First Nickel Inc.

First Nickel Inc.

March 31, 2005 09:03 ET

First Nickel Inc. Provides Details of Debt Financing of the Acquisition of Lockerby Mine, Sudbury Basin


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: FIRST NICKEL INC.

TSX SYMBOL: FNI

MARCH 31, 2005 - 09:03 ET

First Nickel Inc. Provides Details of Debt Financing
of the Acquisition of Lockerby Mine, Sudbury Basin

TORONTO, ONTARIO--(CCNMatthews - March 31, 2005) - First Nickel Inc.
(TSX:FNI) ("First Nickel") provides the details of an agreement made
between First Nickel and McFarlane Gordon Inc. ("MGI") relating to
offering of securities to finance the acquisition of the Lockerby Mine
from Falconbridge Limited (see Releases Nov. 29/04 and Mar.15/05).

First Nickel will offer Special Notes of its capital, by way of private
placement for a maximum amount of $15,000,000 and a minimum amount of
$10,000,000. Each Special Note will be exchangeable, at no additional
consideration, for units of securities of First Nickel, each unit
consisting of $1,000 principal amount of senior unsecured debentures
("Debentures") of First Nickel and 200 common shares ("Common Shares").
The Debentures will bear interest from the date of issue at 11% per
annum, payable semi-annually in arrears, the first payment to be made on
the last day of the six month period following closing. The maturity
date of the Debentures will be the two years from the completion of the
acquisition of the Lockerby Mine (the "Closing") however First Nickel
will have the right to prepay all or part of the outstanding principal
amount of Debentures on prior notice in writing. The subscription
proceeds will be held in escrow pending the Closing. First Nickel has
agreed to pay MGI a commission of 6% of the total gross proceeds,
payable on the Closing.

The offering is subject to board and regulatory approval.

Elizabeth Kirkwood, President & CEO of First Nickel stated "The Unit
offering provides First Nickel the opportunity to finance the
acquisition of the Lockerby Mine while minimizing the dilution to
shareholders. We continue to remain very optimistic about the potential
profitability of the Lockerby Mine at forecasted metal prices."

The Lockerby deposit was discovered by Falconbridge in 1962 and the mine
commissioned in 1976. The mine infrastructure includes two surface
shafts down to 1300m depth and an internal shaft from 1200m to 1550m
depth. Design capacity of the hoist is 1 million tonnes per annum. Up
until December 31, 2003 over 8 million tonnes averaging 1.79% Ni and
1.07% Cu were produced. Recent production was from the East and Depth
zones. The mine shut down in September 2004.

As at January 31, 2005 First Nickel had a working capital of $10,618,318
a total of 44,093,013 common shares were issued and outstanding.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    First Nickel Inc.
    Elizabeth Kirkwood
    President & CEO
    (416) 364-6928
    (416) 364-0618 (FAX)
    ekirkwood@firstnickel.com