Inco's shares closed down 65 cents to $21.80 Tuesday.
Nickel and copper producer Inco Ltd. won approval by 85 per cent of shareholders to buy back its Voisey's Bay shares. Voisey's Bay is Inco's undeveloped nickel deposit in eastern Canada.
Shareholders met Tuesday to vote on a plan that allows Inco to redeem each of its class VBN shares for $7.50 in cash and a 0.45 Inco common share purchase warrant.
Inco chief executive Mike Sopko told shareholders that the special resolution has been approved. Inco wants full control of the deposit from its current 75 per cent. A buyback would avoid a future conflict between VBN and other shareholders.
This is Inco's second bid for the VBN shares. In October, Inco failed to get the necessary 90 per cent support to force in the remaining shares.
While it's good news for the company, its troubles may not be over. Last Thursday, Reuters reported that Inco would face a court challenge if the company succeeds in buying back two-thirds of the outstanding shares.
The challenge will come from Jean-Raymond Boulle, an international businessman who discovered the deposit with Robert Friedland in 1994. They stumbled upon the nickel deposit while searching for copper in northern Labrador. Two years later they sold it for $4.3 billion.
In an interview with Reuters, Boulle said he would vote against the deal because he considered it unfair. He doesn't think the offer represents the fair value.
Inco has said its offer is based on an independent valuation of its VBN shares by Rothschild & Sons, which assessed fair market value in the range of $6.50 to $12.
The Voisey's Bay project has stalled for the past few years because of problems with the Newfoundland government. The provincial government has refused to issue Inco a mining permit until it agrees to build a $1 billion smelter in Newfoundland.
Political obstacles are expected to disappear now that Brian Tobin is no longer premier. Roger Grimes, who supports Voisey's Bay, is expected to become Newfoundland's next premier.
Inco had planned production of 107 million pounds of nickel a year.
