INCA PACIFIC RESOURC

Inca Pacific completes Magistral feasibility study 2007-12-03 11:09 ET - News Release Mr. Anthony Floyd reports INCA PACIFIC COMPLETES FINAL FEASIBILITY STUDY FOR MAGISTRAL COPPER-MOLYBDENUM PROJECT Inca Pacific Resources Inc. has released the results of a final feasibility study for its 100-per-cent-owned Magistral copper-molybdenum project located in Ancash, Peru. The final feasibility study has confirmed the technical and economic viability of the project. Highlights of the study are included in table one attached. (All dollar figures are in United States currency.) NPV (after tax and 8-per-cent discount rate) $146.0-million IRR (after tax) 14.9% Capital payback 3.3 years Initial capital expenditure (before IGV(i)) $402-million including a 14-per-cent contingency LOM C-1 cash costs (net of Mo and Ag byproduct credits) $0.28 per pound Cu Mill capacity (nominal) 20,000 tpd Annual throughput seven million tonnes Mine life 15 years Strip ratio (including preproduction waste) 2.2:1 LOM(i) average annual copper-in-concentrate production 34,100 tonnes LOM(i) average annual molybdenum-in-concentrate production 2,860 tonnes (i)LOM equals life of mine, IGV equals value-added tax Anthony Floyd, president and chief executive officer, said: "I am very pleased that, while capital costs have escalated, we do have a robust project with a rapid payback. In the case of copper our engineering consultants have realistically balanced conservative long-term prices with higher ones indicated by the futures market for 2011 and 2012. In the case of molybdenum they have balanced conservative long-term prices with higher short-term ones predicted by a very rigorous and current supply and demand study." The FFS was managed by MTB Project Management Professionals Inc. and included work by Samuel Engineering Inc. (SE), Mine Development Associates (MDA) and Vector Peru (Vector). Richard Kunter, Neil Prenn, Steve Ristorcelli and Scott Elfen from SE, MDA, MDA and Vector respectively were the independent qualified persons responsible for the preparation of the FFS. The FFS includes a new National Instrument 43-101 mineral resource estimate for Magistral, and a corresponding block model, which were used by MDA to develop a mine plan and production schedule for the project. The FFS will be available on Inca Pacific's website within 45 days. Richard Kunter, one of the independent qualified persons within the meaning of National Instrument 43-101 that prepared the final feasibility study, has reviewed and approved the content of this news release. Inca Pacific will host a conference call on Monday, Dec. 3, 2007, at 9 a.m. (Pacific Time) or noon (Eastern Time) to discuss these results. Call-in information is provided at the bottom of this news release. Project economics A project specific market study by H&H Metals Corporation, a metals trader, was conducted to provide pricing, treatment and refining charges, and freight for Magistral's concentrate production and grades. The results of this market study are the basis for the economic evaluation model. MTB developed a cash flow valuation model for the project based upon the geological and engineering work completed to date. Year Copper price per lb Molybdenum price per Silver price per in lb in troy oz US$ US$ US$ 2011 and 2012 2.76 22.38 12.00 2013 to 2025 1.50 12.00 12.00 These price forecasts are considerably lower than current prices which, as of Nov. 29, 2007, were $3.08 per pound for copper, $33.00 per pound for molybdenum and $14.20 per ounce for silver. The first year of production is assumed to be 2011. Copper concentrate treatment charges and copper concentrate refining charges were assumed to be $80 per tonne and eight cents per pound respectively. Discount rate (real) NPV 0% $584.0-million 5% $259.3-million 8% $146.0-million 10% $ 90.9-million 12% $ 47.5-million SENSITIVITY OF THE BASE CASE'S NPV (AT AN 8% DISCOUNT RATE) TO VARIOUS LONG-TERM COPPER AND MOLYBDENUM PRICES, BUT KEEPING THE METAL PRICES IN 2011 AND 2012 THE SAME AS THE BASE CASE. THE IMPACT OF SILVER PRICING CHANGES IS NOT SIGNIFICANT AND THEREFORE SENSITIVITIES ARE NOT PRESENTED. (millions of dollars) Metal price/oz Cu $1.00 Cu $1.25 Cu $1.50 Cu $1.75 Cu $ 2.00 Mo $16.00 $98.0 $155.0 $212.0 $268.7 $324.9 Mo $14.00 $65.0 $122.0 $179.1 $236.0 $292.5 Mo $12.00 $32.2 $88.7 $146.0 $203.2 $260.0 Mo $10.00 $4.5 $55.4 $112.8 $170.3 $227.3 Mo $8.00 $0.8 $22.6 $79.4 $137.1 $194.5 THE FOLLOWING CHART IN MILLIONS SHOWS THE SENSITIVITY OF THE BASE CASE'S IRR TO VARIOUS LONG-TERM COPPER AND MOLYBDENUM PRICES BUT KEEPING THE METAL PRICES IN 2011 AND 2012 THE SAME AS THE BASE CASE Metal price/lb Cu $1.00 Cu $1.25 Cu $1.50 Cu $1.75 Cu $ 2.00 Mo $16.00 13.0% 15.3% 17.3% 19.1% 20.7% Mo $14.00 11.5% 14.0% 16.1% 18.0% 19.8% Mo $12.00 9.9% 12.6% 14.9% 17.0% 18.8% Mo $10.00 8.3% 11.0% 13.6% 15.8% 17.8% Mo $8.00 8.1% 9.3% 12.2% 14.6% 16.7% Mineral resources and reserves MDA updated the resource model and the corresponding block model in 2007 to develop a mine plan and production schedule for the project. The estimation in all cases included a nearest neighbour, Krige, and inverse-distance interpolation, but in all cases the inverse-distance model was selected as the final and reported model. MDA used mineral domains defined by grade and geology to control the estimation. Estimation parameters were chosen to be appropriate for the drill spacing, geologic complexity, sample locations and parameters defined by point validation and correlograms. The new NI 43-101 mineral resource estimate is based on assay results from 65,214 metres of core drilling in 286 holes and at a 0.4-per-cent copper equivalent(i) cut-off is as follows: Tonnes Grade Copper Grade Molybdenum Resource category millions (% Cu) millions lb (% Mo) millions lb Measured 108.8 0.52 1237 0.055 133 Indicated 86.7 0.51 974 0.047 90 Measured and indicated 195.5 0.51 2,211 0.052 223 Inferred 55.4 0.55 673 0.023 28 (i) Copper equivalent calculation of 5 to 1 reflects metal prices used in the prefeasibility study ($1.20 (U.S.) per pound Cu, $6 (U.S.) per pound Mo) with no adjustment for metallurgical recoveries and relative processing and smelting costs. Using Whittle (Lerchs-Grossman) optimizations of potential economic pit limits on only the measured and indicated resource, MDA determined the mine plan and production schedule. The estimate of mineral reserves within the pit phases was reported using an internal net smelter return cut-off value of $5.25. The table below shows the mineral reserves within the designed ultimate pit based on the MDA resource model. PROVEN AND PROBABLE MINERAL RESERVES HAVE BEEN ESTIMATED AS OF TODAY'S DATE TO BE: Tonnes Grade Copper Grade Molybdenum Reserve category millions (% Cu) millions lb (% Mo) millions lb Proven 76.1 0.48 805 0.051 86 Probable 37.4 0.51 421 0.047 39 Proven and probable 113.5 0.49 1226 0.050 125 Mining and milling The project will use conventional mining and milling processes. The open pit is scheduled to deliver a nominal 20,000 tonnes per day (seven million tonnes per year) of sulphide ore to the primary crusher for 15 years. The processing plant is forecast to produce, on average, 34,178 tonnes (75.2 million pounds) per year of copper in concentrate, 2,860 tonnes (6.3 million pounds) per year of molybdenum in concentrate and 380,000 ounces per year of silver in copper concentrate. Average LOM metallurgical recoveries have been estimated to be 95 per cent for copper and 79 per cent for molybdenum, producing a copper concentrate grading on average 33.5 per cent copper and 117 grams per tonne silver and molybdenum concentrate grading 53 per cent molybdenum. The copper concentrate will attract minor penalties for arsenic. In all years the arsenic content will average less than 0.5 per cent except in year 12 when it will average 0.74 per cent. Capital costs SE developed capital cost estimates for the proposed mining and processing operation at Magistral. The following table summarizes the capital cost estimates in the FFS for the project: Direct capital costs $258-million Indirect capital costs $109-million Owner s direct and indirect capital costs $34-million Closure cost-annual advance payment $1-million Total (base case) $402-million Upfront working capital $2-million LOM sustaining capital $169-million The total (base case) capital cost estimates contain a contingency of $50-million (14 per cent) and excludes IGV. The estimates have been compiled with an accuracy level of minus-4 per cent to over 14 per cent. There has been a material increase in capital costs since the publication of our preliminary feasibility study (PFS) in October, 2006. PFS FFS Increase Item description millions millions (decrease) Direct costs Mining $54.3 $21.4 (61%)(i) Process $86.4 $137.0 59% Infrastructure $81.2 $107.7 33% Subtotal direct costs $221.8 $266.1 20% Indirect costs $15.5 $101.0 552% Owner's costs $22.0 $34.2 56% Total capital $259.3 $401.3 55% (i) Owner mine equipment purchases were deferred due to contract mining being employed in years minus one and minus two (preproduction). Operating costs The results of the FFS show that a mine at Magistral will be a low-cost operation. The FFS estimates that the cash costs (net of Mo and Ag byproducts) over the life of the mine will average 28 cents per pound of copper payable. Cash costs include mining, processing, mine site administration costs, all costs associated, with delivery of concentrates to smelters, and all treatment and refining charges. The LOM operating cost estimate is $8.31 per tonne, not including contingency. Operating costs in the cash flow include a 10-per-cent contingency on estimated cost. Infrastructure Magistral is 261 kilometres by road from the port of Salaverry from which concentrate will be shipped to smelters. Seventy-seven kilometres of the road will require upgrading and 28 kilometres of new road will need to be constructed to allow the passage of 40-tonne trucks. Electrical power for the project will require the construction of a 51-kilometre power line (138 kilovolt) from the existing grid at Sihuas to Magistral. Water will be sourced locally from the Magistral valley and also recycled from the tailings impoundment. Environmental The project will use World Bank guidelines for environmental management practice, development and design. Preliminary baseline studies completed to date have included initial surface water quality sampling, archaeological studies, socio-economic reviews and biological, and revegetation studies. A water-treatment plant will be constructed to process discharges from the tailings impoundment. Employment and taxes The project will create 1,200 temporary construction jobs and 231 permanent jobs. Over the life of the mine, the project should generate $278-million (U.S) in taxes and $90-million (U.S) in royalties. Timing The company anticipates that it will take 12 months to obtain approval of its environmental impact assessment (EIA) and obtain all permits to allow site construction to commence. It will then take a further 24 months to complete site construction of the project. Production is anticipated to commence in the first quarter of 2011. Under its agreement with the government of Peru, the company must commence commercial production by the end of 2011. Next steps The company intends to deliver the final feasibility study to the GOP on or before Dec. 31, 2007. The final feasibility study, in NI 43-101 format, will be available on Inca Pacific's website and SEDAR within 45 days. The project is situated on lands owned by the community of Conchucos. The community of Conchucos has voted to grant the company a surface right to allow development of the project. The company is optimistic that it will obtain this surface right on fair terms and in such a manner that will benefit the community and promote sustainable development in the region. The company has appointed Pincock, Allen & Holt as independent engineer to review the final feasibility study and to express an opinion as to whether the study is in a form and content that would allow major financial institutions to provide all or part of the debt and/or equity financing for the construction of the Magistral project. On or before Feb. 28, 2008, the company must provide the GOP with one or more letters from major financial institutions stating that the feasibility study is a bankable feasibility study. Conference call Call in details for the conference call to be held on Monday, Dec. 3, 2007, at 9 a.m. (Pacific Time) or noon (Eastern Time) are: North American toll-free: 866-322-2356 International: 416-640-3405 A replay of this conference call will be available on Inca Pacific's website. The replay numbers are: North American toll-free: 888-203-1112 International: 647-436-0148 Replay code: 7452209 We seek Safe Harbor.

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Inca Pacific wrestles with delays at Magistral 2007-07-12 10:37 ET - News Release Mr. Anthony Floyd reports INCA PACIFIC GRANTED KEY MODIFICATIONS TO ITS AGREEMENT WITH GOVERNMENT OF PERU Inca Pacific Resources Inc. has been granted the following modifications from Proinversion and Activos Mineros S.A.C., representing the government of Peru (GOP) with respect to its agreements concerning the core claims at the Magistral copper-molybdenum property: An extension until Dec. 31, 2007, of its requirement to file a feasibility study. An extension until Feb. 28, 2008, of its requirement to provide one or more letters from major financial institutions stating that the feasibility study is a bankable feasibility study. An extension until the later of Feb. 28, 2008, or approval by the GOP of the feasibility study, of its requirement to grant the GOP certain annual performance guarantees concerning the investment commitment during the permitting and construction of the mine. Upon execution of formal documentation of the above modifications the company will pay the GOP the sum of $200,000 (U.S.) and upon achievement of commercial production the company will pay the sum of $5-million (U.S.) into a trust account for the benefit of the communities in the immediate area of influence of Magistral. Anthony Floyd, president and chief executive officer, said: "We are pleased that the government of Peru recognizes that the company is doing everything within its control to move Magistral toward production notwithstanding the many constraints facing the mining industry at this time." Juan Valdivia, Minister of Mines of Peru, said: "The government of Peru recognizes Magistral could generate significant taxes and royalties to the benefit of all Peruvians if it becomes a mine therefore I agree with the additional term granted by Proinversion to Inca for completing its feasibility studies and source financing to construct a mine. The fact that we shall create a trust fund for the communities near Magistral demonstrates that both the government and the company recognize the importance of fostering sustainable development around mining projects." Inca Pacific has invested over $18-million (U.S.) on exploration and development of the Magistral property. It currently has over 50 local people employed at site plus four engineering firms working to complete the feasibility

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