Skip to content

Inco Ltd. has another good quarter

BY KEITH LACEY [email protected] The numbers don't compare with last year's staggering results, but the news is still good for Inco Ltd. as it released third quarter results for 2005 Tuesday.

The numbers don't compare with last year's staggering results, but the news is still good for Inco Ltd. as it released third quarter results for 2005 Tuesday.

The nickel giant announced net earnings of $62 million (all dollars amounts are expressed in U.S. currency), or 33 cents per common share,
compared with net earnings of $142 million, or 76 cents per common share, for the third quarter of 2004.

"We continue to operate in a very strong nickel market," said Inco chair and CEO Scott Hand, during a webcast Tuesday morning.

The lower adjusted net earnings for the corresponding period of 2004 are due primarily to increased production costs for nickel and copper, and lower deliveries of copper and platinum-group metals (PGM's), partially offset by higher realized prices for nickel, copper and certain PGM's and higher deliveries of Inco-source nickel, said Hand.

The net earnings for the first nine months of 2005 compare favourably to economic forecasts the company made at the beginning of the year, said Hand.

"We are pleased to record another quarter of positive results," said Hand. "While we have seen a downturn in nickel prices during the third quarter
and into the fourth quarter, nickel prices still remain at historically high levels.

"We believe the underlying nickel demand remains strong and we see limited supply growth at least for the next two years. Given these market factors, we expect tight market conditions for nickel will continue into 2006."

With Inco's Voisey's Bay mine and concentrator now on-line, the company is looking forward to increased production levels, lower costs and stronger cash flow as it realizes benefits from Voisey's Bay feed at Canadian operations, he said.

The recent $12 billion friendly takeover of rival Falconbridge Ltd. creates a world-class Canadian-based metals and mining "powerhouse" that will be the world's largest nickel producer and significant copper producer for years to come, he said.

"We believe the new Inco that will be created through this combination offers a truly exciting future for the shareholders of Inco and Falconbridge," said Hand.

Due to a number of market factors in the stainless steel industry, the cash nickel price on the London Metals Exchange for the third quarter dropped to $6.61 per pound compared to $7.44 per pound in the second quarter, said Hand.

Those prices have recently dropped to $5.71 per pound the first three weeks of October, however, for the first nine months of 2005, the average realized nickel price remained over $7 per pound, he said.

During the third quarter, the company produced 111 pounds of nickel, meeting targets and nickel production at Sudbury and Port Colborne in Ontario produced 49 million pounds, he said.

The target to produce 215 to 220 million pounds of nickel for the year in Ontario remains intact, he said.

The company is forecasting production of 140 to 145 million pounds of nickel for the fourth quarter of 2005 and 485 to 490 million pounds of nickel at all Inco operations.

The company is excited about the first production concentrate from Voisey's Bay in early September and the company remains on target to see the first shipment of concentrate from Voisey's Bay in November, he said.

Other major projects in New Caledonia and Indonesia are also on target, he said.

A summer shutdown at Sudbury operations, due in large part to prepare for the influx of product from Voisey's Bay, took longer than expected and stretched out to four weeks instead of three, which caused a significant reduction in production during this time period, said Hand.

The company is poised "for tremendous growth" considering the new merger, success of major deposits around the world and strong nickel prices, he said.


Verified reader

If you would like to apply to become a verified commenter, please fill out this form.