Inca Pacific Resources Inc.
TSX VENTURE : IPR

Inca Pacific Resources Inc.

March 03, 2011 15:28 ET

Inca Pacific Resources Inc.: Modification to Magistral Arbitration Demand

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 3, 2011) - Inca Pacific Resources Inc. (TSX VENTURE:IPR) ("Inca Pacific" or the "Company") reports that the Company's subsidiary, Minera Ancash Cobre S.A. ("MACSA"), has received confirmation from the arbitration panel as to a request by MACSA to modify its original complaint with respect to the ongoing arbitration proceeding over the Magistral Transfer Agreement. The Transfer Agreement governs the privatization terms for 5 of the 26 concessions originally controlled by MACSA that host the Magistral copper/molybdenum deposit.

Modified Complaint

MACSA's original complaint was comprised of six claims (refer to press release dated October 26, 2010) including termination of the Transfer Agreement due to serious breach of contract by Activos Mineros S.A.C. ("Activos Mineros") with respect to its obligations under the Transfer Agreement (Fourth Claim), and payment of US$195 million for the damages caused by the unilateral illegal termination of the Transfer Agreement by Activos Mineros (Fifth Claim). Under the modified complaint, MACSA has withdrawn the Fourth Claim and Fifth Claim, and included a Seventh Claim whereby MACSA requests that the arbitration panel orders Activos Mineros to pay MACSA approximately US$65 million for significant damages caused by the delay originated by the unilateral illegal termination of the Transfer Agreement by Activos Mineros. The arbitration panel has accepted this modified demand, and Activos Mineros will have 20 business days to respond to this modified demand.

While there are significant issues with the Transfer Agreement being reinstated, the Company believes it is in the best interest of all its stakeholders to request that the Transfer Agreement be reinstated and to reduce the amount of damages. MACSA has invested $40 million into this Project, was committed to the development of Magistral, and is committed to the goal today. Inca Pacific and MACSA have worked extremely hard to find a resolution to the dispute so that the development of Magistral could proceed. The Company has the resources to bring capital and expertise to see that Magistral is developed. While significant damage has been caused to MACSA and Inca Pacific, the Company is confident it can find solutions with the government so Magistral can be brought into production for the benefit of the Company, its shareholders, the communities and Government of Peru.

GOP Privatization Update

The Company continues to request that the Government of Peru cease the privatization of the Magistral Deposit until the arbitration proceedings are completed. This action by the Government of Peru to put the Magistral property out for public tender while the arbitration proceedings are taking place suggest that the government has little regard for the arbitration process. Currently, the Government has extended the decision on this privatization effort until March 18, 2011.

Community & Exploration Program

The Company continues with exploration plans to evaluate the 12,750 hectares of mining concessions surrounding the five core claims subject to the dispute. Even though the claims in dispute constitute the core of the known mineralization, they represent less than 2% of the entire property area, which remains highly prospective for a variety of mineralized systems. The Company has identified 12 priority targets of different mineralization style over its 100% owned mining concessions. As part of this effort, the Company is working on two agreements with the local communities of Conchucos and Pampas. As part of one of the agreements, the Company may issue approximately 2 million common shares to the communities. These shares would be held in escrow and released upon a commercial deposit being brought into production over the property or a 10 year period. The Company is also negotiating a cooperative agreement with the communities during the exploration period. The Company and MACSA are looking for positive solutions for the advancement of the Company's exploration portfolio as well as to resolve the Magistral dispute and feel having the Communities as shareholders of Inca Pacific is a positive step towards this effort. The possible share issuance would be subject to the approval of the TSX Venture Exchange and applicable regulatory authorities.

About Inca Pacific

Inca Pacific is a mineral exploration company with an experienced team dedicated to preserving its rights and investment in the Magistral Project, seeing the Magistral developed, and evaluating additional opportunities in the Magistral district.

INCA PACIFIC RESOURCES INC.

Michael D. Winn, CEO & Director

Forward-Looking Statement - Some of the statements in this news release contain forward-looking information that involves inherent risk and uncertainty affecting the business of Inca Pacific Resources Inc. Actual results may differ materially from those currently anticipated in such statements.

Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Inca Pacific Resources Inc.
    Kim Casswell
    Corporate Secretary
    604 687-3727