources Summary
Resource Category Tonnes
(000's)
% Ni % Cu Contained Ni (tonnes)
Measured & Indicated 4,981 1.22 0.24 60,900
Inferred 17,260 0.76 0.17 131,000
Note: Resources calculated at a US$17/tonne Net Smelter Return ("NSR") cut‐off. See CNI press release April 15, 2011.

Low Contaminant Levels

All concentrates have exhibited low contaminant levels and, especially significant for nickel concentrates, magnesium oxide (MgO) graded between 1.5% MgO and 3.9% MgO, which is low by global standards.

Also very significant, analysis of other contaminant elements, such as arsenic (As), antimony (Sb), chromium (Cr), lead (Pb) and zinc (Zn), returned low levels. For detailed results see Table 3 which may be viewed using the link provided with this release.

Conventional Processing Technique

The flotation tests were at a moderately coarse grind size of 106 µm (P80) using only a simple reagent scheme of collector and frother, and three stages of cleaning. This represents a very conventional processing technique for the production of nickel concentrate from nickel sulphide ore.

Comminution Testing

The results for the Bond Rod Mill Work Index tests on three ore zone composites ranged between 4.7 to 8.9 kWh/t with an average of 6.7 kWh/t (not all composites had sufficient sample available). The results for the Bond Ball Mill Work Index tests on all ore zone composites range between 12.2 to 15.9 kWh/t with an average of 14.8 kWh/t.

These work index results are typical for hard rock sulphide ores and as such confirm the suitability of a conventional comminution circuit with typical operating costs.

Mr. David Massola, President and CEO, commented, "I am extremely pleased with the results of these metallurgical tests which confirm that concentrate produced from this project will be highly marketable and compare favorably to the best nickel sulphide mines in the world. In addition, indications are that high nickel recoveries are achievable using conventional processing technology which greatly reduces technical and start-up risk. The high grade concentrate will also further reduce our low expected transport costs to the Port of Mtwara which is less than 300km from the project site with only around 95km of the route on unsealed road."

Sample Selection

The samples were selected in co-operation with Ms Patricia Tirschmann, CNI's VP Exploration, to represent the range of mineralisation exhibited in the various ore zones and to spatially intersect the larger areas of the ore zones. Samples were not selected from all ore zones with L and NAD13 zones excluded due to their geological similarity with other ore zones and their relatively small size.

Next Steps

Following the completion of detailed quantitative mineralogy examination utilising QEMSCAN and optical methods, further flotation test work will address improving both concentrate grade and recovery through optimisation of grind size and reagent additions. The test work program will also be used expand the understanding the geo-metallurgical domains within the various ore zones and enable development of grade recovery relationships that will allow various optimisation studies to be undertaken for the project.

Fresh core from additional metallurgical drilling planned in 2011 will allow an extensive metallurgical test work program to be undertaken which will provide definitive performance and engineering design data for the project. It is intended that this test work program will be undertaken in the first half of 2012.

Qualified Persons

The quality control, technical information and all aspects of the metallurgical test work program are supervised by Mr Peter Munro FAusIMM, Senior Principal Consulting Engineer with Mineralurgy Pty Ltd an independent consultant to CNI. The information in this release was prepared under the direction of Mr Munro. Mr Munro, a Fellow within the Australasian Institute of Mining and Metallurgy, is a qualified person as defined by National Instrument 43-101 and consents to the inclusion of the data in the form and context in which it appears.

About Continental Nickel Limited

Continental 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 its Nachingwea property in Tanzania, where Mineral Resources (Measured and Indicated) have been estimated at 60,900 tonnes of contained nickel, and an additional 131,000 tonnes of contained nickel in Inferred Mineral Resources (CNI press release April 15, 2011). The project is a 75:25 exploration joint venture between the Company and IMX Resources Limited.

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.

As at the date of this release, the Company has 42,713,508 common shares issued and outstanding (51,031,914 on a fully‐diluted basis) and trades on the TSX Venture Exchange under the symbol CNI. The Company remains well funded with over C$8.7 million in the treasury as at March 31, 2011.

On behalf of

Continental Nickel Limited

Dave Massola, President and Chief Executive Officer

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, is forward‐looking information that involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate and actual results and future events could differ materially from those anticipated in such information. 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.

Table 2 – Detailed Flotation Test Results
Ore Zone Resources (1) Composite Head Grade Concentrate Grade Recovery
Category Tonnes (000) Grade % Ni Grade % Cu %Ni %Cu %Ni %Cu %MgO Ni Cu
H M + I 1,003 1.303 0.187 H 0.77 0.11 15.0 2.26 3.90 88.1 93.1
Inferred 620 0.98 0.14
M M + I 526 1.673 0.350 M 1.49 0.49 17.2 6.10 2.31 88.1 95.5
J M + I 1,026 1.444 0.224 J (2) 1.46 0.25 8.6 1.58 1.64 83.9 89.4
G Indicated 1,990 0.652 0.175 G (2) 0.45 0.15 3.2 1.13 2.40 82.3 87.4
Inferred 1,240 0.53 0.16
Sleeping Giant Inferred 15,400 0.77 0.17 SG1 (3) 0.70 0.13 16.7 3.58 2.46 84.2 94.7
SG2 (3) 0.68 0.15 17.7 4.33 2.10 90.0 97.6
SG3 (3) 1.51 0.33 18.6 4.36 1.51 90.2 97.4
L M + I 202 2.591 0.487 Not Tested
NAD013 M + I 234 2.562 0.567 Not Tested
Notes:
1. Resources calculated at a US$17/tonne Net Smelter Return ("NSR") cut‐off. See CNI press release April 15, 2011.
2. J and G Zone flotation performance, in particular concentrate grade, was predicted to be slightly retarded due to the higher pyrrhotite levels in the mineralisation in these ore zones (previous work by Xstrata Process Support, June 2009 and February 2011, indicated Po:Pn ratios of 4.1 for J zone and 11.1 for G zone, compared with a range of between 0.25 to 2.1 for the other ore zones). The concentrate may therefore be diluted by high levels of pyrrhotite as the test scheme included no specific additions, such as lime, to depress pyrrhotite flotation.
3. SG 1, SG 2 and SG 3 composites represent three different mineralisation types from the Sleeping Giant ore zone being disseminated, stringer and bleb and semi massive sulphide.
4. M + I = Measured + Indicated

To view Table 3 – Minor Element Assays, please visit the following link:

http://media3.marketwire.com/docs/cnitab3.pdf

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

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