Inco intensifies work at Voisey’s Bay project

There were a few hiccups, but Inco (N-T) has digested Diamond Fields Resources and is moving ahead with plans to develop the big nickel-copper deposit at Voisey’s Bay, Labrador.

Inco has set the environmental assessment process in motion, and a full-scale feasibility study is under way. At the same time, delineation and exploration work is proceeding at the project site.

About 340 exploration and delineation holes have been drilled at Voisey’s Bay, for a total of 135,000 metres of drilling. Inco confirms a resource figure of 150 million tonnes, including a new preliminary figure of 50 million tonnes grading 1.36% nickel, 0.67% copper and 0.09% cobalt in the Eastern Deeps.

The published reserve figure for the Ovoid zone open pit remains at 31.7 million tonnes grading 2.83% nickel, 1.68% copper and 0.12% cobalt.

At Voisey’s Western Extension, Inco reports a new mineralized intersection and intends to test a 1-km extension along strike. Drilling is also continuing along the eastern extension of the Eastern Deeps for a strike length of 1 km, and a further strike length of 4 km is being surveyed with electromagnetic equipment.

Inco will investigate geophysical anomalies on the Red Dog grid, 2 km south of the Eastern Deeps, and at the Sarah prospect, 4 km north of the Ovoid. The company plans deep-view electromagnetic surveys on the Ashley prospect, 8 km southwest of the Ovoid, where some nickel mineralization has been found on surface.

Inco started the environmental assessment process by submitting its first project description to the national Department of Fisheries and Oceans in September. This will likely lead to public hearings over the next few months, and Inco expects the regulatory process will allow permits to be issued in May 1998. Actual production of concentrate from the Voisey mill could go ahead by 1999.

Inco envisages a combined open-pit and underground operation, plus a mill with a 20,000-tonne daily capacity. The Voisey operation will ship concentrate to a smelter and refinery which Inco expects to build somewhere in the province. To meet its goal of starting environmental assessment work for the smelter and refinery by Dec. 1, the company will have to select a site some time in November.

Inco is counting on having a complete feasibility study on the mine, mill, smelter and refinery by the end of the year.

The two aboriginal groups affected by the project are now negotiating with Inco to secure their social, economic and environmental interests. Inco expects to have an early agreement with the Labrador Inuit Association, but the company and the Innu (Naskapi Indian) First Nation are farther from a deal.

Inco, which has stated it intends to concentrate on the Voisey’s Bay development, has also reached an arrangement with Nuinsco Resources (NWI-T) to divest the Rainy River, Ont., option and joint-venture agreement inherited in the Diamond Fields takeover. Inco has allowed warrants to buy 2 million Nuinsco shares expire, and will be seeking a buyer for the 2 million shares that Diamond Fields owned over the next 60 days. Two Inco representatives on Nuinsco’s board have also resigned.

Inco, which issued 50.3 million common and 9.4 million preferred shares for the Diamond Fields takeover, has also moved to reduce its share dilution with a plan to buy back shares. A proposal to buy back 11.5 million common shares has been approved by the Toronto and Montreal stock exchanges.

For the third quarter of 1996, Inco reported earnings of US$29 million (or US19 cents) per share on revenue of US$732 million. For the same quarter of 1995, earnings amounted to US$44 million (US33 cents per share) on US$830 million. For the nine months ended Sept. 30, 1996, revenue was US$2.47 billion and earnings US$153 million (US$1.07 per share). For the comparable period in 1995, Inco generated US$2.57 billion in revenue and US$167 million in earnings ($1.37 per share). The earnings-per-share figures take into account dilution from Inco’s takeover of Diamond Fields Resources. The company has declared a dividend of US10 cents per common share and US8 cents per VBN share.