IPR Inca Pacific Resources

Inca Pacific Resources Inc. (TSX VENTURE:IPR) ("Inca Pacific" or the "Company")
reports that the Company's subsidiary, Minera Ancash Cobre S.A. ("MACSA"),
officially filed its claim with the arbitration panel as part of the dispute
with Activos Mineros S.A.C. ("Activos Mineros") over the Magistral Transfer
Agreement. The Transfer Agreement governs the privatization terms for 5 of the
26 concessions controlled by MACSA that host the Magistral copper/molybdenum
deposit.


MACSA's arbitration complaint includes the following terms:

1. First Claim: That the arbitration panel declares invalid the termination
claim of the Transfer Agreement by Activos Mineros on December 1, 2009.


2. Second Claim: That the arbitration panel declares that, the execution of the
Performance Bond in the amount of US$3,000,000 which was in place to guarantee
the investment commitment by MACSA under the Transfer Agreement for expenditures
incurred from 2008 to 2009, constitutes a breach of contract by Activos Mineros.


3. Third Claim: That the arbitration panel orders Activos Mineros to pay MACSA
US$3,000,000 (plus accrued interest) corresponding to the amount charged as a
result of the undue execution of the Performance Bond requested by Activos
Mineros.


4. Fourth Claim: That the arbitration panel terminates the Transfer Agreement
due to serious breach of contract by Activos Mineros with respect to its
obligations under the Transfer Agreement.


5. Fifth Claim: That the arbitration panel orders Activos Mineros to pay MACSA
approximately US$195 million for the damages caused by the illegal termination
of the Transfer Agreement.


6. Sixth Claim: That the arbitration panel orders Activos Mineros to pay the
legal expenses and fees that may arise from the arbitration proceeding.


The dispute with Activos Mineros relates to the investment commitment that MACSA
was required to spend on the Magistral project for the period March 1, 2008 to
February 28, 2009. During this period, MACSA was required to spend US$9,676,769
representing 80% of the annual investment commitment (US$12,095,962). In
conjunction with this commitment, MACSA posted the US$3 million performance
bond. In June 2009, PriceWaterhouseCoopers forwarded to Activos Mineros the
results of the first year audit which showed that MACSA and its related
companies incurred US$15,124,482 in expenditures.


Activos Mineros rejected expenditures not incurred by MACSA directly as well as
disputed the investments incurred by MACSA and its related companies. The
Transfer Agreement is clear that the requirement is to spend 80% of the
investment commitment towards credible expenditures on the Magistral Project.
The Transfer Agreement does not specify that the expenditures have to be made
only through MACSA; and under Peruvian law, related companies like the parent
Inca Pacific, are able to incur expenditures. 


MACSA actively tried to resolve the dispute with Activos Mineros up to the point
when Activos Mineros executed the US$3,000,000 Performance Bond. Upon execution
of the Performance Bond, MACSA informed Activos Mineros they were in breach of
the Transfer Agreement. As permitted under Peruvian law, MACSA is allowed to
suspend all obligations under the Transfer Agreement until a breach has been
cured. Activos Mineros disagreed with the breach and requested that the Company
post the second year performance bond in relation to the second year investment
commitment. Given the disagreement over the expenditures for the first year and
the breach of the Transfer Agreement, the Company did not post the second year
performance bond. On December 1, 2009, Activos Mineros illegally terminated the
Transfer Agreement.


Despite the seizure of the Performance Bond and the illegal termination of the
Transfer Agreement, the Company was hopeful a solution could be reached between
the parties. The lack of interest by Activos Mineros to discuss the dispute led
the Company to initiate arbitration proceedings in March 2010. Recent action by
the Government of Peru to put the Magistral property out for public tender while
the arbitration proceedings are taking place suggest that the Government has
little regard for the arbitration process. In addition, Activos Mineros and
ProInversion have continually inflamed this dispute by spreading false
information with respect to MACSA within the Conchucos Community. MACSA has
invested US$40 million in Magistral, and up until recently enjoyed a very good
relationship with the Conchucos Community and was dedicated to seeing Magistral
brought into production. 


MACSA and the Company will continue to work for a solution through the
arbitration proceedings as well as through continued dialogue with the
government. In addition, the Company continues with exploration plans to
evaluate the 12,750 hectares of mining concession surrounding the five core
claims. Even though the claims in dispute constitute the core of the known
mineralization, they represent less than 2% of the entire property area which
remains highly prospective for a variety of mineralized systems. 


About Inca Pacific 

Inca Pacific is a mineral exploration company with an experienced team dedicated
to preserving its rights and investment in the Magistral Project, seeing the
Magistral developed, and evaluating additional opportunities in the Magistral
district. 


INCA PACIFIC RESOURCES INC.

Michael D. Winn, CEO & Director

Forward-Looking Statement - Some of the statements in this news release contain
forward-looking information that involves inherent risk and uncertainty
affecting the business of Inca Pacific Resources Inc. Actual results may differ
materially from those currently anticipated in such statements.

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