Colony cooperates with Inco

Colony cooperates with Inco

VANCOUVER (Reuter): Colony Pacific Explorations Ltd said it
had agreed in principle with Inco Ltd to carry out mineral
exploration and development in Indonesia.

The agreement would form an alliance covering the entire
island of Sumatra and which will initially focus on the Kareng
and Gedang properties in the southern portion of Sumatra.

Colony said it will have an option to acquire Inco's 100
percent interest in both properties by funding the first US$12
million of exploration and development over four years.

After Colony exercises the option, Inco will have the right to
re-acquire a 60 percent interest in the properties by funding the
next US$30 million on exploration and development work. Inco will
be the exploration manager and will undertake to identify and
acquire other prospective properties on Sumatra for option to
Colony on similar terms, Colony said.

Inco has agreed to purchase 700,000 units of Colony at $0.73
per unit, each unit consisting of one common share and one
warrant exercisable at $1.50 until May 31, 1997, and at $2.50
until May 31, 1998, Colony said.

Inco will have a 50 percent participation right in any Colony
financing to raise exploration and development funds for this
venture and will assist Colony in raising the senior project
financing required to fund Colony's share of mine development
costs.

Imperial Metals Corp, which holds 60 percent of Colony's
shares, will provide ongoing management and administrative
services to Colony.