First Nickel suspending operation of Lockerby mine

The Canadian Press
October 19, 2008 - 10:19 p.m.

TORONTO - First Nickel Inc. (TSX:FNI) announced Sunday that it is suspending production and initiating a care and maintenance program at its wholly owned Lockerby mine due to low metal prices and the "challenging financial environment."

The decision follows an extensive evaluation of mining scenarios and likely near-term metal price projections that rule out the continuation of operations at the mine near Sudbury, Ont., the company said in a release.

The Lockerby Mine will be kept in ready condition through the care and maintenance program that will enable a return to production when economic conditions improve and while First Nickel evaluates its options. The company will continue to explore its properties located in the Sudbury basin as well as northern and eastern Ontario.

"Regrettably, the prevailing nickel prices are below Lockerby's cash costs per pound of payable nickel even though the company has worked diligently throughout 2008 to reduce costs," said William Anderson, president and CEO of First Nickel.

"We believe this is the best option to conserve cash and position the operation for future success while maintaining the long-term benefit to the community and our shareholders."

The company says affected employees will be provided with transition support.

"We intend to work with those who are displaced to help them relocate elsewhere in the industry," said Gerry Bilodeau, VP Operations.