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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 8-K Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 30, 2004    INCO LIMITED (Exact name of registrant as specified in its charter)
 Canada
(State or other jurisdiction of incorporation)
    
    1-1143
(Commission File Number)
    
    98-0000676
(IRS Employer Identification No.)
 145 King Street West, Suite 1500, Toronto, Ontario
(Address of principal executive offices)
    
    M5H 4B7
(Zip code)
 (416) 361 7511
(Registrants telephone number,
including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:  ̈ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)  ̈ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)  ̈ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))  ̈ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




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Item 1.01     Entry into a Material Definitive Agreement On December 30, 2004, the approximately 85% owned subsidiary of Inco Limited (Inco), Goro
Nickel S.A. (Goro Nickel), which is the project company for the Goro nickel-cobalt project in the
French overseas territorial community of New Caledonia (the Project), acting through and on
behalf of its New Caledonian branch, entered into the agreements described below to implement the
Girardin Act tax-advantaged lease financing (the Financing) program provided by the French
Government for the Project. This French legislative program provides certain tax incentives for
French qualified investors (Investors) to extend financing to companies like Goro Nickel who
sponsor investments or projects in French overseas territorial communities like New Caledonia. Under the terms of the Financing, an initial drawdown was made at year-end 2004 to finance the
purchase, construction and installation of specified equipment and
other assets for a portion of the
Projects planned process plant (the Girardin Assets). Additional drawdowns are currently
scheduled to be made in 2005 and 2006. This Financing is currently expected to involve the lease
financing of Girardin Assets estimated to cost approximately U.S. $500 million. Inco currently estimates that Goro Nickel would, through the effective forgiveness of approximately
U.S. $130 million of the total advances to be provided by certain parties who are Investors
(Participating Investors) under this Financing for the
purchase, construction and installation of the Girardin
Assets, realize net cash benefits totalling approximately U.S. $130 million. This estimate assumes
that all of the terms and conditions of the Financing are met on a timely basis and that the
maximum amounts to be drawn down in 2005 and 2006 would be available based upon certain assumptions
relating to this Financing. In connection with the Financing, Goro Nickel and Inco have entered into the following agreements
(collectively, the Transaction Documents):  (1)  a tax loan agreement dated December 30, 2004 (Tax Loan Agreement) among a special
purpose vehicle created to own the Girardin Assets (GNiFi), Participating
Investors and the Participating Investors agent pursuant to which, among other things, the
Participating Investors committed to provide advances to GNiFi in December 2004, 2005 and
2006;  (2)  a loan agreement dated December 30, 2004 (Loan Agreement) between GNiFi and Goro
Funding, LLC (the Lender), a wholly-owned subsidiary of Inco, pursuant to which the
Lender has agreed to provide a loan to GNiFi to finance the balance of the costs not
financed by the Tax Loan Agreement in connection with the purchase, construction and
installation of the Girardin Assets;  (3)  a construction agreement dated December 30, 2004 (Construction Agreement) between
Goro Nickel and GNiFi pursuant to which Goro Nickel has agreed to construct the Girardin
Assets on behalf of GNiFi;  (4)  a lease agreement dated December 30, 2004 (Lease) between Goro Nickel and GNiFi
pursuant to which Goro Nickel has agreed to lease the Girardin Assets




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- 2 -  from GNiFi upon completion of the construction and
installation of the Girardin Assets in accordance with the terms of the
Construction Agreement;  (5)  a first demand guarantee dated December 30, 2004 (First Demand Guarantee) between
Inco and BNP Paribas, in its capacity as security agent under the Inter-Creditor Agreement
described below (Security Agent), pursuant to which Inco has agreed to guarantee the
payment by Goro Nickel of up to a maximum amount of U.S.$100 million (Maximum Amount) in
connection with any indemnity owed to GNiFi or the Participating Investors under the Construction
Agreement and the Lease in the event that any tax deductions permitted under the
tax ruling described below are denied or reversed by the French tax authorities and any
interest or penalties are levied by such authorities (an Add-Back Indemnity);  (6)  an additional guarantee dated December 30, 2004 (Other Guarantee) between Inco
and the Security Agent guaranteeing the payment by Goro Nickel of (a) any Add-Back
Indemnity exceeding the Maximum Amount, and (b) any other amounts payable by Goro Nickel
under the Lease;  (7)  a put option agreement dated December 30, 2004 (Put Agreement) among Inco, Goro
Nickel, the Participating Investors and the Participating Investors agent pursuant to
which, among other things, the Participating Investors have the right to sell for a nominal
price their interests in GNiFi to Goro Nickel and Inco, or their designees, upon the
occurrence of certain material adverse environmental events relating to Goro Nickel; and  (8)  an inter-creditor agreement dated December 30, 2004 (Inter-Creditor Agreement) among
Goro Nickel, Inco, the Lender, the Participating Investors, the Security Agent and the
Participating Investors agent pursuant to which the parties have set out (a) the role of
the Security Agent, (b) the subordination upon the occurrence of a termination event under
the Construction Agreement or the Lease of the repayment of the loan under the Loan
Agreement provided by the Lender to certain payments to the Participating Investors and other
creditors of GNiFi, and (c) the ranking of security interests and the repayment of
creditors of GNiFi or the Participating Investors. Each of the Transaction Documents as well as certain other related agreements in connection with
the Financing is governed by French law. The availability of favorable tax treatment for the Financing was confirmed in a ruling issued on
December 30, 2004 by the French Minister of the Economy, Finance and Industry (the Ruling). The
Ruling provides that the Participating Investors, who either hold interests in GNiFi directly or
through an affiliated company, may take tax deductions equal up to the Euro equivalent of U.S.$481
million (the Deductible Amount) in each of 2004, 2005 and 2006 in annual amounts established in
the Ruling. To support deductions up to the Deductible Amount, GNiFi must own assets at least
equal in value to the Deductible Amount. The Ruling also requires that Goro Nickel and/or Inco
satisfy certain conditions, including, among other things, (1) completing the construction of the
Project by December 31, 2008, (2) meeting certain minimum




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- 3 - production and operating tests as confirmed by independent experts, (3) operating for a minimum
period of five years, and (4) complying with certain ongoing reporting obligations. Under the terms of the Tax Loan Agreement, the Participating Investors have committed to provide
non-refundable loans to GNiFi (Tax Loans). No interest is payable by GNiFi on the
outstanding amounts of the Tax Loans. After the deduction of certain implementation costs
relating to the Financing, assuming all of the conditions with
respect to the Financing are met and the Remaining Tax Loans (as
defined below) are provided, Tax Loans equal to approximately U.S.$130 million have been, or will be,
made available to GNiFi under this agreement in three tranches in December 2004, 2005 and 2006
to partially assist in the funding of the construction of the Girardin Assets. Of the Tax Loans to
be made in 2005 and 2006, approximately 65% of these amounts have been committed by the Participating
Investors with the balance (Remaining Tax Loans) to be placed with additional Investors with the
assistance of a French bank through a best efforts undertaking. That portion of the Financing for the Girardin Assets not provided by the Tax Loan Agreement will
be provided by the Lender pursuant to the terms of the Loan Agreement. The total commitment of the
Lender is sufficient to cover capitalized interest, certain potential
overruns relating to the purchase construction and installation of the Girardin Assets
and any Remaining Tax Loans not taken up by additional Investors in 2005 and 2006. The Loan Agreement
provides for three installments to be made on the same date that the
Participating Investors must provide Tax
Loans under Tax Loan Agreement, with a fourth installment to fund cost overruns, if any, to be made
upon completion of the Girardin Assets in accordance with the terms
of the Construction Agreement,
as described below. The Loan Agreement provides for interest to be payable semi-annually, with
the first interest payment due six months after completion of the Girardin Assets and the first
principal repayment due two and a half years after completion of the
Girardin Assets. The loan
provided under the Loan Agreement is to be repaid over 12 years. Under the terms of the Construction Agreement, Goro Nickel is responsible for the purchase,
construction, installation and commissioning the Girardin Assets on behalf of GNiFi.
Construction costs are fixed at approximately U.S.$500 million and will be payable to Goro Nickel in three
installments, subject to cost overruns up to a specified maximum amount which
would need to be funded through a fourth installment to be provided by the Lender. The Construction
Agreement provides that GNiFi shall acquire title to the Girardin Assets as the assets are
completed and delivered. Once the Girardin Assets have been constructed, installed and commissioned
to the levels required under the Construction Agreement (Substantial Completion), the Girardin
Assets will be leased to Goro Nickel pursuant to the terms of the Lease. Substantial Completion of
the Assets under the terms of the Construction Agreement cannot occur until the Girardin Assets are
complete and integrated into the Project process plant such that the
first autoclave of the planned process
plant is ready to accept feed for processing. Goro Nickel is required to give notice of the
Substantial Completion to GNiFi by December 31, 2008 or such later date as may be approved by the
French tax authorities, but in any event no later than December 31, 2009. The Construction
Agreement also provides that Goro Nickel must meet a specified production test by the earlier of 24
months after Substantial Completion or the end of 2010.




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- 4 - Under the Lease, Goro Nickel will lease the Girardin Assets from GNiFi. The term of the Lease
(unless terminated earlier in accordance with its terms) is 12 years from Substantial Completion.
Rent payable under the Lease will be denominated in U.S. dollars and payable in semi-annual
installments. The amount and timing of such rent payments will coincide with the amount and timing
of repayments of interest and principal under the Loan Agreement by GNiFi. Under the terms of
a tri-partite rental delegation agreement dated December 30, 2004 between Goro Nickel, GNiFi and
the Lender, Goro Nickel is directed to pay rent payable under the Lease directly to the Lender in
full satisfaction of amounts payable under the Loan Agreement. The Construction Agreement and the Lease contain detailed events of default and termination rights
for the benefit of GNiFi, including the failure to meet the terms and conditions of the Ruling.
Following any termination of the Lease, (1) certain termination compensation could be payable by
Goro Nickel to the Participating Investors pursuant to the Add-Back Indemnity described below and
(2) Goro Nickel would be required to either (a) repay the entire outstanding amount of the loan
provided by the Lender under the Loan Agreement or (b) assume all of GNiFis obligations under the
Loan Agreement. Upon the occurrence of such events, Goro Nickel would continue to have the right to
use the Girardin Assets (with GNiFi retaining ownership thereof until all termination compensation
due by Goro Nickel under the Lease is paid). In addition, each of the Construction Agreement and
the Lease provides that Goro Nickel must indemnify GNiFi and the Participating Investors under
broad indemnity provisions covering (1) the Add-Back Indemnity, (2) increased taxes incurred by
GNiFi or the Participating Investors in respect of a change in tax laws or the imposition of an
unanticipated tax in New Caledonia, and (3) operational losses incurred by the Participating
Investors arising out of third party claims in their capacity as owners of the Girardin Assets
through GNiFi. In the event of a termination of the Construction Agreement or Lease or in the
event the Put Agreement is triggered prior to the fifth anniversary of Substantial
Completion, it is possible that the Participating Investors could lose their tax deductions in
respect of the Girardin Assets, thereby triggering an Add-Back Indemnity. As described above, Inco
entered into the First Demand Guarantee and the Other Guarantee guaranteeing the payment of these amounts in certain circumstances if not paid by Goro Nickel. Each of these guarantees
includes events of default which could trigger a termination of the Construction Agreement and the
Lease. In connection with any termination event under the Construction Agreement or the Lease, the
Inter-Creditor Agreement provides restrictions on the repayment of certain parties. In addition to
the elements of such agreement described above, the Inter-Creditor Agreement sets out the ranking
of security interests and the repayment of creditors, with priority being given to the
Participating Investors. This agreement also sets out the procedure in connection with
the payments to be made from the proceeds of (i) any termination compensation payable under the
Construction Agreement or Lease which is paid to the Security Agent under a delegation agreement
dated December 30, 2004, (ii) any amounts collected under the First Demand Guarantee and the Other
Guarantee, (iii) the enforcement of a mortgage granted to the Security Agent over the land on which
the




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- 5 - Girardin Assets will be
located, and (iv) in certain limited circumstances, insurance proceeds received
in respect of the Girardin Assets. The land on which the Girardin Assets are to be located has
been leased by Goro Nickel to GNiFi pursuant to a lease assignment agreement dated
December 30, 2004. The Lease provides Goro
Nickel with a purchase option (the Purchase Option), exercisable starting
on the fifth anniversary of Substantial Completion and every six
months thereafter, and ending on the
twelfth anniversary of Substantial Completion. Upon exercise of Goro Nickels right to purchase the
Girardin Assets pursuant to the Purchase Option, Goro Nickel will be responsible for either (1) the
repayment of all amounts then outstanding under the Loan Agreement, or (2) assuming all obligations
of GNiFi under the Loan Agreement. In addition, Goro Nickel under a call option
agreement dated December 30, 2004 between Goro Nickel, Inco, the Participating Investors and the
Participating Investors agent has an option to purchase the
Participating Investors interests in GNiFi for a nominal
purchase price exercisable on the same dates as the Purchase Option is exercisable. The
Participating Investors also have a right under the Put Agreement described above to sell
their interests in GNiFi to Goro Nickel and Inco, or their designees, for a nominal purchase price
five years and three months after Substantial Completion and at the end of each six month period
thereafter. As a result, the expectation of the parties to the Financing is that the Lease will be
terminated after the fifth year of operation upon the exercise of one of the options by Goro
Nickel. Neither Inco, Goro Nickel nor the Lender has any material relationship with GNiFi, the
Participating Investors, the Security Agent or the Participating
Investors agent. BNP Paribas,
who is one of the Participating Investors and serves as the Security Agent under the Inter-Creditor
Agreement, is one of the lenders under Incos current credit facilities with a group of financial
institutions.




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, hereunto duly authorized. INCO LIMITEDBy:
    /s/ Stuart F. FeinerStuart F. FeinerDate: January 5, 2005
    
    Executive Vice-President,
General Counsel and Secretary