Inca Pacific Disagrees With the Government of Peru's Sale of Magistral

Inca Pacific Resources Inc. (TSX VENTURE:IPR) ("Inca Pacific" or the "Company")
reports that the Government of Peru's Agency for the Promotion of Private
Investment ("ProInversion") has awarded the Magistral Project to Compania Minera
Milpo S.A.A. ("MILPO"), a Peruvian mining company controlled by Votorantim
Metais Ltd, a large private Brazilian company. MILPO will have an option to
develop and exploit the mining concessions comprising the core of the Magistral
Project and is planning to invest over US$ 400 million.


MILPO, was the only bidder in the process and according to its awarded offer,
has a period of 48 months to exercise the option to acquire the Magistral mining
concessions registered under the name of Activos Mineros S.A.C. (a state-owned
Peruvian company) by committing to develop the project in no more than 36 months
from the exercise of the option with an initial payment of US$8.02 million for
the right. Minimum price under the terms of the bidding was US$8 million.
Ownership on the mineral titles held by Activos Mineros S.A.C. are under
litigation with Minera Ancash Cobre S.A. ("MACSA"), Inca Pacific's wholly owned
subsidiary.


According to ProInversion, MILPO offered to pay during the entire period of the
mine life 2% of the net smelter return on the sales of the concentrates
extracted from the transferred concessions in addition to the royalties that are
part of the Peruvian mining law with rates between 1% and 3% of the sales of the
concentrates depending on the value of production. This 2% royalty is to be
shared equally between the Government of Peru and a social fund created for the
benefit of the CONCHUCOS and PAMPAS communities. An agreement with the community
of CONCHUCOS for the use of their land for the Magistral mine is still pending.
According to the last version of the bid basis and option contract to be signed
as published on the Pro-Inversion website, the obligations associated with the
proposed option agreement with MILPO will only be in force if Activos Mineros
prevails in the existing arbitration procedure.


Inca Pacific is extremely disappointed with the Government of Peru's decision to
initiate and now award the Magistral deposit to a third party prior to a
conclusion of the ongoing arbitration proceedings between the MACSA and Activos
Mineros. (for additional information see news releases dated October 1, 2010 and
March 3, 2011). The Company is considering additional legal remedies available
to protect its rights under the Magistral Transfer Agreement including
initiating international arbitration proceedings against the Government of Peru
before the International Centre for Settlement of Investment Dispute (ICSID) in
Washington DC, requesting the guarantee and protections under the Free Trade
Agreement between Peru and Canada. 


The decision to award Magistral to MILPO prior to the arbitration proceeding
casts an ugly light on mining tenure in Peru. Inca Pacific has invested over $40
million in Magistral and will pursue all available remedies to protect its
investment. The Company continues with exploration plans to explore 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. 


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.