La Mancha Resources Inc.
TSX : LMA

La Mancha Resources Inc.

January 18, 2008 18:00 ET

La Mancha Reports its 2007 Production Results, and Plans to Increase its Production by 61% in 2008

All amounts are expressed in US dollars, unless otherwise indicated. Unaudited

MONTREAL, QUEBEC--(Marketwire - Jan. 18, 2008) -

HIGHLIGHTS

- 2007 gold production of 53,900 ounces

- Gold production target of 87,000 ounces for 2008

- Significant improvement of the quartz line now operational at the Hassai mine

- Frog's Leg development continues on time and on budget

La Mancha Resources Inc. (TSX:LMA) (hereinafter "La Mancha" or the "Company") is pleased to announce that its total gold production for 2007 reached 53,900 ounces, in line with its revised production target released in November 2007. The 2007 production was lower than the 62,300 ounces produced in 2006, due mainly to lower gold output at the Hassai mine and a 5.1% reduction of La Mancha's ownership of the Ity mine.

The breakdown of production is as follows:



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Attributable Production (in oz) 2006 A 2007 A 2008 E
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Hassai 40,600 34,760 40,000
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Ity 21,700 19,140 24,600
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Frog's Leg - - 22,400
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Total 62,300 53,900 87,000
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For 2008, La Mancha is anticipating a 61% increase in its attributable gold production to 87,000 ounces at a cash cost of $500/ounce. As shown in the table above, the bulk of the production increase is expected to come from the new Frog's Leg underground mine in Australia, scheduled to enter into production at the beginning of the third quarter. The Hassai and Ity mines should also contribute to increasing La Mancha's attributable production by adding approximately 10,700 ounces of gold to their combined 2007 production.

Michel Cuilhe, President and CEO of La Mancha noted: "We set ourselves very ambitious objectives in 2007. Upgrading our two producing mines to international standards while simultaneously developing two other mines was a very demanding task for a new emerging producer. The solid operating base put in place during 2007 will start paying dividends in 2008. The significant improvement of the production rate recently observed at the quartz line of our Hassai mine, coupled with the optimization of our production practices at the Ity mine and the ongoing development of the Frog's Leg mine, will enable La Mancha to significantly increase its gold production in the coming year."

Total cash cost for 2007 have yet to be compiled, but are expected to be slightly more than originally anticipated due to the increase in operating costs seen across the industry in 2007.

In the fourth quarter of 2007, La Mancha's attributable production was 14,400 ounces of gold compared to 16,100 ounces for the same period in 2006. As previously mentioned, the main factors behind this decrease are Hassai's lower gold output over that period, and the reduction in ownership of the Ity mine.

OPERATIONS

The Hassai mine produced a total of 86,900 ounces of gold in 2007 (34,760 ounces attributable to La Mancha), less than the 101,520 ounces produced the previous year, (40,600 ounces attributable to La Mancha), but better than its revised target of 79,400 ounces (31,750 ounces attributable to La Mancha). The decrease in gold output observed between 2006 and 2007 was essentially due to the lower tonnage and grade milled during the year. The improvement over the revised budget can be explained by a strong fourth quarter production, supported by two consecutive months significantly improved performance of operation of the newly commissioned quartz line.

The following table shows the quartz ore tonnage milled through the quartz line over the past six months and the corresponding grades.



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Daily Tonnage of Quartz Ore Milled
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Tonnage (tonnes) Grade (g Au/t)
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Jul-07 658 5.28
Aug-07 653 6.10
Sep-07 615 4.97
Oct-07 540 5.30
Nov-07 910 6.13
Dec-07 1,255 5.74
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Not only did the start of production of the quartz line help increase the average tonnage milled per day during the last quarter, but it also contributed to increase the average grade milled during the same period. Management expects that the quartz line will have a strong impact on the mill's performance in 2008, justifying the attributable production target of 40,000 ounces of gold at an estimated cash cost per ounce of $496 per ounces set for 2008.

Testifying the amelioration of the situation, the Hassai mine produced 24,500 ounces in the fourth quarter of 2007 (9,800 ounces attributable to La Mancha), which represents a 31% increase over the production of 18,680 ounces (7,470 ounces attributable to La Mancha) recorded during the previous (third) quarter of 2007. Hassai's production had reached 25,600 ounces during the fourth quarter of 2006 (10,260 ounces attributable to La Mancha).

The Ity mine produced a total of 39,960 ounces of gold in 2007 (19,135 ounces attributable to La Mancha), compared to 42,570 ounces of gold in 2006 (21,700 ounces attributable to La Mancha).Starting in June 2007, La Mancha's attributable production was negatively affected by the reduction of its ownership in the mine from 51% to 45.9% . Despite an increase in tonnage processed and slightly higher grades than in 2006, 2007 production output also suffered from lower recovery rates.

Production for the fourth quarter of 2007 was 10,050 ounces of gold (4,615 ounces attributable to La Mancha), compared to the 11,630 ounces (5,930 ounces attributable to La Mancha) for the corresponding quarter of 2006. The decrease in production is explained by lower recovery despite a higher tonnage milled.

La Mancha is forecasting a 28% increase in production at the Ity mine in 2008. The mine's gold production is expected to total 53,400 ounces for the year (24,600 ounces attributable to La Mancha) at a cash cost of $355 per ounce. The increase is essentially due the start of mining at the new Mount Ity pit, which is scheduled to come on stream in February 2008. The higher grades expected from this new pit are responsible for 79% of the total increase in the mine's gold output. The process improvement initiatives introduced in 2007 will also contribute to the planned increase in production, albeit to a lesser degree, thanks to increased tonnage milled and a higher recovery rate.

DEVELOPMENT PROJECTS

The development of the Frog's Leg mine, which started in August 2007, remains on track with the initial timeline and budget outlined in the feasibility study. The details of the feasibility study are now available in the technical report filed today by the Company on SEDAR.

As of December 31, 2007, La Mancha's Australian crew had completed the development of more than 1650 meters of decline, cross cut and ore development. Level development on the Rocket ore is now well advanced and it is expected that stoping will commence on the upper parts of this orebody during March 2008. The new office complex is 80% complete, with the majority of the staff taking over the new premises in December 2007 and construction of the workshop frame has commenced with the completion of the concrete pad. Additional production machinery has been ordered including trucks and a long hole drill. Some 61 personnel now work at the Frog's Leg mine and there are recruitment plans to increase the workforce up to levels flagged in the feasibility study.

Management remains confident that the mine will start contributing to La Mancha's production by July 2008. As indicated in the feasibility study, La Mancha expects Frog's Leg to contribute 43,970 ounces of gold (22,400 ounces attributable to La Mancha) at a cash cost of $667 per ounce during the last six months of 2008.

While delayed, the resumption of activities at the White Foil advanced project remains a priority for La Mancha. Following the complete dewatering of the pit, the recent reassessment of the wall conditions is forcing the review of the mining plan. A feasibility study is currently underway and should be made public by the end of March. Should this feasibility be positive, White Foil could rapidly resume production, adding to La Mancha's production target for 2008.

CORPORATE DEVELOPMENTS

Board Composition:

Mr. Walter Berukoff, Director of the Company since 1998, has informed La Mancha of his intention to resign from the board, effective as of January 16, 2008.

Resource certification:

New technical reports should have been issued to support the Ity and Hassai mine resource update released in April 2007. Such updated technical reports will be filed within the next few weeks. We ask investors not to rely on the information contained in the technical reports currently filed on SEDAR regarding each of Ity and Hassai properties until the new reports are released.

Investor Relations Calendar:

January 20-21: Cambridge House Vancouver Gold Show

March 2-5: PDAC Convention - Toronto

ABOUT LA MANCHA RESOURCES Inc.:

La Mancha Resources Inc. is an international gold producer based in Canada with operations, development projects and exploration activities in Africa, Australia and in Argentina. La Mancha's shares trade on the Toronto (TSX) under the symbol "LMA". For more information on the company, visit the Company's website at www.lamancha.ca.

Caution Concerning Forward-Looking Statements

This press release contains certain "forward-looking statements", including, but not limited to, the statements regarding the Company's strategic plans, future commercial production, development and construction of mine and production targets and timetables, mine operating costs; development plans, objectives; statements regarding the assumptions underlying the White Foil feasibility study; statement regarding the accuracy of our resources and our ability to file the appropriate technical reports; statements regarding the re-commencement of White Foil production. Forward-looking statements express, as at the date of this press release, the Company's plans, estimates, forecasts, projections, expectations or beliefs as to future events and results. Forward-looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements. Risks and uncertainties that could cause results or future events to differ materially from current expectations expressed or implied by the forward-looking statements include, but are not limited to, factors associated with fluctuations in the market price of precious metals, mining industry risks, exploration risks, risks associated with foreign operations, environmental risks and hazards, uncertainty as to calculation of mineral reserves, requirement of additional financing or additional permits, authorizations or licences, risks of delays in construction and production and other risks referred to in La Mancha's 2006 Annual Information Form filed with the Securities Commissions, as well as the Toronto Stock Exchange.



HIGHLIGHTS

(unaudited)

GOLD PRODUCTION STATISTICS Target for
the year
Year ended ending
December 31, December 31,

2006 2007 2008
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Hassai (40%)
Attributable Production (ounces) 40 600 34 760 40 000
Tonnage milled (t) 937 000 888 620 793 900
Grade milled (g Au/t) 4.43 4.05 5.11
Recovery rate (%) 76% 75% 77%
Cash costs (US$ per ounce) 334 N/A(i) 496

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ITY (45.9%)
Attributable Production (ounces) 21 700 19 140 24 600
Tonnage milled (t) 419 000 435 280 458 900
Grade milled (g Au/t) 3.55 3.63 4.55
recovery rate (%) 89% 79% 80%
Cash costs (US$ per ounce) 387 N/A(i) 355

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Frog's Leg (51%)(ii)
Attributable Production (ounces) 22 400
Tonnage milled (t) 300 000
Grade milled (g Au/t) 4.84
recovery rate (%) 95%
Cash costs (US$ per ounce) 667

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Total

Number of ounces produced 62 300 53 900 87 000
Mine operating costs (US$ per ounce) 352 N/A(i) 500

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(i) Total cash cost for 2007 have yet to be compiled therefore will be
made available at a later date
(ii) Frog's Leg mine was not in operation in 2006 and 2007 and is scheduled
to resume operation in the third quarter of 2008

Contact Information

  • La Mancha Resources Inc.
    Martin Amyot
    Vice President Corporate Development
    514-987-5115
    info@lamancha.ca