Both the copper-nickel precious metal LFD and the copper-nickel Rob’s Deposit were the focus of extensive exploration activities in 2008. An advanced exploration access heading was driven into the LFD from Xstrata Nickel’s Craig Mine in 2007 and a 15,027 ton bulk sample was removed from the LFD early in 2008. For the balance of the year, detailed drilling of the LFD continued from underground drill stations on the Craig Mine 4000 Level crosscut. Most of the 98,181 ft of LFD drilling consisted of detailed drilling from 4000 Level platforms to support an initial resource estimate for a 250-ft vertical slice of the LFD hinged on the 4000 Level access.

The initial resource estimate for only this limited portion of the LFD yielded 687,000 tons of indicated mineral resource grading 8.8% Cu, 1.4% Ni and 7.8 g/t TPM. The detailed drilling also expanded the original mineral envelope in this part of the LFD indicating an extensive network of secondary and tertiary veins (see Figure 5), which will require more detailed drilling to be included in the mineral resource estimate.

Figure 5: Plan of Detailed 4000 Level Drilling at LFD

In addition, during 2008, underground drill holes were completed from the Craig 4300 Level designed to expand the LFD. All these holes were targeted to test the LFD extension at least 400 ft down-dip and to the west of the known lower limits of the Deposit. All holes intersected mineralization with the best results from hole FNX 7156, which cut 16.0 ft grading 4.2% Cu, 1.0% Ni and 2.8 g/t TPM and hole FNX 7160 averaging 5.1% Cu, 8.0% Ni and 13.2 g/t over 4.3 ft.

The 15,027 ton LFD bulk sample was brought to surface. Approximately two-thirds of the bulk sample were crushed and sampled, confirming an average grade of 8.3% Cu, 1.4% Ni and 8.8 g/t TPM. Later in 2008, 10,683 tons of LFD bulk sample was sent to the third party mill for test processing and the remaining 4,525 tons remain available for further metallurgical testing.

Additional underground drilling in 2008 was focused on the zone between Rob’s Deposit and the top of the LFD. Additional drill platforms were established as the new access ramp was driven from the Levack Mine 2650 Level toward the Upper LFD. Holes from these drill platforms provided necessary data in a previously poorly-tested zone between the copper-nickel Rob’s Deposit and the top of the copper-precious metal LFD. Most of the holes intersected multiple sharp-walled veins enriched in either copper or nickel mineralization. For example, hole FNX 7248 cut 5.6% Cu, 2.8% Ni and 0.5 g/t TPM over 14.7 ft and hole FNX 7245A cut 12.2 ft averaging 3.5% Cu, 3.4% Ni and 0.6 g/t TPM. These grades are typical of the mineralization expected in Rob’s Deposit.

The exploration focus for 2009 at Rob’s Deposit and the Upper LFD is to effectively delineate the transition zone between the two deposits from new drill platforms established as the 2650 Level access ramp is driven toward the 4000 Level. The expected 70,000 ft of drilling in 2009 will include testing the ore at 50 ft centres to allow for resource estimates to support production start up in 2010.