Filed by Inco Limited
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Falconbridge Limited
Commission File No. 1-11284
Inco Limited Commission File No. 1-1143
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 1
INCO LIMITED
MODERATOR: SCOTT HAND
FEBRUARY 14, 2006
2:00 PM CT
Operator: This presentation will be deemed to be solicitation material
in respect to Inco's Proposed Combination with Falconbridge.
Inco filed with the SEC on October 24, 2005, a registration
statement on Form F-8 containing an offer to purchase and a
share exchange take over bid circular, and on each of
December 15, 2005 and January 20, 2006, an amendments to
such Form F-8, in connection with the proposed combination,
Inco has filed and will file, if required, of the document
with the SEC in connection with the proposed combination.
Falconbridge has filed a scheduled 14D-9F in connection with
Inco's offer and has filed and will file, if required, other
documents regarding the proposed combination in each case
with the SEC.
Investors and security holders are urged to read the
registration statements and any other relevant documents
filed or that will be filed with the SEC when they become
available because they will contain important information.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 2
Investors and security holders may obtain copies of the
registration statement on Inco's and Falconbridge's SEC
filing free of charge at the SEC's Website -- www.sec.gov.
In addition, documents filed with the SEC by Inco maybe
obtained free of charge by contacting Inco's media or
investor relations department.
Scott Hand: Well, good afternoon and thanks for being here today.
Recent times had been pretty interesting and exciting for
Inco, we made a lot of progress in the year 2005 and we
intend to keep right on going in the year 2006.
As you read in our news release, we had another very good
year and we have expect more in the year 2006 and this means
building on the progress that we are making at the end of
last year, and very importantly, successfully completing a
friendly acquisition of Falconbridge to create a new Inco --
very exciting time.
Before I elaborate and before I talk more about that, I want
to turn to the screen for a list of the key members for
management team who are present and who will not be making
presentations today, and also please notes the Safe Harbor
statement on forward-looking information and other related
statements.
The forward-looking information we will make, excludes the
impact of our offer to buy the Falconbridge unless I
indicate otherwise.
And also, given the recent changes in securities legislation
in Canada, there are a few other points that I am supposed
to make on behalf of all the
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 3
speakers, first, actual results could differ materially from
the 2006 outlook and other forward-looking statements that
we will make.
Certain material assumptions as outlined in today's press
release which I hope you all have were made in developing
our 2006 outlook and other forward-looking statements.
Third, we have filed today's press release and the text and
the slides which you will be seeing on the SEDAR in Canada,
and finally, our press release contains additional
information on the risks related to forward looking
information presented today.
Also all references will be in US dollars unless we indicate
otherwise and the conference call is being Webcast on a
live, listen-only basis. As I said before, 2005 was a great
year for Inco, revenues and Canadian GAAP earnings reached
all time high, we realize very strong cash flow from our
operations.
Our balance sheet is strong and last week, we increased our
quarterly dividend by 25% reflecting our strong financial
position, but also a very strong outlook for Inco markets.
But looking at operations, we have met or exceeded our
production, our cost, our price premium targets or guidance,
we achieved consistent and reliable production as well as
productivity improvements across the company and at PG Inco,
we had record production, we delivered.
On the development front, we completed Voisey's Bay ahead of
the original schedule and the ramp up is proceeding very
well and construction is well underway at Goro with a very
strong leadership team.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 4
We finished the year with about a billion dollars in the
bank while implementing our growth program and of course our
friendly acquisition of Falconbridge will create the world's
leading nickel company and a great copper company.
Another key success to us has been and will continue to be
the nickel market which has gathered steam as we moved into
the year 2006.
I know there are lot of people who are saying, we have seen
the high for nickel. I have heard it before and my advise is
be cautious, nickel demand remain strong across the board in
China, every year, the wise man say that China's economic
growth which is improving living standards, increasing
demand, can't continue, I want to say that 1.3 billion
people in China beg to differ, so be aware of what's
happening on the ground and not what you read from the
western commentators that haven't spent a lot of time in
China.
Also industrial productions in capital investment are strong
in the United States and they are now improving in Europe
and Japan.
There is robust demand in the United States and Europe in
the high nickel alloys market, fueled by aerospace, power
generation, chemical processing and the medical markets, and
as Peter Goudie will tell you shortly, we are moving out of
the stainless steel production cut backs in 2005, the
stainless steel output and prices rising.
And nickel companies are producing all they can. New supply
is coming and of course, Inco was playing a very big role on
that through Voisey's Bay, through Goro, and to our
expansion at PT Inco and by getting more production in
Ontario and in Manitoba.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 5
But supply in our view will continue to chase demand for
some time to come.
We have been bullish on the nickel market since the year
2002 and I think we have pointed to you in the right
direction.
Nickel prices have risen in 2002, 2003, 2004, and 2005,
volatile yes, but the direction has been up, so I'd advise
the forecasters to be careful. The bloom has not off the
road set against nickel at your peril.
And with a good year on the books for the year 2005, what do
we see for the year 2006? And here are our objectives --
consistent, reliable, efficient and safe production must
continue across the company with further improvements in
productivity.
The ongoing ramp up of Voisey's Bay along with continuing
efforts to expand that great ore body, steady progress and
delivering on the unique promise of Goro which many of you
saw, when we have to visit to Goro last November.
Nickel production of 565 million pounds with the arrival of
the Voisey's Bay ore as well as total production through
arrangements with OMG and Boliden in Finland which we'll
hear more about shortly.
Copper production of 340 million pounds up almost 20%
because of the Voisey's Bay concentrate. PGM production at
400,000 ounces with the potential for even higher output as
we continue to focus on PGM rich ore.
Nickel price premiums of 5-10 cents and that's in line with
the year 2005 and total cash cost after by product sets us
at $2.35 to go to $2.40 a pound and our own mine production
at $2.15 to $2.20 cents a pound.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 6
That's up from the number that we are working with last year
when we assumed the lower Canadian dollar and lower energy
cost than today, and the space, of course on the higher
energy cost that all miners are facing today.
It also recognizes the fact that Voisey's Bay is expected to
beat our original plans of producing 120 million pounds --
by producing 120 million pounds of concentrate in the year
2006.
But not all that where get through the final production this
year as we fill the pipeline from Labrador to Ontario and to
Manitoba and Peter Jones will elaborate on this.
But once Voisey's Bay is fully in the system in the second
half, our cost should be about 15 cents lower than I
indicated for our own mine production.
And also, you should understand that we are maximizing
production in this nickel market at all locations and
incurring of course higher cost to do so.
If we did not, our ongoing cost will be about 10-12 cents
lower, thus, as we move into the year 2006, we are very
well-placed on the cost curve.
As for the impact on potential earnings, it's a tough call
in 2006 given that consensus metal prices may lag events,
they are doing so right now in the market place, but at the
first call consensus, metal's price is $6.45 cents for
nickel, $1.80 for copper. The PGM price which are on the
screen and all this that I said are below current metals
prices.
We are comfortable with the first call mean consensus for
adjusted 2006 EPS of $3.50 a share.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 7
Our cash generation will be about 1.4 billion or about $6.30
a share.
But let's take a more current look and perhaps to more
realistic one. If you used year-to-date prices, that's 6.70
for nickel, 2.19 for copper, and the PGM numbers on the
screen are adjusted EPS for 2006, will be about 4.10 to 4.15
a share and of course nickel today close at $6.82 a pound.
Our cash flow generation will be about 1.54 billion and cash
flow per share is about $6.90 cents.
And considering what has happened over the past couple of
years, we should carefully consider the likelihood of metals
prices coming in above the consensus.
Remember strong economic growth in China. The OECD countries
are seeing better growth and improved industrial production,
but don't be surprised if supply continues to chase demand
for nickel and for the other metals.
Before I ask Peter Goudie to come up and talk you about the
nickel market, I just want to say a few words about the new
Inco.
We continue to move forward on the anti-trust reviews, we
received clearance from Canada, just two weeks ago, and we
expect to get responses in the next week or so from the
United States Department of Justice and the European
Authority.
And assuming positive outcome, the way would be clear for us
to proceed apparent with our offer for the Falconbridge
share.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 8
We are very much encouraged by the support from the
government in Canada and from the community support that
we've received up until now.
And the management teams of Inco and Falconbridge are of one
mind of the exceptional merits of this combination.
The new Inco would be the world leading nickel company, a
great copper company, 850 million pounds of nickel in 2006
up to almost a billion pounds by the year 2009.
Copper production pro forma of 1.486 billion pounds in 2006
with the potential to double in the year 2011, and also good
positions in zinc, PGMs, cobalt, and aluminum -- all
providing very good cash flow.
We will have diversification, and what we market and sell as
where we mine and produce metals in North and South America,
Europe, Asia, and the South Pacific.
The new Inco will be larger and it will be a better finance
with a great project pipeline and the ability to pursue some
tremendous growth opportunities.
It would be resource-rich company with a terrific
exploration portfolio around the world and outstanding
prospect for long-term growth, and we will have a very
experienced and strong management team.
From year one, the Falconbridge acquisition will be
accretive to (an) asset value, to book earnings and the cash
flow. We will have a very solid financial position in an
enterprise value about 25, $24 billion which move us way up
on the scale of world mining companies.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 9
We expect to achieve synergies, pre-tax, of $350 million, a
net present value of 2.5 billion with a discount rate of 7%
and that's of the end of 2007 or by the end of 2007.
Our nickel and copper cash cost will be very low and we will
be one of the top metals and mining companies in the North
American markets.
Some people asked why it took so long for this to happen and
it would have been great if it could have happened sooner
but when you examine the pluses and the minuses, its clear
that ideal timing aside, doing the transaction now is a
great win for both Inco shareholders and Falconbridge's.
Let's take a look at the numbers and the new Inco and
consider the opportunities not often but a chance comes
along to deal with much larger, a more diversified company
with leading and strong positions in a number of metals and
to create major efficiencies and values along the way,
that's what we are doing by buying Falconbridge --
positioning the shareholders of both companies and of the
new Inco to bring even a better future for the shareholders
of both.
So we are very enthusiastic about it and we are making good
progress.
With that I will ask Peter Goudie to talk about the nickel
markets.
Peter Goudie: Thank you Scott, I am very happy to be here again to be able
to share my views on the nickel market with you this
afternoon.
Last year, I highlight one key fact that would drive the
market in 2005. The possibility that Chinese demand would
grow by 45,000 tons and consume 3/4 of the increase in world
nickel supply, I was wrong.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 10
China continues to surprise on the upside.
Chinese nickel demand growth exceeded 55,000 tons and
accounted for all the growth in world nickel demand. There
is again, the single key fact that you should consider this
year -- world's stainless production growth will rebound at
least 7% underpinned by Chinese stainless production growth
of over 1.2 billion tons.
And you know, I could be wrong again, underestimating this.
This will lead to ongoing tight nickel brackets forcing
price to once again control the supply-demand balance.
In 2005, the LME cash nickel price averaged $14,733 per ton,
$6.68 per pound -- the highest annual nickel price in
history.
Yet western world stainless steel production growth fell by
12% in the second half for the year -- the sharpest
contraction and in at least 15 years.
Given this negative influence, how is the price able to beat
2004's level by 6%? Four reasons -- China's demand growth,
exceptional non-stainless markets around the world, nickel
producers not making target by 45,000 tons, and
exceptionally low nickel inventories.
Our outlook for this year is based on four key points, a
strong rebound in global stainless production, a tightening
scrap market, exceptional non-stainless strength and limited
nickel supply growth.
The combined impact of these points appears to be missed by
many market commentators.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 11
I will be happy to clarify.
The global economy has been improving steadily, that is
great news for stainless production and nickel demand.
Several leading indicators point to a better year.
Remember that nickel demand and industrial production have a
94% correlation over the last 50 years. Stainless production
growth has averaged 1.5 times industrial production growth
for the last 50 years.
Many commentators of steel forecasting lower nickel prices
this year and next and yet we are only six months into the
current economic upswing. Stainless steel is the industrial
metal. The improving economic environment and industrial
production growth forecast of about 6% (playing) confidence
to our stainless production growth forecast to 2006 of
over 7%.
Significant upside potential exist base on the average
rebound year of more than 8% and the stainless production to
industrial production ratio of 1.5.
Stainless production growth will be strong, make no mistake,
and not just in China.
Consumption is rebounding, inventories have fallen and new
facilities will ramp up.
We are already witnessing the start of the production
rebound. We have heard that melt rates in the first quarter
are sharply higher around the world. Orders are picking up
strongly and lead times are well into Q2.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 12
There have been a flurry of announcements of base price
increases worldwide. We have had many requests for spot
nickel units to meet the higher melting schedules.
Some commentators written off, stainless steel, do not join
them.
Stainless steel is an amazing product with unmatched
characteristics and value. The situation in the second half
of 2005 was just an inventory adjustment -- just an
inventory adjustment.
China's stainless steel production growth of 1.2 million
tons, will this year, that make China the world biggest
stainless steel producer.
Only 3 million tons of new capacity will be built just this
year in China as its quest for self sufficiency continues.
We expect the total rise in Chinese nickel consumption of
about 30%, or 50,000 tons, again leading the world and
taking out most of the increase in nickel supply.
And remember, I usually make mistakes and underestimate
Chinese increases. China will not be alone in increasing
stainless output. We expect the Western world production to
rise by over 500,000 tons.
In 2006, the average nickel grade of stainless will increase
as Chinese import controls and consumer reaction against
low-nickel-content 200 Series intensify.
We saw 200 Series imports to China fall from 70,000 tons per
month a year ago to less than 30,000 in December.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 13
This single factor represents 20,000 tons of additional
nickel demand. The market turned to 200 Series as a form of
substitution. But difficulties were encountered and output
is now being cut to more appropriate levels.
The second key driver for 2006 is scrap tightness.
Last year, stainless steel production cutbacks were coupled
with the highest scrap ratio in history, sharply reducing
primary nickel demand in stainless.
But the abundance of scrap was the result of lower total
nickel demand, not higher supply of scrap.
In fact, the highest nickel price in history could not
encourage more scrap to the market. And supply fell by 1%
last year.
This year, we see scrap being much tighter with supply
growth of only 2% at the most. Combined this with 7% to 8%
stainless production growth, lower 200 Series and a flat
(actuated) ratio and you will quickly realize how tight the
scrap market will be and how much primary nickel demand in
stainless will grow.
I'm confused by some commentators who forecast a falling
nickel price, but also predict an increase in scrap supply
-- an illogical pair of assumptions to make.
Stainless steel production cuts in the second half of last
year will deplete the supply chain of thousands of tons of
nickel and scrap for 2006. Rising stainless production
always faces relatively less scrap due to this lag effect.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 14
Periods of high stainless production growth are typically
characterized by a sharp fall in the scrap ratio. The
reverse is also true as we saw in the second half of 2005 as
the steady supply from scrap was fed to mills with the
decreasing output. Do not underestimate the lag time in
collection and delivery of fabrication scrap.
The high nickel prices during the past two years have led to
the collection and liquidation of large quantities of old
scrap which were pulled forward from future periods and, as
a result, will not be available this year.
The third point for 2006 is the further strengthening of the
non-stainless market, up another 6% to 8% as the aerospace
build rate rebound continues and other applications such as
gas turbines, hybrid vehicles, power tools and LNG tankers
all show strong growth.
While you're looking at non-stainless applications, I want
to highlight some of the great work our Inco's Specialty
Products Group has done. We continued to invest in the
rechargeable battery market in China and we are encouraged
by the record growth in the hybrid electric vehicle segment
as well as consumer sales.
Our continuing strong sales of nickel powders for nickel
cadmium batteries are driven in large part by strength in
portable power tools. In this area, nickel cadmium has a
distinct technical advantage.
We are pleased to see the European Parliament voted to
exempt many key industries from cadmium ban, recognizing the
technology's importance.
Inco has recently achieved a breakthrough in diesel exhaust
filtration with the development INCOFoam HigTemp.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 15
This is an exciting new alloy foam that offers significant
advantages in the removal of particulate matter from diesel
exhaust.
It is receiving increased attention especially in Europe
where diesel engines have achieved significant penetration
and where tougher regulations are taking effect.
In fact, we are proud to have recently received the
prestigious Annual Innovation Award by VDI -- the German
Engineering Association, as well as the European Powder
Metallurgy Association Award of Merit, recognizing the
importance of our new product and our new technology.
It offers a lighter and smaller filter as well as
significant cost savings and represents a new market to
value-added nickel demand.
The fourth and final driver of the market in 2006 is nickel
supply. Overall, production growth will be about 3.6% --
45,000 tones -- as relatively few expansions come to market.
This will be another year in which most producers will be at
or above capacities and historic maximum levels in an effort
to produce every ton of nickel that is needed by consumers.
The result is a very high risk of disruptions which cannot
be made up for later in the year.
We only need to look back at last year to see what can occur
when operating at high capacity utilization. Forty-five
thousand tons of production was lost to
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 16
strikes, feed shortages, maintenance problems, and severe
weather conditions. And nickel inventories are still
historically low.
I believe scrap and primary nickel supply growth will be
limited. I know stainless production and nickel demand are
recovering strongly. The global economy is growing. Chinese
demand will continue to be powered by strong increases in
stainless production. Non-stainless applications have
another year of robust growth ahead.
Industrial production growth of 6%, the expected stainless
rebound and limited nickel expansions will lead to a
supply-demand deficit. Elevated nickel prices will again act
to keep demand in line with supply.
Last year was a time of massive restructuring of the
stainless industry which is recognizing the new global
powerhouse of China and its quest for self-sufficiency. This
year, the restructuring continues and total nickel demand
will increase.
The same drivers affect all base metal cycles -- industrial
production, inventory levels, currency movements and capital
investment in the mining industry. As a result, the cycles
of base metals are typically very similar.
Base metals' fundamentals are strong. Yet, nickel seems to
be overlooked in the recent rally by some commentators. This
could prove embarrassing. The fundamentals of nickel are
perhaps stronger than those of many other metals.
Our view, consistent since 2002, has not been changed by
just six months of stainless steel inventory adjustment.
Commodity prices and market forces will cycle as they have
done historically.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 17
But with hundreds of millions of people still climbing the
adoption curves of nickel and stainless consumption, some
historic norms will become irrelevant and cycle times will
change.
Do not assume that markets must soften in the next couple of
years simply because they have softened before. Do not rely
on gut instincts to guide you. Mark my words, your gut has
never been here before.
We are in a new phase in the nickel market, a phase that
will only be complete when a billion more people have made
it into this market. It's a phase that will be studied in
history, but only once the future is behind us.
Thank you.
Scott Hand: Thanks, Peter.
Inco's success in achieving operational and growth
objectives last year prepared us well for a very good year
in 2006. Our worldwide focus on safety led to our best-ever
results -- 1.3 disabling injuries per 200,000 work hours.
And we'll not be satisfied until this number is zero.
PT Inco's new off-gas equipment on Furnace 3 went online in
May and brought dust emissions well within environmental
standards
As an unexpected benefit, the furnace output rose by 1.7
million pounds of nickel a year.
In Ontario, we expanded our asset plant capacity for fluid
bed roasters that will be tied in later this year.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 18
Along with other changes, it will cut sulfur dioxide
emissions by 30% and reduce particulate discharge. And more
improvements are planned.
Nickel production from all sources is 487 million pounds
last year, in line with our October guidance. Given strong
prices, we'll boost profitable production in 2006, even if
this sometimes means higher cost. Currently, we'd estimate
this higher cost at around 10 cents to 12 cents a pound.
This year, our operations are expected to produce 535
million pounds plus another 30 million pounds of finished
nickel through cold smelting and refining concentrates in
Finland under contracts with Boliden and OMG.
And we could do even better. Sudbury smelter is running
well. Our new oxygen plant will be online in May, adding
reliability to an area responsible for much downtime.
By late-2006, at our Ontario concentrator, we'll be able to
divert some copper into copper concentrate and make room for
even more nickel in the smelter.
Voisey's Bay achieved commercial production in December,
four months ahead of our original schedule and the ramp-up
is going well.
It's tough finding ships to get concentrate out when the sea
is frozen, but I think that challenge just reflects how well
the project is doing.
Copper and PGM production were good stories last year too.
We produced 277 million pounds of refined copper, slightly
above guidance, plus another 10 million pounds of copper in
concentrates from Voisey's Bay.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 19
In 2006, copper output should climb almost 20% to 340
million pounds, including 65 million pounds from Voisey's
Bay concentrates.
And PGM outputs reached 419,000 ounces in 2005, well above
the 380,000 to 390,000 ounces that we planned. We expect
this year to be in the 400,000-ounce range, but we'll be
pushing for more.
The cobalt output should rise from 3.7 million pounds last
year to about 5 million pounds in 2006 as we benefit from
the higher cobalt in Voisey's Bay feed.
Well, a year ago, most of us wouldn't have forecast today's
energy prices and the Canada-US exchange rate. These factors
raised our costs. But I believe, in some areas, we did a
great job in cutting the expenses and increasing
productivity.
Last year, Inco's nickel unit cash cost of sales, net of
by-product credits, was $2.65 cents a pound, 25 cents better
than our guidance last October of $2.85 to $2.95. This
exceeded 2004's cost due to dollar strength -- the Canadian
dollar strength -- higher energy prices and rising expenses
for supplies and services.
Output fell because of major plant shutdowns in Ontario and
Manitoba to set up for Voisey's Bay feed and enable us to
cut SO2 emissions this year. Costs were partly offset by
higher by-product prices and less spending on purchased
feeds. In addition, we got 70% -- almost $40 million US --
against that cost reduction target of $60 million last year.
Our operating divisions achieved productivity increases
across the board. We expect further improvements in 2006.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 20
PT Inco's mine productivity rose 21% from 2002 levels to 53
tons of ore per work shift. In 2006, PT Inco aims at 56 tons
a work shift. And Mark Cutifani will discuss our Canadian
operations a little later.
In 2006, we expect nickel unit cash cost of sales after
by-product credits of between $2.35 and $2.40 a pound. Aside
from a 9-cent-a-pound increase due to the Canadian dollar's
appreciation from 82 cents to 85 cents, we face steep energy
costs, mainly high sulfur fuel oil and diesel of PT Inco.
Lower cost for purchased feed, higher nickel and copper
production and rising by-product credits served as a partial
offset. And we now expect 2006 Inco mine sales production
unit cash cost of sales of $2.15 to $2.25 a pound using
consensus prices.
Last year, our 2006 expected production from Voisey's Bay
was 110 million pounds of nickel and concentrate. Given the
good ramp-up, our estimate is now about 120 million.
However, as we schedule a (shift to fill) pipeline, the
quantities of concentrates processed at our operations will
be lower than originally planned resulting in around 83
million to 85 million pounds of finished nickel from
Voisey's Bay source. We'll get 65 million pounds of copper
in concentrate and 1.7 million pounds of cobalt.
And in the second half of the year, with the pipeline
filled, our overall nickel unit cash cost of sales should be
at least 15 cents a pound lower than that projected for the
full year.
We had a record production at PT Inco last year, 168 million
pounds of nickel-in-matte.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 21
In Q4, with no planned downtime, our output exceeded
180-million-pound-a-year rate. We plan to increase PT Inco's
production capacity by 33% over the name plate capacity to
200 million pounds of nickel-in-matte yearly by 2009.
Obviously, this is going to require more mine outputs,
power, and changes to the plants. In the short term, the
outlook is good. Lakes feeding our generators are above last
year's highest level. A historically-best rain period is yet
to come and we'll do cloud seeding.
In the long term, we need another dam and generating plant.
Engineering for this is going well and long-delivery
turbines and generators have already been ordered. Power
generation should start in late-2008, but required changes
to a forestry permit may alter the timing just a bit.
The new dam and power plant will give us another 90
megawatts a year of hydropower and allow us to raise
production, lower annual cash costs by 10 cents to 15 cents
a pound and cut energy supply risk.
In 2005, we used more fuel oil to boost production given
these great nickel prices. We had oil swap contracts in
place for about 16% of PT Inco's usage and we'll continue
hedging (to when it peaks).
Despite energy costs, Indonesia more than doubled internal
diesel price. We recently installed two new fuel power
generators since the strong nickel price enables us to make
good margins on the incremental production.
We're optimizing oil production, using fuels more
efficiently and investigating substitutions of pulverized
coal for high-sulfur fuel oil in our
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 22
kilns and dryers. Given commodity prices, this could yield
operating cost savings of 15 cents to 20 cents a pound for
PT Inco.
We're working to reduce commodity price impacts, improving
roads to extend tire life and lower fuel use.
And, by the way, we secured our tire needs well into 2007;
and by then, we expect the shortage should have eased.
Last year, a new mining area, supplied 2.7 million wet
metric tons of ore. And in June, under an agreement with PT
and (unintelligible), we started selling about 1 million
tons of nickel ore a year to its smelter from our (Pomoloti)
project
Depending on technical and economic viability, sites in our
contract of work area, at Bahodopi and Pomalaa, could
support two projects each producing more than 100 million
pounds of nickel a year.
A hydroelectric plant to treat limonite ore in Soroako could
produce another 50 million pounds of nickel annually.
PT Inco's challenge in 2006 is to produce 167 million pounds
of nickel-in-matte and prepare the plant for even higher
outputs.
Also, we'll install (DEFCAP) equipment on the second furnace
and prepare a third.
At Voisey's Bay, our 15,000 ton a year project, started up
earlier than our regional schedule. (Money) forward returns
from January 2003 should top
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 23
23% based on $3.75 a pound nickel and a $1 a pound copper.
And we all know from Peter, how conservatives those numbers
are.
In October, we opened our demonstration plant and we've
already produced nickel cathode. The plant's running well,
and we can now test our high direct process and construction
materials in extended operation.
We've contracted the use of the Falconbridge ship to move
Voisey's Bay concentrate, pending delivery of our own much
larger vessel, the (Umiak). It's due in April, and will go
into service right after.
Aboriginal employment is nearly 50%. Talks will start
shortly with the United Steel workers on Voisey's Bay labor
agreement but I caution that it's not unusual for a
perspective agreement to take six to 12 months to negotiate.
We continue to achieve good results from our exploration
program on (Reed Brook). Earlier, it indicates a massive
sulfide zone with intersection showing attractive grades.
We're focusing on a section that shows good thickness on the
high nickel copper grades of a massive sulfide zone, with
several hundred meters as favorable structure still to
explore.
Turning to Goro, we're on track to delivery a great new
source of nickel for the growing Asian market.
Last fall, some of you, had a first hand feel for the
project scope, structure , and leadership. We'll likely can
and we will expand Goro many times.
So looking at phase I financial results alone, undervalues
its overall potential. Engineering is about 70% complete,
with construction managers in about 900 workers in place.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 24
Earth work is started for the process plant at our residue
storage facility and on road realignment.
Our test mine extends to the separate horizon and expose
bedrock. We've done a lot of preproduction planning. Soon
the first of almost 3,000 skilled Filipino workers will
arrive and construction will really get underway.
With two yards in the Philippines, we're building 400
modules and pre-assembled units with the process plant
weighing an average 200 to 300 tons, and delivery should
begin on April 1 with the boiler plant first off the ship.
Milestones this year include completing the port and the
steam plant and processed water pipeline in time allow Prony
Energy to fire up its first generator.
We're getting cost efficiencies from modulization and our
contracting strategies.
We bought many major items before cost-types, we are
reprocessing (after training) materials. The material
quantities are within budget.
CAPEX for the mine, process plant and infrastructure will
likely by at the upper end of the 1.87 billion plus 15% cost
range. A definitive estimate is due in the second quarter
when engineering will be 75% complete on all major contracts
would have been (left).
Our start-up target remains late 2007.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 25
Goro's returns should be 16%. That's $3.75 a pound nickel,
and $9 a pound cobalt, exceeding most other projects. We
expect cash cost a pound of nickel after buy credit for
about $1.10 to a $1.15 of this assumed metal prices.
The total nickel unit cost sales will be about $2 a pound,
including depreciation and amortization.
Goro will generate strong cash-flows, giving us low-cost
position and tax holiday. With $3.75 a pound nickel and $9
pound cobalt, Goro should produce about $220 million of
cash-flow in 2009. That's about $1 a share fully diluted.
So I have an overlay team of about 100 people on-site for
commissioning and ramp up.
After a year, we should be at about 75% of annual output of
60,000 tons a nickel and 4,300 to 5,000 tons of cobalt, and
this will rise to 90% after a year or two.
Some people still doubt the technology that nickel pressure
acid leach worked for the Australian laterite producers.
Their issue is with building materials and operating
challenges.
We've learned from them. Nearly all our technology is used
effectively for nickel and we run a two and a half year
pilot term program.
PT Inco's wet laterites has thought us a lot. We've hired
veterans from other projects. And crucial operating team
members are all ready on-site. We're on track and we will
succeed.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 26
Goro can grow either through (unintelligible) on ground
that's already been prepared which would add around 15,000
to 20,000 tons of capacity, or simply by doubling plant
size. And it doesn't stop there.
Inco's growth pipeline is enormous. Voisey's Bay, PT Inco,
Goro, and Sudbury, we believe that we can continue to have
the nickel industry's best asset portfolio.
Now, with that I'll turn you over to Mark Cutifani.
Mara?
Mark Cutifani: Thanks, Peter.
We've had a solid year, we've held our focus and we know
where we're going.
I'll be talking to three key themes in today's Canadian
operations and discussion. The first is reliability
consistency, and our focus on meeting commitments.
Second I'll update our progress on creating shareholder
value. And third, I'll describe how strategy to manage that
critical challenge, (cost precious).
Operational focus is improving consistency and reliability
which drive's productivity and performance.
In Ontario, our mines met target outputs and set new
productivity levels Clarabelle Mill priced at it's highest
been ever since 1999, and also achieved record productivity.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 27
Our smelters' fourth quarter production rate was 7% above
its five year average and are coupled with nickel refinery
operate at its best ever annual rate of 140 million pounds.
We made our nickel output target of 215 million to 220
million pounds. We also met that target despite ramp up
issues after the most complex shut down in our history. We
beat our guidance for copper, PGMs, and cobalt.
In Manitoba, we reached a contract with steel workers
without a strike. Nickel output was 107 million pounds,
slightly below our guidance of 108 million to 110 million
pounds, following a provincial utility power failure.
During our maintenance program, we converted from two
furnaces to a higher productivity, lower cost, single
furnace operation which will raised throughput capacity to
125 million pounds. This was a result in annualized cost
savings of Canadian $8 million starting in the second
quarter of this year.
While focusing on consistency and reliability, we've also
examined how to enhance performance and build shareholder
value to a more aggressive and innovative approach to
managing the flow sheet.
The assessment of our resource base, along with mining and
downstream processing capabilities has identified new
opportunities to create value.
We are managing the North American and European operations
as a fully integrated operation. Our strategy is designed to
extract more value from each process step at each facet of
our operations.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 28
We are developing our mines in a way that allows to us make
best use of our resources and we are reconfiguring the
downstream flow sheet to remove process constraints.
Filling up process and capacity to handle high value feeds,
lets us maximize revenue intensity through our current
infrastructure.
In other words, we are driving more revenues through the
business to improve returns in our existing capital base.
An example of the strategy in action is the Coleman mine.
We've increased all mine by 60% from our highest value
mining operation as mentioned by contained metal value per
ton.
The mine has a high copper and PGM component which was
constrained by the ability that bulk smelter to handle large
amounts of copper.
By installing a copper removal circuit in the Clarabelle
Mill, we will be able to extract up to 40% of the copper in
this grade, in this process step, starting in the fourth
quarter this year.
As a result, more Nickel will be fed to the smelter, our
production bottleneck, raising the net revenue, revenue
intensity of Ontario's processing by at least 10% at an
incremental capital cost of less than 3% of current asset
carrying value.
In addition, we are enhancing recovery in the concentrator
as part of the multi-process improvement plan.
In 2005, we beat our PGM production guides of 385,000
ounces.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 29
Our target for 2006 is 400,000 ounces. We couldn't have
priced it to last year's actual output of 419,000 ounces as
we drive to bring the copper nickel separation project into
production earlier in 2006 and work some higher PGM mining
areas in the plant.
Our strategy positions are to raise that PGM output into
2007 and beyond.
Removing copper before smelting and refining allows to raise
Inco source nickel production which is driving increase
exploration and mine development.
In Ontario, we'll make a decision this year on the
development of (copper) mine, along with nickel, it has a
high PGM component. We'll advance the feasibility study for
the Kelly Lake operations and the deep deposits of the
copper is offset, including (copper with north) and south
mines.
We've identified these options as we rethink our processing
configurations to extract more value from our great resource
position.
Work on Thompson's one day lower deposit has begun, and will
further increase the production of Inco source towards in
the product mix. We expect a successful diamond drill
program for lateral and deeper extensions to be a foundation
for more development and production.
We will work the flow sheet harder by investing in critical
facilities to increase production capability and
reliability.
This will also enhance our environmental performance.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 30
We aim to seamlessly upgrade processing facilities, improve
emissions capture, and raise production capability.
For example, our converter upgrade project underway in
Ontario will cut sulfur emissions, while enabling us to
boost processing rates by at least 2%. This will help
maintain critical process control and stability in the
smelter by reducing daily variations in feed, caused by
local emissions restrictions.
We will deliver an economic return from an environmental
project -- a win-win for all our stake holders.
This project, along with the new oxygen plant to be
commissioned in the second quarter, and the fluid bed
roaster installation, sets the stage for continuing
improvements in production reliability and consistency.
There was great effort in Sudbury and Thompson to sit up for
Voisey's Bay's feed which first arrived in late 2005.
We started out our cobalt circuit in Manitoba just six weeks
ago. The processing of ores has gone well. High grade
Voisey's Bay feed will bring boost production in both
Ontario and Manitoba.
Our most pressing issue, and our key challenge is cost.
Our flow sheet reconfiguration will assist us in achieving
cost reductions and they are focused on delivering
consistency and productivity improvements.
We've made real progress on all fronts.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 31
Productivity improvements have reduced their cost of labor
by 10% to a nickel output. Other efficiencies have lowered
unit cost by 3% to 5%. Labor reductions and other
efficiencies have cut our operating cost base by more than
$100 million Canadian in the last two years.
Our efforts have buffered the impacts of the rising Canadian
dollar and higher energy cost. But there is more to be done.
We will make hard decisions, like last year's closure with
our Sudbury copper refinery which we accomplished without
major disruption.
Despite great efforts by the refinery team, including record
productivity and a 30% unit cost reduction, we struggle to
competitive with a small facility and an aging asset. We use
our capital to develop new mines and improving value driving
components of our business.
We are not fixated on running all facets of the process, we
are fixated on the delivering value. This is our strategy
implied.
The 2006, we have attained record throughput levels for all
our Ontario processing operations, including milling,
smelting, and refining to produce 243 million pounds of
nickel. Peter has also reviewed our overall copper and PGM
production targets.
In Manitoba, we would complete the move to a single line
furnace, and with Voisey's Bay's feed, we plan to produce
120 million pounds for the year.
We will the new and larger cobalt plant into full production
for the first time we will operate for an entire year
without shutting down our processing facilities.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 32
Improving performance and managing cost just can't be done
unless all of you people are on sight. And our strategy for
cost containment is built around how we manage resources and
hardware and how we deploy and managing our partners and
results, our employees.
We have enhanced their operating processes by focusing on
control and delivering improved capability.
We have the best prime workforce in the mining industry and
we are creating value by making each person a true partner
in tackling our challenges and creating our success.
We intend to use this respectful approach with the steel
workers in negotiations for new collective bargaining
agreement to replace the one that expires on May 31 this
year.
Our to-do list in Ontario also includes a three week
maintenance shutdown in July.
Three key points: We are delivering on our equipment's to be
a reliable and consistent nickel producer. We understand the
need to meet and exceed expectations. We are driving change
through our process by focusing on value creation.
We are putting processing in people's strategies in place to
reduce cost and realize real business improvements.
Now Bob Davies will provide the financial review.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 33
Robert Davies: All right. Thank you.
We had another outstanding year in 2005, one that was
highlighted by all time record total revenue, Canadian GAAP
record net earnings and very strong cash-flow from our
operations.
Let me take you through the specifics. Adjusted net earnings
were $811 million in 2005, or $3.64 a share on a diluted
basis. That's slightly less than the 855 million that we
earned in 2004.
Key factors for the impact on production and cost of major
plant shutdown, higher energy cost and a stronger Canadian
dollar, partly offset by higher prices for most metals.
Cash-flow from operations before changes in working capital
and capital expenditure as $1.2 billion. Working capital
rose by 448 million, this was mainly because of lower taxes
payable and higher inventories, following the closure of the
copper refinery, and building inventory pipelines both to
OMG and from a Voisey's Bay operation to our other Canadian
operation in Ontario and Manitoba.
Cash-flow from operations and cash on hand more than covered
our CAPEX of 1.17 billion and that included $793 million for
growth projects.
Given our strong cash-flow, we contributed an additional
$111 million to our pension plans.
Our 2006 pension contribution, is expected to be about $195
million.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 34
The excess contribution in 2005 resulted in a lower adjusted
fourth quarter tax rate of 29% which is down from our
guidance of 36%.
We expect our effective tax rate to be about 34% in 2006 or
about 70% to 80% current and 20% to 30% deferred taxes. Our
yearend cash balance was $958 million, and we have a debt to
cap ratio of 28%.
Higher production and sales enhanced our leverage to the
currently robust nickel and copper prices. And each 10 cents
rise in the nickel price lose our diluted net earnings by
about 12 cents a share, and are cashed by about $27 million.
Our earnings are sensitive to the Canadian US dollar
exchange fluctuations. Each 1 cent rise in the average
Canadian US dollar exchange rate reduces our adjusted
diluted EPS by about 5 cents and increases cash cost by
roughly 3 cents a pound. The screen shows our key commodity
and currency impact.
We expect cash-flow to remain strong this year the current
2006 consensus LME nickel price of 654 a pound, cash-flow
from operations and this again before changes in working
capital and CAPEX will be about $1.4 billion, or $6.30 a
share. At year to date commodity prices, that number would
rise to 1.54 billion.
We estimate that our 2006 CAPEX to be about 1.82 billion
before partner and government funding with Voisey's Bay at
55 million and Goro at 1.14 billion.
We anticipate $140 million in new mines development and
other expansion projects including the construction of the
third dam at PT Inco.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 35
Discretionary CAPEX will be about $50 million and our
sustaining CAPEX will be about 315 million. Environmental
improvements will add 120 million to CAPEX.
Forecast depreciation and amortization for this year is $455
million with 2006 amortization of Voisey's Bay purchase
price which is expected to be about 145 million with a
$90-million earnings impact and $55 million deferred in
inventory.
We started amortizing the Voisey's Bay acquisition cost in
the fourth quarter of 2005 when commercial production was
achieved. This non-cash after tax charge was $12 million for
2005 or about 5 cents a share.
This year, our net CAPEX spending requirements will be about
1.34 billion after the (GRD) and financing for Goro,
expected contributions from our partners at Goro and
government support for Voisey's Bay.
Our net CAPEX funding needs will fall below $760 million in
2007 and drop to 535 million in 2008.
At the current consensus price of $6.45 a pound for nickel,
we can fund our 2006 CAPEX program from internal cash flow
and the cash that we have on hand.
Exploration expenses in 2006 are expected to be about $11
million more than in 2005.
And the increase mainly reflects exploration in and around
Sudbury and Thompson mines as well as drilling at Kelly
Lake.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 36
R&D expenses should be about 12 million higher than in 2005
due to greater spending on the Voisey's Bay process and on
Inco special products.
SG&A should be in line with the 2005 total which was $15
million above the 2004 level primarily owing to the share of
appreciation rights that were tied to the more than 20% rise
in our share price during 2005.
With Voisey's Bay in commercial production, about $55
million of our estimated $135 million of interest payments
in 2005 will be expensed and the balance will be capitalized
to our Goro Project. If the consensus nickel price of $6.45
a pound in 2006 prevails, minority interest should be about
$100 million.
We intend to insure financial flexibility and liquidity as
we profitably grow and we aim to maintain our balance sheet
strength, our investment grade credit rating and our ready
access to capital markets.
These will be key objectives for the long term and we
continue to achieve them.
Thank you.
Scott will conclude with the formal remarks.
Scott Hand: Thanks, everybody.
Just a few closing remarks.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 37
As you can see, we intend to expand all across the company
in terms of production to take advantage of a very strong
nickel market not seen in our history. We're growing and we
are growing profitably.
The context for our growth, as Peter Goudie said, is the
nickel market, they can't really be judged by past cycles;
pretty darn strong and will continue that way.
We intend to perform at every phase in the nickel cycle but
the nickel market remain strong and supply, in our view,
will chase demand for some time to come. We are working to
make our existing nickel operations in Canada and Indonesia
as competitive as possible, low-cost, and they stack up very
well.
As you can see by the numbers we showed you, down towards
the bottom low $2-range, pretty good in the nickel industry,
very good in the nickel industry.
Like everyone else, we face the challenge of energy, the
Canadian dollar, increased materials cost, but as you can
see we are making progress with efficient operation,
improving productivity and showing it in terms of the
performance that we showed last year; hence we will show
again this year.
Voisey's Bay is a great success. It started up commercial
production four months early, a great ramp up and a great
exploration potential to grow that ore body.
Construction is underway at Goro; with a good team and we
believe we have this under control and Goro will be a great
success for Inco. We're expanding at PT Inco and all of
those, of course, to supply that great Asian market that
Peter Goudie had talked about. And of course, we're looking
to get more production out of Ontario and Manitoba.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 38
This means a production increase from 2005 to 2009 of
something like 45% and we can keep on growing beyond that
with the reserves and the resources that we have in which
Peter Jones outlined. We've got great cash flow. We've got a
very strong balance sheet at the consensus price at our
first call, that's $1.4 billion of cash generation, 2006
cash flow per share of $6.30 a pound. As I showed you
earlier, at today's prices even higher earnings, cash flow
and cash flow per share.
So we've got strong financial resources. We've got good cash
flow to create value for our shareholders. And lastly, the
completion of our friendly acquisition of Falconbridge will
truly transform Inco. We will not only become the world's
largest nickel company but also a leading and very low-cost
copper company.
And we'll be diversified in the metals that we produced,
where we produce them, and where they're marketed and sold
with the properties and the financing to be able to grow.
I think the new Inco will be a great opportunity for the
Inco and Falco shareholders going forward and also for the
management and the people of this company.
So in every front, we're making progress; lots of
challenges, lots of opportunities. We have been and we will
continue to succeed and we're very enthusiastic about where
we're going.
And with that, we'd be very happy to answer your questions.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 39
What we will do is we'll start with investors and analysts
in the room followed by those on the conference call. And
then afterwards, there will be a reception and hopefully, we
can even answer some more questions you might have.
People who ask questions, please identify yourself and the
firm that you're with when you ask your question. And we'll
proceed, as I've said, first with people here and then with
people on the phone.
So first question.
Please.
(Terry Osmond): (Terry Osmond), (GSO & Associates).
Scott Hand: Where's (Terry)? I don't see you.
(Terry Osmond): In the dark.
((Crosstalk))
Scott Hand: You're in the dark, (Terry). Go ahead.
(Terry Osmond): Two questions. One to Peter Goudie on the market,
given the (seamless) expansion on the other metals - other
(end users), do you see the shift from (typical) -
historical 2/3 stainless steel 1/3 (other) product shift in
the near future, number one.
Number two is that what is the distribution for China, as a
matter fact, in a similar pie chart? And the second question
is maybe to you Peter and to you,
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 40
Scott, on the Sudbury labor negotiations or the upcoming
deadlines. Last time around it was a fairly lengthy strike
and the gains were actually quite limited by the
(unintelligible) with respect to the Voisey's Bay's - Pete
coming in to the system and all. What are issues do you
think this time around that you expect the - you'd made a
lot of mitigating circumstances and achievement around the
couple of years.
Thanks.
Scott Hand: Peter.
Peter Goudie: (Terry), as far as the future demand and the split between
stainless and non-stainless, there is considerable growth
and growth potential in both the stainless area and the
non-stainless. The stainless area is growing fast. It's
growing fast in consumption and in production in China,
obviously.
And one would have to think that the percentage of nickel
demand from stainless is going to increase over the next few
years as it has increased for quite a number of years now.
Stainless has become a more important part of the pie chart,
if you like.
So that is going to continue but don't forget the potential
and actual growth that's taking place in the non-stainless
area. And that's important to us because a lot of those
non-stainless areas are where the demands for the
value-added products is where Inco has focused for some
time.
So strong growth in both areas but probably just on the
numbers, bigger growth is going forward in stainless. But
please do not forget the non-stainless. It is going to grow
and it is important.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 41
In China, we are seeing a more significant change between
the numbers. China has been the biggest on stainless steels
so a lot of the demand for nickel, for stainless steel has
not been as a China number as being demand for nickel in
other countries where the stainless is made. Stainless steel
has been imported to China.
We're going to see quite a significant change in China as
they build a lot of capacity. As I said in the prepared
remarks, there's extremely - in terms of capacity of (new)
stainless steel opening up in 2006.
There's a lot of nickel demand to go with 3 million tons of
stainless steel capacity.
Scott Hand: On the labor I'll ask Peter Jones to respond and then Mark
Cutifani - Peter was very much involved in the last
negotiations and Mark will be involved in the ones coming
up.
Peter?
Peter Jones: I think it doesn't benefit anybody - (Terry), you alluded to
the fact that it was a lengthy strike to gain not very much.
And I think both sides understand; both sides want an
agreement. Now we (settled out) with the Manitoba
negotiations late last year where that was settled without a
labor stoppage and I think, you know, people were pretty
happy with that.
Mark, I'm sure will tell you, he's been working very, very
hard on relationships in Sudbury. Every indication is that
people want to work towards an agreement as a win-win and
without a labor stoppage.
But Mark?
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 42
Mark Cutifani: Yeah. Thanks, Peter.
I'd break the issues down into three parts. Firstly, the
issues, we've got a three-part demographics with the
expansion of the mines, we've got a third of the workforce
relatively young and we've also got a competitive workforce
compared with 25 years plus served.
I think two key issues -- pensions and benefits will remain
on the table as will some discussions and some of the issues
for the younger workforce. But we've worked - we're working
through those sorts of issues and I think we're making good
progress.
The second part is the relationship. I think we've made a
lot of ground in the relationship. We're focused very much
on our relationship with our employees and a respectful
relationship with the union representatives. And I think
we've made ground in both parts. And I'm encouraged by what
we've done so far and hopeful in terms of going into the
negotiation.
And the third part is obviously with the question of merging
the operations in the Sudbury, that obviously, is part of
the dialog as well.
Scott Hand: Next question.
(Ray): Thank you.
(Ray) (unintelligible). And I have two questions...
Scott Hand: Can I do an advertising for you, (Ray)? I enjoyed your
book.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 43
(Ray): Thank you very much, Scott. It's available (four) chapters
online.
Peter Jones: (Ray), I enjoyed your (scotch). Thank you.
(Ray): I think for (unintelligible), Mr. Jones, first, the - is the
diversion of (content) from the Clarabelle Mill dependent on
any way on whether or not the Falconbridge transaction goes
through?
Peter Jones: No it really isn't. I mean, obviously it would make it
easier because we get the profit on (creating) the copper
concentrate. But it's - it will be a good copper
concentrate. It will be a very saleable product. But most
likely, it will go to Falconbridge. That's what we've had
discussions with.
(Ray): Thank you.
This - the second one was in the press release, you said you
raised your 2006 production estimate for nickel at Voisey's
Bay. And I wondered if that's because of an increase in
tonnage or an increase in grade.
Peter Jones: It's a little bit of both although we expect grade to be
about what we expect it over the year, although the grade so
far is a little higher. But essentially, no, the ramp up has
gone well. We are a full month ahead of schedule and it just
means that we're going to produce more.
Scott Hand: Next question.
Can't see who it is back there. I still - is that (Greg
Barnes) there? That one on the stand?
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 44
(Greg Barnes): (Greg Barnes) from (CDC). Sorry. Peter Goudie, just a
question on the superalloy nickel market, if you can tell us
how big it is, who are the players who produces it, what
your position is, just a bit of clarification for all to
understand it a bit better.
Peter Goudie: The superalloy market is biggest, of course, in the USA,
second would be in Europe and third would be in Japan. It's
a market that's made up by a few very specialized producers
and a few producers that make the superalloys together with
the range of other products that would be near to the
commodity type of product.
The biggest names, I guess, are people like (unintelligible)
and (Carpenter) and Haynes in the USA.
It's an important market for us. It's a market that we've
tried to serve for a very long time.
It is a market that we're being successful in and continue
to have a focus on. But it is also a competitive market.
In Japan, it's more producing for the electronics industry,
whereas in the US and Europe, it's more for the aerospace
industry and the land-based (turbine).
(Greg Barnes): How much nickel are they (unintelligible)?
Peter Jones: It's always a difficult number to come up with because of
the fact that some of the producers of high nickel alloy, as
I said, do produce other products which really don't get
into the classification and (they don't always) disclose all
the breakdown.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 45
I would guess if you're looking at it more from the
aerospace industry, you're looking at somewhere between
20,000 and 30,000 tons.
But not all of that is the really specialized high
(unintelligible) (alloy).
(Greg Barnes): I guess that's how big (the) specialized market is?
Peter Jones: I said that the really specialized segment of the market is
very small and I'd say it's probably less than 15,000 tons
of nickel.
Scott Hand: Or less than about 1% of the whole world nickel (event
here).
Peter Jones: That's correct.
It's a very small segment of the total market.
(Greg Barnes): Can you tell us (or guess) how big your slice of that market
is?
Peter Jones: Again, because of the - (unintelligible) of getting an
accurate breakdown and not knowing what the others supplies
are putting into that market, I would really not like to
make that guess.
(Greg Barnes): There are (supplies).
Peter Jones: Oh yes.
Scott Hand: Yeah I think it's because they are (unintelligible) on it,
Peter. If you look at that small segment and there's been a
bit written about it in the press lately; a lot of experts
out there are beginning to see.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 46
You know, you're looking at, as Peter said, about a 15,000
ton a year market and Inco is - it's important to Inco.
It's important to a number of people. And I guess, Peter,
the best guess that we can come up with, you look at people
who either supply or are capable of supplying in that
industry over time, you're probably looking at something -
what it is, Peter?
Something like ten times that amount of people who could
probably supply. People like (unintelligible), you know.
Russia did have a aerospace industry once and therefore
they're capable of doing it. (Sumitomo) in Japan would be
another, and (Jhuwon) in China, (AeroMet) in France. And so
there a number of people who do supply it. It's very
important. There are a number of people who are capable of
supplying it and supplying that industry, so that when you
look at it - as we look at it, it's a market we like.
It's a market that our (unintelligible) process produces
very pure nickel. But it's a competitive market.
Is that about right, Peter?
((Crosstalk))
Peter Jones: That's right, yeah. And certainly the nickel that has the
specification to be able to supply it, we would say, would
be in the order of something about ten times the total size
of that market.
Scott Hand: Back in the - very back there. (Yin Hao) I think has got a
question.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 47
(Yin Hao): Yeah. (Yin Hao) of National Bank Financial.
Just as a follow up on that, how much of the production
would be outside under (unintelligible) sort of - that would
be a north to the (defense) industry?
Scott Hand: I think the question is how much is the...
(Yin Hao): Outside of the (roster) or the concern is with regards to
the (defense) industry. I'm not sure they want to (buy some
ore) for the Chinese.
Scott Hand: Well nickel is nickel, as far as I'm concerned.
We got a free world market these days.
but I think that if you look at the capability to produce as
in addition to the amount that is being produced, you're
probably looking, Peter, at something like - what, 50,000
tons or something like that?
Peter Jones: Yes. Certainly when we said that the total product
available to the market is more than ten times what the
demand for that segment of the market is.
And we said that Noril was included in the numbers we're
talking about, we are only including in that number, a very
small part of Noril production. That production which comes
out of the (carbon mill) process.
So in that total number we're only including maybe 6,000
tons of production out of Noril. So the Noril number is a
tiny fraction of the numbers that we're putting forward as
being valid to that segment.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 48
The rest of the Noril product could actually -- I would
guess be able to be upgraded very easily to be able to used
by that segment as well but we didn't include that in the
numbers we're referring to.
Scott Hand: And I can also say, having going through in the past some of
the alloys producers. One of which we used to own and walk
to the floors and is very disturbing to me not only to see
Inco nickel there but Noril's nickel as well so it does find
us way in to the alloy producers in the United States.
Next question.
Yes?
Man: On behalf of (unintelligible), a quick question on the
discussion on (unintelligible) in Norway, who is the
scheduled buyer, and where would they get their supplier (to
feed from)?
Scott Hand: From what we've indicated to the regulatory authorities in
the United States and in Europe is that one, we think that
if a remedy is required, I'm not suggesting one is required,
but if one is required we've indicated that one remedy would
be the spin off the refinery. And with the supply contract
for a certain period of time from the new Inco to supply
that so a lot of the supply to the Falconbridge Refinery are
the new refinery, whatever its name, with the marketing
group, would come from us over a period of time.
And it would also come from materials that they've already
received from Africa. And over time, they would be
developing alternatives and additional feeds to run that
refinery. That's the concept that we've been talking about.
Other questions, in the back.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 49
Man: (Unintelligible) JMP Securities. I had a follow-up
question. Can we talk about the remaining regulatory hurdles
that stand in the way of finishing the acquisition and
(unintelligible) done by the extended deadline on the 28th?
Scott Hand: Essentially, where we are is that we've gotten, as I
indicated in the my remarks, the approval from the Canadian
Competition Authorities, the two that remain are the United
States Department of Justice and the European Commission, we
indicated that we have substantially complied with the
second request from the Department of Justice in January and
they're required to give us a response or would normally
give us a response in about 30 days.
We're talking, therefore, at the end of this week or early
next week.
The European Commission -- we submitted what they call a CO,
that's a very detailed document that responds to the
questions that they have, that was submitted I think around
the five weeks from the 24th of February. So we will expect
to get a response from the European Commission, I think
around the 24th of February.
Those are the two days were looking at right now and
depending upon what the response is from them, we will then
decide what the timing would be for the offer. And that's
where we are so we're waiting to hear from those two.
We have worked with both of them. We had a number of
meetings with both, submitted a lot of information. It's
been a (work and life) process with both of them. They are
charged with the responsibility to make their determination.
They talk to us, they talk to competitors, they talk to
customers, that's what is done. It's a confidential process
and it is one that is
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 50
proceeded maybe some people say a little longer than we
would have anticipated.
I guess it is normal when you have to make a second request
and assume and put together all this documents and that's
where we are and we would hope to have responses that are
indicated towards the end of this week from Washington and
towards the end of the following week, I guess the 24th. Or
thereabout from the European Union, that's where we are
Man: I have two more questions. Last week after Falconbridge
released their earnings, in the release, they have about a
dozen labor negotiation set up for this year, just maybe a
comment on that and the other question I had was (as the
CAPEX increase at Goro and the effect it'll have on the
projects IR.
Scott Hand: On the - I really can't comment on the labor negotiations
that Falconbridge has. You're right, there are a number of
them. They got a lot of plants around Canada and other parts
of the world. So they would have more negotiations, I guess
than we would because of large concentration in Sudbury,
something like that. I really can't comment on that other
than to say something, and I will learn more about once
we've successfully complete the acquisition.
Man: (So your plate would be full).
Scott Hand: Excuse me?
Man: (I wanted to say your plate would be full).
Scott Hand: Yes we've learned how to do these kind of things, and we're
getting better and better by the day.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 51
And as to Goro, I'll let Peter Jones comment on that.
Peter Jones: What was the question again?
Scott Hand: I'm sorry, the question was, I think you said if there were
a higher capital cost than the one 8.78 billion, what might
the returns be like?
((Crosstalk))
Man: ...directly, the CAPEX is going to come in towards the upper
end and plus 15% higher than that estimation, and the IRR
being given the presentation is for the bottom end, so I was
wondering what IRR would be after the (unintelligible).
Peter Jones: For that 15% he might drop it by 1% or so.
Scott Hand: Still, if you look around and you look at people seeking to
build nickel projects today and the kind of prices they have
to use to even get a cost to capital rate of return 10%,the
Goro project was pretty damn good.
Any other questions from the audience before we take them
from, I say the telephone but there must be something other
than that?
Any other question from the audience?
Okay, we will take questions from the telephones.
Operator: Ladies and gentlemen, if you would like to register a
question, please press the 1 followed by the 4 on your
telephone.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 52
You will hear a three-tone prompt to acknowledge your
request.
If your question has been answered and you would like to
withdraw your registration, please press the 1 followed by
the 3.
If you're using a speakerphone, please put your handset
before entering your request.
One moment please for the first question.
Scott Hand: Any questions?
Operator: Our first question comes from the line of (Rob Davis).
Please proceed with your question
(Rob Davis): All right, good afternoon.
I just want to follow up with an answer to a question that
you gave earlier, I guess, regarding the (feed) supply to
the nickel (work) refinery. You mentioned that resources,
perhaps in Africa, in my understanding right now is that
this refinery - there are two types of nickels that really
go into some of the superalloys -- specifically to the
aerospace and defense industry and those, generally, really
come from Inco, Falconbridge, or Aramec.
Can you a little bit more specific as to whether their mines
are really globally either, you know, have that type of
nickels that can produce or have reserves that can
eventually be produced, something else that could, you know,
the next let's three or five, (unintelligible) years, from a
realistic ultimate feed stock?
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 53
Scott Hand: One thing - my operating friends will correct me if I'm
wrong, but you shouldn't worry about the nature of the feed
coming from one place to the other, as a refinery is able to
take feeds they receive and turn it in to the kind of nickel
they produce and the take out the impurity.
So it's not the nature of the feed that would be any
concern. The Falconbridge Refinery in Norway can take all
sorts of feeds, indeed they do, one of the more versatile
refineries in world to do that.
As to the feed, what I said was is that there would be a
feed arrangement with the new Inco to receive what they're
currently receiving from Sudbury. That would be one.
The second would be they have current arrangements with the
- I believe is the (Sate) operation in Botswana which
currently feeds them that would continue, it's under
contract. Those will be the two main sources of feeds to run
the refinery going forward should it be required to be spun
off as a remedy to address any concerns than any trust
authorities would have in Europe and the United States.
Overtime, the management of that new company or the
ownership should it be bought by a competitor would be
feeding it either, if we were competitor, with feeds they
would have or they'll be looking for developed feeds around
the world and that happens all the time.
Witness what Inco has been doing for the past five or so
years. We've been buying concentrates from Australia. The
management team of this new operation will be out looking
for additional feeds once the contract with the new Inco
terminated, but it's there for sufficient period of time to
allow the
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 54
new management in the new company to do it and I've
stressed, should a remedy be required?
As we indicated before in the areas that you've read about
in the newspapers, or a lot of you have read about the
newspapers, the superalloy industry, we believe it's a
well-supplied industry (headed) by people who do supply or
could supply, and therefore, we don't see any serious
competition issues.
This remedy is offered if required.
(Rob Davis): Are you suggesting that the feed that you gave to nickel
work right now, or the (stock and bridge) gets to (nickel
work) right now is nothing really that unique to Inco or
Falconbridge? I mean, there was nothing special about it
that couldn't be produced by another standard nickel
provider or many others?
Scott Hand: Nothing special. It's a very versatile refinery in Norway.
It can take feeds from all over the world.
(Rob Davis): And in terms of developing new feeds just a matter of a few
years and genetic projects you should be able to supply?
Scott Hand: The reason we're talking about a contract is to - one, to
get them started and give them time to find other feeds to
act as an independent operation. They'll be independent
anyway. They'll be marketing again should that happen but to
give them a chance to find other feeds.
(Rob Davis): Okay, thanks very much.
I appreciate your being specific with that answer.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 55
Scott Hand: Yes, okay. Next question.
Operator: Our next question comes from the line of (Asemit Seigo) of
Credit Suisse First Boston. Please proceed with your
question.
(Asemit Seigo): Hi, good afternoon. On the antitrust, if the authorities
decide that the spin-off and supply contract is not a viable
entity. What other options are there?
Scott Hall: I'm afraid - (what's the question)?
Man: If it turned down, that spin-off, what other options are
there?
Scott Hall: I don't like to deal on hypotheticals.
Right now we're in confidential discussions with the
Department of Justice and the European Union.
I think those discussions should be between ourselves and
them.
What we've indicated is that we believe that that the remedy
we've outlined and publicly disclosed when we announced this
deal back in October does it. Are there other remedies?
There may be, but what I'm saying is if a remedy is
required, we think this is a very good one and I really
can't go beyond that.
(Asemit Seigo): So is it - to say that you believe there is a commercially
viable solution to the high grade antitrust problem?
Scott Hall: (Unintelligible) you're not coming through very well.
(Asemit Seigo): Is there a commercially viable solution to the high grade
nickel antitrust issue?
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 56
Scott Hall: Well, yes. We wouldn't be proposing something if we didn't
think it was commercially viable.
And that's the judgment, of course, that the regulatory
agencies will make in Washington and Brussels if it's
decided that a remedy is required.
(Asemit Seigo): Thank you.
Scott Hall: All right.
Operator: Ladies and gentlemen as a reminder, to register for a
question please press the 1 followed by the 4 on your
telephone.
Scott Hall: Any more questions?
Operator: There are no questions at this time.
Scott Hall: Any more questions from the floor?
I got a couple more questions from the floor. Yes?
Woman: (Unintelligible).
Scott Hall: You know, I really can't judge on that. There is a second
phase -- a question what is the prospect there might be the
second phase in Europe?
I can't answer that other than to say that the European
Union has until around the 24th of February. It could go a
little bit longer if we get into a remedy
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 57
discussion, there is determination, I believe, they get in
to March before any determination would be made.
Will it be cleared or would a second phase be required?
If there is a second phase, the second phase will go for a
few months.
It's a prescribed process, procedure, and periods of what
happened. I believe it's about a few months.
So I can't make a judgment at this point because the
European Union is still looking at it.
Do I - yes?
Man: (Unintelligible)?
Scott Hall: Peter?
Peter Jones: I'm just trying to think, while last year was a...
((Crosstalk))
Peter Jones: ...I think it was for copper, but the big difference is that
$2 to $2.10 with an 80 cent exchange rate and our current
one is an 85 exchange rate and $1.80 copper.
So exchange rate automatically adds over 15 cents a pound as
compared to $2 to $2.10.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 58
Man: (Unintelligible).
Peter Jones: And it was $1.80.
It's probably a little bit higher.
Scott Hall: The only thing to stress though, as I was saying when you
look at our cash cost of 2.30 - 2.40, whatever that kind of
a number, you then look at our cash cost with a run rate of
Voisey's Bay knocking off another 15 cents.
If you then look at the fact that we are maximizing
production and incurring to do it and I'm referring to the
diesel that we're - diesel fuel that we're using out in
Indonesia and the fact that we are running full out in lower
grade mines in Sudbury. If you take it all into account, you
can see our gross down - bridging down towards the $2 a
pound, in that range, and that's with an 85 cent Canadian
dollar.
That's with all the higher energy cost you're talking about
today. That's with all the materials cost that people are
incurring.
I say to you that anybody who can have cash cost down in
that $2 range has got to be the best in the industry and
that's what we're doing.
Question?
(Terry Ormon): Thanks. (Terry Ormon), and just to follow-up on that,
Scott, (unintelligible) accountable at 2007 (TGM) production
going to be a higher number in 2006, I don't know what
number is going...
((Crosstalk))
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 59
Scott Hall: No, no. He said it was going to be 400,000 ounces and he's
working like hell to make it bigger.
(Terry Ormon): And in 2006 - 2007 is just going to be the...
Scott Hall: Oh, 2007, sorry. So I'll make sure we know what you're
supposed to be doing.
(Terry Ormon): What are the target range that we can talk about, number 1,
and number 2 where is the feed for that going to come from?
Sudbury and (unintelligible) and another question I have
actually is on the exploration number that you have, I think
it is a new high for exploration, not on real dollar term
for Inco, but because Voisey's Bay going to be (confirm)
with that.
And the third question actually is on the (unintelligible)
expenditures and (unintelligible) great breakdown in your
(unintelligible) but the numbers keep coming down which
probably is because of (unintelligible) is coming down?
Thank you.
Scott Hall: I'll try and answer it.
Now I'll ask Mark to talk about PGM first. Where is all that
feed going to come from?
Mark Cutifani: Thanks, Scott.
(Terry), what we are doing is we're pushing the Coleman mine
as showed in our presentation and also we have some other
targets that we're changing as well.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 60
We would expect to certainly do much better than 400 coming
in to 2007, but were careful in providing anything more than
at the moment on the basis that we are still formulating
some of (the mine) plans but we'll certainly find it shifted
by material amount.
Scott Hall: I think under sustaining, capital we have made a lot of
investment on a number of areas of the asset plan, the
oxygen plan, some investments that you've seen up in the
Thompson for cobalt handling, and those sorts of things so
that a number like we have for sustaining capital is in
fact, given the fact that our depreciation, is what - about
475 million...
((Crosstalk))
Scott Hall: ...455 sustaining and sustaining CAPEX of three - something.
That's not bad. And, of course, it does represent -- we got
a new facility at Voisey's Bay.
Did that answer your question?
For exploration. (Nick) here wishes it was higher.
But it does represent, you know, more exploration at
Voisey's Bay, we're very encouraged there.
It does represent more exploration as we indicated up in
Sudbury.
Everybody keep saying, or saying that Sudbury's been around
for a hundred years and is getting tired. Well, it's not.
There are great prospects up there.
You can see what we're able to do and with - PGM potential
there. There's a lot of area and of course we control a lot
of it so there's great potential there
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 61
and, you know, if we're going to grow our production like we
are, that 45% growth for the year 2009 - we got to do some
exploration to develop some new mines particularly in
Sudbury and to do the exploration, we're going to up at (1D)
to have that ore body grow, to continue production in
Thompson.
Well, those some of the main reasons why exploration is
higher plus some grassroots exploration as well.
But (Nick's) not happy. He wants more.
Any other questions?
Well, thank you very much. We appreciate your coming.
I think that you will see that we are delivering consistent
and reliable production. I'd say our cost position is very
good -- one of the best in the industry. We are growing very
well with Voisey's Bay, Goro, and PT Inco and also on
Ontario and Manitoba, and very importantly, we're working
real hard to create a new Inco.
Let's see where the regulatory agency has come out. We want
to get ahead and put these two companies together and
deliver value to the shareholders of Inco and also to the
shareholders of Falconbridge.
Thank you very much and there are refreshments for those of
you who are here in the back of the room.
Many thanks.
INCO LIMITED
Moderator: Scott Hand
02-14-06/2:00 pm CT
Confirmation #: 21280521
Page 62
Operator: Ladies and gentlemen, for those of you who did ask questions
and were not able to ask them to the speaker you will be -
well, somebody from the company will be getting in contact
with you.
And that does conclude the conference call for today.
We thank you for your participation and ask that you please
disconnect your line.
END