First Nickel Inc.
TSX : FNI

First Nickel Inc.

August 13, 2008 16:30 ET

First Nickel Reports Financial and Operating Results for the Three and Six Month Period Ended June 30, 2008

TORONTO, ONTARIO--(Marketwire - Aug. 13, 2008) - First Nickel Inc. ("First Nickel" or the "Company") (TSX:FNI) announces that it has filed with the Canadian securities regulatory authorities its unaudited financial statements, and management's discussion and analysis for the three and six month period ended June 30, 2008.

Complete results will also be available on SEDAR and on the Company's website at www.firstnickel.com. All dollar amounts are expressed in Canadian currency unless otherwise stated.



Summary

- Second quarter net loss of $992,176 ($0.01 per share) compared to net
earnings of $723,904 in the second quarter of 2007. The second quarter
2008 loss reflects weaker nickel prices realized by the Company.

- An increase of $1,518,639 (84%) in copper, cobalt and other metal
revenues (resulting from an overall higher sales volume and price), was
offset by a decrease of $4,888,654 (32%) in the nickel revenues. Although
the pounds of nickel sold during the second quarter of 2008 was 244,560
pounds (35%) higher in 2008 versus 2007, a drop (45%) in the average
realized nickel price offset the higher volume.

- Production during the second quarter of 2008 increased to 969,865 pounds
of payable nickel, an increase of 10% over the 878,866 pounds produced in
the second quarter of 2007, and 3% higher than the 944,182 pounds produced
in the first quarter of 2008.

- 7,776 metres of underground drilling were completed on the historic
Lockerby Main, Lockerby East and Lockerby Footwall zones, where the
targets are contact and copper PGE-rich footwall mineralization,
respectively. Lockerby Main is located approximately 1,300 metres above
current mining levels.

- 2,604 metres of drilling was completed during the quarter on the West
Graham Property on the Conwest Deposit, the up-dip equivalent of the
Lockerby East Zone. The property is under option from Landore Resources
Ltd. A deposit amenable to bulk mining is the target.


Production in the quarter was derived from stopes on 64 Level and development on 65-3 Level in the Depth Zone, and from the East Zone. Production is on track with previously issued guidance.

The Company remains in a strong financial position with working capital of $14,807,578 at June 30, 2008 after investments of $8,995,538 in development, exploration and mine equipment acquisitions during 2008. The Company is debt free.

Financial Results



The following table presents a summary of the results of operations for the
three and six month periods ended June 30, 2008 and 2007:

Three months ended Six months ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
----------------------------------------------------------------------------
------------Unaudited-------- -----------Unaudited---------

Sales Revenue $ 13,580,997 $ 16,951,012 $ 23,543,794 $ 27,410,422
--------------------------- -----------------------------
Operating costs
excluding
amortization 12,631,163 10,068,378 23,053,607 17,855,400
Accretion of
asset retirement
obligations 47,000 45,000 94,000 90,000
Amortization of
mining properties
and equipment 1,515,880 1,018,896 2,423,332 1,607,896
--------------------------- -----------------------------
14,194,043 11,132,274 25,570,939 19,553,296
--------------------------- -----------------------------
Operating profit
(loss) (613,046) 5,818,738 (2,027,145) 7,857,126
--------------------------- -----------------------------

General and
administration 648,672 678,355 1,225,154 1,205,843
Stock-based
compensation 245,469 2,061,286 445,243 2,075,765
Depreciation and
amortization 6,051 7,485 12,102 14,970
Debenture interest
and accretion - 510,413 - 1,266,201
Other interest 111,791 145,542 218,719 270,683
Interest and
other income (160,709) (261,854) (433,817) (390,618)
---------------------------------------------------------
851,274 3,141,227 1,467,401 4,442,844
---------------------------------------------------------

Earnings (loss)
before taxes (1,464,320) 2,677,511 (3,494,546) 3,414,282

Provision for
(recovery of)
future income and
mining taxes (472,144) 1,953,607 (1,078,253) 2,160,109
---------------------------------------------------------

Net earnings
(loss) for the
period $ (992,176) $ 723,904 $ (2,416,293) $ 1,254,173
---------------------------------------------------------

Net earnings
(loss) per share:
Basic and
diluted $ (0.01) $ 0.01 $ (0.02) $ 0.01

Weighted average
number of common
shares outstanding 140,548,098 116,836,671 140,397,503 103,992,131


For the three month period ended June 30, 2008 (the "second quarter of 2008"), the Company recorded a net loss of $992,176, or $0.01 per share, compared to net earnings of $723,904, or $0.01 per share, recorded for the three month period ended June 30, 2007 (the "second quarter of 2007").

Significant differences between the two periods include:

- A decrease in revenues of $3,370,015 (20%) in 2008, compared to 2007.An increase of $1,518,639 (84%) in the copper, cobalt and other metal revenues (resulting from overall higher sales volume and price) was offset by a decrease of $4,888,654 in the nickel revenues. Although the pounds of nickel sold during the second quarter of 2008 was 244,560 (35%) higher in 2008 versus 2007, a drop in the average realized nickel price of $8.69 (45%) from $19.41 to $10.72 more than offset the higher volume. Also contributing to the decrease in revenues is the increase in the value of the Canadian dollar relative to the U.S. dollar. During the second quarter of 2007 the U.S. dollar averaged about $1.11 Canadian, compared to an average of $1.01 in the second quarter of 2008.This lower exchange rate equates to approximately $1.4 million difference in revenues.



Revenue by Product:
Q 2 Year-to date
2008 2007 2008 2007

Nickel $10,245,079 $15,133,733 $17,868,224 $24,332,250

Copper 2,199,312 1,369,320 3,678,261 2,317,994

Cobalt 794,696 365,566 1,373,412 601,960

Other 341,910 82,393 623,897 158,218
------------------------- -------------------------
$13,580,997 $16,951,012 $23,543,794 $27,410,422
------------------------- -------------------------


Revenue from the sale of nickel accounts for more than 75% of the total revenues. Therefore, any movement in the nickel price will have a great impact on revenues and would ultimately affect earnings. The following table sets out selected sales information for the periods indicated:



---------------------------------------------------------------------------
Q2 2008 Q2 2007 YTD 2008 YTD 2007
---------------------------------------------------------------------------
Sales by Payable Metal
---------------------------------------------------------------------------
Nickel - pounds 944,182 699,622 1,565,126 1,171,281
---------------------------------------------------------------------------
Copper - pounds 602,052 433,409 1,082,691 733,170
---------------------------------------------------------------------------
Cobalt - pounds 17,545 11,821 30,116 19,658
---------------------------------------------------------------------------
Ave. price
received - US$/lb
---------------------------------------------------------------------------
Nickel $ 10.72 $ 19.41 $ 11.32 $ 18.31
---------------------------------------------------------------------------
Copper $ 3.61 $ 2.86 $ 3.37 $ 2.79
---------------------------------------------------------------------------
Cobalt $ 44.74 $ 27.82 $ 45.23 $ 27.00
---------------------------------------------------------------------------
Ave. Exch. Rate
Realized
---------------------------------------------------------------------------
US $ 1 equals
Canadian $ $ 1.0123 $ 1.1135 $ 1.0084 $ 1.1346
---------------------------------------------------------------------------


- An increase in mine operating costs, including treatment and refining
charges, of 25% in the second quarter of 2008 compared to 2007. An overall
increase in material and supplies along with higher trucking, royalty and
treatment and refining charges have accounted for the increase in
operating costs. As the operations generated a loss, no nickel bonus was
paid in the second quarter of 2008.

- A decrease of $29,683 (4%) in general and administrative expenses in the
second quarter of 2008, compared to the second quarter of 2007. The
decrease is mostly attributable to a decrease in capital tax and investor
relations activities, offset by an increase in director's fees and tax
consulting.

- The $245,469 stock-based compensation costs in the second quarter of 2008
reflects the fair value of options granted during the second quarter, and
the fair value of options granted in prior periods, which have vested in
the second quarter of 2008, to directors, employees and consultants. The
Company uses the Black-Scholes pricing model in the valuations of the
options.

- A reduction of $510,413 in the second quarter of 2008 in debenture
interest and accretion. Debentures aggregating $14,500,000 were repaid on
June 1, 2007.

- A decrease of $33,751 in other interest in the second quarter of 2008,
versus 2007. Other interest is mostly comprised of interest paid on
advances received from Xstrata on the ore delivered to their facilities.

- Interest and other income is mostly made up of interest earned on cash
balances, and on short term deposits. The lower interest income in the
second quarter of 2008, compared to the second quarter of 2007, is as a
result of lower cash balances in 2008.


Lockerby Mine Operations

During the second quarter of 2008, 31,901 tonnes of ore were delivered to the Xstrata treatment facilities. Although the tonnes delivered in the second quarter were 7,754 tonnes (20%) lower than the tonnes delivered in the first quarter, an increase in the nickel head grade of 23% (1.79% versus 1.46%) resulted in an increase in the pounds of payable nickel in the second quarter of 25,683 pounds (3%) (969,865 pounds versus 944,182 pounds).

For the first six months of 2008, 71,556 tonnes have been delivered to the Mill, an increase of 14,649 tonnes, or 26%, over the 56,907 tonnes of ore delivered in the first six months of 2007. The payable metal content in the ore is estimated to be approximately 1,914,047 pounds of nickel (an increase of 21% over 2007) and 1,138,132 pounds of copper (an increase of 6% over 2007).

Selected operating statistics for the six month period ended June 30, 2008 compared to the same period in 2007 are as follows:



---------------------------------------------------------------------------
Item 1st Q 2008 2nd Q 2008 YTD 2008 YTD 2007
---------------------------------------------------------------------------
Ore Delivered
to Mill (tonnes) 39,655 31,901 71,556 56,907
---------------------------------------------------------------------------
Nickel Mill Head
Grade (%) 1.46 1.79 1.61 1.65
---------------------------------------------------------------------------
Copper Mill Head
Grade (%) 0.82 0.89 0.85 0.99
---------------------------------------------------------------------------
Payable Nickel
(pounds) 944,182 969,865 1,914,047 1,578,488
---------------------------------------------------------------------------
Payable Copper
(pounds) 602,052 536,080 1,138,132 1,074,142
---------------------------------------------------------------------------
Payable Cobalt
(pounds) 17,545 17,604 35,149 28,347
---------------------------------------------------------------------------
Mine operating
cost per tonne $ 238 $ 277 $ 256 $ 294
---------------------------------------------------------------------------
Cash cost per
pound of nickel(i) $ 9.73 $ 9.05 $ 9.39 $ 9.95
---------------------------------------------------------------------------


(i) Cash cost per pound of nickel is a non GAAP measure and is net of other
metal credits, and does not include amortization of mining properties
and equipment.

Premiere Ridge

The Company and Xstrata have agreed to extend the option agreement on Premiere Ridge for such period as may be necessary for completion of project milestones. Such project milestones will be negotiated between the parties and the right to exercise the option contingent on satisfaction of the project milestones.

Exploration Activity



Exploration achievements in the second quarter of 2008 are summarized as
follows:

- 1,841 metres of drilling were completed on the Lockerby Main Zone.
- FNI1738: 19.60 metres grading 2.17% Ni and 0.95% Cu
- FNI1744: 10.00 metres grading 1.73% Ni and 1.27% Cu
- FNI1748: 18.50 metres grading 1.52% Ni and 1.01% Cu

- 3,518 metres of drilling were completed on the Lockerby East Zone.

- FNI3507: 3.00 metres grading 3.74% Ni and 1.83% Cu
- FNI3511: 5.05 metres grading 2.33% Ni and 0.95% Cu

- 2,417 metres of drilling were completed on the Lockerby Footwall.

- 2,604 metres of drilling were completed on the West Graham property.
- FNI2055: 7.85 metres grading 0.63% Ni and 0.55% Cu
- FNI2050: 0.45 metres grading 3.25% Ni and 0.13% Cu

- 230 metres of drilling were completed on a footwall geophysical target on
the Morgan-Lumsden property. Massive chalcopyrite mineralization
intersected 300 metres below the basal contact of the Sudbury Igneous
Complex.

- M-059: 10.15 metres grading 0.03% Ni and 1.41% Cu
- incl: 0.40 metres grading 0.29% Ni and 20.00% Cu

- 2,000 additional hectares staked in the Belmont project area.


Outlook

Metal production is on track with previously issued guidance (see February 12, 2008 press release).

The Company has received the final report of the Prefeasibility Study on the continuation of development and mining of Lockerby Depth (see July 3, 2008 press release). The Company intends to follow through in the weeks ahead with finalizing scheduling and estimating details and then seek financing.

In view of the decline in nickel prices in recent weeks, the Company is examining all of its capital and operating budgets for the balance of 2008, with the intention of eliminating all non-essential items, curtailing expenditures and preserving operating cash margins. A number of operating scenarios are being examined, pending future metal market conditions.

Qualified Person

The foregoing scientific and technical information has been prepared or reviewed by Paul C. Davis, P.Geo., Vice-President Exploration of the Company. Mr. Davis is a "qualified person" within the meaning of National Instrument 43-101.

The Company follows rigorous quality control practices and procedures in full compliance of NI 43-101, and these are described on the Company's website and in all technical press releases.

Non-GAAP Performance Measures

This press release contains non-GAAP measures like operating cost per tonne of ore, net cash cost per pound of nickel, etc. Please see the Company's MD&A on SEDAR for discussion on non-GAAP performance measures.

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 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, 2008 production forecast, 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.

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