Toronto-based INCO LIMITED is waving the Canadian flag high and proudly this week. First, it announced significant new exploration results from its operations in this country. Then it told investors that the second quarter of 2006 will be the best in its history. Shareholders can expect diluted net earnings of $1.70 to $1.75 per share (21% above first call estimates and 60% above the second quarter of 2005).
These two bits of upbeat news come as the company is trying to sway investors to support its takeover of FALCONBRIDGE. The competing bidsthat of TECK COMINCO to swallow Inco and that of XSTRATA to buy up the 80% of Falconbridge it does not already ownhave already cleared the major regulatory hurdles. The original Inco-Falconbridge deal has been bogged down both in Europe and the U.S. by anti-trust investigations. But since Falconbridge announced that it would sell its Norwegian refinery to LIONORE MINING, the Europeans have let it slip that the original deal will probably be approved.
With patriotic thoughts ringing in our ears, we share the highlights of Inco's latest work.
At the Voisey's Bay mine in Labrador, drilling has extended the Upper Reid Brook zone and has confirmed the potential of the recently discovered Lower Reid Brook zone. These zones are 2,000 metres west of the Ovoid deposit.
At the Copper Cliff South mine in Sudbury, drilling has confirmed the potential of two high-grade nickel-copper-PGE mineral deposits associated with the 860 and 865 orebodies. These mineralized zones are near mine infrastructure, and there is a possibility that the mineralization extends at depth.
At the Creighton mine in Sudbury, high-grade nickel-copper-PGE mineralization has been discovered at depth. Drilling has extended the inferred resource of the 400 orebody 150 metres along strike and 250 metres down dip, and approximately 175 metres along strike and 200 metres down dip of the inferred resource of the 461 orebody. Both zones continue to be open at depth and along strike. Drilling is continuing to extend this mineralization at depth.
At Thompson, Manitoba, drilling has demonstrated the potential of two deposits that could be exploited by open pit mining at the Thompson 1-C zone and 1-D zone. Underground drilling at the Thompson 1-D upper zone has demonstrated continuity of the high-grade, sediment-hosted nickel sulphide located up-dip from current mining.
Whether shareholders of Falconbridge will tender their shares to Inco or Xstrata is very much up in the air. Both suitors are expected to up their bids. Personally, I would like to see Inco and Falconbridge join forces; together they will be a nickel powerhouse. The thought of Falconbridge falling into foreign hands sends shivers up my spine. I'll leave the last word to Scott Hand, Inco's chairman and CEO.
"Inco already has one of the best nickel reserve and resource positions in the mining world, both in terms of quality and size," said Hand. "These are all high-grade nickel deposits that provide the potential opportunity to increase nickel production and accelerate cash flow or extend mine life through low-cost development at our current operations, where we have the significant advantage of existing infrastructure. When coupled with our extensive pipeline of international projects, including our new development at Goro and the expansion at PT Inco, they are further evidence of substantial unrecognized value within Inco."
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