Inco finds new zones at Voisey’s Bay

Some existing zones have been extended and new zones of

nickel-copper-cobalt mineralization have been found at Voisey’s Bay, Labrador, reports Inco (N-T).

The company’s exploration drilling and geophysical work in the past quarter focused on the Western Extension section of Voisey’s Bay. This section, the Ovoid zone and the Eastern Deeps zone, represent the three principal sections of the Voisey’s Bay nickel-copper-cobalt deposit.

As drilling has continued, new zones in or outside these sections have been identified. Drilling completed to date on the Reid Brook zone, which represents part of the mineralization of the overall Western Extension section, indicates 16.7 million tonnes of inferred resources grading 1.46% nickel, 0.65% copper and 0.1% cobalt. This zone remains open to the east, and drilling of extensions to the east is in progress. Further drilling will be required to determine whether inferred resources here can be upgraded to the indicated category.

The recently discovered Southeast extension zone, a lower-grade extension of the Ovoid, is also open toward the west, and drilling is under way.

Inco estimates the following totals for the various sections of the Voisey’s Bay deposit:

* a proven reserve of 31.7 million tonnes in the Ovoid;

* an indicated resource of 47 million tonnes in the Eastern Deeps’ Far zone; * an indicated resource of 5.6 million tonnes in the Eastern Deeps’ Main zone; * an inferred resource of 2.4 million tonnes in the Southeast Extension zone; * an indicated resource of 7.3 million tonnes in the Western Extension’s Upper zone;

* an inferred resource of 5.6 million tonnes in the Western Extension’s Lower zone; and

* an inferred resource of 16.7 million tonnes in the Reid Brook zone.

New geophysical and geological drill targets within 10 km of the Ovoid have also been located, including: the Red Dog grid, 5 km southeast of the Ovoid; the Silver Fox grid, between 5 and 10 km east of the Ovoid; and the Makhavinekh (formerly Ashley) grid, 7 km southwest of the Ovoid. These targets are expected to be drilled over the next 12 months.

Targets in areas immediately south and west of the Western Extension section are also being examined. These target areas, as previously described, contain troctolite (the host rock for the mineral resources found in the Voisey’s Bay area) that is chemically identical to the troctolite host rock of the original Voisey’s Bay discoveries.

Geophysical work has continued to extend the area of troctolite found at Voisey’s Bay and in adjacent areas and, accordingly, the potential volume of rock that could contain nickel, copper and cobalt.

Some of Inco’s planned exploration work is dependent on a temporary road and airstrip designed to facilitate the mobilization of equipment. However, in September, the Newfoundland Court of Appeal overturned an earlier court ruling, with the result that Inco cannot complete the temporary road and airstrip.

The action had originally been filed in late June by the Labrador Inuit Association (LIA) and the Innu Nation — native organizations that are seeking to have the temporary road and airstrip subject to the overall environmental review process for the mine and mill facilities.

During the third quarter, Voisey’s Bay Nickel, Inco’s wholly owned subsidiary, continued to focus on construction schedules and power requirements.

Inco announced in September that initial production of an intermediate concentrate product from the Voisey’s Bay mine and mill facilities, which had previously been projected for late 1999, would be delayed by at least one year. The prediction was based on a review of the status of the environmental review and approval process established under a January 1997 memorandum of understanding among the federal and provincial governments and aboriginal groups.

Inco estimates that the necessary environmental approvals for the mine and mill facilities will not be obtained until late 1998 at the earliest.

The next step in the approval process will be the submission of an environmental impact statement (EIS), expected later this year. A 5-person panel will then review the report.

In mid-September 1997, a Newfoundland-based organization, whose members include environmental and other groups, filed an action in a Canadian federal court. The action sought to require that the environmental review and approval process for the proposed smelter and refinery facilities in Argentia, Nfld., be joined with the process governing the mine and mill facilities. While Inco does not believe the action will succeed, if it does it could result in a delay of the environmental review and approval processes and ultimately delay construction of the mine, mill, smelter and refinery.

Inco’s negotiations with the LIA regarding an impact and benefits agreement initially focused on social, educational, environmental and employment issues. The talks recently resumed.

According to a press release, Voisey’s Bay Nickel continues to believe that a resolution of the land claims and related issues between the aboriginal groups and the federal and provincial governments, as well as agreement on the critical issues relating to the completion of impact and benefits agreements, can be reached on a basis that would not delay the current schedule for construction and startup.

Meanwhile, at its Toronto head office, Inco reported net earnings of US$5 million for the third quarter. After the payment of dividends, however, the company ended up with a net loss of US$3 million (or 2cents per share), compared with net earnings of US$29 million (or 21cents per share) in the third quarter of 1996. The dividend declared was 10cents per share.

For the first nine months of 1997, the company’s net earnings were US$79 million (32cents a share), compared with net earnings of US$153 million ($1.14 a share) in the corresponding period of 1996. Per-share amounts for 1997 reflect the issuance of 50.3 million shares in August 1996 as part of the acquisition of former Voisey’s Bay owner Diamond Fields Resources.

Inco blamed the drop in its profits on lower deliveries of nickel from the company’s own stocks and lower realized prices for nickel, copper and cobalt. The company saw its nickel unit production costs increase, due in part to lower production as a result of the scheduled rebuilding of furnace No. 1 at PT Inco, the company’s 59%-owned Indonesian subsidiary.

Results for the first nine months of 1997 also included an after-tax gain of US$36 million (22cents a share), resulting from the sale in February of the company’s 100% interest in Doncasters, formerly known as Inco Engineered Products, and an after-tax expense of US$20 million (12cents a share) associated with a 26-day strike by production and maintenance employees at the company’s Ontario division in June.

The company’s realized nickel price averaged US$3.29 per lb. in the third quarter and US$3.45 per lb. in the first nine months of 1997, compared with US$3.50 and US$3.70 per lb., respectively, in the corresponding periods of 1996. The company’s realized copper price averaged US$1.05 per lb. in the third quarter and US$1.10 per lb. in the first nine months.