News Releases

 October 17, 2012
Indico Signs Binding MOU on the Maria Reyna Property

 Recent drill results including 160 metres @1.03 % CuEq* from 18 metres
New Porphry Cu-Mo system defined

Vancouver, British Columbia - Indico Resources Ltd. ("Indico" or the "Company") (TSX-V: IDI, OTCQX: IDIFF) is pleased to announce the signing of a binding Memorandum of Understanding ("MOU") with the Peruvian owners of Cia Minera Maria Reyna S.A. of Lima, Peru (the "Vendors") wherein Indico will acquire an indirect 51% interest and further be granted an exclusive option to acquire the remaining indirect interest in the Maria Reyna Co-Mo porphyry project in southern Peru. The project consists of a 3164 hectare group of mining titles located in the Andahuaylas-Yauri Belt of skarn-porphyry deposits in Cusco Region, Southern Peru, 100km south of Cusco and within 10km of Hudbay's Constancia Cu-Mo-Ag project (ex Norsemont sold to Hudbay in Q2 2011 for $520 million) which is currently under construction (Figure 1).

Figure 1. Location of Maria Reyna Project, 100 km south of Cusco.

The Maria Reyna concession block covers at least three significant skarn±porphyry systems along 10 kilometres of a northeast-trending structure. Mineralization is related to the regionally significant Andahuaylas batholith and later subvolcanic intrusions. This igneous suite has intruded extensive marine sedimentary rocks of the Yura Group, which in the project area are mainly complexly folded carbonate rocks. Skarn Cu-Mo±Au mineralization is common along the contact zones, and porphyry mineralization occurs within and adjacent to some of the subvolcanic dacitic intrusions. The same geology is present at several significant deposits in the Belt, including the Las Bambas skarn-porphyry cluster (1.7 billion tonnes of 0.60% Cu), Haquira (690 million tonnes at 0.59% Cu), and the Constancia porphyry deposit (reserves of 450 million tonnes at 0.36% Cu), located only 10 kilometres southeast of Maria Reyna.

In 2010, following geophysical and geochemical surveys consisting of 433 rock and 165 soil samples covering a little less than a third of the property, Vale completed 11 diamond drill holes (5585 metres), targeting skarn and porphyry mineralization at the Southwest Zone (Figure 2 and 3). The drilling intersected both high-grade, shallow Cu-Mo skarn and breccia mineralization, and low-grade disseminated porphyry mineralization beneath. Intercepts greater than 0.2% and 0.3% Cu are summarized below in Table 1 and 2. Highlighted in the tables are intersections of shallow mineralization with grades >0.4% CuEq, which will be targeted by future in-fill drilling to generate a near-surface resource. The Company cautions that it has not had the chance to fully verify the quality and accuracy of the relevant historic sampling and drilling results reported in this news release. The historic figures were generated from sources believed to be reliable, based on limited review of the drill core and outcrops in the field, but they have not been confirmed by a Qualified Person, as defined by NI-43-101.

Figure 2. Maria Reyna concession group, Cuscu Region, southern Peru. The copper rock geochemical anomaly defines the SW and NE Zones. Vale's drilling was confined to the SW Zone.

Figure 3. SW Zone drilling by Vale (2010), with notable intercepts, on gridded molybdenum rock geochemical data. Surface skarn outcrops are shown in purple, and the central breccia gossan in red. The system measures approximately 1200 X 1000 metres.

Table 1: Vale Drill Intersections at 0.2% CuEq* Cut-off.

Hole_ID from to Ag (ppm) Cu (ppm) Mo (ppm) CuEq % Interval
DH-001 206 256 1.5 1956 113 0.27 50
DH-002 0 136 4.1 5251 78 0.61 136
DH-003 226 256 1.7 2365 122 0.31 30
DH-003 460 480 0.3 1871 62 0.22 20
DH-004 10 240 3.0 2616 124 0.35 230
DH-004 336 486 1.5 1839 147 0.27 150
DH-004 502 522 0.8 1914 87 0.24 20
DH-005 10 76 4.8 6277 122 0.74 66
DH-006 0 114 4.0 3179 112 0.41 114
DH-007 0 106 2.5 3882 267 0.55 106
DH-007 176 216 1.7 2546 280 0.41 40
DH-007 232 310 1.0 1657 272 0.31 78
DH-008 256 394 1.4 2764 130 0.36 138
DH-008 432 519.85 1.7 2345 209 0.36 87.85
DH-009 18 90 1.7 2815 335 0.47 72
DH-009 110 172 0.7 1358 184 0.24 62
DH-009 196 256 0.9 1793 106 0.24 60
DH-010 262 314 1.7 3036 204 0.42 52
DH-010 344 406 2.1 3429 641 0.68 62
DH-011 18 178 2.9 4970 998 1.03 160
DH-011 374 406 1.1 1448 175 0.24 32
Intervals were calculated with maximum of 10m of 0.1% CuEq internal dilution, 0.2% CuEq edge grade, minimum length of 15m. For CuEq calculations the following variables were used: $3.00/lb Cu, $15.00/lb Mo, $21.00/oz Ag; no allowances for metallurgical recoveries were made.

Table 2: Vale Drill Intersections at 0.3% CuEq* Cut-off.

Hole_ID from to Ag (ppm) Cu (ppm) Mo (ppm) CuEq % Interval
DH-001 222 246 1.8 2442 141 0.33 24
DH-002 0 62 4.5 5789 63 0.66 62
DH-002 74 136 4.3 5510 103 0.65 62
DH-003 232 254 1.7 2504 130 0.33 22
DH-004 10 62 7.2 5122 56 0.61 52
DH-004 108 142 1.7 1663 380 0.37 34
DH-004 364 408 2.4 2547 169 0.36 44
DH-005 10 74 5.0 6455 116 0.75 64
DH-006 0 24 7.9 5501 265 0.76 24
DH-006 56 78 4.8 5551 93 0.65 22
DH-007 2 102 2.6 4002 282 0.57 100
DH-007 176 212 2.0 2670 304 0.44 36
DH-007 244 290 1.2 1962 335 0.38 46
DH-008 270 296 3.1 5162 193 0.64 26
DH-008 322 344 2.0 3435 238 0.48 22
DH-008 438 482 2.0 2632 286 0.43 44
DH-008 504 519.85 2.9 3389 133 0.43 15.85
DH-009 18 76 2.0 3153 371 0.52 58
DH-010 262 314 1.7 3036 204 0.42 52
DH-010 344 406 2.1 3429 641 0.68 62
DH-011 20 82 1.4 2153 328 0.39 62
DH-011 98 178 4.6 8025 1711 1.71 80
Intervals were calculated with maximum of 10m of 0.1% CuEq internal dilution, 0.2% CuEq edge grade, minimum length of 15m. For CuEq calculations the following variables were used: $3.00/lb Cu, $15.00/lb Mo, $21.00/oz Ag; no allowances for metallurgical recoveries were made.

The most significant intercept was in DH-011, which intersected 80m of 1.71% CuEq (0.80% Cu, 1711 ppm Mo), at a 0.3% CuEq cutoff, hosted by hydrothermal breccia. This interval has an upper Cu-rich and a lower Mo-rich segment, in which the matrix of the breccia is filled with semi-massive chalcopyrite and molybdenite, respectively. The mineralization is constrained by adjacent hole DH-001 to dip northeast, and is open along strike to the northwest and southeast.

During a core review, where all significant mineralized intervals were inspected with assays in hand, it was noted that the northeast-directed holes were not optimally oriented, and most stockwork veins are nearly parallel with the core. This is in agreement with surface measurement of structures found on Vale geology maps. Consequently, subsequent infill drilling will be directed mainly to the southwest, with an expected improvement in continuity of mineralization.

The Northeast Zone, lying one kilometre to the northeast of the Southwest Zone, was not drilled or mapped by Vale. A greater than 1 kilometre in diameter Cu-Mo-Au rock and soil anomaly there suggests a significant adjacent mineralized system. Geophysical evidence suggests the anomaly is underlain by an intrusion. Informal mine workings along the northwest peripheries of the area indicate there is skarn mineralization, and future mapping will delineate any related porphyry mineralization.

Another 4 kilometres to the north lies the North Skarn, an area of extensive informal workings and relict trenches from a Phelps Dodge's work program in the 90's. Garnet-skarn with abundant copper oxide and carbonate occurs at the contact of dacite porphyry and marble, with several structurally controlled zones over an area of about 300 X 500 metres. This area was not covered by Vale's geophysical and geochemical surveys and mineralization remains to be outlined.

Terms of the MOU

The Property is currently owned by Compañía Minera María Reyna S.A. ("Reyna").

Pursuant to the MOU, the Vendors have agreed to sell to Indico 51% of the issued and outstanding shares of Reyna (the "Purchase Shares") for the sum of US$2M which sum is payable no later than that date being 4 months following the closing of the Transaction (the "Closing").

In addition the Vendors have granted to Indico the exclusive option (the "Option") to acquire all of the remaining issued and outstanding shares of Reyna by Indico making, at its option, payments of escalating shares and one cash payment over a 5 year period. The total option price is US$20M and 30M shares of Indico with the majority ($10M and 20M shares) being payable in year 5. In the event Indico does not exercise the Option it will transfer back to the Vendors the Purchase Shares.

Upon exercising the Option, Indico will grant to the Vendors collectively a 1% NSR Royalty.

There are no exploration expenditure commitments and no finder's fee are payable in connection with the Transaction. At Closing the parties will enter into a shareholder's agreement that will provide for certain matters regarding the management of Reyna. The Transaction is arm's length.

The schedule of payments is as follows:

Date Shares Cash
On the date Indico receives its first drilling permit for the Property (the “Drilling Date”) 1,000,000  
6 months after the Drilling Date 1,000,000   
12 months after the Drilling Date 2,000,000   
18 months after the Drilling Date 2,000,000   
24 months after the Drilling Date 2,000,000   
30 months after the Drilling Date 2,000,000   
36 months after the Drilling Date 5,000,000  
48 months after the Drilling Date 5,000,000   
60 months after the Drilling Date 10,000,000  US$20,000,000

Conditions to Closing

The closing of the Transaction will be subject to, among others, the following conditions precedent:

  1. the receipt of all necessary regulatory, corporate and third party approvals, including the approval of the TSX-V, and compliance with all applicable regulatory requirements and conditions in connection with the Transaction;

  2. other condition precedents customary for a transaction such as the Transaction including the completion and execution of a formal share purchase and option agreement; and

  3. the completion by Indico of a private placement within 120 days of signing date of the MOU being 17th October 2012.

There can be no assurance that the Transaction will be completed as proposed or at all.

Ocaña Cu-Mo-Au Porphyry Project, Southern Peru

Indico's planned Phase 2 drilling program at Ocaña has commenced, with two holes competed. The program involving a minimum of 4400m will further delimit the southern and eastern edges of both primary and supergene mineralization. It will consist of shallow holes (200m or less) along the southern ridge to test primarily for supergene sulphide and oxide mineralization, and infill drilling to test the upper higher-grade zones within the primary breccia target. The drill hole spacing will be roughly 200 metres. With Phase 2 completed, Indico should have sufficient data to estimate Inferred resources at Ocaña.

About Indico Resources Ltd.

Indico Resources Ltd. is a resource exploration company focused in the discovery and exploration of porphyry copper-gold deposits in South America. The Ocaña Porphyry Project is the Company's primary exploration project and is currently the main focus of exploration activities. In addition, the Company has reviewed multiple additional porphyry exploration projects and is in negotiation to acquire interests in additional porphyry exploration projects. Please visit our website at

The technical information provided in this news release was reviewed and approved by Robert. W. Baxter (FAusIMM), a director of the Company and a qualified person for the purposes of National Instrument 43-101.

On behalf of Indico Resources Ltd.

Robert Baxter
President and Chief Executive Officer

Contact Information:
Dean Linden -- Corporate Development
Phone: +1(604) 638-1429 / Fax: +1(604) 408-7499

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward looking information" within the meaning of the British Columbia Securities Act and the Alberta Securities Act. Specifically, there can be no assurance that the Transaction will be completed as proposed. Generally, the words "expect", "intend", "estimate", "will" and similar expressions identify forward-looking information. By their very nature, forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results, performance or achievements, or that of our industry, to differ materially from those expressed or implied in any of our forward looking information. Statements in this press release regarding Indico's business or proposed business, which are not historical facts, are forward-looking information that involve risks and uncertainties, such as estimates and statements that describe Indico's future plans, objectives or goals, including words to the effect that Indico or management expects a stated condition or result to occur. Since forward-looking statements address events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. All of the Company's Canadian public disclosure filings may be accessed via and readers are urged to review these materials, including the technical reports filed with respect to the Company's mineral properties. The foregoing commentary is based on the beliefs, expectations and opinions of management on the date the statements are made. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise.

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