Inco

(N)

is going to wallop second-quarter earnings estimates thanks to high mine production, good pricing and lower costs.

"We believe that we are the only publicly traded mining company in the world whose costs are going down in 2006, despite higher oil prices and currency exchange impacts," Inco said. The reason is increased use of nickel concentrate from Inco's Voisey's Bay subsidiary, which reduces outside feed costs.

Inco expects to earn $1.70 to $1.75 a share in the second quarter, up about 60% from a year ago and up about 90% from the first quarter. Analysts surveyed by Thomson First Call were forecasting earnings of $1.43 a share in the second quarter.

"Everything is coming together to deliver an outstanding quarter -- a great market, strong production from our operations, and lower than expected costs," the company said.

During the second half of 2006, Inco expects to produce 295 million to 300 million pounds of nickel, up from 275 million to 280 million in the first half. The cash cost of nickel sales should be $1.30 to $1.35 a pound during the period, down from its previous estimate of $2.25 to $2.30 a pound.

Inco said various indicators suggest nickel demand should remain robust through 2006.

"Stainless steel inventories are at low levels globally; stainless steel mills have strong order books and they are booked past the third quarter; stainless steel production across all regions has been stronger than anticipated; LME and producers' nickel inventories are falling rather than rising; and the scrap stainless steel market is very tight," the company said. "All the key facts add up to a strong second half for nickel."

The stock rose $1.81, or 3.1%, to $60.50 in premarket trading Thursday.