IN. Inco

RNS Number:3657E
Inco Ld
21 October 2004


MATERIAL CHANGE REPORT

1.   Name and Address of Company

Inco Limited
145 King Street West
Suite 1500
Toronto, Ontario
M5H 4B7

2.   Date of Material Change

October 19, 2004.

3.   News Release

A press release was issued by Inco Limited ("Inco") in Toronto on October 19,
2004 through the facilities of Canada NewsWire.

4.   Summary of Material Change

Inco announced on October 19, 2004 that, having completed and successfully
achieved the key objectives of the second and final phase of its Goro project
review, it has decided to proceed with the development of its Goro nickel-cobalt
project in the French overseas territorial community (collectivite territoriale)
of New Caledonia.

The final results of the review have included an updated capital cost estimate
of $1.878 billion (U.S.), within a minus 5 per cent to plus 15 per cent
reliability range.

In moving forward with Goro, the project will focus initially on engineering
work, with remobilization for construction at the Goro site expected to begin in
early 2005. Based upon the final results of Phase 2 of the review, the project
construction schedule is expected to be approximately 35 months in length, with
initial production estimated to begin in September 2007.

5.   Full Description of Material Change

Inco announced on October 19, 2004 that, having completed and successfully
achieved the key objectives of the second and final phase of its Goro project
review, it has decided to proceed with the development of its Goro nickel-cobalt
project in the French overseas territorial community (collectivite territoriale)
of New Caledonia.

A key objective of the second phase, or Phase 2, of the Goro review was to
achieve a reliable and acceptable capital cost estimate for the project. This
review, which proceeded in two phases, had begun following the decision made in
December 2002 to suspend the project.

The final results of the review have included an updated capital cost estimate
of $1.878 billion (U.S.), within a minus 5 per cent to plus 15 per cent
reliability range. This estimate includes about $40 million (U.S.) for assumed
escalation in costs during the construction phase of the project, an amount that
was not in previous capital cost estimates, and also reflects favourable
currency hedging gains realized by Inco of about $31 million (U.S.) which were
also not included in previous estimates. The principal reasons for the increase
from the $1.85 billion (U.S.) estimate announced on May 25, 2004 has been higher
costs for a range of construction materials and labour required for construction
and the incorporation of a new tailings storage area as part of the project.

Phase 2 of the project review also focused on a number of other key objectives,
including (1) a viable project implementation schedule and clear project
execution plan, (2) a prudent financing plan taking into account Inco's
projected cash flow potential to fund its expected share of the capital cost of
the project, (3) an experienced and dedicated team for both the construction and
operating phases and (4) optimizing the Goro project's planned process plant
design and engineering requirements while also meeting specific objectives on
project operability, maintainability, risk mitigation and environmental
protection. The final results of Phase 2 of the review have met all of these key
objectives. In moving forward with Goro, the project will focus initially on
engineering work, with remobilization for construction at the Goro site expected
to begin in early 2005. Based upon the final results of Phase 2 of the review,
the project construction schedule is expected to be approximately 35 months in
length, with initial production estimated to begin in September 2007.

Inco and Goro Nickel S.A. ("Goro Nickel"), the project company, currently plan
that, as part of the project schedule, the Goro project would reach about 75 per
cent of its expected annual capacity of 60,000 metric tonnes of nickel within 12
months after initial production, and would be at approximately 90 per cent of
the expected nickel capacity within two years after initial production. The Goro
project's expected cobalt capacity has been revised to a current range of 4,300
to 5,000 metric tonnes per year to take into account the optimized mine plan for
the project as part of the final results of the review.

As part of the objectives Inco set for Phase 2 of the review, Inco has over the
past several months sufficiently advanced, consistent with these objectives,
certain other key milestones to be met to enable the Company to reach its
decision to proceed with the project. These milestones have included (1)
achieving sufficient progress on all key permits for the construction and
operation of the Goro project in New Caledonia and a Good Neighbour Agreement
and having reached appropriate understandings or arrangements with local labour
unions and other key stakeholders in New Caledonia to put Inco and Goro Nickel
in a position to proceed with the project, including with respect to both the
construction and eventual operating phases, on a basis that will help to ensure
a clear dispute resolution process designed to avoid potential labour or other
disruptions, (2) advancing the terms of the Girardin Act tax-advantaged
financing to be provided by the French Government and (3) reaching a
satisfactory understanding on the acquisition by the three provinces of New
Caledonia of the interest in Goro Nickel held by the French Government agency,
Bureau de Recherches Geologiques et Minieres ("BRGM"), as part of a required
realignment of the equity ownership in the project to also enable Sumitomo Metal
Mining Co., Ltd. and Mitsui & Co., Ltd. to be brought into the project.

Inco, the governments of the three provinces of New Caledonia and BRGM have
entered into a letter of understanding covering the acquisition of BRGM's
interest in Goro Nickel by these three provinces. The letter of understanding
also covers the rights, once they have acquired BRGM's interest, that these
three provinces would have as a shareholder in Goro Nickel, including the right
to maintain up to a 10 per cent interest in Goro Nickel once certain shareholder
advances have been capitalized, which will have the effect of reducing BRGM's
current approximately 15 per cent interest to about 10 per cent. It is currently
expected that definitive agreements covering the sale of BRGM's interest and the
rights that the three provinces of New Caledonia will have as a shareholder in
Goro Nickel will be completed prior to the end of 2004.

Inco has continued its discussions with the French Government in obtaining at
least $350 million (U.S.) in the Girardin Act tax-advantaged financing which the
French Government had earlier agreed in principle to provide to the project.
While the French Government has recently reconfirmed the availability of this
financing for the Goro project, the specific terms and conditions of this
financing still need to be agreed upon with the French Government. The current
expected economic benefits to the project of this financing would be about $120
million (U.S.).

Earlier today, the government of the South Province of New Caledonia formally
issued to Goro Nickel the principal governmental operating permit required for
the project.

Inco has entered into a memorandum of understanding with Sumitomo Metal Mining
Co., Ltd. and Mitsui & Co., Ltd. covering their purchase of a 21 per cent
interest in Goro Nickel. Inco and Goro Nickel currently expect that definitive
agreements with these two Japanese companies covering the terms and conditions
of this acquisition and certain other arrangements relating to their
participation in the project, including pro rata rights to product offtake, will
be completed prior to year-end 2004.

Inco and Goro Nickel have developed the framework for a Good Neighbour
Agreement, which has been endorsed by local community leaders in New Caledonia,
setting out the principles intended to build sustainable relationships with the
project's neighbouring communities. This accord is expected to encompass such
areas as education, training, local employment and business opportunities,
traditional values and social impacts, and to provide a community advisory role
in key operational areas such as the environment.

In August 2004, Goro Nickel signed a workplace accord with local unions to be
involved in the project which included a dispute resolution process designed to
avoid labour disruption during Goro's construction and operations phases.

6.   Reliance on subsection 7.1(2) or (3) of National Instrument 51-102

Not applicable.

7.   Omitted Information

Not applicable.

8.   Executive Officer

For further information, contact Stuart F. Feiner at (416) 361-7680 (Executive
Vice-President, General Counsel and Secretary).

9.   Date of Report

Dated October 19, 2004.



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

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