Falconbridge Limited
TSX : FAL.LV
NYSE : FAL

Falconbridge Limited

October 25, 2005 08:55 ET

Falconbridge Reports 2005 Third Quarter Net Income of US$214 Million

TORONTO, ONTARIO--(CCNMatthews - Oct. 25, 2005) -

Earnings Per Share Grows 47% Versus Prior Year

ALL NUMBERS IN U.S. DOLLARS UNLESS OTHERWISE NOTED

Falconbridge Limited (TSX:FAL.LV)(NYSE:FAL) today reported net income of $214 million (basic earnings per share of $0.57 and diluted earnings per share of $0.56) for the third quarter of 2005. This compares with net income of $118 million (basic earnings per share of $0.39 and diluted earnings per share of $0.38) for the third quarter of 2004.

(Note: 2004 financial results, as presented in this press release, represent the consolidated results of Noranda Inc., which was renamed Falconbridge Limited after the amalgamation on June 30, 2005.)

COMMENTARY

"Falconbridge's financial results this quarter continue to reflect the favourable base metal fundamentals and the higher refined metals output achieved at our operations," said Derek Pannell, Falconbridge's Chief Executive Officer. "The outlook for copper, zinc and aluminum prices remain well supported, while the nickel market is undergoing a temporary adjustment as demand catches up with new stainless steel supply. The Company also continued to advance its copper and nickel growth initiatives during the quarter."

"On October 11, 2005 we announced that Falconbridge's Board of Directors has unanimously endorsed a friendly-acquisition offer from Inco Limited," Mr. Pannell continued. "We believe the combination of Inco and Falconbridge offers the best value for shareholders, in the near and long term. Bringing together these two great organizations would create a premier global nickel and copper mining and metals company."



THIRD QUARTER 2005 HIGHLIGHTS
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Financial Results and Position
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$ millions, except per share Q3 Q3 Y-O-Y YTD YTD Y-O-Y
information 2005 2004 Change 2005 2004 Change
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Revenues 2,006 1,703 18% 6,074 5,030 21%
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Income generated by operating
Assets(a) 434 365 19% 1,353 1,010 34%
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Net income 214 118 81% 592 378 57%
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Basic earnings per common
share 0.57 0.39 46% 1.76 1.24 42%
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Diluted earnings per common
share 0.56 0.38 47% 1.74 1.23 41%
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(a) Defined as earnings before net interest, corporate and general administration, research, development, exploration, minority interest, taxes, and other income

- Achieved an 81% increase in year-over-year quarterly net income to $214 million

- Third quarter 2005 realized prices were higher (vs. third quarter 2004) for all metals: copper 28%, nickel 4%, zinc 20%, aluminum 7%; partially offset by increased energy costs and a weakened U.S. dollar

- Repaid approximately $1 billion in debt including $400 million of maturing debentures and $500 million in Junior Preference Shares

Production, Operations & Projects

- Increased output of copper anodes, copper cathodes and refined nickel by 35%, 19% and 22%, respectively, in third quarter year over year

- Copper cash costs decreased to $0.24/lb. from $0.43/lb. during the same quarter last year

- Continued strong performance at Altornorte smelter, Lomas Bayas mine and Antamina mine where significant improvements were achieved on molybdenum recoveries

- Horne copper smelter and CCR refinery now operating close to capacity; resulting annualized cathode production rate will be 370,000 tonnes at CCR by 2006

- Began commercial tolling of molybdenum concentrates through recently completed roaster at Altonorte smelter

- Collahuasi's molybdenum recovery circuit was 90% complete quarter end; September start-up was well ahead of schedule

- Experienced lower head grades, and material handling problems at Collahuasi that led to lower mined copper production

- Strike began at Kidd Creek Metallurgical operations on October 1, 2005; copper and zinc refineries were previously scheduled for annual maintenance shutdowns, mine and mill production unaffected

- No major hurricane damage suffered by Gramercy alumina operations in Louisiana or St. Ann bauxite operations in Jamaica; slightly lower alumina output, natural gas costs adversely affected

- Advanced Nickel Rim South project main shaft sinking to 767 metres and vent shaft sinking to 219 metres

- Initiated scoping study at Kabanga nickel deposit in Tanzania; initial drilling is 66% complete and initial engineering studies are 48% complete

- Completed 27 Six Sigma projects during quarter for total annualized benefit of $7.1 million at an average savings value of $263,000 per project

FALCONBRIDGE ENDORSES INCO OFFER

On October 11, 2005, Inco Limited announced a friendly takeover bid for all outstanding shares of Falconbridge. The offer is comprised of part cash and part Inco common shares, which when prorated would provide Cdn$7.50 and 0.524 Inco shares for each Falconbridge share. Both Boards of Directors unanimously endorsed the acquisition offer and the Falconbridge Board recommended the Company's shareholders tender their shares to the offer.

The combined organization, which will be known as Inco Limited, will be one of the world's premier mining and metals companies. It will be the world's largest producer of nickel and eighth-largest producer of copper and will also operate integrated zinc and aluminum businesses. The new company will have one of the mining industry's most attractive portfolios of low-cost, profitable growth projects. The new Inco would benefit from estimated annual synergies of approximately $350 million.

The Inco Limited Offer to Purchase all the outstanding common shares of Falconbridge Limited, together with the Directors' Circular under which the Falconbridge Board of Directors recommends acceptance of the Offer, were filed with regulators and mailed to the shareholders of Falconbridge Monday, October 24, 2005.

FINANCIAL RESULTS

Third Quarter 2005

Revenues for the third quarter of 2005 were $2.0 billion, 18% higher than revenues of $1.7 billion in the same period of 2004. The increase was mainly due to higher realized metal prices and copper and nickel sales volumes, increased revenue contribution from by-product molybdenum credits and improved copper concentrate treatment and refining terms. Business unit revenues were 24% higher for copper, 23% higher for nickel, 2% higher for zinc and 11% higher for aluminum.

Operating expenses totaled $1.57 billion in the third quarter, 17% higher than $1.34 billion in the same period last year. Cost of operations increased to $617 million from $535 million in the third quarter of 2004 due to the higher levels of copper anode and cathode production, increased refined nickel production, higher energy and supplies/consumables costs, and the impact of a weaker U.S. dollar on operating costs at all Canadian and South American operations. The average value of the Canadian dollar increased 8% to US$0.83 versus US$0.77 during the third quarter of 2004. Included in the cost of operations was a charge of $19 million related to the fair market value increments assumed as a result of the merger of Noranda and Falconbridge at the end of June 2005.

The value of raw materials purchases was $815 million, 19% higher than $684 million in 2004 due to higher metal prices and increased custom feed processing at the Nikkelverk nickel refinery and at all copper smelting and refining operations. Higher purchased raw material values are recovered at the time of sale of the metals contained in the materials treated.

Depreciation, amortization and accretion expense increased to $140 million from $119 million a year ago, with $8 million of the increase being attributable to the amortization of the fair value increment related to the purchase of the Falconbridge minority shareholders' interest and the resulting increase in the book value of the assets acquired. Net interest expense increased to $50 million from $35 million in the third quarter of last year due to the impact of new junior preferred share liabilities issued pursuant to the issuer bid completed in early May 2005. Interest expense included a one-time early redemption premium of $5 million paid to the holders at the time of the partial redemption of the junior preferred shares in August, 2005. Minority interest in earnings of subsidiaries decreased to $5 million from $76 million, largely as a result of the elimination of the former Falconbridge minority share ownership. Tax expenses recorded increased to $136 million from $98 million during the third quarter of 2004, due to the overall increase in profitability.

Income generated by operating assets for the third quarter was $434 million, 19% higher than $365 million in the third quarter of 2004. Income from operating assets increased 27% to $294 million in the copper business, decreased 12% to $128 million in the nickel business, increased to $5 million in the zinc business and decreased 25% to $15 million in the aluminum business.

Net income totaled $214 million, or $0.57 per basic common share and $0.56 per diluted common share for the third quarter 2005, 81% higher than net income of $118 million or $0.39 per basic and $0.38 per diluted common share in the same period of 2004. Higher net income reflects higher realized metal prices, significantly higher Antamina molybdenum concentrate sales and higher treatment and refining charges received at copper smelters and refineries. The third quarter is normally the quarter for plant shutdowns. This year was no exception, but the temporary shutdowns at Gramercy and Timmins intensified their impact.

Consolidated assets totaled $11.7 billion as at September 30, 2005, compared with $9.6 billion at the end of 2004. The increase is primarily due to the increase in carrying values of assets in recognition of the value paid by Noranda to the former Falconbridge minority shareholders and the investment of additional capital in advancing brownfield expansion development projects.

LIQUIDITY AND CAPITAL INITIATIVES

Falconbridge maintains long-term credit arrangements and relationships with a variety of financial institutions and investors in order to facilitate its ongoing access to domestic and international financial markets to meet its funding requirements. Falconbridge's future financial requirements related to debt maturities, operating costs, the projects currently under development and other capital investments will be funded primarily from a combination of existing cash balances, committed bank lines, operating cash flows, project financing and new borrowings. The Company does not currently anticipate issuing additional common shares to meet these needs.

Following its amalgamation, the Company entered into a series of revolving credit arrangements with Canadian and international banks. These five-year bank facilities total $780 million and replace all previous committed bank lines and remain essentially undrawn. At the time of the completion of the Noranda and Falconbridge merger, credit ratings were reaffirmed by S&P (BBB-, stable), Moody's (Baa3, stable) and DBRS (BBB High, stable). This allowed the Company to issue $500 million of new longterm debt; $250 million for 12 years at 5.50% and $250 million for 30 years at 6.20%. Following the announcement of Inco's offer to acquire Falconbridge, the Company's ratings were affirmed again by the rating agencies. During the third quarter the Company redeemed $500 million of Junior Preferred Shares and retired $400 million of long-term debentures that were maturing.

Cash generated from operations, before the net change in accounts receivables, payables and inventories, was $392 million during the third quarter of 2005. Total liquidity remains strong, with over $1.5 billion of cash and undrawn lines at September 30, 2005. Total debt was $3.9 billion at the end of the period. Following the completion of the merger of Noranda and Falconbridge, the net-debt-to-capitalization ratio decreased to 39.9% from 48% proforma at year-end 2004 as previously reported.

Investments in new production capacity such as the Nickel Rim South and Koniambo nickel projects totaled $112 million during the third quarter. For 2005, the Company's projected capital investments are approximately $193 million for sustaining capital expenditures and approximately $488 million in new investments.

REVIEW OF OPERATIONS

Copper Business Unit



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Q3 Q3 Y-O-Y Nine Nine Y-O-Y
2005 2004 Change Months Months Change
(%) 2005 2004 (%)
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Production:
mined copper (MT) 99,900 120,400 (17%) 305,700 312,900 (2.3%)
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refined copper (MT) 138,000 116,700 18% 384,300 357,800 7.4%
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mined zinc (MT) 52,800 43,400 22% 160,600 120,000 34%
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refined zinc (MT) 31,700 23,200 37% 105,200 87,600 20%
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Sales:
contained
copper (MT) 245,900 212,000 16% 662,700 644,200 3%
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contained zinc (MT) 51,200 48,100 6% 166,900 142,500 17%
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Revenues ($ millions) 1,133 913 24% 3,145 2,595 21%
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Realized copper
price ($/lb.) 1.72 1.34 28% 1.58 1.25 26%
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Operating costs
($ millions) 839 681 23% 2,418 2,092 16%
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Cash costs
($/lb. of copper) 0.24 0.43 (44%) 0.30 0.36 (17%)
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Income from operating
assets
($ millions) 294 232 27% 727 503 45%
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Revenues

For the third quarter of 2005, copper business revenues increased 24% to $1,133 million from $913 million in the third quarter of 2004, reflecting higher realized copper, zinc and molybdenum prices. Copper sales volumes totaled 245,900 tonnes, up 16% from the same quarter in 2004, as output from all copper smelters and refineries increased during the quarter. Sales of by-product zinc volumes totaled 51,200 tonnes versus 48,100 tonnes during the third quarter of 2004.

Copper revenues were higher as the realized copper price of $1.72/lb. increased by 28% in the quarter compared to $1.34/lb. realized in the same period in 2004. The benefit of higher copper prices was partially offset by lower copper production volumes at the Collahuasi and Antamina mines. Also contributing to copper group revenues was increased sales of by-product contained zinc from Antamina and Kidd Creek as well as increased sales of by-product molybdenum concentrate from Antamina. Falconbridge's share of the contained molybdenum sales totaled 538 tonnes during the third quarter of 2005 versus 160 tonnes during the same period last year, for a revenue contribution of $38 million.

Costs

Copper business operating costs increased to $839 million from $681 million in the third quarter of 2004, due mostly to the impact of higher prices on purchased raw materials. The cost of operations increased to $241 million from $209 million in the same period last year as a result of the impact of a weaker U.S. dollar on Canadian and South American operating costs and higher energy and supply costs.

The value of raw materials purchased increased to $532 million from $412 million in the third quarter of 2004 due to a combination of increased levels of throughput at Altonorte, Kidd Creek, Horne and CCR and the higher cost of concentrate related to the higher copper price. Higher purchased raw material values are recovered at the time of sale of the metals contained in that material.

The operating cash cost of producing a pound of copper in the third quarter of 2005 decreased to $0.24/lb. from $0.43/lb. in the third quarter of 2004, due to beneficial effect of higher by-product credits, somewhat offset by lower mine production volumes.

Income generated from operating assets

Operating income for the copper business in the third quarter of 2005 increased 27% to $294 million from $232 million a year ago as a result of higher copper, zinc and molybdenum prices, which more than offset lower mine production. Operating income also benefited from higher treatment and refining charges on third-party feeds and increased throughput at each copper smelter and refinery. Partially offsetting the stronger revenues were increased costs resulting from the impact of a weaker U.S. dollar on operating costs.

Production

During the third quarter of 2005, copper mine production from Canadian and South American operations totaled 99,900 tonnes, compared to 120,400 tonnes a year ago. By-product zinc in concentrate production was 22% higher at 52,800 tonnes versus 43,400 tonnes in the third quarter of 2004. Higher by-product zinc mine production was recorded at Antamina (up 22% to 18,600 tonnes) and at Kidd Creek (up 30% to 33,300 tonnes).

At Antamina, copper-in-concentrate production was 29,225 tonnes, a decrease of 6% from the same quarter in 2004. Lower mill throughput due to harder ore processing was partially offset by higher copper recoveries (90.1% vs. 87.1%). Partially offsetting lower copper output at Antamina were richer zinc grades. Copper production was unchanged at the Lomas Bayas mine compared to the same quarter last year. Kidd Creek mine copper production was 29% higher at 11,000 tonnes due to higher copper head grades and mill throughput.

At the Collahuasi mine, the Company's share of production totaled 44,000 tonnes versus 65,100 tonnes in the same quarter a year ago. Production was lower primarily due to lower head grades (0.98% vs. 1.49%) and lower mill throughput, associated mostly with material handling problems.

At the Altonorte smelter, copper anode production of 79,500 tonnes was 41% higher than the same period during the previous year due to improved operations. Third quarter 2004 Altonorte production was reduced following a fire at the concentrator dryer.

Refined copper production was 138,000 tonnes in the third quarter of 2005 versus 116,700 tonnes in the third quarter of 2004. Kidd Creek refinery production was up 12% to 34,800 tonnes due to higher mine production and increased custom feed processing. The CCR refinery cathode production increased to 80,900 tonnes during the third quarter from 63,200 tonnes in the same quarter a year ago, as a result of increased anode production at the Horne smelter providing increased feed.

Other Developments

By the end of the third quarter, the Collahuasi mine achieved the mechanical completion of the new molybdenum recovery plant. The plant will begin processing molybdenum concentrates in the month of October.

During the second quarter, the Altonorte copper smelter in Chile began the tolling of molybdenum concentrates. The $6-million project was completed on time and on budget. During the third quarter, 2,143 tonnes of molybdenum concentrate was treated.

Work continued at the Horne smelter at achieving full capacity utilization. Production is expected to increase from 140,000 tonnes to a rate of 170,000 tonnes per year by 2006.

In June 2005, the Company announced that it will invest in the CCR refinery in Montreal-East, Quebec, as part of a program to increase production to 370,000 tonnes per year of copper cathodes from the less than 300,000 tonnes per year produced currently. The higher treatment rates include the processing of increased anode output from the Horne smelter and the processing of Inco's Copper Cliff refinery anodes that are currently refined in Sudbury. The refining agreement with Inco was announced in June 2005 and is set to begin in 2006 with the capital project at CCR planned to be completed by May 1, 2006.

Nickel Business Unit



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Q3 Q3 Y-O-Y Nine Nine Y-O-Y
2005 2004 Change Months Months Change
(%) 2005 2004 (%)
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Production:
mined nickel (MT) 20,300 21,500 (6%) 61,500 59,700 3%
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refined nickel (MT) 28,600 23,400 22% 85,400 73,300 17%
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mined copper (MT) 9,500 8,600 10% 27,600 23,400 18%
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Sales:
contained
nickel (MT) 26,400 21,700 22% 82,900 72,400 15%
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contained
copper (MT) 14,800 13,900 6% 45,800 38,500 19%
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Revenues ($ millions) 512 417 23% 1,657 1,329 25%
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Realized nickel
price ($/lb.) 6.78 6.54 4% 7.15 6.39 12%
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Operating costs
($ millions) 384 271 42% 1,135 860 32%
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Cash costs
($/lb. of nickel) 3.40 3.02 13% 3.30 2.86 15%
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Income from operating
assets ($ millions) 128 146 (12%) 522 469 11%
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Revenues

For the third quarter of 2005, nickel business revenues of $512 million increased from $417 million in the third quarter of 2004. Nickel sales volumes increased 22% to 26,400 tonnes from 21,700 tonnes in the third quarter of 2004. By-product copper sales volumes of 14,800 tonnes increased by 6% from 13,900 tonnes a year.

Integrated Nickel Operations (INO) sales volumes of refined nickel increased 40% to 21,600 tonnes from 15,400 tonnes in the third quarter of 2004. At Falcondo, ferronickel sales volumes decreased by 23% to 4,800 tonnes from 6,200 tonnes in the third quarter of 2004, reflecting destocking that has taken place in the stainless steel market. Cobalt sales of 919 tonnes in the quarter increased by 11% from the same quarter in 2004. Precious metals revenues increased by $8 million in the third quarter of 2005 compared to the same period in 2004.

Realized nickel prices of $6.78/lb. increased by 4% in the quarter compared with $6.54/lb. in the corresponding period in 2004. Realized ferronickel prices of $7.03/lb. increased by 8% in the quarter, compared with $6.49/lb. in the same period in 2004.

Costs

Nickel business operating costs increased to $384 million from $271 million in the third quarter of 2004. Cost of operations increased to $184 million from $137 million in the same period last year, reflecting new production costs relating to the output from the Montcalm mine, a net sales increase from other mines and increased oil purchase costs at Falcondo. Falcondo's average oil costs rose from $35 per barrel in the third quarter of 2004 to $55 per barrel in the most recent quarter, an increase of 57%. Total nickel operations energy costs increased $22 million versus the same quarter last year.

The value of raw materials purchased increased to $156 million from $109 million in the third quarter of 2004 as the increase in metal prices impacted the cost of feed acquisition and due to additional sales volumes of custom feeds. Higher purchased raw material values are recovered at the time of sale of the metals contained in that material.

The operating cash cost per pound of mined nickel for the nickel business (including INO and Falcondo) was $3.40 in the third quarter of 2005, compared with $3.02 for the same period in 2004. The operating cash cost of producing a pound of nickel from INO mines was $2.69, unchanged from the corresponding period in 2004. The impact of the stronger Canadian dollar on operating costs at the Canadian operations and higher energy costs was offset by higher by-product credits and increased mine production. Falcondo's operating cash cost per pound of ferronickel increased by 31% in the third quarter of 2005 to $4.70/lb., due mostly to the increase in oil prices. At Falcondo, oil is used to fuel the on-site power plant.

Income generated by operating assets

Third quarter operating income for the nickel business totaled $128 million, compared to $146 million in the third quarter of 2004. The $18 million decrease was mainly due to the impact of higher costs of operations, including higher energy costs and costs of raw materials. Higher costs offset the beneficial impact of slightly higher prices and higher sales volumes during the quarter versus the same period a year ago.

Production

Total refined nickel production increased 22% to 28,600 tonnes during the quarter versus 23,400 tonnes during the same period in 2004. Total mined nickel production was 1,200 tonnes lower at 20,300 tonnes.

Sudbury mines production was 4,100 tonnes of nickel and 6,200 tonnes of copper during the third quarter of 2005, compared with 6,800 tonnes of nickel and 6,600 tonnes of copper in the third quarter of 2004. Sudbury mine production was lower than the corresponding quarter in the previous year due to problems with a hoist at the Fraser mine and challenging ground conditions at the Thayer Lindsley mine. Grades were lower because of changes in stope sequencing. At Raglan, nickel in concentrate production in the quarter was 6,400 tonnes and copper production was 1,800 tonnes, compared with 7,000 tonnes of nickel and 1,800 tonnes of copper in 2004. The conversion of the Raglan mill to incorporate semi-autogenous grinding will occur in the fourth quarter of 2005. In its third full quarter after achieving commercial production, the Montcalm mine produced 2,600 tonnes of nickel and 1,600 tonnes of copper.

At the Sudbury smelter, nickel in matte production in the third quarter of 2005 increased to 14,100 tonnes from 8,600 tonnes in the same period of 2004, as a result of the treatment of higher concentrate tonnages (due to a longer maintenance/vacation shutdown in 2004) with lower feed grades.

At the Nikkelverk refinery, nickel production was 21,400 tonnes in the third quarter of 2005, compared to 16,000 tonnes in the same period in 2004.

In the third quarter of 2005, Falcondo produced 7,200 tonnes of nickel in ferronickel, compared with 7,400 tonnes in the third quarter of 2004.

Zinc Business Unit



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Q3 Q3 Y-O-Y Nine Nine Y-O-Y
2005 2004 Change Months Months Change
(%) 2005 2004 (%)
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Production:
mined zinc (MT) 67,200 97,800 (31%) 206,300 292,100 (29%)
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refined zinc (MT)(1) 17,000 17,700 (4%) 50,900 52,500 (3%)
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mined lead (MT) 19,300 17,400 11% 58,700 54,800 7%
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refined lead (MT) 7,700 4,500 71% 52,200 57,900 (10%)
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Sales:
contained zinc
(MT)(2) 63,800 82,600 (23%) 179,600 227,700 (21%)
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contained lead (MT) 10,100 9,600 5% 54,200 60,100 (10%)
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Revenues ($ millions) 103 101 2% 349 296 18%
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Realized zinc
price ($/lb.) 0.60 0.50 20% 0.60 0.51 18%
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Operating costs
($ millions) 98 104 (6%) 313 287 9%
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Cash costs
($/lb. of zinc) 0.38 0.28 36% 0.39 0.32 22%
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Income from operating
assets
($ millions) 5 (3) 36 9
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(1) 25% of CEZ refinery refined zinc
(2) Brunswick mine concentrate contained zinc


Revenues

Zinc business revenues increased to $103 million, slightly higher than the $101 million recorded during the third quarter of 2004. The increased revenue was due to higher prices realized for zinc and other by-products. The average realized price per pound of zinc during the third quarter was $0.60/lb., an increase of 20% compared to $0.50/lb. in the same period last year. The average realized price per pound of refined lead during the third quarter was $0.46/lb., versus $0.45/lb. in the same period last year. Realized silver prices increased to $7.09 per ounce from $6.45 per ounce in the same quarter a year ago.

In the third quarter of 2005, sales volumes of zinc-in-concentrates decreased 23% to 63,800 tonnes from 82,600 tonnes in the second quarter of 2004, while third quarter 2005 lead metal sales increased to 10,100 tonnes from 9,600 tonnes in the same period a year ago. Lower zinc sales volumes reflect the closure of the Bell Allard mine in October 2004.

Costs

Zinc business operating expenses decreased to $98 million from $104 million in the third quarter of 2004. The value of raw materials purchased increased to $41 million from $38 million in the third quarter of 2004.

The operating cash cost per pound of mined zinc was $0.38/lb. in the third quarter of 2005, an increase of 36% from $0.28/lb. for the same period in 2004. The increase is primarily due to a stronger Canadian dollar, higher energy costs, higher consumables costs, higher freight charges and also reflects the loss of production from the Bell Allard mine, which closed in October 2004.

Income generated by operating assets

The third quarter 2005 operating income of the zinc business was $5 million, compared with a loss of $3 million for the third quarter of 2004. The $8 million improvement resulted from higher metal prices and decreased depreciation and amortization charges, which were partially offset by the impact of lower sales volumes and an unfavourable impact on costs due to the foreign exchange variance caused by the strengthening of the Canadian dollar.

Production

Contained zinc production was 67,200 tonnes in the third quarter of 2005, compared to 97,800 tonnes in the same period in 2004. The decrease in production is primarily attributable to the closure of the Bell Allard mine in October 2004. Falconbridge's share of refined zinc production at the Noranda Income Fund CEZ Refinery totaled 17,000 tonnes, versus 17,700 tonnes during the third quarter of 2004. By-product copper in concentrate production decreased to 1,700 tonnes from 3,600 tonnes during the third quarter of 2004, primarily due to the loss of production from the closed Bell Allard mine.

Lead metal production at the Brunswick smelter was 7,700 tonnes in the third quarter of 2005 compared to 4,500 tonnes in the same period in 2004. The increase in production is primarily due to a shorter seasonal shutdown in 2005.

Aluminum Business Unit



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Q3 Q3 Y-O-Y Nine Nine Y-O-Y
2005 2004 Change Months Months Change
(%) 2005 2004 (%)
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Production:
primary (MT) 60,200 62,300 (3%) 183,300 185,200 (1%)
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Sales:
primary (MT) 60,900 60,900 nil 184,600 187,300 (1%)
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Shipments:
fabricated (MT) 45,500 43,700 4% 134,700 131,800 2%
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Revenues ($ millions) 259 233 11% 833 678 23%
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Realized aluminum price
($/lb.) 0.86 0.84 2% 0.90 0.82 10%
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Operating costs
($ millions) 244 213 15% 748 618 21%
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Cash costs
($/lb. of aluminum) 0.66 0.58 14% 0.62 0.58 7%
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Income from
operating assets
($ millions) 15 20 (25%) 85 60 42%
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Revenues

Aluminum business revenues increased to $259 million, 11% higher than the $233 million recorded during the third quarter of 2004. Sales volumes of primary aluminum were unchanged at 60,900 tonnes versus the third quarter of 2004. Third quarter rolled-products sales volumes increased by 4% to 45,500 tonnes compared to 43,700 tonnes the same period a year ago. The realized primary aluminum price increased by 2% in the quarter to $0.86/lb., compared with $0.84/lb. in the same period in 2004.

Costs

Aluminum business operating expenses increased to $244 million from $213 million in the third quarter of 2004. The cost of operations increased to $145 million from $105 million in the same period last year. Operating costs were negatively affected by the temporary production disruption at the Gramercy alumina refinery that resulted from hurricane Katrina and higher natural gas costs. Normal operations at Gramercy resumed shortly thereafter. Energy costs at the New Madrid smelter were negatively impacted by slightly higher electricity rates that came into effect during the third quarter under the new fifteen-year electricity supply contract. The value of raw materials purchased for the rolling mills decreased to $86 million from $99 million in the third quarter of 2004 due to a reduction in Mid-West aluminum premiums.

The operating cash cost per pound of primary aluminum metal production was $0.66/lb. in the third quarter of 2005, an increase from $0.58/lb. for the same period in 2004. The cost per pound at the rolled products division was $0.12/lb. in the third quarter of 2005, compared to $0.06/lb. the same period in 2004.

Income generated by operating assets

Third quarter 2005 operating income for the aluminum business was $15 million compared with $20 million for the third quarter of 2004. The $5 million decrease was mainly due to higher power costs as well as higher natural gas costs resulting from market price increases and the residual impacts of the September hurricanes. These costs increases were somewhat offset by the benefits of the increased aluminum price.

Production

In the third quarter of 2005, primary aluminum production was 60,200 tonnes, compared to 62,300 tonnes in the same period in 2004. For the rolled products operations, shipments were 45,500 tonnes compared with 43,700 tonnes for the third quarter of 2004.

Production Forecast



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2005 Current 2005 Previous
Production Forecast (tonnes) Forecast (tonnes)
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Copper: Mined 480,000 490,000
Refined 566,000 559,000
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Nickel: Mined 82,000 83,000
Refined 114,000 114,000
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Zinc: Mined 473,000 472,000
Refined(1) 205,000 208,000
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Aluminum: Primary 247,000 251,000
Fabricated 180,000 178,000
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(1) Includes 100% of Kidd Creek refinery production and 25% of the
Noranda Income Fund CEZ Refinery production


Labour Agreements

During the quarter, a collective agreement was successfully negotiated and ratified at the Gramercy alumina refinery in Louisiana prior to the expiration of the contract at September 30, 2005.

The Kidd Creek copper and zinc metallurgical site labour contract expired on September 30, 2005 and the employees went on strike the following day. No discussions have yet been set between the parties.

At the Falcondo ferronickel operation in the Dominican Republic, preliminary contract renewal discussions have begun. The current contract expires on November 30, 2005.

DEVELOPMENT PROJECTS UPDATE

Nickel Projects

Raglan Mine Optimization Project

The conversion of the mill from autogenous to semi-autogenous grinding is on schedule and on budget. The conversion was implemented over a 16.5 day outage that commenced on October 15. The conversion will allow an increase in the level of annual throughput to approximately one million tonnes of ore per year and increase the mill's ability to process harder ore with the installation of a new crusher.

Phase two, which is expected to be completed late in 2007, will improve mill efficiency. When complete, the concentrator is expected to process 1.3 million tonnes, resulting in approximately 30,500 tonnes of annual contained nickel production.

Nickel Rim South Project

Vent shaft sinking, which began in February 2005, is now at 767 metres and is ahead of schedule. Main shaft sinking began in April 2005 and is now at 219 metres.

Koniambo Project

Falconbridge continued to advance its joint-venture Koniambo ferronickel project in New Caledonia. The Company has received acceptance of the positive technical feasibility study from the Entity (the third party responsible for implementation of the Bercy Accord), thereby meeting the first of only two conditions in the Bercy Accord. This was achieved well in advance of the January 1, 2006 deadline.

As part of the Company's agreement with SMSP and the French Government, the second condition is to place firm orders of at least $100 million in equipment and services related to the project. These orders have been submitted to the Entity for review.

Falconbridge and its partners are continuing to prepare for the construction phase. Permit applications are progressing well and the finance plan is well advanced with a focus on finalizing the French government support package. Start-up for Koniambo production is targeted for 2009/2010.

Kabanga Project

Falconbridge and Barrick Gold finalized a joint-venture agreement during the second quarter of 2005 regarding the Kabanga nickel deposit and related concessions in Tanzania. Under the current terms of the agreement, the Company has acquired a 50% indirect interest in the Kabanga project for $15 million and will be the operator of the joint venture.

The initial scoping study drilling program is now 66% complete and engineering studies are currently 48% complete. The scoping study is scheduled for completion in the first quarter of 2006.

Copper Projects

Collahuasi

Following the completion of the $623 million Rosario transition project in 2004, Collahuasi has identified the possibility of a debottlenecking project that has the potential to increase the nominal design capacity of the sulphide circuit by upwards of 20%. A feasibility study will be initiated shortly, the results of which will be available in early 2006.

The new molybdenum recovery circuit project was commissioned on September 27, 2005, two months ahead of schedule and under budget. The circuit has a design capacity of 4,300 tonnes of copper-molybdenum concentrate per day. The plant is initially forecast to produce 4,000 tonnes of molybdenum contained in moly concentrate per year, rising up to 8,000 tonnes in later years. At present, the plant is in start-up mode and the first commercial production is anticipated in November, 2005.

Lomas Bayas Expansion

As part of the Company's review of the Fortuna de Cobre deposit, the development of the exploration tunnel began in March 2005 and has now advanced 418 metres. The prefeasibility study is progressing with completion expected at the end of 2006. Construction of the pilot plant was completed in August 2005.

Kidd Mine D Project

Overall project progress is 84% complete based on the new target schedule. Production from blocks 2 and 3 is now expected to begin in the fourth quarter of 2005 and the third quarter of 2006, respectively. Overall capital investment in Phase One of the project should total Cdn$675 million.

EXPLORATION UPDATE

Since the end of the previous quarter, Falconbridge has provided the following exploration updates:

Brazil

Two new significant nickel deposits were discovered on the Company's nickel laterite properties in the Para State of northern Brazil. An extensive exploration program on these promising properties is being conducted.

Raglan

During the last two years, the Company has discovered new mineral resources representing at least double the annual production rate at the Raglan mine and is continuing a major exploration drill campaign. The next core mining area, located five kilometres east of the Katinniq mill and concentrator, was also identified.

Collahuasi

Collahuasi's Rosario Oeste zone contains an Inferred Mineral Resource estimated at 248 million tonnes grading 1.54% copper at a 0.4% copper cut-off. These exploration results further demonstrate the potential of developing resources at Collahuasi. The mineral resource is located only 300 metres from the projected edge of the Rosario open pit.

OTHER

As under the terms of the Support Agreement between Inco and Falconbridge the Corporation is not permitted to issue any additional shares (other than in respect of existing options and other convertible securities), the Corporation has suspended its Dividend Re-Investment Plan. Common shareholders will continue to receive their dividends in cash.

SHARES OUTSTANDING AND DECLARED DIVIDENDS



---------------------------------------------------------------------
Name of new Falconbridge Security Trading Shares
Symbol Outstanding
---------------------------------------------------------------------
Common Shares(1) FAL.LV, FAL 369,454,206
---------------------------------------------------------------------
Preferred Shares, Series 1 N/A 89,835
---------------------------------------------------------------------
Preferred Shares, Series 2 FAL.PR.A 4,787,283
---------------------------------------------------------------------
Preferred Shares, Series 3 FAL.PR.B 3,122,882
---------------------------------------------------------------------
Preferred Shares, Series F FAL.PR.F 3,246,057
---------------------------------------------------------------------
Preferred Shares, Series G FAL.PR.G 8,753,943
---------------------------------------------------------------------
Preferred Shares, Series H FAL.PR.H 6,000,000
---------------------------------------------------------------------
Junior Preference Shares, Series 1(2) FAL.PR.X 11,999,899
---------------------------------------------------------------------
Junior Preference Shares, Series 2(2) FAL.PR.Y 11,999,899
---------------------------------------------------------------------
Junior Preference Shares, Series 3(2) FAL.PR.Z 5,999,903
---------------------------------------------------------------------
(1) Falconbridge common shares trade on the Toronto and New York Stock
Exchanges under the symbols FAL.LV and FAL, respectively.
Falconbridge common shares also trade in U.S. dollars on the Toronto
Stock Exchange under the symbol FAL.LV.U.
(2) 8,000,000 junior preference shares, series (X), 8,000,000 junior
preference shares, series (Y) and 4,000,000 junior preference shares,
series (Z) were redeemed on August 11, 2005, as previously announced.

Declared Dividends

The following dividends have been declared:

---------------------------------------------------------------------
Name of
Falconbridge Dividend
Security Trading Amount Record Date Payable Date
Symbol Per Share
---------------------------------------------------------------------

Common
Shares FAL.LV Cdn $0.12 November 30, 2005 December 15, 2005
---------------------------------------------------------------------
Preferred
Shares,
Series 1 N/A Cdn $0.02 November 15, 2005 December 1, 2005
---------------------------------------------------------------------
Preferred
Shares,
Series 2 FAL.PR.A Floating November 30, 2005 December 12, 2005
rate
Floating December 30, 2005 January 12, 2006
rate
Floating January 31, 2006 February 12, 2006
rate
---------------------------------------------------------------------
Preferred
Shares, Cdn
Series 3 FAL.PR.B $0.2863 November 15, 2005 December 1, 2005
---------------------------------------------------------------------
Preferred
Shares,
Series F FAL.PR.F Floating November 30, 2005 December 12, 2005
rate
Floating December 30, 2005 January 12, 2006
rate
Floating January 31, 2006 February 12, 2006
rate
---------------------------------------------------------------------
Preferred
Shares, Cdn
Series G FAL.PR.G $0.38125 January 15, 2006 February 1, 2006
---------------------------------------------------------------------
Preferred
Shares, Cdn
Series H FAL.PR.H $0.40625 December 15, 2005 January 2, 2006
---------------------------------------------------------------------
Junior
Preference
Shares, US
Series 1 FAL.PR.X $0.375 December 15, 2005 January 2, 2006
---------------------------------------------------------------------
Junior
Preference
Shares, US
Series 2 FAL.PR.Y $0.3906 December 15, 2005 January 2, 2006
---------------------------------------------------------------------
Junior
Preference
Shares, US
Series 3 FAL.PR.Z $0.4063 December 15, 2005 January 2, 2006
---------------------------------------------------------------------


This news release contains forward-looking statements concerning the Company's business and operations. The Company cautions that, by their nature, forward-looking statements involve risk and uncertainty and the Company's actual results could differ materially from those expressed or implied in such statements. Reference should be made to the most recent Annual Information Form for a description of the major risk factors.

Falconbridge Limited is a leading copper and nickel company with investments in fully-integrated zinc and aluminum assets. Its primary focus is the identification and development of world-class copper and nickel mining deposits. It employs 14,500 people at its operations and offices in 18 countries. Falconbridge's common shares are listed on the New York Stock Exchange (FAL) and the Toronto Stock Exchange (FAL.LV). Falconbridge's website can be found at www.falconbridge.com.

Note: All dollar amounts are expressed in U.S. dollars unless otherwise noted. Condensed consolidated financial statements are attached.

Important Legal Information

This communication is being made in respect of the share exchange takeover bid by Inco Limited for common shares of Falconbridge Limited. Inco has filed with the U.S. Securities and Exchange Commission ("SEC") a registration statement on Form F-8 containing a share exchange take-over bid circular. Inco, if required, will file other documents regarding the transaction with the SEC. INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain the documents filed with the SEC free of charge at the SEC's website (www.sec.gov). In addition, documents filed with the SEC by Inco will be available free of charge from Inco. You should direct requests for documents to the Secretary of Inco, Inco Limited, 145 King Street West, Suite 1500, Toronto, Canada, M5H 4B7.

To participate in the third quarter analyst conference call scheduled for Tuesday, October 25, 2005, at 2:00 p.m., please call (416) 620-9644 for local and overseas callers and 1-800-840-6238 toll free in North America, or visit the Company's website at www.falconbridge.com to listen to a live webcast.



FALCONBRIDGE LIMITED

CONSOLIDATED RESULTS

(US$ millions, unaudited)

Nine
months ended
Third Quarter(1) September 30(1)
--------------------------------
2005 2004 2005 2004
--------------------------------

Revenues $ 2,006 $ 1,703 $ 6,074 $ 5,030
--------------------------------

Operating expenses
Cost of operations 617 535 1,895 1,493
Purchased raw materials 815 684 2,421 2,165
Depreciation, amortization and
accretion 140 119 405 362
--------------------------------
1,572 1,338 4,721 4,020
--------------------------------

Income generated by operating assets 434 365 1,353 1,010

Interest expense, net 50 35 126 104
Corporate and general administration 18 17 54 45
Research, development and exploration 16 14 43 33
Minority interest in earnings of
subsidiaries 5 76 154 219
--------------------------------

Income before undernoted 345 223 976 609

Other income (5) 7 (5) (10)
Tax expense 136 98 389 241
--------------------------------

Net Income $ 214 $ 118 $ 592 $ 378

Dividends on preferred shares 5 3 12 9
--------------------------------

Net Income attributable to common
shares $ 209 $ 115 $ 580 $ 369
--------------------------------

Basic earnings per common share $ 0.57 $ 0.39 $ 1.76 $ 1.24
--------------------------------
Diluted earnings per common share $ 0.56 $ 0.38 $ 1.74 $ 1.23
--------------------------------
Basic weighted average number
of shares - 000s 368,275 296,517 329,933 296,122
Diluted weighted average number
of shares - 000s 375,597 303,702 336,646 303,399
---------------------------------------------------------------------

(1) The 2004 and 2005 results represent the consolidated results of
Noranda Inc. which was renamed to "Falconbridge Limited" after
the Amalgamation on June 30, 2005.


FALCONBRIDGE LIMITED

CONSOLIDATED BALANCE SHEETS

(US$ millions, unaudited)

Sep. 30 Dec. 31
2005(1) 2004(1)
-------------------
Assets

Current assets
Cash and cash equivalents $ 692 $ 884
Accounts receivable 853 948
Metals and other inventories 1,508 1,436
-------------------
3,053 3,268

Operating capital assets 6,751 4,870
Development projects 1,573 1,166
Investments and other assets 334 324
-------------------
$ 11,711 $ 9,628
-------------------

Liabilities and Equity

Current Liabilities
Accounts and taxes payable $ 1,137 $ 1,265
Debt due within one year 103 570
-------------------
1,240 1,835

Long-term debt 2,922 2,736
Preferred share liabilities 877 122
Future income taxes 1,151 304
Asset retirement obligation, pension and
other provisions 695 595

Stockholders' interests:
Interests of other shareholders 56 1,197
Shareholders' equity 4,770 2,839
-------------------
$ 11,711 $ 9,628
-------------------

(1) The consolidated balance sheet as at September 30, 2005 and
December 31, 2004 represents the consolidated balance sheet of
Noranda Inc. which was renamed to "Falconbridge Limited" after
the Amalgamation on June 30, 2005.


FALCONBRIDGE LIMITED

CONSOLIDATED STATEMENTS OF CASHFLOWS

(US$ millions, unaudited)

Nine
months ended
Third Quarter(1) September 30(1)
--------------------------------

2005 2004 2005 2004
--------------------------------

Cash realized from (used for):

Operations
Net income $ 214 $ 118 $ 592 $ 378
Charges (credits) not
affecting cash:
Depreciation and amortization 146 133 402 360
Future taxes 32 93 156 146
Minority interest 5 76 154 219
Foreign exchange, and other (5) 15 (37) (27)
--------------------------------
392 435 1,267 1,076
Net change in accounts receivable,
inventories and payables (19) (146) (155) (274)
--------------------------------
Cash from operations 373 289 1,112 802
--------------------------------

Investment activities
Capital investments (187) (189) (459) (459)
Investments and advances (23) (3) (28) 125
Proceeds on dispositions 48 2 54 5
--------------------------------
Cash used in investment activities (162) (190) (433) (329)
--------------------------------

Financing activities
Long-term debt, including
current portion
Issued 37 58 551 199
Repaid (1,056) (57) (1,335) (401)
Issue of shares - common 25 2 37 20
Share purchase plan repayment 1 - 3 -
Dividends paid (43) (31) (107) (90)
Issue of shares - minority
shareholders - 1 18 15
Dividends paid to minority
shareholders - (8) (38) (25)
--------------------------------
(1,036) (35) (871) (282)
--------------------------------

Increase (decrease) in cash
and cash equivalents (825) 64 (192) 191

Cash and cash equivalents,
beginning of period 1,517 628 884 501
--------------------------------

Cash and cash equivalents,
end of period $ 692 $ 692 $ 692 $ 692
--------------------------------

(1) The consolidated statement of cashflows for the three and nine
months ended September 30, 2005 and September 30, 2004 represent
the consolidated statement of cashflows of Noranda Inc. which was
renamed to "Falconbridge Limited" after the Amalgamation on June
30, 2005.


FALCONBRIDGE LIMITED
SALES VOLUMES & REALIZED PRICES
Nine
months ended
Third quarter September 30
---------------------------------
2005 2004 2005 2004
---------------------------------

Metal Sales (tonnes,
except as noted)
--------------------
100% basis,
except as noted
----------------
Copper
Copper business
CCR 79,826 65,533 215,436 216,205
Kidd Creek 21,902 23,040 73,307 59,760
Horne
- (concentrates) 31,210 5,378 31,210 20,568
Antamina
- (concentrates) (33.75%) 20,047 22,537 64,285 58,488
Collahuasi
- (concentrates) (44%) 31,085 59,035 96,232 108,400
Collahuasi (44%) 6,217 1,510 19,997 18,538
Lomas Bayas 15,534 16,271 49,369 44,952
Altonorte
- (anodes) 40,115 18,646 112,839 117,310
---------------------------------
245,936 211,950 662,675 644,221
Nikkelverk 14,847 13,875 45,800 38,536
---------------------------------
260,783 225,825 708,475 682,757
---------------------------------

Nickel 21,592 15,432 64,860 51,575

Ferronickel 4,783 6,247 18,036 20,832

Zinc
Copper business
Kidd Creek 31,034 34,496 104,285 94,696
Kidd Creek
- (concentrates) 11,092 - 27,671 -
Antamina
- (concentrates) (33.75%) 9,111 13,617 34,948 47,767
---------------------------------
51,237 48,113 166,904 142,463
Zinc business
Brunswick/Matagami -
(concentrates) 63,808 82,596 179,641 227,727
---------------------------------
115,045 130,709 346,545 370,190
---------------------------------

Aluminum
Primary Aluminum
- shipments 60,915 60,890 184,559 187,315
Norandal - shipments 45,545 43,658 134,707 131,842
Alumina - shipments (50%) 86,554 - 266,152 -
Bauxite - shipments (50%) 227,420 - 678,486 -

Lead 10,053 9,581 54,211 60,055

Molybdenum concentrate
Antamina (33.75%) 538 160 1,717 318

Gold - 000 ounces 168 245 554 706

Silver - 000 ounces
CCR 7,676 8,868 25,156 28,387
Kidd Creek 1,136 949 3,391 3,096
Antamina (33.75%) 308 624 1,071 1,702
---------------------------------
9,120 10,441 29,618 33,185
---------------------------------

Average Realized Prices -
(US$ per pound, except as
noted)
--------------------------

Copper 1.72 1.34 1.58 1.25
Nickel 6.78 6.54 7.15 6.39
Ferronickel 7.03 6.49 7.10 6.35
Zinc 0.60 0.50 0.60 0.51
Aluminum 0.86 0.84 0.90 0.82
Lead 0.46 0.45 0.49 0.42
Gold - (US$ per ounce) 435.07 395.12 429.31 397.81
Silver - (US$ per ounce) 7.09 6.45 7.05 6.40

Exchange Rate (US$ equals Cdn$1) 0.83 0.77 0.82 0.75
--------------------------------
Exchange Rate (CLP equals US$1) 556.08 627.72 564.33 614.97
--------------------------------

FALCONBRIDGE LIMITED
PRODUCTION VOLUMES

Nine
months ended
Third quarter September 30
-----------------------------------
2005 2004 2005 2004
-----------------------------------

Mine Production (tonnes,
except as noted)
------------------------
100% basis,
except as noted
----------------

Copper
Copper business
Kidd Creek 11,070 8,563 32,168 32,151
Antamina (33.75%) 29,225 31,027 91,223 87,560
Collahuasi (44%) 44,046 65,067 134,248 146,869
Lomas Bayas 15,583 15,719 48,108 46,361
-----------------------------------
99,924 120,376 305,747 312,941
Matagami - 2,113 - 5,993
Brunswick 1,683 1,447 4,508 4,646
Sudbury 6,151 6,640 19,142 17,919
Montcalm 1,611 181 3,775 358
Raglan 1,761 1,795 4,663 5,133
Other 205 3,165 7,485 10,538
-----------------------------------
111,335 135,717 345,320 357,528
-----------------------------------

Nickel
Sudbury 4,096 6,796 15,784 16,928
Montcalm 2,585 348 6,738 628
Raglan 6,406 6,972 17,623 19,869
-----------------------------------
13,087 14,116 40,145 37,425
-----------------------------------

Ferronickel 7,173 7,433 21,322 22,303

Zinc
Zinc business
Brunswick 67,220 64,619 206,288 200,479
Matagami - 33,159 - 91,604
-----------------------------------
67,220 97,778 206,288 292,083
Kidd Creek 33,313 25,594 97,502 57,086
Antamina (33.75%) 18,635 15,186 57,121 55,964
Other 889 2,570 6,016 6,961
-----------------------------------
120,057 141,128 366,927 412,094
-----------------------------------

Lead 19,340 17,383 58,682 54,808

Silver - 000 ounces
Copper business
Kidd Creek 1,033 1,088 2,897 3,039
Antamina (33.75%) 714 770 2,468 2,159
-----------------------------------
1,747 1,858 5,365 5,198
Brunswick 1,603 1,383 4,692 4,348
Matagami - 129 - 362
Other 10 56 179 179
-----------------------------------
3,360 3,426 10,236 10,087
-----------------------------------
Metal Production (tonnes,
except as noted)
-------------------------

Refined copper
Copper business
CCR 80,905 63,180 215,115 209,628
Kidd Creek 34,795 30,957 101,094 83,077
Collahuasi (44%) 6,737 6,894 20,001 18,715
Lomas Bayas 15,583 15,719 48,108 46,361
-----------------------------------
138,020 116,750 384,318 357,781
Nikkelverk 9,987 7,857 28,639 26,837
-----------------------------------
148,007 124,607 412,957 384,618
-----------------------------------
Copper anodes
Horne 41,253 27,611 105,738 112,044
Kidd Creek 35,546 31,870 106,255 85,123
Altonorte 79,458 56,469 218,853 187,561
-----------------------------------
156,257 115,950 430,846 384,728
-----------------------------------
Refined nickel
Nikkelverk 21,447 15,994 64,084 50,952
Falcondo 7,173 7,433 21,322 22,303
-----------------------------------
28,620 23,427 85,406 73,255
-----------------------------------
Refined zinc
Kidd Creek 31,664 23,248 105,202 87,624

Primary aluminum 60,245 62,308 183,323 185,170

Fabricated Aluminum 45,545 43,658 134,707 131,842

Alumina (50%) 141,906 - 441,523 -

Bauxite (50%) 512,768 - 1,453,977 -

Refined lead 7,690 4,549 52,234 57,937

Molybdenum concentrate (33.75%) 573 323 1,496 645

Refined gold - 000 ounces 194 294 652 829

Refined silver - 000 ounces 8,214 8,461 25,487 28,820


Segmented Information
($ US millions)
Third Quarter 2005
--------------------------------------------------

Copper Nickel Zinc Aluminum Other Total
--------------------------------------------------

Revenues $ 1,133 512 103 259 (1) $ 2,006
--------------------------------------------------

Operating expenses
Cost of operations 241 184 48 145 (1) 617
Purchase of raw
materials 532 156 41 86 - 815
Depreciation,
amortization and
accretion 66 44 9 13 8 140
--------------------------------------------------
$ 839 384 98 244 7 $ 1,572
--------------------------------------------------

Income generated
by operating
assets $ 294 128 5 15 (8) $ 434
--------------------------------------------------

Interest expense,
net (50)
Corporate and
general
administration (18)
Research,
development and
exploration (16)
Minority interest
in earnings of
subsidiaries (5)
------
Income before
undernoted $ 345

Other income 5
Tax expense (136)
------

Net Income $ 214
------

--------------------------------------------------
Capital investments $ 73 71 10 17 16 $ 187
--------------------------------------------------


Third Quarter 2004
--------------------------------------------------

Copper Nickel Zinc Aluminum Other Total
--------------------------------------------------
Revenues $ 913 417 101 233 39 $ 1,703
--------------------------------------------------

Operating expenses
Cost of operations 209 137 52 105 32 535
Purchase of raw
materials 412 109 38 99 26 684
Depreciation,
amortization and
accretion 60 25 14 9 11 119
--------------------------------------------------
$ 681 271 104 213 69 $ 1,338
--------------------------------------------------

Income (loss)
generated by
operating assets $ 232 146 (3) 20 (30) $ 365
--------------------------------------------------

Interest expense,
net (35)
Corporate and
general
administration (17)
Research,
development and
exploration (14)
Minority interest
in earnings of
subsidiaries (76)
------
Income before
undernoted $ 223

Other income (7)
Tax expense (98)
------

Net income $ 118
------

--------------------------------------------------
Capital investment $ 71 104 2 7 5 $ 189
--------------------------------------------------


Segmented Information
($ US millions)
Nine Months ended September 30, 2005
--------------------------------------------------

Copper Nickel Zinc Aluminum Other Total
--------------------------------------------------

Revenues $ 3,145 1,657 349 833 90 $ 6,074
--------------------------------------------------

Operating expenses
Cost of operations 747 575 135 421 17 1,895
Purchase of raw
materials 1,482 443 152 291 53 2,421
Depreciation,
amortization and
accretion 189 117 26 36 37 405
--------------------------------------------------
$ 2,418 1,135 313 748 107 $ 4,721
--------------------------------------------------

Income (loss)
generated by
operating assets $ 727 522 36 85 (17) $ 1,353
--------------------------------------------------

Interest expense,
net (126)
Corporate
and general
administration (54)
Research,
development and
exploration (43)
Minority interest
in earnings
of subsidiaries (154)
------
Income before
undernoted $ 976

Other income 5
Tax expense (389)
------

Net Income $ 592
------

Total assets,
excluding cash
and short-term
investments $ 5,350 3,563 383 1,028 695 $ 11,019
--------------------------------------------------
Capital investments $ 183 202 13 32 29 $ 459
--------------------------------------------------


Nine Months ended September 30, 2004
--------------------------------------------------

Copper Nickel Zinc Aluminum Other Total
--------------------------------------------------
Revenues $ 2,595 1,329 296 678 132 $ 5,030
--------------------------------------------------

Operating expenses
Cost of operations 576 430 113 318 56 1,493
Purchase of raw
materials 1,348 342 127 272 76 2,165
Depreciation,
amortization and
accretion 168 88 47 28 31 362
--------------------------------------------------
$ 2,092 860 287 618 163 $ 4,020
--------------------------------------------------

Income (loss)
generated by
operating assets $ 503 469 9 60 (31) $ 1,010
--------------------------------------------------

Interest expense,
net (104)
Corporate
and general
administration (45)
Research,
development and
exploration (33)
Minority interest
in earnings
of subsidiaries (219)
------
Income before
undernoted $ 609


Other income 10
Tax expense (241)
------

Net income $ 378
------

Total assets,
excluding cash
and short-term
investments $ 4,401 1,927 393 837 768 $ 8,326
--------------------------------------------------
Capital
investments $ 217 201 3 18 20 $ 459
--------------------------------------------------



Contact Information