Canadian mining firm Inco reported a fall in its net earnings for the first quarter of 2006.

Adjusted net earnings amomunted to $200 million, compared to $242 million recorded during the first quarter of last year.

It said that lower pgm and copper deliveries had been one of the factors affecting the fall.

The production of pgms fell to 89,000 troy ounces during the first three months of 2006, compared to 108,000 troy ounces produced in the same period in 2005.

Higher production costs, the servicing of debt and lower selling prices for nickel and cobalt were also cited as reasons for the fall, although these had been partially offset by higher average realized selling prices for pgms and nickel.

It is predicting that it will produce 85,000 troy ounces of pgms during the next quarter and is targeting a production of 400,000 troy ounces for 2006.

Inco is currently engaged in a friendly bid to take over the US copper and nickel producer, Falconbridge.

The combination of the companies would create the world's largest nickel company, Inco said.

Ÿ Adfero Ltd