International Minerals Corporation
FRANKFURT : MIW
TSX : IMZ
Swiss : IMZ

International Minerals Corporation

October 02, 2007 08:30 ET

International Minerals Reports Strong Financial Position for Fiscal Year Ended June 30, 2007

SCOTTSDALE, ARIZONA--(Marketwire - Oct. 2, 2007) - International Minerals Corporation (TSX:IMZ)(SWX:IMZ)(FRANKFURT:MIW) (the Company) recently became a precious metal producer with the commencement of underground mining at its 40%-owned Pallancata Mine in Peru in September 2007 and has made great strides in advancing its pipeline of projects in the past fiscal year ended June 30, 2007, while preserving a strong balance sheet with cash and short-term investments of $84.4 million at year end.

During the fiscal year 2007 and year to date, IMZ achieved the following:

- Completed the year ended June 30, 2007, with cash and short-term investments of $84.4 million, aggregate working capital of $81.1 million and total assets of $150.7 million; compared with $82.7 million, $83.1 million and $133.7 million, respectively at June 30, 2006. The Company has no investments in, and no risk exposure, to asset-backed commercial paper;

- Increased the indicated resource estimate at its 40%-owned Pallancata silver-gold mine to 2.6 million tonnes at an average grade of 383 grams per tonne ("g/t") silver and 1.3 g/t gold containing 32.5 million ounces of silver and 106,700 ounces of gold on a 100% basis;

- Subsequent to the end of the year, commenced initial production from the Pallancata Mine in Peru. The Company's joint venture partner, Hochschild Mining plc, is the operator and holds a 60% interest in the project. Under the terms of the joint venture agreement, Hochschild Mining earned its 60% interest by investing all construction and development capital costs through to production, such costs being non-recoverable from the Company's share of cash flow;

- Increased reserves at the 100%-owned Rio Blanco gold-silver project in Ecuador, with probable reserves now estimated to total 2.1 million tonnes at 8.8 g/t gold and 62 g/t silver containing 605,000 ounces of gold and 4.3 million ounces of silver;

- Completed capital, exploration, feasibility and development investments of $18.6 million during the year, mainly in preliminary feasibility study drilling, metallurgy and field work on the approximately 70%-owned Gaby gold property in Ecuador and field work and development costs for the Rio Blanco gold-silver project in Ecuador;

- Commenced drilling at the Antabamba silver-gold project in Peru and published initial results including a drill intersection of 1.4 meters at 646 g/t silver. The Company holds option rights to the project, and is the operator, under an earn-in agreement with Barrick Gold Corporation's ("Barrick") Peruvian subsidiary;

- Completed drill programs at the Pacapausa silver project in Peru with initial assay results that include a drill intersection of 10.8 meters at 212 g/t silver. Pacapausa is a joint venture between the Company (25% interest and operator), IAMGold Corp. (25% interest) and Southwestern Resources (50% interest);

- Subsequent to the end of the year, commenced a 2,000 meter ("m"), core drilling program (seven drill holes) at the Urbaque gold-silver project in Peru - the Company holds option rights to the project, and is the operator, under an earn-in agreement with Barrick Gold;

- Realized net proceeds of $12.0 million as a result of the exercise of warrants issued in a 2005 private placement financing, $1.2 million from the exercise of stock options and gross cash proceeds of $6.0 million for a realized gain of $4.6 million from the sale of marketable securities.

The consolidated net loss for the fiscal year ended June 30, 2007 was $3.0 million ($0.03 per share) compared to a net loss of $0.3 million ($0.01 per share) for the fiscal year 2006. The increase in the loss this period was due to a) a substantial foreign exchange loss ($1.9 million) due to a strengthened Canadian dollar against the U.S. dollar for part of the period (2006-a gain of $0.5 million); b) the write-off of the Vetaspata mineral property for $1.6 million (2006-$nil); c) interest and financing costs of $3.1 million (2006-$0.4 million) relating to a prospectus offering of convertible debentures completed in May 2006; d) an increase in stock based compensation of $2.4 million (2006-$0.2 million); and e) the consolidated portion of an equity loss on joint venture for $0.3 million, representing the Company's 40% share of the loss generated at the Pallancata project joint venture during the mine construction phase. Partially offsetting these costs was a significant increase in interest income of $3.4 million (2006-$529,863) arising from investment of the prospectus offering proceeds, the proceeds of warrants exercised and the sale of marketable securities (Bema Gold and Asia Gold shares), contributing a gain of $4.6 million (2006-$173,612).

Capitalized resource property expenditures for the fiscal year ended June 30, 2007 were $18.6 million, partially offset by a write-off of $1.6 million related to the Vetaspata Property in Peru and a reclassification of $5.5 million to "Investment in Joint Venture" related to the Pallancata joint venture, for a net increase of $11.3 million from the fiscal year 2006, compared to a net increase of $8.15 million for the year ago period.

Further details of the Company's fiscal year 2007 financial results are contained in the Company's audited consolidated financial statements and management discussion and analysis (MD&A) filed on SEDAR.

Outlook

During fiscal year 2008, the Company's exploration and development efforts are expected to focus primarily on:

- Expanding mine production (silver/gold) and conducting further exploration drilling at the Pallancata Mine in Peru, working with our partner, Hochschild. Pallancata is expected to produce significant cash flow for the Company in the second half of fiscal year 2008 and in future years as the mine expands.

- Obtaining required environmental and production permits for the construction and development of a gold-silver mining operation at the Rio Blanco Project in Ecuador. The Company expects to complete permitting by June 2008 and commence construction about three months later.

- Completing the preliminary feasibility study at the Gaby gold project in Ecuador. This study will produce the first NI 43-101 compliant mineral resources and reserves for the project.

- Continuing drilling at the Antabamba and Urbaque properties in Peru under the joint venture agreements with Barrick and at the Pacapausa project in Peru under the agreement with Southwestern.

- Commencing drilling of the Acos gold target in Peru under the IAMGold joint venture agreement;

- Seeking new property acquisitions to continuously fill our pipeline of projects as well as additional strategic joint venture alliances, such as that with Hochschild at Pallancata, in order to advance projects with reduced additional cash outlays by the Company.

ON BEHALF OF THE BOARD

Stephen J. Kay, President and CEO

Cautionary Statement:

Some of the statements contained in this release are "forward-looking statements" within the meaning of Canadian securities law requirements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements in this release include statements regarding the Company's projections regarding drilling and development programs on the Company's project, timing of commencement of production and completion of feasibility studies. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: risks relating to estimates of mineral resources and reserve; risks relating to project capital and production costs; risks relating to obtaining mining and environmental permits; mining and development risks; risk of commodity price fluctuations; political and regulatory risks; and other risks and uncertainties detailed in the Company's Renewal Annual Information Form for the year ended June 30, 2007, which is available at www.sedar.com under the Company's name. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



INTERNATIONAL MINERALS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Expressed in United States Dollars)
AS AT JUNE 30
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2007 2006
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ASSETS

Current
Cash and equivalents $ 29,889,675 $ 82,717,138
Short term investments 54,552,630 -
Receivables 116,654 685,571
Prepaid expenses and deposits 6,007 16,517
Marketable securities 103,252 1,388,840
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84,668,218 84,808,066

Property and equipment 342,308 336,482
Investments 15,000 15,000
Investment in joint venture 6,270,221 -
Resource properties 57,982,008 46,666,104
Environmental bond 136,418 177,970
Deferred finance costs 1,332,448 1,675,426
------------- -------------

$ 150,746,621 $ 133,679,048
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LIABILITIES AND SHAREHOLDERS' EQUITY

Current
Accounts payable and accrued liabilities $ 3,375,236 $ 1,361,312
Accrued interest payable on convertible
debentures 173,070 231,388
Due to related parties 5,932 139,236
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3,554,238 1,731,936
Long term
Convertible debentures 33,507,969 30,858,701
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37,062,207 32,590,637
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Shareholders' equity
Capital stock 126,117,325 112,631,518
Contributed surplus 3,655,503 1,532,325
Equity component of convertible debentures 4,945,008 4,945,008
Deficit (21,033,422) (18,020,440)
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113,684,414 101,088,411
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$ 150,746,621 $ 133,679,048
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INTERNATIONAL MINERALS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Expressed in United States Dollars)
YEAR ENDED JUNE 30
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2007 2006
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EXPENSES
Amortization $ 37,386 $ 19,737
General exploration 140,799 66,455
Investor relations 292,299 102,813
Office and general 171,385 142,095
Professional fees 470,826 248,500
Salaries and benefits 513,868 416,073
Salary charge-outs (72,300) (83,402)
Stock-based compensation 2,405,396 211,768
Transfer agent and listing fees 105,593 125,282
Interest and financing costs 3,114,754 363,466
Travel 54,322 23,255
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7,234,328 1,636,042
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OTHER ITEMS
Foreign exchange gain (loss) (1,897,912) 484,513
Gain on sale of marketable securities 4,609,828 173,612
Management fees 187,635 138,308
Interest income 3,431,394 529,863
Equity loss in joint venture (318,558) -
Write off of resource properties (1,791,041) -
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4,221,346 1,326,296
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Loss for the year (3,012,982) (309,746)

Deficit, beginning of year (18,020,440) (17,710,694)
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Deficit, end of year $ (21,033,422) $ (18,020,440)
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Basic and diluted loss per common share $ (0.03) $ (0.01)
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Weighted average number of common shares
outstanding 93,219,038 82,598,744
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INTERNATIONAL MINERALS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)
YEAR ENDED JUNE 30
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2007 2006
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CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year $ (3,012,982) $ (309,746)
Items not affecting cash:
Amortization 37,386 19,737
Accrued interest receivable - (49,604)
Unrealized foreign exchange (gain) loss 1,818,842 (122,565)
Gain on sale of marketable securities (4,609,828) (173,612)
Interest and financing costs 1,115,086 363,466
Stock-based compensation 2,405,396 211,768
Write off of resources properties 1,791,041 -
Equity loss on investment in joint venture 318,558 -

Changes in non-cash working capital items:
(Increase) decrease in receivables 568,917 (73,758)
(Increase) decrease in prepaid expenses and
deposits 10,510 (1,232)
Decrease in exploration advances - 185,034
Increase (decrease) in accounts payable and
accrued liabilities 212,281 (894,846)
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Net cash provided by (used in) operating
activities 655,207 (845,358)
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CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of capital stock 13,242,745 50,264,356
Capital stock issuance costs - (3,017,754)
Proceeds from issuance of convertible
debentures - 35,711,097
Deferred finance costs - (1,676,181)
Due to related parties (149,557) (93,924)
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Net cash provided by financing activities 13,093,188 81,187,594
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CASH FLOWS FROM INVESTING ACTIVITIES
Short-term investments (54,552,630) 10,003,598
Resource property expenditures (17,664,348) (7,728,328)
Proceeds from sale of marketable securities 5,998,668 208,618
Purchase of marketable securities (103,252) -
Purchase of property and equipment (116,769) (138,660)
Environmental bond 41,552 (177,970)
Investment in joint venture (254,765) -
Recovery of investment in joint venture 75,686 -
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Net cash provided by (used in) investing
activities (66,575,858) 2,167,258
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Change in cash and equivalents during the
year (52,827,463) 82,509,494

Cash and equivalents, beginning of year 82,717,138 207,644
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Cash and equivalents, end of year $ 29,889,675 $ 82,717,138
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