Fiscal Year 2009 - CEO's Letter to Shareholders

Stephen J. Kay President & Chief Executive Officer

September 28, 2009

Dear Fellow Shareholder,

It has been quite a ride for the Company's share price this past year. Although it has now more than tripled from a 52-week low of C$1.17 in December 2008, we are determined to build even greater value for our shareholders. An integral part of this value-building strategy is our proposed acquisition of Ventura Gold Corp. as announced in a news release dated September 23, 2009 (see discussion below). By combining with Ventura the Company will add the exciting Inmaculada advanced gold-silver exploration project in mining-friendly Peru to our project development and exploration pipeline.

We believe that while our share price recovery over the past 9 months stems primarily from a significant increase in production at our 40%-owned Pallancata silver-gold mine in Peru and resurgent precious metal prices, the Company's share price is still being negatively impacted by continuing delays in Ecuador related to the new mining law that was approved in January this year. We expect that these issues will be resolved in the coming months, which should then have a positive effect on the Company's share price.

General Market Comments

The US and foreign media continue to report positive news with respect to the stabilization of the US and European financial systems (as a result of the so-called "success" of the various massive government bailout packages) and the imminent end of the current economic crisis.

I believe that the jury is still out on these bullish prognostications by the media, based on continuing rising unemployment, increased bankruptcies (both personal and commercial), declining consumer spending and continuing severe problems in the housing market, particularly in the US, UK and Spain.

Probably  the biggest single factor affecting the world markets and people's lives  in the future is the rising national debt of the US and European governments, which continue to electronically print money as if  it were confetti (ironically, it may soon be worth about the same!)

Considerable turmoil and volatility can still be expected in the financial sector worldwide until the critical macro-economic issues are gradually resolved, which may take some considerable time.

Recently the US dollar has weakened sharply (and was probably overdue in its correction) to a one-year low against the major currencies. As we have seen in the past, the US dollar typically has an inverse relationship with the gold price, so that a continuing weak dollar is a good indicator of continuing high gold prices in the future

How did the Company, the mining sector and the gold/silver markets perform this year?

The Company's share price dropped to a six-year low of C$1.17 (a market cap of C$112 million or approximately US$104 million) in December 2008 as the financial markets crashed worldwide. No industry sector was spared. Our share price has since recovered to around C$4.45 (a market cap of C$414 million, ~US$387 million), but the perception of the Company in the market is still negatively impacted by political issues in Ecuador (as discussed below) We strongly believe that the Ecuadorian risk factors and our Ecuadorian assets are already significantly discounted in the current share price and so there should only be upside with respect to our share price as Ecuador stabilizes.

Gold and silver metal prices are up 15% and 51% respectively so far in 2009, with trading ranges in London of US$810-$1,001 and US$10.51-$16.75 per ounce respectively. The volatility, however, of gold and silver prices throughout the year has been high as investors and the markets react to news issued by the Central Banks, (including a new Central Bank Gold Agreement limiting annual gold sales to 400 tonnes, down from the previous 500 tonne level), wide fluctuations in the US dollar, and the media's predictions of economic trends related to the US and world markets.

Price volatility will certainly continue in the gold and silver markets into 2010, but I have no doubt that the trend is for higher prices in the future, based primarily on the above economic factors plus other fundamentals such as rising investment demand (as a safe haven and inflation hedge against continually devaluing currencies, which have further reduced confidence in fiat currencies) and a declining mine supply.

Most of the major and intermediate mining companies have seen a significant recovery in share price since their calendar fourth quarter 2008 lows. In fact, the intermediate mining sector has outperformed the majors sector since January 2009 (with some recently exceeding their 12-month highs). This is likely the result of the share prices of the major companies "stagnating" due to a lack of growth as in most cases they are not finding significant new reserves to replace production as a result of the severe cutbacks in exploration programs in the early 2000's. The intermediates are generally viewed by the market as having more dynamic growth potential and often trade at a premium as they are seen as acquisition targets for the major mining companies.

In the junior company sector, however, it is a "mixed bag". Share prices of some junior producers (like International Minerals) have recovered fairly well. The few outperforming juniors appear to be favored due to the lower political risk of the location of their operations (e.g. key mining districts in Canada and Mexico), advanced stage of development of their key assets, solid balance sheets and, importantly, cash flow and cash position.  While there have been some equity raisings by juniors this year, in general the share prices of junior exploration companies continue to be distressed and these companies are finding difficulty in financing their exploration activities as investors' tolerance for risk is much lower than it was 18 months ago. The Company believes, therefore, that there remains opportunity in this sector to increase and geographically diversify the Company's resource assets and is currently pursuing several opportunities in the Americas.

Corporate Update

In terms of the Company's financial health, I am pleased to report that at fiscal year-end June 30, 2009 the Company is again in the enviable position of having a strong balance sheet, with cash and cash equivalents of almost US$ 44 million.

Net Earnings (reported as "Net Equity Income" in the attached June 20, 2009 Financial Statements) from our 40%-owned Pallancata silver-gold mine in Peru was US$ 8.2 million for the 2009 fiscal year.

Pallancata achieved a ramp-up in mine production to 3,000 tonnes per day ("tpd") in calendar third quarter 2009 and paid an initial US$3.1 million of cash dividends to the owners in August 2009, both these milestones well ahead of the planned calendar year-end schedule. For the Company's 40% ownership in Pallancata, we received approximately US$1.2 million in the dividend distribution and an additional dividend is expected before the end of calendar year 2009.

While Pallancata has generated strong operational cash flow since start-up, the Pallancata joint venture company has retained the majority of this cash to fund the costs of aggressively increasing the production rate from 500 tpd (when the mine was commissioned in September 2007) to the current, steady-state production level of 3,000 tpd, an impressive six-fold increase in only two years. The mine has self-funded this expansion without any additional cash input required from the Company. In addition, you may recall that our partner and mine operator, Hochschild, solely funded the initial capital expenditure for construction of the mine and infrastructure and for the expansion costs to reach the 1,000 tpd production level. Certainly a unique deal in the mining industry.

By the end of this year Pallancata is expected to become the fifth or sixth largest primary silver mine in the world with our estimate of total production of approximately 7 million ounces of silver (together with ~25,000 ounces of gold). In 2010, we estimate that Pallancata will produce approximately 10 million ounces of silver and 35,000 ounces of gold (40% attributable to IMZ) and the Company expects to see significant dividends paid to the Company during fiscal 2010. With our share of production at almost four million ounces of silver in 2010, we should be viewed by the market as an intermediate silver producer in a sector that has a scarcity of producers when compared with the gold sector.

In order to help support our loyal shareholders during the stock market "meltdown" in late 2008 and to underscore the confidence that our Board has in the Company's future outlook and strength of our balance sheet, we initiated a share repurchase program ("Repurchase Program") on October 17, 2008. Through the Repurchase Program we have spent to date approximately US$6.2 million to buy back 3.2 million shares at an average price of C$2.38 per share. The repurchased shares have been cancelled, reducing the total shares outstanding by 3.3% to the current issued share capital of 93.0 million. We have not made any additional share repurchases since April 2009. The Repurchase Program will end on October 16, 2009.

Acquisition of Ventura Gold Corp.

On September 23, 2009, the Company announced the signing of a binding letter agreement for the Company to acquire, in an all-share transaction, all of the issued and outstanding shares of Ventura by way of a statutory plan of arrangement (the "Transaction").

Ventura's principal asset is its 51% ownership (and the right to earn a 70% interest) in the Inmaculada gold-silver property in southern Peru, located approximately 25 km southwest of the Pallancata Mine. The remaining property interest in Inmaculada is held by Hochschild Mining plc ("Hochschild"), our partner at the Pallancata Mine.

The Ventura acquisition is an initial and important step in our corporate strategy to grow the Company and build greater value and upside for our shareholders. By combining with Ventura we will add the exciting Inmaculada Project in mining-friendly Peru to our project development and exploration pipeline.

We consider Inmaculada to be one of the best new precious metal discoveries in recent years and we are firmly convinced that Inmaculada will eventually prove to be another Pallancata-style mining operation. We intend to commit the full strength of our technical and development expertise and strong balance sheet to aggressively advance Inmaculada to the feasibility stage and increase our ownership to a 70% interest well ahead of the September 2013 deadline stipulated in the joint venture agreement with Hochschild.

Pertinent details of the Ventura acquisition:

• Ventura shareholders will receive one common share of the Company for every 10 Ventura common shares held. The value of the consideration paid to Ventura is C$0.43 per Ventura common share, representing a 23% premium to Ventura's closing share price on September 23, 2009 and a 37% premium based on the previous 15-day volume weighted average share price for Ventura's shares. The total value of the Transaction is approximately C$64.6 million on a fully diluted basis (approximately US$60 million).
• The Company will issue approximately 13.7 million of its common shares to Ventura shareholders, representing approximately 12.8% of the Company's total post-Transaction issued and outstanding shares of 106.7 million. Our fully diluted share capital will increase from 102.7 million to approximately 117.7 million, based on the additional options and warrants resulting from the assumption by the Company of the Ventura convertible securities.
• Ventura will receive a bridge loan in the principal amount of up to US$2.0 million to enable it to continue its ongoing drill program at Inmaculada. Although the loan will be non-interest bearing, it will be immediately repayable, together with interest accrued at a rate of 10% per annum, should Ventura accept a superior proposal.
• A break fee of $500,000 is payable by Ventura to the Company in the event that a superior unsolicited offer is accepted by Ventura and is payable by the Company to Ventura in the event that we decide not to proceed with the Transaction.
• The Transaction is subject to, among other things, receipt of regulatory, court and Ventura shareholder approval, completion of legal due diligence and completion of definitive documentation. The letter agreement contemplates the completion of due diligence and definitive documentation by October 31, 2009.
• The Transaction must be approved by at least 66 2/3 % of the votes cast by Ventura shareholders at a special meeting of shareholders, which is expected to be held on or about December 17, 2009, with the Transaction anticipated to close shortly thereafter.

Ventura has three directors on its 5-member board of Directors who are directors and/or senior officers of the Company. In addition, the Company currently holds 504,923 common shares of Ventura (representing 0.37% of the issued and outstanding share capital of Ventura) and provides certain administrative and exploration management services to Ventura.

Technical information about the Inmaculada property:

The Inmaculada property hosts multiple, classic, low-sulfidation epithermal vein systems and is located near a well-known mining district and 25 km southwest of the Pallancata Mine.

Since optioning the property from Hochschild in 2007, Ventura's drilling to date has focused primarily on the Angela Vein, one of the more than 11 known significant vein systems identified so far on the 14,672-hectare Inmaculada property. These veins are relatively under-explored and are exposed on surface for more than 25 km in aggregate strike length.

In January 2009, Ventura defined an initial mineral resource estimate for the Angela Vein based on approximately 15,000 m of core drilling that is detailed in an independent National Instrument 43 101 compliant technical report  available at www.sedar.com under Ventura's name.

The estimated inferred resources comprise 483,000 ounces of gold and 16.6 million ounces of silver, contained in 3.7 million tonnes at 4.0 grams per tonne ("g/t") gold and 139 g/t silver (on a 100% basis) at a cut-off grade of 3.0 g/t gold equivalent. These resources represent 690,000 gold equivalent ounces using a gold-silver ratio of 80:1 and metal prices per ounce of $750 for gold and $12.00 for silver and the then estimated metallurgical recoveries of 90% for gold and 70% for silver. Metallurgical testwork is underway to verify these recovery rates.

In August 2009, Ventura announced initial results from a follow-up 7,000 m core drilling program on the Angela Vein, including one of the best drill intercepts to date with an estimated true width of 11.0m at an average grade of 4.1 g/t gold and 324 g/t silver (including 4.5 m grading 6.7 g/t gold and 554 g/t silver).

The new drill results have extended the strike length of mineralization in the Angela Vein to more than 1,100 m and to a depth of approximately 450 m below surface. The deposit remains open at depth and along strike to the northeast. An updated mineral resource estimate is expected in early 2010.

Inclusion in the Swiss Performance Index on the Swiss Stock Exchange (SIX)

We are pleased to announce the inclusion of the Company in the prestigious Swiss Performance Index ("SPI") as of August 24, 2009.

In addition to being the only precious metal mining company listed on the Swiss Stock Exchange ("SIX"), the Company is the first ever gold company included in the SPI and is only one of 11 foreign companies listed on the SPI.

The SPI comprises 227 companies with a recent total market capitalization of approximately 832 billion Swiss Francs (approximately US$778 billion), led by world-renowned companies Nestle, Novartis and Roche. IMZ is ranked in the top 100 companies in the SPI with a weighting of approximately 0.04%. In the Small-Cap sub-index, the Company is currently #11 of 128 companies.

Inclusion in the SPI is expected to increase the Company's market exposure in Switzerland and to open new doors to Swiss funds and investors that can only purchase shares of companies that are listed in the SPI.

Ecuador

In Ecuador, the development of the mining industry has not progressed as expeditiously as was expected this time last year and the market is still concerned about this issue.

In September 2008 a new Constitution was approved and new presidential and congressional elections were held in April 2009. President Rafael Correa was re-elected and, together with a new Congress, took office (for a four year term) in August 2009.

Although the eagerly awaited new mining law was approved in Ecuador in January 2009, the regulations implementing the details of the mining law are now several months behind schedule. Hence, the majority of mining companies in Ecuador, including IMZ, have still not recommenced significant activities on their properties.

Two of the key considerations in the new mining law are the mechanism for a proposed government production royalty (minimum 5%) and the impact of a 70% windfall revenue tax, both of which could severely limit the upside potential of project economics related to future metal price increases. These critical issues still require clarification by the Ecuadorian government.

Please see the Company's "Management Discussion and Analysis" (MD&A) for the 2009 fiscal year for a detailed discussion of these and other issues related to the new mining law in Ecuador.

Company Project Updates

A brief update on the Company's three key properties in Peru and Ecuador is provided below:

Pallancata Silver-Gold Mine, Peru

The Pallancata Mine continues to be a great success story since start-up in September 2007.

In calendar year 2008, in only its first full year of production (4.2 million ounces of silver and 16,000 ounces of gold on a 100% project basis), Pallancata became a world top-10 primary silver producer.

In calendar year 2009, Pallancata (with its estimated production of approximately 7 million ounces of silver and 25,000 ounces of gold) is nearing the top five of primary silver mines in the world. That is quite an achievement.

From start-up in September 2007 until the end of the current fiscal year (June 30, 2009), Pallancata has produced approximately 8.1 million ounces of silver and 31,000 ounces of gold at total cash costs to the Company of about US$6.41per ounce of silver, net of by-product gold credits.

To emphasize the upside potential for increasing reserves at Pallancata, recent exploration drilling has reported encouraging high-grade mineralized assay results from several prospective target areas close to the existing mine operation. A total of 20,000 meters of surface exploration drilling is planned to be completed by the end of 2009.

The major focus of the exploration drilling so far has been at the Virgen del Carmen and Pallancata East areas. Highlights of the assay results received to date include  drill intersections (not true widths) of 1.5 meters grading 785 grams per tonne ("g/t") silver and 1.5 g/t gold at Virgen del Carmen and 1.5 meters grading 857 g/t silver and 2.7 g/t gold at Pallancata East. In comparison, the average mine grades at Pallancata to date are a little over 300 g/t silver and 1.4 g/t gold.

In 2010, our partner and the mine operator, Hochschild, is expected to further evaluate, by drilling and engineering studies, the Virgen del Carmen area (located approximately two kilometers north) as a potential satellite mine to the Pallancata operation. Pallancata East is the extension of the main Pallancata Vein, which is currently being mined. Other vein targets are all currently within two kilometers of the existing mine, which we believe have the potential to extend the mine life and complement the current production with no significant additional infrastructure required for their development.

Rio Blanco Gold-Silver Project, Ecuador

As stated in last year's Shareholder Letter, the required environmental and production permitting for the proposed Rio Blanco underground mining operation was delayed by the suspension of activities caused by the Ecuadorian Mining Mandate in April 2008 and in 2009 we initiated prudent financial measures to decrease costs in Ecuador, including a workforce reduction. Rio Blanco remains temporarily on-hold pending clarification of the important components of the new mining law, as discussed above.

Detailed engineering, however, has been completed at Rio Blanco and our current estimate of timing for production start-up is now sometime in the second half of 2012, subject to the issuance of the regulations for the new mining law, completion of the permitting process, and the raising of additional financing for the project (in an amount to be determined early in 2010 by the Company's management once the timing of permitting and the estimates of next year's dividends from Pallancata are available).

Projected average production is approximately 70,000 ounces of gold and 400,000 ounces of silver over a 7.5 year mine life, based on the current estimated reserves (Proven and Probable) of approximately 600,000 ounces of gold and 4.3 million ounces of silver contained with 2.1 million tonnes grading 8.8 g/t gold and 62 g/t silver at a cut-ff grade of 4.0 g/t gold.

Updated capital and operating costs for Rio Blanco were announced by the Company in February 2009 (using mid-2008 peak inflationary costs for capital and operating items) of approximately US$120 million for the initial capital cost and US$295 per ounce of gold, net of silver credit, in cash costs. Total production costs were estimated at US$595 per ounce of gold, net of silver credit.

At a gold price of US$950 per ounce (close to the current market price) the project has an estimated Internal Rate of Return ("IRR") of almost 30% and a Net Present Value ("NPV") at a 5% discount rate of just under US$150 million, pre-tax and pre-government royalty.

Gaby Gold Project, Ecuador

The Gaby deposit is one of the largest undeveloped, open-pittable gold deposits in South America and offers our shareholders significant leverage to higher gold prices. Effectively it can be considered as an in-the-ground call option on higher gold prices.

In February 2008, the Company announced the results of a Preliminary Feasibility Study ("PFS") at Gaby for a 20,000 tpd mining operation, which showed that although Gaby was unprofitable at the then base-case gold price of US$650 gold, the study indicated that the project's economics were significantly leveraged to higher gold prices with potential to realize economies of scale at higher production levels.

An addendum to the PFS completed in January 2009 evaluated significantly higher process plant throughput rates with the goal of enhancing the project economics and ultimately, if warranted, completing a final feasibility study. This study indicated that at a throughput rate of 60,000 tonnes per day, a capital cost of approximately $900 million and average annual gold production of 330,000 ounces over 16 years, the Gaby Project could break-even economically at a gold price of approximately $850 per ounce. At $1,000 gold the project could generate over $900 million in cash flow and at $1,500 gold it could generate over $4 billion, both estimates being pre-tax and pre-government royalty. These estimates demonstrate the tremendous potential of Gaby at higher gold prices.

Currently at Gaby, the Measured and Indicated Resources (on a 100% project basis) total 356 million tonnes at an average grade of 0.61 grams per tonne ("g/t") gold, containing approximately 6.9 million ounces of gold at a cut-off grade of 0.4 g/t gold. The Company controls approximately 60% of these ounces or approximately 4.2 million gold ounces.

So the bottom-line is that we are not proceeding right now with a final feasibility study at Gaby, pending higher, stable gold prices over US$1,000 per ounce and clarification of the important components of the new mining law discussed above. It is likely, however, that drilling will recommence at Gaby early in 2010 not only as a requirement under the regulations to the mining law (which will require a to-be-negotiated level of exploration activity on all mining properties) but also triggered by continuing higher and stable gold prices over US$1,000 per ounce.

The technical information discussed in this Shareholder Letter has been reviewed by the respective Qualified Persons of the Company and Ventura: Nick Appleyard, Technical Manager and Mark Cannuli, Exploration Manager.

Fiscal Year 2010 - Corporate Objectives

International Minerals Property Locations

During fiscal and calendar year 2010, the Company's exploration and development efforts are expected to focus primarily on:

• Achieving increased mine production and expanding reserves and resources at the Pallancata Mine, working with our partner, Hochschild. Pallancata is expected to produce significant increased cash flow and dividends for the Company in fiscal and calendar year 2010;

• Obtaining clarification of the critical issues of the Ecuadorian mining law, followed by the receipt of production permits for the construction of a gold-silver mining and processing operation at Rio Blanco. The Company now hopes to complete permitting in the first quarter of calendar year 2010 and commence construction about 3-6 months later, subject to raising additional financing (at a level which has not yet been determined by the Company management, pending estimates of Pallancata cash flow in calendar
  year 2010);

• Acquiring production, or near-production opportunities, or advanced exploration projects and/or corporate acquisitions to complement our pipeline of advanced projects and to increase our cash flow and/or reserve and resource base; and

• Seeking strategic joint venture alliances, such as that with Hochschild at Pallancata, in order to advance projects with reduced additional cash outlays by the Company and/or to optimize time-lines for production scenarios.

On behalf of the Board of Directors and senior management of the Company, I want to thank the Company's employees and consultants for their efforts during the year and the Company's loyal shareholders for their continuing support and belief in the success of the Company.

Sincerely,

Stephen J. Kay
President and Chief Executive Officer