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| |   Mon Jul 5, 2004
Inca Pacific Restructures Production Obligation at Magistral
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| | News Release #2004-09
Vancouver, British Columbia, July 5, 2004 - Inca Pacific Resources Inc. (TSX-V: IP) is pleased to announce a restructuring of its obligations to place its Magistral copper-molybdenum deposit into production.
On January 8, 2001, Ancash Cobre S.A., a wholly owned subsidiary of Inca Pacific S.A., became the 100% owner of the Magistral property subject only to a net profits royalty in favor of the Government of Peru and the obligation to place the property into production within five years. That obligation could be extended by a further two years by paying a penalty of US $200,000 at the beginning of the first year of extension and US $400,000 at the beginning of the second year of extension.
On July 1, 2004, Ancash Cobre obtained the approval by the Government of Peru agency Pro Inversion to an agreement which restructures Ancash Cobre's obligations in order to retain own ership of the property, as follows:
- The obligation to place the property into production is extended to December 31, 2011.
- Ancash Cobre must expend US$ 1,000,000 in exploration by December 31, 2005.
- Ancash Cobre must deliver a Feasibility Study by December 31, 2006.
- Ancash Cobre must deliver a Bankable Feasibility Study by December 31, 2007.
- Ancash Cobre must deliver, on or before December 31, 2008, a performance bond (banking guarantee) for an amount equal to 30% of the capital cost of the mine to be incurred during the first year of construction.
- Ancash Cobre will be required to renew the performance bond each year during construction.
As an incentive to accelerate placing the property into production sooner than December 31, 2011, Ancash Cobre will be obliged to make payments to the Government of Peru as follows if the property is not in commercial production:
- January 1, 2006- US $200,000.
- January 1, 2007- US $400,000.
- January 1, 2008- US $400,000.
- January 1, 2009- US $400,000.
- January 1, 2010- US $400,000.
- January 1, 2011- US $400,000.
The net profits royalty in favor of the Government of Peru remains the same. The magnitude of the net profits royalty depends on metal prices, but is expected to equate to between a 0.5% and 3.0 per cent net smelter royalty.
Anthony Floyd, President & CEO of Inca Pacific said, "The project is now free of any unrealistic deadline for being placed into production while at the same time the Government of Peru is assured that the project will advance to Bankable Feasibility following an appropriate timetable and with sufficient economic incentives to discourage Inca Pacific delaying a production decision if it is in possession of a positive Bankable Feasibility Study."
Inca Pacific is a resource exploration company with a focus on copper, gold and molybdenum projects with robust economics in Peru.
Visit our website at www.incapacific.com for the latest corporate information.
INCA PACIFIC RESOURCES INC.
Signed: "Anthony Floyd"
President and Director
For further information contact: Clive Massey
Investor Relations
Phone 604-662-3902
or Email: cmassey@incapacific.com
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. |
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