Inca Pacific Provides Magistral Update

Inca Pacific Resources Inc. (TSX VENTURE:IPR) ("Inca Pacific" or the "Company")
is pleased to provide an update on the Company's ongoing dispute with regards to
the Magistral Project. 


Arbitration Process 

Minera Ancash Cobre S.A. ("MACSA"), the Company's wholly-owned subsidiary in
Peru, initiated the Magistral arbitration proceedings in response to the
unjustifiable seizure by Activos Mineros S.A.C. ("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 ("Transfer Agreement") between Activos
Mineros and MACSA. The Transfer Agreement governed the privatization terms for
five of the twenty-six concessions controlled by MACSA. The five concessions
host the Magistral copper/molybdenum deposit. 


MACSA filed the arbitration demand on March 18, 2010 with the Arbitration
Regulations of the National Institute of Mining and Petroleum Law ("Arbitration
Institute"). The arbitration panel was finally formed on September 23, 2010 and
is comprised of one arbitrator appointed by MACSA, one by Activos Mineros, and a
third arbitrator appointed by the Arbitration Institute. MACSA has until October
22, 2010 to submit its claim to the arbitration panel. Activos Mineros will then
have 20 working days to respond to the claim with the possibility of extending
that period for an additional 10 working days. It is difficult at this time to
estimate how long before a decision will be rendered by the arbitration panel. 


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 based on the Company's Feasibility Study of US$152
million. The Feasibility Study, its economic model and the related financial
projections were approved unconditionally by Activos Mineros in 2008.


MACSA has and continues to maintain a dialogue with the Peruvian Government,
including representatives of Activos Mineros and the Agency for the Promotion of
Private Investment ("ProInversion), in an attempt to find a commercial
resolution to the dispute. If a commercial agreement is reached the arbitration
process may be stopped with no consequences to either party at any time.


ESIA Update

The Peruvian Ministry of Mines and Energy ("MEM") officially approved
Magistral's Environmental and Social Impact Assessment ("ESIA") on June 29,
2009. Subsequent to this approval, the Mining Council, a quasi-independent
branch of the MEM, heard an appeal on the "officially approved" ESIA by the
community of Conchucos, agreed with the appeal, and revoked the Magistral ESIA. 


The appeal by the community of Conchucos was based on a technical issue related
to the proposed location of the tailings dam. The Mining Council did not revoke
the ESIA on technical grounds; instead the Mining Council revoked the ESIA on
environmental concerns unrelated to the appeal. The arguments used in the
decision by the Mining Council was the precautionary principle set forth in the
Peruvian Law on the Environment, applied on account of alleged potential
environmental damages that could be caused to a natural water reservoir (a small
wetland area at the mine/tailing impoundment site) as a result of the
construction of the proposed processing plant and auxiliary facilities. This
argument has never been used with respect to mining projects in Peru before and
has no basis in Peruvian Environmental Law. 


MACSA has challenged this decision by filing a claim in the Peruvian Courts
stating that the Mining Council's reasoning for revoking the ESIA applied the
precautionary principle in an undue manner; contains incongruent reasoning as it
goes beyond the foundations set out in the appeal for review and insufficient
reasoning when it does not base its assertions on technical reports or opinions;
damages the principle of legal certainty when it demands from us to comply with
requirements that do not correspond to the approval procedure of the ESIA; and
affects the principle of material truth, as it did not even attempt to obtain
new evidence to sustain its assertions. MACSA is waiting for a judicial
pronouncement which is expected in the following months.


Exploration & Community Program 

Prior exploration efforts within the Company's concessions focused principally
on the main deposit of Magistral with limited exploration having been done on
the Company's surrounding claims. There remains significant potential throughout
the Company's concessions for the following deposit types: Cu-Mo-Au skarn
porphyries, Au-Ag porphyries, structurally controlled sandstone hosted Au-Ag
systems, replacement type polymetallic systems in limestones, and
intrusive-related tungsten vein deposits associated to precious and base metal
deposits. 


The Company has decided to initiate a field program on its 100%-owned Magistral
claims not under dispute to evaluate several of the occurrences previously
identified. This program will include the acquisition of some existing airborne
geophysics, soil and rock geochemistry, and mapping. The program will take
approximately three months to complete. 


Prior to the start of the field work, the Company will initiate a new community
relations program. Since the cancelation of the Transfer Agreement and the
subsequent initiation of the arbitration proceedings, the Company has actively
tried to maintain a positive relationship with the community of Conchucos as
well as surrounding communities. During the time of our work to keep positive
relationships with the local communities, ProInversion has and continues to
criticize MACSA and provide misinformation concerning MACSA's past and present
activities.


We are of the opinion that the actions of ProInversion have the potential to
divide the community which will ultimately impact the development of the
Magistral. The Company and MACSA have worked diligently to promote a positive
relationship with community of Conchucos and look forward to working with them
as we proceed with our exploration efforts.


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.
Inca Pacific Resources (TSXV:IPR)
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