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FIRST NICKEL INC. PRESENTATION OCT 2009

FIRST NICKEL INC. PRESENTATION OCT 2009. Forward Looking Statement

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FIRST NICKEL INC. PRESENTATION OCT 2009

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  1. FIRST NICKEL INC.PRESENTATIONOCT 2009

  2. Forward Looking Statement Some of the statements contained in this presentation are “forward-looking statements”, within the meaningof Section 21E of the Securities Exchange Act of 1933. such as statements that describe First Nickel’s expectations in regard to project start-up, expected cumulative cash flows, IRR, pay back period, mineral reserve and resource estimates, expected revenue and profit, development performance rates, expected US/Canada exchange rate and mine production estimates. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “does not anticipate”, or “believes” or variations of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Since forward-looking statements are not statements of historical fact and address future events, conditions and expectations, forward-looking statements by their nature 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 copper, nickel and cobalt prices, US/Canada exchange rate and mine operating costs. The forward-looking statements included in this presentation represent First Nickel’s views as of the date of the presentation. While First Nickel anticipates that subsequent events and developments may cause First Nickel’s views to change, First Nickel specifically disclaims any obligation to update these forward-looking statements unless required by law. 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 presentation. 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.

  3. Owns and operates the Lockerby Nickel-Copper mine in the world class Sudbury district Robust high grade reserve to support a development plan for production 2011-2016+, with additional resources defined and ready for development Very capable and experienced operating and exploration teams Major shareholder with established resource industry investment record OVERVIEW

  4. TSX- listed “FNI” • Market Cap (Oct 19) $19 M • Shares outstanding – 9/30/09 159,110,632 • Fully-diluted 164,789,490 • 52 week price range $0.035-0.195 • Working Capital – 9/30/09 $10.4M • Long term debt** US$10M ** Convertible Loan

  5. Management – W.J. Anderson Pres., CEO J. Del Campo, CFO G. Bilodeau, Vice President Operations Paul Davis, Vice President Exploration Board of Directors – T. Pugsley, Chairman W.J. Anderson, Pres., CEO R. Hallisey L. Hepburn D. Comba R. Whittall R. Cranswick We have a strong and capable management team with many years operating and exploration experience, and a strong board with diverse backgrounds

  6. Purchased from Falconbridge in 2005 for ~$8 million No milling facility needed – life-of-mine processing offtake agree-ment in place with Xstrata Nickel From 2006-08 FNI produced 9.4M lbs nickel, and 6.1M lbs copper while exploring and building the resource base Experienced strong management operating team in place Lockerby Mine – well-maintained mine with 30 year production history with demonstrated potential to discover more ore

  7. Lockerby mine has a hoisting capacity of ~1M tpy, two shafts from surface, an internal (#3) shaft, and a haulage ramp down to the current workings (65-3L)

  8. Lockerby Mine – When we purchased it we believed we would discover more ore. From 2006-2008 we grew the recoverable nickel contained within Indicated Resources from 8M lbs to 78 M lbs

  9. Lockerby Mine – 2008 – in the face of declining metal prices we placed the operation on care and maintenance. In that year the mine team achieved a number of performance goals which have built credibility for the future. • Achieved metal production of 3.8M lbs payable nickel in 10 months vs target of 3.8-4.1M for 12 months • Reduced cash cost per pound payable nickel to US$5.64/lb - 33% below budget • Reduced mine operating costs over the year so that in the last four months costs were down to $165/tonne – 30% below budget for the year

  10. Feasibility study prepared by GENIVAR consultants announced in March 2009 GENIVAR prepared an update to the study in October 2009 The new reserve grade is 22% higher than the previous reserve, thereby yielding better margins Study demonstrates robust economics Lockerby Mine 2009 – we concentrated on controlling care and maintenance expenses, and pursued further technical studies seeking to minimize risk by reducing capital and targeting higher margins by raising the cutoff grade

  11. Lockerby Depth Project Reserves – the grades and tonnage place the project as one of the best in the world at a development-ready stage * From “Technical Report and Feasibility Study on the Depth Zone of the Lockerby Deposit.GENIVAR Limited Partnership. April 10, 2009 Cut-off grade 1.5% NiEq NiEq = Ni% +(0.32xCu%)+(0.53xCo%)

  12. Lockerby Depth Mine Plan – the mine design is simple and conservative – the existing ramp haulage infrastructure will be extended, the mine development and extraction of the ore embraces a conservative geotechnical approach of transverse access, and the current mine ventilation layout will be extended and cooling capacity added.

  13. The mine design is conservative, encompassing primary and secondary transverse blasthole mining with backfill. • The Depth Zone has been delineated into two distinct zones; • Contact Zone • Hangingwall Zone Hangingwall Zone Contact Zone

  14. The stope sequencing requires primary stopes in the Contact zone to be mined first, which leads to higher grades at the start – the Contact zone reserves average 2.83% Ni Eq Primaries Secondaries (After Primaries are filled)

  15. Base Case Assumptions: Nickel price US$8.00 Copper “ US$2.75-3.00 Cobalt “ US$15.00 US$/C$ US$0.85 Capex Preprod C$37.6M Capex Sustaining C$32.2M C$69.8M Metal production 2011-2016+ Full production 800tpd/280,000tpy 51.7 M lbs payable nickel 34.4 M lbs “ copper ~1 M lbs “ cobalt Evaluation outcomes: IRR – 74% NPV @ 10% - C$67M Cumulative Cash Flow C$112M (Undiscounted, pre-tax) Cash Cost/lb Ni US$4.56 (net of Byproduct credits) Total Capital Cost/lb Ni US$1.15 Payback Period 14 Months The April feasibility study was updated in October 2009. Mine operating and capital estimates remained the same, but metal prices and exchange rates were adjusted as were treatment charges and revenue from PGE’s

  16. Lockerby Feasibility Update – Cash Flow Model – Base Case

  17. Lockerby Depth Project Risk - The project is most sensitive to US$/C$ exchange and metal price CCF Sensitivity (before taxes and financing) CCF Sensitivity (before taxes and financing) 180 250 160 200 140 120 CCF (M$) 150 CCF (M$) 100 80 100 60 40 50 20 0 0 7.00 7.25 7.50 7.75 8.00 8.25 8.50 8.75 9.00 0.70 0.75 0.80 0.85 0.90 0.95 1.00 Ni Price (US $ per pound) Exchange Rate (US $/C $)

  18. Project technical risks – we view these as low - the capital plan for Lockerby Depth is straightforward underground development at an existing mine with all services etc. in place… • FNI mine management and the supervisory team have extensive experience managing and running such projects, both as contractors and as owners • FNI has been operating the mine for over three years • The project in the capital development phase will be executed by contractors • There are high quality contract crews available for this work • The cost estimates and productivity expectations have been conservatively built and there will be opportunities to improve on outcomes and therefore reduce risk

  19. Assumptions: 10% increase in dev. rates 20% “ “ “ 20% decrease in dev. costs Outcomes: Capex Cum CF 68.1M 113.9M 66.5M 115.5M 64.5M 120.0M In the Update GENIVAR was asked to assess the impact that improvements in development performance would have on the project. Besides potentially shortening the payback period by up to 2 months there would be capital savings as well

  20. FNI has been very successful at both finding additional resources and converting these to reserves At present there are ~14M lbs contained nickel in Indicated resources, and ~23M lbs contained nickel in Inferred resources and these will increase and be assessed for mining in the next several years Lockerby Depth Project Upside – the Feasibility study is based on a reserve carved out of resources outlined in the past three years. We expect further conversion of resources to reserves in the current mine plan that will see a mine life well beyond 2016

  21. Lockerby mining in the future can potentially encompass Upper West, Lower Depth, and East Zone plus extensions.

  22. Lockerby – looking ahead we plan to continue to convert resources to reserves and integrate them into the mine plan …, which could add ~C$60-70M to overall cash flow, and some of that activity would likely overlap with the feasibility schedule, which would further improve economics

  23. First Nickel has a strong exploration group with an excellent track record at Lockerby and vicinity, a pipeline of projects in place and the experience and skills to source and generate new projects • Very successful and cost effective ongoing exploration at Lockerby • Taken West Graham property to advanced status by establishing a significant indicated resource • Generated new regional grassroots program in SE Ontario • Actively investigating new exploration/acquisition opportunities, domestic and international

  24. West Graham Property – adjacent to Lockerby, exploration has confirmed a significant resource • FNI will be vested at 70% on Dec. 31, 2009 • The property has no obligations to either XNI or Vale, hence the product can be sold anywhere • Metallurgical testing is ongoing • Footwall exploration potential

  25. Grassroots exploration – new projects in SE Ontario initiated in 2008, drilling in 2009 • Grassroots exploration program • Targets – Voisey’s Bay and Eagle style nickel copper PGE deposit • Over 40 knownnickel-copper occurrences • Under-explored region of Ontario Sudbury Sudbury Raglan Hills JV Raglan Hills JV Belmont Project Belmont Project Toronto Toronto

  26. Significant cuts in nickel production in 2008 Costs are increasing and new supply from S. hemisphere projects requires huge capital Nickel prices at >US$8.00 long term is reasonable Copper demand also fueled by China, India etc, with similar concerns over supply and cost of production Nickel and copper are our main revenue metals and we are confident the markets and demand for both of these will remain strong

  27. Our near term plans – Through a combination of very hard work and dedication from our people, coupled with the working capital facility secured in July 2009 the Company has emerged from the worst of the downturn with a well-constructed and economically strong business plan • We will focus on securing financing for Lockerby Depth and expect to launch the project in 2010 • Key team members are all on board and detailed engineering and other preparations in advance of a go ahead decision are underway • Exploration will continue through 2009, and on through 2010 at levels matching flow-through funding

  28. First Nickel’s long term vision…. We see the mining business as a sector that will fare better than many in the times ahead, we need and want to grow well beyond a single site operation. • We have the people to find, build, and manage mines • We will continue an organic growth track through our own exploration but realize that to achieve our goals will require deals for producing or near-production assets • The present is a good time to be seeking opportunities • The board is committed to a growth strategy, and we have the support of the largest shareholder

  29. Nickel-Copper miner Capital Development plan that is low risk, and modest in size Experienced operating and management team in place Growth-oriented Large shareholder available to lend financial support SUMMARY

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