30 October 2008

SENIOR DEBT FINANCING UPDATE

PERTH, AUSTRALIA.  Mirabela Nickel Limited (TSX: MNB, ASX: MBN) would like to update the market as to progress in completing the syndication of the US$280m in senior debt underwritten by Credit Suisse and Barclays.

Mirabela intended to complete syndication by early December 2008.  Due to the uncertain credit markets, this syndication process is now delayed by approximately 2 months.

The Company has received the following feedback from preliminary debt marketing:

?         Santa Rita is considered a particularly high quality Project, capable of attracting finance even in a difficult market.

?         There is strong interest in the syndication.  Credit is available for quality projects at the right price.

?         The syndication is best delayed by 2 months to allow credit and commodity markets to stabilise.  Also, some banks have a preference for new credits to be approved in the new year.

?         The price of new credit (i.e. interest rate) needs to reflect higher costs of funds and financing risk perceptions.

The Company has taken the following action to help ensure that the syndication is successfully completed:

?         The capital cost of the project has been reduced by US$40m.  This represents reduced expenditure on drilling and exploration work (which has already defined sufficient resources for a mine life of 20 years), the proposed port upgrade, and other support facilities and services which are non-essential to commencement of production.

?         As a result, the senior debt requirement is reduced to US$240m, of which US$80m is already drawn under the bridge facility provided by Credit Suisse and Barclays.

?         The Santa Rita financial model for the syndication is being updated for the full ramp up to 6.4mtpa (previously 4.6mtpa) and for the latest capital costs, operating costs and exchange rates.  The financial model demonstrates strong viability even at low nickel prices.  At a nickel price of US$5lb, the Project generates about US$90m pa profit after tax over the payback period (before allowance for debt and interest).  At current exchange rates (R2.20), the cash costs after credits are below US$2..40lb of payable nickel.  The Project benefits from the hedging of 37.5m lb of nickel at US$8lb and 20m lb of copper at US$2.73lb.

?         An updated mining reserve is due to be announced shortly.  This new reserve is being included in the financial model and demonstrates an open-pit reserve life of almost 20 years.

The Company presently has cash reserves and available facilities of approximately US$70m and is continuing with the construction of the Project.  The Project is now about 65% complete with clear visibility on the remaining costs and completion schedule, and remains on track for commissioning in mid 2009.

The Company looks forward to completing the senior debt syndication process early next year.

Nick Poll                                                                              Craig Burton

Managing Director                                                          Corporate Director

Background

Mirabela Nickel Ltd owns 100% of the world class Santa Rita nickel sulphide project and is listed on the Australian and Toronto stock exchanges. With a JORC Indicated open-cut resource of 130mt grading 0.60% Ni for 780,000t of contained Ni, Santa Rita is the largest nickel sulphide discovery world-wide in the last 12 years. 

Construction of a 6.4 mtpa nickel sulphide concentrator commenced in November 2007 and is currently 65% complete. The plant will produce 18,500 tpa of nickel in a sulphide concentrate from one open-cut mine starting from mid 2009 increasing to 27,000 tpa by mid 2010.  At this rate of production the project will have a mine life of at least 20 years.  

Photos of the construction progress are available on the Company website at:

http://www.mirabela.com.au/projects_galleries.asp

Contact details

Australia contact:                                                

Nick Poll or Craig Burton                                  

Telephone: +61 8 9324 1177                            

nickp@mirabela.com.au                                  

craigb@mirabela.com.au

Australia contact (media):

Caroline de Mori, Purple Communications

Telephone: +61 8 9485 1254

cdemori@purplecom.com.au

Toronto contact (media):

Eric Tang, Porter Novelli

Telephone: +1 (416) 422 7200

eric.tang@porternovelli.com

Caution Regarding Forward Looking Statements: The forward-looking statements made in this news release are based on assumptions and judgments of management regarding future events and results. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any anticipated future results, performance or achievements expressed or implied by such forward-looking statements.

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Issued by

Purple Communications

Level 3, 28 Kings Park Road, WEST PERTH WA 6005

Ph: 08 9485 1254 Fax: 08 6263 0455

purple@purplecom.com.au