CNI Continental Nickel Limited

Continental Nickel Limited (TSX VENTURE:CNI) ("CNI" or the "Company") is pleased to advise that the Technical Report supporting the recently released results of a Preliminary Economic Assessment (Press Release October 5, 2011) has been filed with SEDAR.

The Preliminary Economic Assessment ("PEA") delivered positive results for the development of its Ntaka Hill Nickel Project ("Ntaka Hill" or the "Project"). Ntaka Hill is part of the 75:25 Nachingwea exploration joint venture property in southern Tanzania with IMX Resources Limited of Australia.

Highlights

--  Total after tax NPV for the Base Case, which consists of all open pit
    mining is US$207M. 
--  Total life of mine forecast production for the Base Case of 376 million
    lbs of nickel contained in high grade concentrate, based on Mineral
    Resources announced 15 April 2011. 
--  Low capital cost for the project reflecting the low infrastructure
    requirements and staged development. 
--  Initial scale of the project sized to suit extraction of high grade near
    surface Measured and Indicated Resources in the first four years
    followed by an expansion, which will be at a scale to suit the resources
    in the Sleeping Giant zone which is still the subject of step-out
    drilling. 
--  Overall mine life in excess of 12 years. 
--  Excellent metallurgical performance (previously announced in detail 15
    September 2011) delivers the possibility to attract a premium for the
    concentrate off take. 

Immediate Upside

--  Previous drilling of the Sleeping Giant zone showed the presence of
    additional disseminated mineralisation that is not included in the
    current resource estimate. 
--  Results of the PEA indicate that this additional disseminated
    mineralisation is economic to treat. 
--  A Sensitivity Case based on an allowance for the potential tonnage and
    grade of this additional disseminated mineralisation contained within
    the Base Case open pit indicated the possibility of increasing contained
    nickel production by 20% and greatly improving project after-tax NPV by
    US$100M. 
--  The current step-out drilling program continues to provide positive
    results on the Sleeping Giant zone which also includes further wide
    intersections of disseminated mineralisation within the Base Case pit
    shell. These results, along with full analysis of the already identified
    disseminated mineralisation, will be used to update Mineral Resources
    and the economic assessment at the beginning of the second quarter of
    2012. 

Mr. David Massola, President and CEO, commented "the issuing of the full Technical Report on the study provides all the details on the economic assessment that has been carried out on the Ntaka Hill Project. Along with this it clearly outlines the development program which is aimed at moving towards the next stage of project evaluation and optimisation to realise the upside that has been identified."

"The next objective for the project evaluation is to update this economic assessment and technical report in light of the current step-out drilling on the Sleeping Giant zone and upcoming mineral resource update. This mineral resource update will also incorporate the understanding of the project economics that were gained from this initial assessment. We are confident that these updates will demonstrate significantly increased return from the project"

Additional detailed information on the PEA is contained in the October 5, 2011 Press Release and the Technical Report available on SEDAR.

Next Steps

Based on the results of this PEA, CNI's management and board are committed to continuing the evaluation of the Project. Activities that are currently underway, which include drilling to secure additional metallurgical samples, metallurgical test work, environmental baseline studies and the preparation of the environmental scoping study will position the project for fast track development.

Following the completion of this year's step-out drilling the Mineral Resource and PEA will be updated. The company is targeting early 2012 to release the results of this work.

The preliminary economic assessment was compiled by Roscoe Postle Associates Inc. ("RPA"), Mineralurgy Pty Ltd ("Mineralurgy") and Lycopodium Minerals Pty Limited ("Lycopodium"). The key consultants involved in the studies are described the October 5, 2011 press release, in the "Qualified Persons" section and in the technical report. The preparation of the study was managed by Stewart Watkins, CNI's Study Manager.

All qualified persons have reviewed this press release and consented to the inclusion of the data in the form and context in which it appears.

Note: All cases in this Preliminary Economic Assessment are preliminary in nature and include both Indicated and Inferred Mineral Resources. Inferred Mineral Resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is no certainty that the Preliminary Economic Assessment will be realized.

About Continental Nickel Limited

Continental is focused on the exploration, discovery and development of nickel sulphide deposits in geologically prospective, but under-explored regions globally. The Company's key asset is its 75% interest in its Nachingwea property in Tanzania, where Mineral Resources (Measured and Indicated) have been estimated at 60,900 tonnes of contained nickel, and an additional 131,000 tonnes of contained nickel in Inferred Mineral Resources (CNI press release April 15, 2011). The project is a 75:25 exploration joint venture between the Company and IMX Resources Limited.

The Company also has an option to joint venture on the St. Stephen project in New Brunswick, Canada where the 2010 diamond drill program discovered new Ni-Cu sulphide zones.

As at the date of this release, the Company has 42,738,508 common shares issued and outstanding (50,956,914 on a fully-diluted basis) and trades on the TSX Venture Exchange under the symbol CNI. The Company remains well funded with over C$13.6 million in the treasury as at June 30, 2011.

On behalf of Continental Nickel Limited

Dave Massola, President and Chief Executive Officer

CAUTIONARY STATEMENT: This News Release includes certain "forward-looking statements". All statements other than statements of historical fact included in this release including, without limitation, statements regarding potential mineralization, potential or estimated metal recoveries, resources and reserves, exploration results, future plans and objectives of Continental Nickel Limited, is forward-looking information that involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate and actual results and future events could differ materially from those anticipated in such information. Important factors that could cause actual results to differ materially from Continental Nickel Limited's expectations are the risks detailed herein and from time to time in the filings made by Continental Nickel Limited with securities regulators.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

Contacts: Continental Nickel Limited Dave Massola President and Chief Executive Officer (905) 815-0533 Ext. 228 (905) 815-0532 (FAX) Continental Nickel Limited Stewart Watkins Vice President Projects +61 403 242 954info@continentalnickel.comwww.continentalnickel.com

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