TORONTO, ONTARIO -- (MARKET WIRE) -- 06/07/2006 -- LionOre Mining International Ltd. ("LionOre") (TSX: LIM)(LSE: LOR)(ASX: LIM)(BSE: LIONORE)

Highlights

- Proposed acquisition of the Falconbridge Nikkelverk refinery, and related operations, for US$650 million

-- US$400 million cash, to be financed through a new acquisition debt facility

-- US$250 million of new LionOre equity, issued to Falconbridge (49.1 million LionOre shares) representing 18.4% of enlarged share capital

-- Transaction subject to regulatory approval and Inco successfully acquiring Falconbridge

-- Appropriate break fee negotiated

- Strong rationale and transaction benefits

-- Accelerates LionOre's stated objective of vertical integration

-- Complements existing Activox® strategy

-- Significantly earnings accretive from year 1

-- 10 year contract with Falconbridge to supply up to 60,000 tonnes of nickel in matte annually to Nikkelverk

-- Falconbridge marketing and custom feed organizations included in the transaction

LionOre Mining International Ltd. ("LionOre") (TSX: LIM)(LSE: LOR)(ASX: LIM)(BSE: LIONORE), Inco Limited ("Inco") (TSX: N)(NYSE: N) and Falconbridge Limited ("Falconbridge") (TSX: FAL.LV)(NYSE: FAL) announce the proposed acquisition by LionOre of Falconbridge's Nikkelverk refinery in Kristiansand, Norway and certain related marketing operations, for US$650 million. The proposed acquisition is subject to receipt of regulatory approvals from the U.S. Department of Justice ("DOJ") and the European Commission ("the Commission") and to Inco acquiring 50% plus one share in Falconbridge.

Commenting on the proposed transaction, Colin Steyn, President and Chief Executive Officer of LionOre said, "This proposed transaction offers LionOre the opportunity to fulfil its objective of vertical integration with immediate effect, and is value enhancing to our Activox® commercialization strategy, our earnings and our production growth profile. Whilst this is an exciting prospect, we are cognizant that the transaction is conditional and subject to regulatory approval as well as the successful acquisition of Falconbridge by Inco.

We have the potential to become a major global player in the nickel industry, with the powerful combination of a refinery and our Activox® hydrometallurgical process, which will maximize our flexibility to exploit the economic value of our existing asset base and unlock our substantial resources to meet the long-term demand of the nickel industry."

Transaction Rationale

The proposed acquisition of the Nikkelverk refinery positions LionOre as a vertically integrated nickel producer and complements LionOre's existing growth strategy through the commercialization of its proprietary Activox® process.

The acquisition would be significantly earnings accretive to LionOre from year 1 and would provide LionOre with strong cash flow generation to help fund LionOre's future growth.

Complementary fit with Activox® Commercialization Strategy

The Nikkelverk refinery and Activox® hydrometallurgical process are complementary as they offer LionOre greater flexibility to unlock value from its existing orebodies, as well as being able to competitively source feedstocks from third parties. Both Nikkelverk and Activox® offer LionOre low cost processing options which will maximize the value of the finished metal. If the proposed acquisition is successful, LionOre will be an integrated nickel producer from mine to finished metal.

The Transaction

LionOre and Falconbridge have signed a binding Share Purchase Agreement for the proposed acquisition of the Nikkelverk refinery and its associated global marketing and custom feed operations for US$650 million. Closing is conditional and subject to receipt of regulatory clearances of the acquisition from the DOJ and the Commission, and Inco successfully acquiring Falconbridge shares, together with receipt of all other requisite regulatory approvals including the Toronto Stock Exchange. The transaction can be terminated by Falconbridge by the payment of an appropriate break fee to LionOre.

GMP Securities L.P. has provided a fairness opinion to the Board of Directors of LionOre, concluding that the transaction was fair, from a financial point of view, to the shareholders of LionOre. Cassels Brock & Blackwell LLP acted as counsel to LionOre in connection with the transaction.

Transaction Financing

The US$650 million acquisition price will be funded by a combination of debt and equity. The debt component of the acquisition price in the amount of US$400 million is intended to be financed through a syndicated facility that is non-recourse to LionOre Mining International Ltd and led by an international bank. The balance of US$250 million will be settled by the issuance of 49.1 million LionOre shares to Falconbridge at a price of C$5.60 per share. The 49.1 million shares represent approximately 18.4% of LionOre's issued and outstanding shares immediately following the issuance. Falconbridge has agreed not to vote any LionOre shares owned by it and not to acquire any additional LionOre shares for a period of two years. Falconbridge is required to reduce its holding in LionOre over an agreed period.

The Nikkelverk Refinery

Located in Kristiansand, Norway, the Nikkelverk refinery is a world class, low cost metals refinery with a highly skilled workforce and an annual capacity of approximately 85,000 tonnes of refined nickel, 39,000 tonnes of refined copper as well as various other metals, including cobalt, platinum group metals, gold and silver. The refinery treats nickel in matte and a variety of other nickel and cobalt intermediates.

Marketing Network

The Falconbridge marketing and custom feed organizations that market and sell the finished nickel and other products produced at Nikkelverk and obtain third party feeds for the refinery are included in this proposed transaction. This marketing and sales network, with offices in Brussels, Tokyo and Pittsburgh, would have the license to use the Falconbridge trademark and brand within the Nikkelverk organization. The addition of the Falconbridge marketing network adds considerable value to LionOre's existing strategy as products produced by LionOre's Activox® process will complement the products currently marketed under the Falconbridge name.

Future Feed Supply

Inco and Falconbridge have contracts to provide up to 60,000 tonnes of nickel in matte per annum to be processed at the Nikkelverk refinery for a period of up to ten years from the closing of the acquisition by LionOre.

Forward-Looking Statements

Certain statements contained herein are forward-looking statements. All statements, other than statements of historical fact, are forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant uncertainties and contingencies. Many known and unknown factors could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward-looking statements. Such factors include, but are not limited to: exploration, development and operating risks, uninsurable risks, ore reserve and resource estimates, additional funding requirements, foreign countries and regulatory requirements, and environmental regulation and liability. For further information concerning certain such factors, see the Company's most recent annual information form filed with Canadian securities regulatory authorities on SEDAR at www.sedar.com. The Company disclaims any intent or obligation to update any forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and, accordingly, not to put undue reliance on such statements.

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LionOre Conference Call and Webcast: Wednesday, June 7th, 2006
                    10:30 a.m. Toronto Time
                    15:30 p.m.  London Time

To join the call, please quote "LionOre  Conference Call":
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Local number:                                     416 641 6114

Instant replay numbers (available for 2 weeks):   Passcode: 3189672#
Toll free number:                                 1 800 408 3053
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Alternatively, to join the webcast, please visit: www.lionore.com.
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The Nikkelverk Refinery

Located in Kristiansand, Norway, the Nikkelverk refinery is a world class, low cost metals refinery with annual capacity of approximately 85,000 tonnes of refined nickel, 39,000 tonnes of refined copper as well as various other metals, including cobalt, platinum group metals, gold and silver.

The plant is ISO 9001 quality and ISO 14001 environment certified.

The Nikkelverk refinery uses a chlorine leach and electro-winning process to separate and recover component metals. It is an extremely cost-efficient process for treating complex raw materials, which achieves high productivity and recoveries. This efficiency allows greater flexibility in sourcing and treating custom feed.

The refinery processes a granulated matte produced by Sudbury and Raglan operations as well as custom feed from other sources, including BCL in Botswana. The granulated matte is crushed to a very fine powder and then transported to the chlorine leach plant. The metals contained in the matte are separated and distributed to the various process areas for further purification and refining. From there, the products are cut, packaged and shipped to world markets.

Nikkelverk Current Capacity and Production (2003-2005)
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                               Annual Current Capacity
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Nickel (mt)                                     85,000
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Copper (mt)                                     39,000
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Cobalt (mt)                                      5,200
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Sulphuric Acid (mt)                            115,000
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