First Nickel Inc.

First Nickel Inc.

February 27, 2009 10:51 ET

First Nickel Announces the Results of the NI 43-101 Reserve Estimate and Mine Plan Feasibility Study Completed on Lockerby Depth Zone

- Probable Mineral Reserves of 1.44 million tonnes grading 2.23% Ni, 1.36% Cu and 0.083% Co - 40.5% Internal Rate of Return ("IRR") - Net Present Value ("NPV") of $34 million at a 10% discount rate

TORONTO, ONTARIO--(Marketwire - Feb. 27, 2009) - First Nickel Inc. ("First Nickel" or the "Company") (TSX:FNI) is pleased to announce that it has received the final report of the Feasibility Study ("Study") on the development and mining of the Lockerby Depth from GENIVAR Limited Partnership ("Genivar"), a consulting engineering firm based in Quebec City, Quebec.

The Study indicates that the project has an IRR of 40.5% and would generate an undiscounted pre-tax, pre-finance cumulative cash flow of $65.4 million after capital recovery assuming average metal prices of US$7.00/lb Ni, US$ 2.00/lb Cu, and US$ 17.00/lb Co. An exchange rate of $US0.82/$C was used for this study. Based on a 10% discount rate the project has a $34.1 million NPV as calculated by GENIVAR.

Capital expenditures and ongoing investments, including a 10% contingency, are estimated to total $69.8 million of which $37.6 million is required during the preproduction phase.

Metal production would total 51.7 million pounds payable nickel, 34.4 million pounds payable copper, and 1.0 million pounds payable cobalt. The mining method proposed is longhole stopping between the 65-3 and 70 levels utilizing a transverse accessed blasthole stope design.

Unit cash operating costs net of by-product credits are estimated at US$4.50 per pound of nickel over the 6.5 year mine plan. Mine operating costs are estimated to average $155/tonne.

The Study derived the reserves from an estimated Indicated Mineral Resource of 1.42 million tonnes grading 2.58 percent nickel, 1.60 percent copper and 0.098 percent cobalt at a 1.5 percent nickel equivalent cut-off grade. Conversion of the resources, above the 70 Level, to reserves yielded a Probable Mineral Reserve of 1.44 million tonnes grading 2.23 percent nickel, 1.36 percent copper and 0.083 percent cobalt. Reserves were estimated using a 20 percent dilution, a 90 percent overall mining recovery and a 1.5 percent nickel equivalent cut-off grade.

The Lockerby Depth Project Mine Plan schedule extracting the Probable Mineral Reserves would last 6.5 years consisting of 1.0 years of preproduction and 5.5 years (less one month) of development and production at a full production rate of 800 tonnes per day or 280,000 tonnes per year. The critical components of the capital plan that will increase output and reduce unit costs are the development program, production schedule, replacing of the haulage fleet with a new diesel fleet and optimized mining sequence, ore handling, ventilation system, cooling strategy and backfill handling.

"This Feasibility Study provides the details of a mine plan and capital program that generates significant cash flow from our Lockerby Mine. Based on the higher cut-off grade used for the Indicated Resource block model and the new Probable Reserve, the optimized mine plan has increased the payable nickel by 12% while reducing our required mining by over 20% resulting in greater revenues and lower unit costs. The projected unit cash operating costs have been reduced by over 25% and the capital costs have been reduced by $16 million, when compared with the Pre-feasibility Study completed in 2008." states William Anderson, President and CEO of First Nickel.

"Significant additional upside potential remains for Lockerby. The production profile outlined in the Study does not incorporate any ore sourced from resources in other zones at the mine including the Lockerby East and Upper West Zones. As the mineralization is open at depth below the 70 Level, opportunities exist to further expand the Depth Zone and sustain the level of production at greater than 800 tonnes per day." concluded Mr. Anderson.

The foregoing technical information in this release was prepared or reviewed by Paul Davis, P.Geo., Vice President Exploration for First Nickel Inc., a "qualified person" as defined by National Instrument 43-101.

Genivar has reviewed this release and has confirmed that the information contained in this release is consistent with the Study. Marc Lavigne, Eng., M.Sc., Senior Mining Engineer and Project Manager, Luc Bourguignon, Eng., Senior Mining Engineer and Jacques Gauthier, P.Eng., Eng., MGP, Director Mining - Eastern Canada, are qualified persons as defined in NI43-101.

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.

Contact Information

  • First Nickel Inc.
    William Anderson
    President & CEO
    (416) 362-7050 or Toll Free: 1-888-362-7050
    (416) 362-9050 (FAX)