$2 BILLION NEW CALEDONIA PROJECT ON HOLD

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NOUMEA, New Caledonia (Oceania flash) - A multi-billion US dollar project in southern New Caledonia has suffered another setback.

Canadian stakeholder, Inco, announced the project will be paused for at least six months, pending the outcome of what is termed as a "comprehensive review" of costs and business trends.

The Goro-Nickel Project is located South of New Caledonia's main island.

Two months ago, Inco decided to withdraw about one hundred Australian engineers, saying the project needed a break.

The project has been at the center of a controversy over its possible environmental impact.

Opposition pro-independence parties in New Caledonia also criticized the fact that local authorities, in their view, had given away mining rights to the Canadian Giant, who has also been granted further prospecting rights in nearby Prony.

Latest estimates by Inco reveal the initial capital cost of some US$1.45 billion would now shoot up by between 30 to 45 per cent, somewhere close to US$ 2 billion.

Based on this latest information, Inco understands that a significantly more comprehensive review of the key aspects of the project will be required.

But according to Inco chairman and chief executive officer, Scott Hand, the Goro project remains a fundamental part of the company's growth strategy.

"We must have a project which is economically feasible and which can be implemented in a financially prudent manner," said Hand.

Hand added that to date, Inco had already spent approximately US$350 million on the project.

This amount excludes a current estimate of between US$300 to US$350 million in total that would have to be spent for equipment and services under existing contracts and commitments.

The review could take at least until mid-2003 to proceed.

In the meantime, Inco would continue to work with the new Caledonian authorities to complete the necessary permitting and local approvals required for the efficient and cost-effective execution of the project.

Oceania Flash/SPC E-mail/Courriel : PatrickD@spc.org.fj  ou padec@iname.com

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