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IncaGold plc (the "Company")

Disposal of IncaGold GmbH

                                

Overview

As reported in the Annual Report and Financial Statements for the year ended 31 December 2008, the Company has agreed to dispose of its 100 per cent. interest in its subsidiary company IncaGold GmbH for nominal consideration to Richard Holmes, the sole director of IncaGold GmbH. Under the AIM Rules, the disposal is deemed to be a fundamental change of business and is therefore conditional on Shareholder approval. The disposal will also constitute a related party transaction because the purchaser was a director of the Company within the last 12 months.  

A circular was posted to Shareholders yesterday explaining the rationale behind the Disposal of IncaGold GmbH and why the Directors unanimously consider it to be in the best interests of the Company and its shareholders as a whole and why they recommend that Shareholders vote in favour of the Resolutions as they intend to do in respect of their own beneficial holdings of Ordinary Shares. 

Background and Reasons for the Disposal

On 29 June 2009, the Board passed a resolution to transfer the games business of the Company to its 100 per cent. owned subsidiary, IncaGold GmbH, under the terms of the Business Transfer Agreement dated 1 February 2008 and subsequently to sell the subsidiary to the director of IncaGold GmbH, subject to shareholder approval, for total consideration of CHF 10.00 with a guarantee from the purchaser for all sums in relation to the liabilities of the subsidiary. Under the terms of the Business Transfer Agreement the purchaser will also indemnify the Company against any sums which the Company may be compelled to pay in connection with the liabilities of the subsidiary.  

The trading operations of IncaGold GmbH reported a loss before tax for the year ended 31 December 2008 of £59,385 and a loss before tax for the six months ended 30 June 2009 of £23,507. The Directors believe that the disposal of IncaGold GmbH is therefore in the best interests of the Company and its Shareholders as a whole because the Company will be divesting itself of a loss making business and the associated liabilities of the subsidiary.

Under the AIM Rules, the disposal is deemed to be a fundamental change of business and must be approved by Shareholders voting (whether in proxy or in person) at a general meeting. 

Related Party Transaction

As noted above, the disposal will also constitute a related party transaction because the purchaser was a director of the Company within the last 12 months. The Directors consider, having consulted with Zeus Capital, the Company's Nominated Adviser, that the terms of the disposal are fair and reasonable insofar as the shareholders of the Company are concerned.

Effect on the Company 

From the date that the sale is completed, the Company will have divested itself of substantially all of its trading business and will therefore be treated as an investing company under the AIM Rules. 

Following the divestiture, the Directors believe that the Company could be attractive to a number of potential targets/investments. The Directors intend to seek to acquire another company or business in exchange for the issue of Ordinary Shares in a single transaction (a "reverse takeover"). The Directors' main investment criteria are: -

• businesses in the UK, Europe and North America;

• businesses which require little or no funding in excess of the cash resources available to the Company following the Disposal; and

• businesses whose growth prospects, if achieved, will be earnings enhancing for Shareholders.

The Company's investing policy going forward must also be approved by Shareholders at the EGM. 

In the event that the Company is unable to implement its investing policy, within twelve months of the date of the EGM and has not made an acquisition or acquisitions in that time which would constitute a reverse takeover under the AIM Rules then the Company's admission to trading on AIM will be cancelled. 

General Meeting

An Extraordinary General Meeting will be held at 11 a.m. on Wednesday 23 December 2009 at the Company's offices at Lorne House, Castletown, Isle of Man at which the Resolutions will be proposed.

Contact:

IncaGold plc   

Justin Martin, Director  

Tel: +44(0)1624 820040   

Website: www.incagoldplc.com

   

Zeus Capital Limited
Ross Andrews

Tom Rowley   

Tel:   +44(0)161 8311512   

Website:  www.zeuscapital.co.uk

  DEFINITIONS

"Act"	the Companies Act 2006
"AIM"	a market operated by London Stock Exchange plc
"AIM Rules"	the AIM Rules for Companies published by the London Stock Exchange from time to time (including, without limitation, any guidance notes or statements of practice) which govern the rules and responsibilities of companies whose shares are admitted to trading on AIM
"Board"	the board of directors of the Company
"Company"	Incagold plc
"Directors"	the directors of the Company
"Extraordinary General Meeting"    or "EGM"	the general meeting of the Company, convened for 11.00 a.m. on 23 December 2009, and any adjournment thereof which will consider the Resolutions
"Form of Proxy"	the form of proxy enclosed with this document for use by Shareholders in connection with the EGM
"Ordinary Shares"	ordinary shares of 0.001p each in the capital of the Company
"Resolutions"	the resolutions to be proposed at the EGM
"Shareholders"	holders of Ordinary Shares and "Shareholder" means any one of them
"UK"	the United Kingdom of Great Britain and Northern Ireland

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