International Minerals Announces Positive Preliminary Economic Assessment and Increased Resource Estimate at Inmaculada Project, Peru

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--International Minerals Corporation (TSX: IMZ)(Zurich: IMZ) is pleased to announce the results of an independent Preliminary Economic Assessment (“Scoping study”) and an updated, increased mineral resource estimate for the Angela Vein deposit at the Inmaculada gold-silver project (“Inmaculada”) in southern Peru. IMZ controls a 70% interest (Hochschild Mining 30%) in Inmaculada with a present 51% interest in direct ownership and currently earning the 70% interest by completing a feasibility study before September 2013 and by issuing 200,000 IMZ shares to Hochschild over a 5-year period commencing February 2011. IMZ intends to fast-track the feasibility study and complete it by the end of 2011.

Highlights of Scoping Study (base case using $1,000 per ounce (“/oz”) gold and $17/oz silver and a 60:1 silver-to-gold equivalency ratio. All currency amounts in US dollars):

• Conceptual mine production (after 5% mining loss and 20% mining dilution): 8.0 million tonnes (“Mt”) at an average grade of 3.8 grams per tonne (“g/t”) gold and 137 g/t silver or 6.1 g/t gold equivalent.
• Recovered ounces (“ozs”): 858,000 ozs gold and 29.3 million ozs silver or approximately 1.35 million ounces of gold equivalent (based on metallurgical recoveries of 88% for gold and 83% for silver).
• Pre-tax cash flows: $660 million non-discounted, $434 million at a 5% discount rate and $286 million at a 10% discount rate.
• Pre-tax Internal Rate of Return (”IRR”): 41%.
• Total cash operating cost per tonne: $52.
• Total cash operating cost per oz:
  • Basis gold with silver credited as a by-product: negative $94 per oz of gold (indicating that silver by-product revenue is great than the total cash operating cost.)
  • Basis gold equivalent: $311 per oz of gold equivalent.

• Initial Capital: $168 million (including $32.9 million in contingency).
• Total cash operating cost per oz, including capital:
  • Basis gold with silver credited as a by-product: $231 per oz.
  • Basis gold equivalent: $517 per oz
• 3,000 tonnes per day (“tpd”) underground mine using a long hole stoping mining method and conventional recovery process by flotation to produce a saleable gold-silver concentrate.

Highlights of Independent Updated Resource Estimate (100% project basis):

• Measured and Indicated (“M&I”) Mineral Resources of 3.8 Mt at an average grade of 4.3 g/t gold and 129 g/t silver respectively, containing approximately 532,000 ounces of gold and 15.8 million ounces of silver or 796,000 ounces of gold equivalent (basis 3 g/t gold equivalent cut-off grade).

This new M&I resource estimate represents a 245% increase in gold ounces and 225% increase in silver ounces compared to the previous IMZ resource estimate (see news release dated February 3, 2010). In addition, the average gold and silver grades in the M&I categories increased by 10% and 6% respectively.

• Inferred Mineral Resources of 4.4 Mt at an average grade of 4.6 g/t gold and 200 g/t silver respectively containing approximately 645,000 ounces of gold and 28.3 million ounces of silver or 1,116,000 ounces gold equivalent (basis 3 g/t gold equivalent cut-off grade).

This new inferred resource estimate represents a 26% increase in gold ounces and 28% increase in silver ounces compared to the February 2010 resource estimate In addition, the average gold and silver grades in the Inferred category increased by 35% and 36% respectively.

Scoping Study Details

Results of the Scoping study for the Inmaculada Project indicate that at base case gold and silver prices of $1,000/oz and $17/oz respectively and a 3,000 tpd throughput, an underground mining project could return a pre-tax non-discounted cash flow of approximately $660 million based on the Scoping study conceptual diluted mine production of 8.0 Mt at a grade of 3.8 g/t gold and 137 g/t silver.

The independent Scoping study was overseen by P & E Mining Consultants Inc. of Brampton, Ontario Canada (“P&E”), with Golder Associates Perú S.A. (“Golder”) responsible for the tailing disposal facility and fresh water supply studies and FSS Canada Consultants Inc. (“FSS”) responsible for the updated resource estimate.

The results of the Scoping study are shown below in Table 1, with sensitivities to metal prices shown in Table 2.

Table 1. Inmaculada, Angela Vein Scoping Study (100% Project Basis, all in US Dollars)

Item	Units
Base Case Gold price	$ per ounce	$1000
Base Case Silver Price	$ per ounce	$17
Initial Mine life	years	7.5
Average annual gold production ^6	ounces/year	117,000
Average annual silver production ^6	ounces/year	4,000,000
Average annual gold Eq. production	Au Eq ounces/year	180,000
Life-of-mine gold production ^6	ounces	858,000
Life-of-mine silver production ^6	ounces	29,300,000
Life-of-mine gold Eq. production	Au Eq. ounces	1,346,000
Plant processing rate (~3,000 tpd)	tonnes/year	1,095,750
Metallurgical recovery – gold	%	88%
Metallurgical recovery – silver	%	83%
Initial capital ^2	$ millions	168
Total Cash operating cost ^3,	per tonne processed	$52.08
Total Cash operating cost ^4	per ounce Au Eq.	$311
Total Cash operating cost, inc capital ^4	per ounce Au Eq.	$517
Total Cash operating cost (by-product) ^5	per ounce Au (Ag credit)	-$94
Total Cash operating cost inc capital (by-product) ^5	per ounce Au (Ag credit)	$231
Pre-Tax IRR	%	41%
Cash Flow (non-discounted)	$ millions	$660
NPV, 5% discount rate	$ millions	$434
NPV, 10% discount rate	$ millions	$286

1) This Preliminary Economic Assessment or Scoping study is preliminary in nature, in that it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the results of the preliminary economic assessment study will be realized and actual results may vary substantially.

2) Initial Capital includes $32.9 million in contingency allowance. Costs are based on Q3 2010 estimates and no escalation factors have been applied. Value added tax has not been included in the cost estimates.

3) Total Cash Operating costs include smelting and refining and Peruvian Government royalties, but do not include employee profit sharing or depreciation, depletion or amortization.

4) Total Cash Costs per ounce of gold equivalent are calculated using a silver-to-gold ratio of 60:1.

5) By-product accounting subtracts the revenue generated by silver from the operating costs as a credit to determine the cost per ounce of gold.

6) Annual and life-of-mine production figures are after 5% mining losses, 20% mining dilution and the respective metallurgical recoveries for gold and silver.

7) Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Table 2. Inmaculada, Angela Vein Sensitivity Analyses (100% Project Basis, all in US Dollars, base case in bold and highlighted)

	Gold Price/Silver Price ($/oz)
Category	$800/ $13.60	$900/ $15.30	$1,000/ $17.00	$1,100/ $18.70	$1,200/ $20.40	$1,300/ $22.10	$1,400/ $23.80	$1,500/ $25.50
IRR	28%	35%	41%	47%	52%	58%	63%	68%
Cash Flow ($ millions)	416	538	660	782	904	1,026	1,148	1,271
NPV 5% ($ millions)	257	346	434	522	611	699	787	875
NPV 10% ($ millions)	156	221	287	352	417	483	548	613

1) Cash flow and NPV’s are all shown pre-tax, but do include Peruvian government royalties and smelter and transportation charges. Value added tax (generally recoverable in Peru) was not included in the cash flows.

Mining

The mine design concept for Inmaculada is to utilize the long hole stoping mining method. The Angela Vein deposit is well suited for this method with good continuity of mineralization along strike and average vein widths of approximately six meters. A main development decline will be driven in the footwall of the vein(s) and the mining blocks will be defined and accessed from a series of spiral ramps driven off the main decline. A majority of the mineralization to be mined is above the main development decline, allowing for gravity transport to the decline for trucking to the process plant. Paste backfill of the mined out stopes is planned to minimize mining recovery losses. Sub-level spacing is 25m, with an assumed 5% mine loss and 20% mining dilution.

Processing

The base case processing plan for Inmaculada project envisages crushing and grinding, followed by flotation to generate a saleable gold-silver concentrate (similar to the recovery process at IMZ’s 40%-owned Pallancata mine located 25km to the North). The Angela Vein mineralization is amenable to other industry-standard recovery methods, but currently the flotation option provides the best project economics.

Mineral Resource Estimate Details

Based on drill results received up to a cut-off date of May 15^th, 2010 (drill hole INMA 139), an updated mineral resource estimate was calculated by FSS Canada, an independent consulting firm. This new estimate was used as the basis for the Scoping study.

The updated resource, as shown in Table 3 and summarized below (on a 100% project basis) comprises:

• Measured and Indicated Resources: 3.8 Mt at an average grade of 4.3 g/t gold and 129 g/t silver containing approximately 532,000 ounces of gold and 15.8 million ounces of silver.
• Inferred Resources of 4.4 Mt at an average grade of 4.6 g/t gold and 200 g/t silver containing approximately 645,000 ounces of gold and 28.3 million ounces of silver.

This updated resource estimate, which includes Measured resources for the first time, represents a significant increase in both the confidence level of the resource estimate and the overall gold and silver content of the Angela Vein deposit from the previously-reported, independently-calculated, Indicated and Inferred mineral resource estimate, as discussed in the Highlight section of this news release.

The resource estimate is reported at a cut-off grade of 3 g/t gold equivalent (using a silver to gold ratio of 60:1), which approximates the cut-off grade for the underground mining and flotation process option selected for Inmaculada, using a base-case gold price of US$1,000 per ounce. Because the cut-off grade is a factor of operating costs, metallurgical recoveries and gold price, it is possible that a lower or higher cut-off grade could be applied in the future.

Table 3. Angela Vein, Inmaculada Project – Mineral Resource Estimate at a cut-off grade of 3 g/t gold equivalent (as of September 9, 2010 at US$1,000/oz gold and $17/oz silver)

Resource Estimate Category	Tonnes	Gold Grade (g/t)	Silver Grade (g/t)	100% Project Contained Ounces
				Gold	Silver	Gold Equivalent	Silver Equivalent
Measured	1,080,000	5.1	107	178,000	3,717,000	240,000	14,395,000
Indicated	2,747,000	4.0	137	354,000	12,128,000	556,000	33,392,000
Measured and Indicated	3,827,000	4.3	129	532,000	15,845,000	796,000	47,788,000
Inferred	4,388,000	4.6	200	645,000	28,283,000	1,116,000	66,959,000

1) Resources are shown on a 100% project basis. IMZ controls a 70% interest (Hochschild Mining 30%) with a current 51% ownership and is earning a 70% interest by completing a feasibility study before September 2013 and issuing to Hochschild 200,000 IMZ shares.

2) Numbers are rounded to reflect the precision of a resource estimate.

3) The estimated mineral resources are not mineral reserves and do not have demonstrated economic viability.

4) To limit the influence of individual high-grade samples, grade cutting was used. Gold assay grades were capped at 100 g/t and silver grades were capped at 1,500 g/t.

5) Average dry bulk densities of 2.51 tonnes per cubic meter (“t/m^3”) were used for all mineralized rocks.

6) The grades were interpolated using “Ordinary Kriging” estimation technique.

7) Descriptions of parameters to determine “Measured”, “Indicated” and “Inferred” resources are provided below.

8) The contained metal estimates remain subject to factors such as mining dilution and process recovery losses.

9) The mineral resources in this press release were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council December 11, 2005.

The mineral resources were estimated based on IMZ’s previously-released assay results from 139 core drill holes totaling approximately 48,513m over a strike length of 2 km. These mineral resources were classified in accordance with CIM guidelines by FSS’s Qualified Person, R. Mohan Srivastava (P.Geo.), and the estimate has an effective date of September 9, 2010.

Ordinary kriging was used to interpolate gold grades for four separate sub-domains that may intermix within each block (block size is 10 meters (“m”) long by 2m wide by 10m high). The four sub-domains were defined by geological sectional interpretation. The grades of each sub-domain were interpolated separately, using only the nearby data from the same sub-domain, and the final block grade was calculated by taking the proportion and density-weighted average of the grades from each of the sub-domains.

Resources were classified according to the number of nearby drill holes, their proximity to the block being estimated, and their spatial arrangement around the block. Blocks were classified as Measured Resources if they were estimated by data within the range of the variogram in at least four of eight octants, and with a sample within 25m (1/3 the range of the variogram) of the block center. Blocks were classified as Indicated Resources if they were estimated by data within the range of the variogram from at least two drill holes in at least three of eight octants, and with a sample within 50m (2/3 the range of the variogram) of the block center. Blocks were classified as Inferred Resources if they had data within the range of the variogram but could not be classified as Measured or Indicated Resources.

Over 99% of all of the assays within the Angela Vein domains were verified against the original assay certificates provided by the SGS laboratory. Eight Angela Vein assays from one of the original exploration holes (drilled by Hochschild) could not be checked against original records and were checked, instead, against previously tabulated values.

General

The technical information reported in this news release was reviewed and approved by IMZ’s Qualified Person, VP of Corporate Development, Nick Appleyard and Eugene Puritch P.Eng. President of P&E Mining Consultants Inc.

A NI 43-101 Technical Report will be filed by IMZ on SEDAR within 45 days of the date of this news release.

Hochschild Mining does not accept any responsibility for the adequacy or inadequacy of the disclosure made in this news release and any responsibility is hereby disclaimed in all respects.

About International Minerals

International Minerals is a silver-gold producer and developer with silver and gold production from its 40%-owned Pallancata Mine in Peru, one of the top-10 primary silver mines in the world. Production of approximately 10 million ounces of silver and 33,000 ounces of gold (on a 100% project basis) is estimated by IMZ in calendar year 2010.

In addition to the Pallancata Mine, IMZ also controls a 70% interest in the Inmaculada gold-silver project in Peru and majority or 100% ownership interests in development stage gold projects in Nevada (Goldfield and Converse) and Ecuador (Rio Blanco and Gaby). IMZ also owns a 3% net smelter return (“NSR”) royalty from Barrick Gold’s Ruby Hill gold mine in Nevada, which produced approximately 100,000 gold ounces in 2009.

IMZ is listed on the Toronto Stock Exchange (since 1994) and the Swiss Stock Exchange (since 2002).

Internet Site: http://www.intlminerals.com

Cautionary Statement:

Some of the statements contained in this release are “forward-looking statements” within the meaning of Canadian securities law requirements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements in this release include statements regarding estimates of capital and operating costs; economic returns; timing and significance of future cash flows and revenue from the project; timing and outcome of any feasibility study; and timing and scale of production and processing; and resource estimates. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: risks relating to estimates of production and processing rates; risks relating to estimates of mineral resources; risks relating to capital and operating costs; risks relating to obtaining mining and environmental permits; mining and development risks; risk of commodity price fluctuations; political and regulatory risks; and other risks and uncertainties detailed in the Company’s Amended Renewal Annual Information Form for the year ended June 30, 2009, which is available at www.sedar.com under the Company’s name. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.