First Nickel Announces Continued Progress at Lockerby in Q4-2011 and Provides Guidance for 2012

TORONTO, ONTARIO--(Marketwire - Jan. 25, 2012) - First Nickel Inc. ("FNI", or the "Company") FNI is pleased to provide an update on its progress in Q4 2011 and announce its outlook with respect to 2012 production and costs.

Highlights

--  Shipped 21,717 tonnes of Lockerby ore to Xstrata in Q4 
    
--  Unrestricted cash balance of $25.9 million as at December 31, 2011 
    
--  Lockerby commercial production expected by mid-2012 

Mr. Thomas Boehlert, President and CEO of First Nickel said "Our safety record and the successful execution of the Lockerby Depth Project are central to the strategy of the Company. We have recommenced production at Lockerby and expect the mine to be in full production later this year. In addition to Lockerby, we are continuing exploration activities at our other Ontario properties and seek to add to our base metal portfolio through acquisitions of promising exploration properties and operating mines."

Q4 2011 Update

In November, FNI surpassed 12 months without a lost time incident, across all employees and contractors, marking a major achievement for a development project.

The Company continues to make steady progress on the Lockerby Depth Project, which was launched in 2011, and delivered ore to Xstrata on-schedule in September 2011. During Q4, the Company shipped 21,717 tonnes of Lockerby ore to Xstrata. As reported in the Company's 2011 third quarter MD&A, FNI expected to produce approximately 400 tonnes per day during the last two months of 2011. November production exceeded this expectation at an average 433 tonnes per day. December production averaged of 209 tonnes per day. This shortfall was primarily the result of the loss of a 6 yard scooptram which is scheduled to be replaced in Q1.

In Q4, FNI added management depth at the corporate level and reorganized at Lockerby. FNI's unrestricted cash balance at December 31, 2011 was $25.9 million.

2012 Summary Outlook

--  Commercial production by mid- 2012 
    
--  Production of between 6.3 to 7.4 million pounds of payable nickel 
    
--  Total cash production costs estimated to be $56.2 to $61.4 million(1) 
    
--  Total cash production costs of $6.00 per lb(1) of nickel by year end 

                                                                            
                                                                            
Production and Cost Outlook                                                 
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                                      H1              H2             Q4     
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Nickel lbs                         2.5 - 2.9 M     3.8 - 4.5 M   2.1 - 2.5 M
                                                                            
Copper lbs                         1.8 - 2.0 M     2.7 - 3.0 M   1.4 - 1.6 M
                                                                            
Total Cash Production Costs(1) $27.8 - $30.2 M $28.4 - $31.2 M $15.1 - $16.6
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Assumptions: Ni per lb - $8.50, Cu per lb - $3.25, CAD/USD $1.00            

The Company anticipates being in commercial production by mid-2012, while continuing to maintain a safe and environmentally compliant operation. The 2012 production sequence has been rescheduled as a result of the impact of the previously stated lost scooptram and other start-up challenges encountered during 2011 (as reported in the company's last MD&A). The Company now expects to be at or near the full production rate of 10 million pounds of nickel per annum in the fourth quarter of 2012 as compared to mid-year as previously stated. The Company continues to review operations to identify optimization opportunities.

Capital Expenditures

Capital expenditures for 2012 are expected to be $16.2 million, of which, $9.7 million relates to development programs as work continues to push the ramp down to the 68 level.

Exploration

Exploration expenditures for 2012 are expected to be $1.9 million and include 6,000 meters of diamond drilling at four of the Company's properties, to assess potential growth opportunities, with the objective of increasing mineral resources for the Company.

General and Administrative

General and administrative expenses for 2012 are estimated to be approximately $4 million (not including stock- based compensation).

About First Nickel

First Nickel is a Canadian mining and exploration company. The Company's mission is to be the most dynamic North American emerging base metal mining company in which to work and invest and to be respected in the communities in which we operate. FNI is in the process of ramping up production at its Lockerby nickel / copper mine in the Sudbury Basin in northern Ontario. Once the Lockerby Mine reaches full production (expected in 2012), it is expected to produce at a rate of approximately 10 million pounds of nickel and approximately 7 million pounds of copper annually, providing a strong base of cash flow from which to grow the Company. In addition to the Lockerby nickel mine, the Company owns exploration properties in the Sudbury Basin, the Timmins region of northern Ontario, and the Belmont region of Eastern Ontario. First Nickel's shares are traded on the TSX under the symbol FNI.

Some of the statements contained in this news release are forward-looking statements regarding First Nickel's business, operations and financial performance and condition of First Nickel, as well as its future plans, intentions, objectives or goals. Forward-looking statements include, but are not limited to, future production at the Lockerby Mine, anticipated production rates at the Lockerby Mine, future production costs, capital expenditures, exploration and development expenditures, and general and administrative expenses. Generally, forward-looking statements can be identified by the use of words such as "expects", "will", "enable", "anticipates", "estimated" or words of similar effect. Since forward-looking statements are not statements of historical fact and address future events, conditions and expectations, forward-looking statements inherently involve unknown risks, uncertainties, assumptions and other factors well beyond the Company's ability to control or predict. Actual results and developments may differ materially from those contemplated by such forward-looking statements depending on, among others, such key factors as fluctuating metal prices, discrepancies between actual and estimated production, mineral reserves and metallurgical recoveries, mining operational and development risks, maintaining operating and exploration teams, and other factors described in the Company's most recently filed 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. The forward-looking statements contained in this press release are based on numerous assumptions regarding present and future business strategies and the environment in which First Nickel will operate in the future, including the prices of nickel and copper, anticipated costs, currency rates, and the ability to achieve goals. The forward-looking statements included in this document represent First Nickel's views as of the date of this document and subsequent events and developments may cause First Nickel's views to change. These forward-looking statements should not be relied upon as representing First Nickel's views as of any date subsequent to the date of this document. Although First Nickel has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on any forward-looking statements. First Nickel does not undertake to update any forward-looking statements that are included in this document, except in accordance with applicable securities laws.

(1) Non-GAAP Financial Measures The cash cost per pound of nickel produced, and total production costs are non-GAAP financial measures that do not have a standardized meaning under Canadian Generally Accepted Accounting Principles ("GAAP"), and as a result may not be comparable to similar measures presented by other companies. Management uses these statistics to monitor operating costs and profitability, and believes that certain investors use this information to evaluate the Company's performance and ability to generate cash flow in addition to conventional GAAP measures. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Total cash production costs include mining costs, milling, equipment operating lease costs, mine site general and administration costs, environmental costs, transportation, and refining of concentrate, less by-product credits from sales of copper, cobalt and PGE's . The cash production cost per pound of nickel produced is the total production costs divided by pounds of nickel produced.