News Release

23 January 2007

CAPEX UPDATE FOR LARGER 4.6 MTPA SANTA RITA PROJECT

PERTH, AUSTRALIA  Following the recent (22 January) announcement of the first mining reserve for the Santa Rita nickel project, Mirabela Nickel Limited (TSX: MNB, ASX: MBN) is pleased to announce a capital expenditure (CAPEX) update for the  project as follows (all costs in US$ dollars unless otherwise stated):

The new CAPEX of $322m represents a 22% increase from the previous July 2007 estimate of $263m and reflects a 15% increase in production capacity from 4.0 to 4.6 million tonnes per year and a doubling of the Indicated resource size to 90mt grading 0.60% nickel.  It is expected that the project will remain on track for a mid 2009 start.

This latest CAPEX estimate follows signed contracts with the lead providers of construction services with work under these contracts already underway.   About 80% of the new CAPEX is based upon firm contracts or final quotes and 10% has already been spent, primarily on drilling, long lead-time items and site infrastructure including a bridge, access roads and accommodation facilities.  The CAPEX estimate is for drilling and construction of the Santa Rita project and does not include working capital, mining fleet, finance costs and other activities of the Company.  The capital cost of the mining fleet is incorporated in the mine operating cost as previously announced.

The Company currently has US$152m in cash reserves.  A debt financing facility for up to $260m was mandated to BNP Paribas and Credit Suisse in January, 2008.  It is expected that the debt facility will be ready for drawdown in mid 2008. 

“Since the original studies earlier this year, we have doubled the resource size and increased the plant capacity from 4.0 to 4.6mtpa, so the 22% increase in construction cost is a worthwhile investment, particularly as it includes the additional cost of more drilling,” said Managing Director Nick Poll.  “The increase also includes allowances for additional land acquisitions and some larger equipment, such as a tailings thickener, which gives the project more flexibility to move to a larger footprint and higher throughput rates at a later date.  We are already considering a move to increase nickel output from 18,500 to 25,000t a year,” he said.

“Appreciation of the Brazilian Real has been a concern, but the new cost structure takes this into account given the Company’s forward exchange contracts in place,” said Mr Poll.

Advanced negotiations are underway to sell the concentrate product to a smelter.  At the same time the Company is finalizing a scoping study to build a smelter at Santa Rita and is expected to announce the results of this work shortly.

The largest component of the CAPEX increase comes from a $16m allowance to cover an additional 50,000m of drilling required to complete the drill out of the much larger Santa Rita Resource.  At the time of the previous CAPEX estimate, the Santa Rita pit contained 46.4mt of Indicated Resource and now, as a result of substantial strike and depth extensions, the Indicated Resource is 90mt and growing.

An allowance for additional land acquisitions totaling $10m has been made in anticipation of the growing resource, a larger project footprint and a possible smelter.  An additional $5m will be required for geotechnical drilling on a larger and deeper open-cut mine.

The exchange rate used to prepare the CAPEX estimate has been adjusted from R$2.05 to R$2.00 to reflect an appreciating Brazilian Real against the US dollar.  The total Real exposure is about 84% of total CAPEX, or US$270m. The Company has now put in place forward exchange contracts to convert the entire $270m to Real at a weighted average exchange close to R$2.00.

Background

Mirabela Nickel is listed on the Australian and Toronto stock exchanges.  With an in-pit Indicated Resource of 90mt at 0.60% Ni, Santa Rita is the largest greenfields nickel sulphide discovery worldwide in the last 12 years and the largest nickel sulphide deposit in Latin America.  Exploration is underway to determine underground mining potential below 500m deep, as mineralization appears to continue well below current drilling.

Construction of a nickel sulphide concentrator commenced in November 2007 and is progressing well. The plant is expected to produce 18,500t a year of nickel in a sulphide concentrate from one open-cut mine starting from mid 2009.  At this rate of production the project is expected to have a mine life of at least 18 years.  Studies are underway to increase nickel production to 25,000t a year.

Nick Poll                                                                               Craig Burton

Managing Director                                                              Corporate Director

Contact details

Australia contact:                                                      Toronto contact (media):

Nick Poll, Managing Director                                         Eric Tang, Porter Novelli

Telephone: +61 8 9324 1177                                      Telephone: +1 (416) 422-7200

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

www.mirabela.com.au

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Nick Poll, who is a Member of The Australasia Institute of Mining and Metallurgy.  Nick Poll is employed by Mirabela Nickel Ltd.  Nick Poll has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserve’.   Nick Poll consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

CautionRegarding Forward Looking Statements: The forward-looking statements made in this announcement 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. Such factors include, among others, the actual market prices of nickel, the actual results of current exploration, the actual results of future mining, processing and development activities, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the Company’s filed documents.  There can be no assurance that the capital expenditures required t construct a mine and related processing facilities at the Santa Rita Project will be as expected, that the Company will successfully arrange a project finance facility or that reserves and resources will be increased.

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Issued by

Purple Communications

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purple@purplecom.com.au