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First Nickel Reports Financial and Operating Results for the Three and Six Month Period Ended June 30, 2008

August 13, 2008

First Nickel Inc. (“First Nickel” or the “Company”) (TSX: FNI) announces that it has filed with the Canadian securities regulatory authorities its unaudited financial statements, and management’s discussion and analysis for the three and six month period ended June 30, 2008.

Complete results will also be available on SEDAR and on the Company’s website at www.firstnickel.com. All dollar amounts are expressed in Canadian currency unless otherwise stated.

 Summary - Second quarter net loss of $992,176 ($0.01 per share) compared to net   earnings of $723,904 in the second quarter of 2007. The second quarter   2008 loss reflects weaker nickel prices realized by the Company. - An increase of $1,518,639 (84%) in copper, cobalt and other metal   revenues (resulting from an overall higher sales volume and price), was   offset by a decrease of $4,888,654 (32%) in the nickel revenues. Although   the pounds of nickel sold during the second quarter of 2008 was 244,560   pounds (35%) higher in 2008 versus 2007, a drop (45%) in the average   realized nickel price offset the higher volume. - Production during the second quarter of 2008 increased to 969,865 pounds   of payable nickel, an increase of 10% over the 878,866 pounds produced in   the second quarter of 2007, and 3% higher than the 944,182 pounds produced   in the first quarter of 2008. - 7,776 metres of underground drilling were completed on the historic   Lockerby Main, Lockerby East and Lockerby Footwall zones, where the   targets are contact and copper PGE-rich footwall mineralization,   respectively. Lockerby Main is located approximately 1,300 metres above   current mining levels. - 2,604 metres of drilling was completed during the quarter on the West   Graham Property on the Conwest Deposit, the up-dip equivalent of the   Lockerby East Zone. The property is under option from Landore Resources   Ltd. A deposit amenable to bulk mining is the target. 

Production in the quarter was derived from stopes on 64 Level and development on 65-3 Level in the Depth Zone, and from the East Zone. Production is on track with previously issued guidance.

The Company remains in a strong financial position with working capital of $14,807,578 at June 30, 2008 after investments of $8,995,538 in development, exploration and mine equipment acquisitions during 2008. The Company is debt free.

Financial Results

 The following table presents a summary of the results of operations for the three and six month periods ended June 30, 2008 and 2007:                             Three months ended             Six months ended                         June 30,       June 30,       June 30,      June 30,                            2008           2007           2008          2007 ----------------------------------------------------------------------------                  ------------Unaudited-------- -----------Unaudited--------- Sales Revenue      $  13,580,997 $  16,951,012   $ 23,543,794  $ 27,410,422                    --------------------------- ----------------------------- Operating costs  excluding  amortization         12,631,163    10,068,378     23,053,607    17,855,400 Accretion of  asset retirement  obligations              47,000        45,000         94,000        90,000 Amortization of  mining properties  and equipment         1,515,880     1,018,896      2,423,332     1,607,896                    --------------------------- -----------------------------                       14,194,043    11,132,274     25,570,939    19,553,296                    --------------------------- ----------------------------- Operating profit  (loss)                 (613,046)    5,818,738     (2,027,145)    7,857,126                    --------------------------- ----------------------------- General and  administration          648,672       678,355      1,225,154     1,205,843 Stock-based  compensation            245,469     2,061,286        445,243     2,075,765 Depreciation and  amortization              6,051         7,485         12,102        14,970 Debenture interest  and accretion                 -       510,413              -     1,266,201 Other interest           111,791       145,542        218,719       270,683 Interest and  other income           (160,709)     (261,854)      (433,817)     (390,618)                    ---------------------------------------------------------                          851,274     3,141,227      1,467,401     4,442,844                    --------------------------------------------------------- Earnings (loss)  before taxes         (1,464,320)    2,677,511     (3,494,546)    3,414,282 Provision for  (recovery of)  future income and  mining taxes           (472,144)    1,953,607     (1,078,253)    2,160,109                    --------------------------------------------------------- Net earnings  (loss) for the  period            $    (992,176) $    723,904   $ (2,416,293) $  1,254,173                    --------------------------------------------------------- Net earnings  (loss) per share:   Basic and    diluted         $       (0.01) $       0.01   $      (0.02) $       0.01 Weighted average  number of common  shares outstanding  140,548,098   116,836,671    140,397,503   103,992,131 

For the three month period ended June 30, 2008 (the “second quarter of 2008″), the Company recorded a net loss of $992,176, or $0.01 per share, compared to net earnings of $723,904, or $0.01 per share, recorded for the three month period ended June 30, 2007 (the “second quarter of 2007″).

Significant differences between the two periods include:

– A decrease in revenues of $3,370,015 (20%) in 2008, compared to 2007.An increase of $1,518,639 (84%) in the copper, cobalt and other metal revenues (resulting from overall higher sales volume and price) was offset by a decrease of $4,888,654 in the nickel revenues. Although the pounds of nickel sold during the second quarter of 2008 was 244,560 (35%) higher in 2008 versus 2007, a drop in the average realized nickel price of $8.69 (45%) from $19.41 to $10.72 more than offset the higher volume. Also contributing to the decrease in revenues is the increase in the value of the Canadian dollar relative to the U.S. dollar. During the second quarter of 2007 the U.S. dollar averaged about $1.11 Canadian, compared to an average of $1.01 in the second quarter of 2008.This lower exchange rate equates to approximately $1.4 million difference in revenues.

 Revenue by Product:                                            Q 2                 Year-to date                             2008          2007           2008          2007 Nickel               $10,245,079   $15,133,733    $17,868,224   $24,332,250 Copper                 2,199,312     1,369,320      3,678,261     2,317,994 Cobalt                   794,696       365,566      1,373,412       601,960 Other                    341,910        82,393        623,897       158,218                      -------------------------    -------------------------                      $13,580,997   $16,951,012    $23,543,794   $27,410,422                      -------------------------    ------------------------- 

Revenue from the sale of nickel accounts for more than 75% of the total revenues. Therefore, any movement in the nickel price will have a great impact on revenues and would ultimately affect earnings. The following table sets out selected sales information for the periods indicated:

 ----------------------------------------------------------------------- ----                          Q2 2008       Q2 2007       YTD 2008      YTD 2007 --------------------------------------------------------------------------- Sales by Payable Metal ---------------------------------------------------------------------------   Nickel - pounds        944,182       699,622      1,565,126     1,171,281 ---------------------------------------------------------------------------   Copper - pounds        602,052       433,409      1,082,691       733,170 ---------------------------------------------------------------------------   Cobalt - pounds         17,545        11,821         30,116        19,658 --------------------------------------------------------------------------- Ave. price   received - US$/lb ---------------------------------------------------------------------------   Nickel               $   10.72     $   19.41    $     11.32    $    18.31 ---------------------------------------------------------------------------   Copper               $    3.61     $    2.86    $      3.37    $     2.79 ---------------------------------------------------------------------------   Cobalt               $   44.74     $   27.82    $     45.23    $    27.00 --------------------------------------------------------------------------- Ave. Exch. Rate  Realized ---------------------------------------------------------------------------   US $ 1 equals     Canadian $          $  1.0123     $  1.1135    $    1.0084    $   1.1346 --------------------------------------------------------------------------- - An increase in mine operating costs, including treatment and refining   charges, of 25% in the second quarter of 2008 compared to 2007. An overall   increase in material and supplies along with higher trucking, royalty and   treatment and refining charges have accounted for the increase in   operating costs. As the operations generated a loss, no nickel bonus was   paid in the second quarter of 2008. - A decrease of $29,683 (4%) in general and administrative expenses in the   second quarter of 2008, compared to the second quarter of 2007. The   decrease is mostly attributable to a decrease in capital tax and investor   relations activities, offset by an increase in director's fees and tax   consulting. - The $245,469 stock-based compensation costs in the second quarter of 2008  reflects the fair value of options granted during the second quarter, and   the fair value of options granted in prior periods, which have vested in   the second quarter of 2008, to directors, employees and consultants. The   Company uses the Black-Scholes pricing model in the valuations of the   options. - A reduction of $510,413 in the second quarter of 2008 in debenture   interest and accretion. Debentures aggregating $14,500,000 were repaid on   June 1, 2007.  - A decrease of $33,751 in other interest in the second quarter of 2008,   versus 2007. Other interest is mostly comprised of interest paid on   advances received from Xstrata on the ore delivered to their facilities. - Interest and other income is mostly made up of interest earned on cash   balances, and on short term deposits. The lower interest income in the   second quarter of 2008, compared to the second quarter of 2007, is as a   result of lower cash balances in 2008. 

Lockerby Mine Operations

During the second quarter of 2008, 31,901 tonnes of ore were delivered to the Xstrata treatment facilities. Although the tonnes delivered in the second quarter were 7,754 tonnes (20%) lower than the tonnes delivered in the first quarter, an increase in the nickel head grade of 23% (1.79% versus 1.46%) resulted in an increase in the pounds of payable nickel in the second quarter of 25,683 pounds (3%) (969,865 pounds versus 944,182 pounds).

For the first six months of 2008, 71,556 tonnes have been delivered to the Mill, an increase of 14,649 tonnes, or 26%, over the 56,907 tonnes of ore delivered in the first six months of 2007. The payable metal content in the ore is estimated to be approximately 1,914,047 pounds of nickel (an increase of 21% over 2007) and 1,138,132 pounds of copper (an increase of 6% over 2007).

Selected operating statistics for the six month period ended June 30, 2008 compared to the same period in 2007 are as follows:

 ----------------------------------------------------------------------- ---- Item                  1st Q 2008    2nd Q 2008       YTD 2008      YTD 2007 --------------------------------------------------------------------------- Ore Delivered   to Mill (tonnes)         39,655        31,901         71,556        56,907 --------------------------------------------------------------------------- Nickel Mill Head  Grade (%)                  1.46          1.79           1.61          1.65 --------------------------------------------------------------------------- Copper Mill Head  Grade (%)                  0.82          0.89           0.85          0.99 --------------------------------------------------------------------------- Payable Nickel  (pounds)                944,182       969,865      1,914,047     1,578,488 --------------------------------------------------------------------------- Payable Copper  (pounds)                602,052       536,080      1,138,132     1,074,142 --------------------------------------------------------------------------- Payable Cobalt  (pounds)                 17,545        17,604         35,149        28,347 --------------------------------------------------------------------------- Mine operating  cost per tonne      $       238   $       277    $       256   $       294 --------------------------------------------------------------------------- Cash cost per  pound of nickel(i)  $      9.73   $      9.05    $      9.39   $      9.95 --------------------------------------------------------------------------- 

(i) Cash cost per pound of nickel is a non GAAP measure and is net of other

metal credits, and does not include amortization of mining properties

and equipment.

Premiere Ridge

The Company and Xstrata have agreed to extend the option agreement on Premiere Ridge for such period as may be necessary for completion of project milestones. Such project milestones will be negotiated between the parties and the right to exercise the option contingent on satisfaction of the project milestones.

Exploration Activity

 Exploration achievements in the second quarter of 2008 are summarized as follows: - 1,841 metres of drilling were completed on the Lockerby Main Zone.   - FNI1738: 19.60 metres grading 2.17% Ni and 0.95% Cu   - FNI1744: 10.00 metres grading 1.73% Ni and 1.27% Cu   - FNI1748: 18.50 metres grading 1.52% Ni and 1.01% Cu - 3,518 metres of drilling were completed on the Lockerby East Zone.   - FNI3507: 3.00 metres grading 3.74% Ni and 1.83% Cu   - FNI3511: 5.05 metres grading 2.33% Ni and 0.95% Cu - 2,417 metres of drilling were completed on the Lockerby Footwall. - 2,604 metres of drilling were completed on the West Graham property.   - FNI2055: 7.85 metres grading 0.63% Ni and 0.55% Cu   - FNI2050: 0.45 metres grading 3.25% Ni and 0.13% Cu - 230 metres of drilling were completed on a footwall geophysical target on   the Morgan-Lumsden property. Massive chalcopyrite mineralization   intersected 300 metres below the basal contact of the Sudbury Igneous   Complex.   - M-059: 10.15 metres grading 0.03% Ni and 1.41% Cu   - incl: 0.40 metres grading 0.29% Ni and 20.00% Cu - 2,000 additional hectares staked in the Belmont project area. 

Outlook

Metal production is on track with previously issued guidance (see February 12, 2008 press release).

The Company has received the final report of the Prefeasibility Study on the continuation of development and mining of Lockerby Depth (see July 3, 2008 press release). The Company intends to follow through in the weeks ahead with finalizing scheduling and estimating details and then seek financing.

In view of the decline in nickel prices in recent weeks, the Company is examining all of its capital and operating budgets for the balance of 2008, with the intention of eliminating all non-essential items, curtailing expenditures and preserving operating cash margins. A number of operating scenarios are being examined, pending future metal market conditions.

Qualified Person

The foregoing scientific and technical information has been prepared or reviewed by Paul C. Davis, P.Geo., Vice-President Exploration of the Company. Mr. Davis is a “qualified person” within the meaning of National Instrument 43-101.

The Company follows rigorous quality control practices and procedures in full compliance of NI 43-101, and these are described on the Company’s website and in all technical press releases.

Non-GAAP Performance Measures

This press release contains non-GAAP measures like operating cost per tonne of ore, net cash cost per pound of nickel, etc. Please see the Company’s MD&A on SEDAR for discussion on non-GAAP performance measures.

First Nickel is a Canadian mining and exploration Company. Its current activities are primarily focused on the Sudbury Basin in northern Ontario, the location of the company’s producing property (the Lockerby Mine) and four of its exploration properties. First Nickel also has two exploration properties in the Timmins region of northern Ontario. First Nickel’s shares are traded on the TSX under the symbol FNI.

This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including the cash flows, metal prices, decrease costs, increase output, expected production, and expected exploration expenditures. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such factors include fluctuating metal prices, 2008 production forecast, lower unit costs and other factors described in the Company’s most recent 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. Such forward-looking statements are made as at the date of this news release, and the company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.

 Contacts: First Nickel Inc. William Anderson President & CEO (416) 362-7050 (416) 362-9050 (FAX) Email: wanderson@firstnickel.com Website: www.firstnickel.com  First Nickel Inc. Forbes West Investor Relations Advisor (416) 203-2200 or Toll Free: 1-888-655-5532 Email: forbes@sherbournegroup.ca

SOURCE: First Nickel Inc.




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