New nickel price high proves province prudent in Voisey�s Bay position

Premier Brian Tobin today commented on the fact that nickel prices broke through $4.00 on the London Metal Exchange. "Today�s nickel price of $4.00 per pound, combined with the technological risks associated with hydromet processing proves that the provincial government has been very prudent in talks with Inco on the Voisey�s Bay Project," the premier said.

In 1998, the province broke off negotiations noting that it could not do a bad deal at the bottom of the price cycle. "Today�s nickel price, the highest since November 1995, is higher than it has been at any point since Inco purchased the rights to Voisey�s Bay. It is almost a dollar higher than the day Inco announced a smelter and refinery for Argentia," said Premier Tobin.

Over the last two years, Inco has retreated from its plans to build a smelter and refinery in the province using proven technology. Premier Tobin said: " In negotiations up to January of this year, Inco would only give us a soft commitment to an unproven hydromet technology with no means or firm time lines to fulfill its processing commitment if that technology didn�t prove up. It was this unwillingness to commit to processing that was the main obstacle to achieving a deal."

The premier said: "There is a proven technology for producing nickel - it�s called smelting and refining. If Inco believes that hydromet is still the best option for Voisey�s Bay, but their confidence with the technology is not good enough for its shareholders and financiers, then Inco should get on with its process research and development program, including a pilot plant. Inco could also increase its proven reserve estimates by proceeding with the underground exploration program as it had intended to do in 1998."

The premier concluded by stating: " Nickel from Voisey�s Bay can be processed in Newfoundland and Labrador at a cash cost amongst the lowest of any nickel project in the world. Our position from day one with Inco has been that the Voisey�s Bay Project will include the processing of nickel concentrate to a final nickel product in the province. The processing technology to be employed is Inco�s choice. I am prepared to wait for the right deal."

Media contact: Heidi Bonnell, office of the Premier, (709) 729-3564.

2000 02 02                                         6:00 p.m.