Inca Pacific Resources Inc.

Inca Pacific Resources Inc.
Quadra Mining Ltd.

Quadra Mining Ltd.

January 12, 2005 08:30 ET

Inca Pacific and Quadra Sign Letter of Intent to Develop Magistral


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: INCA PACIFIC RESOURCES INC.

TSX VENTURE SYMBOL: IPR



AND QUADRA MINING LTD.

TSX SYMBOL: QUA

JANUARY 12, 2005 - 08:30 ET

Inca Pacific and Quadra Sign Letter of Intent to
Develop Magistral

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 12, 2005) - Inca
Pacific Resources Inc. (TSX VENTURE:IPR) ("Inca") and Quadra Mining Ltd.
(TSX:QUA) ("Quadra") are pleased to report they have signed a
non-binding letter of intent whereby Inca Pacific has granted Quadra an
option to earn a 50.1% joint venture interest in the Magistral
copper-molybdenum project in Central Peru by completing a bankable
feasibility study for a minimum 15,000 tonnes per day operation by
September 30, 2006. Once Quadra is vested with a 50.1% interest it has
an option to increase its ownership from 50.1% to 65% by arranging
project financing on or before 30th June 2007. Once Quadra has met its
obligations with respect to the feasibility study and financing, and has
reached 65% ownership, each party will be responsible for its share of
the project development costs.

Certain consideration will be payable by Quadra to Inca as follows:

1. US$1 million in shares of Quadra, US$1 million in cash and a further
CDN$1 million in cash in exchange for 1 million common shares of Inca on
execution of a definitive agreement. Shares issued by Inca will be
subject to a voting trust.

2. US$1 million in shares of Quadra and US$1 million in cash upon
completion of a positive pre-feasibility study.

3. US$1 million in shares of Quadra and US$1 million in cash upon
completion of a positive bankable feasibility study.

4. US$2 million in cash upon completion of project financing.

Quadra may not withdraw from the option until completion of a
pre-feasibility study on or before December 31, 2005, but has the right
to withdraw at any time after this. Once Quadra has an offer to finance
Magistral into production, Inca is entitled to sell its remaining 35%
interest to Quadra at a price to be determined at that point in time
based on the after tax net present value of the project. Payment may be
made, at Quadra's option, in shares or cash. Regarding debt project
finance, at Inca's option Quadra will provide guarantees for the portion
of the debt representing Inca's share and in return Inca shall pay
Quadra a guarantee fee of 4% per annum of the amount of debt
attributable to Inca Pacific, until such time as the debt becomes
non-recourse to Quadra.

Magistral is a late stage development project in Peru with scoping
studies covering all the key issues. Previously disclosed Measured and
Indicated Resources were 76 Million Tonnes at 0.76% Cu and 0.055% Mo and
Inferred Resources were 39 Million Tonnes at 0.71% Cu and 0.039% Mo
using a 0.5% Cu cut off.

Paul Blythe, President of Quadra Mining, said "The Magistral project
fits well into Quadra's business model which is to create growth and
enhance shareholder value through mergers, acquisitions and
participation in advanced projects of merit. The agreement with Inca
Pacific will allow Quadra to earn in to the project at a significant
level. We believe that there is significant value at Magistral,
particularly with the significant bi-product credits available through
the molybdenum."

Anthony Floyd, President of Inca Pacific, said "Quadra is a mid-tier
copper producer with management that has built and operated mines in
South America. We believe that a combination of Inca's exploration
experience in Peru and Quadra's mine building skills will accelerate the
development of the Magistral project thus bringing benefits to all our
shareholders, Peru and especially to the nearby communities of Conchucos
and Pampas."

Inca Pacific has agreed that it will deal exclusively with Quadra for 45
days while Quadra conducts legal and technical due diligence. Execution
of a definitive agreement is expected to occur on or before February 24,
2005. Standard Bank acted as financial advisors to Inca Pacific, and a
success fee will be payable upon closing of the transaction. This
transaction is subject to exchange and regulatory acceptance.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Inca Pacific Resources Inc.
    Clive Massey
    Investor Relations
    (604) 662-3902
    Email: cmassey@incapacific.com
    Website: incapacific.com
    or
    Quadra Mining Ltd.
    Sophie Taylor
    Investor Relations
    (604) 689-8550 (x 110)
    Email: ir@quadramining.com
    Website: www.quadramining.com
    The TSX and the TSX-V have neither approved nor disapproved of the
    information contained herein.