First Nickel Inc. - Home Page

First Nickel is a Canadian mining, exploration and development company. Its current business is centered in the world-class Sudbury basin, where it has one mine in operation, a second project poised for development, and a pipeline of high quality exploration projects.

The Lockerby Mine was acquired from Falconbridge in 2005 and commenced production in 2006. The mine is expected to produce between 3.8 and 4.4 million pounds payable nickel and between 2.3 and 2.7 million pounds payable copper in 2008. First Nickel has successfully increased the indicated resources at its Lockerby Mine ten-fold since it was acquired in 2005.

A July 2008 Prefeasibility Study on the development and mining of the Lockerby Depth, prepared by Genivar Limited Partnership, estimates:

an IRR of 69.3%
undiscounted pre-tax cash flow of $78.20 million after capital recovery*
metal production totaling 46 million pounds payable nickel, 37 million pounds payable copper, and 900 thousand pounds payable cobalt.
unit cash operating costs net of by-product credits are estimated at US$6.08 per pound of nickel over the 5.2 year mine plan, attaining a low of US$5.70/lb in peak production years of 420,000tpy.

The primary mining methods proposed were descendant longhole mining to the 65-1 Level (a continuation of the current plan) and ascendant longhole stoping between the 69 and 65-1 levels. Mine operating costs are estimated to average $130/tonne.

Capital expenditures and ongoing investments, including a 15% contingency, are estimated to total $85.98 million of which $52.21 million is required during the preproduction phase.

The Study derived the reserves from an estimated Indicated Mineral Resource of 2.89 million tonnes grading 1.78 percent nickel, 1.23 percent copper and 0.06 percent cobalt at a 1.0 percent nickel equivalent cut-off grade. Conversion of the upper part of the resources, above the 69 Level, to reserves yielded a Probable Mineral Reserve of 1.838 million tonnes grading 1.69 percent nickel, 1.16 percent copper and 0.06 percent cobalt. Reserves were estimated using a 1.5 percent nickel equivalent cut-off grade, 15 percent dilution, and 91 percent extraction.

Genivar believes that their Probable Mineral Reserve is conservative. Opportunities exist to reintroduce some of the stopes located on the margins of the deposit that were eliminated from the model, as a result of the increased cut off grade, once a new resource block model has been constructed using the higher cut off grade.

The Lockerby Depth Project Mine Plan schedule extracting the Probable Mineral Reserves would last 5.2 years consisting of 1.5 years of preproduction and 3.7 years of development and production at a full production rate of 1,200 tonnes per day or 420,000 tonnes per year. It also assumed launch of the program in 2008 with operations ongoing. The critical components of the capital plan that will increase output and reduce unit costs are the development program, replacing of the haulage fleet with electric trucks and optimized use of high speed personnel carriers. The plan is to being taken to feasibility level that will optimize the flow of funds by detailing the scheduling, determining the level of ongoing mining, and formalize the start dates.

* assuming average metal prices of US$10.23/lb Ni, US$ 2.31/lb Cu, and US$ 14.26/lb Co. An exchange rate of $C/$US 1.05 was used for this study.