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Business Results At Inco / Canada For Jan. - Mar. 2006
= Produced 61,439 Tons Of Nickel, Having Increased By 11% Compared To Same Quarter 2005
Inco Limited of Canada released on the 20th of April ( local time ) their settlement of accounts for the first quarter ( January - March ) of 2006, reporting <> net sales of US$1,211 million ( compared with US$1,121 million for the same quarter of 2005 ) and <> net earnings of US$202 million ( compared to US$317 million for the same quarter of 2005 ), which continued to maintain on a favorable tone. The contents of the results concerning nickel in the first quarter of 2006 were as per the table attached hereto.

Owing to the fact that the Voisey's Bay mine started to operate from November of 2005 as a new nickel mine and is shipping nickel concentrates on a substantial scale, Inco produced 61,439 tons of nickel, having increased by 10.7% compared with that ( 55,507 tons ) in the same quarter of 2005. The chief executive officer of Inco said that we produced 135 million lbs. of nickel, including 6 million lbs. from the Voisey's Bay mine.

Inco is scheduled to produce 61,000 - 63,000 tons of nickel in April - June quarter of 2006 and also has planned to produce 265,000 tons of nickel in the calender year ( January - December ) of 2006, which will have a considerable increase of 20.0% compared with that ( 220,727 tons ) produced in the preceding calender year of 2005. The Voisey's Bay nickel project has the designed capacity to produce 50,000 tons per annum of nickel and a smooth start-up of this new nickel production is expected to put a substantial effect on nickel production at Inco as a whole.

Since the Voisey's Bay nickel mine started its operations in order, Inco's nickel unit cash cost of sales after by-product credits for the quarter was US$2.59 per lb. with a considerable improvement. Substituting Voisey's Bay feed for external purchased feeds at the Canadian operations is helping to lower nickel costs at Inco and it is anticipated that the full benefit of this will be realized in the second half of 2006. For a reference, the average realized price of nickel at Inco for sales in January - March quarter of 2006 was US$15,021 per ton or US$6.81 per lb. respectively.

However, the operations at Inco, mainly its production activities, have been maintained on a favorable tone as mentioned above but Inco has held the following serious matters for their operations ;

(1)The existing labor agreement concluded between Inco Management and Union of Sudbury Division ( US Steel Workers - Local 6500 ) in Ontario Province of Canada is expired on the 31st May of 2006 and, therefore, it is necessary for Inco Management to negotiate with this Union on renewal of labor agreement. ( The negotiation in 3 years ago was not successful and the strike continued for 3 months. )

(2)The friendly offer to acquire Falconbridge of Canada as announced by Inco in October of 2005 has to be progressed smoothly. The date targeted for this acquisition was already prolonged twice and the final date at present is on the 30th June of 2006. This aspect of the extensions is due to the matter that the investigations in relation to the Antimonopoly Act by the US Department of Justice and the European Commission have still taken time The top executive of Inco said that we remain optimistic that we will be able to agree with both agencies and proceed to obtain their clearance of the acquisition.

(3)The engineering work for the Goro nickel project in New Caledonia was about 72% complete as of the 31st March of 2006. However, a number of acts of vandalism by Kanak occurred at the Goro project site in an early part of April. Consequently, the works were forced to suspend for a while. The full impact of these recent developments on the project's capital cost and schedule is still being assessed. This includes the building of 400 modules and preassembled units in the Philippines.
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last modified : Thu 27 Apr, 2006 [14:41]
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