First Nickel Reports an 87% Increase in First Quarter Production at Lockerby, Affirms Full Year Production and Cost Guidance

TORONTO, ONTARIO--(Marketwire - May 2, 2012) - First Nickel Inc. ("First Nickel", "FNI" or the "Company") (TSX:FNI) today announced its preliminary first quarter production and costs and affirmed the full year production and cost guidance. (All dollar amounts herein are in Canadian funds unless otherwise indicated.)

First Nickel produced approximately 1.2 million pounds of nickel and 0.9 million pounds of copper at the Lockerby mine in Sudbury, Ontario, in the first quarter of 2012 and incurred approximately $13 million of cash production costs¹. Ore production, during the first quarter 2012 was 40.5 thousand tonnes (451 tonnes per day) an 87% increase over fourth quarter 2011 production of 21.7 thousand tonnes (241 tonners per day). Ore production is expected to average between 500 and 550 tonnes per day in the second quarter as the Project ramps up over the course of the year. First quarter results are within the guidance ranges disclosed by the Company in its January 25, 2012 press release (below) and the Company expects to perform within those guidance ranges for the balance of the year.

2012 Production and Cost Outlook

• Production of between 6.3 to 7.4 million of payable nickel
• Total cash production costs estimated to be $56.2 to $61.4 million¹
• Total cash production costs of $6,00 per lb¹ of nickel by year end

			H1		H2		Q4
	Nickel lbs		2.5 - 2.9 M		3.8 - 4.5 M		2.1 - 2.5 M
	Copper lbs		1.8 - 2.0 M		2.7 - 3.0 M		1.4 - 1.6 M
	Total Cash Production Costs1		$27.8 - $30.2 M		$28.4 - $31.2 M		$15.1 - $16.6 M

Assumptions: Ni per lb - $8.50, Cu per lb - $3.25, CAD/USD $1.00

The Company expects to be at or near the full production rate of 10 million pounds of nickel per annum in the fourth quarter of 2012.

Thomas M Boehlert, President and Chief Executive Officer of First Nickel Inc. commented "The ramp up of the Lockerby project, which is our first priority, is tracking well to plan. In addition to being focused on the project, we are turning our attention to improving the long-term potential of our Sudbury operation by looking at possible improvements to the Lockerby mine plan and initiating a new drill program for the Link zone."

The Lockerby depth zone technical report issued by Genivar on November 2, 2010 demonstrated a 6.5 year mine life with average annual production of 10 million lbs of nickel and 7 million lbs of copper at an average total estimated cash production cost of $5.56/lb of nickel (net of by-product credits).

On March 23, 2012, the Company announced it has increased the 2012 exploration budget by $1.5 million to $3.4 million in order to undertake 5,000 meters of additional exploration drilling at the Link zone which is down plunge of the Conwest deposit near the Lockerby mine.

First Nickel will announce its full first quarter results by May 15, 2012.

About First Nickel Inc.

First Nickel is a Canadian mining and exploration company. The Company's mission is to be the most dynamic North American emerging base metal mining company in which to work and invest and to be respected in the communities in which we operate. FNI is in the process of ramping up production at its Lockerby nickel / copper mine in the Sudbury Basin in northern Ontario. Once the Lockerby Mine reaches full production (expected by end of 2012), it is expected to produce at a rate of approximately 10 million pounds of nickel and approximately 7 million pounds of copper annually, providing a strong base of cash flow from which to grow the Company. In addition to the Lockerby nickel mine, the Company owns exploration properties in the Sudbury Basin, the Timmins region of northern Ontario, and the Belmont region of Eastern Ontario. First Nickel's shares are traded on the TSX under the symbol FNI.

Forward-Looking Statements

This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including the cash flows, metal prices, decrease costs, increase output, expected production, and expected exploration expenditures. 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 factors include fluctuating metal prices, lower unit costs and other factors described in the Company's most recent Annual Information Form under the heading "Risk Factors" which has been filed electronically by means of the System for Electronic Document Analysis and Retrieval ("SEDAR") located at www.sedar.com. 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, except as may be required under applicable securities law.

¹ Non-GAAP Financial Measures

The cash cost per pound of nickel produced, and total production costs are non-GAAP financial measures that do not have a standardized meaning under Canadian Generally Accepted Accounting Principles ("GAAP"), and as a result may not be comparable to similar measures presented by other companies. Management uses these statistics to monitor operating costs and profitability, and believes that certain investors use this information to evaluate the Company's performance and ability to generate cash flow in addition to conventional GAAP measures. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Total cash production costs include mining costs, treatment, equipment operating lease costs, mine site general and administration costs, environmental costs, Vale royalty, transportation, and refining of concentrate, less by-product credits from sales of copper, cobalt and PGE's. The cash production cost per pound of nickel produced is the total production costs divided by pounds of nickel produced.