First Nickel drills Dundonald South (February 21, 2005)

Ongoing drilling on the Dundonald nickel property, near Timmins, Ont., continues to return encouraging results for First Nickel (FNI-T).

Highlighting results form the latest batch of 14 holes on the Dundonald South zone was hole S05-30, which yielded 3 metres (beginning 123.5 metres below surface) running 11.2% nickel, including 1.3 metres (from 125.2 m) of 23.7% nickel, 0.64% copper and 0.34% cobalt.

Beginning at a depth of 195.5 metres, the hole yielded a further 1.6-metre interval averaging 8.5% nickel, followed by 4.9 metres (from 219.1 m) of 2.3% nickel. The hole cut Dundonald South’s E, F, and G zones, and was terminated while still in mineralization. First Nickel plans to extend the hole as its continues to drill this little-explored portion of Dundonald South.

Better results were also seen in hole S05-40, which cut a 4.85-metre interval (from 85.9 m) grading 5.9% nickel, including the first 1.3 metres that contained 11.5% nickel and 4.5 grams combined platinum, palladium and gold per tonne in the G zone.

Platinum group element (PGE) assay results for both holes are pending.

The remaining holes generally returned grades of around 1% to 4% nickel over intercepts measuring 1-3 metres. PGE values from the 8 holes assayed run from 0.2 to 2.8 grams combined platinum, palladium and gold.

Assays results for holes S05-31, and S05-33 to 39 are pending.

To date, First Nickel has sunk 77 holes for some 16,800 metres worth of diamond drilling at Dundonald; nearly all of the holes have cut significant nickel.

Based on the latest results, First Nickel is planning a program of line cutting and detailed ground geophysics focused on the 1.2-km eastward continuation of the favourable host ultramafic volcanic package. Diamond drilling will follow up on any positive results.

The company now believes that the E to H sulphide zones may represent a structural repetition of the A to D zones, with zones A to C, and E to G being the most promising.

Looking ahead, First Nickel plans include a permitted stripping program designed to remove some 300,000 cubic metres worth of surface material from the eastern portion of the Dundonald South zone this summer, provided that continued drilling indicates that the high-grade material encountered so far continues to the bedrock-overburden interface. Bulk sampling would follow up on positive results.

In the nearer term, the company will begin drilling on the Dundeal nickel zone, 1.2 km to the north, early next month. The initial aim is to test the near-surface, up-plunge projection of the existing zone, which has seen only limited drilling.

Previous drilling by Falconbridge (FL-T) outlined a zone of ultramafic volcanic-associated nickel mineralization along 1.5 km of strike. Included is an 800-metre-long core zone that extends to a depth of at least 700 metres; the zone remains open at depth.

Historic drill results include 4.7 metres grading 2.1% nickel, 4.25 metres of 2.4% nickel, and 3.9 metres of 3% nickel. Another hole yielded 2.6% nickel plus 2 grams combined platinum-palladium-gold over 2 metres. The intersections are centred around 400 metres below surface.

Dundonald South strikes east and dips steeply to the south; the northern portion comprises five sub-parallel zones, with another three in the southern portion. The property is situated around 25 km from Falconbridge’s Kidd Creek metallurgical facility.

First Nickel acquired the property early last year via a deal that saw Falconbridge granted an 18.4% stake in the junior. To maintain its interest, First Nickel must spend at least $1.75 million on the property by the end of 2005.

The latest drill results sent shares in First Nickel as much as 8 higher to 97 in morning trading in Toronto on Feb. 21.