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ASX ANNOUNCEMENT

11 March 2022

FINANCIAL REPORT HALF YEAR ENDED 31 DECEMBER 2021

Pacific Nickel Mines Limited (ASX Code: PNM) (Pacific Nickel or Company) provides its Financial Report for the Half Year ended 31 December 2021.

Authorised by the Board.

For further information please contact:

Mr. Geoff Hiller

Executive Director & CEO

Mr. Andrew J. Cooke

Company Secretary

Email: acooke@pacificnickel.com

Please visit the company's website at www.pacificnickel.com

Pacific Nickel Mines Limited ABN 86 075 613 268 Level 4, 283 George Street, Sydney NSW 2000, Australia PO Box R1295, Royal Exchange NSW 1225, Australia

Email: info@pacificnickel.com

www.pacificnickel.com

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Directors' report
Auditor's independence declaration
Consolidated statement of profit or loss and other comprehensive income Consolidated statement of financial position
Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements Directors' declaration
Independent auditor's review report
Page
A.B.N 86 075 613 268
INTERIM FINANCIAL REPORT
FOR THE HALF YEAR ENDED 31 DECEMBER 2021

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personalThis Interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2021 and any public announcements made by Pacific Nickel Mines Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

For

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Mr T Cuthbertson (Non-ExecutiveChairman) Mr J. Dean (Non-ExecutiveDirector)
Mr G Hiller (Executive Director)
Mr R Thomson (Non-ExecutiveDirector)

Pacific Nickel Mines Limited

ABN 86 075 613 268

and Controlled Entities

DIRECTORS' REPORT

DIRECTORS' REPORT

onlyYour directors present their report on the consolidated entity consisting of Pacific Nickel Mines Limited ("Pacific Nickel" or the "Company") and the entities it controlled (together, the 'Group') at the end of, or during, the half-year ended 31 December 2021 ("Period").

DIRECTORS

The names of the Pacific Nickel's directors in office during the half-year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated.

useREVIEW OF RESULTS AND OPERATIONS

During the Period the Group's main business activity was the development of nickel laterite deposits in the Solomon Islands.

SOLOMON ISLAND NICKEL PROJECTS

Kolosori Nickel Project (80%) Solomon Islands

The Kolosori Nickel Project ("Project") is an advanced stage direct shipping ore nickel laterite project with excellent potential for development. The project has several positive aspects including its close proximity to the coast, no processing requirements, low capital route to direct shipping ore production and local landowner support.

The Company has focused on development drilling, feasibility work and regulatory approvals for the Project as follows:

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• Initial development drilling program completed with 83 holes drilled. 11 of the 83 holes drilled were for metallurgical

test work and were distributed across the proposed first mining area to ensure a representative sample. The other

72 holes drilled formed the first stage of infill holes designed to increase the confidence level of the current Mineral

Resource in preparation for the development of the project;

• The next phase of development drilling included approximately 150 holes. This program commenced in August 2021

and was completed in November 2021. The program has been designed to increase the confidence in the resource

estimate in preparation for financing and the development of the project;

• Resindo Resources and Energy Group ("Resindo") completed a financial and technical study on the Kolosori Project

for the lodgement of a mining lease application. The mining lease application was submitted in August 2021.

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• The Company lodged an environmental and social impact assessment ("ESIA") required for the development consent.

The development consent was approved in December 2021 by the Environment and Conservation Division of the

Solomon Islands Ministry of Environment;

• The results of scoping study of the Project was announced to the ASX on 18 November 2021;

• The Company initiated a definitive feasibility study for the Project; with many of the key infrastructure components

already well advanced. The definitive feasibility study is expected to be completed around April 2022.

• The Company began initial discussions with a number of potential financiers and is also reviewing potential nickel

offtake arrangements for the Project; and

• An Early Works Program commenced in December 2021 and was completed by the date of this Report.

Scoping Study for Kolosori Nickel Project

The Scoping Study, which was announced on 18 November 2021, was conducted by a group of leading independent consultants from Australia and Indonesia including Resindo and Mining One, overseen by in-house Company personnel who are experienced in mining projects in the region.

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The Company planned a test pit located in proposed mining area nearest to the proposed wharf area. The exploration team has drilled grade control holes in the area of this pit. The grade control holes are closely spaced (approximately 10 metres apart) and will enable a reconciliation of the grades from the drilling compared to the grades from the mined material.
Test Pit
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Carry out a geotechnical assessment of the proposed wharf site; Carry out a test pit for mining;
Prepare a temporary camp including fuel tanks;
Carry out a detailed environmental survey within the main project infrastructure areas; Assess quarry sites to provide construction materials for wharf and road construction; and
Facilitate site visits in December 2021 and January 2022 for third party contractors to assess port construction, barging, site infrastructure, logistics and mining activities.
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Production Target of 6.23m tonnes at 1.5% Ni for 93,450t of contained nickel
Production Target contains 43% Measured and Indicated Resources with more than 75% of the Production Target over the first 2.5 years from Measured and Indicated Resources
The shallowness of mining allows flexibility to mine the Measured and Indicated Mineral Resource as early as possible where required
Ability to mine higher grades in excess of 1.6%Ni early in mine schedule First production targeted in late 2022
Capital cost estimate between US$18m and US$20m
Site operating cost estimate in the range US$15 to US$17/wmt Barging costs in the range US$4.50 to US$5.50/wmt Shipping cost of around US$38/wmt
Saprolite shipped to China for the RKEF plants for end use in the stainless steel industry Pricing of 1.5% Ni saprolite US$85/wmt (CIF China)
Pricing of 1.6% Ni saprolite US$91/wmt (CIF China) Capital payback approximately one year
The key assumptions and result inputs of the Scoping Study were:
usepersonalEarly Works Program
The Company commenced an Early Works Program in December 2021, which was designed to allow the Company and its contractors to establish a site base at Kolosori in preparation for the main construction program targeted for the middle of 2022 subject to the completion of the definitive feasibility study, regulatory approvals, and financing.
The scope of the Early Works includes the following: For
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Shallow open pit mining operation
No processing or tailings dams required (as it is a direct ship ore) Initial haul road from first pit to the port area less than 1 km
Stockpile management a key to moisture control and loading DSO onto barges Barge ore less than 1km to 50,000 to 60,000 tonne geared ships for export Production of 1.3 wet mtpa based on port throughput
onlyThe key parameters of the Scoping Study were as follows:
REVIEW OF RESULTS AND OPERATIONS (CONTINUED)

Pacific Nickel Mines Limited

ABN 86 075 613 268

and Controlled Entities

DIRECTORS' REPORT (CONTINUED)

The Company engaged a local contractor to carry out the geotechnical work for the Project. The main focus of the Early Works is to carry out an assessment of the ground conditions at the wharf site. The results from the test pit and the geotechnical work will feed into the definitive feasibility study work currently being undertaken by the Company and Resindo.
Geotechnical Work
for barging and shipping.
At the date of this Report the test pit had been completed.
The test pit will also provide the Company with valuable information regarding the ore characteristics with respect to mining productivity and moisture content. The material from the test pit will be stockpiled so that moisture content can be analysed over time to measure its drying characteristics as the moisture content of the ore is an important consideration

Pacific Nickel Mines Limited

ABN 86 075 613 268

and Controlled Entities

DIRECTORS' REPORT (CONTINUED)

REVIEW OF RESULTS AND OPERATIONS (CONTINUED)

onlyuseJejevo Nickel Project (80%) Solomon Islands

The Jejevo Nickel Project is an advanced stage direct shipping ore nickel laterite project with excellent potential for development.

The Company owns Pacific Nickel Mines (SI) Limited which holds an 80% shareholding in Pacific Nickel Mines Varei Limited, which holds Prospecting License PL 01/18 located on the south coast of Santa Isabel Island in the Solomon Islands. The personalremaining 20% of Pacific Nickel Mines Varei Limited is owned by traditional land owners. The Jejevo Nickel Project is located

within the PL 01/18 project area.

On 4 October 2021, PL 01/18 was renewed by the Solomon Islands Minister of Mines, Energy and Rural Electrification for a period of two years commencing 4 October 2021.

No exploration work was conducted at the Jejevo Nickel Project during the Period.

On 7 October 2021 the Company announced an initial JORC (2012) Mineral Resource estimate for the Jejevo Nickel Project (Jejevo). The total JORC mineral resource estimate at Jejevo is 7.82 million tonnes at 1.46 % Ni at a 1.2% Ni cut off. In addition, there is a conceptual resource extension target at Jejevo of a further 3.0 million to 5.0 million tonnes at 1.2% to 1.6% Ni.

The Mineral Resource estimate will form the basis of a scoping study at Jejevo, which is expected to be carried out in 2022.

The Company notes that there is a legal case relating to a judicial review of decisions made by government authorities in the Solomon Islands in relation to the awarding of PL 01/18 in 2018. At the date of this Report these legal proceedings are ongoing. The Company has legal advice that the case lacks merit.

EPM 18908 (100%) Queensland Australia

ForNo exploration work was conducted at EPM 18908 during the Period.

CORPORATE

As part of a recent internal restructuring by the Company, the transfer of PL 05/19 from Kolosori Nickel (SI) Limited to Pacific Nickel Mines Kolosori Ltd (PNMK), a subsidiary entity of the Company incorporated in the Solomon Islands, was approved by the Mines and Minerals Board in the Solomon Islands on 22 September 2021. The Company owns an 80% interest in PNMK,

with the remaining 20% interest held by local landowners.

On October 4 2021, the title to PL 01/18 was transferred to Pacific Nickel Mines Varei Limited (PNMV), a subsidiary entity of the Company incorporated in the Solomon Islands, as part of the Company's recent internal restructuring. The Company holds an 80% interest in PNMV, with the remaining 20% interest held by local landowners.

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Pacific Nickel Mines Ltd. published this content on 11 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 March 2022 04:05:01 UTC.