La Mancha Resources Inc.
TSX : LMA

La Mancha Resources Inc.

July 20, 2009 11:04 ET

La Mancha's Frog's Leg Mine to Boost its Average Annual Gold Production by 29%

MONTREAL, QUEBEC--(Marketwire - July 20, 2009) - La Mancha Resources Inc. (TSX:LMA)

HIGHLIGHTS:

- Frog's Leg Proven and Probable reserves grow 45% to 789,504 ounces of gold

- New upgraded mine plan converts 86% of M&I resources to reserves

- Average gold output per annum expected to increase 29% to 113,388 oz (57,828 oz attributable to La Mancha) from 2010 onwards

La Mancha Resources Inc. (TSX:LMA) (hereinafter "La Mancha" or the "Company") is pleased to announce that the Frog's Leg Proven and Probable reserves (thereafter "P&P reserves") are up by 37% from the 2007 definitive Feasibility study in light of an upgraded mine design incorporating the significant resource increase of May 2008. With the upgraded mine plan, gold output for the mine is expected to average 113,388 ounces of gold per annum (57,828 ounces attributable to La Mancha), from 2010 onwards, representing a 29% increase over the December 2007 feasibility study average annual gold production estimate, and the mine life is extended by 1.2 years.

The project's P&P reserves now stand at 789,504 ounces of gold (402,647 oz attributable to La Mancha), up 45% from the December 31st, 2008, estimate of 582,918 ounces of gold (297,288 oz attributable to La Mancha).

The following table highlights the changes in the mine's operational and economic profile from 2010 onward:



Table 1
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(Attributable to La Mancha) December July 2009
2007 Feasibility New mining
Study design(i)
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Production:
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Gold reserves (in situ) (oz) 232,503 366,244
Average tonnes of ore
mined per year (100%) (+) 2,650,256 4,385,014
Average grade (g/t Au) 5.35 5.09
Average gold contained mined (oz) 232,503 366,244
Gold recovered (oz) 293,772 402,467
Metallurgical recovery 94.9% 94.0%
Annual production rate (oz) 45,000 57,828
Mine life 5.2 years 6.3 years
Cash costs per ounce(i) US $552/oz
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(i) Excluding royalties


Michel Cuilhe, President and CEO of La Mancha, stated "Having surpassed the ore production and profitability targets set in the original feasibility study, Frog's Leg continues to exceed expectations with an increased mine life and production profile that should now average 113,388 ounces of gold per year starting in 2010, 29% more than originally expected. The mine continues to show strong growth opportunities for the future, as it remains open to the south and at depth. Moreover, the solidity of the Frog's Leg mine should now enable La Mancha to accelerate the growth of its Australian presence through the development of the nearby White Foil and Park Dam projects."

MINERAL RESERVES AND RESOURCES

La Mancha began updating the Frog's Leg mining plan after completing its ambitious 2007-2008 exploration program that led to a 37% increase in its measured and indicated resource.

"The goal for the mining team was to develop a mine plan that would capture the maximum of this additional value for our shareholders. Dozens of scenarios were considered. We found that extending the "Rocket" decline was the only scenario that allowed both an increase in early production and maximized conversion of resources into reserves," stated Bill Plyley, La Mancha's Chief Operating Officer.

Figures 1 in Appendix A, show the evolution of the mine plan relative to the one in the 2007 feasibility study. The extension of the decline below the pit will provide access to the newly-expanded Rocket ore zone at depth and to the new "Gap" area, where mineralization was identified in early 2008, while the relocation of the second decline to the north will provide more efficient access to the Mist/Fog ore body. This upgraded mine design allows for an 86% conversion rate for the latest Frog's Leg measured and indicated resource, and adds 243,723 ounces of gold to its P & P reserves, which are up 45% at 789,504 ounces (402,647 ounces attributable to La Mancha) as at April 1, 2009 compared to 2008 year end reserves.

Based on the new mine design, the Frog's Leg mineral reserves and resources are as follows:



Table 2
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(as at 1 April 2009) Tonnes Grade Ounces
Resources are inclusive (g/t Au) Total Attributable
of reserves to La Mancha
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Proven reserves 594,816 5.49 104,899 53,498
Probable reserves 4,297,399 4.96 684,605 349,149
Total P&P reserves 4,892,215 5.02 789,504 402,647
Measured resources 996,000 7.1 230,000 115,770
Indicated resources 3,553,000 6.7 760,000 387,600
Total M&I resources 4,549,000 6.8 990,000 503,370
Inferred Resources 934,000 5.9 176,000 89,760
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The mineral reserves were estimated in accordance with definitions and guidelines adopted by the Canadian Institute of Mining, Metallurgy and Petroleum. They were calculated using a mining cut-off grade of 3.0 g/t, standard dilution parameters applied to the resource based upon empirical knowledge of the Frog's Leg rock conditions and industry standards, mining methods, pillar and panel recoveries, standard assumptions on mine design made to suit operating equipment parameters and AMC Consultants Pty Ltd benchmarks. An updated technical report will be filed on SEDAR within the next 45 days in accordance with National Instrument 43-101 for mining projects.

As shown in the table below, this proven and probable reserve estimate represents an 86% conversion from the Measured and Indicated resource reported in May 2008.



Table 3
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Conversion of Resources to Reserves
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Mining activity to 31/03/2009 61,771 mined ounces
Mineral reserves at 01/04/2009 789,504 mined ounces
Total project (actual + reserves) 851,275 mined ounces
Total Measured and Indicated Resource 990,000 ounces
Conversion of Resources to Reserves 86%
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PRODUCTION

The new Frog's Leg mine design is expected to boost average gold output to 113,388 ounces per annum (57,828 ounces attributable to La Mancha) from 2010 until the beginning of 2016, representing a 29% increase over the previous mine plan, while extending the mine life by 1.2 years. The new mine plan provides for the extraction of 4.89 million tonnes of ore at a fully diluted grade of 5.0 g/t Au for 789,504 oz recovered over a remaining mine life of 7.1 years, thus increasing the total gold output over the life of the mine by 37% .

As seen in the table below, an increase in the production rate is anticipated from 2010 onwards. This will be achieved through an expansion of the mining fleet and workforce. Allowances for this equipment and manpower have been made in the financial evaluation of the project. The Rocket decline has already progressed beyond the original feasibility design and is currently producing ore from both development and stoping.

The mining method is longhole open stoping. Mining will continue progressing in a top down manner to allow for earlier stoping cash flows under shallow, favourable geotechnical conditions. Stopes are currently left open using sill and island pillars to provide stability, but a paste fill plant is scheduled to be built and operational by mid-2010, which will eliminate the need for pillars and improve mining recovery. The Frog's Leg underground mine design was based on resource estimate block modelling information provided by La Mancha and CSA Australia Pty Ltd.

Based on the above-mentioned mineral reserves, the Frog's Leg revised production profile is as follows:



Table 4
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Year Tonnes Grade Ounces of production
(g/t Au) Total Attributable to
La Mancha
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2009 650,033 4.34 90,781 46,298
2010 806,510 5.01 129,905 66,251
2011 727,112 5.34 124,934 63,716
2012 720,596 4.77 110,584 56,398
2013 734,499 5.28 124,560 63,526
2014 775,689 5.23 130,517 66,564
2015 550,530 4.99 88,381 45,074
2016 70,082 4.1 9,244 4,714
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Total 5,035,051 5.0 808,907 412,543
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While La Mancha acts as manager and operator of the Frog's Leg mine, La Mancha's share of the ore mined will continue to be shipped at the nearby Greenfields plant for processing.

ABOUT THE FROG'S LEG MINE

The Frog's Leg mining project is a joint venture between La Mancha Resources Australia (51%) and Dioro Exploration NL (49%). The project is situated 25 km west of Kalgoorlie-Boulder in the Eastern Goldfields of Western Australia. The Frog's Leg deposit was discovered in late 1999, put to production by the previous operator in April 2004 via open pit mining, and shut down in 2005. The property remained on care and maintenance until 2006, when La Mancha began a significant diamond drilling program aimed at outlining sufficient resources for an underground mining operation. Following successful drilling programs and resource increases, a positive feasibility study was issued in December 2007. Frog's Leg was successfully converted into an underground mine, with the first gold pour occurring on May 13, 2008, less than 12 months after construction began. Since then, the mine has steadily increased its performance, and was considered to have met commercial production criteria on January 1, 2009.

The mine is currently producing ore from development drives and stopes. The following table outlines the mine's activity since underground activities began in 2007:



Table 7
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2007 2008 2009 Jan-Mar TOTAL
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Decline and lateral
development (m) 1,361 3,792 848 6,001
Ore drive development (m) 152 2,532 846 3,530
Total waste (t) 127,101 357,863 58,460 543,424
Total ore (t) 24,392 289,807 142,834 457,033
Total ore grade (g/t) 3.52 4.25 4.22 4.20
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Gold mined (oz) 2,763 39,605 19,403 61,771
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QUALIFIED PERSONS AND DATA VERIFICATION

The independent Qualified Persons (QPs) involved in preparing the new mining plan and related reserves calculations are:

Denis Grubic (MausiMM) as a qualified Mining Engineer and an employee of AMC Consultants Pty Ltd has conducted a review of the Ore Reserve for the Frog's Leg Gold Mine.

La Mancha Qualified Persons are:

Trevor Eddie Bsc.(Geol) MAusIMM, Chief Geologist of La Mancha Resources Australia, supervised the drilling program and was responsible for quality control and verification of the drill hole data used by La Mancha Resources Australia in calculating the resource estimates. Details of the procedures for logging, sampling, density determinations, assaying and quality control measures are given on La Mancha's web site: www.lamancha.ca; please refer to Investor Info/Technical reports/Frogs Leg Report/Page 39.

Trevor Eddie Bsc.(Geol) MAusIMM, Chief Geologist, La Mancha Resources Australia, conducted the resource estimation and supervised the geostatistical analysis of the drill data.

Joe McDiarmid, BSC, BEng(Mining), AusIMM, Underground Mining Manager, Frog's Leg, La Mancha Resources Australia, supervised the study and all of the information contained in this release.

Frog's Leg mineral reserve estimates were evaluated in accordance with definitions and guidelines adopted by the Canadian Institute of Mining, Metallurgy and Petroleum. They were calculated using a mining reserve cut-off grade of 3.0 g/t, standard dilution parameters applied to the resource based upon empirical knowledge of the existing Frog's Leg Underground mine conditions and industry standards, mining methods, standard assumptions on pit design made to suit operating equipment parameters and consulting benchmarks.

There are numerous uncertainties inherent in estimating mineral reserves, including many factors beyond the Company's control. Resource estimation is a subjective process, and the accuracy of any resource estimate is a function of the quality of available data and engineering and geological interpretation and judgment. Results from drilling, testing and production, as well as material changes in metal prices subsequent to the date of an estimate, may justify revision of such estimates. To the best of La Mancha's knowledge, at the time of estimation there were no known environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other relevant issues that would materially impact on the eventual extraction of the mineral resources. An updated Technical Report will be filed with SEDAR within the next 45 days in accordance with National Instrument 43-101 for mining projects.

The effective date of the mineral reserve estimate is April 1, 2009. To La Mancha's knowledge, the reserve estimates are not materially affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

The updated resource review and estimation conforms to the requirements of NI43-101 and the CIM Best Practices for Estimation of Mineral Resources.

Mr. Joe McDiarmid, Mr. Trevor Eddie & Mr. Denis Grubic have read National Instrument 43-101 of the Canadian Securities Administrators ("NI 43-101"). By reason of their education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, they are "qualified person" for the purposes of NI 43-101. Mr. Joe McDiarmid, Mr. Trevor Eddie & Mr. Denis Grubic to the inclusion in the report of the matters based on their information in the form and context in which it appears.

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 shares trade on the Toronto Stock Exchange (TSX) under the symbol "LMA". For more information on the Company, visit its website at www.lamancha.ca

FORWARD-LOOKING STATEMENTS

This press release contains certain "forward-looking statements", including, but not limited to, the statements regarding the quantity of mineralization in place, particularly in numbers of ounces of gold, the mineable character of the drill results, future gold production and associated cash cost per ounce produced, mining exploration risks, estimation and evolution of mineral resources, potential for resources additions, interpretation of work results and anticipated timetables, in particular as regards the update of the feasibility study work, the economic and technical potential for an underground mining operation and the potential of the mining plan to create additional value for the shareholders. 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, risks associated with foreign operations, environmental risks and hazards, uncertainty as to calculation of mineral reserves and other risks referred to in La Mancha's 2008 Annual Information Form filed with the Securities Commissions of all provinces in Canada, as well as the Toronto Stock Exchange.

A map (Appendix A) is available at the following address: http://media3.marketwire.com/docs/Mining_plan_0720.pdf

Contact Information

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