Inca Pacific Provides Update on Government of Peru Negotiations

  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 [e-mail]