Inca Pacific Provides Update on Government of Peru Negotiations
21 October 2009 - 3:17AM
Marketwired
Inca Pacific Resources Inc. (TSX VENTURE: IPR) announces that
Activos Mineros, the Peruvian agency responsible for administering
the Company's contract with the Government of Peru ("GOP") has
advised the Company that it intends to withdraw $3M that the
Company currently has on deposit as security for its investment
commitments in connection with the Company's Magistral Project.
Activos Mineros claims that the Company did not satisfy its
obligation to make certain investments and minimum levels of
expenditure for the 2008 fiscal year which ended in February 2009.
Activos Mineros also asserts that a pre-production spending
guarantee in respect of approximately $24M for the 2009 fiscal year
is required.
During 2008, under its contract with GOP, the Company had the
obligation to invest not less than $12M on certain budgeted
activities. With the onset of the global credit crisis in 2008, the
Company modified its planned spending to focus on engineering and
the Environmental and Social Impact Assessment approval process
which was finalized in June 2009. At the same time, the Company
applied to the GOP for an extension to the deadline for bringing
the project into production and a modification to the spending
schedule.
Inca Pacific believes that it has honoured its obligations and
confirms that it has spent in excess of the minimum expenditure
requirements for the 2008 fiscal year.
At the same time, the Company is in active negotiations with the
GOP to secure an extension for the deadline for bringing Magistral
into production, currently set at December 31, 2011. The GOP has
indicated that it would like the Company to partner with a party
with the financial resources to complete the project and the
Company has been pursuing such an option for some time. In the
event the Company is unable to find such a partner or otherwise
satisfy the GOP that such an extension is warranted, the GOP has
the right to require the return of the central claims constituting
the Magistral project without recourse by the Company. The Company
would retain its rights to the surrounding claims that are
necessary for development.
The Company is reviewing its options while continuing to work to
resolve the dispute with Activos Mineros and to bring the
negotiations with the GOP to a satisfactory conclusion.
INCA PACIFIC RESOURCES INC.
James R. Rothwell, President and Chief Executive Officer
Standard & Poor's Listed
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
Contacts: Inca Pacific Resources Inc. Bill Galine Investor
Relations 604-662-3922 bgaline@incapacific.com
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