30 July 2008

MIRABELA NICKEL: 40% CAPACITY INCREASE AT SANTA RICA

PERTH, AUSTRALIA Mirabela Nickel Limited (TSX: MNB, ASX: MBN) is pleased to announce that the Santa Rita project is now being engineered and constructed for a 6.4 mtpa throughput capacity, up 40% from 4.6 mtpa. This reflects an average annual production rate of 27,000tpa of nickel in concentrate assuming a resource grade of 0.61% Ni and a recovery rate of 70%. The Company plans to complete ramp up to the full 6.4mtpa throughput rate by mid 2010.

The increase in throughput rate optimizes the project$B!G(Bs value in light of the increasing resource size at a relatively low incremental cost. The estimated sunk capital cost of the revised 6.4 mtpa project is US$387m and includes plant, infrastructure, land acquisition, port upgrade, first fills, spares and contingency. The new capital cost estimate represents a 20% increase over the previous estimate of US$322m for the 4.6mtpa project.

The cost increase is mostly attributable to additional equipment required for the upgrade and Brazilian Real exposure on the additional expenditure. Other than these items, the previous capital cost estimate has not significantly changed, assisted by hedging of the Brazilian Real and fixing prices for structural steel, concrete, diesel and other items.

$B!H(BA production rate of 27,000tpa of nickel positions Mirabela to become one of the largest independent nickel producers in the world and we are currently studying the possibility of additional capacity from an underground operation,$B!I(B said Managing Director Nick Poll. $B!H(BWe are very pleased with the construction progress with over 50% of the project now completed and capital costs remain under control, due largely to prudent hedging of the Brazilian Real and fixed price purchasing. The increase in production capacity, capital cost and timing is in line with expectations and we are expecting an upgrade to the resource estimate in August,$B!I(B he said.

Construction of the project is now 50% complete and the project remains on target for commencement of production in mid 2009. Civil engineering works for the primary crusher and the ore stockpile area are on track to be completed within weeks, enabling delivery of the primary crusher in September. The mill foundations and other civil engineering works for the flotation plant are also on schedule for delivery of the grinding circuit and flotation tanks in December. Suppliers of long lead time items (crusher, grinding circuit, flotation tanks and transformers) have confirmed that fabrication of these items is also on schedule. About 2.3mt of pre$B!>(Bstrip material has already been removed from the open$B!>(Bpit, much of which is being used for construction of the tailings dam. Critical to achieving the 6.4mtpa throughput rate will be delivery of a second ball mill that remains on schedule for delivery in July 2009.

Mining Fleet

The only capital item not covered above is the initial mining fleet, which will cost about US$20m and will be funded by a separate lease finance package. The mining fleet capital costs are included in the mining operating expense estimate of US$1.31 per tonne of material (at BRL$2.00), as previously announced by the Company. Completion of the purchase and financing agreements is expected by September.

Other working capital requirements

In addition to sunk capital, there are a number of other working capital requirements that require financing on a pre$B!>(Brevenue basis:

Working capital requirements, Santa Rita

The $43m in respect of sales tax is due to domestic selling of concentrate to Votorantim $B!>(B the Company is not able to obtain a sales tax exemption on capital purchases that would have been available if the concentrate was being exported as originally planned. A full rebate on this charge is received during the first year of production. This working capital requirement has been financed by a US$50m subordinated loan as part of an offtake agreement with Votorantim, signed in July.

The financing charge of $28m comprises interest and fees incurred under the various debt facilities prior to the project becoming cashflow positive.

The pre$B!>(Bstrip charge of $24m is included in the overall 7.7 to 1 strip ratio for the project. However, this component of the mining costs needs to be funded prior to the project becoming cashflow positive. In effect, the pre$B!>(Bstrip operates as a reduction in subsequent mining costs.

The corporate, drilling and exploration charge of $18m represents about $10m allocated to further resource and underground drilling at Santa Rita and $2m for other exploration projects, including Palestina. Corporate overhead includes a technical team that is overseeing project construction.

The estimates of additional sunk capital and working capital above use the current exchange rate of 1.6 Brazilian Real to the US dollar. The original US$322m cost estimate was based on an exchange rate of 2.0 Brazilian Real to the US dollar with the Real component covered by US$270m of currency hedging at that exchange rate.

Financing

The total sunk capital and working capital requirement for Santa Rita of US$515m (ex mining fleet) will be funded as follows:

Summary of Santa Rita financing

This total funding position leaves a buffer of US$30m.

The Company recently announced the underwriting of US$280m in senior debt by Barclays and Credit Suisse, and an interim debt facility of US$80m provided by Barclays and Credit Suisse repayable upon syndication of the senior debt. The Company also recently announced a subordinated debt facility of US$50m to be provided by Votorantim in conjunction with a 5 year off$B!>(Btake agreement for 50% of Santa Rita concentrate production. The Company is currently in advanced negotiations to finalise a second off$B!>(Btake agreement and is expecting that to include a further US$50m subordinated debt facility.

Nick Poll                                                                                             Craig Burton

Managing Director                                                                            Corporate Director

Background

Mirabela Nickel Ltd is listed on the Australian and Toronto stock exchanges. With an open$B!>(Bcut mining reserve of 84mt grading 0.61% Ni, Santa Rita is the largest greenfields nickel sulphide discovery in the last 12 years and the third largest open$B!>(Bcut nickel sulphide mining reserve worldwide.

Construction of a nickel sulphide concentrator commenced in November 2007 and is progressing well. The plant is expected to produce 18,500 tpa of nickel in a sulphide concentrate from one open$B!>(Bcut 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 14 years. A resource update is expected in August.

Contact details

Australia contact:                                                                                Toronto contact (media):

Nick Poll, Managing Director                                                              Eric Tang, Porter Novelli

Telephone: +61 8 9324 1177                                                              Telephone: +1 (416) 422$B!>(B7200

nickp@mirabela.com.au                                                                    eric.tang@porternovelli.com

Australia contact (media):

Caroline de Mori, Purple Communications

Telephone: +61 8 9485 1254

cdemori@purplecom.com.au

Caution Regarding Forward Looking Statements: The forward$B!>(Blooking statements made in this announcement are based on assumptions and judgments of management regarding future events and results. Such forward$B!>(Blooking 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$B!>(Blooking statements. There can be no assurance that the capital expenditures required to construct a mine and related processing facilities at the Santa Rita Project will be as expected or that the Company will successfully arrange all required project finance facilities.

***

The new Spam Act commenced on 10 April 2004. This Act is aimed at reducing the amount of unauthorised emails you receive.  You have been receiving e-mails containing information and news releases from us on behalf of our clients because you are an important contact of Purple Communications, a boutique stakeholder communications consultancy.   If you do not wish to receive such emails from Purple, please click mailto: purple@purplecom.com.au subject=UNSUBSCRIBE or reply to this email and put UNSUBSCRIBE in the subject line and we will not email you again. If you do not reply, we will continue sending you relevant news and information via email. However, all future emails will allow you to unsubscribe.

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