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Inco announces first quarter results

The news remains very good for Inco Ltd. just not as good as it was last year at this time. The nickel giant reported Thursday net earnings of $200 million, or $1.

The news remains very good for Inco Ltd. just not as good as it was last year at this time.

The nickel giant reported Thursday net earnings of $200 million, or $1.04 per share (90 cents per share on a diluted basis), for the first quarter of 2006, compared with adjusted net earnings of $242 million, or $1.28 per share ($1.09 per share on a diluted basis), for the first quarter of 2005. All dollar amounts are expressed in U.S. currency.

Net earnings for the first quarter of 2006 in accordance with Canadian generally accepted accounting principles were $202 million, or $1.05 per share, compared with net earnings of $317 million, or $1.68 per share for the first quarter of 2005.

The company says adjusted net earnings for the first quarter of 2006 were lower than the first quarter of last year due to higher production costs and other operating expenses and lower deliveries of copper and platinum group metals and slightly lower realized prices for nickel.

The company is pleased with its strong start to the new year, said CEO and president Scott Hand.

"We were pleased to post another quarter of strong results, thanks to a nickel market that remained very strong and excellent performance from our operations," said Hand, in a news release.

Inco's current collective agreement with the United Steelworkers Local 6500 at Ontario operations expires May 31, 2006 and negotiations on hammering out a new three-year deal are continuing between the union and management at a downtown Sudbury hotel.

"As always, we will aim to conclude an agreement that is fair to our employees while helping to maintain a long-term, cost-competitive future for our operation," said Hand.

The company fully expects the deal to acquire full control of Falconbridge Ltd. to finally be accepted later this summer, said Hand, which will provide a "rare opportunity to create a much larger, more diversified company with strong or leading positions in a number of metals, and to gain major efficiencies and create real value along the way.

"The combination of our two companies will create the world’s largest nickel company and a leading copper company, with excellent prospects for growth, and outstanding opportunities for synergies that are available only to Inco and Falconbridge."


Excerpts of remarks made April 20 by Peter Jones, Inco's president and COO at an annual shareholders meeting in Toronto.

"At our Ontario operations we’re improving our process flow to boost our
nickel production. For instance, by removing copper before smelting and
refining, we can get more high margin nickel through our Sudbury smelter.

"And we have the potential to do even better.

"Our Sudbury smelter and refinery are running well, and our new oxygen plant
and converter upgrade project will set the stage for better production,
reliability and consistency.

"As I mentioned earlier, our strategy is to increase nickel throughput at our
Sudbury operations. In turn, this is driving increased exploration and mine
development.

"We’ll make a decision this year on developing the Totten Mine, which has a
high platinum group metal component in addition to nickel.

"We’ll advance the feasibility study of Kelly Lake, and the deep deposits of
the Copper Cliff offset – including Copper Cliff North and South mines.

"And we’ll continue to explore in the local area – because we still think it’s
one of the likeliest places to find a new mine!

"Now let’s turn to environmental performance -- another area where we’re
delivering on our commitments.

"We’ve talked about minimizing our environmental footprint at our growth projects.

"Let me mention two other examples from our existing operations.

"For the past few years we’ve talked about our $115 million Cdn. new fluid bed
roaster project in Sudbury and how it will significantly reduce our SO2
emissions and also reduce our metals emissions.

"This year, we’re delivering on our promise.

"We’ll commission our fluid bed roaster project in Sudbury starting this
quarter and we hope to have it functional by mid-year. 

"Once functional, it will reduce our emissions to 34 per cent below the
current cap for SO2 emissions in Ontario, and below the new limits that come
into effect in 2007.

"And we’re already taking the first step in our next phase of SO2 reduction.

"This year, we’ll get an added boost from a new $40 million US converter
upgrade that will cut SO2 emissions at our Sudbury smelter even further,
while improving our processing rates.


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