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Continental Nickel Receives Final Assay Results from Nachingwea Nickel Project in Tanzania

Continental Nickel Limited (TSX VENTURE:CNI) has reported that it has received the final assay results from the remaining six diamond drill holes of its recently completed seven hole "Phase II" diamond drilling program at the newly discovered "Sleeping Giant" zone on the Nachingwea Project in Tanzania.

The project is a 75:25 Joint Venture between CNI and IMX Resources Limited ("IMX") of Australia. Highlights include drill hole NAD10-226 which intersected a high grade sulphide interval grading 3.97% nickel and 0.16% copper over 4.7 metres, from within a wider interval grading 2.28% nickel and 0.57% copper over 17.25 metres, at the northern limit of drilling. NAD10-226 is located approximately 200 metres north along strike of drill hole NAD10-220, which as previously reported (Press Release December 13, 2010), also intersected a high grade sulphide interval grading 2.58% nickel and 0.41% copper over 23.3 metres, including 5.01% nickel and 0.77% copper over 9.3 metres. The Sleeping Giant zone remains open in all directions.

Field activities from the Company's 2010 exploration program were completed in December 2010. With the encouraging early results from the Sleeping Giant discovery, the 2010 drill program was expanded to allow for the completion of an additional seven drill holes, totalling 2,036.4 metres. This "Phase II" program was designed to test for extensions to the zone along strike and up plunge to the north and up dip to the east of the original discovery drill holes. All seven drill holes intersected variable zones of largely disseminated sulphide mineralization, often associated with intervals of stringer to net-textured sulphide mineralization and occasional narrow intervals of massive sulphide mineralization corresponding to the Sleeping Giant Zone.

Sleeping Giant

Section 3500N

Drill holes NAD10-221 and 223 were drilled to depths of 298.8 and 220.8 metres, respectively, and were designed to intersect the Sleeping Giant zone up dip of drill hole NAD10-220. Both holes intersected intervals of disseminated sulphide mineralization corresponding to the Sleeping Giant zone. NAD10-220, as previously reported, intersected a 23.3 metre interval of disseminated, stringer to massive sulphide mineralization grading 2.58% nickel and 0.41% copper corresponding to the interpreted position of the Sleeping Giant zone. Higher grade intervals include 9.3 metres grading 5.01% nickel and 0.77% copper which includes a 2.65 metre interval of massive sulphide mineralization grading 13.63% nickel and 2.17% copper (Press Release December 13, 2010).

Drill Hole NAD10-221 intersected a zone of disseminated sulphides, corresponding to the Sleeping Giant zone, 150 metres up dip of NAD10-220. The zone grades 0.50% nickel and 0.12% copper over 20.3 metres, including a higher grade interval over 4.2 metres grading 1.34% nickel and 0.35% copper. Drill hole NAD10-223 drilled 90 metres up dip of NAD10-221 and intersected a 7.7 metre interval of disseminated sulphide mineralization grading 0.45% nickel and 0.17% copper.

With three holes completed on this section, the Sleeping Giant zone has been intersected over a 300 metre dip length, with both grade and thickness increasing down dip to the west.

Section 3400N

Drill hole NAD10-222 was drilled to a depth of 283.9 metres to intersect the Sleeping Giant zone up dip of drill hole NAD10-216 which had intersected a sulphide zone grading 0.50% nickel and 0.11% copper over 73.4 metres, including a higher grade interval of 1.22% nickel and 0.21% copper over 15.9 metres (Press Release October 16, 2010). NAD10-222 intersected a 14.75 metre interval of disseminated sulphides, approximately 80 metres up dip of NAD10-216, grading 0.52% nickel and 0.11% copper.

Similar to the drill results from section 3500N (described above), the three drill holes completed on this section (NAD10-211, 216 and 222) indicate the overall grade of the Sleeping Giant zone appears to be increasing down dip to the west.

Section 3600N

Drill holes NAD10-224 and 225 were drilled to a depth of 319.9 and 259.7 metres respectively and are located approximately 100 metres north along strike of drill holes NAD10-211, 216 and 222. Both drill holes intersected disseminated to stringer sulphide mineralization corresponding to the Sleeping Giant zone as well as several new disseminated sulphide zones above the Sleeping Giant. NAD10-224 intersected the Sleeping Giant zone starting at 238.0 metres down hole over a 33.0 metre interval grading 0.55% nickel and 0.12% copper, including a higher grade interval grading 1.00% nickel and 0.21% copper over 6.05 metres.

NAD10-225 was drilled approximately 90 metres up dip of NAD10-224 and intersected an 11.0 metre sulphide interval grading 1.12% nickel and 0.17% copper.

Section 3700N

Drill hole NAD10-226 was drilled to a depth of 255.1 metres, 100 metres north along strike of drill holes NAD10-224 and 225 and is the most northerly hole drilled on the zone to date. The drill hole intersected multiple sulphide zones, including a 17.25 metre interval of disseminated to stringer mineralization with occasional narrow massive sulphide intervals corresponding to the Sleeping Giant zone. The interval grades 2.28% nickel and 0.57% Cu over 17.25 metres and includes a higher grade interval grading 3.97% nickel and 0.16% copper over 4.7 metres. Several narrow, high grade intervals of massive and semi-massive sulphide veins from within the zone individually grade 8.04% nickel and 0.12% copper over 0.85 metres, 14.45% nickel and 0.40% copper over 0.6 metres and 5.52% nickel and 2.16% copper over 1.0 metres.

With the drilling completed to date, the Sleeping Giant zone has been intersected in eleven, wide spaced, drill holes over a 500m strike length and over a dip length of up to 300 metres. The zone is open in all directions and appears to be increasing in grade down dip to the west on several sections. In addition, drilling has intersected additional new zones of disseminated sulphide mineralization located above the Sleeping Giant Zone which require further exploration.

Craig MacDougall, President & CEO of Continental Nickel Limited, said, "The recent drill results continue to demonstrate the potential of the Sleeping Giant, both with respect to its expanding size as well as its potential to host higher grade mineralization. The zone remains open along strike in both directions and there are indications that the nickel grade may be increasing at depth. A key objective in 2011 will be to fully explore this rapidly developing new discovery once our field activities commence in April."

Next Steps

With assay results now received for all drill holes from the Sleeping Giant program, geological interpretation and 3D modelling of the zone is currently in progress in advance of a planned Mineral Resource Estimate.

Meanwhile, a revised Mineral Resource estimate for the Ntaka Hill area is currently in progress. The current NI 43-101 compliant Mineral Resources at Ntaka Hill (Measured and Indicated) total 3.1 million tonnes grading 1.31% nickel and 0.24% copper at a US$23/tonne Net Smelter Return cut-off (Press Release July 15, 2009). The study is being updated by URS/Scott Wilson of Toronto and the results are expected in February.

Assay results from a twenty-four hole reverse circulation drill program (totalling 2,257 metres) targeting regional exploration targets and completed in November, 2010 will be reported once they are fully received, validated and compiled.

Qualified Persons

The quality control, technical information and all aspects of the exploration program are supervised by Patricia Tirschmann, P. Geo., Vice President, Exploration for CNI. The information in this release was prepared under the direction of Craig MacDougall, P. Geo., President and CEO for Continental Nickel Limited. Both Ms. Tirschmann and Mr. MacDougall are qualified persons as defined by National Instrument 43-101.

Quality Control

The drilling was completed by Tandrill Limited of Tanzania. Drill core samples (NQ) are cut in half by a diamond saw on site. Half of the core is retained for reference purposes. Samples are generally 1.0 metre intervals or less at the discretion of the site geologists. Sample preparation is completed at the ALS Chemex preparation lab in Mwanza, Tanzania. Sample pulps are sent by courier to ALS Chemex analytical laboratory in Vancouver, Canada. Blank samples and commercially prepared and certified Ni sulphide analytical control standards with a range of grades are inserted in every batch of 20 samples or a minimum of one per sample batch. Analyses for Ni, Cu and Co are completed using a peroxide fusion preparation and ICP-AES finish (Analytical Code ME-ICP81). Analyses for Pt, Pd, and Au are by fire assay with an ICP-AES finish (Analytical Code PGM-ICP23).


Continental Nickel Limited

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