The Toronto-based company had been planning further development at the mine but said Monday it has decided to discontinue that work because of low nickel prices and low production levels at Lockerby.
First Nickel says the Lockerby mine will either be put on "care and maintenance" for a possible restart or closed.
It acquired the Lockerby mine in 2005 and idled it in 2008 during another period of low commodity prices before restarting it in September 2011.
The company's announcement didn't say what impact its decision will have on its workforce. According to regulatory documents, First Nickel had 165 employees plus contractors at the end of last year and reduced that by 30 per cent in January.
The Lockerby property formerly belonged to Falconbridge Ltd., a Canadian mining giant that is now part of Glencore, a Swiss commodities multinational that buys all the mine's ore under an agreement with First Nickel.