Mr. Robert Guzman reports

FIRST ATLANTIC NICKEL CLOSES $3 MILLION DOLLAR INVESTMENT THROUGH ISSUANCE OF NON-DILUTIVE UNSECURED DEBENTURE WITH OPTION TO DEFER INTEREST AND PRINCIPAL PAYMENTS FOR 5 YEARS

First Atlantic Nickel Corp. has closed the previously announced agreement dated Feb. 9, 2025, and it has received $3-million in cash to advance its wholly owned district scale Atlantic nickel project through the issuance of a $3-million senior unsecured debenture pursuant to a non-brokered debt private placement. This strategic investment marks a significant milestone for the company, providing a non-dilutive source of capital to support the development of the project.

The debenture is the largest individual capital funding transaction in First Atlantic's history and contains favourable terms, including a five-year deferral on all interest and principal payments, with the option to convert the entire principal amount of the debenture plus accrued interest to a royalty which can be repurchased. No equity securities were issued on closing the debenture, ensuring no immediate dilution to the company. Additionally, there were no finders/ fees of cash or warrants issued as the company closed the transaction directly with the lender.

Highlights

• $3-million in proceeds: The $3-million in non-dilutive proceeds from the debenture will fully finance the company's phase 2 Drill program, assays and metallurgical testing.
• Strategic capital: The $3-million in new funding from a strategic investor provides strong financial backing for the company's Atlantic nickel project exploration and development.
• No dilution: No equity securities are required to be issued to the lender under the debenture.
• No commissions: No commissions, finders' fees or broker warrants were issued as the private placement was initiated and completed between the company and the lender.
• Five-year maturity: The debenture is not required to be repaid until maturity in 2030 and the company is entitled to satisfy the annual interest obligations under the debenture by adding such amounts to the principal amount outstanding under the debenture.

For further information, questions, or investor inquiries, please contact Rob Guzman at First Atlantic Nickel by phone at 1-844-592-6337 or via e-mail at rob@fanickel.com.

Debenture overview

• Non-dilutive capital, meaning no new shares issued that would dilute existing shareholders' ownership;
• $3-million senior unsecured debenture (a type of loan) with a five-year maturity and a 9.5-per-cent annual interest rate;
• Interest payments can be deferred until maturity in 2030 when both the principal and deferred interest payments become due;
• The lender has the option to convert the combined principal and interest into a 2-per-cent net smelter return (NSR) royalty on certain claims;
• If the lender elects to convert the principal and interest into a royalty instead of receiving cash repayment of the principal and interest owed, then First Atlantic has the right to buy back the entire 2-per-cent NSR for 130 per cent of the principal plus interest within 90 days from the conversion date, or buy back 1.5 per cent (reducing the NSR to 0.5 per cent) for 200 per cent of the principal plus interest at any time after 90 days with no expiry date, including during commercial production.

The proceeds from the debenture will fund the fully permitted phase 2 drilling program and preliminary metallurgical testing at the project as detailed in the company's news release dated Jan. 15, 2025. Following the closing of the private placement, the company anticipates an accelerated news cycle in the coming weeks, with updates from the completed phase 1 drill program and the commencement of phase 2 drilling.

Transaction terms

The debenture bears interest at an interest rate of 9.5 per cent per annum. Interest will be calculated in 12-month intervals from closing, over a term of five years.

The company may satisfy interest payments due prior to maturity in one of three ways, by:

1. Adding the interest to the principal amount of the debenture;
2. Issuing common shares to the lender;
3. Or payment in cash, and interest payable on maturity may be satisfied pursuant to items (2) or (3).

If the company elects to issue common shares to satisfy interest payments, the common shares will be issued at the greater of: (i) the 20-day volume-weighted average price of the common shares; or (ii) the minimum price permitted by the TSX Venture Exchange. The company may not elect to issue common shares if such issuance would result in the lender owning or controlling more than 9.99 per cent of the company's outstanding common shares (the ownership cap), provided that the lender may, on 61 days of prior written notice, increase the ownership cap to a maximum of 19.99 per cent.

The debenture will mature five years from the date of issue. In the event of a change of control of the company or a project transfer, the holder may redeem the debenture at a price equal to 130 per cent of the outstanding principal amount, plus all accrued and unpaid interest.

On or after the third anniversary of the issue date of the debenture and before the fourth anniversary, the company may elect to prepay all (but not less than all) of the principal and accrued interest under the debenture by paying 130 per cent of the principal amount, plus all accrued and unpaid interest. On or after the fourth anniversary of the issue date of the debenture, the company may prepay all (but not less than all) of the principal and accrued interest by paying 115 per cent of the principal amount, plus all accrued and unpaid interest.

The debenture holder may, at its option, at any time until 5 p.m. (Toronto time) on the maturity date, elect to receive a 2-per-cent net smelter return royalty on certain claims within the Atlantic nickel project instead of repayment of the principal amount and all accrued and unpaid interest under the debenture.

If the lender elects to convert all of the outstanding principal and interest into a 2-per-cent NSR instead of repayment, First Atlantic has the has the right to buy the entire amount up to 2-per-cent NSR royalty from the royalty holder under the following terms: Within 90 days of the date the company enters into the royalty agreement with the lender, the company can purchase 2 per cent of the 2-per-cent royalty for 130 per cent of the principal amount of the debenture plus accrued interest; after 90 days, the company can purchase 1.5 per cent of the 2-per-cent royalty (reducing the royalty rate to 0.5 per cent) for 200 per cent of the principal amount plus accrued interest.

No finders' fees were payable in connection with the private placement. Closing of the private placement remains subject to receipt of final exchange approval. All securities issued pursuant to the private placement are subject to a statutory four-month hold period.

Investor information

The common shares trade on the exchange under the symbol FAN, the American OTCQB Exchange under the symbol FANCF and on several German exchanges, including Frankfurt and Tradegate, under the symbol P21.

Awaruite (nickel-iron alloy Ni2Fe, Ni3Fe)

Awaruite, a naturally occurring sulphur-free nickel-iron alloy composed of Ni3Fe or Ni2Fe with approximately 75 per cent nickel content, offers a proven and environmentally safer solution to enhance the resilience and security of North America's domestic critical minerals supply chain. Unlike conventional nickel sources, awaruite can be processed into high-grade concentrates exceeding 60-per-cent nickel content through magnetic separation and simple floatation without the need for smelting, roasting, or high-pressure acid leaching. Beginning in 2025, the United States Inflation Reduction Act's (IRA) $7,500 electric vehicle (EV) tax credit mandates that eligible clean vehicles must not contain any critical minerals processed by foreign entities of concern (FEOC). These entities include Russia and China, which currently dominate the global nickel smelting industry. Awaruite's smelter-free processing approach could potentially help North American manufacturers meet the IRA's stringent critical mineral requirements and reduce dependence on FEOCs for nickel processing.

The U.S. Geological Survey (USGS) highlighted awaruite's potential, stating: "The development of awaruite deposits in other parts of Canada may help alleviate any prolonged shortage of nickel concentrate. Awaruite, a natural iron-nickel alloy, is much easier to concentrate than pentlandite, the principal sulfide of nickel." Awaruite's unique properties enable cleaner and safer processing compared with conventional sulphide and laterite nickel sources, which often involve smelting, roasting or high-pressure acid leaching that can release toxic sulphur dioxide, generate hazardous waste and lead to acid mine drainage. Awaruite's simpler processing, facilitated by its amenability to magnetic processing and lack of sulphur, eliminates these harmful methods, reducing greenhouse gas emissions and risks associated with toxic chemical release, addressing concerns about the large carbon footprint and toxic emissions linked to nickel refining.

The development of awaruite resources is crucial, given China's control in the global nickel market. Chinese companies refine and smelt 68 per cent to 80 per cent of the world's nickel and control an estimated 84 per cent of Indonesia's nickel output, the largest worldwide supply. Awaruite is a cleaner source of nickel that reduces dependence on foreign processing controlled by China, leading to a more secure and reliable supply for North America's stainless steel and electric vehicle industries.

Disclosure

Adrian Smith, PGeo, is a qualified person as defined by National Instrument 43-101. The qualified person is a member in good standing of the Professional Engineers and Geoscientists Newfoundland and Labrador (PEGNL) and is a registered professional geoscientist (PGeo). Mr. Smith has reviewed and approved the technical information disclosed herein.

About First Atlantic Nickel Corp.

First Atlantic Nickel is a Canadian mineral exploration company developing the 100-per-cent-owned Atlantic nickel project, a large-scale nickel project strategically located near existing infrastructure in Newfoundland, Canada. The project's nickel occurs as awaruite, a natural nickel-iron alloy containing approximately 75 per cent nickel with no sulphur and no sulphides. Awaruite's properties allow for smelter-free magnetic separation and concentration, which could strengthen North America's critical mineral supply chain by reducing foreign dependence on nickel smelting. This aligns with new U.S. IRA (Inflation Reduction Act) requirements on electric vehicles, which stipulate that, beginning in 2025, an eligible clean vehicle may not contain any critical minerals processed by an FEOC (foreign entity of concern).

First Atlantic aims to be a key input of a secure and reliable North American critical mineral supply chain for the stainless steel and electric vehicle industries in the United States and Canada. The company is positioned to meet the growing demand for responsibly sourced nickel that complies with the critical mineral requirements for eligible clean vehicles under the U.S. IRA. With its commitment to responsible practices and experienced team, First Atlantic is poised to contribute significantly to the nickel industry's future, supporting the transition to a cleaner energy landscape. This mission gained importance when the United States added nickel to its critical minerals list in 2022, recognizing it as a non-fuel mineral essential to economic and national security with a supply chain vulnerable to disruption.

We seek Safe Harbor.