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Thursday, March 27, 2008

Net earnings of $814,354 were recorded in 2007. The first profitable year in the Company's history.





First Nickel Reports Financial and Operating Results For the Year Ended December 31, 2007


14:39 EDT Thursday, March 27, 2008

TORONTO, ONTARIO--(Marketwire - March 27, 2008) - First Nickel Inc. ("First Nickel" or the "Company") (TSX:FNI) announces that it has filed with the Canadian securities regulatory authorities its audited financial statements, and management's discussion and analysis for the year ended December 31, 2007.

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.

Highlights

- Net earnings of $814,354 were recorded in 2007. The first profitable year in the Company's history.

- Achieved a mine operating profit of $13.6 million in 2007, an increase of $9.1 million (202%) over the $4.5 million achieved in 2006.

- Nickel production of 3,259,095 pounds and copper production of 2,185,023 pounds in 2007, highest in the Company's history. An increase of 33% and 36%, respectively, over 2006.

- Nickel and Copper metal sold in 2007 was 3,082,481 pounds and 2,005,190 pounds, respectively. An increase of 56% and 53%, respectively, over 2006.

- Increased operating cash flow in 2007 to $15.8 million compared to a cash usage of $0.1 million in 2006.

- Overall increase in cash balance of $17.1 million during 2007.

- The Company is debt free and had working capital of $24.0 million.

- In Q4, the Company wrote off $5.4 million of deferred exploration costs incurred on the Foy Mouth Property, following the termination of the option agreement with Xstrata.

Financial Results

The following table presents a summary of the results of operations for the three and twelve month periods ended December 31, 2007 and 2006:


Three months ended Twelve months ended
December 31, December 31,
2007 2006 2007 2006
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Sales Revenue $ 15,333,945 $ 8,227,080 $ 56,925,326 $ 28,893,857
--------------------------- ----------------------------

Operating costs
excluding
amortization 10,402,686 7,049,512 39,490,509 22,089,758
Accretion of
asset retirement
obligations 47,310 177,000 182,310 177,000
Amort. of mining
properties &
equipment 1,018,896 720,000 3,645,688 2,160,000
--------------------------- ----------------------------
11,468,892 7,946,512 43,318,507 24,426,758
--------------------------- ----------------------------

Operating profit 3,865,053 280,568 13,606,819 4,467,099
--------------------------- ----------------------------

General and
administrative 376,832 557,981 1,809,275 2,381,160
Stock-based
compensation 639,271 371,124 2,742,978 530,585
Amortization 7,485 10,347 29,940 40,794
Debenture interest
and accretion - 764,527 1,266,201 3,045,000
Other interest 409,379 92,590 864,087 257,429
Interest and
other income (329,610) (149,650) (1,017,667) (383,658)
----------------------------------------------------------
1,103,357 1,646,919 5,694,814 5,871,310
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Earnings (loss)
before the
following 2,761,696 (1,366,351) 7,912,005 (1,404,211)

Write off of
mineral resource
properties
and deferred
exploration
costs 5,396,955 - 5,396,955 -
----------------------------------------------------------

Earnings (loss)
before taxes (2,635,259) (1,366,351) 2,515,050 (1,404,211)

Provision for
(recovery of)
future income
and mining taxes (926,032) (385,029) 1,700,696 (454,297)
----------------------------------------------------------

Net earnings
(loss) for
the period $ (1,709,227) $ (981,322) $ 814,354 $ (949,914)
----------------------------------------------------------

Net earnings
(loss)
per share:
- basic and
diluted $ (0.02) $ (0.01) $ 0.01 $ (0.01)


A net loss of $1,709,227 was recorded in the fourth quarter of 2007 compared with a net loss of $981,322 in the fourth quarter of 2006. The fourth quarter loss is mostly due to the write off of $5,396,955 of deferred exploration costs incurred on the Foy Mouth Property, as the Company has terminated the option agreement with Xstrata. These expenditures were mostly incurred prior to 2007 and did not have a material impact on the 2007 cash flow. For the year ended December 31, 2007, the Company recorded net earnings of $814,354, or $0.01 per share, compared to a net loss of $949,914, or $0.01 per share in 2006.

Sales revenue from the sale of nickel, copper and cobalt for the three month period ended December 31, 2007 (the "fourth quarter of 2007") increased by $7.1 million (86%) compared with the three month period ended December 31, 2006 (the "fourth quarter of 2006"). Higher nickel and copper metal sold of 136% and 73%, respectively, offset by a reduction in the realized nickel price of 7% and a weaker U.S. dollar compared to the Canadian dollar, accounted for this increase.

On a full year basis, the 2007 revenues increased by $28.0 million (97%) over 2006. Higher volumes of nickel and copper metal sold of 56% and 53%, respectively, along with a 38% increase in the realized average nickel price accounted for this increase, which was partially offset by a stronger Canadian dollar.

The following table sets out selected sales information for the periods indicated:


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4th Q 2007 4th Q 2006 2007 Total 2006 Total
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Sales by Payable Metal
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Nickel - pounds 1,032,334 436,899 3,082,481 1,972,657
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Copper - pounds 631,287 365,330 2,005,190 1,309,500
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Cobalt - pounds 18,373 9,286 54,557 39,650
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Average price
received US$/lb
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Nickel $12.40 $13.36 $14.67 $10.61
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Copper $3.25 $3.15 $3.09 $3.01
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Cobalt $32.36 $18.19 $28.43 $15.57
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Average Exch. Rate
Realized
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US $ 1 equals
Canadian $ $0.9794 $1.1374 $1.0650 $1.1254
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Mine operating costs, including treatment and refining charges, increased by 48% to $10.4 million in the fourth quarter of 2007 from $7.0 million in the fourth quarter of 2006. Higher tonnes treated (79%) and an overall increase in manpower of 23% at the Lockerby Mine, mostly accounted for the increase in operating costs. A nickel bonus of $941,000 is included in the fourth quarter of 2007 operating costs. In the fourth quarter of 2006, there was no nickel bonus. The bonus is defined in the Company's collective agreements and is tied to the price of nickel.

On a year-to-date basis, mine operating costs, including treatment and refining charges, increased by 79% in 2007 compared to 2006. The 2007 year was for the full 12 months, whereas 2006 only included costs for 9 months. Higher tonnes treated (28%), and an overall increase in manpower of 23% at the Lockerby Mine, mostly accounted for the increase in operating costs. A nickel bonus of $3,975,576 is included in the 2007 operating costs, whereas in 2006, the nickel bonus was $414,000.

General and administrative expenses in the fourth quarter of 2007 and for the year ended December 31, 2007, decreased by 32% and 24%, respectively, compared to the same periods for 2006. The lower 2007 expenditures reflect an overall reduction in costs. The 2006 expenditures included severance and termination costs of approximately $213,000 as a result of the management changes made during the year.

The higher stock-based compensation costs in the fourth quarter and for the 2007 year reflect the fair value of options granted that have vested in the current period. The Company uses the Black-Scholes pricing model in the valuations of the options.

Debenture and other interest expense in the fourth quarter of 2007 and for the year ended December 31, 2007 have been substantially reduced due to the repayment of the Series A Debentures on June 1, 2007. The interest expense in the fourth quarter mostly reflects the interest on advances received from Xstrata on the ore delivered to their facilities and a one time interest charge on the Part XII.6 tax regarding the timing of flow through expenditures.

Interest and other income is mostly made up of interest earned on term deposits. The higher interest income in 2007 compared to 2006 results from the Company having substantially higher cash balances in 2007 to invest.

Lockerby Mine Operations

During 2007, 124,492 tonnes of ore were delivered to the Xstrata treatment facilities, an increase of 26,883 tonnes, or 27%, over the 97,609 tonnes of ore delivered in 2006. Payable metal content in ore for 2007 is estimated to be approximately 3,259,095 pounds of nickel (an increase of 33% over 2006) and 2,185,023 pounds of copper (an increase of 36% over 2006).

Selected operating statistics for the twelve month period ended December 31, 2007 compared to the total 2006 year are as follows:


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Item 1st Q 2nd Q 3rd Q 4th Q Total Total
2007 2006
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Ore Delivered
to Mill (tonnes) 21,564 35,343 36,308 31,277 124,492 97,609
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Nickel Mill
Head Grade (%) 1.90 1.50 1.72 1.23 1.57 1.52
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Copper Mill
Head Grade (%) 1.06 0.95 0.91 0.78 0.92 0.88
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Payable Nickel
(pounds) 699,622 878,866 1,032,334 648,273 3,259,095 2,444,316
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Payable Copper
(pounds) 433,409 640,733 631,287 479,594 2,185,023 1,609,261
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Payable Cobalt
(pounds) 11,821 16,526 18,373 12,705 59,425 47,487
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Mine operating
cost per tonne $354 $254 $239 $278 $268 $232
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Cash cost per
pound of
nickel (i) $10.42 $9.58 $8.60 $14.26 $10.13 $8.14
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(i) Cash cost per pound of nickel is net of other metal credits, and does
not include amortization of mining properties and equipment, but does
include the nickel bonus defined in the Company's collective agreements
which is tied to the price of nickel.


From the beginning of the year until the end of the third quarter nickel production increased and unit operating costs declined, a trend which was interrupted in the fourth quarter. In the latter period, failure of the wear plates in the 4300 Level crusher resulted in a shutdown of production while repairs were being made. During the fourth quarter production was sourced from lower grade areas which further reduced nickel production. Following completion of repairs to the crusher in late December, production including ore grades returned to planned levels.

Excepting for the reduced output in the fourth quarter, the operation demonstrated improved productivity over the course of the year, increasing mine daily production from under 300 tonnes per day at the beginning to 400 tonnes per day going into 2008. Development continued satisfactorily toward 65-3L, the source for much of 2008 production. A maintenance program for the mobile fleet was launched, and vacancies in the technical and supervisory staff levels were filled.

For the full year the mine achieved a cash operating margin of $146 per tonne milled. Metal prices are expected to remain strong, but are unlikely to be as robust as early 2007, and therefore the emphasis at the mine in 2008 will be to continue to drive costs down, and increase output so as to preserve these margins.

Development productivity improved somewhat in 2007 but still lags, and the resulting limit in the number of working areas and therefore operating flexibility, means production scheduling has been vulnerable to short term interruptions. New development scenarios are being examined for the East Zone in 2008, which should add to production plans. The forthcoming mine development plan for Lockerby Depth is being built around the latest resource estimate (January 16, 2008), and will result in a long term production schedule and capital plan for the mine infrastructure, along with increased production.

The value of the fourth quarter 2007 payable metal will be recorded as revenue based on settlement prices in the first quarter of 2008 as per the Company's revenue recognition policy. The Company has received an advance payment totaling $2,970,681 towards the final settlement of the fourth quarter ore delivered to Xstrata.

Life of Mine Planning

On January 16, 2008, First Nickel reported a 289% increase in Indicated Resources at the Lockerby Mine. This resource estimate, coupled with the recently completed drilling is being integrated into studies by outside engineering consultants to estimate the operating and development costs and economic value associated with extending one of the shafts to better exploit the expanded resources. At the same time a reserve estimate and life of mine plan is expected to be completed.

A feasibility study was completed on Premiere Ridge in July, and subsequently an additional round of metallurgical work was undertaken at Xstrata's Process Centre. Permitting was advanced, a closure plan prepared, and further detailed engineering was undertaken by year-end. Discussions with Xstrata are underway in early 2008 to finalize offtake agreement terms, following which the Company will make a decision on development.

Exploration Activity

Exploration programs continued to focus on the Company's two other Sudbury properties in 2007. The majority of the Company's exploration costs were expended on the Morgan-Lumsden and West Graham properties.

A total of 52 drill holes representing 17,400 metres of core were completed on 4 properties in 2007 (refer to the table below) and selected holes were surveyed using the latest in borehole geophysical techniques.

Diamond drilling statistics: January 1, 2007 to December 31, 2007


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SURFACE UNDERGROUND TOTALS

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# Holes Metres # Holes Metres # Holes Metres
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Lockerby 1 932 22 2,690 23 3,622
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Premiere 0 0 0 0 0 0
Ridge
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West Graham 21 5,190 0 0 21 5,190
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Dundonald 0 0
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Foy Mouth(a) 2 980 0 0 2 980
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Morgan- 6 6,853 0 0 6 7,608
Lumsden(a)
---------------------------------------------------------------------------
TOTALS 30 13,955 22 2,690 52 17,400
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The year also marked an expansion of exploration beyond the Sudbury Basin with the staking of unpatented mining claims in Eastern Ontario. The Company staked in excess of 7,000 hectares of claims within this area.

The Company and Pacific Northwest Capital Corp entered into a 50:50 Joint Venture Agreement on the Raglan Hills Property in southeast Ontario.

The Company optioned the Dundonald Property to Avion Resources Corp.

The Company provided Xstrata Nickel with formal notification to terminate the Foy Mouth Option Agreement.

2008 Outlook

For 2008 the Company has previously issued guidance (February 12, 2008 press release) whereby the Company expects to produce between 3.8 and 4.4 million pounds of payable nickel, and between 2.3 and 2.7 million pounds of payable copper. The Company has budgeted $17 million for development and capital improvements at the Lockerby Mine and expects to spend approximately $7 million on exploration, the majority of which will be spent on targets around the existing Lockerby Mine infrastructure, Lockerby East and footwall areas.

The engineering and technical investigations for a new life of mine development and production plan, with the goal of determining the investment capital needed to substantially increase mine production, extend the mine life, and significantly improve operating efficiencies continues.

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.

FOR FURTHER INFORMATION PLEASE CONTACT:

First Nickel Inc.
William Anderson
President & CEO
(416) 362-7050
(416) 362-9050 (FAX)
Email: wanderson@firstnickel.com
Website: www.firstnickel.com