Inca Pacific Resources Inc.
TSX VENTURE : IPR

Inca Pacific Resources Inc.

January 18, 2006 16:40 ET

Inca Pacific Negotiates $3.4 Million Private Placement

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 18, 2006) - Inca Pacific Resources Inc. (TSX VENTURE:IPR) announces that it has entered into an agreement for a non-brokered private placement of 6.8 million common shares at a price of $0.50 per share (the "Offering") with RAB Special Situations (Master) Fund Limited ("RAB") for total proceeds of $3.4 million. RAB currently owns approximately 29% of the issued and outstanding shares of Inca Pacific on a partially diluted basis (assuming exercise of its common share purchase warrants). On completion of the Offering RAB will own approximately 49.9% of the issued and outstanding shares of Inca Pacific on a non-diluted basis and approximately 54% on a partially-diluted basis (assuming exercise of its common share purchase warrants). Inca Pacific may increase the size of the Offering by an additional $1.6 million to accommodate interest from other potential investors, in which event RAB has an option to subscribe for an additional number of shares of Inca Pacific in order to maintain a 49.9% interest. A finder's fee of 2% is payable in connection with the RAB private placement.

Proceeds from the Offering totaling up to $3.4 million will be used to fund the preparation of a Feasibility Study on Inca Pacific's Magistral Copper-Molybdenum Property in Peru and general working capital.

Simultaneously RAB has entered into a Voting Agreement with Inca Pacific which provides that RAB will vote all shares in Inca Pacific owned or acquired by it, or over which it exercises control or direction, in accordance with the recommendations of the board of directors of Inca Pacific upon any matter brought before Inca Pacific's shareholders. This obligation expires upon the earlier of: (a) the date of Inca Pacific's annual general meeting of shareholders in 2007; (b) the completion of a Bankable Feasibility Study in respect of Inca Pacific's Magistral Project; (C) May 31, 2007; or (d) such other date as agreed to by Inca Pacific and RAB. The Voting Agreement will also terminate upon certain other specified events, including if the board of directors or management of Inca Pacific diverge in a significant and material manner from Inca Pacific's plan to complete a Bankable Feasibility Study on the Magistral Project before Inca Pacific's annual general meeting of shareholders in 2007.

The Offering is subject to TSX Venture Exchange approval and, in accordance with the policies of the Exchange, approval of the shareholders of Inca Pacific, excluding those shares held by RAB and any non-arm's length parties to RAB. Inca Pacific intends to seek shareholder approval of the Offering at an extraordinary meeting of shareholders which is scheduled to be held on or about March 2, 2006.

INCA PACIFIC RESOURCES INC.

Anthony Floyd, President and Director

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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