Continental Nickel Reports Up to 4.96 g/t Gold from New Gossan and Provides Exploration Update for Nachingwea Project in Tanz...

Continental Nickel Limited (TSX VENTURE:CNI) ("CNI" or the "Company") is pleased
to provide an exploration update for its Nachingwea project and also to report
results for grab samples from the Hog showing recently discovered on one of its
regional exploration licenses. The project is part of the 75:25 joint venture
between CNI and IMX Resources Limited of Australia. 


Highlights



--  Values of up to 4.96 g/t Au in grab samples from the Hog showing 
--  2 diamond drill rigs currently in operation completing in-fill drilling
    at Sleeping Giant zone (Ntaka Hill) with a third diamond drill rig
    expected to be on site by the end of May 
--  20,000 - 25,000 meters of drilling currently planned from May through
    December 2012 
--  VTEM survey planned to cover prospective regional areas 



Patricia Tirschmann, Vice President Exploration for the Company, commented: "We
have a very exciting exploration program planned for 2012 with high quality
drill targets identified at both Ntaka Hill and on the regional licenses. At the
Ntaka intrusion, the exploration is focussed on identifying additional nickel
sulphide mineralization which has the potential to add to the currently defined
estimated mineral resource and, on our regional licenses, targets have been
expanded to include those with the potential to host nickel, copper or gold
mineralization. We are looking forward to drill testing a number of these
targets this year."


2012 Exploration Program 

The Nachingwea joint venture has a $10 million exploration program and budget
for 2012, which will include the completion of 20,000 - 25,000 metres of diamond
and reverse circulation (RC) drilling. The main objectives of the program are
to: 




--  carry out 15,000m of in-fill and step-out diamond drilling at Sleeping
    Giant to upgrade current estimated mineral resource categories and to
    test for the potential down-plunge extension of the high grade core of
    the zone; 
--  drill test high priority exploration targets associated with the nickel-
    bearing Ntaka and Lionja ultramafic intrusions (approx. 4,500m); and 
--  continue to explore our extensive regional land position to identify
    copper, gold and nickel sulphide deposits.  



Capital Drilling (Tanzania) Limited has been contracted to carry out the 2012
drilling program. The program was initiated in mid-May with two diamond drill
rigs now operating at the Sleeping Giant zone. Drilling will be focused on the
northern near surface portion of Sleeping Giant in order to upgrade the
estimated Inferred and Indicated mineral resources to Indicated and Measured
categories and on testing for potential extensions of the down-plunge portion of
the high grade core of the zone which remains open to the south. A third diamond
drill rig is expected to start by the end of May and will be testing exploration
targets elsewhere within the Ntaka intrusion. This drilling is planned to target
both high grade nickel sulphides and near surface disseminated nickel sulphides.



An extensive regional exploration program is planned and will comprise a 2,500
line km airborne versatile time domain electromagnetic (VTEM) survey, follow-up
ground geophysical surveys, diamond and RC drilling (approx. 2,500m),
geochemical sampling, mapping and prospecting. Potential exploration targets on
our regional land position have the potential to include nickel, copper and gold
mineralization. 


A number of drill ready regional targets have already been outlined, including
the Chilalo 7 area where a coincident copper in soil and ground EM anomaly was
identified in 2011 (see Press Release dated March 27, 2012). Airborne and ground
geophysical surveys as well as geochemical sampling, prospecting and mapping
will be employed to identify additional priority targets for drill testing later
in the year. 


Hog Showing 

In late 2011, exploration on the regional licenses identified a new gossan
located approximately 20 kilometres northeast of Ntaka Hill. The gossan is 1,150
metres long and 25-180 metres wide and remains open to the north and south. It
is exposed along a narrow low lying ridge and consists of abundant
sub-outcropping and loose gossanous boulders interpreted to be hosted within
metasedimentary rocks. 


Thirty-four sub-cropping gossan grab samples collected over a strike length of
900 metres were sent for laboratory analysis. A number of these samples were
found to contain anomalous gold values, including four samples which returned
values of greater than 1 g/t gold ranging from 1.86 to 4.96 g/t. Nine additional
samples returned values between 0.4 and 1.0 g/t gold. The gold-bearing samples
were collected at sample spacing of 30 to 180 metres over a strike length of 500
metres. A number of the grab samples also returned elevated silver values (1 -
18 g/t) and copper values (0.11 - 0.64%). 


The Company plans additional mapping, prospecting and sampling over the Hog
showing to more fully define its extents and significance. In addition, this new
area of interest will be covered by the upcoming 2012 airborne VTEM survey. 


Qualified Persons / Quality Control 

The quality control, technical information and all aspects of the exploration
program are supervised by Patricia Tirschmann, P. Geo., Vice President,
Exploration for CNI. Ms. Tirschmann is a qualified person as defined by National
Instrument 43-101. 


Quality Control 

Lithogeochemical samples were collected by the Company's personnel and shipped
to the ALS Chemex preparation lab in Mwanza, Tanzania. Sample pulps were sent by
courier to the ALS Chemex analytical laboratory in Vancouver, Canada.
Multi-element analyses including, Cu, Zn, Ag and sulphur, were completed using a
HF-HNO3-HClO4 digestion and HCl leach preparation and an ICP-AES and ICP-MS
finish (Analytical Code ME-MS61). Analyses for Pt, Pd, and Au were by fire assay
with an ICP-AES finish (Analytical Code PGM-ICP23). Laboratory duplicates,
standards and blanks were included and analyzed with each sample batch. 


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% joint venture interest in the
Nachingwea project in Tanzania, where measured and indicated mineral resources
have been estimated at 12.8 Mt grading 1.21% nickel and inferred mineral
resources have been estimated at 45 Mt grading 0.30% nickel (CNI press release
April 17, 2012).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 2010-2012
diamond drill programs discovered new Ni-Cu sulphide zones. 


As at the date of this release, the Company has 42,793,508 common shares issued
and outstanding (46,866,008 on a fully-diluted basis) and trades on the TSX
Venture Exchange under the symbol CNI. The Company had over $9.4 million in the
treasury as at December 31, 2011. 


On May 16, 2012 CNI and IMX Resources announced the entering into of definitive
agreements under which IMX Resources would acquire CNI, subject to the terms and
conditions of such agreements.


On behalf of Continental Nickel Limited

Dave Massola, President and CEO 

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 or targets, 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. 


Information in this announcement relating to exploration results is based on
data collected under the supervision of or compiled by Patricia Tirschmann, P.
Geo., who holds the position of Vice President, Exploration and is a full time
employee of Continental Nickel Limited. Ms. Tirschmann is a registered member of
the Association of Professional Geoscientists of Ontario and has sufficient
relevant experience to qualify as a Competent Person under the 2004 Edition of
the Australasian Code for the Reporting of Exploration Results, Mineral
Resources and Ore Reserves. Ms. Tirschmann consents to the inclusion of the data
in the form and context in which it appears.