First Nickel Inc. has announced that the Lockerby nickel/copper mine, located in the Sudbury basin in Ontario, is being restructured in order to reduce costs, increase exploration and extend mine life. In 2013, the Company disclosed that, as a result of low nickel prices, ramp development below the 6800 level would be suspended. The Company has also said that if a decision was not made to restart ramp development, Lockerby would cease mining operations in 2015.

In December 2014, the Company concluded that, unless costs could be substantially reduced, developing the mine below the 6800 level would be uneconomic based on the current cost structure. The Company has recently engaged Mr. Vern Baker as Vice President, Sudbury Operations. Mr. Baker was most recently President of Duluth Metals and was previously the Vice President of Operations of FNX Mining in Sudbury.

He has a track record of leading effective change in underground mines, keeping mines operating where they would have otherwise been closed. Mr. Baker, together with the mine leadership team, undertook a review of the Lockerby Mine to determine whether it could continue operating in a safe manner with a lower cost basis. This work has resulted in a restructuring plan that reduces costs to a level that will enable FNI to continue to operate the Lockerby Mine in a sustainable manner, preserving the jobs of 115 FNI employees.

The Plan was recently reviewed and approved by the FNI board of directors. The Plan is founded on productivity improvements to be realized through a strong focus on basics and essential work, and is expected to allow a reduction in costs while maintaining relatively consistent nickel production. Cost reductions and productivity changes require a 30% reduction in FNI personnel, and a 75% reduction in third-party contractor personnel, for an overall workforce reduction of 45%.

Costs at the Toronto corporate office are also being reduced as part of the Plan. The expected reduction of costs at the Lockerby Mine has resulted in a decision to recommence the ramp development below the 6800 level to reach the 7100 level in the first half of 2016. The underlying mine plan is essentially unchanged from the 2012 Technical Report.

The Company expects to file a new Technical Report on the Lockerby Mine during the first half of 2015. Production in 2015 is not expected to be significantly impacted and is expected to continue through 2016. FNI plans to release 2015 production and cost guidance later in January.

The Plan also includes the restart of exploration diamond drilling at Lockerby, with a planned 6,300 metres of underground exploration drilling in 2015 and 7,200 metres in 2016, targeting increased resources/reserves and increasing mine life.