Press Release 
08/01/07 12:14
PT Inco Tbk Reports Second Quarter 2007 Earnings of US$479.2 Million

- (All amounts are expressed in US$)

Jakarta, August 1, 2007 (ANTARA) - PT International Nickel Indonesia Tbk ("PT 
Inco", or the "Company", JSX:INCO) today reported second quarter 2007 unaudited 
sales of US$859.0 million, a 232% increase from US$258.6 million in the same 
quarter last year. Net earnings in the quarter ended June 30, 2007 were 
US$479.2 million, or US$0.48 per share, up 501% from net earnings of US$79.7 
million, or US$0.08 per share, in the same quarter of 2006.

Sales rose 196% to US$1,305.7 million in the first six months of 2007 from 
US$440.5 million in the same period in 2006. Net earnings in the first half of 
2007 increased 473% to US$707.0 million, or US$0.71 per share, from US$123.3 
million, or US$0.12 per share, in the first half of 2006.

"PT Inco's balance sheet improved further during the second quarter 2007. 
Despite increased dividend payments of US$497.1 million in the first quarter of 
2007, our cash balance at the end of the second quarter 2007 stood at US$683.2 
million compared with US$170.4 million at the end of the second quarter of 
2006," said Arif Siregar, Presiden and Chief Executive Officer.

The Company?s realized price for nickel in matte averaged US$38,926 per tonne 
(US$17.66 per pound) in the second quarter of 2007, compared with US$14,326 per 
tonne (US$6.50 per pound) in the corresponding 2006 period and US$29,149 per 
tonne (US$13.22 per pound) in the first quarter of 2007. Under PT Inco's 
long-term, must-take US dollar-denominated sales contracts, the selling price 
of our nickel in matte is determined by a formula based on the London Metal 
Exchange ("LME") cash price for nickel, and CVRD Inco Limited's net average 
realized price for nickel.

Production of nickel in matte for the second quarter of 2007 was 21,100 tonnes 
(46,5 million pounds), an increase of 33% from 15,900 tonnes (35.0 million 
pounds) in the corresponding 2006 period. Production of nickel in matte in the 
first half of 2007 increased 18% to 39,100 tonnes (86.1 million pounds) from 
33,200 tonnes (73.3 million pounds) in the first six months of 2006. During the 
2007 second quarter, PT Inco also provided approximately 225,000 tonnes of ore 
from its Pomalaa operation to PT Antam Tbk.

"Above average levels of rainfall since the end of February 2007 have raised 
the level of our water reservoirs slightly, permitting the Company to operate 
its hydroelectric generators at normal levels. The improved water situation and 
strong production during the first half of 2007 positions the Company well to 
meet our previously announced 2007 production target of 160-to-165 million 
pounds (72,575-to-74,843 tonnes) of nickel in matte. Furthermore, new diesel 
generators have been installed providing the Company with additional power. 
These diesel generators allowed us to maintain production when the steam boiler 
was shut down for inspection in the second quarter. This extra power supply 
will also help when the steam boiler is refurbished later this year," Mr. 
Siregar said.

"We believe that we are making progress toward obtaining a final forestry 
permit from the Indonesian Government in relation to the construction of a new 
dam and generating facility at Karebbe on the Larona River. Obtaining final 
forestry permit on acceptable terms is necessary for the Company to recommence 
construction on this important facility. As well, during the quarter, the 
Company launched an important initiative to increase the capacity of local 
contractors to participate in business opportunities associated with our 
Sorowako operations", continued Mr. Siregar.

Unit cash cost of production in the second quarter of 2007 increased 6% to 
US$3.30 per pound from US$3.11 per pound in the same period last year. The 
increase in unit cast costs resulted from rising employment costs, increased 
consumption of high sulphur fuel oil, and the use of greater amounts of more 
expensive diesel. The diesel price climbed to an average of US$0.56 per liter 
in the second quarter of 2007 from US$0.53 per liter in the prior year period. 
The Company's operations consumed 33.5 million liters of diesel in the second 
quarter of 2007, compared to 29.0 million liters in the first quarter of 2007. 
High LME prices for nickel increases royalties and water levies paid to the 
Indonesian Government in the second quarter of 2007 compared to the first 
quarter of 2007. Notwithstanding the increased diesel use and increased 
payments to the Indonesian Government, unit cash cost of production in the 
second quarter fell slightly when compared with the
 first quarter 2007, mainly due to increased production. In order to maximize 
the production in the current high nickel price environment, the Company will 
continue to use expensive fuel-fired power in order to supplement its low-cost 
hydroelectric power.

In the first half of 2007, cash provided by operating activities, but before 
capital expenditures, increased to US$763.1 million from US$103.8 million for 
the same period last year, primarily due to increased receipts from customers 
of US$1,220,6 million, partly offset by higher tax payments of US$212.8 million 
and higher payments to employees of US$44.2 million. Cash used in relation to 
capital expenditures in the first six months of 2007 rose to US$55.5 million 
from US$50.8 million in the corresponding 2006 period. Cash used for dividend 
payments in the first half of 2007 increased to US$497.1 million from US$85.4 
million in the first half of 2006. As a result there was a net cash inflow of 
US$205.3 million in the first half of 2007 compared with an outflow of US$78.7 
million for the corresponding period in 2006.

The company's results are summarized below:
 Second QuarterFirst Half
2007200620072006
Nickel in matte production
- thousand tonnes21.1015.9039.1033.20
- million pounds46.5035.0086.1073.30
 
Nickel in matte deliveries
- thousand tonnes21.7017.8036.8033.90
- million pounds47.9039.2081.1074.70
 
Average realized price:

- per tonneUS$ 38,926US$14,326US$34,919US$12,811
- per poundUS$ 17.66US$ 6.50US$ 15.84US$ 5.81
 
Sales - millionsUS$ 859.0US$ 258.6US$ 1,305.7US$ 440.5
 
Net earnings - miliionsUS$ 479.2US$ 79.7US$ 707.0US$ 123.3
 
Net earnings per share US$ 0.48US$ 0.08US$ 0.71US$ 0.12


At June 30, 2007, the Company's inventories of nickel in matte were 2,902 
tonnes (6.4 million pounds), compared with 3,544 tonnes (7.8 million pounds) at 
March 31, 2007 and 128 tonnes (0.3 million pounds), at June 30, 2006. 
Variations in inventories and deliveries are largerly due to shipment 
scheduling.

For further information, please contact:
Indra Ginting, Tel: +6221 524 9000
Jan Kees van Gaalen, Tel: +6221 5249002


Copyright © 2007 ANTARA


      
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