First Nickel Inc.

First Nickel Inc.

December 20, 2006 11:14 ET

First Nickel Inc.: Promising Off-Hole Conductors Identified on Morgan-Lumsden Property

TORONTO, ONTARIO--(CCNMatthews - Dec. 20, 2006) - First Nickel Inc. (TSX:FNI) reports encouraging geophysical results from the 2006 exploration program conducted under the direction of Xstrata Nickel on the Morgan-Lumsden Property. The Morgan-Lumsden Property is a greenfield exploration project located on the North Range of the Sudbury Basin approximately 12 kilometres to the east of Xstrata Nickel's Strathcona Mill Complex. First Nickel has an option from Xstrata Nickel to earn a 50% interest in the Morgan-Lumsden property on the terms previously announced in First Nickel's March 22, 2005 news release.

A bore hole UTEM 3 survey completed on M-058A, a hole wedged off of M-058 from 610 metre to a final depth of 1,253 metres, identified discrete off-hole regions of high conductivity at a drill depth of 1075 and 1105 metres. The wedged hole, M-058A was drilled to test a broad zone of increased conductivity identified by bore hole UTEM in M-058 after the hole was deepened 272 metres to a final depth of 1290 metres.

First Nickel is encouraged by these exploration results. The off-hole conductors when coupled with the presence of nickel sulphide mineralization identified in M-055 approximately 200 metres to the north of M-058A, (previously announced in First Nickel's November 21, 2005 news release), and the development of an apparent embayment feature indicates there is the potential to discover a significant sulphide body on the Morgan-Lumsden Property.

Drilling is currently underway to test these off-hole conductors approximately 60 metres to the south of M-058A. The hole is expected to be completed in January 2007 to a final depth of approximately 1,400 metres.

The exploration program is being carried out under the direction of Xstrata Nickel's Senior Geologist, Alger St. Jean P.Geo., a "qualified person" as defined in National Instrument 43-101. The information in this release was prepared under the direction of Paul Davis, P.Geo., Vice President of Exploration for First Nickel Inc., a "qualified person" as defined by National Instrument 43-101. Xstrata Nickel follows a rigorous QA/QC protocol for the Morgan-Lumsden Project which includes the regular insertion of standards and blanks in the sample batches. Drill core of interest (NQ size) is sawn in half, with one half retained for future reference and one half sent to a commercial laboratory, SGS Laboratories in Garson for preparation and specific gravity measurements and shipped internally by SGS to Toronto for assay.

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.

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