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

International Minerals Corporation

August 30, 2007 08:30 ET

Production Imminent at International Minerals' Pallancata Project, Peru

Results of Independent Prefeasibility Study Reported

SCOTTSDALE, ARIZONA--(Marketwire - Aug. 30, 2007) - International Minerals Corporation (TSX:IMZ)(SWX:IMZ)(FRANKFURT:MIW) -

Production Schedule Update

International Minerals Corporation (the "Company") is pleased to announce that underground production and initial processing of ore is expected to commence in the next few weeks at the Pallancata silver-gold deposit in southern Peru. Pallancata is jointly-owned by the Company (40%) and London-listed Hochschild Mining PLC ("Hochschild", 60%), with Hochschild as the mine operator.

A joint venture agreement (the "Agreement") signed between the Company and Hochschild in the summer of 2006 has allowed the development of the Pallancata mine to be fast-tracked from exploration to production prior to the industry-standard prefeasibility/feasibility study phases as a result of:

a) the proximity of Hochschild's Selene silver-gold mine and processing plant precluding the need to permit and construct a stand-alone process plant at the Pallancata mine site;

b) the geological similarity of the Pallancata vein deposit to Hochschild's other three underground silver-gold mining operations in the same region; and

c) Hochschild's extensive knowledge (over a period of more than 40 years) of the development and mining of low-sulfidation epithermal vein deposits in Southern Peru.

Pallancata ore will be toll-processed (to produce a saleable flotation concentrate) at Hochschild's Selene plant, located approximately 12 linear kilometers north of the Pallancata deposit. The Selene plant has recently been expanded (at Hochschild's cost) to accommodate the initial mining rate of 500 tonnes per day ("tpd") from Pallancata. Under the terms of the Agreement, Hochschild is also committed to increase the mining rate at Pallancata from 500 tpd to 750 tpd within one year of the start of production at the 500tpd rate and to expand the Selene plant (at Hochschild's cost) to accommodate the increased tonnage from Pallancata.

A further expansion of mine production to 1,000 tpd is subject to approval by both parties but all new capital expenditures required to expand the mine to 1,000 tpd will be funded solely by Hochschild. Any mine expansion in excess of 1,000 tpd will be funded pro-rata by the Joint Venture (60% Hochschild and 40% the Company) but any process plant expansions required to accommodate such increased tonnage from Pallancata will be funded by Hochschild.

In addition, a unique feature of the Agreement is that the Company will receive its 40% of cash flow from the mining operation starting with the sale of the first batch of concentrates because Hochschild is funding 100% of the start-up capital costs for the main Pallancata Vein and none of such costs are recoverable from the Company's share of cash flow. All exploration and development costs outside of the main Pallancata Vein, however, will be funded 40% by the Company and 60% by Hochschild, as will any future sustaining (replacement) capital costs for mining the main Pallancata Vein.

Results of Independent Prefeasibility Study

In June 2007, the Company commissioned independent technical consultants, IMC Group Consulting Limited of London, England ("IMCGCL") to: (a) audit the Company's Indicated and Inferred resource estimates, which were published by the Company earlier this year (see news release of May 17, 2007, which also includes details of the Company's resource estimation methodology), and (b) to prepare a National Instrument ("NI") 43-101 compliant prefeasibility study for Pallancata so that the Company can provide mineral reserve estimates at Pallancata in addition to its resource estimates, as well as to evaluate the economic potential of the Pallancata mine as it relates to the Company.

IMCGCL is also updating the previously SEDAR-filed (October 25, 2005) technical report for the Pallancata project and this updated report will be filed on SEDAR within the next 45 days.

A summary of the results of the IMCGCL prefeasibility study are provided below in Table 1.

TABLE 1. PALLANCATA PROJECT - INDEPENDENT PREFEASIBILITY STUDY - SUMMARY

(100% Project basis unless stated - the Company holds a 40% interest)

- Base Case Metal Price Assumptions:

- Silver US$12.00 per ounce. Gold US$600 per ounce.

- Cut-off Grade:

- 150 g/t silver, which reflects the most recent estimates of operating costs.

- Estimated Probable Reserves (no Proven Reserve at this time) Based on Current Mine Plan:

- 1.1 million tonnes at an average grade of 311 g/t silver and 1.2 g/t gold containing 11.5 million ounces of silver and 45,000 ounces of gold.

- Estimated Resources NOT included in Reserves:

- Indicated Resources: 1.5 million tonnes at an average grade of 412 g/t silver and 1.2 g/t gold, containing 20.4 million ounces of silver and 59,000 ounces of gold.

- Inferred Resources: 2.6 million tonnes at an average grade of 359 g/t silver and 1.5 g/t gold, containing 29.5 million ounces of silver and 119,000 ounces of gold.

- Mine Life Based on Current Reserves:

- 5 years, based only on the currently estimated Probable Reserves and mine plan.

- Exploration is ongoing and the Company anticipates that additional resources will be added and that the majority of the existing resources will be converted to reserves with additional drilling and underground development.

- Mining Method:

- Mining (underground) will be by means of mechanised (trackless) cut-and-fill overhand stoping methods. The minimum designed mining width is 0.8m and the maximum design mining width is approximately 25m,

- Ore will be loaded from the base of the ore-passes into 22 tonne standard road haulage trucks carrying the material up the mine ramps either to a temporary stockpile or directly to the process plant primary crusher at the Selene facility. All mining services will be provided by mining contractors.

- Annual Production:

- Based only on the current 5 year reserves: an average of approximately 2.0 million ounces of silver and 7,600 ounces of gold per year, with approximately 0.8 million ounces of silver and 3,000 ounces of gold attributable to the Company.

- Initial Capital:

- The Company does not have to provide any start-up capital, only 40% of any sustaining (replacement) capital requirements. Start-up capital is funded by Hochschild and not recoverable from the Company's share of cash flow.

- Operating Costs:

- Life-of-Mine average operating cost is estimated at US$56.94 per tonne ("/t"), including a project management fee to Hochschild of US$3.43/t, toll processing costs of $18.10/t and a government royalty of US$1.06/t, but excluding commercialization costs of the concentrate.

- Metallurgical Recovery:

- The flotation plant at Hochschild's Selene Mine will be used for toll processing of the ore from Pallancata. Anticipated recoveries to a saleable concentrate are estimated at 87% for silver and 75% for gold. Average grades for the concentrate are estimated at 8,425 g/t silver and 29.0 g/t gold.

- Pre-Tax Cash Flow/NPV/IRR/Payback (Using US$600 gold and US$12.00 silver):

- On a 100% project basis, the current reserves are estimated to generate a pre-tax, undiscounted cash flow of approximately US$55.6 million over the initial 5-year mine life, with approximately US$22.2 million being attributable to the Company for its 40% interest in the project. This estimate does not take into consideration the start-up capital incurred by Hochschild, as this is not relevant to the Company.

- At a 5% Discount Rate, the project generates a Net Present Value ("NPV") of approximately US$47.5 million over the initial 5-year mine life, with approximately US$19.1 million being attributable to the Company for its 40% interest in the project.

- An Internal Rate of Return ("IRR") and Payback Period cannot be calculated for the Company's share of cash flow as the Company is not required to fund any start-up capital expenditure.

- Cash Operating Cost per Ounce:

- Cash operating cost (including geology, mining, transportation to plant, processing, general services, management fee and government royalty) per ounce of silver, net of gold credit, is estimated at US$4.59.

The estimates in Table 1, and elsewhere in this news release, are projections only and there can be no assurance that these projections can be attained in an actual mining operation.

Sensitivity analyses based on silver price only are shown below in Tables 2 and 3. The overall project is relatively insensitive to variations in the gold price.

Table 2. Pallancata Project - Sensitivity to Variations in Silver Price - 100% Project Basis (No capital)



----------------------------------------------
Silver Price (US$/oz)
-------------------------------------------------------------
Category $ 8.00 $ 10.00 $ 12.00 $ 14.00 $ 16.00
(base case)
-------------------------------------------------------------
IRR %(1) N/A N/A N/A N/A N/A
-------------------------------------------------------------
Cash Flow $ 17.5 $ 36.6 $ 55.6 $ 74.7 $ 93.7
($US millions)
-------------------------------------------------------------
NPV 5% $ 15.2 $ 31.3 $ 47.5 $ 63.7 $ 79.9
($US millions)
-------------------------------------------------------------
NPV 10% $ 13.2 $ 27.2 $ 41.1 $ 55.0 $ 68.9
($US millions)
-------------------------------------------------------------
(1) IRR cannot be calculated as start-up capital is funded 100%
by Hochschild and is only recoverable from its share of
cash flow.


Table 3. Pallancata Project - Sensitivity to Variations in Silver Price - The Company's 40% Interest



----------------------------------------------
Silver Price (US$/oz)
-------------------------------------------------------------
Category $ 8.00 $ 10.00 $ 12.00 $ 14.00 $ 16.00
(base case)
-------------------------------------------------------------
IRR %(1) N/A N/A N/A N/A N/A
-------------------------------------------------------------
Cash Flow $ 7.0 $ 14.6 $ 22.2 $ 29.9 $ 37.5
($US millions)
-------------------------------------------------------------
NPV 5% $ 6.1 $ 12.6 $ 19.1 $ 25.6 $ 32.0
($US millions)
-------------------------------------------------------------
NPV 10% $ 5.3 $ 10.9 $ 16.5 $ 22.1 $ 27.7
($US millions)
-------------------------------------------------------------
(1) IRR cannot be calculated as start-up capital is funded 100%
by Hochschild and is only recoverable from its share of
cash flow.


Mineral Reserves and Resources

Table 4 below shows estimated mineral resources and reserves (audited and prepared, respectively, by IMCGCL) for the Pallancata deposit, including the estimated Probable Reserves that were used to generate the economic and operating data shown in Tables 1, 2 and 3 above. A range of silver cut-off grades were used, with a base-case cut-off grade of 150 g/t silver, which reflects the most recent operating cost estimates.

The mineral reserve estimates, effective August 30, 2007, were prepared in accordance with NI 43-101 by IMCGCLs' Qualified Person, Dr. Stephen Henley and reviewed by the Company's Technical Manager, Nick Appleyard.

Table 4: Pallancata Project - IMCGCL Reserve and Resource Estimates (as of August 30, 2007) - 100% Project Basis



-------------------------------------------------------------------------
Cut-off Average Average
Grade grade grade Contained Contained
Estimate (g/t (g/t (g/t Silver Gold
Category silver) Tonnes silver) gold) Ounces Ounces
-------------------------------------------------------------------------
Probable 200 989,000 335 1.3 10,641,000 41,800
Reserves ---------------------------------------------------------------
150 1,145,000 311 1.2 11,465,000 45,300
-------------------------------------------------------------------------
Indicated 200 1,123,000 500 1.4 18,056,000 50,500
Resources ---------------------------------------------------------------
150 1,539,000 412 1.2 20,402,000 59,100
-------------------------------------------------------------------------
Inferred 200 2,074,000 402 1.6 26,776,000 108,700
Resources ---------------------------------------------------------------
150 2,558,000 359 1.5 29,496,000 119,300
-------------------------------------------------------------------------

1. 40% of the estimated reserve and resource estimate ounces are
attributable to the Company, 60% are attributable to Hochschild.

2. No material qualified for the Proven category of reserves.

3. Reserves are derived from previously estimated Indicated Resources
(see news release dated May 14, 2007, which also includes resource
estimation methodology).

4. The above Indicated and Inferred Resources are exclusive of the Probable
Reserves.

5. Metal prices used are US$12.00/oz for silver and US$600/oz for gold.

6. The estimated reserves include an allowance of 5% for ore loss during
mining and 10% for dilution with zero grade.

7. The estimated mineral resources are not mineral reserves and do not have
demonstrated economic viability.

8. Numbers have been rounded in all categories to reflect the precision of
the estimates.

9. Estimated reserves are subject to metallurgical recovery estimates of
87% for silver and 75% for gold.


The Company's reserve and resource estimates differ from those published earlier in 2007 by Hochschild primarily due to: (a) differences in reserve calculation rules between JORC guidelines for London listed companies and NI 43-101 guidelines for Canadian listed companies; (b) lower metal prices used by Hochschild of $8.50 per ounce for silver and $500 per ounce for gold; (c) a higher silver cut-off grade by Hochschild - 214 g/t silver versus 150 g/t silver by the Company; and (d) minor differences in the interpretation and modeling of the vein structures, which affect dilution and internal waste estimates.

Summary

The Company's prefeasibility study was prepared in accordance with the requirements of NI 43-101 to allow the Company to provide independent mineral reserve estimates and economic parameters for the Pallancata Project prior to production commencing.

In most cases, a prefeasibility study is the precursor to a feasibility study, but in the case of Pallancata a feasibility study will not be prepared by the Company because of the proximity of actual mine production. This prefeasibility study provides the currently identified reserves and all the basic operating and economic data for the Pallancata deposit based on current estimates by the Company of operating costs, mineable reserves, mine planning and metallurgical recoveries. Capital cost estimates are not, however, included in this study as all start-up capital is provided by Hochschild.

Hochschild is the mine operator and is continually optimizing the Pallancata mine plan and schedule, together with undertaking additional drilling and underground development in order to convert material in the resource categories into reserves.

The technical information reported in this news release was supervised and reviewed by IMC's Qualified Person, Technical Manager, Nick Appleyard.

Hochschild Mining PLC does not accept any responsibility for the adequacy or inadequacy of the disclosure made in this news release and any such responsibility is hereby disclaimed in all respects.

ON BEHALF OF THE BOARD

Stephen J. Kay, President and CEO

The Toronto, Swiss and Frankfurt Stock Exchanges neither approve nor disapprove the information contained in this News Release.

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