TORONTO, ONTARIO--(Marketwire - May 30, 2011) - First Nickel Inc. ("First Nickel" or the "Company") (News - Market indicators) announces that it has filed with the Canadian securities regulatory authorities its condensed unaudited financial statements, and management's discussion and analysis for the three month period ended March 31, 2011.

Complete results will also be available on SEDAR and on the Company's website at www.firstnickel.com. All dollar amounts are expressed in Canadian currency unless otherwise stated. 

• At March 31, 2011 the Company had a cash balance of $24.3 million
• In March 2011 the Company received a Commitment Letter from two banks for a $30 million secured project debt facility
• At March 31, 2011, the Company was on track and on budget with its re-commissioning phase of the capital program at Lockerby Mine
• Ramping back to full production is expected to start in Q3 of 2011

For the three month period ended March 31, 2011, the Company recorded a net loss of $2,798,209, or $0.01 per share, compared to a net loss of $3,238,751, or $0.02 per share, recorded for the three month period ended March 31, 2010. The Company has recorded a full valuation allowance against any future income tax assets. The loss in the first quarter of 2011 includes a non-cash expense of $1,996,191 (2010 - $1,220,355) due to the change in fair value of the equity related to the convertible loan. Under IFRS, the equity component of the convertible loan will be fair valued at each reporting period, and any change in the fair value will be recorded in income or loss.

General and administrative expenses, excluding stock-based compensation, totaled $618,658 in the first quarter of 2011, compared to $534,320 recorded in the same period of 2010. The increase is mostly attributable to including the wages and related costs of the Chief Operating Officer with the corporate costs. In the prior year, these costs were included with the care and maintenance costs at the Lockerby Mine. 

Share-based payments costs in the first quarter of 2011 amounted to $57,717 (2010 - $1,500). This cost relates to the 6,800,000 stock options that were granted to directors, officers and employees at an exercise price of $0.12 in December 2010. The fair value of the options granted was estimated at the grant date to be $468,155. Of this amount, $167,596 was expensed in 2010, with the balance amortized over the vesting period of the options. The Company uses the Black-Scholes pricing model in the valuations of the options.

An increase in the value of the Canadian dollar relative to the U.S. dollar during the first quarter of 2011 resulted in a foreign exchange gain of $206,485 (2010 - $275,392) being recorded. Exchange gains or losses arise from the revaluation of the US dollar cash balances, and the US dollar Convertible Loan account.

The interest on the loan facilities with Resource Capital Fund IV ("RCF IV") for the first quarter of 2011 amounted to $251,746 ($235,520 on the Convertible Loan and $16,226 on the Bridge Loan). RCF IV notified the Company of its option to receive Common Shares in payment of this interest. A total of 1,665,967 Common Shares were issued to RCF IV in full satisfaction of this liability. The Bridge Loan has been fully exchanged into Common Shares and therefore will not incur any interest going forward. 

Financial income is mostly made up of interest earned on cash balances, and on short term deposits. The higher interest income in 2011, compared to 2010, mostly reflects the higher cash balance as a result of the equity financing completed in 2010.

2011 Outlook for Lockerby Mine

Following the launch of the re-commissioning phase of its capital program in October 2010, the Company has achieved significant progress. Both financing and project schedules are currently on track and on budget for commencement of production in the third quarter of 2011, and a ramp-up to full annualized production of 10 million pounds of nickel and 7 million pounds of copper, per year by mid-2012.

• Rehabilitation work on mine conveyances and mobile equipment, is well-advanced and near completion
• Procurement and installation of a new waste/ore handling system on 51 Level are on time and on budget. This is a critical path activity required before physical mining activities begin.
• Refurbishment of pumps, ventilation fans and various installation, and general preparation work which facilitates the re-start are on schedule and on budget.
• Recall of production and maintenance and office, clerical and technical workers remains on schedule.

Elements of the main Capital program began in the first quarter of 2011. A lease agreement was reached with Atlas Copco Canada to provide an equipment fleet of four 42T haulage trucks, three 6 yard scooptrams, and one 2-boom electric hydraulic jumbo. The first of the 42T trucks was delivered to the mine site in March.

A rigorous tendering process was followed for the selection of a mining contractor for the development program which makes up the bulk of the capital plan. J.S. Redpath Ltd. was selected and awarded the contract on April 25, 2011. Site mobilization commenced in May.

Qualified Person

The foregoing scientific and technical information has been prepared or reviewed by Paul C. Davis, P.Geo., Vice-President Exploration of the Company. Mr. Davis is a "qualified person" within the meaning of National Instrument 43-101.

The Company follows rigorous quality control practices and procedures in full compliance of NI 43-101, and these are described on the Company's website and in all technical press releases.

First Nickel is a Canadian mining and exploration Company, whose principal asset is the Lockerby Mine near Sudbury, Ontario. In addition to its Lockerby operation, the Company maintains an active exploration program on projects near the mine around Sudbury, and elsewhere in Ontario. First Nickel's shares are traded on the TSX under the symbol FNI.

This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including the cash flows, metal prices, decrease costs, increase output, expected production, and expected exploration expenditures. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such factors include fluctuating metal prices, lower unit costs and other factors described in the Company's most recent Annual Information Form under the heading "Risk Factors" which has been filed electronically by means of the System for Electronic Document Analysis and Retrieval ("SEDAR") located at www.sedar.com. Such forward-looking statements are made as at the date of this news release, and the company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.