Inco predicts 'unprecedented' $1.4 billion second-half profit

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INCO LTD.

********************* Inco expects 'unprecedented' second half results (All dollar amounts are expressed in U.S. currency)

TORONTO, July 23 - Inco today announced that it expects its adjusted net earnings in the second half of 2006 to significantly exceed those in the first half, based on the company's belief that the nickel market will remain strong through the remainder of the year.

"We have every reason to believe that the strength we're seeing in the nickel market today will continue unabated through the second half of 2006," said Executive Vice-President Marketing Peter Goudie. "With nickel stocks on the London Metal Exchange equivalent to less than one day of world demand, and below normal inventories throughout the supply chain, the market is extremely tight. We see no signs of relief on the horizon in terms of new supply - if anything, supply surprises for a number of years will likely be on the downside. Meanwhile, nickel demand remains strong from all sectors and shows no signs of slowing down." "When you combine the price levels we are now seeing with our record production and the impact of Voisey's Bay in our second half, our earnings and cash flow could reach levels that we've never approached before," said Chairman and CEO Scott Hand. Assuming second half prices equal the July month-to-date nickel price of $12.01 per pound and the July month-to-date copper price of $3.53 per pound, Inco's adjusted net earnings for the second half of the year would be approximately $1.415 billion or $6.17 per share on a fully diluted basis.

Taking into account the first half results for 2006, the estimated results for the full year would be $2.015 billion or $8.87 per fully diluted share.

On the same basis, again assuming second half prices equal the July month-to-date nickel and copper prices, estimated cash flow from operations before changes in working capital for the second half of the year would be approximately $1.66 billion. These estimates are on an Inco stand-alone basis and are based on Inco's guidance for production and costs provided with our second quarter earnings released on July 19, 2006. "We believe we're poised to see unprecedented earnings at Inco in the second half of this year. The timing of Inco's offer for Falconbridge simply couldn't be better for Falconbridge shareholders," Mr. Hand said. "By tendering to Inco's offer on July 27th, they not only get cash, but also the full benefit of unprecedented cash generation and earnings potential for both Inco and Falconbridge by becoming a shareholder in the New Inco. Following the creation of the New Inco, the subsequent creation of Phelps Dodge Inco will create an even greater copper nickel powerhouse offering significant value for investors." "If you are a Falconbridge shareholder, you should not be basing your decision based on consensus forecasts. Instead, look at the strength of current and expected metals markets in making your decision to tender to Inco's offer," said Mr. Goudie. "There is no better way for investors to profit from the expected strength in the nickel markets for the next five years or more than by participating in the nickel assets, resources and production of the combined Inco and Falconbridge," he said. "If you believe in nickel, Inco's offer is clearly the right option."

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