Continental Nickel Report Additional Assays From Ntaka Hill

Continental Nickel Limited "Continental" or "CNI" or the "Company" is pleased to report further assay results from its diamond drill program on the Nachingwea nickel-copper sulphide project ("Nachingwea") in Tanzania. The project is a 70:30 Joint Venture between CNI and IMX Resources Limited ("IMX") of Australia. Highlights include: 4.15% nickel and 0.49% copper over 5.35 metres, including a higher grade interval grading 10.04% nickel and 1.00% copper over 1.9 metres from a "step-out" diamond drill hole, NAD10-199 at L Zone. 

The Company is currently implementing a $4 million exploration program at Nachingwea. In the current program, thirty-five diamond drill holes, totalling 4,722.7 metres, were completed at Ntaka Hill, and one 266.1 metre drill hole was completed at Lionja, 8 kilometres to the south. Assay results have now been reported for fourteen of the thirty-six drill holes, including the results of nine holes totalling 986.7 metres reported herein. The assay results are provided below as Table I and a location figure may be viewed using the link provided with this release. The remaining assay results will be reported as they are received, compiled and validated. 

The Ntaka Hill drilling program was designed:

Currently defined NI 43-101 compliant, Measured and Indicated Mineral Resources, from six separate sulphide deposits (G, H, J, L, M and NAD013) at Ntaka Hill, total 3.1 million tonnes grading 1.31% nickel and 0.24% copper at a US$23 / tonne Net Smelter Return ("NSR") cut-off (Press Release dated July 15, 2009).

L Zone

The current Measured and Indicated Mineral Resources at L Zone (July 2009) are estimated at 221,000 tonnes grading 1.71% nickel and 0.32% copper. Two drill holes, totalling 201.8 metres, were positioned along strike to the north and to the south of the current resource limit to test for potential extensions of the mineralized zone.

Diamond drill hole NAD10-198 was drilled up-plunge, 50 metres to the north. This hole failed to intersect significant mineralization and the zone probably pinches out in this direction. 

Drill hole NAD10-199 was positioned to test for an extension of the high grade mineralization intersected 30 metres to the north in drill hole NAD08-124, which had intersected 5.47% nickel and 0.96% copper over 4.0 metres. NAD10-199 intersected a 5.35 metre mineralized interval grading 4.15% nickel and 0.49% copper, including 1.9 metres of massive sulphide mineralization grading 10.04% nickel and 1.00% copper. Bore hole electromagnetic ("BHEM") surveys have indicated that the high conductance plate associated with this zone is now largely tested.

This drilling has extended the high grade mineralization at least 30 metres to the south, increasing the total strike length of the zone to 180 metres. These results will be incorporated in a revised resource model for the L Zone.

M Zone

The current Measured and Indicated Mineral Resources at M Zone (July 2009), contained in a preliminary pit shell, are estimated at 344,000 tonnes grading 1.73% nickel and 0.38% copper. Three diamond drill holes totalling 318.4 metres were completed to test the potential for extensions to the deposit along strike to the north and south. 

Two drill holes were positioned at the northern end of M Zone to test for mineralization up-plunge and near surface. NAD10-193 was drilled approximately 25 metres up-dip above drill hole NAD08-169 which intersected 0.50% nickel and 0.08% copper over 9.0 metres (previously reported January 28, 2009). NAD10-193 intersected a wide zone of disseminated to net-textured mineralization grading 0.89% nickel and 0.22% copper over 21.0 metres, including higher grade intervals grading 1.20% nickel and 0.36% copper over 10.0 metres and 1.92% nickel and 0.22% copper over 2.4 metres. Drill hole NAD10-196 was positioned 50 metres along strike of NAD10-193 and did not intersect any mineralized rock.

Stainless steel tube drill hole NAD10-197 was drilled at the south end of the zone and intersected a narrow zone of disseminated to net textured sulphide mineralization grading 0.80% nickel and 0.14% copper over 2.0 metres. 

The drilling at the M Zone successfully intersected higher grade mineralization up-dip and near surface at the north end of the deposit. Results of BHEM surveys indicate the zone is now largely tested. The new results will be incorporated into an updated resource model for use in a pit optimization study. This study will evaluate whether mineralization currently extending below the original preliminary pit shell can be upgraded to a Mineral Resource category which would increase the current Mineral Resources at M Zone.

C Zone

The C Zone was discovered in 2009 while drill testing a strong, 500 metre long, surface electromagnetic ("EM") anomaly. Diamond drill hole NAD09-180 intersected sulphide mineralization grading 2.53% nickel and 0.42% copper over 5.3 metres, including an interval of massive sulphide grading 4.31% nickel and 0.60% copper over 2.4 metres (Press Release dated November 24th, 2009).

Four diamond drill holes, totalling 466.5 metres, were completed to test the continuity of the zone near the surface in the area of drill hole NAD09-180, as well as along strike to the south to test a strong off-hole BHEM anomaly.

Diamond drill holes NAD10-190 and 191 were positioned 25 metres up-dip and down-dip, respectively, of drill hole NAD09-180 to provide an east-west section across the zone. Both drill holes failed to intersect significant mineralization, indicating that the zone has limited dip extent on this section.

Drill hole NAD10-192 was drilled 50 metres north and along strike of NAD09-180 and intersected strongly oxidized sulphide mineralization grading 1.18 % nickel and 0.26% copper over 4.0 metres. This intersection is interpreted as the northern limit of the sulphide zone.

Drill hole NAD10-194 was drilled 210 metres to the south and along strike of NAD09-180 and was positioned to test a strong off-hole BHEM anomaly detected from hole NAD09-181, which intersected sulphide mineralization grading 1.06% nickel and 0.30% copper over 7.60 metres (Press Release dated December 16, 2009). The hole intersected several wide, mineralized intervals including: 10.0 metres grading 0.58% nickel and 0.18% copper, starting at 27.0 metres down hole; and 0.74% nickel and 0.17% copper over 13.25 metres, starting at 125.0 metres down hole. A BHEM survey of drill hole NAD10-194 has confirmed that the targeted off-hole BHEM anomaly detected from drill hole NAD09-181 has been intersected.

The new drill results will be interpreted along with the 2009 drill results in order to assess if a Mineral Resource can be outlined and estimated for this zone. 

Next Steps:

With the completion of the Ntaka Hill drill program, a reverse circulation drilling program is planned to commence in October to test priority targets developed from an ongoing regional exploration program.

Craig MacDougall, President & CEO of Continental Nickel Limited, said "the drilling completed at M and L zones, and as previously reported at H Zone, has extended the mineralization in all three zones. This new information will now be incorporated into the resource models ahead of an updated Mineral Resource Estimation study which will commence after all of the outstanding assay data is received. We continue to look forward to additional assay results from the Ntaka Hill area, including follow-up holes at the recent discovery of a wide zone of disseminated sulphide mineralization at the Sleeping Giant Zone." 

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 the 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).