First Nickel Announces Continued Progress at Lockerby in Q4-2011 and Provides Guidance for 2012

Thursday, Jan 26, 2012

First Nickel Inc. ("FNI", or the "Company") (TSX:FNI) is pleased to provide an update on its progress in Q4 2011 and announce its outlook with respect to 2012 production and costs.

Mr. Thomas Boehlert, President and CEO of First Nickel said "Our safety record and the successful execution of the Lockerby Depth Project are central to the strategy of the Company. We have recommenced production at Lockerby and expect the mine to be in full production later this year. In addition to Lockerby, we are continuing exploration activities at our other Ontario properties and seek to add to our base metal portfolio through acquisitions of promising exploration properties and operating mines."

Q4 2011 Update 

In November, FNI surpassed 12 months without a lost time incident, across all employees and contractors, marking a major achievement for a development project. 

The Company continues to make steady progress on the Lockerby Depth Project, which was launched in 2011, and delivered ore to Xstrata on-schedule in September 2011. During Q4, the Company shipped 21,717 tonnes of Lockerby ore to Xstrata. As reported in the Company's 2011 third quarter MD&A, FNI expected to produce approximately 400 tonnes per day during the last two months of 2011. November production exceeded this expectation at an average 433 tonnes per day. December production averaged of 209 tonnes per day. This shortfall was primarily the result of the loss of a 6 yard scooptram which is scheduled to be replaced in Q1.

In Q4, FNI added management depth at the corporate level and reorganized at Lockerby. FNI's unrestricted cash balance at December 31, 2011 was $25.9 million.

The Company anticipates being in commercial production by mid-2012, while continuing to maintain a safe and environmentally compliant operation. The 2012 production sequence has been rescheduled as a result of the impact of the previously stated lost scooptram and other start-up challenges encountered during 2011 (as reported in the company's last MD&A). The Company now expects to be at or near the full production rate of 10 million pounds of nickel per annum in the fourth quarter of 2012 as compared to mid-year as previously stated. The Company continues to review operations to identify optimization opportunities.

Capital Expenditures 

Capital expenditures for 2012 are expected to be $16.2 million, of which, $9.7 million relates to development programs as work continues to push the ramp down to the 68 level.

Exploration 

Exploration expenditures for 2012 are expected to be $1.9 million and include 6,000 meters of diamond drilling at four of the Company's properties, to assess potential growth opportunities, with the objective of increasing mineral resources for the Company.

General and Administrative 

General and administrative expenses for 2012 are estimated to be approximately $4 million (not including stock- based compensation).

Source: Marketwire