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Gold/Mining/Energy : Chesbar Resources- CBI Montreal

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To: stubbs who wrote (967)10/22/1999 10:40:00 AM
From: George Castilarin   of 980
 
Inco Opens US$50 Million Pilot Plant at its Goro Nickel Project
TORONTO, Oct. 22 /CNW-PRN/ - Inco Limited today officially commissioned the new pilot plant for the Company's Goro nickel project on the South Pacific island of New Caledonia, a French Overseas Territory.

Speaking at the opening, Inco President Scott Hand said the Goro project has the potential to be one of the world's leading and lowest cost laterite nickel producers. The pilot plant program is expected to cost about $50 million (U.S.).

``One of the great strengths of our Company, which has been one of the world's leaders in nickel for almost a century, is the high quality of our mineral developments. Goro is an excellent property and is a key part of our strategy to develop new sources of low cost, profitable nickel to meet the growing needs of the global nickel market,' Mr. Hand said.

The Goro project is 85 per cent owned by Inco and 15 per cent by the Bureau de Recherches G\006ologiques et Mini\022res, an agency of the French government. The project hosts extensive nickel laterite deposits with resources in excess of 200 million dry tonnes, averaging 1.6 per cent nickel and 0.17 per cent cobalt. Inco has dileneated an initial mining zone of 47 million tonnes of proven and probable reserves.

The fully integrated pilot plant, which was constructed from modules built in Canada and assembled on site, has a 12-tonne-per-day ore processing capacity. This plant is expected to validate the proprietary pressure acid leach and solvent extraction processing technologies Inco has developed to treat the Goro ores. The results of the pilot plant program will also be evaluated as part of the decision to be made on the construction of a commercial facility. This plant, which currently employs about 70 people, also will be used to train and develop New Caledonian employees for future commercial operations.

Based upon the results of the pilot plant program, the Company expects to be in a position to make a decision on building a commercial plant as early as the second half of 2000. Initial production could begin within three years after construction commenced. When fully developed, the commercial plant could have a production capacity of up to approximately 54,000 tonnes of nickel and 5,400 tonnes of cobalt annually and could be designed and constructed in one or two stages.

This news release contains forward-looking statements regarding the Goro project and Inco. Actual results may differ materially from these statements and projections depending on such key factors as the timing of the completion of the Goro pilot plant operation, engineering and construction timetables, construction and operating costs and rates, exploration and pilot plant results, nickel and cobalt prices and production rates, financing arrangements and the timing of the receipt of required governmental regulatory approvals.

Pictures of the Goro Pilot Plant and location map are available through Canada NewsWire E-Pix at www.newswire.ca.

GORO NICKEL QUESTIONS AND ANSWERS
October 22, 1999

Q1. How long has Inco been involved with Goro?

A1. Our involvement with Goro goes back to 1969 when we decided to
develop the newly-discovered (by Inco) deposit on the island of New
Caledonia. In 1992, we acquired the rights to the deposit.

Q2. How important is Goro to Inco's strategy to become the low cost,
most profitable producer of nickel?

A2. Goro is a very attractive nickel project for many reasons. It has an
excellent and large ore body with grades of nickel of 1.6 per cent
which is approximately 40 per cent higher than the Australian
laterite ore bodies which are currently being brought into
production. It can be mined by low-cost open pit methods, utilizing
innovative and proprietary Inco process technologies, which we
believe, will offer low operating costs. Inco has a strategic plan
to grow and meet the demands of expanding global market for nickel
with low-cost, profitable nickel. Goro offers excellent potential
and flexibility to meet that objective.

Q3. Can Inco proceed with the development of both Goro and Voisey's Bay?

A3. World demand for nickel is growing at the rate of about four per
cent a year. We want to grow with that market by supplying low cost,
profitable nickel. Good nickel projects such as Goro and Voisey's
Bay will always get developed. Both fit prominently into our growth
strategy.

Q4. How many people have been hired for Goro? And how many are local?

A4. Our Goro operation now employs 70 people, most of whom are from New
Caledonia. The rest are Inco engineering and technical support
personnel.

Q5. How long will Inco need to run a pilot plant to get the results
needed to make a decision on construction of a commercial plant?

A5. Based on past experience, a pilot plant campaign could take some 12
months. In the case of Goro, we have already carried out some
successful, but smaller scale, pilot plant and mini-pilot plant
tests in Canada so we are not starting from a zero base.

Q6. Why is Inco going through a piloting stage rather than proceeding
immediately to commercial production like other new lateritic
producers?

A6. Inco has had extensive experience with the commissioning of new
``greenfield' facilities employing new technologies. In the Goro
nickel process, there are large measures of very innovative
technologies, some of which have never been practised on a
commercial scale. For that reason and because we want to train a
group of employees in these new technologies, we consider it not
only prudent but essential to begin with a fully integrated pilot
plant before seeking to undertake the operation of a commercial
facility. The pilot plant will also provide residue for the design
of tailings containment. Certainly, the recent experience of other
new laterite producers in Australia would suggest that a more
conservative and prudent approach is justified.

Q7. When will Inco make a decision on a commercial operation at Goro?

A7. With the pilot plant in operation, we will have an opportunity to
demonstrate our proprietary processing technology, train our
employees and fine-tune the economics of the project. We expect to
be in a position to make a decision on a commercial operation as
early as the second half of 2000. If we start construction in 2001,
the commercial plant could be finished as early as the end of 2003.

Q8. How much would a commercial operation cost?

A8. The total capital cost for the entire project would be about $1.4
billion(US). We would likely develop a commercial operation in
phases with phase one being about 30,000 tonnes, 27,000 tonnes of
nickel and 2,700 tonnes of cobalt a year. The plant would be
designed in such a manner that its capacity could be readily
doubled.

Q9. What are the significant differences between Inco's process to treat
Goro ores and the process for Australian laterite ores?

A9. Inco's proprietary technology processes the Goro ore at a higher
temperature than the Australian projects. As a result, leaching is
much faster and the number of autoclaves needed is reduced. Inco
also utilizes a proprietary solvent extraction process for recovery
of the nickel and cobalt. The Goro process produces nickel oxide by
pyro-hydrolysis that can be fed to refineries in Japan, South Korea
or Taiwan. Other lateritic producers produce a finished product such
as electro-nickel or hydrogen-reduced nickel.

Q10. A recent news story suggested corrosion was the problem with
pressure acid leaching in other lateritic operations. What makes
Inco's technology less susceptible to corrosion problems?

A10. With Inco's innovative and proprietary processing technologies, we
do not have to use saline water.

Q11. Has Inco found a partner to develop Goro? Why would Inco need a
partner?

A11. While we have had considerable interest from potential partners, we
have decided to direct our attention, in the near term, to proving
our proprietary processing technologies. It still remains our
intention to seek a partner in this project and we remain receptive
to attractive partnership opportunities.

A partner can be important for a number of reasons -- reducing
Inco's financial risk by helping finance the project, bringing
special technological and other expertise to the project, or
marketing some of the production. That's the kind of partnership we
have with our PT Inco Indonesia operation.

NEW CALEDONIA: INTERESTING FACTS

- New Caledonia is one of the largest Pacific Island countries,
consisting of a main island known as the Grande Terre or Mainland,
surrounded by smaller islands, the most prominent being the
Loyalty Islands. It lies just north of the Tropic of Capricorn with
Australia 1500 kilometres to the west and New Zealand about 2,000
kilometres to the south. The Mainland itself is 400 kilometres long.

- Discovered in 1774 by Captain James Cook, New Caledonia is now a
French territory composed of three provinces, the Northern Province,
the Southern Province and the Loyalty Islands Province.

- The population of New Caledonia is nearing 200,000, half of whom are
under 25. It is considered a multicultural population with interests
ranging from Pacific Islands customs to French traditions.

- New Caledonia ranks among the 20 richest countries in the world. The
services sector is New Caledonia's chief source of wealth.

- Nickel ore extraction and smelting remain the main industrial
activities by far and will be the cornerstone for future development.
Nickel is the main export commodity, well ahead of seafoods and fruit.
It's not surprising since New Caledonia comprises nearly a quarter of
the world's known nickel reserves. Part of New Caledonia's ore is
processed by the Soci\006t\006 Le Nickel (SLN), a French company.

- The Port of Noumea, initially developed to meet the needs of the
mining industry, remains today the hub of the New Caledonian economy.

Tourism is a major growth industry. It's easy to see why. New Caledonia possesses the world's largest lagoon, has outstanding landscapes on the Mainland and on the outer islands, and has a moderate climate where monthly temperatures seldom exceed 27 degrees C.

HISTORICAL HIGHLIGHTS

1999 Inco Limited officially commissions the US$50 million pilot
plant for the Goro Nickel Project.

1997 Inco and its partner, Bureau de Recherches G\006olgogiues et
Mini\022res, an agency of the French government, announced it
will proceed with the next stage of the Goro Nickel
Project, the construction of an integrated pilot plant at
Goro.

1995 Inco completed an environmental baseline study.

1994 Inco constructed a mini-pilot plant in Canada and completed
eight test campaigns of Goro ore samples.

1993 Inco completed evaluation of various possible processes and
recommendations and selected sulfuric acid leaching under
pressure and solvent extraction as the preferred process
for the project.

1992 Inco and BRGM formed Goro Nickel with Inco holding 85 per
cent and BRGM 15 per cent.
Inco allocated US$30 million to select and develop a
metallurgical process to convert Goro ore to marketable
nickel and cobalt products.

1969 Inco entered into an agreement with a French company set up
to develop the New Caledonia deposits at Goro, which were
discovered by Inco.

1926 International Nickel sold its mining properties in New
Caledonia.

1905 Canadian nickel production surpassed that of New Caledonia
for the first time.

1902 International Nickel Company was formed, merging the
Interests of the Canadian Copper Company, Orford Copper
Company and Soci\006t\006 Mini\022re Caledonienne, among others.

1900 Soci\006t\006 Mini\022re Caledonienne was incorporated at Noumea in
New Caledonia. It held large holdings of mineral land in
New Caledonia, jointly and independently with Nickel
Corporation Limited.

1864 Nickel was discovered in New Caledonia.
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