Colony-Inco-Imperial - Indonesia Mineral Exploration and Development Venture.

VANCOUVER, British Columbia--(BUSINESS WIRE)--May 14, 1996-- IMPERIAL METALS CORP. (TSE: CYX TSE: IPM) Imperial Metals Corporation and Colony Pacific Explorations Ltd. jointly announced today that Colony and Inco Limited have reached agreement in principle on a Strategic Alliance to carry out mineral exploration and development in Indonesia. The arrangement is subject to execution of final agreements and the receipt of all shareholder and regulatory approvals which may be required.

The Strategic Alliance will cover the entire island of Sumatra and will initially focus on the Kareng and Gedang properties located in the southern portion of Sumatra.

Colony 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 a four year period. 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.

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

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 exerciseable at $1.50 until May 31, 1997 and at $2.50 until May 31, 1998.

The Kareng and Gedang properties cover approximately 3,000 square kilometres along one of the major volcanic arcs of the Indonesian archipelago. The properties contain several areas with porphyry copper-gold and gold mineralization and alteration together with strong untested stream sediment geochemical anomalies. The properties are underlain by intrusives similar to those associated with major porphyry deposits such as the Grasberg deposit (2 billion tonnes grading 1.2 percent copper and 1.2 g/t gold) and the Batu Hijau deposit (800 million tonnes grading 0.57 percent copper and 0.48 g/t gold).

The initial exploration program will cost in excess of US$5 million and consist of airborne geophysical surveys, mapping, sampling and surface evaluation of the known mineral occurrences and follow-up of the numerous copper-gold stream sediment anomalies. The second phase will consist of additional ground surveys and diamond drilling.

Inco has been actively exploring and mining in Indonesia for over 25 years and has invested more than $1.5 billion to develop its Soroako nickel mining and processing facilities on the island of Sulawesi. Inco recently announced a further expansion of its operations at Soroako and an extension of its Contract of Work for a 30 year period to the year 2025.

The venture represents an opportunity for Colony and its shareholders to be involved in a major new exploration initiative in Indonesia operated by one of the world's premier mining companies.

Pierre Lebel President

CONTACT: Colony Pacific Explorations Ltd.

Imperial Metals Corporation,

Pierre Lebel, President

or

Colony Pacific Explorations Ltd.

Imperial Metals Corporation,

Charlene Parisotto, 604/669-8959, 604/687-4030 (Fax)