Items 1. and 2. Business and Properties of Inco Limited

30 December 2004

GNiFi
(as Lessor)

GORO NICKEL S.A.
(as Lessee)

LEASE AGREEMENT

(Contrat de Crédit-Bail)

TABLE OF CONTENTS

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THIS LEASE, DATED 30 DECEMBER 2004, IS ENTERED INTO BY AND BETWEEN:

each a “Party” and together the “Parties”.

WHEREAS:

(A)     The Lessor has been organised for the purpose of constructing, financing and leasing the Assets which constitute a portion of the Plant. The Project shall be developed and operated by the Lessee. The transactions contemplated by this Lease and the other Transaction Documents are based on the special tax support available for Dom-Tom investments.

(B)     In accordance with the Girardin Law, the Request for DGI Final Approval was filed with the DGI. A preliminary approval of the Transaction was granted by the DGI by a letter dated May 4, 2001 and the DGI Final Approval is to be issued. The retrocession rate as calculated in Appendix 8 at the date of this Lease is higher than 80%.

NOW THEREFORE, THE PARTIES AGREES AS FOLLOWS:

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1. Definitions

1.1 For the purpose of this Lease, capitalised terms and expressions which are not otherwise defined in this Lease (whether in singular or in plural form) shall have the respective meanings given to them in Appendix 1.

1.2 In this Lease

2. Purpose and Term of this Lease

2.1 The Lessor hereby agrees to lease the Assets to the Lessee and the Lessee agrees to lease the Assets from the Lessor, in accordance with the provisions of Articles L.313-7 et subseq. of the French Code Monétaire et Financier, the laws in force in New Caledonia and the terms and conditions of this Lease.

2.2 This Lease shall commence on the date hereof and end on the date on which the Lessee has fully performed all of its obligations hereunder and no claim is capable of being made against the Lessor in respect of which it would be entitled to be indemnified hereunder. The “Lease Term” shall commence on the Substantial Completion Date and end, except as otherwise provided herein, on the twelfth anniversary of the Substantial Completion Date.

2.3 The Parties hereby acknowledge that the Lessor has agreed only to provide financing for the Transaction and that all risks associated with the ownership and the operation of the Assets will be borne solely by the Lessee pursuant to the terms and conditions of this Lease.

2.4 The Lessor shall acquire title to the Assets in accordance with clause 7.3 of the Construction Agreement.

2.5 The Lessor shall deliver and the Lessee shall accept the Assets on the Substantial Completion Date in accordance with the terms of the Construction Agreement.

2.6 The Parties agree that no inventory (état des lieux) shall be prepared for the Assets, and the Lessee shall take the Assets in the condition they are in as at the Substantial Completion Date, without recourse of any sort against the Lessor. The delivery of the Definitive Acceptance Certificate:

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2.7 With effect from the date of this Lease until the fifth anniversary of the Substantial Completion Date, the Lessee expressly renounces any investment tax benefit understood as “aide fiscale locale à l’investissement, équivalente à l’ aide fiscale de l’ article 217 undecies (déduction extra-comptable, crédit-d’ impôt)” and undertakes not to request any investment subsidies (subventions d’ investissement) in relation to the Assets.

3. Undertakings of the Lessor

3.1 The Lessor undertakes:

3.2 The Lessor makes no representation, warranty, undertaking or guarantee in connection with the condition or use of the Assets (in particular relating to any fault or apparent or hidden defect of the Assets), and, in particular, the Lessor has no obligation to maintain the Assets, in accordance with articles 1719 2°, 1719 4°, 1720 and 1721 of the French Civil Code, in recognition of the fact that the Lessee (in its capacity as Lessee and Project Manager) is responsible for the selection of the location, the type, the configuration, the design and the intended use of the Assets and the selection and installation of the Equipment.

4. Defects

4.1 Notwithstanding the provisions of articles 1720 and 1721 of the French Civil Code, the Lessee may not make any claim against the Lessor in respect of any defect in the Assets or obtain a decrease in the amount of the Rent or a reduction in the purchase price under Clause 26, even where such defect is such that it would prevent the use of the Assets.

4.2 As between the Lessee and the Lessor, the Lessee shall be solely responsible and liable for the following:

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The Lessee agrees not to make a claim against the Lessor, and that the Lessor shall not be liable, for any losses incurred as a result of such defects. The Lessee shall be required to perform at its own expense all repairs and replacements of any type that are necessary as a result of any defect, whether apparent or hidden.

4.3 The Lessee agrees to notify the Lessor of any defects in the Assets, whether apparent or hidden, in respect of which a claim has been or will be made under the Insurance Policies within the time limits imposed under the Insurance Policies, and in any case, not later than one (1) month after the Lessee’s discovery thereof. All the consequences of any delay in providing notice of any defects that might otherwise be covered by any insurance benefits shall remain the responsibility of the Lessee.

5. Terms and Conditions of Occupation

5.1 Authorised use of the Assets

The Assets shall be used by the Lessee in connection with the Project (the “Authorised Activities”).

5.2 Operating permits

5.3 Compliance with standard practice

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5.4 Easements (if any)

5.5 Modifications

5.6 Lessee financial information

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6. Rent and Other Charges

6.1 Rent and Termination Value

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6.2 Payment of cost, charges and Taxes

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6.3 Supplemental Rent

In the event that the Substantial Completion Date occurs after December 31, 2007 or there is a delay in claiming deductions, the Lessee shall pay to the Lessor a supplemental rent as and when indicated in paragraphs (5) or (6) of Appendix 4.

In the event that any centimes additionels are payable by the Lessor a supplemental rent calculated in accordance with paragraph (ee) of Section C to Appendix 3 will be payable by the Lessee.

6.4 Costs and charges

The Lessee shall bear any cost or charges due and payable in connection with the possession, control, safekeeping, management, maintenance, refurbishment, repair or operation of the Assets.

7. Work performed during the Lease Term

7.1 Maintenance / repairs

7.2 Liability of the Lessee by reason of the work

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7.3 Status of the works performed by the Lessee during this Lease

8. Liabilities and recourse

8.1 During the Lease Term the Lessee shall have the use, administration, management and control of the Assets. In such respect, the Lessee shall be deemed to be the custodian (gardien) of the Assets and the Assets shall be placed under its exclusive care, which the Lessee must assume in full, without any right for the Lessee to bring any claims or actions against the Lessor in connection with the Assets except as otherwise provided for in this Lease. Therefore, as between the Lessee and the Lessor, the Lessee shall be responsible during the Lease Term for any damage to the Assets or any damage that may arise due to reasons attributable to the Assets, whatever the cause thereof, including defects.

8.2 During the Lease Term all damage or loss that may be caused to the Lessee by reason of the Assets shall be entirely borne by the Lessee, without any right for the Lessee to bring any claims or actions against the Lessor and the Lessee shall indemnify and hold harmless the Lessor against all losses, claims, costs (including legal costs) and judgments in connection therewith (other than those arising from a third party claim). The provisions of Clause 25.1(c), (d) and (e) shall apply mutatis mutandis to the indemnity given under this Clause 8.2 as if amounts paid under this indemnity were Indemnification Amounts and such losses, claims, costs and judgments were Operational Losses.

8.3 The provisions of this Lease related to assumption of liability by the Lessee and acceptance by the Lessee of the Assets at the Substantial Completion Date shall not release or be deemed to release any Contractor or other third party from its obligations and liabilities in connection with the work and the construction of the Assets. In this respect, the Lessor grants a power of attorney to the Lessee in order to file any claims in relation to the installation and the operation of the Assets against any Contractor or other third party pursuant to the warranties issued by such Contractor or other third party with respect to the installation and the operation of the Assets in favour of the Lessor and to complete any necessary steps. Such power of attorney will be automatically terminated upon the occurrence of a Lessor Termination Event.

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8.4 The Lessee shall be entitled to bring all actions that it may deem appropriate against any Contractor or other third party provided that the Lessee shall not be entitled to assert that the Lessor is liable or otherwise implicate the Lessor in any such actions, in any manner.

8.5 The Lessee shall bear the cost of all interest, legal costs and fees in relation to such proceedings, as well as the damages or other judgments (if any) that may be awarded or entered as a result thereof.

9. Inspections

9.1 During the Lease Term, the Lessor or its agents may, upon reasonable prior notice and not more than once per year, inspect the Assets in order to verify their condition, and the Lessee must provide, upon any request from the Lessor, all the documentary proof that may be reasonably requested from the Lessee on the proper performance of the Lessee’s obligations under this Lease.

9.2 Unless a Lease Termination Event shall have occurred and be continuing, the Lessee shall bear any reasonable out of pocket expenses of the Lessor’s agent in connection with one inspection each calendar year. If a Lease Termination Event shall have occurred and be continuing, the Lessee shall bear any reasonable out of pocket expenses of the Lessor’s agent in connection with any inspection. Any inspection must be requested in advance in order to ensure that the inspection does not hinder the operations of the Project.

9.3 The Lessor must procure that any Person given access under Clause 9.1 or Clause 9.2 complies with the Lessee’s site rules and must procure that such access does not hinder or disrupt the Project.

10. Environmental Risks

10.1 Obligations of the Lessee

(a) During the Lease Term, the Lessee will operate the Project (including the Assets), in compliance in all material respects with all applicable Environmental Laws.

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10.2 Administrative requirements

In the event of any shutdown of operation of the Assets (arrêt definitif), upon the Lessor’s request, the Lessee shall:

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11. Safety and Security

11.1 During the Lease Term, the Lessee shall be solely liable and responsible for the safety and security of the persons and properties involved in the operation of the Assets and the Lessee shall indemnify and hold harmless the Lessor against all losses, claims, costs (including legal costs) and judgments in connection therewith (other than those arising from a third party claim). The provisions of Clause 25.1(c), (d) and (e) shall apply mutatis mutandis to the indemnity given under this Clause 11 as if amounts paid under this indemnity were Indemnification Amounts and such losses, claims, costs and judgments were Operational Losses.

11.2 During the Lease Term, the Lessee shall provide the Lessor with a report on any major developments related to safety and security and on the measures implemented by the Lessee related to safety and security at the Assets, such report to be provided semi-annually prior to the Final Completion Date and annually thereafter.

12. Insurances

12.1 The Lessee shall obtain and maintain the following insurance cover from appropriate solvent insurers with ratings by Standard & Poor’s Ratings Group of no less than A-, for the period commencing on the Substantial Completion Date and ending on the later of the expiry of the Lease Term and the date on which title to the Assets is transferred to the Lessee on payment of the Termination Compensation (if any) in full, on a basis consistent with Inco’s policies and best practice, providing such cover (including deductions and exclusions) and in such form and amounts as are customarily obtained for this type of operation and in accordance with good business practices:

12.2 The Lessee shall cause each Insurance Policy to:

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12.3 In respect of the Insurance Policies:

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12.4 The Lessee shall not seek to cancel the Insurance Policies or to introduce any amendment materially reducing the cover thereunder without the prior consent of the Lessor which consent shall not be unreasonably withheld.

13. Total and Partial Loss

13.1 Total Loss

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13.2 Partial Loss and Repair

13.3 Upon the occurrence of any fortuitous or force majeure event which does not cause an Abandonment to occur, this Lease shall not be terminated. The Lessee shall remain responsible for the payment of all the Rent on the terms of this Lease, whatever the length of time of the event.

14. Partial Expropriation

14.1 Partial expropriation

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The Rent and the charges payable under this Lease shall be owed in full by the Lessee. The Lessee shall not be entitled to claim any adjustment to, or reduction in, the Rent by reason of the reduction in the Assets.

14.2 Rights of the Lessee

15. Temporary requisition

16. Transfer

Neither Party may sell, assign or transfer (collectively, “Transfer”) in any form its rights and obligations under this Lease without the prior written agreement of the other Party provided that this shall not apply to any Transfer permitted under any Transaction Document.

17. Liens

17.1 The Lessee shall not create nor permit to exist any Liens other than any Permitted Liens over the Assets.

17.2 The Lessee shall not grant or permit to exist any mortgage, lien, pledge, impediment, inscription on a public record in the nature of a security interest or any other type of security interest or lien of any kind over any of its assets or undertaking in respect of any indebtedness for borrowed money (howsoever characterised), unless the Lessor is entitled to share in such

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security interest pari passu in respect of the Add-Back Indemnity provided that this shall not apply to a security interest granted in respect of the initial financing of the acquisition of an asset, where such financing is limited in recourse solely to the asset acquired.

18. No Waiver

It is hereby formally agreed and understood that the fact that any act of forbearance or waiver that may be made by a Party with regard to the enforcement of this Lease, whatever the frequency and/or the duration thereof, shall, unless expressly provided otherwise in writing, in no event:

and in each case, except as expressly provided in writing, that Party shall be entitled to put an end to such act of forbearance or waiver, without any prior notice being required.

19. Representations

19.1 The Lessor hereby makes the following representations to the Lessee as at the date of this Lease:

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19.2 The Lessee hereby makes the following representations to the Lessor as at the date of this Lease:

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The Lessee shall be deemed to repeat the representations in Clause 19.2 (other than (e) (Insolvency), (f) (No default), (g) (Litigation), (i) (Taxes), (j) (Environment) and (k) (Accounts)) on each day of the Lease Term.

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20. Termination Events

20.1 Lessor Termination Events

For the purpose of this Lease, the occurrence of any of the following events after the Substantial Completion Date shall be a “Lessor Termination Event”:

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(i) Environmental proceedings:

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20.2 Lessee Termination Events

For the purpose of this Lease the occurrence of any of the following events after the Substantial Completion Date shall be a “Lessee Termination Event”:

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21. Termination

21.1 The Lease Term may be terminated prior to its scheduled expiry date as set out in this Clause 21.1.

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21.3 If Clause 21.1(a) or Clause 21.1(c) applies then during the 45-day grace period during which the default may be remedied the Lessee and the Lessor will meet with a view to maintaining the Transaction and avoiding recapture of the Tax advantages under the DGI Final Approval. If the Lessee and the Lessor agree on a plan to maintain the Transaction and avoid recapture of the Tax advantages under the DGI Final Approval, the grace period of 45 days referred to in Clause 21.1(a) or Clause 21.1(c), as the case may be will be extended in order to allow the implementation of such plan.

21.4 Upon the occurrence of the Lessee Termination Event set out under Clause 20.2(f) in relation to an individual Tax Investor, the Lessee will have the option to require the Lessor to expel the Tax Investor affected by the illegality (if a solution to that Lessee Termination Event is not found in accordance with clause 6.1(c) of the Tax Loan Agreement) by terminating the Tax Loan Agreement as far as that Tax Investor is concerned in accordance with Clause 6.1(c) of the Tax Loan Agreement. If the Lessee chooses to exercise this option it shall notify the Lessor not later than 30 days after receipt of the first notification from the Lessor referred to in Clause 21.1(b). In such case, the Lessor shall promptly notify the Lessee of the Take-out Amount.

21.5 Subject to the Lessee having paid to the Lessor the Take-Out Amount within 5 Business Days from the notification of the Take-out Amount by the Lessor to the Lessee, the Lessee Termination Event will be deemed to have been cured and the Tax Investors not affected by such illegality will continue to perform their obligations under the Transaction Documents.

21.6 Upon the occurrence of a Lessee Force Majeure event, the Lessee shall notify the Lessor as soon as practicable (such notification to include details of the relevant event, the likely effect on the Lessee’s ability to perform its obligations under this Lease and the proposed actions to mitigate the consequences of the event). The Lessor and the Lessee shall consult with each other in good faith and use reasonable endeavours to agree appropriate terms to mitigate the effects of the Lessee Force Majeure event and facilitate the continued performance of this Lease.

22. Payment on Termination – Transfer of Title to the Assets

22.1 On the termination of the Lease Term pursuant to Clause 21, the Lessee shall owe to the Lessor:

22.2 The Lessee shall pay, or cause the payment of, the Termination Compensation to the Lessor on the Termination Compensation Payment Date. Any amount of the Termination Compensation not paid on its due date for payment shall bear interest at a rate per annum equal to LIBOR (if the unpaid amount is in US$) or at EONIA (if the unpaid amount is in Euro) plus 300 basis points per annum, calculated on the basis of a 360-day year and the exact number of days elapsed from and including the due date to and including the actual date of payment. Without prejudice to Clause 22.4, on payment of the Termination Compensation the Lessor shall

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transfer title to the Assets to the Lessee and the Lessor undertakes to execute any documentation and take any steps required in order to transfer title to the Assets.

22.4 On the Termination Date the Lessor shall sell the Assets to the Lessee subject to a retention of title (vente avec clause de réserve de propriété), with the payment of the Termination Compensation pursuant to this Clause 22 as full consideration for such sale. The retention of title (vente avec clause de réserve de propriété) shall be released on full and final payment of the Termination Compensation, it being understood that the posting of Lessee Collateral does not constitute full and final payment of the Termination Compensation.

22.5 The Lessor shall transfer the Assets under the ordinary de facto and legal terms and conditions without any warranty to be offered by the Lessor, acting in its capacity as the seller and with its contents and in the “as is” condition of the Assets as at the date of such transfer.

22.6 The Lessee shall bear all the costs, duties, levies and Taxes in respect of the termination of the Lease Term and the transfer of Assets, and the title thereto.

22.7 If the Lessee fails to comply with its obligations under Clause 22 when due for performance, the Lessor shall have available to it all remedies available under this Lease and at law.

23. Add-Back Indemnity

23.1 General Principles and Computation

The Lessee shall indemnify and hold harmless the Lessor or any Member (as the case may be) against any Add-Back Loss (the “Add-Back Indemnity”).

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23.2 Payment of Add-Back Indemnity

If any Add-Back Indemnity shall be payable as part of the Termination Compensation then that Add-Back Indemnity shall be paid on the Termination Compensation Date unless Lessee Collateral in an amount not less than the Tax Loan Reference TV has been posted.

For the avoidance of doubt and without prejudice to the obligation of the Lessee to post Lessee Collateral as provided for under Clause 24, the Add-Back Indemnity will at no time be payable by or on behalf of the Lessee unless the Lessor, the Lessee and the Security Agent have received a copy of each of:

23.3 Exclusions

The provisions of Clauses 23.1 and 23.2 shall not apply to, and the amount thereof shall exclude any loss incurred or sustained by the Lessor, which is directly caused by (and only to the extent that such loss is directly caused by):

it being understood that the exclusions will apply only to that Tax Investor or that Member which has defaulted as provided under Clauses 23.3 (a) to (d) and not to the other Tax Investors or other Members.

The provisions of Clause 23.1 shall not apply to, and the amount thereof shall exclude any loss incurred or sustained by the Lessor which has already been compensated by the payment of the Termination Compensation.

23.4 Conduct of claims

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So long as the Lessee Collateral has not been released pursuant to Clause 24.1(d)(ii) or Clause 24.1(d)(iii), the Lessee shall have full rights, at its election and at its own cost, to control the conduct of any proceedings with respect to any claims under the indemnities in this Clause 23, with the Lessor to provide full cooperation with such proceedings and claims, provided that the Lessee and/or Inco as the case may be shall keep the Lessor fully informed of the conduct of such proceedings and shall, where reasonably practicable, consult with the Lessor regarding the conduct of such proceedings.

The Lessee shall provide the Lessor with copies of all correspondence with the DGI in respect of such proceedings.

23.5 Specification

For the avoidance of doubt, it is specified that when a claim is made and paid under this Clause 23, the same claim will not give rise to another payment pursuant to clause 20.4(a) of the Construction Agreement. Further, notwithstanding any other provision of this Clause 23, this Clause 23 (other than this Clause 23.5) shall only be in effect after (but not including) the Substantial Completion Date, except to the extent required to give effect to Clause 20.4(a) of the Construction Agreement prior to the Substantial Completion Date.

24. Collateralisation

24.1 General Principles of Collateralisation

In the event the Lessee is required to post Lessee Collateral under Clause 22.3, it shall post, or shall cause to be posted, Lessee Collateral in an amount at least equal to the Tax Loan Reference TV by no later than the Termination Compensation Payment Date.

In connection with the posting of any Lessee Collateral, the Lessee shall provide an opinion of counsel addressed to the Lessor to the effect that the means of posting constitutes a valid security interest over such Lessee Collateral (or similar opinion taking into account the mechanism used to post the Lessee Collateral). In addition, the chief financial officer of the Lessee shall provide a certificate of solvency in favour of the Lessor.

When Lessee Collateral is required to be posted under this Lease, it may be posted by the Lessee or by a third party in its name and on its behalf.

The Security Agent shall be authorised and directed by the Lessor to apply the Lessee Collateral in satisfaction of any Add-Back Indemnity upon receipt (by the Security Agent or the Lessor) of:

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The Security Agent shall be required by the Lessor to release Lessee Collateral (or any part remaining after discharge of any amounts in respect of which such Lessee Collateral was posted) on the earliest to occur of:

such date being the “Lessee Collateral Release Date”.

The Parties acknowledge and agree that the Lessor will not be entitled to receive the benefit of any form of collateral in accordance with this Lease (by way of insurance proceeds or a letter of credit in under Clause 12.3 or as Lessee Collateral) which in total exceeds the Tax Loan Reference TV. Accordingly, if the Lessee (or the Security Agent on behalf of the Lessee) receives:

at any point in time to the value of the Tax Loan Reference TV, notwithstanding any provision of this Lease, the Lessor will have no further entitlement to any insurance proceeds pursuant to Clause 12.3(a)(v) or Clause 12.3(a)(vi) or of any letter of credit pursuant to Clause 12.3(a)(iv) or Clause 12.3(a)(vi) or any Lessee Collateral.

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The Security Agent shall be required by the Lessor to purchase Eligible Investments with the Lessee Collateral unless the Security Agent is unable to do so in which case the Security Agent shall be required by the Lessor to consult with the Lessee in order to agree how the Lessee Collateral should be invested. Income arising from the Lessee Collateral (including any Eligible Investments) but excluding Taxes (if any) payable on such income shall form part of the Lessee Collateral.

25. Indemnification

25.1 General Indemnity

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then the Lessor shall without delay repay to the Lessee, as applicable, the net amount so received or the benefit so realised.

If, as a result of an executory judgment despite appeal (jugement éxecutoire malgré appel), the Lessor has made payments to the third party by means of funds made available to it by the Lessee and such payments could be refundable by such third party as a result of a final judgment, the Lessor shall immediately transfer and assign to the Lessee its claim on the third party resulting from such final judgment.

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it being understood that the exclusions set out in paragraphs (i) to (iv) of this Clause 25.1(e) will apply only to that Tax Investor or that Member which has defaulted as provided under paragraphs (i) to (iv) of this Clause 25.1(e) and not to the other Tax Investors or the Members.

in each case in respect of this Lease, any of the other Transaction Documents or the Assets, or any part or interest therein or in respect of any transaction contemplated by this Lease or any of the other Transaction Documents, including (without limitation) the purchase, ownership, delivery, leasing, use, possession and operation, import to or export from any country, return, storage, maintenance, protection, sale, attempted sale or other disposition of the Assets, or any part or interest therein.

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it being understood that the exclusions set out in paragraphs (i) to (iv) of this Clause 25.2(d) will apply only to that Tax Investor or that Member who will have defaulted as provided under paragraphs (i) to (iv) of this Clause 25.2(d) and not to the other Tax Investors or the Members.

The Lessee and/or Inco shall have full rights, at its election and at its own cost, to control the conduct of any proceedings with respect to any claims under the indemnities in this Clause 25, with the Lessor having to provide full cooperation with such proceedings and claims, provided that the Lessee and/or Inco as the case may be shall keep the Lessor fully informed of the conduct of such proceedings and shall, where reasonably practicable, consult with the Lessor regarding the conduct of such proceedings.

The Lessee and the Lessor shall use their reasonable endeavours to avoid and mitigate all Operational Losses, Tax Losses and Add-Back Losses, including the Lessee making expenditure of funds and taking action which results in incurring costs. The Lessor is not obliged to take any steps under this Clause 25.4 if, in the opinion of the Lessor (acting reasonably), to do so might require it, or any Member, to expend funds.

For the avoidance of doubt, it is specified that when a claim is made and paid under Clause 25, the same claim will not give rise to another payment pursuant to clause 25 of the Construction

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Agreement. Further, notwithstanding any other provision of this Clause 25, this Clause 25 (other than this Clause 25.7) shall only be in effect after (but not including) the Substantial Completion Date.

Notwithstanding any provision of this Lease to the contrary, it is agreed that the Lessee shall not be affected by, or required to contribute to any Loss deriving solely or directly from the syndication mechanism, as described in the letter from Capstar Partners dated 15 October 2004, as approved by the DGI on 19 October 2004.

26.1 In accordance with the provisions of Article L.313-7 (second paragraph) of the French Code Monétaire et Financier, the Lessor hereby undertakes, for the benefit of the Lessee, to sell to the Lessee, at the election of the Lessee (the “Purchase Option”) the Assets contemplated in this Lease on the terms set out in this Clause 26.

26.3 The exercise of the Purchase Option must be requested by registered letter with return receipt requested sent to the Lessor:

26.4 The exercise of the Purchase Option is subject to the full and complete performance by the Lessee of all of its obligations under this Lease that have fallen due for performance by the date of exercise of the Purchase Option.

26.5 The purchase of the Assets by the Lessee shall be:

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The Lessor undertakes to execute any documentation and to take any steps required to effect such purchase and the transfer of the Assets.

26.6 The purchase price shall be calculated in accordance with Annex 10 of Appendix 3. The Lessor agrees that the Lessee will be deemed to have paid the amounts described in paragraphs (a) and (b) of the definition of Termination Value if the Lessee, or another Person acceptable to the Lender, executes an assumption (novation) of all amounts, whether actual or contingent, payable by the Lessor to the Lender under the terms of the Loan Agreement (such assumption having been consented to by the Lender in accordance with Clause 21 of the Loan Agreement).

26.7 It is expressly agreed and understood that the Lessor alone shall be bound by this Purchase Option, which is accepted by the Lessee as a mere option (promesse).

26.8 For the avoidance of doubt, the Parties agree that upon payment of the purchase price under Clause 26.6, the Lease Term will terminate.

27. DGI Process

27.1 Upon the earlier of the receipt by the Lessor and/or any Tax Investor or by the Lessee and/or Inco of:

(a “Global Reassessment” and the date of such receipt being the “DGI Notice Date”) the Lessor will promptly notify the Lessee, or the Lessee will promptly notify the Lessor, as the case may be, of such occurrence and provide details as to the steps which it is considering in relation thereto, in particular as to any written response it may be required to provide to the DGI (including, where applicable, providing a written response to the French tax authorities within the prescribed 30-day period).

27.2 Upon receipt from the DGI of any official notice of the DGI’s decision to withdraw the DGI Final Approval (notification de retrait d’agrément):

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the DGI related to such withdrawal of the DGI Final Approval or Global Reassessment without the prior written approval of Inco (not to be unreasonably withheld).

The rights of the Lessee and Inco under this Clause 27.2 shall cease on the delivery of a final non-appealable court decision confirming the withdrawal of the DGI Final Approval.

28. Conditions Precedent

The rights and obligations of the Parties under this Lease are subject to the satisfaction of the following conditions:

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29. Consent Rights

29.1 Consent Rights Regarding Management of the Lessor

Except where (x) the Lessor is required to do so by law or (y) a Lessor Termination Event has occurred and is continuing, the Lessor shall obtain the consent of the Lessee prior to undertaking any of the following events, which consent shall not be unreasonably withheld (each such required consent being a “Consent Right”):

29.2 Lessor financial information

Upon request, the Lessor will provide its audited annual reports to the Lessee no later than 30 June of each year and will provide its unaudited annual report to the Lessee by not later than 15 February in each year.

The Lessor shall provide a list of the Lessor’s transactions for the most recently completed financial quarter within 15 days of the end of each such financial quarter.

The Lessor shall also provide such other information regarding the Lessor’s financial condition or operations as may be reasonably requested by the Lessee in connection with the preparation of Inco’s or the Lessee’s financial statements. If so required to ensure compliance with Inco Limited’s regulatory reporting requirements, the Lessee shall be entitled, at its own expense and

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upon reasonable notice, to carry out an audit of the Lessor. The Lessee shall ensure that any such audit is carried out in a manner that minimises disruption to the Lessor.

30. Waiver of Recourse

30.1 Subject to the Exceptions, the Lessee hereby expressly waives any recourse for any sum, against the Members, in the event of default by the Lessor in the performance of its obligations under this Lease.

30.2 The Lessee hereby undertakes to limit any recourse for any sum, against the Lessor to the Assets and any rights and claims the Lessor may have with respect to the Assets, in the event of default by the Lessor in the performance of its obligations under this Lease.

30.3 The Lessee acknowledges and agrees that the undertakings contained in this Clause 30 constitute an express, irrevocable waiver of the provisions of article L.251-6 of the French Commercial Code. In consequence thereof, the Lessee hereby undertakes, subject to the Exceptions, to refrain from invoking against any or all of the Members, the capacity of Members with liability on their own assets for the debt of a groupement d’intérêt économique, before any jurisdiction with respect to the obligations of the Lessor under this Lease.

30.4 The Lessee hereby undertakes to refrain from taking any action (including the filing of any claim, petition or motion) with a view to the opening of any of the following proceedings against the Lessor or any or all of the Members:

31. Amendments

This Lease may only be amended with the written agreement of each Party.

32. Partial Invalidity

In the event that one of the provisions of this Lease is invalid or becomes impossible to perform, such event will not affect the validity or performance of any other provision of this Lease.

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33. Confidentiality

The Parties shall treat the terms of this Lease and all information provided under or in connection with the Transaction, this Lease and each other Transaction Document (“Confidential Information”) as confidential and shall not disclose Confidential Information without the prior written consent of the other Party, save that consent shall not be required for disclosure:

(c)   to the extent required by any competent authority having jurisdiction over a Party;

34. Choice of Law - Jurisdiction Clause

34.1 This Lease is governed by French law.

34.2 Subject to any specific provisions of this Lease, and to any mandatory legal provisions that may apply, the Parties agree to submit to the jurisdiction of the relevant courts located within the geographical jurisdiction of the Cour d’Appel (Court of Appeal) of Paris, in connection with any and all proceedings and procedures (other than actions in rem).

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34.3 In addition, the Courts of Paris shall have exclusive jurisdiction, even in the event of an impleader (appel en garantie), plurality of defendants or motion on a point of law (demande incidente).

35. Costs and Expenses

35.1 All the costs, expenses, duties and fees of this Lease arising after the Closing Date, and all those that may arise in connection with, or as a consequence of, this Lease and incurred after the Closing Date, shall, to the extent that they are not Implementation Costs, be borne by the Lessee, which hereby agrees to pay them.

35.2 The Lessee shall pay within 3 Business Days of demand by the Lessor, any amount which the Lessor is required to pay:

provided that the Lessee shall not be required to pay such amounts which is the Lessor is required to pay if such amounts are Implementation Costs or would not be recoverable by the Lessor under this Lease.

35.3 All the costs, expenses and Taxes relating to the Lease payable in connection with the publicity formalities of the Lease to the Tribunal de Commerce shall be borne by the Lessee together with, if any, any costs, expenses and Taxes relating the publicity formalities to the local mortgages registry.

36. Notices

Lessor:

BNP Paribas Nouvelle Calédonie
37 avenue Henri Lafleur
BP K3, 98800 Nouméa cedex, Nouvelle Calédonie

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Fax: +687.25.84.59
Attention: Bernard Monteilh

And copied to

BNP Paribas-Capstar Partners
37 place du Marché Saint Honoré
75031 Paris Cedex 01, France
Facsimile number: +33 1 42 98 12 03
Attention: Khalid Ammari

Lessee:

Goro Nickel S.A.
7 bis, rue Suffren, BP218
98845 Nouméa Cedex, New Caledonia
Fax number: +687 273 710
Attention: Président Directeur Général

And copied to

Goro Nickel
38, rue du Colisée
75008 Paris, France
Attention: Directeur Général Délégué
Facsimile number: +33 1 45 63 29 97

And copied to:

Address: Inco Limited
145 King Street West
Toronto, ON, M5H 4B7, Canada
Fax number: + ###-###-####
Attention: Office of the Secretary

or to such other address or facsimile number as the recipient may have notified to the other Party in writing.

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Made and executed in Paris,

In three (3) originals, one of which will be used for the purposes of registration with the Register of Commerce and Companies.

On December 30, 2004.

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APPENDIX 1

DEFINITIONS

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requirement imposed on it by the DGI Final Approval that is under its sole control,

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APPENDIX 2

DESCRIPTION OF THE ASSETS

As set out in appendices 2A, 2B and 2C of the Construction Agreement.

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APPENDIX 3

ASSUMPTIONS

The calculations performed in the Annexes 1 to 10 of Appendix 3 are based on the following assumptions, which are summarised in Annex 0 of Appendix 3:

A. Overall assumptions:

     The projected annual deductible amounts are:

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B. Assets assumptions:

The amounts and date of the Construction Costs payments are stipulated in the Appendix 3 - Annex 4.

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The metropolitan VAT rate is of 19.60%. It is assumed that the Implementation Costs, as well as any other sum due under the Transaction will not be submitted to the metropolitan VAT rate.

Any other tax, contribution applicable in metropolitan France that could be due by the Lessor and the Members will be at the exclusive expense of the Lessee.

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C. New Caledonian assumptions:

It is specified that the Corporate Tax Rate applicable in New-Caledonia for FYE 2004 and following would be 30 %.

Any New Caledonian corporate tax due by the Members in New-Caledonia would remain at the expense of the Lessee in accordance with Section 26 of the Lease. In the event of the Members would have to pay such tax, a supplemental rent would be called upon by the Lessor taking into account (i) such tax , as well as (ii) any additional tax

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resulting from the payment of the tax on the said supplemental rent constituting a taxable product in the Lessor (“gross-up”).

The projected tax results of the Lessor and the projected Corporate Tax applicable in New-Caledonia which will be due by the Members are attached in Appendix 3 - Annex 8.

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(i) account for and amortize all of the Assets, as one element, according to the declining balance method over 12 years commencing as of the Substantial Completion Date,

(ii) deduct the interest under the Loan Agreement as well as expenses to set up the Transaction, and

(iii) deduct any commission or fee payable.

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will be deductible from the tax result of the Lessee, and will not be taxable for the Lessor if the Lessor pays out the indemnity to the Tax Investors, and will not be subject to T.S.S.

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Appendix 3 - Annex 0

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Appendix 3 - Annexe 1.

Projected Deductible Amounts

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Appendix 3 - Annexe 2.

Projected Loan Agreement schedule

Amount in USD

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Appendix 3 - Annexe 3.

Projected Rents

Amount in USD