Lockerby

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LOCKERBY WEST GRAHAM RAGLAN HILLS BELMONT

LOCKERBY
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INVESTOR PRESENTATION

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STOCK QUOTE

The Lockerby Mine is the cornerstone of First Nickels Sudbury operations. First Nickels long term business plan includes a capital program to improve the mines infrastructure and extend the original mine plan by 6.5 years. View our up to date stock quote

A highly successful exploration and ore delineation program resulted in a major increase in the resource base for the Lockerby Depth Zone which enabled us to undertake a technical feasibility study that identifies key infrastructure improvements that will allow us to increase production, achieve higher operating efficiencies and mine at greater depths. The Lockerby Mine is located southwest of the City of Sudbury and was developed and operated by Falconbridge Limited from 1974 until 2004, extracting over 8 million tonnes of ore during that period. First Nickel acquired the Lockerby Mine in June 2005 and commenced commercial production in 2006 extracting an additional 364,000 tonnes to October 2008 when the mine was placed on care and maintenance due to low metal prices.

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Lockerby

http://www.firstnickel.com/Projects/Lockerby.aspx

2009 GENIVAR FESIBILITY STUDY

In October of 2009, an update of the economic model of the Feasibility Study, filed on SEDAR on April 13, 2009, on the development and mining of the Lockerby Depth was completed by GENIVAR Limited Partnership. An update to the Feasibility Study was completed in November, 2009 incorporating changes in project timing and treatment charges and investigating the impacts of mine development performance improvements on the capital plan. Parameters considered for the Feasibility Study and the update include: metal price forecasts; US$/C$ exchange rate; project start-up; escalation adjustments of the treatment charges and incorporation of the revenues from Au/Pt/Pd/Ag net smelter returns.

Highlights of the Feasibility Study and Update assuming average metal prices of US $8.00/lb Ni, US $2.75/lb Cu and US $15,00/lb C at an exchange rate of US $0.85/$C include: 6.5 year mine plan on current Probable Reserves yielding 51.7 Mlbs of payable Ni, 34.4 Mlbs of payable Cu and 1.0 Mlbs of payable Co 74% Internal Rate of Return $112 million pre-finance cumulative cash flow after capital recovery 14 month payback period $66.8 million Net Present Value at a 10% discount rate Unit Cash Cost of US$4.56 per pound of payable nickel net of byproduct credits $155 per tonne estimated average mine operating cost $37.6 million pre-production Capex $32.3 million sustaining Capex Probable Mineral Reserve of 1.4 Mt @ 2.23% Ni, 1.36% Cu, 0.083% Co at a 1.5% Ni Eq cutoff grade ( NiEq% = Ni%+(0.32xCu%)+(0.53xCo%))

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RESOURCES AND RESERVES

A new interpretation of the mineralization was used to model the current Lockerby Depth Indicated Resources in 2009 using a cut-off grade of 1.5% nickel equivalent (NiEq is defined as Ni% + 0.32 X Cu% + 0.53 X Co%). The estimate was derived from block models where the grade was interpolated into the blocks using ordinary kriging and compared with inverse distance squared and nearest neighbour interpolations to verify the accuracy of the model. A cut-off grade of 1.5% NiEq is considered reasonable for the Lockerby Depth Zone based on the projected accountable metal recoveries and metal prices applied under the current Off-Take Agreement with Xstrata Nickel.

LOCKERBY MINE: INDICATED AND INFERRED MINERAL RESOURCES

1. A 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.

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Lockerby

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Indicated mineral resources were converted into Probable Mineral Reserve by GENIVAR by dividing up the resource block model into stopes considering a minimum mining width of 3m. Dilution was assumed at 0.7 m of rock grading 0.4% Ni from both the hanging wall and footwall of each stope. This resulted in an average dilution of 25% in volume once the minimum mining width is reached. However, due to the lower density of the dilution material, the dilution factor actually used for the Lockerby Depth Zone was 20% in tonnage. An overall mining recovery of 90% was applied to both ore development and stoping. After applying the above dilution and losses, each stopes tonnage and grade was integrated into the Probable Mineral Reserve, provided its NiEq grade was greater than or equal to 1.5%. The overall extraction rate of the mineral resources is 94%. The Probable Mineral Reserves for the Contact and Hanging Zones of the Lockerby Depth Orebody are shown in the following table. Probable Mineral Reserves by Zone: Lockerby Depth Zone Mining Zone Contact Zone Hanging Zone Total Diluted Tonnes 1,252,800 183,400 1,436,200 Ni (%) 2.34 1.46 2.23 Cu (%) 1.38 1.20 1.36 Co (%) 0.88 0.053 0,083 NiEq (%) 2.83 1.87 2.71

Significant additional upside potential remains for Lockerby. The production profile outlined in the study does not incorporate any ore sourced from resources in other areas 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.

LOCKERBY DEPTH MINE PLAN

The Lockerby Depth Project as planned would last 6.5 years, consisting of 1.0 year of preproduction and 5.5 years (less one month) of development and production at a 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, replacement of the existing haulage fleet, an optimized mining sequence, ore handling and ventilation system improvements including a cooling strategy and backfill handling.

GENIVAR proposes a new transverse accessed blasthole stope design, accessing the deposit transversely rather than longitudinally. The orebody will be accessed via a ramp and level crosscuts to main haulage drifts. Haulage drifts will be driven parallel to the orebody and drawpoints will be excavated perpendicular to the long axis of the orebody.

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The Contact Zone has been subdivided into primary and secondary stopes where the primary stopes will be mined top-down and the secondaries will be mined bottom-up using a sublevel longhole stoping method. Once mining on the Contact Zone is complete, the Hanging Wall Zone will be mined bottom-up following a central core retreat sequence using the existing Contact Zone drawpoints. High-density hydraulic backfill will be used in all mined out stopes and waste rock will be utilized in the Contact Zone to construct cemented rockfill plugs in all primary stopes and some selected secondary stopes.

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