Positive Results From the Acoje Pre-Feasibility Study in the Philippines

European Nickel PLC notes the positive pre-feasibility study results on the Acoje deposit in the Philippines, announced today by Rusina Mining NL. European Nickel and Rusina will now commence a definitive feasibility study (“DFS”), which is due for completion by late 2009.

European Nickel will, pursuant to the terms of the joint venture, earn a 40% economic interest in the Acoje deposit, located on Luzon island, by spending US$10 million on the metallurgical heap leach trial, engineering design and permitting, following which Rusina will hold a 40% interest and the Philippine partner, DMCI Mining Corporation, will hold 20%.

The PFS results demonstrate an economically viable nickel laterite project using European Nickel’s heap leach technology producing an estimated 24,500 tonnes a year of contained nickel and 930 tonnes of contained cobalt. The Acoje project currently has a JORC indicated resource of 30.76 million tonnes at 1.12% nickel and 0.05% cobalt (at a 0.8% nickel cut-off for saprolite and a 0.9% nickel cut-off for limonite) giving the project an initial mine life of ten years. Mining will be at a rate of three million tonnes per annum, with a low strip ratio of 0.46, and cash costs are estimated at US$3.10 per pound of nickel (at US$6/lb nickel), net of by-products including a refining charge of 25% of the nickel price and a cobalt price of US$10/lb. Further JORC inferred resources have been identified at Acoje and the Zambales Chromite deposit, which are expected to extend the mine life beyond 20 years and are expected to be confirmed to JORC indicated resource levels during the DFS.

The Acoje project’s total development cost is estimated at US$498 million, including infrastructure and working capital, which equates to a capital cost per annual pound of nickel produced of US$7.76. The project has an ungeared post-tax Net Present Value of US$375 million (at a 10% discount rate), an Internal Rate of Return of 28.3% and a three year payback period. Annual sales, based on a long term nickel price of US$6.00 per pound, are forecast at US$260 million, including by-product credits which would generate US$108 million of free cash flow annually.

Commenting on the PFS, Simon Purkiss, Managing Director of European Nickel, said “The positive economics shown by the Acoje pre-feasibility are very encouraging and demonstrate the competitive edge of the heap leach process. The ability to utilise all the engineering design work from the Caldag project at Acoje will cut the development time of the project quite significantly.”