(1)		Previously filed with the Bidder’s Schedule 14D-1F (File No. 005-62437) filed October 25, 2005.
(2)		Previously filed with the Bidder’s Amendment No. 1 to Schedule 14D-1F (File No. 005-62437) filed December 15, 2005.
(3)		Previously filed with the Bidder’s Amendment No. 2 to Schedule 14D-1F (File No. 005-62437) filed January 20, 2005.
(4)		Previously filed with the Bidder’s Amendment No. 3 to Schedule 14D-1F (File No. 005-62437) filed February 28, 2006.

 

	(a) Cdn.$51.17 in cash (the “Cash Alternative”); or (b) 0.6927 of a common share of Inco Limited and Cdn.$0.05 in cash       (the “Share Alternative”),

In Canada:		In the United States:
RBC Dominion Securities Inc.		RBC Capital Markets Corporation

NOTICE TO SHAREHOLDERS IN THE UNITED STATES

      The Offer is made for the securities of a Canadian issuer by a Canadian issuer that is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare the Offer and Circular, the First Extension, the Second Extension, the Third Extension and this Notice of Variation in accordance with the disclosure requirements of Canada. Prospective investors should be aware that such requirements are different from those of the United States. The financial statements included or incorporated by reference in the Offer and Circular have been prepared in accordance with Canadian generally accepted accounting principles, and are subject to Canadian auditing and auditor independence standards, and thus may not be comparable to financial statements of United States companies.

      Shareholders in the United States should be aware that the disposition of Falconbridge Shares and the acquisition of Inco Shares by them as described herein may have tax consequences both in the United States and in Canada. Such consequences may not be fully described in the Circular and such holders are urged to consult their tax advisors. See Section 21 of the Circular, “Certain Canadian Federal Income Tax Considerations”, and Section 23 of the Circular, “Certain U.S. Federal Income Tax Considerations”.

      The enforcement by Shareholders of civil liabilities under United States federal securities laws may be affected adversely by the fact that the Offeror is incorporated under the laws of Canada, that some or all of its officers and directors may reside outside the United States, that the Canadian Dealer Manager for the Offer and some or all of the experts named herein may reside outside the United States, and that a substantial portion of the assets of the Offeror and Falconbridge and the above-mentioned persons are located outside the United States.

      THE SECURITIES OFFERED PURSUANT TO THE OFFER AND CIRCULAR HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (“SEC”) OR ANY UNITED STATES STATE SECURITIES COMMISSION NOR HAS THE SEC OR ANY UNITED STATES STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFER AND CIRCULAR, THE FIRST EXTENSION, THE SECOND EXTENSION, THE THIRD EXTENSION OR THIS NOTICE OF VARIATION. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

      Shareholders should be aware that, during the period of the Offer, the Offeror or its affiliates, directly or indirectly, may bid for or make purchases of the Falconbridge Shares to be exchanged, or certain related securities, as permitted by applicable laws or regulations of Canada or its provinces or territories and the United States.

CURRENCY

      In this Notice of Variation, unless otherwise indicated, all references to ‘$” or “dollars” refer to United States dollars and references to “Cdn.$” refer to Canadian dollars.

CURRENCY EXCHANGE RATE INFORMATION

      The following table sets out the high and low exchange rates for one U.S. dollar expressed in Canadian dollars for the period indicated and the average of such exchange rates, and the exchange rate at the end of such period, in each case, based upon the noon rates as quoted by the Bank of Canada:

      On May 26, 2006, the exchange rate for one U.S. dollar expressed in Canadian dollars based upon the noon rate of the Bank of Canada was Cdn.$1.1073.

CAUTION REGARDING FORWARD-LOOKING INFORMATION

      The Offer and Circular (for greater certainty, as amended or supplemented by the First Extension, the Second Extension, the Third Extension and this Notice of Variation, respectively) and some of the information incorporated by reference into the Offer and Circular contain forward-looking information (as defined in the Securities Act (Ontario)) and forward-looking statements (as defined in the United States Securities Exchange Act of 1934) that are based on expectations, estimates and projections as of the date of this Notice of Variation. Often, but not always, such forward-looking statements can be identified by the use of forward-looking words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Inco to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements in the Offer and Circular.

      Examples of such forward-looking statements in the Offer and Circular include, but are not limited to: (A) factors relating to the Offer and the results expected to be achieved from the successful completion of the Offer and the combination of Inco and Falconbridge, including the operating and other synergies and cost savings expected to be realized, and the timing thereof; the increased market capitalization, share price multiple and improved liquidity of Inco Shares; the improved cash flow and earnings of Inco; statements regarding plans, objectives and expectations with respect to existing and future operations; statements regarding business and financial prospects; statements regarding anticipated financial or operating performance and cash flows; statements regarding possible divestitures; statements regarding strategies, objectives, goals and targets; and the financial position and international presence that permits Inco to compete against global metals and mining companies; and (B) factors relating to mining and the business, financial position, operations and prospects of Inco, including (1) the price volatility for nickel and other primary metal products produced by Inco; (2) the demand for and supply of nickel, copper and other metals, both globally and for certain markets and uses, as well as the availability of, and prices for, intermediate products containing nickel purchased by Inco and/or to be produced by Inco and nickel-containing stainless steel scrap and other substitutes for primary nickel and nickel inventories; (3) the premiums realized by Inco over the London Metal Exchange (“LME”) cash prices and the sensitivity of Inco’s results of operations to changes in metals prices, prices of commodities and other supplies used in its operations and interest and exchange rates; (4) Inco’s strategies and plans; (5) Inco’s nickel unit cash cost of sales before and after by-product credits, interest and other expenses; (6) Inco’s energy and other costs, and pension contributions and expenses and assumptions relating thereto; (7) Inco’s position as a low-cost producer of nickel; (8) Inco’s debt-equity ratio and tangible net worth; (9) the political unrest or instability in countries (such as Indonesia) in which Inco and its subsidiaries (such as PT International Nickel Indonesia Tbk (“PT Inco”)) operate and the impact thereof on Inco and/or its subsidiaries; (10) construction, commissioning, initial shipment and other schedules, capital costs and other aspects of Inco’s Goro and Voisey’s Bay projects and other growth projects and PT Inco’s program to increase its production, capital expenditures, and hydroelectric power generation at PT Inco and the effect thereon of lower water levels; (11) the necessary agreements and arrangements for the construction of the Goro project, and the timing of the start of production and the costs of construction with respect to the issuance of the necessary permits and other authorizations required for, and engineering and construction timetables for, the Goro and Voisey’s Bay projects; (12) Inco’s estimates of the quantity and quality of its ore/mineral reserves; (13) planned capital expenditures and tax payments; (14) Inco’s costs of production and production levels, including the costs of and potential impact on operations and production of complying with existing and proposed environmental laws and regulations and net reductions in environmental emissions; (15) the impact of changes in Canadian dollar-U.S. dollar and other exchange rates on Inco’s costs and the results of its operations; (16) Inco’s sales of specialty nickel products; (17) Inco’s cost reduction and other financial and operating objectives and planned maintenance and other shutdowns; (18) the commercial viability of new production processes and process changes for, and processing recoveries from, its development projects; (19) Inco’s productivity, exploration and research and development initiatives as well as environmental, health and safety initiatives; (20) the negotiation of collective agreements with its unionized employees; (21) Inco’s sales organization and personnel requirements; (22) business and economic conditions; and (23) the extension of current mining and other leases, export licences and concessionary rights. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in the Offer and Circular.

      Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions in connection with the combination of Inco and Falconbridge or otherwise about: the ability of Inco to successfully compete against global metals and mining and exploration companies by creating through such a combination an enterprise of increased scale; strong demand for nickel, copper and other metals in emerging markets such as China; approximately $550 million per annum in pre-tax operating and other synergies and cost savings, and other benefits, expected to be realized, and the timing and net present value thereof, based on the achievement of operational efficiencies from restructuring, integration and other initiatives relating to the combination of Inco and Falconbridge (as described in Section 5 of the Circular, “Purpose of the Offer and Inco’s Plans for Falconbridge — Strategic Rationale for the Offer and Anticipated Benefits to be Realized” and Section 1 of this Notice of Variation, “Background to the Increased Offer — Updated Synergies Estimate); the accuracy of projected synergies in respect of expected cash flows, cost savings and profitability; the ability of the combined company to achieve continuity in mining operations and realize projected production optimization levels; the approvals or clearances required to be obtained by Inco and Falconbridge from regulatory and other agencies and bodies being successfully obtained and divestitures required by regulatory agencies being acceptable and completed in a timely manner (as described in Section 20 of the Circular, “Regulatory Matters”, Section 4 of the First Extension, “Recent Developments — Regulatory Clearances”, Section 4 of the Second Extension, “Recent Developments — Regulatory Clearances”, Section 4 of the Third Extension, “Recent Developments  — Regulatory Clearances”, and Section 6 of this Notice of Variation, “Regulatory Matters — Inco’s Offer”); there being limited costs, difficulties or delays related to the integration of Falconbridge’s operations with those of Inco; the timely completion of the steps required to be taken for the eventual combination of the two companies; business and economic conditions generally; exchange rates (including estimates on the U.S. dollar — Canadian dollar exchange rate), energy and other anticipated and unanticipated costs and pension contributions and expenses; the supply and demand for, deliveries of, and the level and volatility of prices of, nickel, copper, cobalt, aluminum, zinc and other primary metals products, purchased intermediates and nickel-containing stainless steel scrap and other substitutes and competing products for the primary nickel and other metal products Inco and Falconbridge produce; the timing of the receipt of remaining regulatory and governmental approvals for the Goro project and other operations; the continued availability of financing on appropriate terms, including through partner or other participation arrangements in the case of the Goro project, for development projects for the combined company; Inco’s costs of production and production and productivity levels, as well as those of Inco’s competitors; engineering and construction timetables and capital and operating costs for the Goro and Voisey’s Bay projects and PT Inco’s expansion initiative; market competition; mining, processing, exploration and research and development activities; the accuracy of ore/mineral reserve estimates; premiums realized over LME cash and other benchmark prices; tax benefits/ charges; the resolution of environmental and other proceedings and the impact on the combined company of various environmental regulations and initiatives; assumptions concerning political and economic stability in Indonesia and other countries or locations in which Inco operates or otherwise; Inco’s ongoing relations with its employees at its operations throughout the world; and the extent of any labour, equipment or other disruptions at any of its operations of any significance other than any planned maintenance or similar shutdowns and that any third parties which Inco relies on to supply purchased intermediates or provide toll smelting or other processing do not experience any unplanned disruptions. The mine planning and other assessments related to the determination of the value of the synergies expected to be realized as a result of the combination of Inco and Falconbridge are based on preliminary evaluations only, and feasibility studies remain to be undertaken to confirm the mine plans and evaluations upon completion of the combination.

      While Inco anticipates that subsequent events and developments may cause Inco’s views to change, Inco specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing Inco’s views as of any date subsequent to the date of this Notice of Variation. Inco has attempted to identify important factors that could cause actual actions, events or results to differ materially from those current expectations described in forward-looking statements. However, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended and that could cause actual actions, events or results to differ materially from current expectations. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. These factors are not intended to represent a complete list of the factors that could affect Inco and the combination of Inco and Falconbridge. Additional factors are noted elsewhere in the Offer and Circular and in the documents incorporated by reference into the Offer and Circular. See, for example, Section 6 of the Circular “Risk Factors Related to the Offer” and the section entitled “Risks and Uncertainties” contained in the Offeror’s Annual Report on Form 10-K for the year ended December 31, 2005. Inco undertakes no obligation to update forward-looking statements.

INFORMATION CONCERNING FALCONBRIDGE

      The information concerning Falconbridge contained in the Offer and Circular, the First Extension, the Second Extension, the Third Extension and this Notice of Variation, including information contained in Section 2 of the Circular, “Falconbridge”, and any documents filed by Falconbridge with a securities regulatory authority in Canada that are incorporated by reference therein, has been taken from or based upon publicly available documents and records on file with Canadian securities regulatory authorities and other public sources. See Section 2 of the Circular, “Falconbridge — Documents Incorporated by Reference”, Section 6 of the First Extension, “Documents Incorporated by Reference”, Section 6 of the Second Extension, “Additional Falconbridge Documents Incorporated by Reference”, Section 6 of the Third Extension, “Falconbridge Documents Incorporated by Reference” and Section 3 of this Notice of Variation, “Other Changes to the Original Offer”. Although Inco has no knowledge that would indicate any statements contained therein relating to Falconbridge taken from or based upon such documents and records are untrue or incomplete, neither Inco nor any of its officers or directors assumes any responsibility for the accuracy or completeness of the information relating to Falconbridge taken from or based upon such documents or records, or for any failure by Falconbridge to disclose events that may have occurred or may affect the significance or accuracy of any such information but which are unknown to Inco.

NOTICE OF VARIATION

May 29, 2006

      By notice to the Depositary and as set forth in this Notice of Variation, Inco has varied its Original Offer dated October 24, 2005, as amended or supplemented by the notices of extension dated December 14, 2005, January 19, 2006 and February 27, 2006, respectively, to purchase all of the issued and outstanding Falconbridge Shares other than any Falconbridge Shares owned directly or indirectly by Inco and including Falconbridge Shares that may become issued and outstanding after the date of the Offer but before the Expiry Time upon the conversion, exchange or exercise of any securities of Falconbridge that are convertible into or exchangeable or exercisable for Falconbridge Shares (other than SRP Rights).

      Except as otherwise set forth in this Notice of Variation, the terms and conditions of Inco’s offer to purchase the Falconbridge Shares as previously set forth in the Original Offer, as amended or supplemented by the First Extension, the Second Extension and the Third Extension, respectively, continue to be applicable in all respects and this Notice of Variation should be read in conjunction with the Offer and Circular, the First Extension, the Second Extension, the Third Extension, the Letter of Transmittal and the Notice of Guaranteed Delivery, the provisions of which are incorporated herein by reference.

      Unless the context requires otherwise or unless otherwise defined, defined terms used in this Notice of Variation have the same meaning as in the Offer and Circular. All references to the term “Offer” in the Offer and Circular, the Letter of Transmittal, the Notice of Guaranteed Delivery and this Notice of Variation mean the Original Offer as amended or supplemented by the First Extension, the Second Extension, the Third Extension and this Notice of Variation.

1.   Background to the Increased Offer

      On October 11, 2005, Inco and Falconbridge announced that their respective Boards of Directors had approved the acquisition of all of the outstanding common shares of Falconbridge by Inco by way of a friendly take-over bid pursuant to the Support Agreement originally entered into on October 10, 2005, as subsequently amended. On October 24, 2005, Inco mailed its Original Offer to purchase all of the outstanding common shares of Falconbridge. The combined company created by a successful completion of the Offer will be one of the world’s premier mining and metals companies in both nickel and copper, with one of the mining industry’s most attractive portfolios of low-cost, profitable growth projects.

      On May 13, 2006, the Board of Directors of Inco reaffirmed its commitment to the combination of Inco and Falconbridge by increasing the cash consideration payable to Shareholders under the Offer from Cdn.$34.00 in cash per Falconbridge Share to Cdn.$51.17 in cash per Falconbridge Share and by increasing the maximum amount of cash consideration available under the Offer by Cdn.$1,914,029,962 from Cdn.$2,872,648,913 to Cdn.$4,786,678,875. The Board of Directors of Falconbridge reaffirmed its support for Inco’s increased Offer in a Notice of Change to Directors’ Circular, accompanying this Notice of Variation, in which it unanimously recommended that Shareholders accept Inco’s increased Offer and tender their Falconbridge Shares to the increased Offer.

      Under the increased Offer, Shareholders may elect to receive (a) Cdn.$51.17 in cash in respect of each Falconbridge Share held or (b) 0.6927 of an Inco Share and Cdn.$0.05 in cash in respect of each Falconbridge Share held, subject to proration such that if all Shareholders tendered to the Cash Alternative or all Shareholders tendered to the Share Alternative, each Shareholder would be entitled to receive Cdn.$12.50 in cash and 0.524 of an Inco Share for each Falconbridge Share tendered, subject to adjustment for fractional shares.

Why Did Inco Increase its Offer?

      Falconbridge’s strong financial performance in the intervening period since the announcement of the Original Offer was a significant factor in Inco’s decision to increase its Original Offer. As a result of higher metals prices, particularly in respect of copper, Falconbridge’s cash flow increased to $668 million in the first quarter of 2006, representing an increase of 48% over its first quarter of 2005. Falconbridge has utilized the cash flow to redeem $500 million of its junior preference shares, and has announced its intention to redeem the remaining $253 million of its junior preference shares, since the proposed combination of Inco and Falconbridge was first announced.

Updated Synergies Estimate

      Last October, Inco and Falconbridge announced that the companies had jointly identified the potential to realize estimated average annual pre-tax run-rate operating and corporate synergies of approximately $350 million through a combination of Inco and Falconbridge.¹ The estimated synergies were attributable to: (1) savings in general and administrative costs (approximately $110 million), (2) cost improvements from more efficient operations, streamlined procurement practices and economies of scale (approximately $90 million), (3) optimizing material feeds, intermediate product flows and processing facilities (approximately $120 million), and (4) maximizing mine production by accelerating mine development (approximately $30 million).

      After several months of working together with Falconbridge to further evaluate potential opportunities to maximize the value of the companies’ respective mining and processing operations, Inco and Falconbridge have now jointly identified the potential to realize estimated average annual pre-tax run-rate operating and corporate synergies of approximately $550 million,² an increase of $200 million from the estimated synergies at the time of the announcement of the Original Offer. This increase in the synergies estimate is attributable to developed improvements in the Inco-Falconbridge integration plan and to changes in commodity price assumptions as a result of the improved commodity market outlook since October 2005. Inco believes that it should be able to achieve synergies approaching the average annual pre-tax run rate by approximately 24 months after completion of the transaction.

      The Inco and Falconbridge synergies/ integration team has developed a number of changes to its initial plans for the combined company in order to further optimize material feeds and increase mine production in the Sudbury basin. As a result, Inco is now able to revise its estimate of average annual pre-tax run-rate operating and corporate synergies upwards. This increase in the estimate of synergies is attributable to (1) further cost improvements from more efficient operations, streamlined procurement practices and economies of scale (approximately $10 million), (2) further optimization of material feeds, intermediate product flows and processing facilities (approximately $30 million), and (3) further maximization of mine production by accelerating mine development (approximately $80 million).

      The bulk of the increase in value in the synergies from the transaction is driven by increased production of copper, nickel and platinum group metals in the Sudbury basin. Some of the key drivers of the additional identified synergies include the following projects:

      Applying revised short and long-term commodity price assumptions to these synergies, based on the improved outlook in commodity markets since October 2005, yields a further increase in the estimated synergies of approximately $80 million.³     

      The net present value of the estimated average annual pre-tax run-rate operating and corporate synergies of $550 million, using a 7% discount rate, is approximately $3.5 billion on an after-tax basis.

      These anticipated benefits and expected synergies are based on various assumptions and are subject to various risks. See “CAUTION REGARDING FORWARD-LOOKING INFORMATION” above and Section 6 of the Circular, “Risk Factors Related to the Offer”.

Creation of a World-Class Metals and Mining Company

      Inco’s proposed combination with Falconbridge offers a unique opportunity to create a much larger nickel and copper company with strong positions in a number of other metals, and to create significant shareholder value at the same time. Inco would become one of the world’s largest metals and mining companies in terms of enterprise value based upon share prices as of May 26, 2006. The combined company would be primarily a producer of nickel and copper, becoming the world’s largest nickel producer and a leading copper producer, and would have world-leading nickel and copper reserve bases, with an attractive portfolio of long-life, low-cost development opportunities.

2.   Increase in Offer Price

      Inco has varied the Original Offer by increasing the maximum aggregate cash consideration available under the Offer from Cdn.$2,872,648,913 to Cdn.$4,786,678,875, representing an increase of Cdn.$5.00 per Falconbridge Share on an adjusted fully diluted basis. As a result, Inco has increased the price offered to Shareholders for each Falconbridge Share to, at the election of the Shareholder:

in each case, as elected by the Shareholder in the applicable Letter of Transmittal, and subject to proration as set out in the Original Offer and this Notice of Variation. The increase in the exchange ratio for Inco Shares from 0.6713 to 0.6927 results from an increased number of Falconbridge Shares that will be purchased by Inco for cash and a lesser number of Falconbridge Shares that will be exchanged for Inco Shares under the Offer with the additional cash consideration.

      The maximum amount of cash consideration available under the Offer has been increased from Cdn.$2,872,648,913 to Cdn.$4,786,678,875, representing an increase of Cdn.$1,914,029,962. The maximum number of Inco Shares issuable under the Offer has been reduced from 200,702,404 Inco Shares to 200,657,578 Inco Shares, reflecting an 85,545 reduction in the number of Falconbridge Shares outstanding on an adjusted fully diluted basis since the date of the Original Offer.

      The consideration payable under the Offer will be prorated on each Take-Up Date as necessary to ensure that the total aggregate consideration payable under the Offer and in any Subsequent Acquisition Transaction does not exceed these maximum aggregate amounts and will be based on the number of Falconbridge Shares acquired in proportion to the number of Falconbridge Shares outstanding on an adjusted fully diluted basis.

      Assuming all Shareholders tendered to the Cash Alternative or all Shareholders tendered to the Share Alternative, each Shareholder would be entitled to receive Cdn.$12.50 in cash and 0.524 of an Inco Share for each Falconbridge Share tendered, subject to adjustment for fractional shares.

      Accordingly, the definitions of “Maximum Take-Up Date Cash Consideration” and “Maximum Take-Up Date Share Consideration” in the “Glossary” section of the Offer and Circular (found at page 9 of the Offer and Circular) are deleted and replaced by the following definitions, respectively:

      Fractional Inco Shares will not be issued in connection with the Offer. Where a Shareholder is to receive Inco Shares as consideration under the Offer and the aggregate number of Inco Shares to be issued to such Shareholder would result in a fraction of an Inco Share being issuable, the number of Inco Shares to be received by such Shareholder will either be rounded up or down and the amount of cash to be received by such Shareholder will

correspondingly be either decreased or increased (on the basis of Cdn.$73.80 per Inco Share) such that the Maximum Take-Up Date Cash Consideration is paid and the Maximum Take-up Date Share Consideration is issued in respect of Falconbridge Shares taken up on such Take-Up Date.

      If any holder of Falconbridge Options does not exercise such options prior to the Expiry Time, their Falconbridge Options will remain outstanding in accordance with their terms and conditions, including with respect to term to expiry, vesting schedule and exercise prices, except that, to the extent permitted, an option to acquire Falconbridge Shares will become an option to acquire that number of Inco Shares equal to the number of Falconbridge Shares multiplied by 0.6934 (representing 0.6927 of an Inco Share adjusted to account for the Cdn.$0.05 payable under the Share Alternative) and have an exercise price per Inco Share equal to the exercise price per Falconbridge Share of that option immediately prior to the Expiry Time divided by 0.6934, subject to adjustments to ensure the “in-the-money” amount in respect of such option does not increase.

      All references in the Offer and Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery to: the price offered by the Offeror; the Maximum Take-Up Date Cash Consideration and the Maximum Take-Up Date Share Consideration offered by the Offeror; the amount of cash and Inco Shares that would be received assuming that either all Shareholders tendered to the Cash Alternative or all Shareholders tendered to the Share Alternative; and the methods by which the number of Falconbridge Shares, and the exercise price per Inco Share, are calculated under Falconbridge Options are amended to reflect the foregoing changes set out in Section 1, “Increase in Offer Price”, of this Notice of Variation.

      Assuming that all of the conditions to the Offer are satisfied or waived, all Shareholders whose Falconbridge Shares are taken up under the Offer, including those Shareholders who have already deposited their Falconbridge Shares to the Offer, will receive the increased price for their Falconbridge Shares. Shareholders who have validly deposited and not withdrawn their Falconbridge Shares need take no further action to accept the Offer.

      Inco has received sufficient commitments from Morgan Stanley Senior Funding (Nova Scotia) Co., RBC Capital Markets together with Royal Bank of Canada, Goldman Sachs Canada Credit Partners Co. and The Bank of Nova Scotia for the purpose of financing the cash portion of Offer.

3.   Other Changes to the Original Offer

      On March 21, 2006, the Board of Directors of Falconbridge announced that Falconbridge had adopted a new shareholder rights plan agreement dated as of March 21, 2006 between Falconbridge and CIBC Mellon Trust Company (the “Shareholder Rights Plan”). The Shareholder Rights Plan became effective on March 21, 2006 and, among other things, defined a “Permitted Bid” as a take-over bid where the bid is made by way of a take-over bid circular and (i) is made to all holders of Voting Shares (as defined in the Shareholder Rights Plan), other than the offeror, for all of the Voting Shares held by those holders; and (ii) the bid must not permit Voting Shares tendered pursuant to the bid to be taken up unless at such time more than 50% of the Voting Shares held by Shareholders other than the bidder, its affiliates and Persons acting jointly or in concert with the bidder (the “Independent Shareholders”) have been tendered pursuant to the take-over bid and not withdrawn.

      In order to make the terms of the Offer consistent with the revised “Permitted Bid” provisions of Falconbridge’s new Shareholder Rights Plan, Inco, as permitted under the Support Agreement, as amended on March 21, 2006, has varied the Original Offer by deleting in its entirety the last paragraph of Section 7 of the Offer to Purchase, “Extension and Variation of the Offer” (found at page 20 of the Offer to Purchase), which read as follows:

4.   Amendments to the Support Agreement

      On May 13, 2006, Inco entered into a fourth amending agreement (the “Amending Agreement”) with Falconbridge to amend the Support Agreement originally entered into by Inco and Falconbridge on October 10, 2005,

as subsequently amended on January 12, 2006, February 20, 2006 and March 21, 2006, respectively. This summary is qualified in its entirety by the full text of the Support Agreement, as amended. The Amending Agreement was filed by Inco (i) with the Canadian securities regulatory authorities and available at www.sedar.com and (ii) with the SEC and available at www.sec.gov.

Increase in Offer Price

      Under the terms of the Amending Agreement, Inco agreed to increase the cash consideration offered to holders of Falconbridge Shares to Cdn.$51.17 per Falconbridge Share pursuant to the Offer. As a result, and as described more fully in this Notice of Variation, Shareholders will be entitled to elect to receive either (a) Cdn.$51.17 in cash per Falconbridge Share held or (b) 0.6927 of an Inco Share plus Cdn.$0.05 in cash per Falconbridge Share held, subject, in each case, to proration based upon the maximum amount of cash available and the maximum number of Inco Shares issuable under the Offer.

Recommendation of the Board of Directors of Falconbridge

      Falconbridge has confirmed that the Board of Directors of Falconbridge, upon consultation with its financial and legal advisors, has unanimously determined that the increased price offered under the Offer is fair from a financial point of view to all Shareholders (other than the Offeror) and that it is in the best interests of Falconbridge for the Offer to be made and for the Board of Directors of Falconbridge to support the Offer. Accordingly, the Board of Directors of Falconbridge has unanimously approved the entering into of the Amending Agreement and the making of a recommendation that Shareholders accept the Offer.

Agreements as to Termination Payments and Expense Reimbursement

      In consideration of Inco increasing the cash consideration under the Offer, Falconbridge has agreed to increase the amount of the termination payment that may be payable to Inco in specified circumstances from $320 million to $450 million.

      Falconbridge has also agreed to increase the amount of the expense payment payable to Inco from $30 million to $40 million if the Support Agreement is terminated by Inco in circumstances where Falconbridge is in default of any covenants or obligations under the Support Agreement or if any representation or warranty of Falconbridge is untrue or incorrect or shall have become untrue or incorrect at any time prior to the Expiry Time and such default or inaccuracy is not curable or, if curable, is not cured by the earlier of such date which is within 30 days from the date of notice of such breach and the Expiry Time.

      In addition, Falconbridge has agreed to increase the enhanced expense payment payable to Inco from $107 million to $150 million. The enhanced expense payment will now also be payable to Inco if (i) the Offer is not completed as a result of the Minimum Tender Condition not having been satisfied in circumstances in which the clearances under the Competition Act, the HSR Act and the EC Merger Regulation have been obtained, or such clearances have not been obtained and Falconbridge has not complied with certain of its covenants and obligations (and the Support Agreement is terminated by Inco); or (ii) the Board of Directors of Falconbridge or any committee thereof fails to recommend or withdraws, modifies, changes or qualifies its approval or recommendation of the Support Agreement or the Offer in any manner adverse to Inco; or the Board of Directors of Falconbridge or any committee thereof recommends or approves, or publicly proposes to recommend or approve, an acquisition proposal; or Falconbridge fails to take any action required under the Support Agreement with respect to the Shareholder Rights Plan to defer the separation time of the SRP Rights or to allow the timely completion of any Contemplated Transaction; or the Board of Directors of Falconbridge or any committee thereof fails to publicly affirm its approval or recommendation of the Offer within five calendar days of any written request to do so from Inco (in each case, without requiring termination of the Support Agreement by Inco), unless (A) the events set out in (i) and (ii), as the case may be, arise solely as a result of a material adverse change in respect of Inco which has occurred since the date of the Support Agreement; (B) the Board of Directors of Falconbridge has determined in good faith (after receipt of advice from its legal and financial advisors) that (x) a material adverse change in Inco has occurred since the date of the Support Agreement; and (y) the failure to change the Falconbridge Board’s recommendation, or refusal to reaffirm such recommendation, would be inconsistent with its fiduciary duties; and (C) Inco has filed, or the OSC has determined that it should have filed, a material change report in accordance with applicable securities laws in respect of such material adverse change.

      Moreover, in circumstances where the enhanced expense payment is payable and Inco has received the enhanced expense payment, Falconbridge is permitted to deduct from the termination payment, when payable, the amount of the enhanced expense payment received by Inco.

Inco Opportunity to Match

      Pursuant to the Amending Agreement, the period of time during which Falconbridge is not permitted to accept, approve or recommend, or enter into any agreement relating to, an acquisition proposal (other than a confidentiality agreement contemplated by the Support Agreement) has been increased from seven business days to 10 business days. Accordingly, the corresponding period of time during which Inco has the opportunity, but not the obligation, to amend the terms of the Offer has been increased from seven business days to 10 business days. The Board of Directors of Falconbridge must review any proposal by Inco to amend the terms of the Offer in order to determine, in good faith in the exercise of its fiduciary duties, whether Inco’s proposal to amend the Offer would result in an acquisition proposal not being a superior proposal compared to the proposed amendment to the terms of the Offer.

Superior Proposal

      The definition of a “superior proposal” under the Support Agreement means, among other things, an unsolicited bona fide acquisition proposal made by a third party to Falconbridge that is “reasonably capable of being completed without undue delay, taking into account all legal, financial, regulatory and other aspects of such proposal and the party making such proposal”. This element of the definition of superior proposal has been amended to clarify that “regulatory” aspects includes U.S. Competition Authority and Investment Canada approval.

5.   Xstrata’s Offer

      On May 18, 2006, Xstrata Canada Inc., a wholly-owned subsidiary of Xstrata plc (“Xstrata”), filed a take-over bid circular relating to an unsolicited, competing offer to purchase all of the outstanding common shares of Falconbridge that it does not already own for Cdn.$52.50 in cash (the “Xstrata Offer”). Falconbridge’s Board of Directors is required to mail a Directors’ Circular to Shareholders responding to the Xstrata Offer by no later than June 2, 2006. The Xstrata Offer is conditional upon receipt of regulatory approvals, including Investment Canada Act approval, and the approval of the Xstrata shareholders at a meeting scheduled for the end of June 2006. See Section 6 of this Notice of Variation, “Regulatory Matters — Xstrata’s Offer”.

      Inco believes its Offer provides significant advantages over the Xstrata Offer in the ability for Shareholders (i) to remain invested in a larger portfolio of world-class mining assets at a time of robust metal market performance, and (ii) to participate in the realization of very significant expected synergies and growth opportunities in the combined company resulting from the successful completion of the Offer. See Section 1 of this Notice of Variation, “Background to the Increased Offer”. We urge you to REJECT the Xstrata Offer and ACCEPT Inco’s increased Offer.

6.   Regulatory Matters

Inco’s Offer

      The remaining regulatory clearances for the pending transaction relate to clearances from the antitrust/ competition authorities at the European Commission (the “EC”) and the U.S. Department of Justice (the “DOJ”). Inco has been pursuing these clearances since October 2005, and as discussed below, is working towards a final resolution of the remaining clearances as soon as possible, with an expectation of conclusion by not later than mid-July 2006. A “no action letter” was obtained from the Canadian Competition Bureau on January 27, 2006. Since Inco is a Canadian entity, clearance under the Investment Canada Act is not required.

      The EC and the DOJ have been reviewing the combined market share of Inco and Falconbridge in certain segments of the nickel markets. Inco and Falconbridge have proposed a remedy to address the concerns identified by the EC and DOJ, which comprises the divestiture of Falconbridge’s Nikkelverk refinery located in Norway and related marketing organizations which sell the finished nickel and other metal products produced at Nikkelverk, as well as a possible long-term agreement under which Inco would supply nickel-in-matte as feed for Nikkelverk equivalent to the volumes that Falconbridge would have supplied absent the completion of the transaction.

      On May 8, 2006, Inco and Falconbridge received a Statement of Objections from the EC to the pending transaction, a normal step in a second phase review of an acquisition with the profile of Inco’s transaction with

Falconbridge. Inco responded to this Statement on May 22, 2006 in accordance with the applicable timetable for this process.

      Both the EC and the DOJ have raised certain issues with respect to the adequacy of the possible remedy that Inco and Falconbridge have discussed with each regulatory authority. Inco and Falconbridge have been evaluating how those issues can be addressed through changes to the remedy developed by them that would be acceptable to both of them as well as to the EC and to the DOJ. It is currently expected that the EC will complete that review and render its decision on the transaction by July 12, 2006. The DOJ is currently required, based upon understandings previously reached among the DOJ, Inco and Falconbridge, to indicate its final position on the pending transaction by early July 2006. Management is confident that it will receive regulatory clearance from both these authorities.

      Under the terms of the Support Agreement, in the event the Competition Clearance Conditions (as defined in the Support Agreement) are not satisfied or waived by the Initial Expiry Time (being December 23, 2005), Inco will extend the Offer, subject to the terms of the Support Agreement, through one or more extensions for such number of days as does not exceed the lesser of: (i) an additional 229 days from the Initial Expiry Time; and (ii) such number of days as required for the Competition Clearance Conditions to be satisfied.

      Management’s expectations with respect to the satisfaction of the Competition Clearance Conditions and the anticipated timing of completion of the regulatory clearance process are subject to various risks and assumptions. See “CAUTION REGARDING FORWARD-LOOKING INFORMATION” above. Also see Section 6 of the Circular, “Risk Factors Related to the Offer”.

Xstrata’s Offer

      Xstrata announced the Xstrata Offer on May 17, 2006. Xstrata has not indicated when (or whether) it commenced the regulatory clearance process relating to the Xstrata Offer. Inco has received no indication that it has done so. Similarly, Xstrata has not announced receipt of any of its required clearances. As described in Xstrata’s take-over bid circular dated May 18, 2006, the Xstrata Offer is subject to antitrust/ competition clearances in Canada, the United States and Europe. Since Xstrata is a non-Canadian entity, an acquisition of Falconbridge by Xstrata also requires pre-clearance and approval of the Minister of Industry under the Investment Canada Act, based on the Minister being satisfied that Xstrata’s acquisition of Falconbridge would be of “net benefit to Canada”. Further, the Xstrata Offer is subject to obtaining the approval of its shareholders, and Xstrata has stated that it expects a shareholder meeting for that purpose to occur by the end of June 2006.

7.   Other Recent Developments

Actions Against the Goro Development Project

      On the evening of April 1, 2006, protesters committed a series of actions against Inco’s Goro development project in New Caledonia. Various public roads leading to the Goro project site were blocked and trucks, excavators and building materials were vandalized. In addition, the main water supply to the project site was cut off and pipes that were to have been used in the water supply pipeline to the project were damaged. French military police were mobilized to remove the protesters and secure the site, having particular regard to the safety of workers. The construction site was shut down over a three-week period, with a phased remobilization that commenced in late April.

      Inco is currently assessing the extent of the damage to the site and estimating the remediation and other costs to the project which will be attributable to these actions. Inco is also currently assessing the extent to which these actions will affect the schedule for the completion of the project.

      Management’s capital cost estimates with respect to the Goro development project are subject to various risks and assumptions. See “CAUTION REGARDING FORWARD-LOOKING INFORMATION” above.

Construction of New UTILITY^® Nickel Plant in China

      On May 5, 2006, Inco confirmed its plans to proceed with the construction of a new facility in Dalian, Liaoning Province, China for the production of UTILITY nickel, a refined form of nickel product for the special needs of the stainless steel industry. The new plant will have a nominal capacity of 32,000 tonnes per year. Feed for the new plant, consisting of intermediate forms of nickel, will be supplied by Inco’s Goro development project and other sources. Construction work on the $63 million facility is expected to commence in the third quarter of 2006, with commissioning expected to take place in the first half of 2008.

      Management’s expectations and estimates with respect to the construction of a new facility in China are subject to various risks and assumptions. See “CAUTION REGARDING FORWARD-LOOKING INFORMATION” above.

Teck Offer for Inco

      On May 8, 2006, Teck Cominco Limited (“Teck”) announced its intention to make an unsolicited take-over bid for all the common shares of Inco (the “Teck Bid”). On that same date, Inco issued a press release announcing that it had received notice of Teck’s intention and that Inco’s Board of Directors would review and evaluate a formal offer from Teck when made available. On May 23, 2006, Teck mailed its take-over bid circular to Inco shareholders. On that same date, Inco issued a press release announcing that its Board of Directors recommended that shareholders not take any action with respect to the Teck Offer until Inco’s Board has fully evaluated the offer and communicated its views to shareholders. On May 31, 2006, Inco issued a press release announcing that its Board of Directors had approved a directors’ circular (the “Directors’ Circular”) for delivery to the shareholders of Inco in response to the Teck Offer and filed a Solicitation/ Recommendation Statement on Schedule 14D-9 with the SEC. For the reasons detailed in the Directors’ Circular, Inco’s Board of Directors unanimously recommended that Inco’s shareholders reject the Teck Offer and not tender their Inco Shares to the Teck Offer.

IMPORTANT INFORMATION FOR INVESTORS CONCERNING THE TECK OFFER

     Investors and security holders may obtain copies of the Directors’ Circular and Solicitation/ Recommendation Statement and other public filings made from time to time by Inco with the SEC free of charge at the SEC’s web site, www.sec.gov. In addition, documents filed with the SEC by Inco may be obtained free of charge by contacting Inco’s media or investor relations departments.

PT Inco Fire

      On May 24, 2006, a fire occurred at one of the four electric furnaces at PT Inco’s Sorowako operations. While PT Inco is currently investigating the causes of the fire and assessing its impact, preliminary indications are that it will be approximately seven to eight weeks before the electric furnace returns to normal operating levels. PT Inco estimates that, until the electric furnace is operating at normal levels, PT Inco’s production of nickel-in-matte, an intermediate nickel product, will be reduced by approximately 2,200 tonnes (1,000,000 pounds) per week.

      Management’s estimates and expectations with respect to operations at PT Inco are subject to various risks and assumptions. See “CAUTION REGARDING FORWARD-LOOKING INFORMATION” above.

Ontario Operations Tentative Labour Agreement

      On May 29, 2006, Inco reached a tentative agreement with the United Steelworkers union, which represents employees at its mining and processing operations in Sudbury, Ontario and Port Colborne, Ontario. Details of the proposed new three-year agreement will not be made public until the union has had the opportunity to present the tentative agreement to its membership. Voting to approve the contract has been scheduled for May 31, 2006.

Nickel and Copper Market Updates

      In Inco’s view, four key factors account for nickel’s projected future market strength: (i) strong rebounding world stainless steel output; (ii) a tighter stainless steel scrap market; (iii) persistent strength in non-stainless nickel demand; and (iv) limited nickel supply growth. These four factors are expected to translate into a nickel supply/ demand deficit for the next several years.

      During the first quarter of 2006, the LME benchmark cash nickel price rose, averaging $14,811 per tonne ($6.72 per pound), as compared with a fourth quarter 2005 average of $12,628 per tonne ($5.73 per pound). Inco believes that this rise was due principally to strong nickel demand from a sharp recovery in the production of nickel-containing stainless steel, the principal end-use for primary nickel, and due to a strong inflow of buying by hedge funds. This upturn in LME cash nickel prices has continued in April and May with the April price averaging $17,942 per tonne ($8.14 per pound) and with the benchmark price for the period thus far in May, from May 1 to 26, 2006, averaging

$20,868 per tonne ($9.47 per pound). The LME cash nickel price was $20,705 per tonne ($10.30 per pound) on May 26, 2006, the last trading day before the date of this Notice of Variation.

      Inco believes that nickel demand strengthened in the first quarter of 2006 principally due to the recovery in stainless steel production but also from the other sectors of nickel demand. The oversupply condition that existed in nickel-containing stainless steel during the second half of 2005 has ended, and producers are ramping up stainless steel output to meet stronger demand. Stainless steel prices have improved significantly and continue to rise. There was also continued strong demand for nickel from non-stainless steel applications such as the aerospace, oil and gas, construction and plating markets. On the nickel supply side, growth has continued to be slow as production disruptions have curtailed output from several producers, including seven to eight week production disruptions of approximately 2,200 tonnes (1,000,000 pounds) per week at PT Inco, as of May 24, 2006, due to the temporary shutdown of one of its four furnaces. See “PT Inco Fire” above. Nickel producer inventories remain at low levels and, if there are additional supply disruptions, supply would be further tightened. In line with these tight nickel market conditions, LME cash nickel prices have been rising and this has been accompanied by decreases in LME nickel stocks/ inventory. Inco currently believes that the market will remain strong throughout the balance of 2006 led by a recovery in stainless steel production.

      The LME benchmark cash copper price has averaged $4,944 per tonne ($2.24 per pound) for the first quarter of 2006, as compared with a fourth quarter 2005 average of $4,297 per tonne ($1.95 per pound). For the month of April 2006, the LME cash copper price averaged $6,388 per tonne ($2.90 per pound) and from May 1, 2006 to May 19, 2006, the price has averaged $8,016 per tonne ($3.64 per pound). Within the month of May, the LME cash price set a new record of $8,788 per tonne ($3.99 per pound) on May 12, 2006. The LME cash copper price was $8,301 per tonne ($3.77 per pound) on May 26, 2006, the last trading day before the date of this Notice of Variation.

      Copper prices continue to be driven by strong demand, very low inventories, supply constraints, operating disruptions and strong hedge fund buying. Demand has been supported by ongoing economic growth in the United States, notwithstanding the recent difficult hurricane season. Demand for copper and copper products is expected to remain strong over the next 18 months driven by strong global economic growth and continued strong demand in China and India.

      Inco believes that the world’s refined copper production capacity expansions currently in the planning pipeline will be barely sufficient to meet forecast demand. This supply-demand balance would imply high utilization rates for existing operations and the continuation of low levels of inventory which when combined with the risk of further unexpected supply disruptions is expected to result in volatile copper prices over the next few years.

      Management’s expectations with respect to nickel prices, copper prices, the recovery in stainless steel production, nickel supply, and demand for nickel, nickel from non-stainless steel applications, copper and copper products are subject to various risks and assumptions. See “CAUTION REGARDING FORWARD-LOOKING INFORMATION” above.

8.   Revised Selected Inco Pro Forma Consolidated Financial Information

      The following is an updated version of, and replacement for, the selected pro forma consolidated financial information previously contained in the Offer and Circular, as amended or supplemented, and should be read in conjunction with Inco’s unaudited pro forma consolidated financial statements, the accompanying notes thereto and the compilation report of PricewaterhouseCoopers LLP thereon, included in this Notice of Variation. The pro forma consolidated balance sheet has been prepared from the unaudited consolidated balance sheet of the Offeror and Falconbridge as at March 31, 2006 and gives pro forma effect to the successful completion of the Offer (including any Compulsory Acquisition or Subsequent Acquisition Transaction) as if the transactions occurred on March 31, 2006. The pro forma consolidated statements of earnings for the year ended December 31, 2005 and the three month period ended March 31, 2006 have been prepared, respectively, from the audited consolidated statement of earnings of the Offeror and Falconbridge for the year ended December 31, 2005 and the unaudited interim consolidated statement of earnings of the Offeror and Falconbridge for the three month period ended March 31, 2006, and gives pro forma effect to the successful completion of the Offer (including any Compulsory Acquisition or Subsequent Acquisition Transaction) as if the transactions occurred on January 1, 2005.

      The selected pro forma consolidated financial information is not intended to be indicative of the operating results or financial condition of the consolidated entities that would actually have occurred, or the results expected in future periods, had the events reflected herein occurred on the dates indicated. Actual amounts recorded upon consummation of the transactions contemplated by the Offer will differ from the pro forma information presented below. The pro

forma consolidated financial information does not reflect and does not give effect to (1) any special items such as payments pursuant to change of control provisions or integration costs which may be incurred as a result of the acquisition, (2) operating efficiencies, cost savings and synergies that are expected to result from the acquisition, or (3) the impact of undertakings that Inco is prepared to make in order to address regulatory clearance requirements, as there are no current agreements providing for implementation of such undertakings which, however, are expected to be carried out after the completion of the Offer.

     If the combination of Inco and Falconbridge had occurred on January 1, 2006, the revenue of Inco on a pro forma basis for the three months ended March 31, 2006 would have derived approximately 38% from nickel, 47% from copper, 8% from aluminium, 5% from zinc, 2% from precious metals and other non-precious metals. On a stand-alone basis, Inco’s revenues for the same time period were derived approximately 79% from nickel, 11% from copper, 6% from precious metals and 4% from all other metals.

9.   Other Changes to the Offer and Circular

      The definitions of “Material Adverse Change”, “Material Adverse Effect” and “Shareholder Rights Plan”, as they appear in the “Glossary” section of the Offer and Circular (found at pages 7 to 10 of the Offer and Circular), are deleted and replaced by the following definitions:

      The definition of “superior proposal” as it appears in Section 4 of the Offer and Circular, “Background to the Offer — Support Agreement” (found at page 34 of the Offer and Circular) is deleted and replaced by the following:

      The paragraph entitled “Management” in Section 5 of the Offer and Circular, “Strategic Rationale for the Offer and Anticipated Benefits to be Realized — Combined Operations of Inco and Falconbridge” (found at page 40 of the Offer and Circular) is hereby deleted and replaced by the following:

10. Withdrawal of Deposited Falconbridge Shares

      Except as otherwise provided herein or in Section 4 of the Offer to Purchase, “Withdrawal Rights”, all deposits of Falconbridge Shares to the Offer will be irrevocable. Unless otherwise required or permitted by applicable Laws, any Falconbridge Shares deposited in acceptance of the Offer may be withdrawn by or on behalf of the depositing Shareholder:

      Withdrawals may not be rescinded and any Falconbridge Shares properly withdrawn will thereafter be deemed not validly deposited for the purposes of the Offer. However, withdrawn Falconbridge Shares may be re-deposited at any

subsequent time prior to the Expiry Time by again following any of the procedures described in Section 3 of the Offer to Purchase, “Manner of Acceptance”.

      Shareholders are referred to Section 4 of the Offer to Purchase, “Withdrawal Rights”, for a description of the procedures for exercising the right to withdraw Falconbridge Shares deposited under the Offer.

11. Take-Up of and Payment for Deposited Falconbridge Shares

      Upon the terms and subject to the conditions of the Offer (including, without limitation, the conditions specified in Section 5 of the Offer to Purchase, “Conditions of the Offer”, and, if the Offer is further extended or varied, the terms and conditions of any such extension or variation), Inco will take up Falconbridge Shares validly deposited under the Offer and not withdrawn pursuant to Section 4 of the Offer to Purchase, “Withdrawal Rights”, not later than 10 calendar days after the Expiry Time and will pay for the Falconbridge Shares taken up as soon as possible, but in any event not later than three business days after taking up the Falconbridge Shares. Any Falconbridge Shares deposited under the Offer after the date on which Inco first takes up Falconbridge Shares will be taken up and paid for not later than 10 days after such deposit.

      Shareholders are referred to Section 6 of the Offer to Purchase, “Take Up of and Payment for Deposited Shares”, for details as to the take-up of and payment for Falconbridge Shares under the Offer.

12. Variations to the Original Offer

      The Offer and Circular, the First Extension, the Second Extension, the Third Extension, the Letter of Transmittal and the Notice of Guaranteed Delivery shall be read together with this Notice of Variation in order to give effect to the variations in the terms and conditions of the Offer and the changes in information to the Offer and Circular set forth in this Notice of Variation.

13. Offerees’ Statutory Rights

      Securities legislation in certain of the provinces and territories of Canada provides Shareholders with, in addition to any other rights they may have at law, rights of rescission or damages, or both, if there is a misrepresentation in a circular or a notice that is required to be delivered to such securityholders. However, such rights must be exercised within prescribed time limits. Shareholders should refer to the applicable provisions of the securities legislation of their province or territory for particulars of those rights or consult with a lawyer.

14. Registration Statement Filed with the SEC

      A Registration Statement on Form F-8 under the U.S. Securities Act has been filed, which covers the Inco Shares to be issued pursuant to the Offer. The Offer and Circular do not contain all of the information set forth in the Registration Statement. Reference is made to the Registration Statement and the exhibits thereto for further information. In addition to the documents listed under the heading, “Documents Filed as Part of the Registration Statement” on page 64 of the Offer and Circular (which Section is separate from and not part of the “Experts” section that immediately precedes it) and the documents listed under the heading, “Registration Statement Filed with the SEC” in each of the First Extension, the Second Extension and the Third Extension, respectively, the Amending Agreement has been filed with the SEC as part of the Registration Statement on Form F-8.

15. Directors’ Approval

      The contents of this Notice of Variation have been approved, and the sending of this Notice of Variation to the Shareholders has been authorized, by the Board of Directors of Inco.

AUDITORS’ CONSENT

      We have read the Notice of Variation of Inco Limited dated May 29, 2006 (the “Notice of Variation”), relating to the Offer and Circular furnished with Inco Limited’s Offer dated October 24, 2005 (the ”Offer and Circular”) as amended by the Notice of Extension dated December 14, 2005, the Notice of Extension dated January 19, 2006, the Notice of Extension dated February 27, 2006 and the Notice of Variation dated May 29, 2006 to purchase all of the issued and outstanding common shares of Falconbridge Limited. We have complied with Canadian generally accepted standards for an auditor’s involvement with offering documents.

      We consent to the incorporation by reference in the Offer and Circular, as amended or supplemented, of our report to the shareholders of Inco Limited on the audited consolidated financial statements of Inco Limited as at December 31, 2005, 2004 and 2003 and for each of the years in the three-year period ended December 31, 2005 and management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as at December 31, 2005. Our report is dated February 28, 2006.

      We also consent to the use in the Notice of Variation of our compilation report dated May 29, 2006 to the Board of Directors of Inco Limited on the pro forma consolidated balance sheet as at March 31, 2006 and the pro forma consolidated statements of earnings for the three months then ended and for the year ended December 31, 2005.

AUDITORS’ CONSENT

      We have read the Notice of Variation of Inco Limited dated May 29, 2006 (the “Notice of Variation”), relating to the Offer and Circular furnished with Inco Limited’s Offer dated October 24, 2005 (the “Offer and Circular”) as amended or supplemented by the Notice of Extension dated December 14, 2005, the Notice of Extension dated January 19, 2006, the Notice of Extension dated February 27, 2006 and the Notice of Variation dated May 29, 2006 to purchase all of the issued and outstanding common shares of Falconbridge Limited. We have complied with Canadian generally accepted standards for an auditor’s involvement with offering documents.

      We consent to the incorporation by reference in the Offer and Circular, as amended or supplemented, of our report to the shareholders of Falconbridge Limited on the consolidated balance sheets of Falconbridge Limited as at December 31, 2005 and 2004 and the consolidated statements of income, retained earnings (deficit) and cash flows for the years then ended. Our report is dated February 7, 2006 (except as to Note 23 which is as of March 16, 2006).

CERTIFICATE

      The foregoing, together with the Offer and Circular dated October 24, 2005 and the notices of extension dated December 14, 2005, January 19, 2006 and February 27, 2006, respectively, contain no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made. For the purpose of the Province of Québec, the foregoing, together with the Offer and Circular dated October 24, 2005 and the notices of extension dated December 14, 2005, January 19, 2006 and February 27, 2006, respectively, do not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed.

Dated: May 29, 2006

May 29, 2006

To the Board of Directors of Inco Limited

      We have read the accompanying unaudited pro forma consolidated balance sheet of Inco Limited (the “Company”) as at March 31, 2006 and the unaudited pro forma consolidated statements of earnings for the three months then ended and for the year ended December 31, 2005, and have performed the following procedures.

           The officials:

      Pro forma financial statements are based on management assumptions and adjustments which are inherently subjective. The foregoing procedures are substantially less than either an audit or a review, the objective of which is the expression of assurance with respect to management’s assumptions, the pro forma adjustments, and the application of the adjustments to the historical financial information. Accordingly, we express no such assurance. The foregoing procedures would not necessarily reveal matters of significance to the pro forma consolidated financial statements, and we therefore make no representation about the sufficiency of the procedures for the purposes of a reader of such statements.

(Signed) PricewaterhouseCoopers LLP

Chartered Accountants

Toronto, Ontario

PricewaterhouseCoopers refers to the Canadian firm of PricewaterhouseCoopers LLP and the other member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

    The following unaudited pro forma consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial condition of the consolidated entities that would have been achieved if the offer made by Inco Limited (“Inco”) to purchase all of the outstanding common shares of Falconbridge Limited (“Falconbridge”) dated October 24, 2005, as extended December 14, 2005, January 19, 2006 and February 27, 2006 and amended on May 13, 2006 (collectively, the “Offer”) had been completed during the period presented, nor is the selected pro forma consolidated financial information necessarily indicative of the future operating results or financial position of the consolidated entities. The pro forma consolidated financial information does not reflect and does not give effect to (1) any special items such as payments pursuant to change of control provisions or integration costs which may be incurred as a result of the acquisition, (2) operating efficiencies, cost savings and synergies that are expected to result from the acquisition or (3) the impact of undertakings that Inco is prepared to make in order to address regulatory clearance requirements, as there are no current agreements providing for implementation of such undertakings which, however, are expected to be carried out after the completion of the Offer, and no adjustments have been made to eliminate historical sales between Inco and Falconbridge as the amounts are not considered significant.

INCO LIMITED

PRO FORMA CONSOLIDATED BALANCE SHEET

As at March 31, 2006

(unaudited)

(millions of US dollars)

INCO LIMITED

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS

Three months ended March 31, 2006

(unaudited)

(millions of US dollars)

INCO LIMITED

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS

Year ended December 31, 2005

(unaudited)

(millions of US dollars)

INCO LIMITED

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(tabular amounts in millions of US dollars, except per share amounts)

        Earnings per share computation for the three months ended March 31, 2006

        Earnings per share computation for the year ended December 31, 2005

6.  SUBSEQUENT EVENT

The Depositary for the Offer is:

CIBC MELLON TRUST COMPANY

Telephone: (416) 643-5500

Toll Free: 1-800-387-0825

E-Mail: inquiries@cibcmellon.com

The Dealer Manager for the Offer is:

RBC CAPITAL MARKETS

The Information Agent for the Offer is:

105 Madison Avenue

New York, New York 10016

proxy@mackenziepartners.com

(212) 929-5500 (call collect)

or

Toll-Free: (800) 322-2885 (English)

                  (888) 405-1217 (French)

      Any questions and requests for assistance may be directed by holders of Falconbridge Shares to the Depositary, the Dealer Manager or the Information Agent at their respective telephone numbers and locations set out above. Shareholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer.

May 29, 2006

Dear Falconbridge Shareholder:

     On behalf of the Board of Directors and management of Inco Limited, we are pleased to send you our increased offer to purchase all of the outstanding common shares of Falconbridge Limited.

Increased Inco Offer

     In recognition of Falconbridge’s strong financial performance in the period since the announcement of our original offer, we agreed with the Falconbridge Board of Directors to increase our original offer to purchase your Falconbridge common shares. Under the increased Inco Offer, you will be entitled to receive either: (i) Cdn.$51.17 in cash; or (ii) 0.6927 of an Inco common share plus Cdn.$0.05 in cash for each of your Falconbridge common shares, at your election, subject to proration and the maximum cash and maximum share amounts, as described in the accompanying Notice of Variation.

     We believe, and the Falconbridge Board of Directors agrees, that the reasons for combining Inco and Falconbridge are even more compelling today than when we made our original offer. The value of the synergies we’ve identified by combining our two companies has increased significantly. And given today’s strong metals markets, and the outstanding prospects for nickel and copper, shareholders in the New Inco have the opportunity to participate in a company with truly outstanding earning potential both in the near and long term. The New Inco will be a true mining powerhouse, with a substantial resource base and impressive growth prospects, and we believe that it will be one of the most attractive mining companies for investors on a global basis.

Xstrata’s Competing Offer

     On May 18, 2006, a wholly-owned subsidiary of Xstrata plc filed a take-over bid circular relating to an unsolicited, competing offer to purchase all of the outstanding common shares of Falconbridge that it does not already own for Cdn$52.50 in cash per share. You may already have received Xstrata’s offer in the mail. We believe that our offer provides significant advantages over the Xstrata offer in that it provides for Falconbridge shareholders the opportunity (i) to remain invested in a large portfolio of world-class mining assets on a tax-effective basis at a time of robust metal market performance, and (ii) to participate in the realization of expected synergies and growth opportunities in the New Inco.

     We urge you to REJECT the Xstrata Offer and ACCEPT the increased Inco Offer.

Creation of a World-class Metals and Mining Company

     Inco’s combination with Falconbridge offers a unique opportunity to create a much larger nickel and copper company and to create real shareholder value. New Inco will be a truly formidable player on the world mining stage. It will be the world’s number one producer in nickel and a strong producer of copper, with first-class operations around the world. And it will have one of the best project pipelines in the mining business, with the world’s best portfolio of properties and growth projects in nickel and copper, arguably the two metals with best prospects going forward.

Updated Synergies Estimate

     Bringing together Inco and Falconbridge will accomplish what no other combination of companies can, which is to unlock the significant value of the synergies in our Canadian nickel and copper operations, particularly in the Sudbury basin. We also believe that the value of those synergies is significantly greater than our original estimate.

     We now estimate that the average annual pre-tax run-rate of the New Inco synergies would be approximately $550 million, with a net present value of approximately $3.5 billion on an after-tax basis, using a 7% discount rate. Inco believes it should be able to achieve synergies approaching the average annual pre-tax run-rate by approximately 24 months after the completion of the Inco-Falconbridge transaction. The estimated synergies figure has increased as a result of seven months of working closely with Falconbridge on how to maximize synergies and the impact of higher commodity price assumptions. Through this process we have identified several additional opportunities to accelerate and increase production utilizing New Inco’s resources and infrastructure, which are described in the Notice of Variation.

Regulatory Update

     Our offer for Falconbridge has experienced delays due to the pending regulatory clearances from the U.S. Department of Justice and European Commission in respect of antitrust concerns that each has raised in respect of certain segments of the

nickel markets. Inco has been pursuing these clearances since October 2005 and is working towards a final resolution of the remaining clearances as soon as possible, with an expectation of conclusion by not later than mid-July 2006.

     Xstrata’s offer is also conditional upon receipt of anti-trust and other regulatory approvals. Since Xstrata is a non-Canadian entity, an acquisition of Falconbridge by Xstrata will also require pre-clearance and approval of the Minister of Industry under the Investment Canada Act, based on the Minister being satisfied that Xstrata’s acquisition of Falconbridge would be of “net benefit to Canada”.

Reasons to Accept the Increased Inco Offer and Benefits of the Combination

     We believe the increased Inco Offer represents a unique and compelling opportunity for you to realize fair value for your Falconbridge common shares and that all Falconbridge shareholders should accept the increased Inco Offer. Moreover, we believe that the combination of Inco and Falconbridge will produce significant benefits including the creation of:

     We encourage you to read the terms and conditions of the increased Inco Offer as set out in the Notice of Variation. To help you understand the increased Inco Offer, we also encourage you to consult with your financial advisor.

     We want you to make an informed choice because we believe the more that you know about Inco and the opportunities for the combined company, the more you will want to take advantage of the increased Inco Offer.

     Together with the Notice of Variation, the Board of Directors of Falconbridge has delivered to you a Notice of Change to Directors’ Circular with respect to the increased Inco Offer. Your Falconbridge Board of Directors unanimously recommends that Falconbridge shareholders accept our increased Offer.

     To accept the increased Inco Offer, you will need to complete the Letter of Transmittal and Election Form (printed on blue paper) or a facsimile that accompanied our original offer, and return it in the envelope provided with our original offer such that it is received by the expiry time. A shareholder wishing to accept the increased Inco Offer whose Falconbridge common shares are held in the name of a nominee should request the broker, investment dealer, bank, trust company or other nominee to deposit the shareholder’s common shares.

     We urge you to accept our increased Offer and invite you to join us in building a strong, competitive, valuable, international and pre-eminent metals and mining company.

INCO LIMITED, 145 King Street West, Suite 1500, Toronto, Ontario M5H 4B7

 

 

(1)		Previously filed with the Bidder’s Schedule 14D-1F (File No. 005-62437) filed October 25, 2005.

 

INCO LIMITED
By:	/s/ Simon A. Fish
	Simon A. Fish, Esq.
	Executive Vice-President, General Counsel and Secretary

	/s/ Simon A. Fish
	Simon A. Fish, Esq.
	Executive Vice-President, General Counsel and Secretary May 31, 2006