La Mancha Resources Inc.
TSX : LMA

La Mancha Resources Inc.

January 25, 2010 10:35 ET

La Mancha's 2010 Gold Production set to Increase by up to 48%

MONTREAL, QUEBEC--(Marketwire - Jan. 25, 2010) - La Mancha Resources Inc. (TSX:LMA) -

HIGHLIGHTS

- Record gold production of 94,570 ounces in 2009

- Gold production target of up to 140,000 ounces for 2010

- Average cash costs expected to be US$539 per ounce of gold

- New Australian White Foil mine set to start operations in March
2010

- Frog's Leg mine to contribute up to 70,000 ounces of gold net to La Mancha in 2010, 41% more than in 2009

La Mancha Resources Inc. (TSX:LMA)(hereinafter "La Mancha" or the "Company") is pleased to announce that its consolidated gold production for 2009 reached a record 94,570 ounces, compared to 71,550 ounces of gold for 2008, in line with its production guidance. This 32% increase is due to the steady production ramp-up at the Australian Frog's Leg mine, which more than compensated for lower African production.

Continuing on its accelerated growth path, La Mancha expects to increase consolidated production by up to 48% in 2010. Total production is expected to be in the range of 120,000 to 140,000 attributable ounces at an estimated average cash cost of US$ 539/oz.

The breakdown of La Mancha's attributable production is as follows:



Table 1

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Attributable Production
(in oz) 2007A 2008A 2009A 2010E
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Australian mines
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Frog's Leg (51% owned) - 15,375 46,120 62,000 - 70,000
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White Foil (100% owned) - 1,910 - 13,000 - 16,000
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African mines
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Hassai (40% owned) 34,760 29,270 24,715 25,000 - 30,000
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Ity (45.9% owned) 19,140 24,995 23,735 20,000 - 24,000
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Total 53,900 71,550 94,570 120,000 - 140,000
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As shown in the table above, La Mancha's Australian assets should continue to fuel the Company's growth in 2010 as 1) the Frog's Leg mine is expected to continue to ramp up in light of its recently upgraded mining plan and increased toll-milling availability, and 2) the White Foil advanced project is set to start operation in March 2010. At the Ity mine in Cote d'Ivoire, gold production is expected to remain stable, with strong performance offsetting the one-month production halt needed to replace the heap leaching pads. At the Hassai mine in Northeast Sudan, gold production is expected to increase in light of improved efficiencies with the quartz line.

Dominique Delorme, President and CEO of La Mancha, stated: "La Mancha's growth rate is a success story in itself. When compared to the gold production achieved in 2007, La Mancha's first full year of operation as a producer, the production of up to 140,000 ounces of gold expected in 2010 marks a 150% increase. In less than four years, La Mancha will have transformed itself from an operator of two mines with an African focus, to a diversified producer operating four mines and deriving more than 60% of its production from Australia. Moreover, the Company's VMS project in Sudan and the high prospectivity of its exploration grounds in Cote D'Ivoire and Australia suggest strong future growth potential."

During the fourth quarter ended December 31, 2009, La Mancha produced 23,683 attributable ounces of gold. This compares to production of 20,985 attributable ounces of gold for the corresponding period of 2008.

AUSTRALIAN OPERATIONS

Completing its first full year of production in 2009, the Frog's Leg mine generated 46,120 ounces of gold net to La Mancha, compared to 15,375 ounces generated during the period from May 2008 (its inauguration) to December 31, 2008.

Despite this significant year-over-year increase in production, the mine's performance was negatively impacted by its limited milling capacity, as evidenced by the 61,000 tonnes of ore stockpiled at the mine site at December 31. The gold content of the ore accumulated at year-end totalled 9,800 ounces of gold. As the new mining plan tabled in July 2009 should lead the Frog's Leg average monthly tonnage mined to increase from 50,844 tonnes in 2009 to 65,965 tonnes in 2010 (for 100% of the mine), management is currently renegotiating Frog's Leg's existing milling agreement with the nearby Greenfields plant. An upgraded 500,000-tonne-per-annum milling agreement should be finalized within the next few weeks to address the mine's rapidly increasing ore extraction capacity.

Consequently, La Mancha expects its share of Frog's Leg 2010 mine production to increase by up to 31% compared to 2009 to reach 62,000 to 70,000 ounces of gold (attributable to La Mancha) at an estimated cash cost of US$502 per ounce. The back filling required by the new mine design is the main reason for the expected cash cost increase over 2009.

During the fourth quarter, the Frog's Leg mine generated 11,611 ounces of gold net to La Mancha, compared to 5,470 ounces generated in the corresponding period of 2008. It is important to note that at year-end, 60,955 tonnes of ore at 5.04 g/t Au were stockpiled.

The 100%-owned White Foil project is set to become La Mancha's fourth mine, with Phase 1 of mining operations scheduled to start in March 2010. Production for 2010 is expected to be between 13,000 and 16,000 ounces of gold at an estimated cash cost of US$634 per ounce.

La Mancha is please to report that it has secured toll-milling capacity at the nearby Three-Mile-Hill treatment plant, located 26 km from the White Foil pit. This milling agreement will provide La Mancha with a minimum of 200,000 tonnes of milling capacity in 2010, shared equally between two milling campaigns scheduled for April and September 2010. In parallel with this milling agreement, the Company has also secured a mining contract for the first bench of the pit, representing 279 000 tonnes of ore at an average grade of 2.65g Au/t. The mining of White Foil is set to begin at mid March 2010.

Highlights of the feasibility study, dated October 2009, for White Foil Phase 1 operations include:



------------------------------------------------------------------
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White Foil Feasibility Study (Phase 1)
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Production:
Tonnage: Ore (tonnes) 980,000
Waste (tonnes) 1,770,305
Total (tonnes) 2,750,305
Average grade (g Au/t) 2.41
Gold reserves (in situ) 76,000 oz
Metallurgical recovery 91.0%
Gold recovered 69,160 oz
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The White Foil open pit commenced production in 2002 and produced 120,000 ounces of gold before operations were suspended a year later due to excessive flow of saline water into the pit. Following its acquisition by La Mancha in 2006, the pit was fully dewatered, and the drilling program that followed increased the Measured and Indicated resource on the property to 531,000 ounces of gold. This reserve estimate only considers the first phase of mining and corresponds to the recommencement of mining operations from the floor of the existing pit in accordance with the original pit design. This explains the low conversion of the overall resource into mineral reserves.

This decision to split White Foil's potential into two distinct phases was made to maximize short-term cash flow generation while minimizing capital requirements. The capital requirements of CAD$1.3 million to resume first phase production are mainly for working capital purposes.

Management considers that the mining envisaged in the Phase 1 feasibility study in no way precludes the possibility of mining a Phase 2 pit (i.e. a cutback of the existing pit crest) at some point in the future. Mining of a Phase 2 pit would eventually result in higher recovery of the White Foil resource.

AFRICAN OPERATIONS

The Hassai mine produced a total of 61,790 ounces of gold in 2009 (24,715 ounces attributable to La Mancha) compared to 73,175 ounces of gold in 2008 (29,270 ounces attributable to La Mancha). As anticipated, the transition from SBR-type ore to quartz ore continued in 2009, marked by a 60% increase in quartz mill throughput. Despite this improvement, gold output was at the lower range of production guidance because of quartz-line technical failures associated with operating a ball mill on a dry line.

Production at the Hassai mine is expected to be in the range of 62,500 to 75,000 ounces of gold (25,000 to 30,000 ounces attributable to La Mancha) in 2010 at an estimated cash cost of US$ 689 per ounce. Thanks to the newly installed dust vacuum system, La Mancha expects to process the quartz ore at a rate of 2,000 tonnes per day in 2010, in line with the fourth quarter of 2009. To fill the excess SBR-line mill capacity, La Mancha expects to continue to supplement the freshly mined SBR-type ore with the stockpiled material from the tailings.

Due to increased mill throughput on both the SBR and quartz circuits, Hassai had a strong fourth-quarter performance, with 16,860 ounces of gold produced (6,744 ounces attributable to La Mancha), representing a 36% increase over third quarter 2009 production of 12,435 ounces of gold (4,974 ounces attributable to La Mancha). Hassai production was 17,475 ounces in the fourth quarter of 2008 (6,990 ounces attributable to La Mancha).

The Ity mine produced a total of 51,710 ounces of gold in 2009 (23,735 ounces attributable to La Mancha), in line with the lower range of the 2009 production guidance, compared to 54,460 ounces of gold in 2008 (24,995 ounces attributable to La Mancha). Despite the higher gold grades from the new Mount Ity pit, production decreased slightly from last year due to a reduction in mill throughput and a lower gold recovery rate.

Production at the Ity mine is expected to be in the range of 43,570 to 52,285 ounces of gold (20,000 to 24,000 ounces attributable to La Mancha) in 2010 at an estimated cash cost of US$ 402 per ounce. An investment of CAD9.9 million (CAD4.5 attributable to La Mancha) is planned for 2010 to replace the old heap leaching area during the second quarter. This investment is necessary as the current heap leaching area restricts the ore process volume. As previously explained, La Mancha expects Ity mine production to remain stable in 2010, with strong performance offsetting the one-month production halt needed to replace the heap leaching pads.

During the fourth quarter, production at the Ity mine reached 11,615 ounces of gold (5,328 ounces attributable to La Mancha) compared to 18,590 ounces of gold (8,525 ounces attributable to La Mancha) in the corresponding quarter of 2008.

CORPORATE EVENTS

Investor Relations Calendar

La Mancha will be attending the BMO Capital Markets 2010 Global Metals & Mining Conference, held from February 28th until March 3rd in Hollywood Florida.

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 Argentina. La Mancha's shares trade on the Toronto Stock Exchange (TSX) under the symbol "LMA". For more information, visit the Company's website at http://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 and cash costs, the start of operation of the White Foil advanced project and its related production targets and timetables; statements regarding the progression of Frog's Leg and its capacity to eventually reach the objectives set by the updated mine design of July 2009 and related feasibility study; statement regarding the future production level of the quartz line in Sudan and its future potential to generate important cash flows for the mine; statements regarding the future production of the Ity mine, and the impact that the construction of new leaching pads will have on production in 2010 and forward. 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 licenses, risks of delays in construction and production and other risks referred to in La Mancha's 2009 Annual Information Form filed with the Securities Commissions, as well as the Toronto Stock Exchange.



HIGHLIGHTS

GOLD PRODUCTION
STATISTICS
(unaudited) Year ended
December 31, For the quarters of 2009 ended respectively,
(All amounts 2008 2009 March 31 June 30 September 30 December 31
are in CDN
dollars
unless
otherwise
noted)
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Frog's Leg
(51%)(ii)
Attributable
Production
(ounces) 15 375 46 120 6 293 15 933 12 283 11 611
Tonnage
milled (t) 159 370 298 024 38 595 119 089 67 530 72 810
Grade
milled
(g Au/t) 3,3 5,2 5,5 4,5 6,1 5,3
Recovery
rate (%) 92 93 92 93 93 93
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Hassaï (40%)
Attributable
Production
(ounces) 29 270 24 715 6 485 6 512 4 974 6 744
Tonnage
milled
(t)(iii) 809 285 725 303 163 800 184 745 164 997 211 762
Grade
milled
(g Au/t) 4,1 3,8 4,6 4,3 3,5 3,5
Recovery
rate (%) 69 70 67 63 68 70
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ITY (45.9%)
Attributable
Production
(ounces) 24 995 23 735 5 915 5 310 7 182 5 328
Tonnage
milled
(t)(iii) 469 580 449 050 123 400 116 920 96 794 111 936
Grade milled
(g Au/t) 4,4 5,0 3,8 3,8 6,3 4,5
Recovery
rate (%) 82 72 86 80 80 72
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Total
Number of
ounces
produced 71 550(i) 94 570 18 693 27 755 24 439 23 683
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(i) Including 1,910 ounces of pre-production following the de-watering of
the White Foil mine
(ii) Frog's Leg mine started its operations in May 2008
(iii) On a 100% basis

Contact Information

  • La Mancha Resources Inc.
    Martin Amyot
    Vice President Corporate Development
    514-987-5115
    info@lamancha.ca
    or
    La Mancha Resources Inc.
    Nicole Blanchard
    Investor Relations
    514-961-0229