First Nickel Inc.

First Nickel Inc.

June 01, 2005 15:14 ET

First Nickel Inc. Closes on Acquisition of Lockerby Mine, Sudbury Basin

TORONTO, ONTARIO--(CCNMatthews - June 1, 2005) - First Nickel Inc. (TSX:FNI) ("First Nickel") is pleased to announce that it has closed on the acquisition of the Lockerby Mine from Falconbridge Limited ("Falconbridge"), following the release dated May 31, 2005.

First Nickel staff has moved in today to take charge of the Lockerby mine site. Falconbridge has maintained the mine in excellent condition since it ceased mining operations in September, 2004 and First Nickel has plans for getting the underground mobile equipment and related facilities back into service as quickly as possible. With current metal prices, First Nickel's immediate priority is to begin mobilizing crews to resume mining later this summer with the intention of ramping up to historic production levels of 220,000+ tonnes per year. As part of the acquisition, First Nickel entered into an arrangement with Falconbridge to process all of the Lockerby ore at Falconbridge's Strathcona Mill in Sudbury.

First Nickel is embarking on an aggressive exploration and definition drilling program within the Mine designed to investigate exploration opportunities identified on the property and to delineate the known resources to incorporate them into the mine plan.

First Nickel further announces that it has entered into a royalty agreement with Inco Limited whereby First Nickel will develop and mine extensions of the Lockerby Depth ore body on adjacent property owned by Inco.

First Nickel has entered into agreements in principle, to be executed prior to commencement of any mining operations, with Sudbury Mine, Mill & Smelter Workers Union Local 598 and United Steel Workers of America Local 2020, Unit 6855 regarding the operation of the Lockerby Mine.

First Nickel also announced that it closed the subscription by Falconbridge under a non-brokered private placement for 2,222,222 Common Shares of First Nickel at $0.90 per Common Share for total consideration of $2,000,000 (the "Private Placement"). Following the Private Placement Falconbridge holds approximately 21.9% of the issued and outstanding shares of First Nickel.

First Nickel is pleased to also announce that the exchange of the Class A and B Special Notes previously issued on April 29, 2005 into Series A Debentures and Common Shares, respectively, was completed. First Nickel has an issued and outstanding face value of Series A Debentures of CDN$14,500,000 and issued an additional 3,625,000 common shares which issuance brings First Nickel's total issued and outstanding common shares to 53,046,098.

First Nickel is very pleased to have completed this acquisition, is looking forward to joining the ranks of nickel producers and building a long term business in Sudbury.

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