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EXHIBIT 99 PROXY CIRCULAR AND STATEMENT
DATED FEBRUARY 20, 2004




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| |                    
| | -------------------
| | Notice of Annual   
| | and Special Meeting
| | of Shareholders    
|
| | April 21, 2004     



|            | 
|----------- | 
|(INCO LOGO) | 



| |                          
| | -------------------------
| | Proxy Circular           
| | and Statement            
|
| | INCO LIMITED             
| | To be held at 10:00 a.m. 
| | Wednesday, April 21, 2004
| | Design Exchange          
| | Trading Floor            
| | 234 Bay Street           
| | Toronto, Ontario         



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March 19, 2004

Dear Shareholder:

The Companys Annual and Special Meeting of
Shareholders will be held at the Design Exchange, Trading Floor,
234 Bay Street, Toronto, Ontario on Wednesday,
April 21, 2004 at 10:00 a.m. (Toronto time). The
formal Notice of Meeting and Proxy Circular and Statement, which
are contained in the following pages, outline the actions to be
taken by Shareholders at the Meeting. We have included a Table
of Contents to assist Shareholders in locating specific items or
sections included in this document.

We sincerely hope that you will be able to attend
the Meeting. However, if you are not planning to be present, you
may vote your Common Shares in any one of the following three
ways: (1) by completing, signing and returning the
accompanying form of proxy or written voting instruction form in
the enclosed postage-paid envelope; (2) by following the
instructions for telephone voting in the accompanying Proxy
Circular and Statement; or (3) by following the
instructions for Internet voting in the accompanying Proxy
Circular and Statement. Regardless of the number of Common
Shares you may own, your vote is important.

Thank you for your continued interest in our
Company.



| |                                                                            
| | ---------------------------------------------------------------------------
| | Yours sincerely,                                                           
|
| | (-s- Scott M. Hand)Scott M. Hand 
     Chairman and Chief Executive Officer

INCO LIMITED, 145 King Street West,
Suite 1500, Toronto, Ontario M5H 4B7



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TABLE OF CONTENTS

|                                                  |                                                          |  |     |    | 
|------------------------------------------------- | -------------------------------------------------------- |  | --- | -- | 
|NOTICE OF
    MEETING                             |                                                          |  | 1   |   
|PROXY CIRCULAR AND
    STATEMENT                  |                                                          |  | 3   |   
|PART I  VOTING
    INSTRUCTIONS                  |                                                          |  | 3   |   
|PART II 
    BUSINESS OF THE MEETING             |                                                          |  | 6   |   
|                                                  | 1. Financial
    Statements                              |  |     | 6  | 
|                                                  | 2. Approval of the
    By-law Confirmation Resolution    |  |     | 6  | 
|                                                  | 3. Election of
    Directors                             |  |     | 7  | 
|                                                  | 4. Appointment of
    Auditors                           |  |     | 10 | 
|                                                  | 5. Other Business                                        |  |     | 11 | 
|PART III 
    CORPORATE GOVERNANCE               |                                                          |  | 12  |   
|                                                  | Information Regarding the
    Board and Board Committees |  |     | 12 | 
|                                                  | Statement of Corporate
    Governance Practices          |  |     | 14 | 
|                                                  | Audit Committee Report                                   |  |     | 18 | 
|PART IV 
    DIRECTOR AND EXECUTIVE COMPENSATION |                                                          |  | 20  |   
|                                                  | Director Compensation                                    |  |     | 20 | 
|                                                  | Executive Compensation                                   |  |     | 22 | 
|                                                  | Report on Executive
    Compensation                     |  |     | 27 | 
|                                                  | Comparative Shareholder
    Return                       |  |     | 31 | 
|PART V 
    OWNERSHIP OF SECURITIES              |                                                          |  | 32  |   
|                                                  | Significant Security
    Holders                         |  |     | 32 | 
|                                                  | Security Holdings of
    Directors and Officers          |  |     | 32 | 
|PART VI  OTHER
    INFORMATION                   |                                                          |  | 34  |   
|                                                  | Solicitation of Proxies                                  |  |     | 34 | 
|                                                  | 2005 Annual Meeting                                      |  |     | 34 | 
|EXHIBIT A 
    Charter of the Audit Committee    |                                                          |  | A-1 |   





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NOTICE OF MEETING

NOTICE IS HEREBY GIVEN that the Annual and
Special Meeting (the Meeting) of Shareholders of
INCO LIMITED (the Company) will be held at the
Design Exchange, Trading Floor, 234 Bay Street, Toronto, Ontario
on Wednesday, April 21, 2004 at the hour of ten oclock in
the morning for the purposes of:



| |     |                                                                                                                                                                                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | receiving the Companys financial statements
    for the year ended December 31, 2003 and the Auditors
    report thereon;                                                                                                                                                          
|
| | (2) | considering, and if thought fit, approving a
    resolution confirming an amendment to the Companys by-laws
    to declassify the Companys Board of Directors and provide
    for the annual election of all of the Companys Directors
    (the By-Law Confirmation Resolution);
|
| | (3) | electing all of the Companys Directors for
    a one-year term expiring in 2005 (or, if the By-Law Confirmation
    Resolution is not approved, electing four of the Companys
    Directors for a two-year term expiring in 2006);                                                 
|
| | (4) | appointing Auditors of the Company; and                                                                                                                                                                                                                                              
|
| | (5) | transacting such other business as may properly
    be brought before the Meeting.                                                                                                                                                                                                   

If you are not planning to be present in person,
you may vote your Common Shares in any one of the following
three ways: (1) by completing, signing and returning the
accompanying form of proxy or written voting instruction form in
the enclosed postage-paid envelope; (2) by following the
instructions for telephone voting in the accompanying Proxy
Circular and Statement; or (3) by following the
instructions for Internet voting in the accompanying Proxy
Circular and Statement.

By Order of the Board of Directors

LOGO

Stuart F. Feiner


Executive Vice-President, General
Counsel & Secretary


Dated: March 19, 2004

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February 20, 2004




PROXY CIRCULAR AND STATEMENT

This Proxy Circular and Statement is furnished
by the Board of Directors of INCO LIMITED (Inco or
the Company) in connection with the solicitation of
proxies to be used at the Annual and Special Meeting of
Shareholders of the Company (the Meeting) to be held
on Wednesday, April 21, 2004 beginning at 10:00 a.m.
local time at the Design Exchange, Trading Floor, 234 Bay
Street, Toronto, Ontario and at any and all adjournments
thereof.This Proxy Circular and
Statement and a form of proxy will be mailed to Shareholders of
record up to and including March 16, 2004 (the Record
Date), commencing on or about March 19, 2004.
Shareholders who are unable to be present at the Meeting may
vote through the use of proxies or by the other methods for
voting described under Voting Instructions below.

The Company has its executive offices at
145 King Street West, Suite 1500, Toronto, Ontario
M5H 4B7. All dollar amounts in this Proxy Circular and
Statement are stated in U.S. dollars unless otherwise
indicated. Information contained in or otherwise accessed
through the Companys website, or any other website
referred to in this Proxy Circular and Statement, does not form
part of this Proxy Circular and Statement and any website
addresses contained herein are inactive textual references
only.

As of February 20, 2004,
187,295,012 Common Shares were issued and outstanding. This
number does not include fractional share interests (aggregating
5,096 Common Shares) which cannot be voted. Each of the
Common Shares carries one vote. The Common Shares are the only
securities of the Company which will have voting rights at the
Meeting.




PART I  VOTING
INSTRUCTIONS

Shareholders who hold their Common Shares
directly (Registered Shareholders) as of the close
of business on the Record Date will find a form of proxy
accompanying this Proxy Circular and Statement. Common Shares
may also be registered in the name of an intermediary such as a
bank, trust company, securities dealer or broker or a trustee or
administrator of a retirement, savings or similar plan (an
Intermediary) or in the name of a clearing agency in
which such Intermediary is a participant. The Company has
provided such Intermediaries with additional copies of this
Proxy Circular and Statement so that such Intermediaries may
distribute this Proxy Circular and Statement to the beneficial
owners of Common Shares (the Beneficial
Shareholders) for whom such Intermediaries act and who
have not waived their right to receive such materials.
Beneficial Shareholders may be forwarded either a form of proxy
already signed by the relevant Intermediary or a voting
instruction form to allow them to direct the voting of Common
Shares that they beneficially own.

Registered Shareholders and Beneficial
Shareholders may provide their voting instructions in one of the
following three ways: (1) by returning by mail the form of
proxy or the voting instruction form accompanying this Proxy
Circular and Statement; (2) by using the telephone voting
procedures outlined below; or (3) by using the Internet
voting procedures outlined below. Shareholders wishing to
appoint a person as a proxy other than the management nominees
named on the proxy form will not be able to do so using the
telephone or Internet voting procedures outlined below.

Voting By Mail.Completed, signed and dated forms of
proxy or voting instruction forms may be returned in the
postage-paid envelopes accompanying the Proxy Circular and
Statement. Shareholders who mail their proxies must ensure
that their proxies are received by the Company no later than
24 hours prior to the time fixed for holding the Meeting
(or any adjournment thereof) (that is, by 10:00 a.m.
Toronto time on April 20, 2004).

Telephone Voting.A
Registered Shareholder may vote by telephone using a touch-tone
telephone within North America by dialing the following
toll-free number: 1-866-271-1207. Beneficial Shareholders should
follow the instructions for telephone voting conveyed to them by
their Intermediaries. The Shareholder will be asked to

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provide the Shareholders 12- or 13-digit
Control Number (located in the bottom left corner of the
Shareholders form of proxy) in order to verify the
Shareholders identity. See Control Numbers
below for further details. Voting instructions are then conveyed
using touch-tone selections over the telephone. Shareholders
may vote by telephone up to 24 hours prior to the time
fixed for holding the Meeting (or any adjournment thereof) (that
is, by 10:00 a.m. Toronto time on April 20, 2004).


Internet Voting.A
Registered Shareholder may vote by Internet by accessing the
following website: www.eproxyvoting.com/ incovote.
Beneficial Shareholders should follow the instructions for
Internet voting conveyed to them by their Intermediaries. The
Shareholder will be asked to provide the Shareholders 12-
or 13-digit Control Number (located in the bottom left corner of
the Shareholders form of proxy) in order to verify the
Shareholders identity. See Control Numbers
below for further details. Voting instructions are then conveyed
using click-through selections over the Internet.
Shareholders may vote by Internet up to 24 hours prior
to the time fixed for holding the Meeting (or any adjournment
thereof) (that is, by 10:00 a.m. Toronto time on
April 20, 2004).

Control Numbers.In
order to vote by telephone or the Internet, as noted above,
Shareholders will be required to enter a 12- or 13-digit Control
Number. Registered Shareholders will be provided with a 13-digit
Control Number located in the bottom left corner of their form
of proxy. Beneficial Shareholders will be provided with a
12-digit Control Number located on their voting instruction
form. Shareholders who own Common Shares both as a Registered
Shareholder and as a Beneficial Shareholder will need to vote
separately as a Registered Shareholder and as a Beneficial
Shareholder, using each of the applicable Control Numbers.

Revocation of
Proxies.Pursuant to
subsection 148(4) of the Canada Business Corporations
Act(CBCA), the corporate law under which the
Company is organized, a Registered Shareholder may revoke a
proxy by depositing an instrument in writing executed by the
Registered Shareholder or his or her attorney authorized in
writing. If the instrument of revocation is deposited with the
chairman of the Meeting on the date of the Meeting or any
adjournment thereof, the instrument will not be effective with
respect to any matter on which a vote may already have been cast
pursuant to the proxy. Voting instructions conveyed by mail or
in person by a later-dated instrument in writing or conveyed by
telephone or the Internet will revoke any prior voting
instructions. Shareholders will not be able to vote by telephone
or the Internet (and thereby revoke any prior voting
instructions) less than 24 hours prior to the time fixed
for the holding of the Meeting (or any adjournment
thereof) (i.e., at any time after 10:00 a.m. Toronto
time on April 20, 2004). A Beneficial Shareholder who
wishes to revoke previously given voting instructions within
24 hours prior to the time fixed for the holding of the
Meeting (or any adjournment thereof) must contact his or her
Intermediary to determine whether special arrangements may be
made for the Registered Shareholder who holds the Beneficial
Shareholders Common Shares as nominee to provide an
instrument in writing revoking the previously given proxy or
voting instructions. Unless otherwise specified in such
forms, proxy and voting instruction forms which are undated are
deemed to bear the date upon which they were sent to the
Shareholder. Accordingly, if revoking a previously given proxy
or voting instruction form by mail, the new proxy or voting
instruction form should be dated in order to be effective.

Voting Instructions.Proxies properly executed and returned, and not revoked, will be
voted at the Meeting. If voting instructions are given, the
proxies will be voted in accordance with those instructions.

If no voting instructions are given but the
proxies are properly executed and returned, and are not revoked,
the proxies will be voted: (1) FOR the By-law
Confirmation Resolution; (2) FOR the election
of Directors; and (3) FOR the appointment of
Auditors.

The enclosed form or forms of proxy confer
discretionary authority upon the persons named in the proxy with
respect to voting on amendments to, or variations of, matters
identified in the Notice of Meeting and on other matters that
may properly come before the Meeting or any adjournment thereof.
At the time of the printing of this Proxy Circular and
Statement, the Company knows of no such amendment, variation, or
other matter expected to come before the Meeting. If any other
matters should properly come before the Meeting, the persons
named in the enclosed form or forms of proxy will vote on them
in accordance with their best judgment.

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In the case of the vote regarding the By-Law
Confirmation Resolution, proxies may be marked as
FOR or AGAINST. In the case of the votes
for the election of Directors and the appointment of Auditors,
proxies may be marked as FOR or
WITHHOLD. Proxies marked as WITHHOLD
will be treated as present for purposes of determining a quorum
but will be counted as having been withheld from voting. The
resolutions regarding the election of Directors and the
appointment of Auditors require a majority of the votes cast by
all Shareholders at the Meeting in order to pass. As a result,
proxies marked as WITHHOLD will have no effect on
the outcome of the vote on these resolutions.

Proxies returned by Intermediaries as
non-votes on behalf of Common Shares held in street
name, because the Beneficial Shareholder has not provided voting
instructions or, under applicable stock exchange or other rules,
the Intermediary does not have the discretion to vote such
Common Shares as to one or more matters on the agenda for the
Meeting, will be treated as present for purposes of determining
a quorum but will not be counted as having been voted in respect
of any such matter. As a result, such proxies will have no
effect on the outcome of the vote.

It is the policy of the Company that all proxies
which identify Shareholders be kept confidential. Proxies are
tabulated by the Companys transfer agent and are not seen
by, or reported to, the Directors or management of the Company,
except in cases in which Shareholders write comments on their
proxies or in limited other circumstances, such as a proxy
contest or where necessary to enable management or the Board of
Directors to discharge their legal duties to the Company.

The form of proxy will include any whole Common
Shares which are held by the Company on a Shareholders
behalf under the Companys Share Purchase Plan, Optional
Stock Dividend Program (which is currently suspended) or former
Employee Share Award Plan (which was terminated as of the end of
1998).

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PART II  BUSINESS OF THE
MEETING



1.   FINANCIAL
STATEMENTS

The Companys financial statements for the
year ended December 31, 2003 and the Auditors report
thereon are included in the Companys 2003 Annual Report,
which has been mailed to Shareholders together with this Proxy
Circular and Statement. The financial statements will be placed
before the Shareholders at the Meeting.




2.   APPROVAL OF THE BY-LAW
CONFIRMATION RESOLUTION

Shareholders are being asked to approve a
resolution confirming an amendment to the Companys By-Law
No. 1 (the By-Law) to eliminate the
Companys classified board structure and require all of the
Companys Directors to be elected each year.

Section 3.01 of the By-Law provided, prior
to the amendment described below, that the Board would be
divided into two classes of Directors, with each class being
elected for a two-year term, at alternate annual meetings of the
Shareholders. The number of Directors in each class would be
determined by the Board from time to time, provided that the
number of Directors in one class could not exceed the number of
Directors in the other class by more than four. A standing
resolution of the Board (the Standing Resolution)
provided, prior to the amendment described below, that the
Company would have twelve Directors, divided into two classes of
six Directors each.

On February 3, 2004, the Directors amended
the By-Law and the Standing Resolution to declassify the
Companys Board of Directors and provide for the annual
election of all of the Companys Directors. The Board made
these changes in order to provide greater accountability to the
Shareholders and to further strengthen the Companys
corporate governance practices. As a result of these changes and
the retirement from the Board of Judith A. Erola and
Richard M. Thomson in accordance with the Companys
retirement policy for non-employee Directors, the Directors also
amended the Standing Resolution to change the size of the Board
from twelve Directors to ten Directors, effective immediately
prior to the Meeting.

Classified or staggered boards have a long
history in corporate law. Proponents of classified or staggered
boards believe that such boards help maintain continuity of
experience and skill and, as a result, may assist a
companys long-term strategic planning. Additionally,
supporters believe that classified or staggered boards may
assist the directors in defending a company against a take-over
bid that the board believes is not in the companys best
interests. Because a bidder is unable to replace the entire
board in a single election, a classified or staggered board may
encourage a person seeking control of the company to initiate
discussions with the board, where the board may be in a position
to negotiate a higher price or more favourable terms as a result
of having a classified or staggered board.

Opponents of classified or staggered boards
believe that they limit the ability of shareholders to exercise
influence over a companys strategic direction and hold
management accountable for company performance. In addition, the
existence of a classified or staggered board may deter some
take-over bids or purchases of substantial blocks of shares that
might give shareholders the opportunity to sell their shares at
an attractive price. A number of leading companies have recently
eliminated their classified or staggered boards in response to
these criticisms.

As part of its ongoing review of the
Companys corporate governance policies, the Board
considered carefully the advantages and disadvantages of
maintaining a classified board structure. On balance, the Board
concluded that it would be in the best interests of the
Shareholders to elect all of the Directors on an annual basis.
This change maximizes accountability to the Shareholders, by
allowing the Shareholders to review and express their opinions
on the performance of all of the Directors every year. The Board
believes that it can continue to achieve the desired continuity
of experience and skill on the Board through the Boards
succession process.

If the By-Law Confirmation Resolution is approved
by the Shareholders, then each of the ten persons who have been
nominated for election as Directors at the Meeting will stand
for election for a one-year term. If the By-Law Confirmation is
not approved by the Shareholders, then Section 3.01 of the
By-Law will revert to its previous terms and the Standing
Resolution will provide that the Company will have ten
Directors, divided into

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one class of four Directors and a second class of
six Directors. In this event, the class of four Director
nominees consisting of Ronald C. Cambre, Scott M.
Hand, Chaviva M. Hosek and David P. OBrien would
stand for election at the Meeting for a two-year term expiring
in April 2006, and the class of six Directors consisting of
Glen A. Barton, Angus A. Bruneau, Peter C. Jones,
John T. Mayberry, Roger Phillips and James M. Stanford
would continue to serve their two-year term, which would expire
at the next annual meeting of the Shareholders in April 2005.


The text of the By-Law Confirmation Resolution is
set forth below:

BE IT RESOLVED THAT:



| |                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Shareholders hereby confirm the amendment of
    the Companys By-Law No. 1 to delete the second
    sentence of Section 3.01 thereof and replace it with the
    following:



| |                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The term of each Director shall expire at
    the 2004 annual meeting of shareholders. At that annual meeting
    of shareholders, and at each annual meeting of shareholders
    thereafter, each Director shall be elected for a one-year
    term.

To become effective, the By-Law Confirmation
Resolution must be approved by Shareholders representing in the
aggregate not less than a majority of the votes cast by all of
the Shareholders at the Meeting. Unless the Shareholders signing
the accompanying form of proxy specify otherwise, the persons
named in the form of proxy intend to vote in favour of the
By-Law Confirmation Resolution.

The Board of Directors recommends that
Shareholders vote in favour of the By-Law Confirmation
Resolution.




3.   ELECTION OF
DIRECTORS

If the By-Law Confirmation Resolution is
approved, then ten Directors will be elected at the Meeting,
each to hold office for a one-year term expiring at the
Companys Annual Meeting in 2005. Unless the Shareholder
signing the enclosed form of proxy specifies that the proxy be
withheld from voting on the election of all Directors, or except
to the extent that such Shareholder specifies that authority to
vote for any individual nominee be withheld, the persons named
in the form of proxy intend to vote the proxy for the election
of the following ten persons, each of whom is currently a
Director of the Company: Glen A. Barton, Angus A.
Bruneau, Ronald C. Cambre, Scott M. Hand,
Chaviva M. Hosek, Peter C. Jones, John T.
Mayberry, David P. OBrien, Roger Phillips and
James M. Stanford. Each of these nominees has been
recommended by the Corporate Governance and Nominating Committee
and the Board of Directors for election by the Shareholders.

If the By-Law Confirmation Resolution is not
approved, then four Directors will be elected at the Meeting,
each to hold office for a two-year term expiring at the
Companys Annual Meeting in 2006. Unless the Shareholder
signing the enclosed form of proxy specifies that the proxy be
withheld from voting on the election of all Directors, or except
to the extent that such Shareholder specifies that authority to
vote for any individual nominee be withheld, the persons named
in the form of proxy intend to vote the proxy for the election
of the following four persons, each of whom is currently a
Director of the Company: Ronald C. Cambre, Scott M.
Hand, Chaviva M. Hosek and David P. OBrien. Each
of these nominees has been recommended by the Corporate
Governance and Nominating Committee and the Board of Directors
for election by the Shareholders. If the By-Law Confirmation is
not approved, then the class of Directors consisting of
Glen A. Barton, Angus A. Bruneau, Peter C. Jones,
John T. Mayberry, Roger Phillips and James M. Stanford
will continue to serve their two-year term expiring at the next
annual meeting of the Shareholders in April 2005.

The Board of Directors is not aware of any
circumstances that would cause any nominee to be unable to serve
as a Director. In the event that any nominee should be unable at
any time to serve as a Director, each of the persons named in
the accompanying form of proxy reserves the right to vote for
another person of his or her choice in such nominees
place, unless the Shareholder signing the form of proxy has
specified that the proxy be withheld from voting on the election
of all Directors.

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Nominees for Election

Biographical information regarding each of the
nominees for election to the Board is set forth below.
Additional information regarding the security holdings of the
Directors and Officers of the Company is set forth on
page 32.

|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               
|(BARTON PHOTO)  |  | Glen A. BartonDirector since 1994Peoria, IllinoisCommon Shares: 20,706*
    Mr. Barton, 63, served as Chairman and Chief Executive
    Officer of Caterpillar Inc., a leading heavy equipment and
    diesel engine manufacturer based in Peoria, Illinois, from
    February 1999 until his retirement at the end of January 2003.
    Mr. Barton was Group President and head of the machinery
    divisions of Caterpillar from 1990 to 1999 and Vice-Chairman
    from 1998 until February 1999. Mr. Barton is also a
    Director of Newmont Mining Corporation and serves on the
    Deans Engineering Advisory Council of the University of
    Missouri-Columbia. He is also a Global Advisor to The Conference
    Board in the United States, a trustee of the Malcolm Baldridge
    National Quality Award Foundation and a member of The Business
    Council, The Business Roundtable and the Illinois Business
    Roundtable.
|               
|(BRUNEAU PHOTO) |  | Angus A. Bruneau, O.C.Director since 1998St. Johns, NewfoundlandCommon Shares: 10,443*
    Dr. Bruneau, 68, is Chairman of Fortis Inc., a leading
    Newfoundland-based company with businesses in the electric
    utilities and real estate sectors, a position he has held since
    October 1987. From October 1987 to April 1996, Dr. Bruneau
    was Chairman and Chief Executive Officer of Fortis Inc. He is
    also a Director of Fortis Properties, Petro-Canada, SNC-Lavalin
    Group Inc., the Canada Institute for Child Health and the
    Foundation for Sustainable Development Technology Canada. He
    also serves as a trustee of the Nature Conservancy of Canada and
    is a member of the Canada Foundation for Innovation.                                                                                                                                                                                      
|               
|(CAMBRE PHOTO)  |  | Ronald C. CambreDirector since 2002Denver, ColoradoCommon Shares: 5,123*
    Mr. Cambre, 65, is the retired Chairman and Chief Executive
    Officer of Newmont Mining Corporation, a leading international
    producer and marketer of gold and certain other products.
    Mr. Cambre served as Chairman of Newmont Mining Corporation
    from January 1995 until December 2001, as Chief Executive
    Officer from November 1993 until December 2000 and as President
    from June 1994 until July 1999. Prior to that, he served as
    Vice-President and Senior Technical Advisor to the Office of the
    Chairman, Freeport-McMoRan Copper & Gold Inc.
    (formerly Freeport-McMoRan Inc.). He is currently a
    Director of Cleveland Cliffs Inc., McDermott
    International Inc. and W.R. Grace & Co.                                                                                                                      
|               
|(HAND PHOTO)    |  | Scott M. HandDirector since 1991Toronto, OntarioCommon Shares: 146,826
    Mr. Hand, 61, is Chairman and Chief Executive Officer of the
    Company, a position he has held since April 2002. From April
    2001 until April 2002 he served as Deputy Chairman and Chief
    Executive Officer of the Company. Prior to April 2001, Mr. Hand
    was President of the Company from April 1992 and was Executive
    Vice-President, General Counsel and Secretary from April 1991 to
    April 1992 and Vice-President, General Counsel and Secretary
    from 1984 to 1991. Mr. Hand is also a Director of
    Independence Community Bank Corp.                                                                                                                                                                                                                                                                                           

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|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                
|(HOSEK PHOTO)    |  | Chaviva M. HosekDirector since 2002Toronto, OntarioCommon Shares: 5,068*
    Dr. Hosek, 57, is President and Chief Executive Officer of the
    Canadian Institute for Advanced Research, a leading
    not-for-profit organization that brings together Canadas
    top thinkers in areas of basic research with distinguished
    colleagues around the world. She has held this position since
    January 2001. From 1993 until December 2000, Dr. Hosek
    served as Director of Policy and Research for the Prime Minister
    of Canada. Over the 1985-1993 period, she held positions in
    government and private industry, including serving as Minister
    of Housing for the Province of Ontario and a partner in Gordon
    Capital Corporation, a major Canadian investment banking firm.
    Dr. Hosek has also served as President of the National
    Action Committee on the Status of Women in Canada and has held
    senior governance positions at the University of Toronto and the
    University of British Columbia. In 2002, she received an
    honorary Doctor of Laws degree (LL.D.) from the University
    of Waterloo. Dr. Hosek is a Director of Maple Leaf
    Foods, Inc., The Trudeau Foundation, and The Leading Edge
    Endowment Fund.
|                
|(JONES PHOTO)    |  | Peter C. JonesDirector since 2003Toronto, OntarioCommon Shares: 18,882
    Mr. Jones, 56, is President and Chief Operating Officer of
    the Company, a position he has held since April 2001.
    Mr. Jones joined the Company in January 1997. He served as
    Executive Vice-President, Operations, from April 1998 to April
    2001 and as Executive Vice-President, Technology and Project
    Development from January 1997 to April 1998. Before joining the
    Company, Mr. Jones held a number of senior positions in the
    mining industry in North America and overseas, including serving
    as President and Chief Executive Officer of Hudsons Bay
    Mining and Smelting Limited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                
|(MAYBERRY PHOTO) |  | John T. MayberryDirector since 2003Burlington, OntarioCommon Shares: 4,564*
    Mr. Mayberry, 58, served as Chair of the Board and Chief
    Executive Officer of Dofasco Inc., a producer of primary
    steel and finished steel products, from May 2002 until his
    retirement in May 2003. He served as President and Chief
    Executive Officer of Dofasco from January 1993 to May 2002. He
    is also a Director of The Bank of Nova Scotia, Decoma
    International Inc., CFM Inc. and MDS Inc.
    Mr. Mayberry serves as Past Chairman and a Director of the
    American Iron and Steel Institute and is currently Chairman and
    a Director of the International Iron and Steel Institute.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                
|(OBRIEN PHOTO)   |  | David P. OBrienDirector since 1996Calgary, AlbertaCommon Shares: 12,729*
    Mr. OBrien, 62, serves as Chairman of EnCana
    Corporation, one of the worlds leading independent oil and
    gas companies and as Chairman of the Royal Bank of Canada,
    Canadas largest financial institution.
    Mr. OBrien served as Chairman and Chief Executive
    Officer of Canadian Pacific Limited from May 1996 to October
    2001. He also served as Chairman of PanCanadian Energy
    Corporation from 1992 until its merger with Alberta Energy
    Company Ltd. to form EnCana Corporation in April 2002.
    Mr. OBrien is also a Director of Fairmont Hotels
    & Resorts Inc., TransCanada PipeLines Limited, Molson
    Inc. and the C.D. Howe Institute.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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|                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                
|(PHILLIPS PHOTO) |  | Roger Phillips, O.C.Director since 2003Regina, SaskatchewanCommon Shares: 9,108*
    Mr. Phillips, 64, served as President and Chief Executive
    Officer of IPSCO Inc., a leading steel producer and fabricator,
    from February 1982 until his retirement in January 2002.
    Mr. Phillips remains an Honourary Director of
    IPSCO Inc. He is a Director of The Toronto-Dominion Bank,
    Canadian Pacific Railway Limited, Fording Inc., Imperial
    Oil Limited, Cleveland Cliffs Inc., the C.D. Howe
    Institute and the Fraser Institute.                                                                                                                                                                                                                                                                                                                                       
|                
|(STANFORD PHOTO) |  | James M. StanfordDirector since 1998Calgary, AlbertaCommon Shares: 11,738*
    Mr. Stanford, 66, is President of Stanford Resource
    Management Inc. Mr. Stanford served as President and Chief
    Executive Officer of Petro-Canada, one of Canadas largest
    oil and gas companies, from 1993 until his retirement in January
    2000, and as non-executive Chairman of Petro-Canada from January
    to May 2000. Mr. Stanford is also a Director of EnCana
    Corporation, Terasen Inc., Iogen Corporation, OPTI
    Canada Inc., OMERS Resources and Nova Chemicals
    Corporation. He also serves as Chair of the Canada Foundation
    for Sustainable Development Technology and serves on the Board
    of the Mount Royal College Foundation, the Council for Business
    and the Arts in Canada as well as with a variety of other
    industry and community organizations.



|  |                                                                                                                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Includes whole Deferred Share Units credited to
    the account of such Director nominee pursuant to the
    Companys 2002 Non-Employee Director Share Ownership Plan,
    described under Director Compensation on
    page 20.




4.   APPOINTMENT OF
AUDITORS

PricewaterhouseCoopers LLP and its
predecessors have served as Auditors of the Company since it was
incorporated in 1916.

The persons named in the accompanying form or
forms of proxy intend to vote such proxy or proxies in favour of
the appointment of PricewaterhouseCoopers LLP as Auditors
of the Company for the term expiring at the Annual Meeting in
2005 at a remuneration to be approved by the Audit Committee of
the Board of Directors, unless the Shareholder signing such form
or forms of proxy specifies otherwise. At its February 3,
2004 meeting, the Audit Committee recommended the appointment of
PricewaterhouseCoopers LLP as Auditors of the Company for
the term expiring at the Annual Meeting in 2005.

It is intended that
PricewaterhouseCoopers LLP will for 2004 conduct an audit
of the scope customarily made by it on behalf of the Company, as
indicated in the Auditors Report to the Shareholders dated
February 3, 2004 set forth on page 75 of the 2003
Annual Report to Shareholders of the Company, as well as an
attestation on managements assessment of the effectiveness
of internal control over financial reporting, as required under
Section 404 of the U.S. Sarbanes-Oxley Act of 2002.

Representatives of
PricewaterhouseCoopers LLP will attend the Meeting and will
have the opportunity to make a statement if they desire to do so
and will respond to any appropriate questions.

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Auditors Fees

The following table sets for the various services
provided by PricewaterhouseCoopers LLP and its affiliates to the
Company during each of the Companys last two fiscal years,
together with the fees billed for such services:

|                       |  |                             |           |                             |  |   |           | 
|---------------------- |  | --------------------------- | --------- | --------------------------- |  | - | --------- | 
|                       |  | Fees Billed During the Year |           | Fees Billed During the Year
|Services               |  | Ended December 31, 2003     |           | Ended December 31, 2002    
|                       |  |                             |           |                            
|Audit services         |  | $                           | 1,872,000 |                             |  | $ | 1,687,000 | 
|Audit-related services |  |                             | 198,000   |                             |  |   | 213,000   | 
|Tax services           |  |                             | 464,000   |                             |  |   | 1,522,000 | 
|Other services         |  |                             | 72,000    |                             |  |   | 13,000    | 
|                       |  |                             |           |                             |  |   |           | 
|Total                  |  | $                           | 2,606,000 |                             |  | $ | 3,435,000 | 
|                       |  |                             |           |                             |  |   |           | 

The audit services related to professional
services rendered for audits of the Companys annual
financial statements and reviews of the Companys quarterly
financial statements. The audit-related services relate
principally to accounting-related advice, audits in accordance
with agreements with certain of the Companys customers,
audits of certain of the Companys pension plans and
environmental audits. The tax services related to services for
tax compliance, tax planning and tax advice. The other services
related to access to computer software, research tools and
subscriptions, company liquidation advisory services and
translation services.

The Audit Committees policy is to
specifically pre-approve audit and non-audit services provided
to the Company by the independent auditors. Of the services and
fees described, approximately $48,000 related to tax services
(being approximately 10% of the total tax services provided by
PricewaterhouseCoopers LLP and its affiliates to the Company in
2003) which were subject to, and covered by, the de minimis
exemption for pre-approval under applicable regulations and the
Audit Committees policies. The Audit Committee considered
whether the provision of the non-audit services described above
would be consistent with maintaining the Auditors
independence and determined that such services were fully
consistent with the maintenance of the Auditors
independence.






|   |               
|-- | --------------
|5. | OTHER BUSINESS

The Board of Directors is not aware that any
matters are to be presented for action at the Meeting other than
those specifically referred to in the Notice of Meeting.
However, if any other matters properly come before the Meeting,
it is the intention of the persons named in the accompanying
form or forms of proxy to vote on such matters in accordance
with their judgment. The accompanying form or forms of proxy
will also confer discretionary authority upon the persons named
therein with respect to any amendments to the matters set forth
in the Notice of Meeting.

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PART III  CORPORATE
GOVERNANCE



INFORMATION REGARDING THE BOARD AND BOARD
COMMITTEES

The Companys Board of Directors believes
that the purpose of corporate governance is to ensure that the
Company maximizes shareholder value in a manner consistent with
legal requirements and the highest standards of integrity. The
Board has adopted and adheres to corporate governance practices
which the Board and management believe promote this purpose, are
sound and represent best practices. The Board continually
reviews these governance practices, applicable laws and
regulations, the rules and listing standards of the New York
Stock Exchange and the Toronto Stock Exchange, and best
practices suggested by recognized corporate governance bodies
and authorities.

Currently, the Companys Board of Directors
has twelve members. The Board has reviewed its guidelines on
corporate governance and applicable securities laws and stock
exchange listing standards regarding director independence and,
based upon its review and its business judgment, has determined
that ten of twelve Directors (1) meet those guidelines and
(2) are independent as required by applicable
securities laws and stock exchange listing standards, including
the listing standards of the New York Stock Exchange. Each of
the members of the five standing committees of the Board also
meets those guidelines and is an independent
Director for purposes of applicable requirements and the
relevant charters of such committees. A copy of the Boards
guidelines on corporate governance may be viewed on the
Companys website at www.inco.com.

Attendance Record

Directors are expected to attend all meetings,
absent unusual circumstances. During 2003, the Board held 19
meetings and each of the Directors attended over 82% of the
meetings of the Board and of the Committees of the Board on
which such Director served. At the 2003 Annual Meeting of
Shareholders, ten of the twelve then current Directors were
present.

Board Committees

The Board of Directors currently has five
standing committees: the Audit Committee, the Corporate
Governance and Nominating Committee, the Management Resources
and Compensation Committee, the Pension Committee and the
Environment, Health and Safety Committee. The Board may also
form special committees as required to review particular
transactions or matters. The composition, mandate and focus of
each of the five standing committees of the Board of Directors
are discussed below.

Audit Committee

The Audit Committee is composed of at least four
Directors, each of whom must satisfy the Boards guidelines
on corporate governance and applicable securities laws and stock
exchange listing standards with respect to independence. Members
of the Audit Committee must also satisfy the Boards
guidelines and applicable securities laws and stock exchange
rules regarding financial knowledge, literacy and expertise. The
Board has adopted a written charter for the Audit Committee,
which was most recently revised in February 2004. A copy of this
charter is attached to this Proxy Circular and Statement as
Exhibit A and may also be viewed on the Companys
website at www.inco.com. The charter provides the Audit
Committee with the authority and responsibility for the
appointment, retention, compensation and oversight of the
Companys independent auditors, including pre-approval of
all audit and non-audit services to be performed by them, and
the review and evaluation of such auditors independence.
Pursuant to its charter, the Audit Committee meets with the
Companys financial management personnel, its internal
auditors and its independent auditors at least four times a year
to review and assist the Board of Directors in its oversight
responsibilities relating to, among other matters:
(1) accounting and financial reporting principles,
policies, practices and procedures of the Company; (2) the
adequacy of the Companys systems of internal accounting
control and the effectiveness of the Companys internal
control over financing reporting; (3) the quality and
integrity of the Companys financial statements; and
(4) the independent auditors qualifications,
performance and independence. Given that the Audit
Committees function is one of oversight and that its
members are not accountants or auditors, the members of the
Committee rely on the integrity of management, the internal
audit staff and the independent auditors from whom they receive

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information, the accuracy of the information
provided to them by such persons and organizations and on
representations made by management in carrying out their
responsibilities. In connection with the discharge of its duties
and responsibilities, the Committee reviews, among other areas,
the Companys financial reporting practices and procedures,
the Companys quarterly and annual financial statements
prior to their release and filing with regulatory agencies,
actual and prospective changes in critical or significant
accounting policies and their effect, the planned scope of
examinations by both the independent auditors and internal audit
staff and their findings and recommendations. The Audit
Committees annual report is found on page 18. The
Audit Committee held five meetings in 2003 and has the following
members: J.M. Stanford, Chair, G.A. Barton, R.C. Cambre and J.A.
Erola.


Corporate Governance and Nominating
Committee

The Corporate Governance and Nominating Committee
is composed of at least three Directors, each of whom must
satisfy the Boards guidelines on corporate governance and
applicable securities laws and stock exchange listing standards
with respect to independence. The Lead Director serves as the
Chair of the Committee. The Board has adopted a written charter
for the Committee, which was revised in February 2004. A copy of
this charter may be viewed on the Companys website at
www.inco.com. Pursuant to its charter, the Committee is
responsible for, among other things, the following:
(1) making recommendations with respect to the size of the
Board and its standing committees; (2) identifying and
making recommendations to the Board regarding individuals to be
nominated for election or appointment to the Board or any of its
standing committees; (3) evaluating the performance of the
Board as a whole and the performance and contribution of
individual Directors and making recommendations to the Board
with respect to Director compensation; (4) overseeing Board
and Board Committee tenure policies and policies covering the
resignation of incumbent Directors; (5) evaluating at least
on an annual basis the performance of the Chairman and Chief
Executive Officer; (6) reviewing and making recommendations
to the Board with respect to developments in corporate
governance practices (including best practices), legislation and
initiatives affecting the Company; and (7) reviewing the
independence of the Directors and considering questions of
possible conflicts of interest. The Corporate Governance and
Nominating Committee held seven meetings in 2003 and has the
following members: G.A. Barton, Chair, A.A. Bruneau, J.T.
Mayberry and D.P. OBrien. Nominees for election as
Directors at the Meeting, as well as members of each Committee
of the Board of Directors, were approved by the Committee at its
meeting in early February 2004.

In identifying or recommending candidates for
election or appointment to the Board, the Committee is required
to take into consideration the criteria set forth in the
Boards guidelines on corporate governance and such other
factors as it deems appropriate, including the judgment, skill,
integrity, independence, diversity and business experience of
the candidates. The Committee will consider any candidates
recommended by the Shareholders in accordance with the same
criteria as any other proposed candidate. Shareholders who wish
to have persons considered by the Committee for nomination to
the Board of Directors at the 2005 Annual Meeting should submit
their requests in writing, including biographical data regarding
such persons, to the Secretary of the Company for referral to
the Committee not later than December 19, 2004.

Management Resources and Compensation
Committee

The Management Resources and Compensation
Committee is composed of at least three Directors, each of whom
must satisfy the Boards guidelines on corporate governance
and applicable securities laws and stock exchange listing
standards with respect to independence. The Board has adopted a
written charter for the Committee, which was revised in February
2004. A copy of this charter may be viewed on the Companys
website at www.inco.com. Among its responsibilities, the
Committee reviews and evaluates the performance of the
Companys senior executives, other than the Chairman and
Chief Executive Officer, against certain performance
measurements and other factors. The Committee also
(1) makes recommendations to the Board on the remuneration
of the Companys senior executives, including the Chairman
and Chief Executive Officer, (2) oversees the
administration of the Companys incentive compensation
plans, including the Companys annual Management Incentive
Plans, the Mid-Term Incentive Plan and the 2001 Key Employees
Incentive Plan and (3) oversees the development and
implementation of the Companys executive succession plans
and plans for

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developing and evaluating potential candidates
for executive positions, including the position of Chief
Executive Officer. The Management Resources and Compensation
Committee held two meetings in 2003 and has the following
members: R.M. Thomson, Chair, R.C. Cambre, D.P. OBrien and
J.M. Stanford.


Pension Committee

The Pension Committee is composed of at least
three Directors, each of whom must satisfy the Boards
guidelines on corporate governance and applicable securities
laws and stock exchange listing standards with respect to
independence. The Board has adopted a written charter for the
Committee and a copy of the charter may be viewed on the
Companys website at www.inco.com. The Committee
advises the Board on the financial aspects of the pension plans
of the Company and its subsidiaries, including actuarial
assumptions, the adequacy of funding and the implementation of
sound investment strategies for such pension plans. In addition,
the Committee recommends to the Board the appointment of
trustees and investment advisors or managers for such pension
plans. The Pension Committee held four meetings in 2003 and has
the following members: C.M. Hosek, Chair, A.A. Bruneau and
J.A. Erola.

Environment, Health and Safety
Committee

The Environment, Health and Safety Committee is
composed of at least four Directors, each of whom must satisfy
the Boards guidelines on corporate governance and
applicable securities laws and stock exchange listing standards
with respect to independence. The Board has adopted a written
charter for the Committee and a copy of the charter may be
viewed on the Companys website at www.inco.com. The
Committee assists the Board in its oversight responsibilities
relating to, among other matters: (1) the review of the
Companys environmental, health and safety policies;
(2) the monitoring of compliance with applicable
environmental, health and safety laws and regulations relating
to the Companys businesses and operations; and
(3) the development, review and evaluation of the
Companys environmental and health and safety goals and
objectives. The Environment, Health and Safety Committee held
four meetings in 2003 and has the following members: A.A.
Bruneau, Chair, C.M. Hosek, R. Phillips and R.M. Thomson.




STATEMENT OF CORPORATE GOVERNANCE
PRACTICES

In accordance with guidelines adopted in 1995 by
the Toronto Stock Exchange (the Guidelines),
companies such as the Company, whose securities are listed on
that exchange, are required to include in their proxy materials
annually a discussion of their systems of corporate governance
with specific reference to the Guidelines. This Statement of
Corporate Governance Practices is intended to summarize the
Companys approach to corporate governance with reference
to, and taking into account, each of the Guidelines. In
preparing this Statement, we have also considered the New York
Stock Exchange listing standards regarding corporate governance.

The Company and its Board of Directors recognize
the importance of corporate governance to the effective
management of the Company and to its Shareholders and its other
stakeholders. The Companys approach to significant issues
of corporate governance has been, and continues to be, designed
with a view to ensuring that the business and affairs of the
Company are effectively managed so as to enhance long-term
shareholder value. The Company and its Board of Directors have
implemented procedures to ensure that the Companys
corporate governance practices have been, and will continue to
be, subject to review on a regular basis to ensure that adequate
structures, procedures and processes are in place to develop
approaches to, and address, significant issues of corporate
governance. Such periodic review, consistent with the
Guidelines, is one of the duties of the Corporate Governance and
Nominating Committee of the Companys Board of Directors.
The Corporate Governance and Nominating Committee and management
of the Company continue to monitor pending regulatory
initiatives and developments in the corporate governance area,
including the corporate governance guidelines recently proposed
by certain of the Canadian Securities Administrators, and intend
to meet such guidelines.

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Mandate of Board of Directors of the
Company

Given that the Board of Directors is not in a
position to manage the business and affairs of the
Company on a day-to-day basis in meeting the requirements
applicable to directors of a corporation under the CBCA, as well
as under other statutory or legal requirements applicable to
companies which carry on business in numerous jurisdictions, the
Board of Directors delegates to the Companys Chief
Executive Officer and certain other members of the
Companys senior management certain of its powers of
management. The mandate of the Board of Directors focuses on its
responsibility for the overall stewardship of the business and
affairs of the Company. In order to carry out its mandate, the
Board of Directors holds at least eight regularly scheduled
meetings annually, with additional meetings being held as
required to consider particular issues or conduct specific
reviews between regularly scheduled meetings whenever
appropriate. During 2003, the Board of Directors held
19 meetings.

In furtherance of its duties and
responsibilities, the functions which the Board of Directors has
assumed, either directly or through the standing committees of
the Board of Directors, include, as contemplated in the
Guidelines, (a) overseeing the Companys strategic
planning process and overall strategic and business plans and
their implementation, including the scope of operations and
business activities, and investments or divestitures;
(b) assessing the principal risks arising from or
incidental to the operations of the Company, including
financial, operational, regulatory, technological and
environmental, health and safety risks, and overseeing the
systems implemented to manage those risks; (c) electing or
appointing all senior executives of the Company, overseeing the
Companys executive compensation and development policies
and programs, and succession planning, and their implementation,
and reviewing the performance of senior executives in line with
corporate policies in effect and the applicable annual and long
term business and strategic plans and other objectives of the
Company; (d) overseeing shareholder, investor and public
communications policies and their implementation, including
timely disclosure of material information; and
(e) monitoring and assessing the scope, implementation and
integrity of the Companys internal accounting control,
audit and management information systems.

Decisions Requiring Board Approval

In light of the responsibilities of the Board of
Directors for the overall stewardship of the business and
affairs of the Company, all fundamental decisions relating to
the management of the Company are reviewed and approved in
advance by the Board. The Board of Directors has from time to
time delegated to senior management of the Company the authority
to enter into certain types of transactions, including financial
transactions, subject to specified limitations. Subject to such
delegation, major proposed decisions or actions concerning,
among other matters, the Companys corporate status,
capital structure, annual and long-term business and strategic
plans, major acquisitions or divestitures, strategic alliances
and other actions as required under the CBCA, are subject to the
prior approval of the Board. Capital investments and other
expenditures above certain minimum levels established by the
Board are also subject to the prior approval of the Board of
Directors.

Boards Expectations of
Management

The Board of Directors does not believe that it
is appropriate for it to be involved in the day-to-day
management and functioning of the Company. It expects that
senior management will be responsible for the effective,
efficient, and prudent management of the Company, subject to the
Boards overall stewardship responsibilities. Given the
Boards overall stewardship responsibilities, the Board of
Directors expects management of the Company to meet the
following key objectives: (a) report, in a comprehensive,
accurate and timely fashion, on the business and affairs of the
Company generally, and on any specific matters that management
considers to be of material or significant consequence for the
Company and its Shareholders and other stakeholders;
(b) take timely action, and make all appropriate decisions
required, with respect to the Companys operations in
accordance with all applicable legal and other requirements or
obligations and within the framework of corporate policies in
effect, with a view to maximizing shareholder value;
(c) conduct a comprehensive annual budgeting process and
monitor closely the Companys financial and operating
performance in conjunction with the Companys annual
business plan approved by the Board; (d) review on an
ongoing basis the Companys near term and long term
strategic plans and their implementation in all key areas of the
Companys activities in light of, among other critical
factors, evolving market conditions and changes in applicable
laws, regulations and

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technology; and (e) implement appropriate
policies, procedures and processes to assure the highest level
of conduct and integrity of the Companys management and
employees worldwide.


Board Composition and Independence

In this Statement of Corporate Governance
Practices, the term unrelated director has the
meaning given to it in the Guidelines: a director who is
independent of management and free from any interest and any
business or other relationship which could, or could reasonably
be perceived to, materially interfere with the directors
ability to act with a view to the best interests of the Company.
The Company has no significant shareholder for the
purposes of the Guidelines.

In deciding whether a particular Director is an
unrelated director for the purposes of the
Guidelines, as well as whether a particular Director is
independent under the New York Stock Exchange
listing standards, the Corporate Governance and Nominating
Committee annually reviews this issue in the context of a number
of factors, including the Boards guidelines on corporate
governance. The Committee most recently determined, at its
meeting in early February 2004, that no Director, other than the
Chairman and Chief Executive Officer and the President and Chief
Operating Officer, who are full-time employees of the Company,
currently has any significant business or other relationship
with the Company which would make such Director not
unrelated or independent. Accordingly,
the Committee determined that all of the members of the Board,
except the Chairman and Chief Executive Officer, Mr. Hand,
and the President and Chief Operating Officer, Mr. Jones,
are, in accordance with the Guidelines, unrelated
directors of the Company. At the same meeting, the
Committee also determined that all of the members of the Board,
other than Mr. Hand and Mr. Jones, are
independent in accordance with applicable New York
Stock Exchange listing standards and the Boards guidelines
on corporate governance.

The Board of Directors is currently comprised of
twelve members. However, the size of the Board will be changed
to ten members, effective as of the Meeting. The Board made this
change to accommodate the retirement of Judith A. Erola and
Richard M. Thomson, in accordance with the Companys
retirement policy for non-employee Directors. The Board of
Directors and the Corporate Governance and Nominating Committee,
as discussed below, periodically consider the size of the Board.
The Board believes that, while a Board size of ten members is
adequate, the addition of new Directors would be desirable to
maintain the size of the Board at twelve members. Accordingly,
the Corporate Governance and Nominating Committee is currently
searching for new Director candidates and the Company has
engaged executive-search consulting firms to assist it in
identifying suitable candidates.

Chairman of the Board and Executive Officer
Positions and Responsibilities and Lead Director
Position

The Chief Executive Officer of the Company,
Mr. Hand, was appointed as Chairman of the Board of
Directors on April 17, 2002. At the same time, the Board
formalized the creation of a lead director position and elected
Glen A. Barton, an independent Director, to serve as lead
Director. The principal duties and responsibilities of the lead
Director include chairing the executive sessions held by the
non-employee Directors, reviewing, to the extent appropriate,
with the Chairman and Chief Executive Officer the matters
discussed in such executive sessions, reviewing and interacting
with management in the preparation of the agendas for all Board
meetings and arranging for key issues identified by non-employee
Directors to be addressed at one or more Board meetings.

The Board of Directors has reviewed whether the
positions of Chair of the Board and Chief Executive Officer
should be held by separate persons and, in accordance with its
guidelines on corporate governance, the Board will implement,
when it believes it would be in the best interests of the
Company, on either an interim basis or otherwise, arrangements
whereby the positions of Chairman and Chief Executive Officer
would not be held by the same person. It will also continue to
evaluate new structures and procedures to enhance or supplement
existing structures and procedures regarding the operation of
the Board.

As a part of existing procedures, and consistent
with the New York Stock Exchange listing standards, regular
executive sessions of the independent/unrelated Directors are
held in conjunction with at least each face-to-face Board
meeting separately from the inside Directors and any management.
These sessions are chaired by the lead

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Director. Any independent/unrelated Director or
group of such Directors may, taking into account the relevant
circumstances and subject to the approval of the Corporate
Governance and Nominating Committee, engage independent advisors
at the expense of the Company.


The Corporate Governance and Nominating
Committee, whose responsibilities are summarized beginning on
page 13, is responsible for overseeing and reviewing the
position description and performance of the Chairman and Chief
Executive Officer and the development, at least on an annual
basis, of the limits to the responsibilities of the Chief
Executive Officer and the corporate objectives which the Chief
Executive Officer will be responsible for meeting and the
Management Resources and Compensation Committee, whose
responsibilities are summarized on page 13, is responsible
for overseeing and reviewing the position descriptions,
performance and corporate objectives which the other Executive
Officers will be responsible for meeting.

Director Recruitment

The maintenance of a diverse, dedicated and
highly qualified group of independent and unrelated Directors is
critical to the functioning and effectiveness of the Board of
Directors. As summarized on page 13, the Corporate
Governance and Nominating Committee is charged with identifying,
evaluating and recommending Director nominees with the
assistance of senior management, other Directors and outside
advisors, as appropriate. Nominees are assessed based on the
criteria which have been developed for Director candidates,
which criteria are periodically reviewed and updated by the
Corporate Governance and Nominating Committee, taking into
account the desired size of the Board and the diversity of its
composition. The Committee recognizes the benefits of diversity
and in selecting candidates utilizes a comprehensive list of
criteria, including desired skills, areas of expertise,
experience and accomplishments, gender, age and other personal
characteristics, which are intended to result in the selection
of candidates who are best able to contribute to the direction
of the business, strategies and affairs of the Company.

Board Committees and Board
Performance

As discussed above, the Board currently has five
standing committees: the Audit Committee, the Corporate
Governance and Nominating Committee, the Management Resources
and Compensation Committee, the Pension Committee and the
Environment, Health and Safety Committee. Special committees of
the Board are formed as required to review particular
transactions or matters. The Corporate Governance and Nominating
Committee, consistent with the Guidelines, regularly reviews,
assesses and reports to the Board and, when appropriate, makes
recommendations on the size, composition, compensation,
effectiveness and performance of the Board and the existing
Board Committees, the charters of the existing Board Committees,
whether new Board Committees should be created, the orientation
and education programs developed by the Company for new
Directors and the Companys approach to corporate
governance and to the principles set forth in the Guidelines.
The compensation arrangements for the Companys
independent/unrelated Directors are described under
Director Compensation, beginning on page 20. All of
the members of the five standing Board Committees are
independent/unrelated Directors. The composition of the Audit
Committee and the functions, duties and responsibilities of the
Audit Committee are consistent with the requirements for such
committee as set forth in the Guidelines and other applicable
requirements, including the New York Stock Exchange listing
standards.

Shareholder/ Investor Communications and
Feedback

The Company has programs in place to effectively
communicate with its stakeholders, including its Shareholders,
employees and the general public. The fundamental objective of
these programs is to ensure an open, accessible and timely
exchange of information with Shareholders, employees and other
stakeholders concerning the business, affairs and performance of
the Company, subject to the requirements of applicable
securities laws and other statutory and contractual obligations.
The Companys shareholder and investor relations personnel
are responsible for responding to shareholder communications and
addressing feedback from Shareholders and other stakeholders
with review, as appropriate, by senior management and the Board
of Directors. The Companys shareholder and investor
relations function includes quarterly conference calls with
industry analysts and media representatives in conjunction with
the release of the Companys financial results, as well as
regular presentations to or meetings with industry analysts and
with institutional shareholders. Through

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webcasting services, Shareholders and other
stakeholders may access these conference calls and most of the
presentations made by the Company to the investment community.
Shareholders or other interested parties may contact the
companys investor relations personnel through the
Companys website, at www.inco.com, or by telephone
at (416) 361-7670.





AUDIT COMMITTEE REPORT

The Audit Committee of the Board has four
members. The Board has reviewed its guidelines on corporate
governance and applicable securities laws and stock exchange
listing standards regarding director independence and, based
upon its review and its business judgment, has determined that
each of the members of the Audit Committee (1) meets those
guidelines and (2) is independent as required
by applicable securities laws and stock exchange listing
standards, including the listing standards of the New York Stock
Exchange. The Board has also determined that each of James M.
Stanford (Chair), Glen A. Barton and Ronald C. Cambre meets the
applicable requirements and, accordingly, is an audit
committee financial expert as that term is defined under
applicable U.S. securities legislation.

The role of the Audit Committee is to assist the
Board in its oversight of the Companys accounting and
financial reporting principles, policies and procedures, as well
as the adequacy of the Companys systems of internal
control over financial reporting and the quality and integrity
of the Companys financial statements. The Committee
operates pursuant to a charter that was amended and restated by
the Board in February 2004. A copy of the charter is attached to
this Proxy Circular and Statement as Exhibit A. As set
forth in the charter, management of the Company is responsible
for the preparation, presentation and integrity of the
Companys financial statements, the Companys
accounting and financial reporting principles, and internal
accounting and other controls and procedures designed to assure
compliance with accounting standards and applicable laws and
regulations. The Companys independent auditors are
responsible for auditing the Companys financial statements
and expressing an opinion as to their conformity with Canadian
generally accepted accounting principles.

In assisting the Board in its oversight function,
the Committee has reviewed and discussed the Companys
audited financial statements for the year ended
December 31, 2003 with management, the Companys
internal audit staff and the Companys independent
auditors, PricewaterhouseCoopers LLP. The Committee has also
reviewed and discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards
No. 61, Communication with Audit Committees (as
codified by AU Section 380), and related guidance in
Canada. The Committee has also received the written disclosures
and the letter from the independent auditors required by the
current Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, in
the United States and related guidance in Canada, and has, as
part of its responsibilities, reviewed with the independent
auditors, taking into account recent legislation and
regulations, such auditors independence from the Company
and its management. The Audit Committee has also discussed with
management, the Companys internal audit staff and the
independent auditors the quality and adequacy of the
Companys internal accounting and other controls and the
Companys internal audit functions, organization,
responsibilities, budgets and staffing. The Audit Committee has
reviewed with both the independent auditors and the
Companys internal audit staff their respective audit
plans, audit scope and identification of audit risks for the
year ended December 31, 2003, and, having developed
policies and procedures relating to the pre-approval of such
services, has considered the nature and scope of the non-audit
services proposed to be supplied to the Company by its
independent auditors and whether the provision of any such
non-audit services by the auditors is fully compatible with the
maintenance of their independence.

The members of the Audit Committee are not
professionally engaged in the practice of auditing or
accounting, are not experts in the fields of accounting or
auditing, including in respect of auditor independence, and are
not employed by the Company for accounting or financial
management or for any aspects of the Companys systems of
internal accounting control. Members of the Committee rely,
without independent verification, on the information provided to
them, and on the representations made, by management, the
Companys internal audit staff and the Companys
independent auditors. Accordingly, the Audit Committees
oversight does not provide an independent basis to determine
that management has maintained appropriate accounting and
financial reporting principles and policies, or internal
accounting controls and procedures, designed to assure
compliance with accounting standards and applicable laws and
regulations. In addition, the

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Audit Committees considerations and
discussions referred to above do not assure that the audit of
the Companys financial statements has been carried out in
accordance with Canadian and/or U.S. generally accepted auditing
standards, that the Companys financial statements are
presented in accordance with Canadian generally accepted
accounting principles, or that the Companys auditors are
in fact independent.


Based upon the reports, discussions and reviews
described in this Report, and subject to the limitations on the
role and responsibilities of the Committee referred to above and
in the Charter of the Audit Committee, the Committee has
(i) approved, subject to requisite Shareholder approval in
accordance with the CBCA, the appointment of
PricewaterhouseCoopers LLP as independent auditors for the
Companys fiscal year ended December 31, 2004, and
(ii) recommended to the Board of Directors, which has
approved the Committees recommendations, that the
Companys audited financial statements for the year ended
December 31, 2003 be included in the Companys Annual
Report to Shareholders for the year ended December 31,
2003. At the time of this report, the note to the Companys
financial statements for the year ended December 31, 2003
that sets forth and reconciles the significant differences
between Canadian and U.S. generally accepted accounting
principles and that is required to be included in the
Companys Annual Report on Form 10-K (but not in the
Annual Report to Shareholders) had not been finalized pending
discussions of certain matters with the U.S. Securities and
Exchange Commission. In such circumstances, the Committee has
not approved the version of the Companys financial
statements to be included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2003 at the
time of this report. The Companys Annual Report on
Form 10-K for the year ended December 31, 2003 is expected
to be approved by the Committee and filed by the Company in
mid-March 2004 with the U.S. Securities and Exchange
Commission and Canadian securities regulatory authorities.

The Audit Committee

James M. Stanford, Chair

Glen A. Barton


Ronald C. Cambre


Judith A. Erola


February 20, 2004

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##### Table of Contents






PART IV  DIRECTOR AND
EXECUTIVE COMPENSATION



DIRECTOR COMPENSATION

Directors Compensation in 2003

In 2003, the Company paid its non-employee
Directors an annual retainer for serving on the Board, plus
additional annual retainers for serving (1) on a Board
Committee, (2) as Chair of a Board Committee and/or
(3) as Lead Director. The Company also paid its
non-employee Directors an attendance fee for each meeting of the
Board or a Board Committee (subject to certain exceptions when
certain Board Committees met on the same day) and granted them
options to purchase 5,000 Common Shares under the Companys
2002 Non-Employee Director Share Option Plan (the
Directors Option Plan). The Company does not
provide any additional compensation to Directors who are also
employees of the Company.

The following table sets forth the amount of each
of the annual retainers, attendance fees and share option grants
paid to the Companys non-employee Directors in 2003:

|                                                          |  |                                                                  
|--------------------------------------------------------- |  | -----------------------------------------------------------------
|Retainer, Fee or Option Grant                             |  | Amount                                                           
|                                                          |  |                                                                  
|Annual Director Retainer                                  |  |  $15,000 in cash*                                               
|                                                          |  |  700 Common Shares or Deferred Share
    Units                  
|Committee Member Retainer (per Committee)                 |  |  $3,000 in cash*                                                
|                                                          |  |  200 Common Shares or Deferred Share
    Units                  
|Committee Chair Retainer (other than Audit
    Committee) |  |  $2,000 in cash*
     200 Common Shares or Deferred Share Units
|Audit Committee Chair Retainer                            |  |  $2,000 in cash*                                                
|                                                          |  |  500 Common Shares or Deferred Share
    Units                  
|Lead Director Retainer                                    |  |  $15,000 in Common Shares or Deferred
    Share Units           
|Attendance Fee                                            |  |  $750 in cash per meeting*                                      
|Stock Option Grant                                        |  |  5,000 Common Share Options                                     



|  |                                                                                                                                                                     
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Non-employee Directors may elect to receive all
    or part of their cash compensation in the form of Common Shares
    or Deferred Share Units, as described below.

Annual Award of Common Shares or Deferred
Share Units.The annual retainer for
service on the Board, and the additional annual retainers for
service on a Board Committee, as Chair of a Board Committee or
as Lead Director of the Board, are payable partially in cash and
partially in the form of an annual award of Common Shares or, at
the Directors election, Deferred Share Units, pursuant to
the Companys 1998 Non-Employee Director Share Ownership
Plan (the Ownership Plan). The Common Shares awarded
under the Ownership Plan are purchased in the secondary market,
thereby avoiding dilution. The Deferred Share Units awarded
under the Ownership Plan are book-keeping entries that represent
the value of a Common Share. In conjunction with a
Directors retirement from the Board, the Deferred Share
Units are cashed out by the Company based upon the fair market
value of the Common Shares at such time.

Additional Equity Compensation and Minimum
Equity Ownership Requirements.The
Ownership Plan also provides the Companys non-employee
Directors with the opportunity to elect to receive all or part
of the portion of their compensation that would ordinarily be
payable in cash in the form of Common Shares or Deferred Share
Units. The Company has a share ownership requirement for
non-employee Directors, pursuant to which, in fiscal 2003, each
non-employee Director was required to hold, over time, the
greater of (a) 7,500 Common Shares and/or Deferred Share
Units, or (b) Common Shares and/or Deferred Share Units
having a fair market value of at least $150,000. These
requirements have been raised for fiscal 2004 (as described
under New Fee Structure for 2004, below). Under the
Ownership Plan, a non-employee Director is required to take at
least 25% of his or her cash compensation in the form of Common
Shares or Deferred Share Units until such time as he or she has
satisfied the Companys minimum share ownership
requirements.

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Option Grants.Pursuant to the Directors Option
Plan referred to above, on April 16, 2003, the non-employee
Directors elected at the Companys 2003 Annual Meeting were
each granted options to acquire 5,000 Common Shares at an
exercise price of $19.23 per share and on April 17, 2003,
the Companys other non-employee Directors were each
granted options to purchase 5,000 Common Shares at an exercise
price of $19.39 per share. The options had a Black-Scholes value
of $20,750 and $26,900, respectively, as at the date of grant
(based upon the following key assumptions: dividend yield: 0%;
volatility: 41.1%; risk-free rate of return: 2.13%; and expected
exercise period: three years). The Directors Option Plan
has since been suspended by the Board (as described under
New Fee Structure for 2004, below). The
Directors Option Plan provided that each non-employee
Director was automatically granted options to purchase 5,000
Common Shares upon joining the Board and options to acquire an
additional 5,000 Common Shares after each annual meeting of
Shareholders thereafter (provided that, if the Director had
served for at least six but less than twelve months prior to the
annual meeting, his or her option grant would be pro-rated,
based on the number of full months of service up to and
including the annual meeting). The options became exercisable on
the first anniversary of the date of grant, and remain
exercisable for up to ten years following the date of grant. The
exercise price of the options was based on the average of the
high and low sales prices of the Common Shares on the New York
Stock Exchange.

Aggregate Value.Assuming that a non-employee Director served as a member of two
standing Board Committees and attended all 19 Board meetings and
an additional eight Board Committee meetings, the aggregate
value of the compensation package for such service would have
been $92,229, consisting of (1) $41,250 in cash;
(2) $24,079 in Common Shares or Deferred Share Units (based
on the closing price of the Common Shares on the New York Stock
Exchange of $21.89 on January 2, 2003, the date of the 2003
annual award); and (3) $26,900 in share options (based on
the Black-Scholes value of the grant of 5,000 options on
April 17, 2003, as described above).

New Fee Structure for 2004

For 2004, the Company has changed the way it
compensates its non-employee Directors in furtherance of its
corporate governance objectives.

In order to simplify non-employee Director
compensation and make it more transparent to Shareholders, the
Company has decided to eliminate meeting attendance fees and
additional retainers for service on Board Committees. The Board
has taken the view that each Director is expected to attend all
meetings of the Board and to serve on at least two Board
Committees, and that compensation for these services should be
included in the non-employee Directors annual retainer.
Accordingly, for 2004, the annual retainer has been raised to
$30,000 in cash and 1,100 Common Shares or Deferred Share Units.
Where a Director sits on more than two Board Committees, that
Director will receive an additional 200 Common Shares or
Deferred Share Units. The Company will continue to provide
additional retainers for serving as Chair of a Board Committee
or as Lead Director, at the same level as in 2003.

The Board has also decided to suspend the
Directors Option Plan and, in lieu of the annual grant of
5,000 options thereunder, to make an additional award of 1,500
Deferred Share Units pursuant to the Ownership Plan. This
special award will be made immediately following the Meeting, to
each of the non-employee Directors who are serving on the Board
at that time. Any additional non-employee Director who may be
appointed to the Board prior to the Companys next annual
meeting will receive a pro-rated award as at the date of his or
her appointment to the Board. The Board decided that Deferred
Share Units would more closely align the Directors
interests with the long-term interests of the Shareholders than
share options. As in the case of share options granted under the
Directors Option Plan, the Deferred Share Units will vest
at the end of one year, provided that the Director is still
serving on the Board. For 2004, the Company has also raised the
minimum share ownership requirement for non-employee Directors
to the greater of (a) 7,500 Common Shares and/or Deferred
Share Units or (b) Common Shares and/or Deferred Share
Units having a fair market value of at least $180,000 (increased
from $150,000 in 2003). Non-employee Directors will continue to
be required to take at least 25% of their cash compensation in
the form of Common Shares or Deferred Share Units until such
time as they have satisfied the Companys minimum share
ownership requirements. The existing options granted pursuant to
the Directors Option Plan will remain outstanding.

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##### Table of Contents






EXECUTIVE COMPENSATION

Compensation of Officers

The table below sets forth the compensation paid
by the Company to the Companys Chairman and Chief
Executive Officer, and to each of the Companys four next
most highly compensated Executive Officers, for services
rendered in all capacities to the Company in respect of the
years 2003, 2002, 2001.




SUMMARY COMPENSATION TABLE





|                                      |  |                     |  |            |         |              |  |              |         |               |  |        |         |  |  |  |         |  |  |  |        | 
|------------------------------------- |  | ------------------- |  | ---------- | ------- | ------------ |  | ------------ | ------- | ------------- |  | ------ | ------- |  |  |  | ------- |  |  |  | ------ | 
|                                      |  |                     |  |            |         |              |  |              |         |              
|                                      |  |                     |  |            |         |              |  | LONG TERM    |         |              
|                                      |  |                     |  |            |         |              |  | COMPENSATION |         |              
|                                      |  |                     |  |            |         |              |  | AWARDS       |         |              
|                                      |  |                     |  |            |         |              |  |              |         |              
|                                      |  |                     |  |            |         | Securities   |  |             
|                                      |  | ANNUAL COMPENSATION |  | Restricted |         | Underlying   |  | All Other   
|Name and                              |  |                     |  | Stock      |         | Options/SARs |  | Compensation
|Principal Position                    |  | Year                |  | Salary($)  |         | Bonus($)(1)  |  | Awards($)(2) |         | Granted(#)(3) |  | ($)(4)
|                                      |  |                     |  |            |         |              |  |              |         |               |  |       
|Scott M. Hand(5)                      |  | 2003                |  |            | 772,086 |              |  |              | 537,000 |               |  |        | 726,024 |  |  |  | 72,000  |  |  |  | 80,697 | 
|Chairman and Chief Executive Officer  |  | 2002                |  |            | 608,000 |              |  |              | 357,000 |               |  |        | 374,000 |  |  |  | 100,000 |  |  |  | 63,000 | 
|                                      |  | 2001                |  |            | 552,000 |              |  |              | 310,000 |               |  |        | 324,000 |  |  |  | 77,000  |  |  |  | 56,000 | 
|Peter C. Jones(6)                     |  | 2003                |  |            | 542,967 |              |  |              | 305,016 |               |  |        | 413,848 |  |  |  | 66,000  |  |  |  | 48,000 | 
|President and Chief Operating Officer |  | 2002                |  |            | 418,000 |              |  |              | 243,000 |               |  |        | 206,000 |  |  |  | 59,468  |  |  |  | 48,000 | 
|                                      |  | 2001                |  |            | 368,000 |              |  |              | 162,000 |               |  |        | 167,000 |  |  |  | 42,000  |  |  |  | 45,000 | 
|Stuart F. Feiner                      |  | 2003                |  |            | 401,556 |              |  |              | 179,000 |               |  |        | 221,960 |  |  |  | 32,000  |  |  |  | 50,145 | 
|Executive Vice-President,             |  | 2002                |  |            | 338,000 |              |  |              | 152,000 |               |  |        | 118,000 |  |  |  | 44,000  |  |  |  | 43,000 | 
|General Counsel and Secretary         |  | 2001                |  |            | 334,000 |              |  |              | 118,000 |               |  |        | 97,000  |  |  |  | 33,000  |  |  |  | 43,000 | 
|Peter J. Goudie                       |  | 2003                |  |            | 373,752 |              |  |              | 179,000 |               |  |        | 221,960 |  |  |  | 32,000  |  |  |  | 49,402 | 
|Executive Vice-President, Marketing   |  | 2002                |  |            | 292,000 |              |  |              | 152,000 |               |  |        | 106,000 |  |  |  | 44,000  |  |  |  | 41,000 | 
|                                      |  | 2001                |  |            | 271,000 |              |  |              | 118,000 |               |  |        | 78,000  |  |  |  | 33,000  |  |  |  | 41,000 | 
|Farokh S. Hakimi(7)                   |  | 2003                |  |            | 344,874 |              |  |              | 143,200 |               |  |        | 193,320 |  |  |  | 32,000  |  |  |  | 46,012 | 
|Executive Vice-President              |  | 2002                |  |            | 251,000 |              |  |              | 132,000 |               |  |        | 80,000  |  |  |  | 35,000  |  |  |  | 31,000 | 
|and Chief Financial Officer           |  | 2001                |  |            |        |              |  |              |        |               |  |        |        |  |  |  |        |  |  |  |       | 
|                                     



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The amounts shown represent cash bonus awards
    granted pursuant to the Companys annual Management
    Incentive Plans (described below). Awards earned in a particular
    year are paid in the first quarter of the immediately succeeding
    year. The Company reports these awards in the year in which they
    were earned, rather than in the year in which they were actually
    paid. The bonuses awarded to Executive Officers who were paid in
    Canadian dollars have been converted into U.S. dollars at the
    average rate of exchange for the year in which their bonuses
    were earned. See Report on Executive Compensation,
    beginning on page 27.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(2) | The amounts shown represent awards of restricted
    Common Shares and cash in an amount generally sufficient to
    cover tax liabilities in respect of the award. These awards were
    made pursuant to the Companys Mid-Term Incentive Plan
    (described below), for 2003 and 2002, and pursuant to the
    predecessor to such plan, for 2001. Awards earned in a
    particular year are paid in the first quarter of the immediately
    succeeding year. The Company reports these awards in the year in
    which they were earned, rather than the year in which they were
    actually paid. The restricted Common Shares comprising part of
    such awards have been valued, for the purposes of the Summary
    Compensation Table, at the average of the high and low sales
    prices of the Common Shares on the Toronto Stock Exchange on the
    date of the award, which amount has been converted into U.S.
    dollars at the average rate of exchange for the year in which
    the awards were earned. The restricted Common Shares awarded in
    respect of 2003 may not be transferred, sold or encumbered for a
    three-year period ending in February 2006, unless the awardee
    retires during such period, and will generally be subject to
    forfeiture within that three-year period if such restrictions
    have been violated by the awardee or the awardee leaves
    employment voluntarily (other than by reason of retirement or
    death) or is terminated for cause. Such restricted Common Shares
    will be held by the Company for the three-year period, but the
    awardee will have all rights as a holder of such shares,
    including rights to dividends, if any. The aggregate number and
    value of restricted Common Shares held by the Executive Officers
    as at February 20, 2004, based on the closing price of the
    Common Shares on the New York Stock Exchange on
    December 31, 2003 (being $39.82), is set forth in the
    following table:

|                  |  |                      |        |          |  |  |              | 
|----------------- |  | -------------------- | ------ | -------- |  |  | ------------ | 
|                  |  | Number of Restricted |        |         
|Executive Officer |  | Common Shares Held   |        | Value($)
|                  |  |                      |        |         
|Scott M. Hand     |  |                      | 28,367 |          |  |  | 1,129,573.94 | 
|Peter C. Jones    |  |                      | 14,477 |          |  |  | 576,474.14   | 
|Stuart F. Feiner  |  |                      | 8,327  |          |  |  | 331,581.14   | 
|Peter J. Goudie   |  |                      | 7,241  |          |  |  | 288,336.62   | 
|Farokh S. Hakimi  |  |                      | 3,836  |          |  |  | 152,749.52   | 

The restricted Common
Shares shown in the table above have been included in the number
of Common Shares shown to be beneficially owned by such
Executive Officers in the table included under the heading
Security Holdings of Directors and Officers,
beginning on page 32.

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##### Table of Contents





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | The amounts shown represent options and related
    share appreciation rights (SARs) granted under the
    Companys 2001 Key Employees Incentive Plan, in respect of
    2002 and 2003, and its predecessor plan, the 1997 Key Employees
    Incentive Plan, in respect of 2001. Grants of options and
    related SARs are reported in the year in which they are made.                                                                                                                                                            
|   
|(4) | Consists of (a) an annual perquisite
    allowance of approximately $28,640 on an annualized basis,
    (b) annual contributions made by the Company under the
    Companys contributory security reserve plans (see
    page 25) and (c) the dollar value of insurance premiums
    paid by the Company for the benefit of such individuals for
    group term life insurance (see page 27).                                                                                                                                         
|   
|(5) | Mr. Hand became Chairman of the Company
    effective April 17, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(6) | Mr. Jones was elected as a Director on
    February 4, 2003 and as President and Chief Operating
    Officer of the Company on April 25, 2001. He served as
    Executive Vice-President, Operations from April 1, 1998 to
    April 24, 2001 and as Executive Vice-President, Technology
    and Development from January 1, 1997 to April 1, 1998.                                                                                                                                                                                   
|   
|(7) | Mr. Hakimi was appointed Executive
    Vice-President and Chief Financial Officer of the Company
    effective February 27, 2002. He joined the Company in
    January 2002 as a consultant focusing on strategic planning and
    related areas. Previously, he was Vice-President and Chief
    Financial Officer of Rio Algom Limited from January 2000 to July
    2001. He also held a number of senior financial positions at
    Cyprus Amax Minerals Company between 1986 and 1999, including
    Vice-President and Treasurer.

Management Incentive Plans

The Companys Executive Officers are
eligible to receive three forms of incentive compensation:
(1) cash bonuses under the Companys applicable annual
Management Incentive Plan (MIP), (2) awards of
restricted Common Shares and cash generally sufficient to cover
tax liabilities in respect thereof under the Companys
Mid-Term Incentive Plan (MTIP), and (3) grants
of options and related SARs under the Companys 2001 Key
Employee Incentive Plan (2001 KEIP). Each of these
plans is described below. The factors determining the size of
the payments and awards made under those plans in respect of
2003 is discussed in the Management Resources and Compensation
Committees Report on Executive Compensation,
beginning on page 27.

The Company establishes a MIP on an annual basis.
Under the MIP, cash bonus awards may be made to Officers and
other key employees of the Company and its subsidiaries. The
amount of the cash bonus awards, if any, is based on the
achievement of key strategic objectives, the financial and
operating performance of the Company and/or its applicable
operating units, and such other targets and objectives as may be
established and approved by the Management Resources and
Compensation Committee in respect of the applicable year, as
well as the performance of, and contribution made by, each
individual plan participant. Proposals for awards to be made
under the MIP are reviewed by the Management Resources and
Compensation Committee and are subject to the Boards
approval.

The Mid-Term Incentive Plan was approved by the
Board in April 2002, replacing a similar predecessor plan. Under
the MTIP, the Management Resources and Compensation Committee
establishes an incentive fund in respect of each financial year.
The maximum amount of the incentive fund is equal to (a) 2%
of the sum of (i) the consolidated net earnings of the
Company for the year and (ii) the related provisions for
income and mining taxes in such year (the Award
Pool) and the Award Pool for each of the two immediately
preceding years, less (b) the aggregate amount of awards
actually made from the Award Pool in respect of each of the two
immediately preceding years under the MTIP and the predecessor
thereto. Under the MTIP, incentive awards are based upon the
longer-term performance of the Company and are paid in the form
of restricted Common Shares, valued at their fair market value
on the date of the award, and cash in an amount generally
sufficient to cover tax liabilities arising in respect of the
award. The MTIP also authorizes other awards which are measured
or otherwise dependent upon future consolidated net earnings of
the Company.

The 2001 KEIP provides for the issuance of
options to purchase Common Shares and related share appreciation
rights (SARs). SARs entitle an optionee, in lieu of
exercising an option to purchase Common Shares, to surrender the
option to the Company, in exchange for an amount equal to the
difference between the then-current market price of a Common
Share and the exercise price of the related option. The Company
may satisfy its obligation through the delivery of cash, Common
Shares or a combination of cash and Common Shares. The 2001 KEIP
is the successor to certain similar option/ SAR plans of the
Company, which date back to 1979.

Non-employee Directors are not eligible to
participate in the Companys 2003 MIP, the MTIP, the 2001
KEIP or any of the Companys previous management incentive
plans.

23



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##### Table of Contents



Share Option Grants and Exercises

The table below sets forth information related to
grants of options and related SARs in 2003 pursuant to the 2001
KEIP to the Chairman and Chief Executive Officer and to each of
the four next most highly compensated Executive Officers of the
Company.




OPTION/ SAR GRANTS IN 2003





|                 |  |                   |        |              |  |              |     |            |  |             |       |  |  |  |          |  |  |  |         | 
|---------------- |  | ----------------- | ------ | ------------ |  | ------------ | --- | ---------- |  | ----------- | ----- |  |  |  | -------- |  |  |  | ------- | 
|                 |  |                   |        |             
|                 |  | Individual Grants |        |             
|                 |  |                   |        |             
|                 |  | Number of         |        | % of Total   |  |              |     |           
|                 |  | Securities        |        | Options/SARs |  |              |     |           
|                 |  | Underlying        |        | Granted to   |  | Exercise or  |     |            |  | Grant      
|                 |  | Options/SARs      |        | Employees in |  | Base Price   |     | Expiration |  | Date       
|Name             |  | Granted(#)(1)     |        | 2003         |  | ($/share)(2) |     | Date       |  | Value($)(3)
|                 |  |                   |        |              |  |              |     |            |  |            
|Scott M. Hand    |  |                   | 72,000 |              |  |              | 6.8 | %          |  | $           | 20.85 |  |  |  | 2/3/2013 |  |  |  | 452,000 | 
|Peter C. Jones   |  |                   | 48,000 |              |  |              | 4.5 | %          |  | $           | 20.85 |  |  |  | 2/3/2013 |  |  |  | 301,000 | 
|Stuart F. Feiner |  |                   | 32,000 |              |  |              | 3.0 | %          |  | $           | 20.85 |  |  |  | 2/3/2013 |  |  |  | 201,000 | 
|Peter J. Goudie  |  |                   | 32,000 |              |  |              | 3.0 | %          |  | $           | 20.85 |  |  |  | 2/3/2013 |  |  |  | 201,000 | 
|Farokh S. Hakimi |  |                   | 32,000 |              |  |              | 3.0 | %          |  | $           | 20.85 |  |  |  | 2/3/2013 |  |  |  | 201,000 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | All of the options granted include related SARs.
    Half of the options and related SARs became exercisable on
    August 4, 2003 and the remaining half become exercisable on
    August 4, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(2) | The exercise price of the options and related
    SARs is the average of the high and low sales prices for the
    Common Shares reported on the New York Stock Exchange on
    February 4, 2003, the date of the grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(3) | This estimate of value has been developed for the
    purpose of comparative disclosure in accordance with the rules
    and regulations of the U.S. Securities and Exchange Commission
    and is consistent with the assumptions that the Company is using
    for Statement of Financial Accounting Standards
    (SFAS) 123 reporting purposes. The estimated
    value has been determined by application of the Black-Scholes
    option pricing model, based upon the terms of the option grant
    and the Companys share price performance history as at the
    date of the grant. The key assumptions used in this model are as
    follows: dividend yield: 0%; volatility: 41.1%; risk-free rate
    of return: 2.13%; and expected exercise period: 3 years. No
    adjustment has been made for risk of forfeiture or limitations
    on transferability. The assumptions used in the valuation are
    based upon experience and are not a forecast of future stock
    price or volatility or of future dividend policy.

The table below sets forth information concerning
exercises of options and related SARs in 2003 by the Chairman
and Chief Executive Officer and each of the four next most
highly compensated Executive Officers of the Company.




AGGREGATED OPTION/ SAR EXERCISES IN 2003 AND


YEAR-END 2003 OPTION/ SAR VALUES





|                 |  |             |         |          |  |                             |           |                                |  |  |                |  |  |  |                   | 
|---------------- |  | ----------- | ------- | -------- |  | --------------------------- | --------- | ------------------------------ |  |  | -------------- |  |  |  | ----------------- | 
|                 |  |             |         | Value    |  | Number of Securities        |           | Value of Unexercised          
|                 |  | Common      |         | Realized |  | Underlying Unexercised      |           | In the Money                
|                 |  | Shares      |         | on       |  | Options/SARs at             |           | Options/SARs at               
|                 |  | Acquired on |         | Exercise |  | Year-End 2003 (#)           |           | Year-End 2003($)              
|Name             |  | Exercise(#) |         | ($)(1)   |  | (Exercisable/Unexercisable) |           | (Exercisable/Unexercisable)(2)
|                 |  |             |         |          |  |                             |           |                               
|Scott M. Hand    |  |             | 259,000 |          |  |                             | 3,983,045 | (3)                            |  |  | 424,000/36,000 |  |  |  | 6,625,180/682,920 | 
|Peter C. Jones   |  |             | 83,100  |          |  |                             | 833,909   |                                |  |  | 219,900/24,000 |  |  |  | 4,699,910/455,280 | 
|Stuart F. Feiner |  |             | 103,000 |          |  |                             | 990,930   | (3)                            |  |  | 136,000/16,000 |  |  |  | 1,906,870/303,520 | 
|Peter J. Goudie  |  |             | Nil     |          |  |                             | Nil       |                                |  |  | 239,000/16,000 |  |  |  | 5,051,080/303,520 | 
|Farokh S. Hakimi |  |             | 20,000  |          |  |                             | 167,600   |                                |  |  | 31,000/16,000  |  |  |  | 612,220/303,520   | 






|    |                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The amounts shown represent the difference been
    the aggregate value of the Common Shares underlying the
    exercised options/ SARs (based on the average of the high and
    low sales prices of the Common Shares on the New York Stock
    Exchange on the date of exercise) and the aggregate exercise
    price of such options/ SARs.                                         
|   
|(2) | For the purposes of this table, options/ SARs are
    in-the-money if the closing price of the Common
    Shares on the New York Stock Exchange on December 31, 2003
    (being $39.82) is greater than the exercise price of the
    options/ SARs.                                                                                                                                  
|   
|(3) | Mr. Hand exercised 259,000 SARs pursuant to
    which he received 65,017 Common Shares and $1,779,581 in cash,
    of which $972,217 was withheld to satisfy applicable income
    taxes. Mr. Feiner exercised 4,000 SARs pursuant to which he
    received 1,000 Common Shares and approximately $38,330 in cash,
    of which $17,311 was withheld to satisfy applicable income taxes.

24



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##### Table of Contents



Termination of Employment and Change in
Control Arrangements

In order to encourage them to remain in the
Companys service, the Company has entered into agreements
with each of the named Executive Officers which entitle them, in
the event of (i) involuntary termination of employment
(except for cause) or resignation under circumstances making
such resignation not wholly voluntary (Good Cause
Resignation) or (ii) involuntary termination of
employment (except for cause) or a Good Cause Resignation within
two years following a change in control of the Company (as
defined in the agreements), to continue to receive salary and
certain other payments and benefits (including payments to which
they would be entitled under certain incentive plans as a result
of a change in control and participation in medical, insurance
and certain other benefit plans) for a severance period not
exceeding 36 months, and to exercise for a period of up to
five years any vested or unvested share options and related SARs
outstanding as of the date of an involuntary termination of
employment or Good Cause Resignation. These agreements also
provide that, during such severance period, each such Executive
Officer will continue to receive applicable age and service
credits under the Companys non-qualified retirement plans
discussed beginning on page 26 but such retirement benefits
would generally not be payable until the expiration of such
severance period, and will also be entitled to certain gross up
payments in respect of certain U.S. excise taxes, if applicable,
payable under these agreements as a result of an involuntary
termination or Good Cause Resignation following a change in
control under (ii) above. The rights outlined in this
paragraph are in lieu of any rights which such individual would
have had at common law and are in addition to rights which such
individual may have upon an involuntary termination of
employment pursuant to other benefit plans (other than severance
plans) of the Company.

The Company has also entered into agreements with
each of its other Officers under which such Officers will be
entitled, in the event of involuntary termination of employment
(except for cause) or Good Cause Resignation within two years
following a change in control of the Company (as defined in such
agreements), to receive substantially the same compensation and
other benefits as those referred to in the preceding paragraph.
Such rights are in lieu of any rights which such Officers would
have had at common law and are in addition to rights which they
may have upon an involuntary termination of employment pursuant
to other benefit plans (other than severance plans) of the
Company.

Security Reserve Plans

The Company provides a system of defined
contribution savings plans, which it refers to as security
reserve plans, for employees located at its major
operations in Canada and the United States. The plans are open
to substantially all of the Companys salaried employees,
including Officers, and to certain other employees. Non-employee
Directors are not eligible to participate in the security
reserve plans.

Under the Canadian plans, the majority of
eligible employees may elect to contribute from 1% to 6% of
their base pay. Subject to statutory limitations, the Company
may elect to match a given percentage of such contributions,
depending upon the age and years of service of the employee.
Company contributions for participating employees increase
gradually from a matching level of up to 50% for employees under
age 40 who have less than 15 years of service to a
matching level of up to 100% for employees aged 62 or over
or who have 37 or more years of service. In addition,
participating employees may contribute amounts over and above 6%
of base pay up to specified limits. The Company does not make
matching contributions with respect to such additional
contributions.

Under the U.S. plans, subject to certain
limitations, eligible employees may contribute up to 16% of
their gross compensation. Employees age 50 or over who have
made the maximum pre-tax contribution may contribute certain
additional amounts. The Company will make matching contributions
equal to 100% of employee contributions up to 3% of the
employees gross compensation up to certain limits and 50%
of additional employee contributions over the 3% level and not
exceeding 5% of the employees gross compensation, up to
certain limits. Employee contributions in excess of 5% of gross
compensation and additional contributions made by employees
age 50 and over are not matched by the Company.

The security reserve plans are administered by
their respective boards of administration, but recordkeeping and
trust services are provided by outside plan administration
entities. Plan assets are managed by professional fund managers
and participating employees may elect to have their
contributions invested in a number of mutual

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##### Table of Contents



fund and other investment vehicles. Funds in
these plans become distributable as to vested amounts upon
retirement, death or other termination of employment, or upon
discontinuance of the particular plan. Subject to certain
conditions, a participating employee may also make withdrawals
of and borrow against his or her contributions under such plans
during employment.


Retirement Plans

Officers of the Company participate in the
Companys non-contributory retirement plans which provide
retirement income and a 50% surviving spouses pension
based on years of service and the employees average annual
compensation for the highest-paid five years of the last ten
years of service (Final Average Annual Compensation)
under a formula reflecting the Companys contributions to
applicable social security systems. Final Average Annual
Compensation for any year includes target bonus awards
established and approved by the Management Resources and
Compensation Committee and approved by the Board of Directors
under the Companys annual MIP in lieu of actual bonus
awards. A number of other factors may influence pension benefits
payable under such retirement plans, including age at retirement.

Canadian and U.S. legislation place certain
limits on the amount of pensions which may be paid out of, and
the maximum compensation that may be recognized in determining
benefits under, tax-qualified plans, such as the Companys
regular retirement plans. In the event that the pension benefit
of any employee of the Company, including any Officer, exceeds
such statutory limits, that excess portion of his or her pension
benefit would be paid by the Company in accordance with the
terms of certain supplemental retirement benefits agreements and
other non-qualified arrangements. Such agreements and
non-qualified arrangements also provide that the total pension
benefit payable to an Officer at normal retirement age with at
least 20 years of service may not be less than 50% or more
than 75% of such Officers Final Average Annual
Compensation (except in the case of an Officer who has met
retirement eligibility but not reached normal retirement age
where a proration factor will apply to reduce the total benefits
to below the 50% minimum if an Officer chooses to receive
pension benefits prior to normal retirement age).

The following table illustrates the net amount of
the maximum annual pension, computed without any adjustment for
survivor benefits and after integration of applicable
governmental benefits, for an employee retiring at age 65
as of January 1, 2004 who has not elected any optional form
of payment that would be available to certain Officers to
increase the normal 50% surviving spouses pension under
the relevant tax-qualified plan. Any such elections would reduce
the annual pension payable to the employee.




PENSION PLAN TABLE





|                     |  |                                    |         |    |  |    |         |    |  |    |         |  |  |  |           |  |  |  |           | 
|-------------------- |  | ---------------------------------- | ------- | -- |  | -- | ------- | -- |  | -- | ------- |  |  |  | --------- |  |  |  | --------- | 
|                     |  |                                   
|                     |  | Approximate Maximum Annual Pension
|                     |  | Years of Credited Service(2)      
|Final Average Annual |  |                                   
|Compensation(1)      |  | 25                                 |         | 30 |  | 35 |         | 40 |  | 45
|                    
|                    
|600,000.             |  |                                    | 219,800 |    |  |    | 263,700 |    |  |    | 307,700 |  |  |  | 352,200   |  |  |  | 396,700   | 
|800,000.             |  |                                    | 294,800 |    |  |    | 353,700 |    |  |    | 412,700 |  |  |  | 472,200   |  |  |  | 531,700   | 
|1,000,000.           |  |                                    | 369,800 |    |  |    | 443,700 |    |  |    | 517,700 |  |  |  | 592,200   |  |  |  | 666,700   | 
|1,200,000.           |  |                                    | 444,800 |    |  |    | 533,700 |    |  |    | 622,700 |  |  |  | 712,200   |  |  |  | 801,700   | 
|1,400,000.           |  |                                    | 519,800 |    |  |    | 623,700 |    |  |    | 727,700 |  |  |  | 832,200   |  |  |  | 936,700   | 
|1,600,000.           |  |                                    | 594,800 |    |  |    | 713,700 |    |  |    | 832,700 |  |  |  | 952,200   |  |  |  | 1,071,700 | 
|1,800,000.           |  |                                    | 669,800 |    |  |    | 803,700 |    |  |    | 937,700 |  |  |  | 1,072,200 |  |  |  | 1,206,700 | 






|    |                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The compensation covered by the plans is composed
    of base salary and target bonus awards which may be payable
    under the Companys annual MIP (described under
    Management Incentive Plans on page 23).                                                                          
|   
|(2) | At age 65, Messrs. Hand, Jones, Feiner,
    Goudie and Hakimi will have 35, 17, 38, 43 and 12 years of
    credited service, respectively. As of February 20, 2004,
    Messrs. Hand, Jones, Feiner, Goudie and Hakimi had 29, 6,
    27, 32 and 2 year(s) of credited service, respectively.

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##### Table of Contents



The aggregate cost to the Company in 2003 of all
pension benefits proposed to be paid under the Companys
regular retirement plans and agreements and arrangements
referred to above covering payments in excess of statutory
limits to all of the Officers of the Company as a group upon
retirement at age 65 is estimated to be $2,273,000.

Life Insurance

A standard group life insurance plan provides
eligible employees of the Company, including Officers, with life
insurance during retirement in an amount of not more than 50% of
their final annual salary. The Company provides supplemental
life insurance (Supplemental Insurance) to certain
Officers in an amount up to 75% of final annual salary, for a
total not to exceed 125% of such salary. This Supplemental
Insurance coverage applies from the earlier of age 65 or
the date of any involuntary termination, and continues to
age 70. Beginning at age 70, the Supplemental
Insurance is progressively reduced in annual amounts until
age 74 to a floor of 25% of final annual salary, at which
time the combined supplemental and standard life insurance
becomes and remains at not more than 75% of final annual salary.

Directors and Officers Liability
Insurance

The Directors and Officers of the Company as a
group are insured against certain liabilities pursuant to
directors and officers liability insurance policies maintained
by the Company. The general effect of these policies is that if,
during the policy period, any claims are made against Directors
or Officers of the Company for a wrongful act (as defined) while
acting in their capacities as Directors or Officers, the
insurers will pay for loss (as defined) which the Directors or
Officers shall become obligated to pay, up to a limit of
$70,000,000 in a policy year, subject to certain deductibles.
Premiums totaling $1,705,000 for such insurance were paid by the
Company in respect of coverage for 2003.

Compensation Committee Interlocks and Insider
Participation

In 2003, the Management Resources and
Compensation Committee of the Board was comprised of
Richard M. Thomson (Chair), Ronald C. Cambre,
David P. OBrien and James M. Stanford. None of
these individuals has ever been an officer or employee of the
Company or any of its subsidiaries. None of the Companys
current Executive Officers has served as a member of the
compensation committee or as a director of any other entity in
respect of which any of the members of the Management Resources
and Compensation Committee or any of the other Directors is an
executive officer.



REPORT ON EXECUTIVE COMPENSATION

The Management Resources and Compensation
Committee of the Board of Directors (the MRC
Committee), as part of its duties and responsibilities,
exercises broad oversight of the Companys executive
compensation. None of the members of the MRC Committee is or may
be an employee of the Company and the Board has determined that
each member meets the independence requirements as a
member of the Board and this Committee under applicable stock
exchange requirements and the Boards guidelines on
corporate governance. The members of the MRC Committee currently
serve on the following other Committees of the Board:

|                           |  |                                              
|-------------------------- |  | ---------------------------------------------
|Member                     |  | Service on Other Board Committee(s)          
|                           |  |                                              
|Richard M. Thomson (Chair) |  | Environment, Health and Safety Committee     
|Ronald C. Cambre           |  | Audit Committee                              
|David P. OBrien           |  | Corporate Governance and Nominating Committee
|James M. Stanford          |  | Audit Committee                              

27



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##### Table of Contents



Approach to Executive Compensation

The MRC Committee reviews and recommends to the
Board for its approval the Companys compensation policies.
The MRC Committee also makes recommendations to the Board of
Directors, after taking into account the evaluation of the
performance of the Chairman and Chief Executive Officer by the
Corporate Governance and Nominating Committee and the full
Board, concerning the compensation proposed to be paid to the
Chairman and Chief Executive Officer, the President and Chief
Operating Officer and the other Executive Officers of the
Company, as well as awards proposed to be made to them under the
Companys incentive plans. The MRC Committee also reviews
the Companys management development programs, its
succession plans relating to senior management and all of the
key performance targets or thresholds developed for purposes of
the Companys incentive plans. As a means of assisting the
MRC Committee, the Company retains external compensation
consultants. In addition, the MRC Committee may retain its own
compensation and other consultants in meeting its duties and
responsibilities, including those with respect to the
Companys compensation policies, executive compensation and
the design, scope and appropriateness of the Companys
incentive plans.

The policy of the Company and the MRC Committee
with respect to the compensation of the Chairman and Chief
Executive Officer, the President and Chief Operating Officer and
the other Executive Officers and other Officers of the Company
continues to be based upon the principles that compensation
must: (1) be competitive in order to help attract and
retain the talent needed to lead and grow the Companys
business and maximize the creation of long-term shareholder
value; (2) provide a strong incentive for Executive and
other Officers and key employees to achieve the Companys
goals and maximize the creation of long-term shareholder value;
and (3) ensure that the interests of management and the
Companys shareholders are aligned.

The compensation paid to the Chairman and Chief
Executive Officer and the other Executive Officers of the
Company consists of base salary and performance-oriented
incentive compensation. Incentive compensation is contingent
upon the performance of the Company and the individuals
contribution toward that performance. The MRC Committees
current policy is that approximately 60% to 70% of the overall
compensation of the Chairman and Chief Executive Officer and the
President and Chief Operating Officer, and in the range of 50%
to 60% in the case of the other Executive Officers, be related
to and contingent upon Company performance and thus be at
risk.

Base Salaries

Annual base salary levels for Executive Officers
are normally established on a preliminary basis for each year
utilizing external surveys of base salaries paid to executive
officers having comparable responsibilities at other Canadian
companies engaged in the same or similar lines of business as
the Company with the objective of having base salaries be
competitive. Actual base salaries are then established by the
MRC Committee and approved by the Board based upon the average
salary levels so established and an assessment of each Executive
Officers actual performance during the prior year. At its
meeting in February 2003, the MRC Committee approved base salary
increases, as reflected in the Summary Compensation
Table on page 22, in the range of approximately 2.5%
to 11.5% for the Executive Officers and other Officers of the
Company. While base salaries are intended to be competitive, the
MRC Committee has continued to focus compensation on the
performance and growth of the Company and maximizing long-term
shareholder value.

Incentive Compensation

Incentive compensation of the Executive Officers
consists of (1) short-term incentive compensation in the form of
annual cash bonuses under the Companys annual MIP,
(2) longer-term incentive compensation in the form of
awards of restricted Common Shares and cash generally sufficient
to cover tax liabilities in respect of such awards under the
MTIP, and (3) longer-term incentive compensation in the
form of awards of share options under the 2001 KEIP. This
structure reflects the MRC Committees policy that the
Companys longer-term incentive compensation plans should
depend in part on the price performance of the Common Shares, as
in the case of the share option awards, but should also be
performance-based, as in the case of the restricted share
awards. For incentive compensation under the MTIP for 2003, the
MRC Committee evaluated the split between restricted shares
awards under the MTIP and share option grants under the 2001
KEIP and determined, in

28



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##### Table of Contents



enhancing the alignment of incentive compensation
with long-term shareholder value, to increase the target award
levels relating to restricted share awards under the MTIP for
the Chairman and Chief Executive Officer, the President and
Chief Operating Officer and the other Executive Officers and for
2004 to reduce the number and value, based upon the
Black-Scholes option pricing model, of share option awards to
Executive Officers under the 2001 KEIP. The MIP, the MTIP and
the 2001 KEIP are each described in further detail under
Management Incentive Plans beginning on page 23.


Annual MIP Awards

Cash bonus awards under the Companys annual
MIP depend upon whether the Company and its principal operating
units have met or exceeded certain financial and operating
targets established for the applicable year by the MRC
Committee, as well as individual performance. The financial
targets relate to the Companys net earnings and the
Companys return on capital employed (ROCE), in
each case subject to adjustments as determined by the MRC
Committee. Subject to any adjustments approved by the MRC
Committee, ROCE generally represents the Companys pre-tax
earnings divided by the sum of the Companys
shareholders equity, minority interest and long-term debt,
net of cash and marketable securities, all as calculated in
accordance with Canadian generally accepted accounting
principles. The 2003 MIP was approved by the MRC Committee in
February 2003 and provided, as in the case of previous
years MIPs, for a weighting of operating unit targets and
individual performance, with payments of bonuses increasing in
step with increases in the Companys ROCE. Target award
levels established under the 2003 MIP for the Chairman and Chief
Executive Officer and the other Executive Officers ranged from
40% to 60% of base salaries, with the possibility of higher
awards, subject to certain maximum levels. At its two meetings
in February 2004, the MRC Committee reviewed the various
financial and operating targets to be evaluated under the terms
of the 2003 MIP. The applicable financial targets evaluated
included the Companys level of net earnings for 2003 and
ROCE for 2003, subject to adjustments for both favourable and
unfavourable currency translations and certain expenditures
relating to the Companys development projects as approved
by the MRC Committee but including the effect of the three-month
strike at the Ontario operations. The applicable operating
targets included cash flows, operating earnings, production
levels, safety and certain other controllable performance
targets for each of the Companys principal operating
units. Based upon (i) the fact that most of the key
strategic, operating, financial and other targets set forth in
the 2003 MIP had been met or exceeded, (ii) the
Companys financial performance for 2003, including the
level of earnings from operations at each of the Companys
principal operating units except for the Companys Ontario
operations, and the level of positive cash flows generated in
2003, and (iii) the level of the Companys ROCE both
in absolute terms and in relation to the target ROCE set forth
in the 2003 MIP, as adjusted by the MRC Committee, the MRC
Committee approved cash bonus awards under the 2003 MIP for the
Chairman and Chief Executive Officer and other Executive
Officers in certain cases modestly above target award levels and
in the range of approximately 40% to 70% of base salaries, as
reflected in the Summary Compensation Table on
page 22.

Awards Under MTIP

Awards of restricted Common Shares and cash
payments generally sufficient to pay the tax liability on the
value of such Common Shares under the MTIP are dependent upon
the Companys net earnings before unusual charges and ROCE
meeting or exceeding specified targets, in each case over
generally a rolling three-year period. In determining award
levels, the MTIP provides for a weighting of these two financial
performance measures together with individual performance.
Depending upon the extent to which the Companys actual net
earnings before unusual charges and/or ROCE for the applicable
periods exceed the target levels set forth in the MTIP, target
award levels for the Chairman and Chief Executive Officer and
the other Executive Officers would be in the range of between
75% to 125% of base salaries, with higher award levels when both
financial performance measures substantially exceed target
levels, subject to certain maximum award levels. As discussed
above, in establishing the target levels for awards under MTIP
for 2003, the MRC Committee increased the target award levels
for the Chairman and Chief Executive Officer, the President and
the other Executive Officers from the previous range of between
45% and 75%. As in the case of the predecessor plan, awards
under the MTIP are also dependent on the availability of
positive consolidated pre-tax earnings for the applicable period
in accordance with the terms of the 2001 KEIP, or an Award Pool,
as discussed under Management Incentive Plans on

29



---



##### Table of Contents



page 23. Based upon the applicable period
for awards payable for 2003 under the MTIP, the ROCE exceeded
the Companys cost of capital target under the MTIP but the
net earnings target was not exceeded. Taking into account the
weighting of the financial performance measures under the terms
of the MTIP, awards in the range of approximately 55% to 95% of
base salaries were made to the Executive Officers, as reflected
in the Summary Compensation Table on page 22.


Share Option Awards

The MRC Committee recommends to the Board the
number of options to be granted to the Chairman and Chief
Executive Officer, the President and Chief Operating Officer and
the other Executive Officers under the 2001 KEIP. The number of
options awarded to the Chief Executive Officer and the other
Executive Officers in respect of 2003 (as set forth in the table
on page 24) reflected a reduction in the number of share
options by approximately 20% to 40% from the number of share
options awarded in respect of 2002. As discussed above, the MRC
Committee shifted the allocation of incentive awards under the
MTIP and share option awards under the 2001 KEIP and for 2004
the share option grants awarded in February 2004 were
approximately 15 to 20% below the February 2003 grant levels in
terms of the number of share options awarded to the Chairman and
Chief Executive Officer, the President and Chief Operating
Officer and the other Executive Officers. In reducing the share
option awards for 2004, the MRC Committee did take into account
the value of the option grants based upon the Black-Scholes
option pricing model. To reduce the non-cash charges to net
earnings associated with SARs, the MRC Committee approved the
elimination of any SARs as part of any option grants in 2004. In
making the annual awards of options, the MRC Committee did not
consider the aggregate number of the options and SARs already
held by the recipients. The options and SARs are exercisable
over a period of ten years in order to maximize their incentive
value and to enhance the Companys ability to retain its
Executive Officers.

Share Ownership Requirements

In keeping with the principles set forth at the
beginning of this report, the MRC Committee has established,
based upon the evaluation of data from the Companys senior
human resources personnel and external consultants, share
ownership requirements for the Chairman and Chief Executive
Officer, the President and Chief Operating Officer and the other
seven members of the Companys internal Management
Committee. The Chairman and Chief Executive Officer will be
responsible for monitoring compliance with these requirements.



---

In summary, the MRC Committee believes that the
Companys compensation structure appropriately takes into
account those factors that are particularly characteristic of
the mining and metals industry as a whole, including the
cyclicality of the industry, the Companys comparative
performance within that industry, and the individual
contributions toward that performance by the Chairman and Chief
Executive Officer, the President and Chief Operating Officer and
the other Executive Officers and other Officers of the Company.

The Management Resources and Compensation
Committee

Richard M. Thomson, Chair

Ronald C. Cambre


David P. OBrien


James M. Stanford


February 20, 2004

30



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##### Table of Contents






COMPARATIVE SHAREHOLDER RETURN

The following line graph and succeeding table set
forth the total return on the Common Shares for the period
December 31, 1998 through December 31, 2003 assuming a
$100 initial investment and the reinvestment of all dividends,
as compared to the cumulative returns, assuming a corresponding
investment and reinvestment of dividends in respect of the
S&P 500 Stock Index, the S&P Diversified Metals &
Mining Index, the S&P/ TSX Composite Index and the S&P/
TSX Capped Diversified Metals & Mining Index. For the
S&P/ TSX indices, the table shows an investment in Canadian
dollars.

Comparison of Five-Year Cumulative Total
Return on Common Shares

December 31, 1998 
December 31, 2003








INDEXED CUMULATIVE RETURN





|                                                         |  |      |        |      |  |      |        |      |  |      |        |      |  |  |        |  |  |  |        |  |  |  |        | 
|-------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                                         |  | 1998 |        | 1999 |  | 2000 |        | 2001 |  | 2002 |        | 2003
|                                                         |  |      |        |      |  |      |        |      |  |      |        |     
|Inco Limited                                             |  |      | 100.00 |      |  |      | 225.14 |      |  |      | 160.57 |      |  |  | 162.29 |  |  |  | 203.30 |  |  |  | 381.49 | 
|S&P 500 Stock Index(1)                                   |  |      | 100.00 |      |  |      | 121.04 |      |  |      | 110.02 |      |  |  | 96.95  |  |  |  | 75.52  |  |  |  | 97.18  | 
|S&P Diversified Metals & Mining
    Index(2)             |  |      | 100.00 |      |  |      | 190.04 |      |  |      | 132.34 |      |  |  | 116.48 |  |  |  | 127.99 |  |  |  | 314.46 | 
|S&P/ TSX Composite Index(3)                              |  |      | 100.00 |      |  |      | 98.42  |      |  |      | 129.63 |      |  |  | 139.23 |  |  |  | 121.73 |  |  |  | 154.26 | 
|S&P/ TSX Capped Diversified Metals &
    Mining Index(4) |  |      | 100.00 |      |  |      | 155.93 |      |  |      | 126.20 |      |  |  | 137.78 |  |  |  | 127.32 |  |  |  | 188.37 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The S&P 500 Stock Index is a broad
    market-weighted index of 500 companies designed to provide a
    measure of U.S. stock market performance. The Company was
    included in this index until July 2002, when Standard &
    Poors Corporation deleted non-U.S. companies, including
    the Company, from this index.                                                                                                                                                                                                                                                                                                                                                      
|   
|(2) | The S&P Diversified Metals & Mining Index
    is a sub-index of the S&P 500 Stock Index that presently
    includes two companies: Phelps Dodge Corporation and
    Freeport-McMoRan Copper & Gold Inc. The Company was
    included in this index until July 2002, when Standard &
    Poors Corporation deleted non-U.S. companies, including
    the Company, from the S&P 500 Stock Index. Because the
    Company is no longer a constituent of the S&P Diversified
    Metals & Mining Index, and because the index has been
    reduced to only two constituent companies, the Company intends
    to discontinue the use of this index as a comparison index in
    2005.
|   
|(3) | The S&P/ TSX Composite Index is a broad
    market-weighted index of 300 companies on the Toronto Stock
    Exchange, including the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(4) | The S&P/ TSX Capped Diversified Metals &
    Mining Index is a sub-index of the S&P/ TSX Composite Index
    that presently includes twelve companies, including the Company.
    The index is subject to a cap so that no single issue may
    comprise more than 25% of the index.                                                                                                                                                                                                                                                                                                                                                                                              

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##### Table of Contents






PART V  OWNERSHIP OF
SECURITIES



SIGNIFICANT SECURITY HOLDERS

The following table sets forth, as of
February 20, 2004, information concerning those persons
known to the Company to be the beneficial owner of more than 5%
of the Common Shares (being the only voting securities of the
Company). The Company is not aware of any other beneficial
holder of more than 5% of the Common Shares.

|                                        |  |       |               |            |  |          |            |     |  |  |      |  
|--------------------------------------- |  | ----- | ------------- | ---------- |  | -------- | ---------- | --- |  |  | ---- | -
|                                        |  |       |               | Beneficial |  | Percent 
|Name and Address of Beneficial Owner    |  | Class |               | Ownership  |  | of Class
|                                        |  |       |               |            |  |         
|Capital Research and Management Company |  |       | Common Shares |            |  |          | 14,583,680 | (1) |  |  | 7.79 | %
|333 South Hope Street                   |  |       |               |            |  |          |            |     |  |  |      |  
|Los Angeles, California 90071           |  |       |               |            |  |          |            |     |  |  |      |  
|FMR Corp.                               |  |       | Common Shares |            |  |          | 10,255,200 | (2) |  |  | 5.48 | %
|82 Devonshire Street                    |  |       |               |            |  |          |            |     |  |  |      |  
|Boston, MA 02109                        |  |       |               |            |  |          |            |     |  |  |      |  






|    |                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents beneficial ownership as of
    December 31, 2003, according to the Schedule 13G/A filed by
    Capital Research and Management Company on February 9,
    2004. Includes 690,380 Common Shares resulting from the assumed
    conversion of $26 million aggregate principal amount at
    maturity of the Companys zero coupon convertible notes
    (LYON Notes).
|   
|(2) | Represents beneficial ownership as of
    December 31, 2003, according to the Schedule 13G/A
    filed by FMR Corp. on February 16, 2004. Includes 353,669
    Common Shares resulting from the assumed conversion of
    $9.2 million aggregate principal amount at maturity of the
    Companys 3 1/2% Subordinated Convertible Debentures
    due 2052.                     




SECURITY HOLDINGS OF DIRECTORS AND
OFFICERS

The following table sets forth, as of
February 20, 2004, information regarding beneficial
ownership of each class of equity securities of the Company and
its subsidiaries by each Director, each nominee for Director,
the Chairman and Chief Executive Officer, the four other most
highly compensated Executive Officers of the Company, and all of
the Directors and the Executive Officers of the Company as a
group. The equity securities of the Company and its subsidiaries
consist of the Common Shares, Warrants, Convertible Debentures
due 2023, 3 1/2% Subordinated Convertible Debentures due
2052, LYON Notes and common shares of PT International Nickel
Indonesia Tbk, the 59% owned subsidiary of the Company
(PTI Common Shares). No family relationships exist
among any of the Directors, Executive Officers or other Officers
of the Company.

|                         |  |                   |  |                  |        |                 |  |       |        |             |  |  |        |  |  |  |   | 
|------------------------ |  | ----------------- |  | ---------------- | ------ | --------------- |  | ----- | ------ | ----------- |  |  | ------ |  |  |  | - | 
|                         |  |                   |  | Beneficial       |        |                 |  |       |        |            
|                         |  |                   |  | Ownership        |        |                 |  |       |        |            
|                         |  |                   |  | (excluding       |        |                 |  |       |        | Percent    
|Name of Beneficial Owner |  | Class             |  | Options/SARs)(1) |        | Options/SARs(2) |  | Total |        | of Class(3)
|                         |  |                   |  |                  |        |                 |  |       |        |            
|Glen A. Barton           |  | Common Shares     |  |                  | 20,706 | (4)             |  |       | 10,000 |             |  |  | 30,706 |  |  |  | * | 
|                         |  | Warrants          |  |                  | 0      |                 |  |       |       |             |  |  | 0      |  |  |  | * | 
|                         |  | PTI Common Shares |  |                  | 0      |                 |  |       |       |             |  |  |        |  |  |  | * | 
|Angus A. Bruneau         |  | Common Shares     |  |                  | 10,443 | (4)             |  |       | 10,000 |             |  |  | 20,443 |  |  |  | * | 
|                         |  | Warrants          |  |                  | 1,125  |                 |  |       |       |             |  |  | 1,125  |  |  |  | * | 
|                         |  | PTI Common Shares |  |                  | 0      |                 |  |       |       |             |  |  | 0      |  |  |  | * | 
|Ronald C. Cambre         |  | Common Shares     |  |                  | 5,123  | (4)             |  |       | 10,000 |             |  |  | 15,123 |  |  |  | * | 
|                         |  | Warrants          |  |                  | 0      |                 |  |       |       |             |  |  | 0      |  |  |  | * | 
|                         |  | PTI Common Shares |  |                  | 0      |                 |  |       |       |             |  |  | 0      |  |  |  | * | 
|Judith A. Erola          |  | Common Shares     |  |                  | 8,557  | (4)             |  |       | 5,000  |             |  |  | 13,557 |  |  |  | * | 
|                         |  | Warrants          |  |                  | 0      |                 |  |       |       |             |  |  | 0      |  |  |  | * | 
|                         |  | PTI Common Shares |  |                  | 0      |                 |  |       |       |             |  |  | 0      |  |  |  | * | 
|Chaviva M. Hosek         |  | Common Shares     |  |                  | 5,068  | (4)             |  |       | 10,000 |             |  |  | 15,068 |  |  |  | * | 
|                         |  | Warrants          |  |                  | 0      |                 |  |       |       |             |  |  | 0      |  |  |  | * | 
|                         |  | PTI Common Shares |  |                  | 0      |                 |  |       |       |             |  |  | 0      |  |  |  | * | 
|John T. Mayberry         |  | Common Shares     |  |                  | 4,564  | (4)             |  |       | 5,000  |             |  |  | 9,564  |  |  |  | * | 
|                         |  | Warrants          |  |                  | 0      |                 |  |       |       |             |  |  | 0      |  |  |  | * | 
|                         |  | PTI Common Shares |  |                  | 0      |                 |  |       |       |             |  |  | 0      |  |  |  | * | 

32



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|                                         |  |                   |  |                  |         |                 |  |       |           |             |  |  |           |  |  |  |      |  
|---------------------------------------- |  | ----------------- |  | ---------------- | ------- | --------------- |  | ----- | --------- | ----------- |  |  | --------- |  |  |  | ---- | -
|                                         |  |                   |  | Beneficial       |         |                 |  |       |           |            
|                                         |  |                   |  | Ownership        |         |                 |  |       |           |            
|                                         |  |                   |  | (excluding       |         |                 |  |       |           | Percent    
|Name of Beneficial Owner                 |  | Class             |  | Options/SARs)(1) |         | Options/SARs(2) |  | Total |           | of Class(3)
|                                         |  |                   |  |                  |         |                 |  |       |           |            
|David P. OBrien                         |  | Common Shares     |  |                  | 12,729  | (4)             |  |       | 10,000    |             |  |  | 22,729    |  |  |  | *    |  
|                                         |  | Warrants          |  |                  | 225     |                 |  |       |          |             |  |  | 225       |  |  |  | *    |  
|                                         |  | PTI Common Shares |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|Roger Phillips                           |  | Common Shares     |  |                  | 9,108   | (4)             |  |       | 5,000     |             |  |  | 14,108    |  |  |  | *    |  
|                                         |  | Warrants          |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|                                         |  | PTI Common Shares |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|James M. Stanford                        |  | Common Shares     |  |                  | 11,738  | (4)             |  |       | 10,000    |             |  |  | 21,738    |  |  |  | *    |  
|                                         |  | Warrants          |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|                                         |  | PTI Common Shares |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|Richard M. Thomson                       |  | Common Shares     |  |                  | 13,395  | (4)             |  |       | 10,000    |             |  |  | 23,395    |  |  |  | *    |  
|                                         |  | Warrants          |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|                                         |  | PTI Common Shares |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|Scott M. Hand                            |  | Common Shares     |  |                  | 146,826 | (5)             |  |       | 424,000   |             |  |  | 570,826   |  |  |  | *    |  
|                                         |  | Warrants          |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|                                         |  | PTI Common Shares |  |                  | 50,000  |                 |  |       |          |             |  |  | 50,000    |  |  |  | *    |  
|Peter C. Jones                           |  | Common Shares     |  |                  | 18,882  |                 |  |       | 219,900   |             |  |  | 238,782   |  |  |  | *    |  
|                                         |  | Warrants          |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|                                         |  | PTI Common Shares |  |                  | 19,000  |                 |  |       |          |             |  |  | 19,000    |  |  |  | *    |  
|Stuart F. Feiner                         |  | Common Shares     |  |                  | 18,341  |                 |  |       | 136,000   |             |  |  | 154,341   |  |  |  | *    |  
|                                         |  | Warrants          |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|                                         |  | PTI Common Shares |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|Peter J. Goudie                          |  | Common Shares     |  |                  | 10,942  |                 |  |       | 239,000   |             |  |  | 249,942   |  |  |  | *    |  
|                                         |  | Warrants          |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|                                         |  | PTI Common Shares |  |                  | 22,000  |                 |  |       |          |             |  |  | 22,000    |  |  |  | *    |  
|Farokh S. Hakimi                         |  | Common Shares     |  |                  | 4,711   |                 |  |       | 31,000    |             |  |  | 35,711    |  |  |  | *    |  
|                                         |  | Warrants          |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|                                         |  | PTI Common Shares |  |                  | 0       |                 |  |       |          |             |  |  | 0         |  |  |  | *    |  
|Directors and Executive                  |  | Common Shares     |  |                  | 347,210 |                 |  |       | 1,586,900 |             |  |  | 1,934,110 |  |  |  | 1.03 | %
|Officers as a group,                     |  | Warrants          |  |                  | 1,350   |                 |  |       |          |             |  |  | 1,350     |  |  |  | *    |  
|30 persons in total,                     |  | PTI Common Shares |  |                  | 111,000 |                 |  |       |          |             |  |  | 91,000    |  |  |  | *    |  
|including those individuals listed above |  |                   |  |                  |         |                 |  |       |           |             |  |  |           |  |  |  |      |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For purposes of the table, beneficial
    ownership is determined pursuant to Rule 13d-3 under
    the U.S. Securities Exchange Act of 1934, as amended,
    pursuant to which a person or group of persons is deemed to have
    beneficial ownership of a class of outstanding
    shares which such person or group has the right to acquire
    within 60 days after February 20, 2004. The
    individuals named herein have sole voting power and investment
    power with respect to the Common Shares, Warrants and PTI Common
    Shares shown in the table as being beneficially owned by them,
    except as otherwise noted in footnote (5) below.
|   
|(2) | The options shown in this column may be exercised
    to acquire an equivalent number of Common Shares as at
    February 20, 2004 or within 60 days of
    February 20, 2004. The options were granted pursuant to the
    2001 KEIP, the Directors Option Plan or certain
    predecessor plans. The term SARs refers to share
    appreciation rights related to options granted under the 2001
    KEIP and certain of its predecessor plans.                                                                                                                                                                                                               
|   
|(3) | For purposes of computing the percentage of the
    outstanding class of shares held by each person or group named
    above, any shares which such person or group has the right to
    acquire within 60 days after February 20, 2004 are
    deemed to be outstanding, except for the purpose of computing
    the percentage ownership of any other person. As of
    February 20, 2004, 187,295,012 Common Shares (not including
    fractional share interests), 11,022,886 Warrants and 248,408,468
    PTI Common Shares were issued and outstanding.                                                                                                      
|   
|(4) | Includes whole Deferred Share Units credited to
    the account of such Director pursuant to the Ownership Plan (see
    Directors Compensation in 2003 at
    page 20).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(5) | Includes an aggregate of 114,995 Common Shares
    held jointly by Mr. Hand and his spouse. Also includes an
    aggregate of 222 Common Shares held by Mr. Hand for
    the benefit of one of his children, as to which he disclaims any
    beneficial ownership.                                                                                                                                                                                                                                                                                                                                                                                                
|   
|*   | Less than 1%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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##### Table of Contents






PART VI  OTHER
INFORMATION



SOLICITATION OF PROXIES

The Company will bear the cost of solicitation of
proxies. Solicitation will be by mail, possibly supplemented by
telephone or other personal contact by employees of the Company.
In addition, the Company has retained Georgeson Shareholder
Communications Canada, 66 Wellington Street West,
Suite 5210, TD Tower, Toronto Dominion Centre,
Toronto, Ontario M5K 1J3 to aid in the solicitation of
proxies from individuals and institutional holders in Canada.
Georgeson Shareholder Communications Canada will, in turn,
coordinate with Georgeson Shareholder Communications Inc.,
17 State Street, 10th Floor, New York, New York 10004
to aid in that process in the United States. The toll free
number to contact Georgeson in Canada or the United States is
1-866-800-0251. The aggregate fee for these services in Canada
and the United States is expected to be approximately
Cdn.$32,500 plus out-of-pocket expenses.




2005 ANNUAL MEETING

Under the CBCA, Shareholders who wish to present
proposals for action at the 2005 Annual Meeting must forward
their proposals to the Company by December 19, 2004 (being
90 days prior to the anniversary date of the Notice of this
Meeting), after which any proposals shall be considered to be
untimely. The 2005 Annual Meeting is expected to be held on
Wednesday, April 20, 2005.

The Board of Directors has approved in substance
the contents of this Proxy Circular and Statement and also its
mailing to Shareholders.

-s- Stuart F. Feiner

Stuart F. Feiner


Executive Vice-President, General
Counsel & Secretary


34



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##### Table of Contents






EXHIBIT A

CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS

As amended as of February 3, 2004


I.   Committee Composition
and Meetings

The members of the Audit Committee (the
Committee) shall, subject to appointments made as a
result of resignations, removals or retirements, be appointed
annually by the Board of Directors (Board) of Inco
Limited (the Company), taking into account the
recommendations made by the Corporate Governance and Nominating
Committee with respect to who should serve on the Committee. The
Board shall annually designate a Chair of the Committee from
among the members of the Committee. The Committee shall consist
of at least four Directors, each of whom shall satisfy all
applicable stock exchange and other regulatory requirements and
the Guidelines of the Board of Directors on Corporate Governance
with respect to (a) having no material relationships with
the Company and who are otherwise independent and
(b) their financial knowledge, literacy and expertise and
other requisite qualifications. The requirements for
qualification of members of the Committee shall be determined
and interpreted by the Board from time to time based upon
recommendations by the Corporate Governance and Nominating
Committee.

No Director may serve as a member of the
Committee if such Director serves on the audit committee of more
than two other public companies unless the Board determines that
such simultaneous service would not impair the ability of such
Director to effectively serve on the Committee, and discloses
this determination in the Companys annual proxy circular
and statement. No member of the Committee may receive directly
or indirectly any consulting, advisory or other compensatory
fees or other payments from the Company other than (i) annual
retainer and meeting fees, which may be received in cash, common
shares or deferred share units, and stock options or any other
in-kind consideration ordinarily payable to non-employee
Directors for serving as a Director and a chair and/or member of
any committee of the Board and (ii) other regular benefits
that other non-employee Directors receive.

The Committee shall hold at least four regularly
scheduled meetings in each calendar year in person or by
conference call or by means of similar communications equipment
hook-up and shall meet more frequently if circumstances warrant,
including convening a meeting to cover any matters at the
request of the independent auditors or the head of internal
audit.

Attendance by at least three members of the
Committee either in person or by conference call or by means of
similar communications equipment hook-up shall constitute a
quorum for the transaction of any business that may properly
come before any meeting of such Committee. The head of internal
audit shall serve as secretary of the Committee and shall be
responsible for preparing and circulating the agenda and all
supporting and supplementary material for each meeting and
preparing the minutes of each meeting.

II.  Function, Duties and
Responsibilities

The purpose of the Committee is to assist the
Board in its oversight of (a) the accounting and financial
reporting principles, policies, practices and procedures of the
Company and its subsidiaries and affiliates, (b) the
adequacy of the systems of internal accounting control
throughout the Company and its subsidiaries and affiliates,
(c) the quality, integrity and transparency of the
Companys financial statements, (d) the independent
auditors qualifications and independence, (e) the
performance of the independent auditors and the Companys
internal audit function and (f) the Companys
compliance with all legal and regulatory requirements with
respect to (i) financial reporting principles, policies,
practices and procedures of the Company and its subsidiaries and
affiliates, (ii) the Companys financial statements,
and (iii) the duties and responsibilities of the Committee. The
independent auditors and any other registered public accounting
firm engaged pursuant to paragraph (A)(1)(b) below shall
report directly to the Committee. The head of the Companys
internal audit function and the independent auditors shall have
direct and ready access to the Chair of the Committee.

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Management of the Company is responsible for the
preparation, presentation and integrity of the Companys
financial statements and for the effectiveness of internal
control over financial reporting. Management of the Company is
also responsible for maintaining appropriate accounting and
financial reporting principles and policies and internal
accounting controls and procedures designed to assure compliance
with accounting standards and all applicable laws and
regulations. The Companys independent auditors are
responsible for planning and carrying out proper audits and
reviews, including reviews of the Companys quarterly
financial statements prior to the filing of each quarterly
report on Form 10-Q and any similar reporting or filing
requirements and procedures, and, in connection with the
Companys annual financial statements, annually auditing
managements assessment of the effectiveness of internal
control over financial reporting in accordance with all legal
and regulatory requirements, and other procedures. In fulfilling
their responsibilities, it is recognized that members of the
Committee are not full-time employees of the Company and are
not, and do not represent themselves to be, performing the
functions of accountants or auditors. As such, it is not the
duty or responsibility of the Committee or any of its members to
conduct field work or other types of auditing or
accounting reviews or procedures, and each member of the
Committee shall be entitled reasonably to rely on (i) the
integrity of those persons and organizations within and outside
the Company from whom the Committee receives information and
(ii) the accuracy of the financial and other information
provided to the Committee by such persons or organizations
absent actual knowledge to the contrary (in which event any such
occurrence shall be promptly reported to the Board).

In assisting the Board in fulfilling its function
of oversight, the Committee shall have the following duties and
responsibilities:

(A)  With respect to the independent
auditors:



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | appoint, retain, terminate and oversee the work
    of (a) the independent auditors (subject to nominating, or
    recommending to the Board for nomination of, the independent
    auditors to be proposed for shareholder approval or ratification
    in any proxy circular or statement and the approval of such
    nomination by shareholders) including, in each case, the
    resolution of disagreements between management and the
    independent auditors regarding financial reporting, and
    (b) any other registered public accounting firm engaged for
    the purpose of preparing or issuing an audit report or
    performing audit, review, attestation or similar services;                                                                                          
|
| | (2) | pre-approve, or adopt appropriate procedures to
    pre-approve, all audit and permitted non-audit services to be
    provided by the independent auditors, including all auditing and
    non-auditing services deemed necessary or desirable to
    facilitate the Companys offering and issuance of
    securities (which may involve having such auditors participate
    in due diligence sessions, prepare comfort letters and
    agreed-upon procedures letters, and provide consents in
    connection with any such offerings and issuances), and to
    consider whether the independent auditors provision of
    particular non-audit services to the Company is compatible with
    maintaining the independence of the independent auditors;                               
|
| | (3) | ensure that the independent auditors prepare and
    deliver annually the Annual Independent Auditors
    Statement, as defined below (it being understood that the
    independent auditors are responsible for the accuracy and
    completeness of this Statement) and discuss with the independent
    auditors any relationships or services disclosed in such
    Statement that may impact the quality of audit services or the
    objectivity and independence of the independent auditors;                                                                                                                                                                                                                                                                                       
|
| | (4) | obtain from the independent auditors in
    connection with any audit relating to the Companys annual
    audited financial statements a timely report relating to the
    Companys annual financial statements which describes all
    critical accounting policies and practices used, all alternative
    treatments within generally accepted accounting principles for
    policies and procedures related to material items that have been
    discussed with management, the ramifications of the use of such
    alternative treatments, and the treatment preferred by the
    independent auditors, and any material written communications
    between the independent auditors and management, such as any
    management letters or schedule of unadjusted
    differences;

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| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (5) | review and evaluate the qualifications,
    performance and independence of the lead audit partner and other
    key members of the audit team of the independent auditors,
    taking into account the opinions of management and the
    Companys internal audit personnel in assessing the
    qualifications, performance and independence of such personnel
    of the independent auditors;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (6) | discuss with management the timing and process
    for implementing the rotation of the lead audit partner, the
    concurring partner and any other active audit engagement team
    partner of the independent auditors, and to consider whether
    there should be a regular rotation of the independent auditors
    themselves;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | (7) | obtain, and review and evaluate, the independent
    auditors annual formal written statement (the Annual
    Independent Auditors Statement) addressing or
    describing at least the following; (a) the independent
    auditors internal quality-control procedures; (b) any
    material issues raised by the most recent internal
    quality-control review or peer review of the independent
    auditors, or by any inquiry or investigation by governmental or
    professional authorities, within the preceding five years, with
    respect to one or more independent audits carried out by the
    independent auditors, and any steps taken to deal with any such
    issues; and (c) all relationships between the independent
    auditors and the Company, including each permitted non-audit
    service provided to the Company and at least all of the matters
    set forth in Independence Standards Board Standard No. 1
    and any other similar standards or other requirements applicable
    to such auditors;                                                                                                                                                      
|
| | (8) | obtain, and review and evaluate, at least
    annually the independent auditors formal and appropriately
    detailed written statement of its fees billed for each of the
    last two fiscal years covering each of the following categories
    of services rendered by the independent auditors: (a) the
    audit of the Companys annual financial statements for
    those fiscal years and the reviews of the financial statements
    included in the Companys Quarterly Reports on
    Form 10-Q for those fiscal years and any other services
    that are normally provided by the independent auditors in
    connection with statutory and regulatory filings or engagements;
    (b) assurance and related services not included in clause
    (a) that are reasonably related to the performance of the
    audit or review of the Companys annual and quarterly
    financial statements; (c) tax compliance, tax consulting
    and tax planning services, in the aggregate and by each service;
    and (d) all other products and services provided or
    rendered by the independent auditors for those fiscal years, in
    the aggregate and by each product or service; and
|
| | (9) | obtain from the independent auditors assurance
    that their audit was conducted in a manner consistent with
    Section 10A  Audit Requirements of the U.S.
    Securities Exchange Act of 1934, as amended, and all applicable
    rules and regulations thereunder, and any corresponding
    legislation or rules and regulations applicable to the Company,
    which sets forth certain procedures to be followed in any audit
    of financial statements required under such legislation and
    rules and regulations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



| |     |                                                                                                                                                                  
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (B) | With respect to accounting principles, financial
    reporting principles, policies, practices and procedures, and
    internal control over financial reporting:



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | advise management, the head of internal audit and
    the independent auditors that they are expected to provide to
    the Committee a timely analysis of significant issues and
    practices relating to accounting principles and policies,
    financial reporting and internal control over financial
    reporting;                                                                                                                                                                                                                           
|
| | (2) | consider any reports or communications (and
    managements and/or the internal audit departments
    responses thereto) submitted to the Committee by the independent
    auditors required by or referred to in Statement on Auditing
    Standards No. 61, Communication with Audit
    Committees (as codified by AU Section 380), as such
    Statement may be modified or supplemented, and any other similar
    standards or requirements, as such other standards or
    requirements may be modified or supplemented from time to time;

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| |     |                                                                                                                           
| | --- | --------------------------------------------------------------------------------------------------------------------------
| | (3) | meet with management of the Company, the
    independent auditors and, if appropriate, the head of internal
    audit, to:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | discuss the planned scope of the annual audit by
    the independent auditors and (a) the annual financial
    statements (including the notes thereto) and related financial
    material and the independent auditors report and opinion
    to be included in the Companys Annual Report to
    Shareholders, Annual Report on Form 10-K, Annual
    Information Form and any other similar filings with regulatory
    agencies, stock exchanges and other bodies as may be required,
    (b) the quarterly financial statements of the Company prior
    to their inclusion in any Quarterly Report on Form 10-Q and
    any similar filings to be made with any regulatory agencies,
    stock exchanges or other bodies, (c) the Companys
    disclosures under Managements Discussion and
    Analysis of Financial Condition and Results of Operations
    set forth in any report including the Companys quarterly
    or annual financial statements, and (d) the results of the
    Companys periodic surveys relative to compliance with the
    Companys Conflicts of Interest policy
    statement and Guidelines on Business Conduct, and
    the results of compliance with any other codes, surveys, policy
    statements, guidelines and policies covering appropriate
    standards of conduct reported on to the Committee, and any
    amendments to such policy statements, guidelines or policies,
    and any other matters covering such policy statements,
    guidelines and policies brought to the attention of the
    Committee by management of the Company;
|
| |  | discuss any significant matters arising from any
    audit, including any audit problems or difficulties, whether
    raised by management, the head of internal audit or the
    independent auditors, relating to the Companys financial
    statements;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | discuss any difficulties the independent auditors
    encountered in the course of the audit, including any
    restrictions on their activities or access to requested
    information and any significant disagreements with management;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | discuss any management or
    internal control letters issued, or proposed to be
    issued, by the independent auditors to the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | review the form of report and opinion the
    independent auditors propose to render to the Board and
    shareholders; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | discuss, as appropriate, the following:
    (a) any major issues regarding accounting principles and
    financial statement presentations, including any significant
    changes in the Companys selection or application of
    accounting principles, and major issues as to the adequacy of
    the Companys internal controls and any special audit steps
    adopted in light of material control deficiencies;
    (b) analyses prepared by management of the Company and/or
    the independent auditors setting forth significant financial
    reporting issues and judgments made in connection with the
    preparation of the financial statements, including analyses of
    the effects of alternative generally accepted accounting
    principles on the financial statements; and (c) the effect
    of regulatory and accounting initiatives, as well as off-balance
    sheet structures, on the financial statements of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (4) | inquire of the Companys Chief Executive
    Officer and Chief Financial Officer as to the existence of any
    significant deficiencies or material weaknesses in the design or
    operation of internal control over financial reporting that are
    reasonably likely to adversely affect the Companys ability
    to record, process, summarize and report financial information
    and as to the existence of any fraud, whether or not material,
    that involves management or other employees who have a
    significant role in the Companys internal control over
    financial reporting;
|
| | (5) | (a) discuss guidelines and policies
    governing the process by which senior management of the Company
    and the relevant departments of the Company assess and manage
    the Companys exposure to risk, and discuss the
    Companys major financial risk exposures and the steps                                                                                                                                                                                                                                                                                                                  

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| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      | management has taken to monitor and control such
    exposures and (b) review and evaluate the quarterly reports on
    the Companys risk management policies and procedures;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (6)  | discuss with the Chief Financial Officer
    generally (representing a discussion of the general types of
    information to be disclosed) the substance of all financial
    results press releases, including the transparency of such
    results and the financial measures included in such releases
    that are not in accordance with generally accepted accounting
    principles and earnings and related guidance provided in such
    releases, and the types of presentations made to the investment
    community and credit rating agencies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (7)  | establish procedures for the receipt, retention
    and treatment of complaints received by the Company regarding
    accounting, internal accounting controls or auditing matters,
    and for the confidential, anonymous submission by Company
    employees of concerns regarding questionable accounting or
    auditing matters relating to the Company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (8)  | establish hiring policies for employees or former
    employees of the independent auditors;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | (9)  | meet with management of the Company, the head of
    internal audit, and/or the independent auditors to review and
    discuss (a) any significant matters arising from any audit
    or report or communication, whether raised by management, the
    internal audit staff or the independent auditors, relating to
    the Companys financial statements, (b) significant
    changes to the Companys auditing and accounting
    principles, policies, controls, procedures and practices
    proposed or contemplated by the independent auditors, the
    internal audit staff or management of the Company, (c)
    significant risks and exposures, if any, relating to the
    integrity of the Companys financial information and
    systems of internal accounting control, and the steps taken to
    monitor and minimize such risks and exposures and
    (d) critical security and other measures implemented or to
    be considered relating to the integrity of the Companys
    financial information;
|
| | (10) | discuss with the Companys General Counsel
    any significant legal, compliance or regulatory matters that may
    have a material effect on the Companys financial
    statements, business or compliance policies, including material
    notices to or inquiries received from governmental or other
    similar agencies or bodies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (11) | with respect to the systems of internal
    accounting control throughout the Company, review and evaluate
    (i) the adequacy of the quality of such systems after
    consultation with appropriate members of management of the
    Company, the head of internal audit and the independent
    auditors, (ii) managements performance in maintaining
    and improving these systems and whether management is setting
    the appropriate control culture by communicating the importance
    of internal control and management of risks and
    (iii) recommendations made by the independent auditors and
    the head of internal audit relative to improvements to these
    systems;                                                                                                                                                                                                                                                                                                                             
|
| | (12) | review and evaluate the results of any special
    investigation undertaken by the Committee at the request of the
    Board; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (13) | review and evaluate the integrity of the
    Companys policies, procedures, practices and systems
    covering the security of Company information stored, maintained
    and transmitted electronically or by or through any electronic
    device and any significant breaches in such policies,
    procedures, practices and systems.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

(C)   With respect to the internal
audit function:



| |     |                                                                                                                                                                                                                                                       
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | review the appointment and replacement of the
    head of internal audit and any other key personnel of this
    function and the coordination of responsibilities between the
    Companys independent auditors and the internal audit
    function;

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| |     |                                                                                                                                                                                                                                                                        
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | review and discuss with the independent auditors
    and management the internal audit functions
    responsibilities, budget and staffing, performance and
    effectiveness and any recommended changes in the planned scope
    of the internal audit function; and
|
| | (3) | advise the head of internal audit that he or she
    is expected to provide to the Committee summaries of and, as
    appropriate, copies of, all significant reports to management
    prepared by the internal audit function and managements
    responses thereto.

(D)   With respect to its
responsibilities involving its meetings and its reporting and
related matters:



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | prepare any report or other disclosures from the
    Committee, including any recommendations of the Committee,
    required by the rules of the U.S. Securities and Exchange
    Commission or any other applicable regulatory agency or body or
    stock exchange, to be included in the Companys annual
    proxy circular and statement or any other reports, disclosures
    or filings required by the Committee with any other regulatory
    agencies or bodies or stock exchanges;                                                                                                                                                                                                                                                                                        
|
| | (2) | review this Charter at least annually and
    recommend any changes thereto to the Board;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (3) | report its activities to the Board on a regular
    basis and make such recommendations with respect to matters
    relating to the Committee as the Committee may deem necessary or
    appropriate;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (4) | prepare and review with the Board an annual
    performance evaluation of the Committee, which evaluation shall
    compare the performance of the Committee with the requirements
    of this Charter and recommend to the Board any improvements or
    changes to this charter deemed necessary or desirable by the
    Committee. Such performance evaluation by the Committee shall be
    conducted in such manner as the Committee deems appropriate and
    may take the form of an oral report by the Chair of the
    Committee or any other member of the Committee designated by the
    Committee to make such report;                                                                                                                                                  
|
| | (5) | during its regularly scheduled meetings, and any
    special meetings as it deems necessary or appropriate, meet
    privately (in executive session) with the independent auditors
    and the head of the internal audit; the Committee may request
    any officer or employee of the Company or the Companys
    outside counsel or independent auditors, or any advisors or
    experts the Committee has retained, to attend all or any part of
    any meeting of the Committee or to meet with any members of, or
    advisors or experts to, the Committee; the Committee shall also
    meet separately to discuss any matters that the Committee or any
    of these persons or firms believe should be discussed with the
    Committee and/or management privately; and
|
| | (6) | the Chair of the Committee shall review and
    approve at least annually the business expenses incurred by the
    Chief Executive Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

III. Delegation to
Subcommittee

The Committee may, in its discretion, delegate
all or a portion of its functions, duties and responsibilities
to a subcommittee of the Committee. The Committee may, in its
discretion, delegate to one or more of its members the authority
to pre-approve any audit or permitted non-audit services to be
performed by the independent auditors, provided that any such
approvals are presented to the Committee for ratification at its
next scheduled meeting.

IV. Resources and Authority of the
Committee

The Committee shall have the resources and
authority appropriate to fully discharge its functions, duties
and responsibilities, including the authority to select, retain,
terminate and approve the fees of and other terms of retention
of special or independent counsel, accountants, auditors or
other experts and advisors as it deems necessary or appropriate,
in connection with its functions, duties and responsibilities
without seeking approval of the Board or management. The
Committee shall have unrestricted access to management,
employees and information it believes will be relevant in
carrying out its functions, duties and responsibilities.

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The Company shall provide for appropriate funding
as determined by the Committee, in its capacity as a formal
committee of the Board, for payment of:



| |     |                                                                                                                                                                                                                                     
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | compensation to the independent auditors and any
    other public accounting firm engaged for the purpose of
    preparing or issuing an audit report or performing other audit,
    review or attestation services for the Company;
|
| | (2) | compensation of any counsel, experts or advisors
    retained by the Committee; and                                                                                                                                                 
|
| | (3) | ordinary administrative expenses of the Committee
    that are necessary or appropriate in carrying out its functions,
    duties and responsibilities.                                                                             

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