TORONTO, ONTARIO--(Marketwire - Aug. 3, 2012) - First Nickel Inc. ("First Nickel", "FNI" or the "Company") (News - Market indicators) announces that it has filed the complete technical report associated with the updated Lockerby Mine Plan ("the Mine Plan") which incorporates an optimized mining method and updated costing (in total, the "Optimization Study") previously announced on June 18, 2012.

OPTIMIZATION STUDY HIGHLIGHTS

• Significant reduction of more than 100,000 waste tonnes, or 21%, through the elimination of more than 3,000 metres of lateral development in waste
• The reduction in volume of waste through the materials handling system results in fewer ore-waste changeovers, and lower spending on fixed plant maintenance
• The new Mine Plan provides additional operational flexibility with multiple mining fronts and flexible panel lengths
• $86.9 million Net Present Value ("NPV") @ 8%, pre-tax
• 10 million lbs Nickel, 7 million lbs Copper average annual production
• $5.56 average cash cost per pound of nickel¹
• $28 million LOM Capex (including $17 million in development)
• 58 month mine life from July 1, 2012

Change in Mining Method. (see firstnickel.com for Detail of Change in Mining Method)

The prior method of transverse mining has been changed to a longitudinal mining method. This change in mining method, together with optimizing the design of each level (eliminating crosscuts and lateral development, etc.) reduces required development, decreasing the tonnes of waste in the Mine Plan and supports opening multiple levels allowing a second bottom up mining front to be established. 

Updated cost drivers. Costs in the previous FNI Lockerby Mine studies were determined based on assumptions made in 2008 and 2009. Cost assumptions in this Optimization Study, are based on the past nine months of operating experience and improvements identified in the new Mine Plan, all of which have been reviewed by external consultants. Average cash cost per pound¹ from July 2012 forward remained unchanged as compared to the previous FNI Lockerby Mine studies. The cost increases, generally being experienced by the mining industry globally, were primarily offset in the Optimization Study by increased byproduct credits and costs savings relating to the reduction in development waste tonnes.

ASSUMPTIONS OF THE OPTIMIZATION STUDY AND SENSTITIVITIES

BACKGROUND ON THE OPTIMIZATION STUDY

The Optimization Study has been developed with the support of three independent consulting firms:

Stantec, under the direction of George Darling, P.Eng., was responsible for the mining, cost estimating and project economics.

Roscoe Postle Associates (RPA), led by Chester Moore, P.Eng., Principal Geologist, reviewed the procedures used for the resource estimation and found them consistent with CIM best practices and in compliance with NI43‐101 guidelines. Holger Krutzelmann, P.Eng., Vice President and Principal Metallurgist reviewed metallurgical and ore processing. Jeff C. Martin, P.Eng., Associate Environmental Engineer reviewed Environmental aspects.

Itasca, Alternative stoping sequences were modelled by Itasca Canada (under the direction of Richard Brummer, P.Eng), and the proposed stoping sequence has been optimised based on the modeling work done.

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. 

Cautionary Statement Regarding Forward-Looking Information

Certain statements contained in this news release may contain forward-looking information about First Nickel. Forward-looking information can often be identified by the use of forward-looking terminology such as "anticipate", "believe", "continue", "budget", "forecast", "estimate", "schedule", "expect", "goal", "intend", "target", "potential", "objective", "may", "plan" or "will" or the negative thereof or variations thereon or similar terminology. Forward-looking information may include, but is not limited to: the resumption of operations at Lockerby mine and the continued operation thereof; availability of financing in the future; future financial or operating performance of the Company and its projects; the future price of metals; the long term supply and demand for nickel; continuation of exploration activities; mineral reserve and mineral resource estimates; the realization of mineral resource estimates; costs of production and key supplies; capital, operating and exploration expenditures; forecasts of sales and production; costs and timing of the development of new and existing deposits; costs and timing of future exploration; execution of the Optimization Study and updated Mine Plan in accordance with their terms; the requirements for additional capital; government regulation of mining operations; environmental risks, reclamation expenses and/or title disputes or claims.

By its nature, forward-looking information is based on certain factors and assumptions which involve known and unknown risks, uncertainties and other factors which may cause the actual results, realization of mineral resources, performance or achievements of the Company, financial position or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Accordingly, actual events may differ materially from those implied by any forward-looking information. Readers are cautioned not to place undue reliance on forward-looking information, which speak only as of the date the statements were made and readers are also advised to consider such forward-looking information while considering the risk factors set forth in the management's discussion and analysis for the year ended December 31, 2011 under the heading "Risks and Uncertainties" and under the heading "Risk Factors" in the Company's Annual Information Form for the year ended December 31, 2011. The Company disclaims any intention or obligation to publicly update or otherwise revise any forward-looking information whether as a result of new information, future events or other such factors which affect this information or to explain any material difference between subsequent actual events and such forward-looking information, except as required by applicable law.

¹Non-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.