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Gold/Mining/Energy : Donner Minerals (DML.V) -- Ignore unavailable to you. Want to Upgrade?

To: Ed Pakstas who wrote (1054)	11/15/1997 9:22:00 PM
From: GOLDIGER	Read Replies (1) \| Respond to of 11676

Ed, Inco LTD. Saturday, November 15, 1997 Weak nickel demand may torpedo Voisey's Bay timetable By PAUL BAGNELL Mining Reporter The Financial Post Doubts are growing among analysts that Inco Ltd. can bring its huge Voisey's Bay nickel project into full production as an already sluggish nickel market faces the startup of new mines. Inco is meeting analysts on Tuesday in Toronto and several say they want the company to clarify its plans. The company's shares (N/TSE) have declined to their lowest level in more than four years. They closed Friday at $25.75, down 35›. Inco won the massive nickel-copper-cobalt deposit in April 1996, paying $4.3 billion. Moving Voisey's Bay toward production, however, has proved difficult. In September, the company said it had given up plans to start production by late 1999. It blamed slow progress in getting environmental approval and negotiations with two native groups with historic claims to the area of northern Labrador. The mining giant said it would review aspects of the project, now slated to begin in late 2000, and make its decisions known later this year. Many observers wonder if Inco will scale down its annual production estimate of 270 million pounds of nickel - about 13% of current world demand. Some believe it can't put that much nickel on the market without dousing the metal's price. "I just don't think that's do-able," said Manford Mallory of Research Capital Corp. in Toronto. "Unless they want to shut down Sudbury, they can't push that [volume of nickel] at the market. They've got to address that issue." "I think it makes more sense for Voisey's Bay to come on line in two phases," said Vahid Fathi of ABN Amro Chicago Corp. The delays have given Australian nickel producers a chance to lock up customers for three new mines there. "A good question for management will be: What is Inco's response to this window of opportunity that has been created for other producers?" But curtailing annual production will also reduce the project's annual cash flows, eroding it's value, said Ray Goldie of Deutsche Morgan Grenfell Inc. in Toronto. Analysts are also keen to hear Inco's latest analysis of the state of the world market. For most of 1997, slumping prices have been blamed on a flood of cheap nickel from Russia and a large volume of scrap stainless steel being used by stainless steel makers instead of nickel. Nickel closed Friday on the London Metal Exchange at US$2.82 a pound, close to its 12-month low of US$2.74. Inco, however, has insisted demand remains strong and growing. However, some analysts say it may not be as robust as Inco believes. "Will they bite the bullet and say there really is a surplus of nickel and not a deficit, as they've been saying all year?" asked Goldie. "At the end of the day, the key is demand," said Fathi. "If demand doesn't shape up, there is definitely a cloud of uncertainty on the horizon for nickel." A slowdown in the U.S. economy, he said, could deal a serious blow to demand. GOLDIGER.