##### 



Exhibit 99.1 (INCO NEWS RELEASE LOGO) INCO REPORTS RESULTS FOR THIRD QUARTER OF 2004   CANADIAN GAAP THIRD
QUARTER NET EARNINGS REFLECT CONTINUED
STRONG NICKEL MARKET (All dollar amounts are expressed in U.S. currency) TORONTO, October 19, 2004  Inco Limited today reported adjusted net
earnings(1) of $212 million, or $1.12 per share ($1.05 per share on a diluted
basis(2)), for the third quarter of 2004, compared with adjusted net
earnings(1) of $20 million, or 10 cents per share (10 cents per share on a
diluted basis(2)), for the third quarter of 2003. The adjustments made in
arriving at adjusted net earnings(1) for the third quarter of 2004 reflected
primarily the exclusion of unfavourable non-cash currency translation
adjustments relating to changes in the Canadian-U.S. dollar exchange rate of
$62 million, or 33 cents per share. The adjustments made in arriving at
adjusted net earnings(1) for the third quarter of 2003 reflected primarily the
exclusion of an expense associated with a strike by production and maintenance
employees at our Ontario operations of $46 million, or 25 cents per share. Adjusted net earnings(1) for the third quarter of 2004 represent a significant
improvement compared with adjusted net earnings(1) for the third quarter of
2003 principally due to substantially higher prices realized for all of the metals produced
by us, higher deliveries of all metals produced as compared with the lower
deliveries due to the strike and ramp-up issues experienced at our Ontario
operations in the third quarter of 2003. The positive factors
experienced in the third quarter of 2004 were partially offset by increased
nickel unit cash cost of sales before by-product credits due principally to
increased prices and volumes for purchased nickel intermediates processed,
higher energy costs and earnings-based compensation payments and a stronger
Canadian dollar. Our net earnings for the third quarter of 2004 in accordance with Canadian
generally accepted accounting principles (Canadian GAAP) were $148 million,
or 78 cents per share (73 cents per share on a diluted basis(2)), compared with
a net loss of $23 million, or 13 cents per share (13 cents per share on a
diluted basis(2)), for the third quarter of 2003.   (1)
    
    The adjusted net earnings reported in this release have not been calculated
in accordance with Canadian GAAP, the accounting principles under which our
consolidated financial statements are prepared, and there is no standard
definition in such principles for such adjusted net earnings or loss.
Accordingly, it is unlikely that comparisons can be made among different
companies in terms of such adjusted results reported by them. A reconciliation
of adjusted net earnings to net earnings in accordance with Canadian GAAP
appears below as well as an explanation of why we believe adjusted net earnings
is useful information.(2)
    
    The calculation of adjusted net earnings per share and net earnings per
share in accordance with Canadian GAAP on a diluted basis takes into account
the dilutive effect of our outstanding warrants, share options and convertible
debentures. The amount of dilution per share due to these items is dependent on
our level of earnings and the price of our common shares.




---



##### 



All of the adjustments made in arriving at adjusted net earnings for the third
quarter of 2004 and 2003, respectively, and our adjusted net earnings
and net earnings in accordance with Canadian GAAP for the first nine
months of 2004 and 2003, respectively, are set forth
under Reconciliation Between Adjusted Net Earnings and Net Earnings in
Accordance with Canadian GAAP below. Chief Executive Officers Message I am happy to report that we
achieved significantly improved earnings in the third quarter of 2004
as world nickel markets
remained strong, yet volatile, and we met or exceeded our expectations for
production, for premiums realized over London Metal Exchange (LME)
nickel prices and for costs. We also made
solid progress in advancing our strategy for profitable growth at Voiseys Bay,
Goro and PT Inco. Nickel market outlook The average LME cash nickel price for the third quarter
2004 was $6.35 per pound, the fourth highest quarterly average LME cash nickel
price since nickel became one of the metals traded on that exchange, as nickel
markets remained tight. Nickel prices were volatile due, we believe, in large
measure to trading activities by hedge and other funds in nickel.
Reflecting this volatility, the difference between the high and low LME cash nickel price for
the quarter was approximately $1.80 per pound. We believe that
underlying nickel demand remains strong as we continue to see
stainless steel demand growth in many markets and a better than
expected recovery in nickel demand in a number of non-stainless
applications. However, market volatility and high
prices continue to cause substantial quantities of nickel-containing stainless steel
scrap, a substitute for our primary nickel in certain applications, to enter
the market. There has also been a high level of stocking and
de-stocking activity in both nickel and stainless steel as
consumers of these materials reacted to price volatility. We believe that the overall trends we have seen this year will continue for the
remainder of the year, with prices expected to remain at relatively
high levels in order to keep demand
in line with limited supply. We do expect to see continued volatility in nickel
prices at least for the balance of 2004. Our strategy continues to be
doing all we can to meet the needs of our customers in this tight
market, both by maximizing production at our existing operations and by
bringing new sources of supply on stream. Production and costs We produced 118 million pounds of nickel during the third quarter of 2004, 3
million pounds ahead of our guidance for the quarter. We have increased our
2004 total production guidance modestly for nickel, copper and platinum-group
metals (PGMs). Our current forecast is to produce 505 to 510 million pounds of
nickel for the full year, our highest annual production since 1974. We produced 118,000 troy ounces of PGMs in the third quarter. Our current
full-year PGMs production forecast is 405,000 troy ounces. We produced 76
million pounds of copper for the quarter, and our full-year forecast is 265
million pounds. Our third quarter nickel unit cash cost of sales, after by-product credits, was
$2.30 per pound, above the $2.26 per pound level of the third quarter of 2003.
This was due to greater volumes of higher cost external feed used to
fill our processing facilities in Canada in advance of the start-up
of Voiseys Bay. We also experienced a stronger
Canadian dollar, higher earnings-based compensation payouts, and
increased energy costs at PT Inco. These increases were partially offset by
higher by-product credits, the absence of ramp-up issues related to the strike
at our Ontario operations which we experienced in the third quarter of 2003,
and cost reductions and savings of almost $20 million. We remain on track to
achieve our goal of $63 million in cost -2-




---



##### 



reductions and related
savings although some of these cost reductions and
related savings are not expected to be realized until early 2005. We
remain as committed to productivity improvements and programs to
offset the cost pressures we face when nickel prices are high as we
do when nickel prices are low. We recognize that this must continue
to be a firm objective for all of us at Inco. Progress on growth projects We recently completed Phase 2 of our Goro project review. We will
announce the final results of the review and update our plans for Goro in a separate
press release today. Our Voiseys Bay project remains about six months ahead of its original
schedule and on budget in Canadian dollars, with first production expected to
enter the market in the first quarter of 2006. Work on the mine and
concentrator is going smoothly, with engineering complete and pre-stripping of
the Ovoid deposit underway. This year we plan to deliver all equipment to the
site before freeze-up to allow construction and equipment installation to
continue through the winter. PT Inco has announced plans to build a third dam which will increase its
hydroelectric capacity by 90 megawatts to 365 megawatts. The third dam, at a
capital cost of about $150 million, represents the first stage of a four-year,
$250 million capital program at PT Inco aimed at raising its annual production
by 25 per cent to about 200 million pounds of nickel in matte by 2009, while
cutting its unit cash costs by about 7 per cent, or about $0.10 to $0.15 per
pound, from its current 2004 expected annual level of $1.65 to $1.70 per pound. Building on a strong financial foundation We generated $380 million of cash from operations, after changes in working
capital, during the third quarter of 2004. If the First Call consensus 2004
mean LME cash nickel price of $6.14 per pound is achieved, we should generate
about $1.35 billion of cash from operations in 2004, after changes in working
capital, an amount well in excess of our estimated $965 million in capital
expenditures for the year. Given how we pay taxes in Canada, we expect to pay
the balance of our 2004 taxes of about $275 million in early 2005. As a
matter of long-standing policy, we continue not to publicly forecast future
nickel prices. With our cash position of
$869 million at the end of the quarter, a ratio of total debt to
total debt plus shareholders equity of 25 per cent and
strong cash generation given the nickel and other metal markets which
we are seeing, we believe that we are in a very favourable position
to finance our aggressive growth plans going forward. We are pleased with what we have accomplished during the first nine months of
2004. We will continue our efforts to do everything possible to maximize
production and reduce expenditures across our operations. We have a nickel
market that should be very robust into the foreseeable future, but we will not
rely on the nickel market to deliver value. Rather, we will do so by maximizing
the potential of our existing operations and realizing the promise of our
growth projects. I look forward to reporting on our performance for the fourth quarter and the
full year of 2004. (SCOTT HAND SIGNATURE) Scott Hand
Chairman and Chief Executive Officer -3-




---



##### 



Reconciliation Between Adjusted Net Earnings and Net Earnings in Accordance
with Canadian GAAP We define adjusted net earnings and adjusted net earnings per share as a
calculation of net earnings that excludes items that, because of the nature,
timing or extent of such items, we believe do not reflect or relate to our
ongoing operating performance. Accordingly, the items that are excluded from
this calculation would include asset impairment charges, non-cash currency
translation adjustments relating principally to liabilities that are not
expected to be discharged or settled for a number of years, income tax benefits
(charges) relating to the impact of currency translation adjustments and
adjustments for tax rulings and other decisions, interpretations and
determinations covering transactions in prior periods and for revaluation of
recorded future tax liabilities due to changes in laws or regulations affecting
future tax rates, interest income associated with tax refunds, project
suspension and similar costs, including related project currency hedging gains
and losses, losses or gains on debt retirements, strike expenses, gains and
losses of a non-recurring nature and, for earnings per share calculations, the
premium payable on preferred share redemptions. The determination of which
items to exclude when calculating adjusted net earnings involves the
application of judgment by us. The following table provides for the periods indicated a reconciliation between
our adjusted net earnings and net earnings (loss) as reported in accordance
with Canadian GAAP: (in millions except per share amounts)
    
    Net Earnings (Loss)
    
    Basic Net Earnings (Loss) Per ShareThird Quarter
    
    Nine Months
    
    Third Quarter
    
    Nine Months2003
    
    
    
    
    
    2003
    
    
    
    
    
    2003
    
    
    
    
    
    20032004
    
    (Restated)(1)
    
    2004
    
    (Restated)(1)
    
    2004
    
    (Restated)(1)
    
    2004
    
    (Restated)(1)Adjusted net earnings
    
    $
    212
    
    
    $
    20
    
    
    $
    597
    
    
    $
    153
    
    
    $
    1.12
    
    
    $
    0.10
    
    
    $
    3.15
    
    
    $
    0.77Asset impairment charge
    
    
    
    
    
    
    
    
    
    
    (191
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.02
    )
    
    
    Currency translation adjustments
    
    
    (62
    )
    
    
    (6
    )
    
    
    (29
    )
    
    
    (156
    )
    
    
    (0.33
    )
    
    
    (0.03
    )
    
    
    (0.15
    )
    
    
    (0.85
    )Income tax
benefits (charges)(2)
    
    
    (9
    )
    
    
    (8
    )
    
    
    2
    
    
    
    126
    
    
    
    (0.05
    )
    
    
    (0.04
    )
    
    
    0.01
    
    
    
    0.69Interest on an accrued tax refund
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    0.05
    
    
    
    
    
    
    
    0.05Goro project suspension costs and
related currency hedging gains, net
    
    
    (1
    )
    
    
    8
    
    
    
    2
    
    
    
    13
    
    
    
    
    
    
    
    0.04
    
    
    
    0.01
    
    
    
    0.07Gains on
forward currency contracts(3)
    
    
    8
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    0.04
    
    
    
    
    
    
    
    0.04
    
    
    
    Strike expense
    
    
    
    
    
    
    (46
    )
    
    
    
    
    
    
    (69
    )
    
    
    
    
    
    
    (0.25
    )
    
    
    
    
    
    
    (0.38
    )Loss on redemption of convertible
debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.01
    )Redemption premium on Series E
Preferred Shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.08
    )Canadian GAAP net earnings (loss), as
reported
    
    $
    148
    
    
    $
    (23
    )
    
    $
    389
    
    
    $
    74
    
    
    $
    0.78
    
    
    $
    (0.13
    )
    
    $
    2.04
    
    
    $
    0.26
  (1)
    
    The 2003 results have been restated due to the retroactive application of
a change in accounting policy for depreciation and depletion.(2)
    
    Relates to the tax effect of currency translation
adjustments on long-term debt, partially offset by certain tax
rulings and other determinations relating to prior year transactions.(3)
    
    Relates to gains relating to forward foreign currency contracts to purchase
Australian dollars which were entered into with respect to anticipated
Australian dollar-denominated expenditures relating to our Goro project. We believe that the reporting of adjusted net earnings, a calculation that, as
noted above, excludes asset impairment charges, non-cash currency translation
adjustments and other items that, given their nature, timing or extent, may
obscure trends in the performance of our operations or otherwise not be
representative of our ongoing operations, provides our shareholders and other
investors with a potentially useful picture that eliminates the volatility of
such items, whether they are favourable or unfavourable, and may assist them in
assessing -4-




---



##### 



our operating performance. In addition, management uses such information
internally for operating, budgeting and financial planning purposes. Outlook for Balance of 2004 and Certain Factors Expected to Affect 2005 Our current estimates for production for the fourth quarter of 2004 and the
full year 2004 of nickel, copper and platinum-group metals
(PGMs), including
PGMs produced from purchased material, are as follows: Fourth Quarter
    
    Full Year2004
    
    2004Nickel
     tonnes (thousands)
    
    58 to 60
    
    
    
    229 to 231 pounds (millions)
    
    129 to 134
    
    
    
    505 to 510Copper
     tonnes (thousands)
    
    27
    
    
    
    120 pounds (millions)
    
    60
    
    
    
    265PGMs
     troy ounces (thousands)
    
    66
    
    
    
    405
 We currently project that our nickel unit cash cost of sales after by-product
credits for the full year 2004 will be about $2.25 to $2.35 per pound ($4,961
to $5,181 per tonne). A reconciliation between our nickel unit cash costs of
sales both before and after by-product credits as indicated and cost of sales
in accordance with Canadian GAAP is set forth in the table entitled
Reconciliation of Nickel Unit Cash Cost of Sales to Canadian GAAP Cost of
Sales below. The premium on our nickel products for 2004 we currently expect
to realize over the London Metal Exchange (LME) cash nickel prices will be
between $0.00 and $0.06 per pound ($0 and $132 per tonne). Our premiums are
affected by fluctuations in the LME cash nickel price and the effect this has
on the price we receive for the matte product produced by PT International
Nickel Indonesia Tbk (PT Inco), the lag effect that changes in the LME
benchmark price have on the pricing of certain of our nickel products, and how
certain of our specialty nickel products are priced. As reflected in the chart
above, we have historically experienced, and expect to continue to experience,
some quarter-to-quarter variability in production levels of our primary metals
products due to planned maintenance shutdowns of operations and other normal
planned actions. The current First Call consensus mean estimate for our adjusted net earnings
per share for 2004 is $3.78 on a diluted basis. Based upon the current First
Call mean forecast for the average LME cash nickel price for 2004, which we
understand to be $6.14 per pound, and our understanding of First Calls and
Reuters latest mean forecasts for 2004 for the prices for our other metal
products, we are comfortable with the current First Call consensus estimate for
2004 for our adjusted net earnings per share of $3.78, on a diluted basis. We
are not endorsing the First Calls mean forecasts for the LME cash nickel price
and First Calls and Reuters other benchmark metal prices for 2004. Our
policy continues to be that we do not publicly forecast where nickel and other
metal prices will be in the future given the historic volatility of these
prices and the level of economic uncertainty that currently exists in at least
some of our key geographic markets. The LME cash nickel price
averaged $6.29 per
pound ($13,861 per tonne) for the January 2  October 18, 2004 period. The LME cash
nickel price on October 18, 2004 was $6.10 per pound ($13,450 per tonne). -5-




---



##### 



The earnings per share consensus mean estimate above refers to an estimate for
adjusted net earnings and excludes certain adjustments that would be made in
the calculation of net earnings in accordance with Canadian GAAP. Since such
adjustments would include assumptions or forecasts relating to changes in the
Canadian-U.S. dollar exchange rate and other currency exchange rate changes and
other external factors that we do not believe we are in a position to predict
with any degree of certainty, we do not provide a reconciliation between any
adjusted net earnings estimate and a corresponding net earnings estimate in
accordance with Canadian GAAP. In terms of the current estimated sensitivity of our earnings per share to
changes in nickel prices, for every change of 10 cents, up or down, per pound
in our realized nickel price over a full year, our Canadian GAAP basic net
earnings per share (EPS) over a full year would change, up or down, by about 12
cents. As reflected in the table below, while our financial results are most
sensitive to changes in (1) the Canadian-U.S. dollar exchange rate given that a
substantial portion of our expenses are incurred in Canadian dollars and we
have substantial Canadian dollar-denominated liabilities and (2) nickel prices,
our results are also sensitive to changes in copper and other prices as well
as, on the cost side, changes in oil and natural gas prices and changes in our
share price given how we account for share appreciation rights granted in
connection with certain share options: ESTIMATES OF CURRENT 2004 SENSITIVITY OF EPS(1) TO CERTAIN
METALS PRICES AND OTHER CHANGES
OVER ONE YEAR (IN U.S.$)   Amount of Change(up or down)
    
    EPS Effect(1)Realized nickel price
    
    $    0.10
    /lb.
    
    $
    0.12Realized copper price
    
    0.10
    /lb.
    
    
    0.09Realized palladium price
    
    50.00
    /troy oz
    
    
    0.03Realized platinum price(2)
    
    50.00
    /troy oz
    
    
    0.03Realized cobalt price
    
    1.00
    /lb.
    
    
    0.01Cdn.-U.S. exchange rate(3)(4)
    
    
    0.01
    
    
    
    0.13Fuel oil price (West Texas Intermediate)(2)(4)
    
    1.00
    /bbl
    
    
    0.006Natural gas price(2)(4)
    
    0.10
    /MM BTU
    
    
    0.001Share appreciation rights(4)(5)
    
    
    1.00
    
    
    
    0.006
   (1)
    
    Canadian GAAP basic net earnings per share. Each sensitivity assumes
other factors are held constant.(2)
    
    Includes the impact of hedging activities as of September 30, 2004.(3)
    
    The EPS effect represents (a) $0.06 for a non-cash balance sheet
translation effect relating to Canadian dollar-denominated liabilities, (b)
$0.02 relating to accrued taxes for Canadian dollar currency translation
gains associated with U.S. dollar-denominated liabilities and (c) $0.05 for
operating cost translation effect.(4)
    
    Increases in these costs, exchange rates and our share price have a
negative effect on EPS.(5)
    
    Reflects the effect on EPS of a change in our common share price on our
expense accrual for share appreciation rights granted in connection with
certain share options.
   Our capital expenditures for our existing operations and growth projects are
also sensitive to changes in exchange rates depending upon the currency in
which such expenditures are incurred. We currently project that our total
capital expenditures for 2004 will be approximately $965 million. While we are still in the process of putting together our plan for 2005, we
currently expect that the following factors will affect 2005 production and
results. We did not have a scheduled maintenance shutdown at our Ontario
operations in 2004 but, consistent with our current plan to have such a
scheduled shutdown at these operations every -6-




---



##### 



eighteen months, we will have one in 2005. Such a shutdown would be expected
to reduce our annual nickel production by about 20 million pounds, our copper
production by about 25 million pounds and our PGMs production by about 35,000
troy ounces from levels at these operations if there were no shutdown. Assuming
a continuation of the current prices for oil and natural gas and expected
increases in electricity rates in Ontario for industrial users, our energy
costs are currently projected to increase in 2005 by about $0.10 per pound of
nickel to be produced. During the third quarter of 2004, lower rainfall in the
area of PT Incos operations has reduced water inflow to the dam reservoirs for
PT Incos hydroelectric facilities. If rainfall were to continue in 2005 at
the levels recently experienced, this development could reduce
hydroelectric power generation and, accordingly, adversely affect PT
Incos production for 2005. Commentary on Results for the Third Quarter of 2004 (Tabular amounts are in millions of U.S. dollars
except per share amounts) Results of Operations The following table summarizes our results in accordance with Canadian GAAP for
the periods indicated: Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2004
    
    2003
    
    2004
    
    2003(Restated)
    
    
    
    
    
    (Restated)Net sales
    
    $
    1,031
    
    
    $
    450
    
    
    $
    3,117
    
    
    $
    1,642Net earnings (loss)
    
    
    148
    
    
    
    (23
    )
    
    
    389
    
    
    
    74Net earnings (loss) per common share basic
    
    
    0.78
    
    
    
    (0.13
    )
    
    
    2.04
    
    
    
    0.26 diluted
    
    
    0.73
    
    
    
    (0.13
    )
    
    
    1.92
    
    
    
    0.26Cash provided by operating activities
    
    
    380
    
    
    
    19
    
    
    
    1,099
    
    
    
    2
 The significant increase in results of operations between the third quarter of
2004 and the third quarter of 2003 was primarily the result of the higher
realized prices for all of the metals produced by us as well as higher deliveries
for all of these metals. This was partially offset by the unfavourable effect
of higher nickel cash cost of sales before by-product credits and an unrealized
currency translation loss as discussed below. With respect to net earnings for the third quarter and first nine months of
2003, those results included a charge in respect of a three-month strike which
began on June 1, 2003 at our Ontario operations. The effect of certain of these items on our results of operations is set forth
under Reconciliation Between Adjusted Net Earnings and Net Earnings in
Accordance with Canadian GAAP above. Net sales Net sales increased substantially to $1,031 million and $3,117 million,
respectively, in the third quarter and first nine months of 2004, compared with
$450 million and $1,642 million for the same periods in 2003. This improvement
in net sales was primarily due to higher selling prices for all of the metals
we produced, particularly for nickel and copper, as well as higher deliveries
of Inco-source nickel, copper, cobalt and PGMs. Deliveries of Inco-source
nickel in the third quarter of 2004 increased by 51 per cent compared with the
third quarter of 2003 due to increased production at our Canadian and U.K.
operations as well as at PT Inco. -7-




---



##### 



Production for all metals for
the third quarter and first nine months of 2003 was adversely affected
by a three-month strike at our Ontario operations that began on June 1, 2003. Cost of sales and other expenses Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2004
    
    2003
    
    2004
    
    2003Nickel unit cash
cost of sales
beforeby-product
credits per pound
    
    $
    2.66
    
    
    $
    2.20
    
    
    $
    2.54
    
    
    $
    1.97Nickel unit cash
cost of sales after
by-product credits
per pound
    
    $
    2.30
    
    
    $
    2.26
    
    
    $
    2.22
    
    
    $
    2.04
 For the third quarter and
first nine months of 2004 compared with the
corresponding periods of 2003, the increase in nickel unit cash cost of sales
before by-product credits was principally due to the higher cost for, and
volumes of, purchased intermediates, the higher average Canadian dollar
exchange rate relative to the U.S. dollar exchange rate compared with
2003,
higher costs for heavy oil at PT Inco and higher earnings-based compensation
payments, partially offset by the absence of ramp-up costs which we incurred in
the third quarter of 2003 after the end of a strike at our Ontario operations,
and the cost reductions and related savings as discussed below. For the third quarter and
first nine months of 2004 compared with the
corresponding periods of 2003, the increase in nickel unit cash cost of sales
after by-product credits was due to higher unit cash cost of sales before
by-product credits, partially offset by higher by-product credits as a result
of higher realized selling prices for and higher deliveries of
certain by-products. We use purchased intermediates to increase processing capacity utilization at
our Canadian operations. While the cost of purchased intermediates is higher
than that for processing our own mine production and such cost increases as the
prevailing prices, LME cash nickel or other benchmark prices, on
which basis this
material is purchased by us increases, the price realizations are also higher,
resulting in margins on these purchases remaining relatively unchanged. A reconciliation of our nickel unit cash cost of sales before and after
by-product credits to cost of sales under Canadian GAAP is shown in the table
entitled Reconciliation of Nickel Unit Cash Cost of Sales to Canadian GAAP
Cost of Sales below. In the third quarter of 2004, we realized cost reductions and related savings
of about $20 million, bringing the total cost reductions and related savings
realized for the first nine months of 2004 to $44 million. We currently expect
to meet our goal of $63 million in cost reductions and related savings, with some of these reductions and related savings to be realized in early
2005. Nickel production increased to 53,365 tonnes (118 million pounds) and 170,622
tonnes (376 million pounds) in the third quarter and first nine months of 2004,
respectively, compared with 32,072 tonnes (71 million pounds) and 127,497
tonnes (281 million pounds) in the corresponding periods of 2003. The
increases primarily reflect higher production at our Canadian and U.K.
operations compared with the production for the third quarter of 2003 which was
negatively affected by the three-month strike at our Ontario operations that
began on June 1, 2003 and a difficult ramp-up of operations in September 2003
following the strike. PT Incos production increased by about 5 million pounds
during the first nine months of 2004 compared with the same period in 2003. -8-




---



##### 



Selling, general and administrative expenses Selling, general and administrative expenses increased by $13 million and $28
million in the third quarter and first nine months of 2004, respectively,
compared with the corresponding periods in 2003. These increases for both the
third quarter and first nine months of 2004 were due primarily to higher
expenses associated with share options and other awards under our corporate
incentive compensation programs, reflecting our higher share price
and improved earnings. Currency translation adjustments Currency translation adjustments represented primarily the effect of exchange
rate movements on the translation of Canadian dollar-denominated liabilities,
principally post-retirement benefits, accounts payable and certain deferred
income and mining taxes, into U.S. dollars. Unfavourable currency translation
adjustments were $62 million and $29 million in the third quarter and first
nine months of 2004, respectively, and were due to the strengthening of the
Canadian dollar as of September 30, 2004 relative to the U.S. dollar. The
Canadian  U.S. dollar exchange rate appreciated by six per cent during the
third quarter of 2004 and by two per cent during the first nine months of 2004. Income and mining taxes The effective tax rates for the third quarter and first nine months of 2004
were 35 per cent and 43 per cent, respectively, compared with the combined
statutory income and mining tax rate in Canada of 39.9 per cent. The lower
effective tax rate in the third quarter of 2004 was due principally to proportionately
higher earnings generated in lower tax rate jurisdictions. The higher tax rate for the first nine months of 2004 was
primarily due to the negligible tax relief recorded with respect to the $201
million non-cash impairment charge before minority interest and taxes,
recorded in the second quarter of 2004. This was partially offset by the impact of earnings
generated in lower tax rate jurisdictions. Cash Flows and Financial Condition Net cash provided by operating activities in the third quarter of 2004 was $380
million, compared with $19 million in the third quarter of 2003. The increase
in net cash provided by operating activities was primarily due to higher
earnings. Cash provided by operations for the first nine months of 2004 has
also increased given that a significant portion of income and mining taxes
payable in respect of the 2004 taxation year will not be paid until the first
quarter of 2005. Net cash used for investing activities increased to $247 million and $562
million in the third quarter and first nine months of 2004, respectively,
compared with $123 million and $400 million in the same periods of 2003.
Capital expenditures in the third quarter of 2004 were higher due to higher
capital spending for our Voiseys Bay project, at our Ontario operations as
compared with the strike-affected level for the third quarter and first nine
months of 2003, and at PT Inco, partially offset by lower capital expenditures
for our Goro project. During the first quarter of 2004, we used cash of
$28 million to acquire an additional two per cent of the issued and outstanding
shares of PT Inco from a shareholder, increasing our ownership of PT Inco to
approximately 61 per cent. At September 30, 2004, cash and cash equivalents were $869 million, up from
$418 million at December 31, 2003 and up from $774 million at June 30, 2004,
reflecting the cash provided -9-




---



##### 



from operating activities as discussed above. Total debt was $1,432 million at
September 30, 2004, compared with $1,512 million at December 31, 2003. Total
debt as a percentage of total debt plus shareholders equity was 25 per cent at
September 30, 2004, compared with 28 per cent at December 31, 2003. Under
Canadian GAAP, a substantial portion of our convertible debt is recorded as
equity and not debt. Accounting Changes Depreciation and depletion expense Effective January 1, 2004 on a retroactive basis, we changed the method by
which we calculate depreciation and depletion expense. Under the previous
method, we depleted mine development costs on a composite basis. Total
historical capitalized costs and estimated future development costs relating to
our estimated developed and undeveloped proven and probable ore reserves were
depleted using the unit-of-production method based on total estimated developed
and undeveloped proven and probable ore reserves in our twenty-year plan.
Under the revised method, depletion of the deferred mine development costs is
calculated on a unit-of-production basis over the estimated proven and probable
ore reserves which relate to the particular category of development, either
life of mine plan or area-specific. No future development costs are taken into
account in calculating the depletion charge. In addition, the depreciation
method for certain other assets of our 61 per cent owned subsidiary, PT Inco,
has been changed to a straight line basis to conform the depreciation method
used to the depreciation methods generally used for similar assets in our other
locations. Adoption of this change in accounting policy also removes a significant
difference that had existed between Canadian GAAP and United States GAAP with
respect to the effect on our consolidated financial statements. Depreciation
and depletion expense decreased by $27 million for the first nine months of
2003 as a result of this change. Generally accepted accounting principles Effective January 1, 2004, we adopted Canadian Institute of Chartered
Accountants (CICA) section 1100, Generally Accepted Accounting Principles.
CICA section 1100 describes what constitutes Canadian GAAP and its sources.
Adoption of this standard did not have a significant impact on our results of
operations or financial condition. Hedging Relationships Effective January 1, 2004, we adopted a new accounting guideline issued by the
CICA in respect of hedging relationships which provided guidance concerning
documentation and effectiveness testing for derivative contracts. Adoption of
this guideline did not have a significant impact on our results of operations
or financial condition. -10-




---



##### 



Access to Webcast of Third
Quarter 2004 Results and Goro Project Update Presentation to Investment
Community As previously announced, interested investors can listen to our presentation to
the investment community currently expected to cover (1) our third quarter 2004
financial and operating results and (2) an update on our Goro project in New
Caledonia, including the final results of Phase 2 of our Goro project review
and the status of the key milestones to be met in connection with our
decision to restart this project, on a live, listen-only basis, or access the
archival webcast or the recording of the presentation through the Internet or
by calling the toll-free telephone number in North America as indicated below. The presentation is scheduled for October 19, 2004, beginning at 4:30 p.m.
(Toronto time), and can be accessed by visiting the website of a third-party
webcasting service we will be using, Canada NewsWire Ltd., at
www.newswire.ca/webcast, at least five minutes before the start of the
presentation. Slides or other statistical information to be used for the
presentation can be accessed and will be available for online viewing through
www.newswire.ca/webcast on the event title or through our website,
www.inco.com, by clicking on the Latest Quarterly Webcast link on our
homepage. The archival webcast of the presentation can be accessed via the Internet
through www.newswire.ca/webcast. A recording of the presentation can be
listened to until 11:59 p.m. (Toronto time) on November 2, 2004 by dialling
1-800-558-5253 in North America and by entering the reservation number
21208377. This recording is also available outside North America by dialling
416-626-4100 and by entering the same reservation number. This news release contains forward-looking statements regarding the Companys
costs, its position as a low-cost producer of nickel, production levels for
nickel, copper and platinum-group metals for its fourth quarter and full year
2004 and for 2005 at its Canadian, Indonesian and other operations, nickel market conditions
and nickel demand and supply both globally and for certain markets and uses,
premiums realized on its metals prices, nickel unit cash cost of sales after
by-product credits, its financial results, including cash flow from operations,
cash generation, the sensitivity of financial results to changes in nickel and other metal
prices, exchange rates, energy and other costs and its common share price, cost
reduction and related savings objectives, construction, commissioning, initial
shipment and other schedules, capital costs and other aspects of its
Goro and Voiseys Bay projects, capital expenditures and hydroelectric power generation at PT Inco,
overall capital expenditures, tax payments, planned shutdowns at certain operations and other issues
and aspects relating to its business and operations. Inherent in those
statements are known and unknown risks, uncertainties and other factors well
beyond the Companys ability to control or predict. Actual results and
developments may differ materially from those contemplated by these statements
depending on, among others, such key factors as business and economic
conditions in the principal markets for the Companys products, the supply,
demand and prices for metals to be produced, purchased intermediates and
nickel-containing stainless steel scrap and other substitutes and competing
products for the primary metals and other products the Company produces,
developments concerning labour relations, the Companys deliveries, production
levels, production and other anticipated and unanticipated costs and expenses,
metals prices, premiums realized over LME cash and other benchmark prices, tax
benefits and charges, changes in tax legislation, hedging activities, the
Canadian-U.S. dollar and other exchange rates, changes in the Companys common
share price, the
capital costs, scope, schedule, and other key aspects of the Goro project, the
timing of receipt of all necessary permits and governmental, regulatory and
other approvals, and engineering and construction timetables, for the Voiseys
Bay and Goro projects and PT Inco's latest expansion project, the necessary financing plans and arrangements for, -11-




---



##### 



and joint venture, partner or similar investments and other agreements and
arrangements associated with, the Goro project, political unrest or instability
in countries such as Indonesia, risks involved in mining, processing and
exploration activities, market competition and other risk factors listed from
time to time in the Companys reports filed with the U.S. Securities and
Exchange Commission. The forward-looking statements included in this release
represent the Companys views as of the date of this release. While the Company
anticipates that subsequent events and developments may cause the Companys
views to change, the Company specifically disclaims any obligation to update
these forward-looking statements. These forward-looking statements should not
be relied upon as representing the Companys views as of any date subsequent to
the date of this release. October 19, 2004
IN 04/13 For further information: Media Relations:
    
    Steve Mitchell (416) 361-7950Investor Relations:
    
    Sandra Scott (416) 361-7758
 or www.inco.com -12-




---



##### 



Inco Limited Key Financial and Operating Statistics Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2004
    
    2003
    
    2004
    
    2003Average Realized PricesNickel(1)   per tonne
    
    $
    14,258
    
    
    $
    9,614
    
    
    $
    13,815
    
    
    $
    8,902 per pound
    
    
    6.47
    
    
    
    4.36
    
    
    
    6.27
    
    
    
    4.04Copper      per tonne
    
    
    2,821
    
    
    
    1,329
    
    
    
    2,802
    
    
    
    1,684 per pound
    
    
    1.28
    
    
    
    0.60
    
    
    
    1.27
    
    
    
    0.76(1) Including intermediatesLME Average Cash PricesNickel         per tonne
    
    
    13,998
    
    
    
    9,375
    
    
    
    13,747
    
    
    
    8,699 per pound
    
    
    6.35
    
    
    
    4.25
    
    
    
    6.24
    
    
    
    3.95Copper      per tonne
    
    
    2,851
    
    
    
    1,753
    
    
    
    2,790
    
    
    
    1,686 per pound
    
    
    1.29
    
    
    
    0.80
    
    
    
    1.27
    
    
    
    0.76DeliveriesNickel in all forms (tonnes) Inco-source
    
    
    53,850
    
    
    
    35,779
    
    
    
    167,914
    
    
    
    131,894 Purchased finished
    
    
    3,619
    
    
    
    8,531
    
    
    
    13,004
    
    
    
    23,49457,469
    
    
    
    44,310
    
    
    
    180,918
    
    
    
    155,388Copper (tonnes)
    
    
    35,070
    
    
    
    355
    
    
    
    95,190
    
    
    
    59,114Cobalt (tonnes)
    
    
    278
    
    
    
    85
    
    
    
    1,028
    
    
    
    680Platinum-group metals (in thousands of
troy ounces)
    
    
    117
    
    
    
    19
    
    
    
    339
    
    
    
    203Net Sales to Customers by Product (in millions)Primary nickel
    
    $
    819
    
    
    $
    426
    
    
    $
    2,499
    
    
    $
    1,383Copper
    
    
    99
    
    
    
    1
    
    
    
    267
    
    
    
    100Precious metals
    
    
    69
    
    
    
    9
    
    
    
    195
    
    
    
    103Other
    
    
    44
    
    
    
    14
    
    
    
    156
    
    
    
    56$
    1,031
    
    
    $
    450
    
    
    $
    3,117
    
    
    $
    1,642Nickel Production in all Forms (tonnes)
    
    
    53,365
    
    
    
    32,072
    
    
    
    170,622
    
    
    
    127,497Finished Nickel Inventories at end of
Period (tonnes)
    
    
    28,681
    
    
    
    18,304
    
    
    
    28,681
    
    
    
    18,304
 -13-




---



##### 



Inco Limited Reconciliation of Nickel Unit Cash Cost of Sales to Canadian GAAP Cost of Sales Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(in millions of U.S. dollars except where noted)
    
    2004
    
    2003
    
    2004
    
    2003Cost of sales and other expenses, excluding
depreciation and depletion
    
    $
    568
    
    
    $
    358
    
    
    $
    1,705
    
    
    $
    1,189By-product costs
    
    
    (148
    )
    
    
    (19
    )
    
    
    (425
    )
    
    
    (252
    )Purchased finished nickel
    
    
    (49
    )
    
    
    (78
    )
    
    
    (182
    )
    
    
    (202
    )Delivery expense
    
    
    (9
    )
    
    
    (5
    )
    
    
    (25
    )
    
    
    (17
    )Other businesses cost of sales
    
    
    (9
    )
    
    
    (6
    )
    
    
    (29
    )
    
    
    (18
    )Strike expense, excluding depreciation
    
    
    
    
    
    
    (59
    )
    
    
    
    
    
    
    (88
    )Non-cash items(1)
    
    
    (7
    )
    
    
    (3
    )
    
    
    (25
    )
    
    
    (14
    )Remediation, demolition and other related expenses
    
    
    (7
    )
    
    
    (5
    )
    
    
    (18
    )
    
    
    (18
    )Adjustments associated with affiliate transactions
    
    
    (23
    )
    
    
    (9
    )
    
    
    (64
    )
    
    
    (8
    )Other
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Nickel cash cost of sales before by-product credits(2)
    
    
    316
    
    
    
    174
    
    
    
    938
    
    
    
    573By-product net sales
    
    
    (191
    )
    
    
    (15
    )
    
    
    (541
    )
    
    
    (233
    )By-product costs
    
    
    148
    
    
    
    19
    
    
    
    425
    
    
    
    252Nickel cash cost of sales after by-product credits(2)
    
    $
    273
    
    
    $
    178
    
    
    $
    822
    
    
    $
    592Inco-source nickel deliveries (millions of pounds)
    
    
    119
    
    
    
    79
    
    
    
    370
    
    
    
    291Nickel unit cash cost of sales before by-product
credits per pound
    
    $
    2.66
    
    
    $
    2.20
    
    
    $
    2.54
    
    
    $
    1.97Nickel unit cash cost of sales before by-product
credits per tonne
    
    $
    5,864
    
    
    $
    4,851
    
    
    $
    5,600
    
    
    $
    4,344Nickel unit cash cost of sales after by-product
credits per pound
    
    $
    2.30
    
    
    $
    2.26
    
    
    $
    2.22
    
    
    $
    2.04Nickel unit cash cost of sales after by-product
credits per tonne
    
    $
    5,071
    
    
    $
    4,983
    
    
    $
    4,894
    
    
    $
    4,498
      (1)
    
    Post-retirement benefits other than pensions.(2)
    
    Nickel cash cost of sales before and after by-product credits includes costs
for both Inco-source and external feed. -14-




---



##### 



Inco Limited Consolidated Statement of Earnings (unaudited) For the Three Months Ended
    
    For the Nine Months EndedSeptember 30,
    
    September 30,(in millions of U.S. dollars except per share amounts)
    
    2004
    
    2003
    
    2004
    
    2003(Restated)
    
    
    
    
    
    (Restated)RevenuesNet sales
    
    $
    1,031
    
    
    $
    450
    
    
    $
    3,117
    
    
    $
    1,642Other income, net
    
    
    17
    
    
    
    20
    
    
    
    32
    
    
    
    611,048
    
    
    
    470
    
    
    
    3,149
    
    
    
    1,703Costs and expenses (income)Cost of sales and other expenses, excluding
depreciation and depletion
    
    
    568
    
    
    
    358
    
    
    
    1,705
    
    
    
    1,189Depreciation and depletion
    
    
    59
    
    
    
    53
    
    
    
    178
    
    
    
    166Selling, general and administrative
    
    
    57
    
    
    
    44
    
    
    
    132
    
    
    
    104Research and development
    
    
    6
    
    
    
    4
    
    
    
    22
    
    
    
    18Exploration
    
    
    7
    
    
    
    6
    
    
    
    19
    
    
    
    18Currency translation adjustments
    
    
    62
    
    
    
    6
    
    
    
    29
    
    
    
    156Interest expense
    
    
    6
    
    
    
    10
    
    
    
    20
    
    
    
    36Asset impairment charge
    
    
    
    
    
    
    
    
    
    
    201
    
    
    
    Goro project suspension
    
    
    1
    
    
    
    (8
    )
    
    
    (2
    )
    
    
    (2
    )766
    
    
    
    473
    
    
    
    2,304
    
    
    
    1,685Earnings (loss) before income and mining taxes
and minority interest
    
    
    282
    
    
    
    (3
    )
    
    
    845
    
    
    
    18Income and mining taxes
    
    
    100
    
    
    
    5
    
    
    
    366
    
    
    
    (94
    )Earnings (loss) before minority interest
    
    
    182
    
    
    
    (8
    )
    
    
    479
    
    
    
    112Minority interest
    
    
    34
    
    
    
    15
    
    
    
    90
    
    
    
    38Net earnings (loss)
    
    
    148
    
    
    
    (23
    )
    
    
    389
    
    
    
    74Accretion of convertible debt
    
    
    (2
    )
    
    
    (2
    )
    
    
    (6
    )
    
    
    (5
    )Dividends on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )Premium on redemption of preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15
    )Net earnings (loss) applicable to common shares
    
    $
    146
    
    
    $
    (25
    )
    
    $
    383
    
    
    $
    48Net earnings (loss) per common shareBasic
    
    $
    0.78
    
    
    $
    (0.13
    )
    
    $
    2.04
    
    
    $
    0.26Diluted
    
    $
    0.73
    
    
    $
    (0.13
    )
    
    $
    1.92
    
    
    $
    0.26
 -15-




---



##### 



Inco Limited Consolidated Balance Sheet (unaudited) September 30,
    
    December 31,(in millions of U.S. dollars)
    
    2004
    
    2003(Restated)ASSETSCurrent assetsCash and cash equivalents
    
    $
    869
    
    
    $
    418Accounts receivable
    
    
    565
    
    
    
    435Inventories
    
    
    812
    
    
    
    746Other
    
    
    136
    
    
    
    112Total current assets
    
    
    2,382
    
    
    
    1,711Property, plant and equipment
    
    
    7,251
    
    
    
    7,033Deferred charges and other assets
    
    
    371
    
    
    
    319Total assets
    
    $
    10,004
    
    
    $
    9,063LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesLong-term debt due within one year
    
    $
    101
    
    
    $
    103Accounts payable
    
    
    267
    
    
    
    253Accrued payrolls and benefits
    
    
    184
    
    
    
    165Other accrued liabilities
    
    
    412
    
    
    
    332Income and mining taxes payable
    
    
    339
    
    
    
    27Total current liabilities
    
    
    1,303
    
    
    
    880Deferred credits and other liabilitiesLong-term debt
    
    
    1,331
    
    
    
    1,409Deferred income and mining taxes
    
    
    1,785
    
    
    
    1,706Post-retirement benefits
    
    
    643
    
    
    
    603Asset retirement obligation
    
    
    145
    
    
    
    141Minority interest
    
    
    496
    
    
    
    442Total liabilities
    
    
    5,703
    
    
    
    5,181Shareholders equityConvertible debt
    
    
    615
    
    
    
    606Common shareholders equityCommon shares issued and outstanding 187,672,653
(2003  186,915,865 shares)
    
    
    2,877
    
    
    
    2,858Warrants
    
    
    62
    
    
    
    62Contributed surplus
    
    
    570
    
    
    
    562Retained earnings (deficit)
    
    
    177
    
    
    
    (206
    )3,686
    
    
    
    3,276Total shareholders equity
    
    
    4,301
    
    
    
    3,882Total liabilities and shareholders equity
    
    $
    10,004
    
    
    $
    9,063
 -16-




---



##### 



Inco Limited Consolidated Statement of Cash Flows (unaudited) For the Three Months Ended
    
    For the Nine Months EndedSeptember 30,
    
    September 30,(in millions of U.S. dollars)
    
    2004
    
    2003
    
    2004
    
    2003(Restated)
    
    
    
    
    
    (Restated)Operating activitiesEarnings (loss) before minority interest
    
    $
    182
    
    
    $
    (8
    )
    
    $
    479
    
    
    $
    112Charges not affecting cashDepreciation and depletion
    
    
    59
    
    
    
    53
    
    
    
    178
    
    
    
    166Deferred income and mining taxes
    
    
    3
    
    
    
    3
    
    
    
    45
    
    
    
    (49
    )Asset impairment charge
    
    
    
    
    
    
    
    
    
    
    201
    
    
    
    Other
    
    
    53
    
    
    
    1
    
    
    
    61
    
    
    
    73Decrease (increase) in non-cash working
capital related to operationsAccounts receivable
    
    
    (61
    )
    
    
    10
    
    
    
    (115
    )
    
    
    (17
    )Inventories
    
    
    27
    
    
    
    (39
    )
    
    
    (66
    )
    
    
    (89
    )Accounts payable and accrued liabilities
    
    
    29
    
    
    
    3
    
    
    
    47
    
    
    
    (50
    )Income and mining taxes payable
    
    
    79
    
    
    
    24
    
    
    
    313
    
    
    
    (138
    )Other
    
    
    23
    
    
    
    (15
    )
    
    
    (20
    )
    
    
    (18
    )Other
    
    
    (14
    )
    
    
    (13
    )
    
    
    (24
    )
    
    
    12Net cash provided by operating activities
    
    
    380
    
    
    
    19
    
    
    
    1,099
    
    
    
    2Investing activitiesCapital expenditures
    
    
    (248
    )
    
    
    (126
    )
    
    
    (543
    )
    
    
    (417
    )Other
    
    
    1
    
    
    
    3
    
    
    
    (19
    )
    
    
    17Net cash used for investing activities
    
    
    (247
    )
    
    
    (123
    )
    
    
    (562
    )
    
    
    (400
    )Financing activitiesRepayments of long-term debt
    
    
    (42
    )
    
    
    (53
    )
    
    
    (90
    )
    
    
    (269
    )Long-term borrowings
    
    
    
    
    
    
    308
    
    
    
    
    
    
    
    308Convertible debt issued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    470Common shares issued
    
    
    4
    
    
    
    23
    
    
    
    18
    
    
    
    27Preferred shares redeemed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (487
    )Preferred dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )Dividends paid to minority interest
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    (2
    )Other
    
    
    
    
    
    
    (2
    )
    
    
    1
    
    
    
    (5
    )Net cash provided by (used for) financing
activities
    
    
    (38
    )
    
    
    276
    
    
    
    (86
    )
    
    
    36Net increase (decrease) in cash and cash
equivalents
    
    
    95
    
    
    
    172
    
    
    
    451
    
    
    
    (362
    )Cash and cash equivalents at beginning of
period
    
    
    774
    
    
    
    553
    
    
    
    418
    
    
    
    1,087Cash and cash equivalents at end of period
    
    $
    869
    
    
    $
    725
    
    
    $
    869
    
    
    $
    725
 -17-