SOURCE: International Minerals Corporation

International Minerals Corporation

August 18, 2011 18:00 ET

International Minerals Update on Rio Blanco Contract Negotiations With Ecuadorian Government

SCOTTSDALE, AZ--(Marketwire - Aug 18, 2011) - International Minerals Corporation (TSX: IMZ) (SWISS: IMZ) reports that negotiations are continuing with the Ecuadorian government with respect to the terms of a production contract for its 100%-owned Rio Blanco gold-silver project in southern Ecuador.

IMZ is one of three mining companies currently negotiating production contracts with the Ecuadorian government. The other two companies are Kinross Gold Corp. (the Fruta del Norte gold deposit) and EcuaCorriente, a private Chinese company (the Mirador copper deposit).

Based on recent announcements made by Ecuadorian President, Rafael Correa, the government currently expects that all three production contracts will be concluded by October this year, but there is no guarantee of that timing. Although it was initially expected to conclude all three production contracts earlier this summer, the evaluation by the Ecuadorian government of the complex technical and economic models of all of the mining projects, combined with discussions on the critical issues of production royalties and a windfall revenue tax, have resulted in significant delays in finalizing the production contracts.

With respect to the production royalty, under the provisions of the 2009 Mining Law it cannot be less than 5% of metal "sales" and is expected to be some form of Net Smelter Return (or NSR) royalty. The Ecuadorian President recently stated that he expects to receive a minimum of 8% as a royalty from each of the mining projects. The royalty percentage has not yet been established for the Rio Blanco project.

In addition, the government has indicated that it expects to receive an advance royalty (ahead of production) from each of the three projects currently in negotiations and the President has stated publicly that he expects this advance royalty to generate $100 million - $200 million in total from all three projects. The amount of this advance royalty and the procedure for the recovery of such advance royalty payments against future production royalty payments have not yet been established for the Rio Blanco project.

The windfall revenue tax (which is part of the Tax Law and not the Mining law) payable to the government will be calculated as 70% of any metal price above a negotiated reference price multiplied by the number of metal units (ounces, pounds etc) produced. The metal reference price has not yet been established for the Rio Blanco project.

About International Minerals

International Minerals is a silver-gold producer, explorer and developer with silver-gold production from its 40%-owned Pallancata Mine in Peru, the fifth largest primary silver mine in the world. Production at Pallancata in calendar year 2010 was approximately 10.1 million ounces of silver and 36,000 ounces of gold (on a 100% project basis).

In addition to the Pallancata Mine, IMZ also owns a 40% interest in the Inmaculada gold-silver development project in Peru, which is scheduled to commence production in late 2013, and majority or 100% ownership interests in development stage gold projects in Nevada (Goldfield and Converse) and Ecuador (Rio Blanco and Gaby).

IMZ also receives a 3% net smelter return royalty from Barrick Gold's Ruby Hill gold mine in Nevada, which produced approximately 80,000 gold ounces in 2010.

IMZ is listed on the Toronto Stock Exchange (since 1994) and the Swiss Stock Exchange (since 2002).

To access this news release from IMZ's website, please click this link:

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 conclusion of material agreements with national governments. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as:, difficulties in negotiating material agreements with national governments and other risks and uncertainties detailed in the Company's Renewal Annual Information Form for the year ended June 30, 2010, which is available at 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.

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