Inca Initiates Magistral Arbitration
19 3월 2010 - 5:11AM
Marketwired
Inca Pacific Resources Inc. (TSX VENTURE: IPR) announces that
Minera Ancash Cobre S.A. ("MACSA"), the Company's wholly-owned
subsidiary in Peru, has initiated arbitration proceedings against
Activos Mineros S.A.C. ("Activos Mineros") with respect to the
Magistral Project. MACSA has also requested that notice of
arbitration be served on the Agency for the Promotion of Private
Investment ("ProInversion) and the National Fund for Financing
State Enterprise Activity ("Fonafe").
MACSA has initiated the arbitration in response to the seizure
by Activos Mineros of a US$3 million bond in October 2009 and the
follow-on termination in December 2009 of the Mining Concession
Transfer Agreement between Activos Mineros and MACSA ("Transfer
Agreement") which governs the five core mining concessions within
the Magistral Project. The Company has suffered significant damage
from the actions of Activos Mineros and will be seeking monetary
damages of approximately US$195 million. The Company will continue
to work with the local community in Conchucos in seeing the
Magistral Project through to a positive conclusion for the Company
and our stakeholders.
Magistral Dispute
Under the Transfer Agreement, MACSA posted a bank guarantee of
US$3 million as a performance bond in connection with MACSA's
investment commitment for expenditures to be incurred at Magistral
for the year ending February 2009. Over the course of 2009, MACSA
and Activos Mineros disputed the amount spent. The 2009
expenditures were audited by PricewaterhouseCoopers which found
that Inca Pacific and MACSA together had spent approximately US$15
million, compared with a commitment to spend US$12 million. Activos
Mineros claimed that only US$4.6 million had been spent, since
expenses incurred by Inca Pacific could not be considered for
purposes of the Transfer Agreement. Activos Mineros also claimed
that MACSA had failed to incur certain specific expenditures
committed for the year ending February 2009. This dispute led to
Activos Mineros calling the performance bond without any
justification or support. Activos Mineros further demanded the
immediate posting of a bond for $24 million for expenditures in
2009.
MACSA responded by asserting that Activos Mineros is in breach
of the Transfer Agreement. MACSA demanded that Activos Mineros
remedy its breach and reimburse the US$3 million. Furthermore,
MACSA advised Activos Mineros that, as long as the breach was in
place, MACSA would suspend the fulfillment of any other obligations
under the Transfer Agreement, as permitted under Peruvian law.
In response to our demand for reimbursement of the US$3 million
and notice of arrears, Activos Mineros notified MACSA that it had
terminated the Transfer Agreement on the grounds of a non-existent
breach by MACSA and had registered such contract termination in the
public registration records of the mining concessions referred to
in the Transfer Agreement.
For the past three months the Company attempted to find a legal
and commercial solution to the Magistral dispute. The lack of
progress in finding a commercial solution with Activos Mineros and
ProInversion has left the Company no choice but to start
arbitration. The Company has initiated the arbitration with a
request that the Transfer Agreement be terminated for causes
attributable to Activos Mineros, and that the Company be
compensated for resulting damages.
Arbitration Proceedings
Disputes under the Transfer Agreement are handled through
arbitration and are governed by the Arbitration Regulations of the
National Institute of Mining and Petroleum Law. Each party selects
an arbiter with the two arbiters selecting a third arbiter. It is
anticipated that once the arbitration panel has been named, the
arbitration proceedings could last up to 12 months. However, the
Transfer Agreement dictates that the arbitration procedure must not
take more than 120 days, something the Company will look to
enforce. All decisions by the arbitration panel are final and no
appeal can be filed to contest the arbitration panel's
decision.
Damages Claimed
The Company is seeking monetary damages of US$195 million. The
amount of damages reflect the US$3 million performance bond seized,
the Company's investment in Magistral to date of approximately
US$40 million, and the loss of the project which has a net present
value (NPV) based on the Company's Feasibility Study of US$152
million (at prices of US$1.50/lb copper and US$12/lb molybdenum).
The Feasibility Study was accepted and approved by Activos Mineros
in 2008.
The disputed concessions are five of the twenty-six contiguous
concessions held by MACSA in the Magistral Project area. While the
five disputed concessions contain the bulk of the known
copper/molybdenum mineralization, the other concessions have
several other mineral occurrences which MACSA will continue to
evaluate.
The Company will continue to seek a commercial resolution with
government representatives as we believe that an agreement that
allows the project to be developed in the short term is in the best
interest of all the stakeholders. In addition, the Company will
continue its community relations program in the Conchucos
region.
INCA PACIFIC RESOURCES INC.
Michael Winn, CEO and 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
Standard & Poor's Listed
Neither the TSX Venture Exchange nor the Investment Industry
Regulatory Organization of Canada accepts responsibility for the
adequacy or accuracy of this release.
Contacts: Inca Pacific Resources Inc. Michael Winn 604-687-3727
604-662-3904 (FAX) michael@terrasearch-inc.com or
contact@incapacific.com www.incapacific.com
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