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| | Overview The Lockerby Mine is located southwest of the city of Sudbury. The mine was developed and operated by Falconbridge Ltd. from 1974 until September 2004, and over 8 million tonnes of ore were extracted. First Nickel acquired the mine in June 2005, and commenced commercial production at the start of 2006. As a result of persisting low metal prices, production at the mine was suspended and the facility placed on care and maintenance status in October 2008  Click Here to Enlarge The mine is remains a cornerstone of First Nickel's Sudbury operations. The key to Lockerby's future and the basis for our long term business in Sudbury is a capital program to improve the infrastructure., following a recovery in metal prices. The major increase in the resource base that arose from our 2006 drilling program has enabled us to undertake a life of mine and engineering study which will determine key infrastructure improvements and targeting changes to the mine configuration which will allow us to increase production, achieve higher operating efficiencies, and mine at greater depth. GENIVAR Feasibility Study 2009 A February 2009 Feasibility Study on the development and mining of the Lockerby Depth, prepared by GENIVAR Limited Partnership, estimated:
* assuming average metal prices of US$7.00/lb Ni, US$ 2.00/lb Cu, and US$ 17.00/lb Co. An exchange rate of $US0.82/$C was used for this study. The Study indicates that the project has an IRR of 40.5% and would generate an undiscounted pre-tax, pre-finance cumulative cash flow of $65.4 million after capital recovery assuming average metal prices of US$7.00/lb Ni, US$ 2.00/lb Cu, and US$ 17.00/lb Co. An exchange rate of $US0.82/$C was used for this study. Based on a 10% discount rate the project has a $34.1 million NPV as calculated by GENIVAR. Capital expenditures and ongoing investments, including a 10% contingency, are estimated to total $69.8 million of which $37.6 million is required during the preproduction phase. Metal production would total 51.7 million pounds payable nickel, 34.4 million pounds payable copper, and 1.0 million pounds payable cobalt. The mining method proposed is longhole stoping between the 65-3 and 70 levels utilizing a transverse accessed blasthole stope design. Unit cash operating costs net of by-product credits are estimated at US$4.50 per pound of nickel over the 6.5 year mine plan. Mine operating costs are estimated to average $155/tonne. The Study derived the reserves from an estimated Indicated Mineral Resource of 1.42 million tonnes grading 2.58 percent nickel, 1.60 percent copper and 0.098 percent cobalt at a 1.5 percent nickel equivalent cut-off grade. Conversion of the resources, above the 70 Level, to reserves yielded a Probable Mineral Reserve of 1.44 million tonnes grading 2.23 percent nickel, 1.36 percent copper and 0.083 percent cobalt. Reserves were estimated using a 20 percent dilution, a 90 percent overall mining recovery and a 1.5 percent nickel equivalent cut-off grade. The Lockerby Depth Project Mine Plan schedule extracting the Probable Mineral Reserves would last 6.5 years consisting of 1.0 years of preproduction and 5.5 years (less one month) of development and production at a full production rate of 800 tonnes per day or 280,000 tonnes per year. The critical components of the capital plan that will increase output and reduce unit costs are the development program, production schedule, replacing of the haulage fleet with a new diesel fleet and optimized mining sequence, ore handling, ventilation system, cooling strategy and backfill handling. "This Feasibility Study provides the details of a mine plan and capital program that generates significant cash flow from our Lockerby Mine. Based on the higher cut-off grade used for the Indicated Resource block model and the new Probable Reserve, the optimized mine plan has increased the payable nickel by 12% while reducing our required mining by over 20% resulting in greater revenues and lower unit costs. The projected unit cash operating costs have been reduced by over 25% and the capital costs have been reduced by $16 million, when compared with the Pre-feasibility Study completed in 2008." states William Anderson, President and CEO of First Nickel. "Significant additional upside potential remains for Lockerby. The production profile outlined in the Study does not incorporate any ore sourced from resources in other zones at the mine including the Lockerby East and Upper West Zones. As the mineralization is open at depth below the 70 Level, opportunities exist to further expand the Depth Zone and sustain the level of production at greater than 800 tonnes per day." concluded Mr. Anderson. The foregoing technical information in this release was prepared or reviewed by Paul Davis, P.Geo., Vice President Exploration for First Nickel Inc., a "qualified person" as defined by National Instrument 43-101. Genivar has reviewed this release and has confirmed that the information contained in this release is consistent with the Study. Marc Lavigne, Eng., M.Sc., Senior Mining Engineer and Project Manager, Luc Bourguignon, Eng., Senior Mining Engineer and Jacques Gauthier, P.Eng., Eng., MGP, Director Mining - Eastern Canada, are qualified persons as defined in NI43-101. Exploration and Development On February 23, 2009 First Nickel Inc reported an updated mineral resource estimate for its Lockerby Mine in Sudbury.  Click Here to Enlarge First Nickel has estimated a NI 43-101 compliant Mineral Resource that contains Indicated Resources of 1.84 million tonnes grading 2.33% Ni, 1.44% Cu and 0.086% Co, in the Lockerby Depth, Lockerby East and Upper West Zones; and Inferred Resources of 0.58 million tonnes grading 1.88% Ni, 1.10% Cu and 0.065% Co, from the Lockerby Depth and Lockerby East Zones (see table for details). The Mineral Resource models were prepared by First Nickel's Technical Team conforming to NI 43-101 standards. In First Nickel's opinion, the density of drilling and continuity of mineralization is sufficient to classify a significant portion of the estimated resources as Indicated Mineral Resources. These resource estimates will form the basis of a more comprehensive Technical Resource Report being prepared by First Nickel Inc. The Mineral Resource estimate for the Lockerby Mine was derived from block models created with Datamine(c) software, applying industry standard resource modeling procedures. Grade was interpolated into the blocks using Ordinary Kriging, and results were compared to that derived from Inverse Distance Squared weighting (ID2) and Nearest Neighbour (NN) methodologies. The estimate was constrained by geological interpretation and wireframe models based on contouring varying NiEq grades for each individual area (1.5% NiEq -- Lockerby Depth; 1.0% NiEq -- Lockerby East; 0.8% NiEq -- Upper West). NiEq factors are based on Ni, Cu and Co grades and are derived from metal accountability and economic viability. The factor is: NiEq% = Ni% + (0.32 x Cu%) + (0.53 x Co%). The Mineral Resource estimate for the Lockerby Mine was derived from three dimensional block models utilizing Datamine(c) software, applying industry standard resource modeling procedures. Grade was interpolated into the blocks using Ordinary Kriging (OK), and results were compared to those derived from Inverse Distance Squared weighting (ID2) and Nearest Neighbour (NN) methodologies. The block models were generated from three dimensional wireframe meshes, constrained by interpreted geological continuity and nickel-equivalent (NiEq) cut-off grades. NiEq factors are based on Ni, Cu and Co grades and are derived from a relationship between significant payable metal processing accountability and long term metal price ratios. The equivalency factor utilized is NiEq% = Ni% + (0.32 x Cu%) + (0.53 x Co%). The NiEq cut-off grades vary for each individual area (1.5% NiEq -- Lockerby Depth; 1.0% NiEq -- Lockerby East; 0.8% NiEq -- Upper West). Factors influencing the selection of the appropriate cut-off grade for each different area include geological continuity, style of mineralization, and proximity to existing infrastructure. The Lockerby Mine Mineral Resource estimates are tabulated as follows:
1. 1.5% nickel equivalent (NiEq) cut-off grade used for the Lockerby Depth Resource Estimate (NiEq = Ni grade + (0.32 X Cu grade) + (0.53 X Co grade)) rounded to the nearest 10,000 tonnes; 2. A 1.0% nickel equivalent (NiEq) cut-off grade was used for the Lockerby East Resource Estimate (NiEq = Ni grade + (0.32 X Cu grade) + (0.53 X Co grade)) rounded to the nearest 10,000 tonnes; 3. A 0.8% nickel equivalent (NiEq) cut-off grade was used for the Upper West Resource Estimate (NiEq = Ni grade + (0.32 X Cu grade) + (0.53 X Co grade)) rounded to the nearest 10,000 tonnes; 4. Total Indicated and Inferred tonnes represent the sum of the detailed estimates rounded to the nearest 10,000 tonnes; 5. Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, taxation, sociopolitical, marketing, or other relevant issues; 6. The quantity and grade of reported inferred resources in this estimation are conceptual in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category. First Nickel's diamond drill program was carried out under the supervision of First Nickel's Chief Mine Geologist, Stephen Conquer, P.Geo. and First Nickel's Sudbury Exploration Manager, Phil Vicker, P.Geo., "qualified persons" as defined by National Instrument 43-101. The Mineral Resource modeling was carried out under the supervision of First Nickel's Sudbury Exploration Manager, Phil Vicker, PGeo, a "qualified person" as defined by National Instrument 43-101. The information in this release was prepared under the direction of Paul Davis, PGeo, Vice President of Exploration for First Nickel Inc., a "qualified person" as defined by National Instrument 43-101. First Nickel Inc. follows a rigorous QA/QC protocol on all of its projects. 
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Lockerby
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