BC00 Ebrd 29

RNS Number:0702X
Inco Ld
11 June 2002


Inco Limited agrees on statement of principles with Province of Newfoundland and
               Labrador for development of Voisey's Bay deposits


      30-year deal expected to see US$1.9 billion invested in the province


    Site development to begin in July; first concentrate production in 2006


     Government of Canada support for overall project will help assure full
                             processing in province


       Inco webcast conference call set for 10:30 a.m. Toronto time today


Toronto, June 11, 2002 -- Inco Limited and the Province of Newfoundland and
Labrador jointly announced today that they have entered into a statement of
principles on the development of the Voisey's Bay nickel-copper-cobalt deposits
in Labrador.

Inco also confirmed separate Impacts and Benefits Agreements (IBAs) have been
finalized with both the Labrador Inuit Association (LIA) and Innu Nation with
respect to the project. The two IBAs are currently proceeding through a
ratification process by their respective memberships that is currently expected
to be completed by late June 2002.

The non-binding statement of principles with the province provides for
development of a US$470 million (Cdn$710 million) mine and mill/concentrator
processing plant at Voisey's Bay, and a US$120 million (Cdn$180 million)
research and development program in hydrometallurgical processing, including a
US$85 million (Cdn$130 million) demonstration plant at Argentia. This is the
initial step toward the ultimate development of a commercial processing facility
to be constructed and operated in the province.  Inco expects that
infrastructure, site development and other work will begin in July 2002 with a
total expected investment of approximately US$35 million (Cdn$55 million) by the
end of March 2003.

The next step for Inco and the province is completion by the end of September
2002 of one or more definitive agreements intended to implement terms of the
statement of principles.  Before proceeding to complete such agreements, the
statement of principles is subject to approval in the provincial legislature.

In addition to legislative approval and completing definitive agreements, there
are certain other conditions to be met before the project can proceed.  These
include enactment of certain changes to the provincial mining tax regime,
issuance of the necessary governmental and regulatory permits and approvals,
acceptable financing arrangements, as well as interim measures agreements with
the LIA and Innu Nation covering their land claims.

A total investment of approximately US$1.9 billion (Cdn$2.9 billion) is
currently estimated over the 30-year life of the project, including sustaining
capital.  Approximately 400 direct operating jobs would be created with the mine
and mill/concentrator in Labrador, and approximately 400 jobs for the Argentia
commercial processing facility.  The number of jobs in Labrador will increase
significantly when the company shifts to the underground mining phase.  The two
major construction projects are expected to involve 3,700 person years of
employment.

The statement of principles provides for shipment on an interim basis of a
specified amount of Voisey's Bay nickel-in-concentrate to Inco's operations in
Ontario and Manitoba beginning when the demonstration plant has begun operation
to validate a new hydrometallurgical process, and during development and
construction of a commercial scale processing facility in the province. This
will generate early cash flow that is crucial to financing the project. The
commencement and continued shipment of nickel-in-concentrate through 2011 would
be subject to Inco meeting the following conditions in its phased development of
the project:

  • that the demonstration plant would be operational and ready to test
    concentrate before any concentrate can be shipped out of province; and
  • that Inco advise the province by the end of 2008 about the specific
    processing facility it will build in the province or face suspension of
    concentrate shipments until such a decision is made.

Under terms of the statement of principles, Inco will bring back for processing
in the province contained nickel-and-cobalt-in-concentrate or other feeds from
external sources equivalent to the quantity shipped out of the province during
the interim period.



The company has also agreed to an industrial and employment benefits program for
the project that will encourage participation by local firms from Newfoundland
and Labrador in the supply of goods and services, and promote training and
employment of members of the provincial labour force.



Inco also confirmed that the Government of Canada has identified, from within
existing programs, up to Cdn$150 million that could support activities in and
around the Voisey's Bay project.  Inco plans to move forward, in cooperation
with other stakeholders, to access existing programs such as Industry Canada's
Technology Partnerships Canada (TPC) program for technology development of the
demonstration plant, the Atlantic Canada Opportunities Agency (ACOA) for
innovation and infrastructure, Human Resources Development Canada (HRDC) for
employment training and skills development, and Indian and Northern Affairs
Canada for economic and business development opportunities for Aboriginal
people.



"It took mutual patience and resolve to finally get a deal that works for
everyone, but we did it," said Inco Chairman and CEO Scott Hand.  "The Province
needed to ensure full benefits to the people of Newfoundland and Labrador,
including a firm commitment to processing in the province; the aboriginal groups
wanted assurance on their benefits and rights; and Inco needed a technically and
economically feasible project framework that made sense to our shareholders,"
said Mr. Hand.



"We are looking forward to a solid and enduring relationship with the people of
Newfoundland and Labrador," he said.



"Inco is well positioned to handle a phased project that responsibly develops
our assets and delivers attractive returns for our shareholders in a financially
prudent way," said Mr. Hand.  "At the same time, our existing Canadian
operations will benefit from additional concentrate that will provide an
effective bridge to local brownfield development and other initiatives, and will
enhance their long-term viability as mining communities."



    Key provisions of the statement of principles include the following:

  • in July Inco will begin work on infrastructure such as roads, temporary
    port facilities, a construction camp, land clearing at Voisey's Bay, site
    preparation at Argentia, and initiation of the research and development
    program for the hydromet process;
  • construction of a 6,000 tonne per day mine and mill/concentrator
    processing plant is expected to begin in 2003. First concentrate production
    is currently expected in 2006.   Initial investment in the mine and mill/
    concentrator processing plant is expected to be approximately US$470 million
    (Cdn$710 million) and will create approximately 400 direct jobs when
    operational;
  • as part of the hydrometallurgical processing research and development
    program, Inco has agreed to construct a demonstration plant at Argentia to
    confirm and demonstrate the technical and economic feasibility of such
    technology on the sulphide concentrate from Voisey's Bay ores.  The research
    and development program will employ about 200 people;
  • upon successful completion of the demonstration plant's testing program
    and completion of a bankable feasibility study in 2008, Inco has agreed to
    commit to construction of a commercial hydrometallurgical plant capable of
    producing 110 million pounds of nickel annually.  When operational following
    a projected three-year engineering and construction period, it would be a
    state-of-the-art, low-cost, environmentally advanced plant that would
    provide approximately 400 jobs and cost an estimated US$530 million (Cdn$800
    million);
  • while Inco remains fully confident in the feasibility of processing
    Voisey's Bay concentrate with a hydrometallurgical process, in the unlikely
    event that the technology does not prove to be technically or economically
    feasible, Inco will build a state-of-the-art, 110-million pound per annum
    refinery in the province, using proven technology that will produce finished
    nickel.
  • Inco also has agreed to develop and support a US$13 million innovation
    centre in conjunction with Memorial University of Newfoundland for education
    and research into mineral exploration, mining and metallurgy.  Planning and
    development will begin immediately and will bring together Inco's
    world-leading expertise in exploration, mining and processing technologies
    and outstanding post-secondary students, including many at the graduate
    level.  Inco sees students from this program being part of the operating
    teams for the plants to be built and operated in the province.



Voisey's Bay is an excellent undeveloped nickel resource and includes 31 million
tonnes of estimated proven mineral reserves in the Ovoid deposit.  The Ovoid can
be mined using open pit mining methods and holds average grades of 2.9 per cent
nickel, 1.69 per cent copper and 0.14 per cent cobalt.



"The willingness of the province to, in effect, loan our other Canadian
operations nickel-in-concentrate during the first phase of development will
produce the kind of cash flow required to help finance the second phase of the
project," said Mr. Hand.



Inco currently expects to complete a bankable feasibility study for the mine and
mill/concentrator by year-end 2002.  The company expects cash costs, after
projected by-product credits for cobalt at US$7 a pound and copper at US$.90 a
pound, will be about US$1 a pound.



The company said it is also assessing the need to write down the net carrying
value of Voisey's Bay based upon the terms for the development of the project
contemplated in the statement of principles and other relevant factors.



"The company reviews and evaluates its property, plant and equipment and other
assets for impairment when events or changes in economic or other circumstances
indicate that the carrying value of such assets may not be fully recoverable,"
explained Mr. Hand.  "The company will review the net carrying value of certain
assets, including the net carrying value of US$3.7 billion for Voisey's Bay, in
light of these very recent, important events and taking into consideration how
the development of Voisey's Bay fits with the company's overall long-term
development plans."



"The company currently anticipates that this review could well result in a
significant adjustment to the net carrying value of Voisey's Bay and possibly
certain other assets and, as a result of such adjustment(s), a material non-cash
charge to earnings is currently expected to be recorded in the second quarter of
2002," said Mr. Hand.



Webcast Information



We will webcast, on a live, listen only basis, a conference call covering this
announcement. This webcast will be made available through a separate third party
webcasting service, Canada NewsWire Ltd. The conference call is expected to
begin at 10:30 a.m. (Toronto time) today.



In order to access this webcast, any person having a computer and Internet
access who is interested in listening to the conference call can access this
webcast by visiting either of Canada NewsWire's two current websites,
www.newswire.ca/webcast or www.q1234.com. Interested persons are encouraged to
test their computer system at least five minutes prior to the 10:30 a.m.
(Toronto time) scheduled start for the call on June 11. Computer systems must
meet certain minimum requirements in order for persons to be able to listen to
the call.  For any questions on whether a system meets the minimum requirements
or if any person listening experiences any problems, Canada NewsWire provides a
"Webcast Help" page which can be accessed at www.newswire.ca/webcast, and their
helpdesk is also available to answer any questions or to assist with any
problems. Canada NewsWire's helpdesk can be reached in advance of June 11 at
webcast@newswire.ca, or at any time by contacting their toll free number,
1-877-377-1234.



Copies of any slides or other statistical information for the conference call
can be accessed and will be available for online viewing by persons with a
computer and Internet connection through either www.newswire.ca/webcast or
www.q1234.com by clicking on the event title or listen link or through Inco's
website, www.inco.com, by clicking on the "Latest Presentations" link on the
homepage and then referencing the heading "June 11, 2002 - Voisey's Bay".



It is currently expected that the scheduled speaker for the company on the
conference call will be Scott Hand, Inco's Chairman and Chief Executive Officer.
The conference call may, but not necessarily will, including forward-looking
statements.



The archival webcast of the conference call will be available through
www.newswire.ca/webcast beginning one hour after the end of the call.  Canada
NewsWire makes such archivals available for a period of 90 days.  To access the
archival webcast through your computer, please use www.newswire.ca/webcast.
Computer systems must also meet certain minimum requirements in order to access
the archival webcast.  A recording of the conference call will also be available
in North America beginning one hour following the call and until 11:59 p.m.
(Toronto time) on June 25, 2002 by dialing 1-800-558-5253 and entering the
reservation number 20666593.



This release contains forward-looking statements regarding the Voisey's Bay
nickel-copper-cobalt project and Inco.  Actual results may differ materially
from these statements, estimates and projections depending on such key factors
as the timing of the receipt and terms of all necessary regulatory, governmental
and other approvals and arrangements for the Voisey's Bay project; demonstration
plant results; the availability of financing on reasonable terms; costs of
production, products to be produced, and production, productivity and employment
levels for the Voisey's Bay project; engineering and construction timetables and
capital and operating costs for various parts or facilities of the Voisey's Bay
project; the settlement of land claims with aboriginal groups concerning the
Voisey's Bay project; risks involved in mining, processing, exploration and
research and development activities relating to the Voisey's Bay project; the
accuracy of reserve estimates and expenses related to the Voisey's Bay project;
accounting adjustments; and the provincial tax regime for the Voisey's Bay
project.



                                      -30-

IN 02/16

June 11, 2002



For further information:

            Media:                  Steve Mitchell      (416) 361-7950

            Investor Relations:     Sandra Scott        (416) 361-7758

or www.inco.com


                      This information is provided by RNS
            The company news service from the London Stock Exchange

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