With the rising global demand for nickel, combined with the market shift towards battery production, the nickel resource landscape is evolving from the sulphide ores to the oxidic nickeliferous laterites. These laterite deposits contain two major ore types: limonitic and saprolitic. While nickel in the sulphide ores can be readily concentrated by flotation, this is not feasible for the oxide ores. Consequently, extracting the metal from the oxide ores involves treating large quantities of raw materials using numerous unit operations. Presently, the nickel in the saprolitic ores is extracted by pyrometallurgical processes, using carbon as the reducing agent. However, there is a need to develop more economical and environmentally friendly alternatives. One potential option involves the solid-state reduction of the nickel oxide in these ores using hydrogen-enriched natural gas, followed by the concentration of the resulting ferronickel. In this paper, a thermodynamic model was developed using HSC Chemistry® 7.1 to predict the equilibrium amounts of the products resulting from the solid-state reduction of a saprolitic ore using methane–hydrogen mixtures. Since nickel oxide has very high stability in the saprolitic ores, it was found that it was necessary to destabilize the nickel oxide using lime to facilitate reduction. Based on the modelling results, the optimum conditions were determined.