This transaction will increase Inco's effective interest in the financial performance of the Voisey's Bay nickel-copper-cobalt deposit in Labrador, Canada from its current 25 per cent to 75 per cent and would allow Inco to cancel without additional cost the U.S. $387 million Series D Convertible Preferred Shares which it issued in June 1995 to acquire its initial interest in the deposit.

The Inco Class VBN Shares to be issued, a new class of Inco targeted shares, will represent a 25 per cent aggregate interest in the financial performance of the Voisey's Bay project, expected to become the lowest-cost source of nickel in the world. This interest will also participate in all future discoveries in Labrador which Voisey's Bay Nickel Company Limited, Diamond Fields' subsidiary, has the right to explore and develop, as well as in existing exploration properties held by Diamond Fields in Norway and Greenland. The Inco Class VBN shareholders will benefit from having Inco Limited -- the world's premier nickel producer -- develop Voisey's Bay to its maximum potential. A mine feasibility study, which will be completed later this year, is expected to target annual production of 270 million pounds of nickel and 200 million pounds of copper. Initial production could begin as soon as 1998, with full production attained by 2000.

Earnings per Inco Class VBN Share will be calculated based on 25% of the net income before goodwill amortization of Voisey's Bay Nickel Company Limited. Inco's dividend policy in respect of the Inco Class VBN shares is to declare and pay dividends equal to such 25% amount, subject to certain adjustments and available cash. During the first ten years after issuance of the Class VBN Shares, this policy also provides that these Shares will receive a minimum dividend per share equal to 80% of any Inco regular cash dividend per common share declared and paid. Inco will retain 100 per cent legal ownership of Voisey's Bay Nickel Company Limited. The Inco Class VBN Shares, like all Inco common shares, will have one vote per share along with Inco's common shares, and will be entitled to elect two Inco directors. Beginning in 2006, Inco will be entitled to convert the Class VBN Shares into Inco common shares at 120% of the then prevailing market price of a Class VBN Share. Inco will have the right to sell up to 24% of Voisey's Bay Nickel Company Limited without a restrictions. In the event of a sale by Inco of more than 24% of Voisey's Bay Nickel Company Limited, holders of the Inco Class VBN Shares will have a right to convert their Inco Class VBN Shares into Inco common shares based on the same 120% market price formula.

The new Series E Convertible Redeemable Preferred Shares will have an issue price and liquidation value of U.S.$50 per share, will carry one vote per share, and have an annual dividend of 5.5% payable in U.S. dollars or the equivalent in Canadian funds. The Series E Preferred Shares will be convertible at any time into Inco Common Shares at a conversion price of U.S.$41.85 and will be callable after five years, at an initial premium of U.S.$1.375 per Series E Share, with the premium declining annually and with mandatory redemption at par in ten years.

Inco and Diamond Fields expect to hold shareholder meetings to obtain their requisite shareholder approvals contemplated by the agreement reached between the parties by mid-to-late May 1996, with closing, subject to regulatory consents and approvals, of the transaction to be completed shortly thereafter.

As part of this transaction, Inco will have the right to increase its ownership interest in Diamond Fields from 7% to 15% in the event of any partial bid for Diamond Fields shares by a third party. In addition, Diamond Fields will pay Inco a fee of Cdn.$115 million plus reimbursement of Inco's expenses not to exceed $15 million in the event that within the next six months a third party acquires control of Diamond Fields or takes up shares of Diamond Fields pursuant to a takeover bid made for less than all of the shares of Diamond Fields. Inco has the right to terminate its agreement with Diamond Fields unless Robert M. Friedland and Jean-Raymond Boulle, Co-Chairmen of Diamond Fields, shall have entered into agreements committing to support the acquisition of Diamond Fields by Inco prior to April 15, 1996.

Over the next five years, Inco currently expects to use cash flow from operations, together with any proceeds from possible asset sales, to repurchase common shares through open market purchases from time to time, subject to appropriate regulatory approvals and market conditions. Any such share repurchases would also be subject to maintenance of Inco's investment grade credit ratings. It is projected that up to one-third of Inco's post-acquisition pro forma number of common shares outstanding could be repurchased by the year 2000.

It is anticipated that the exchange of Diamond Fields shares solely for the Inco securities to be offered should be tax-free in Canada and for U.S. federal income tax purposes. This announcement does not constitute an offer for Diamond Fields common shares or any of the securities to be issued by Inco as described.

For further information:
Bob Purcell, Media Relations,
Inco Limited