La Mancha Resources Inc.
TSX : LMA

La Mancha Resources Inc.

September 07, 2010 07:57 ET

La Mancha Announces a Positive Preliminary Economic Assesment for Its Hassai Mine VMS Project

PARIS, FRANCE--(Marketwire - Sept. 7, 2010) - La Mancha Resources Inc. (TSX:LMA)

All amounts are in US dollars and for 100% of the project, unless otherwise indicated.

HIGHLIGHTS:

  • Total NPV of $238.7 million;
  • Robust economic indicators justifying immediate commencement of feasibility work for the CIL phase of the project;
  • Start of an $18 million exploration program with 100,000 meters over the next 12 months;
  • Investor conference meeting/call to further discuss the results on September 7, 2010, at 3:30 p.m. (Toronto time)

La Mancha Resources Inc. (TSX:LMA) (hereinafter "La Mancha" or the "Company") is pleased to announce that it has received a positive Preliminary Economic Assessment (hereinafter "PEA") for each of the two phases of its Volcanogenic Massive Sulphide (hereinafter "VMS") project at its 40%-owned Hassaï mine in North-Eastern Sudan. Phase 1 of the project is aimed at maximizing the gold resource found on the property through the upgrade of the existing heap leach plant to Carbon-In-Leach technology (hereinafter "CIL"). Phase 2 of the project addresses the substantial copper/gold potential of the VMS lenses identified on the property.

Highlights of the study include:

Table 1: Highlights of the study

  Phase 1: CIL Phase 2: VMS Global
Main assumptions      
 Gold price USD 950/oz USD 950/oz  
 Copper price -- USD 2.19/lb  
 Royalties (%) Gold 7% 5%  
  Copper -- 3.5%  
Corporate tax rate 10% 10%  
Mining inventory      
 Tonnes, Mt 15.8 29.4 45.2
 Grades Gold, g/t 2.01 1.11 1.43
  Copper, % -- 1.22 1.22
Production:      
 Commissioning 2013 2015 --
 Yearly mill run rate, Mtpa 3 5 --
 Gold recovered, '000 oz 811 378 1,189
 Copper recovered, '000 t -- 323 323
 Metallurgical recovery Gold 79% 36% --
  Copper -- 90% --
 Yearly production* Gold (oz) 155,880 59,355 --
  Copper (t) -- 51,516  
 Mine life, years 6 10 6+
Financials:      
 Initial capital cost $185.6 M $319.4 M $505.0 M
 Total sustaining capital $4.9 M $35.9 M $40.8 M
 Average cash costs $ 482/oz Au $ 1.24/lb Cu*** -
 Internal rate of return 30% 11% 17%
 NPV @ 0% discount $195.8 M $230.9 M $447.1 M
 NPV @ 5% discount $149.8 M $122.7 M $238.7 M
 Payback** , years 1.9 3.9 varies
*CIL: Excludes low production projected in last year of operation, VMS: Rate for first 5 years of operation (when project is running at design run-rate), **Calculated from the commencement of production, ***Including gold credit

Dominique Delorme, President and CEO of La Mancha, noted: "The fact that our VMS project presents a combined IRR that already surpasses 17% at such an early stage is very indicative of the materiality that it could have for La Mancha in the years to come. The very positive response of the financial model for Phase 2 to an eventual increase in resource coupled with the very low exploration risk associated with such an increase represents the assurance that we needed to push the process to the next step. We have therefore already initiated Phase 1 of the project feasibility work, with the expectation that an investment decision will be taken for that first phase during the first half of 2011. In parallel with the feasibility work, we will pursue discussions with our Sudanese partner in the project with respect to financing solutions. A positive outcome on these important matters could allow for the start of production for Phase 1 by early 2013. With respect to Phase 2, we are resuming exploration with an aggressive program of 100,000 meters of drilling worth US $18 million, to be completed within the next 12 months."

All the main operating assumptions for Phases 1 and 2 of the project, including Mineral Resource Estimation, Geotechnical and Environmental Review, Mine Design, Mining Inventory and Cost Estimates, Metallurgical Testwork, Processing Design, Metal Production Estimates and Cost Estimates were prepared by independent engineering firms retained to provide specific technical expertise, including Sedgman Ltd (Sedgman) and CSA Global Pty Ltd (CSA) for Phase 1 of the project (CIL) and AMEC Minproc Ltd (AMEC) and SGS Lakefield (SGS) for Phase 2 of the project (VMS). The key consultants involved in the studies and their respective areas of responsibility are described at the end of the "Qualified Persons and Data Verification" section.

CONCLUSION OF THE PEA

Table 2 and 3 below shows that Hassaï's resource is composed of four different ore types: traditional gold ore, acidic gold ore, heap leach residue and VMS ore. The inability of the existing heap leaching facility currently in operation on site to effectively process each one of these ore types explains the fact that as of December 31, 2009, only 410,000 ounces of gold of the Hassaï mine's resources were qualified as reserves out of a Measured and Indicated resource of 1.43 million ounces and an inferred resource of 2.5 million ounces of gold and 576,000 tonnes of copper (see table 2 below).

The mandate of the PEA was to find alternatives to the existing plant to maximize the value of the different ore types that have been added to the resource since 2008.

Table 2: Resource of Hassaï property

As at Dec. 31, 2009            
(resources shown inclusive of reserves) Type of Material Tonnes g/t
Au
Ounces Cu
%
Cu t
Proven Reserves   - - - - -
Probable Reserves   2,557,000 4.99 410,400 - -
Subtotal   2,557,000 4.99 410,400 - -
Measured Resource   3,832,000 1.88 231,000 - -
Indicated Resources Au Ore (Oxide, Quartz and Residue) 9,160,000 3.79 1,117,000 - -
Indicated Resources Cu-Au Ore (VMS) 2,900,000 0.93 86,700 1.27 36,800
Total M&I   15,890,000 2.81 1,434,000 - 36,800
Inferred Resources Au Ore (Oxide, Quartz and Residue) 4,464,000 3.03 434,000   -
Inferred Resources Cu-Au Ore (VMS) 48,480,000 1.33 2,078,000 1.19 576,000
Total Inferred   52,944,000 1.48 2,512,000   576,000

Table 3: PEA Mining Inventory 

  Tonnes g/t Au Ounces Cu % Cu t
Traditional Ore* 3,084,789 2.90 287,386    
Heap leach residue (tailings) 12,248,249 1.62 636,830    
Acidic Ore 538,452 6.00 103,926    
VMS 29,362,202 1.11 1,049,685 1.22 357,351
Total 45,233,691 1.43 2,077,827   357,351
*Traditional ore is comprised of silica-barite rock ("SBR") and Quartz ore

As seen in Table 2 above, the PEA confirms that the upgrade of the existing plant to CIL technology (Phase1) would enable the high conversion rate of the resource contained in the 9.7 million tonnes of heap leach residue that have been accumulated on site since the start of operations (to end of 2009). It would also enable the recuperation of a larger portion of the remaining traditional gold resource on site. The PEA also determines that a significant portion of the large VMS resource discovered in 2008-2009 could be economically mined, highlighting the considerable potential of a new copper/gold operation that would be built around a new flotation plant.

PHASE 1: CIL POTENTIAL

As shown in Table 14 of the appendix, Phase 1 of the project relies on the upgrade of the current heap leaching facility into a three million tonne-per-annum CIL plant that would be used to process the remaining part of the current reserve plus most of the 12.2 million tonnes of the heap leach residue estimated to be accumulated at the start of CIL operations, as well as a portion of the acidic ore stockpiled on site. The PEA assumes that in total, 15.9 million tonnes of ore at an average grade of 2.0 g Au/t would be processed through this new upgraded circuit over a six-year period. The expected recovery rate for the current reserves and the acidic ore stockpiles was established at 93% on the basis of metallurgical test work simulating CIL conditions on samples from 1 million tonnes of stockpiled traditional ore, while the recovery rate for the heap leach residue was set to 70% on the basis of metallurgical test work simulating CIL conditions on samples from the heap leach residue drilled in 2008-09.

Table 4 below shows the gold production expected from the CIL circuit over the mine life of Phase 1, with the corresponding cash cost per ounce. It is worth noting that, as the main ore feed for this first phase (the heap leach residue) has already been mined and processed once, the project cost structure remains very low.

Table 4: Production schedule – Phase 1

  2013 2014 2015 2016 2017 2018 Tot /Avg
Tonnage Milled (t) 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 871,489 15,871,489
Gold Grade (g/t) 2.61 2.09 1.96 1.92 1.62 1.62 2.01
Recovery (%) 83% 82% 80% 78% 70% 70% 79%
Gold Production (oz) 209,801 165,133 150,687 144,230 109,566 31,828 811,245
Cash Cost (USD/oz) 442 508 495 449 526 542 482

In terms of capital development costs, a total budget of $185.6 million is envisaged. This includes $3.2 million for mining equipment. Sedgman estimate $182.4 million for the upgrade of the plant and infrastructure. The main capital items are presented in Table 4 below:

Table 5: Capital Cost Estimate – Phase 1

  USD 000's
  Plant 74,299
  Nile pipeline 39,641
  Powerline 25,364
  Other direct costs 14,348
  Indirect costs 28,765
  Mining Equipment 3,200
  TOTAL 185,617

As shown above, one of the main capital investments for this first phase will address the need for water. As the mine is located in the middle of the Red Sea Desert, 140 km from the Nile River, nearby water sources are limited. Strict management of the underground water sources found around the mine have met the water requirements of the existing heap leaching operation but would not be sufficient for an upgraded CIL plant, not to mention the flotation plant required by the second phase of the project. The projected pipeline will pump 7.7 million cubic meters of water per year to provide sufficient water for the Phase 1 CIL plant and Phase 2 VMS flotation plant. The pipeline has been designed to ensure sufficient water to allow extension of the 3 mtpa (million tonnes per annum) CIL plant operating life and feed the 5 mtpa flotation plant. The construction of the single, final pipeline (rather than two smaller lines over time), is planned at the beginning of Phase 1 to reduce overall capital requirements.

Another standard infrastructure item and significant capital item is the power line connecting to the National Grid. Current on-site power generation capacity is insufficient for Phase 1. Construction of the final power line sufficient for both phases is planned in Phase 1 (similar to the water line approach).

PHASE 2: VMS POTENTIAL

The Hassaï mining area has been in operation since 1992, with over a dozen open pits developed over the years to extract high-grade oxide ore. Most of the ore mined to date comes from the enriched upper zone of a much larger mineralized system. The deeper VMS deposits that are the primary source of the gold can be seen at the bottom of at least six of the pits.

La Mancha began drilling on two of the most promising VMS targets in late 2007 with the intention of confirming and quantifying their potential. In September 2009, a NI 43-101 compliant resource estimate was released for the first target, at the bottom of the Hassaï South pit, and in November 2009, a second estimate followed for the target at the bottom of the Hadal Awatib pit. Phase 2 of the PEA was prepared by AMEC and SGS Lakefield and focuses on the economic viability of this VMS potential.

It is believed that improvements in the resource estimation/modelling of the Hassai South underground and Hadal Awatib open pit deposits would assist in more accurate spatial definition of the mineralisation and mining-related dilution, and in turn may have the effect of increasing the schedule grades.  It should also be noted, however, that there will likely be a drop in the overall mining inventory tonnes, as contained metal would not be affected.

Figures 1 and 2 at the end of this press release show the mine plan used by AMEC Minproc for each of the two VMS deposits in light of their respective resource estimates. The Hassaï deposit is expected to be mined by underground methods to a depth of 320 meters below the current pit floor, while the much wider Hadal Awatib deposit would be mined by open pit only. Table 6 below shows the resulting mining schedule:

Table 6: Operational highlights – Phase 2

  Total
Waste mined, '000 t 79,536
Total ore mined, '000 t 29,362
  Underground, '000 t 12,469
  Open pit, '000 t 16,894
Ore milled, '000 t 29,362
Concentrate produced, '000 t 1,281
Metal in concentrate :  
  Gold, oz 377,896
  Copper, '000 t 322
Operating costs  
  Underground mining ($/t of ore) 26.17
  Open pit mining ($/t moved) 2.47
  Milling ($/t) 9.96

On the processing side, AMEC Minproc used the results of the metallurgical testwork completed by SGS to assess the flotation plant characteristic to be used to produce the copper/gold concentrate. Their study indicates that results are optimized by a concentrator with a throughput of 5 million tonnes per annum, which would exhaust the mining inventory in 10 years.

The recovery rates used in the PEA differ slightly from those in the SGS report. The test results were adapted to the resource grades and applied to the concentrator mass balance model being used for the PEA. Based on the currently understood material variability, three ore types are expected for the concentrator feed: Hassaï South Supergene, Hassaï South Primary and Hadal Awatib. Tests have not been conducted on Hadal Awatib, but the mineralogy is expected to be similar. The test results were extrapolated to the three material types, and then modeled to generate the concentrate grades and metal recoveries shown below. Material grade differences and batch flotation test results were considered by AMEC Minproc when making the assumptions. Table 7 shows the resulting production profile generated by Phase 2 of the project:

Table 7: Production expectations – Phase 2

  Units Value
Concentrator production start-up year 2015
     
Average gold grade (milled) g/t 1.11
Average copper grade (milled) % 1.22
     
Gold recovery to concentrate (average) % 36%
Copper recovery to concentrate (average) % 90%
     
Gold production from VMS (2015 – 2025) oz 377,896
Copper production from VMS (2015 – 2025) tonnes 322,000

The initial capital investment for Phase 2 amounts to $319.4 million dollars, and to this is added an accuracy provision of $22.8 million. The main capital allocation is for the construction of the flotation plant ($117 million) and mine development. Table 8 below provides more details on the capital expenditures.

Table 8: Capital expenditures – Phase 2

  USD 000's
  Mine Development 142,157
  Process Plant 78,194
  Plant Infrastructure 38,834
  Area Infrastructure 12,900
  Regional Infrastructure & Miscellaneous 11,917
  Indirect Costs 38,386
  Accuracy Provision 22,790
  Camp Improvement & Core Yard 3,000
  Subtotal 348,178
  Sustaining Capex 35,930
  Total 384,108

PROJECT ECONOMICS
Using all the operating assumptions prepared by AMEC Minproc, Sedgman and CSA, La Mancha built the financial model for the project. The results shown are based on the conservative price assumptions of $950 per ounce for gold and $2.19 per pound for copper. The net present value (NPV) and Internal Rate of Return (IRR) are presented for the after-tax scenario. Table 9 presents the financial highlights of the project:

Table 9: Financial highlights

  Phase 1: CIL Phase 2: VMS Global
Main assumptions      
 Gold price USD950/oz USD 950/oz USD 950/oz
 Copper price   USD 2.19/lb USD 2.19/lb
 Royalties Gold 7% 5% 5 - 7%
  Copper   3.5% 3.5%
 Corporate tax rate 10% 10% 10%
Financials:      
 Revenues $770.7 M $1,848.7 M $2,619.4 M
 Operating income $197.0 M $299.8 M $516.8 M
 Net earnings $177.3 M $266.8 M $462.6 M
 Cash flow from operations $386.4 M $612.0 M $1,016.8 M
 Cash flow from investing activity $190.5 M $381.1 M $569.7 M
 Free cash flow to equity $195.8 M $230.9 M $447.1 M
Investment analysis:      
 Initial capital cost $185.6 M $319.4 M $505.0 M
 Total sustaining capital $4.9 M $35.9 M $40.8 M
 Internal rate of return 30% 11% 17%
 Payback*, years 1.9 3.9 --
 NPV @ 0% discount rate $195.8 M $230.9 M $447.1 M
 NPV @ 5% discount rate $149.8 M $122.7 M $238.7 M
*Calculated from the commencement of production

Although additional leach testwork performed on the flotation tailings showed that gold recovery can be improved to up to 92% for the Hassaï pit Supergene composite and 75% for the Hassaï pit Primary composite, the PEA was built with the more conservative assumptions that the only gold recovered from the VMS ore would be the gold contained in the concentrate. More analyses are underway to measure how these metallurgical results could be adapted to an industrial application. This could substantially improve the economics of the project.

The sensitivity of the project's NPV/IRR to changes in the price of gold and copper was tested and is presented in Tables 10 and 11 below.

Table 10: Sensitivity Analysis (NPV in $'000 - Global project) 

      Copper Price
      $1.81/lb   $2.18/lb   $2.54/lb   $2.91/lb   $3.27/lb   $3.63/lb
  NPV   $4,000/t   $4,800/t   $5,600/t   $6,400/t   $7,200/t   $8,000/t
Gold Price US $750/oz   -79,652   76,405   229,253   381,652   533,909   686,165
US $850/oz   2,192   157,589   310,259   462,634   614,891   767,147
US $950/oz   83,866   238,666   391,158   543,509   695,766   848,022
US $1,150/oz   247,074   400,539   552,956   705,259   857,516   1,009,772
US $1,250/oz   328,347   481,439   633,856   786,134   938,391   1,090,648
US $1,350/oz   409,458   562,338   714,753   867,010   1,019,266   1,171,523

Table 11: Sensitivity Analysis (IRR – Global project)

              Copper   price        
      $1.81/lb   $2.18/lb   $2.54/lb   $2.91/lb   $3.27/lb   $3.63/lb
  IRR   $4,000/t   $4,800/t   $5,600/t   $6,400/t   $7,200/t   $8,000/t
Gold Price US $750/oz   0%   9%   15%   21%   25%   29%
US $850/oz   5%   13%   19%   24%   29%   33%
US $950/oz   10%   17%   23%   28%   32%   36%
US $1,150/oz   20%   26%   31%   35%   39%   43%
US $1,250/oz   24%   30%   35%   39%   43%   47%
US $1,350/oz   29%   34%   39%   43%   47%   50%
   
  As per PEA assumptions
  As per current market conditions

UPDATE ON CURRENT OPERATIONS

As shown in table 15 at the end of this press release, as of December 31, 2009, there was still a total of 410,000 ounces in reserves at the Hassaï mine. These reserves come mainly from the last two deposits of traditional ore identified to date on the property. As the mine's extraction and processing capacity are now stabilized at around 700,000 - 800,000 tonnes per annum, Hassaï has the potential to continue its current operations until the end of 2013. Table 12 below shows the theoretical operational profile of the mine if the CIL and VMS potential are excluded.

Table 12: Highlights of the current operations

  2010 2011 2012 2013 Total
Tonnage Milled, t 751,376 631,835 650,598 503,192 2,537,000
Gold Grade, g/t 4.2 5.0 3.7 8.0 5.0
Recovery, % 70% 73% 74% 74% 73%
Gold Production, oz 71,728 73,079 57,871 96,452 299,130

It is important to note that the rapidity with which the first phase of the VMS project can be implemented has an important impact on this scenario, as all the ore feed planned in this scenario would be immediately re-directed towards the upgraded CIL plant as soon as it becomes operational. It is also worth mentioning that the mine has been very successful at identifying new pockets of traditional ore over the past years, virtually replacing its reserves as they are mined. Future exploration success of that nature could also positively impact this scenario.

NEXT STEPS

Internal modelling shows that the IRR of the project responds very favourably to future resource growth. This is even more so with Phase 2 of the project (VMS). The fact that several other VMS structures have been identified at the bottom of some of the pits mined in the past on the Hassaï property, and the high level of geological understanding of these structures gained over the last 20 years of mine operation, provide a strong assurance that substantial potential remains to grow the size of the resource with minimal geological risk, and therefore significantly improve the project economics.

An aggressive $18 million exploration program has been designed to tap this potential. A total of 100,000 meters of drilling are planned over a 12-month period starting in October 2010 with three objectives in mind: a) infill the existing VMS resources with the intent of converting the Inferred resources to the Measured and Indicated categories; b) increase the resources of HassaÑ— at depth and that of the set of Hadal Awatib pits (Hadal Awatib West and extensions of Hadal Awatib); and c) test the potential of the VMS structures identified at the bottom of a third target, the Hadayamet pit, located 30 km east of the Hassaï pit, where the first target was identified in 2008.

The Hadayamet pit, which was in production in the early 2000s, yielded 2.4 million tonnes of traditional ore at an average grade of 6.6 g/t Au for gold production of 500,000 ounces.

Furthermore, the solid financial performance of Phase 1 of the project on a stand-alone basis allows the Company to move forward with the next stage: the start of feasibility work. In light of Sedgman work on the PEA, its mandate was extended to cover the feasibility study for Phase 1, which is expected to be completed during the first quarter of 2011. An investment decision should therefore be taken in the first half of 2011, followed by a rapid start to development.   

QUALIFIED PERSONS AND DATA VERIFICATION

The PEA summarized here for the Hassaï VMS project will be incorporated into an NI 43-101 compliant Preliminary Assessment Report to be available on SEDAR and the Antares Minerals website within 45 days of the date of this news release.

The mineral resource estimate upon which the PEA was based (see La Mancha's press release of March 2, 2010) was completed by or under the direction of Rémi Bosc, a geologist and an independent Qualified Person under NI 43-101.

La Mancha's sample security and data quality control procedures for the Hassaï mine are described in its press release dated March 2, 2010.

The PEA is preliminary in nature and includes the use of Inferred resources, which are considered too speculative geologically to have the economic considerations applied to them or that would enable them to be categorized as mineral reserves. Mineral resources do not have demonstrated economic viability and future in-fill drilling, and scoping, pre-feasibility and feasibility studies will determine what percentage of the inferred resource can be placed into the mineable category. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Thus, there is no certainty that the results shown in the PEA will be realized. Actual results may vary, perhaps materially. La Mancha is not aware of any environmental, permitting, legal, title, taxation, socio-political, marketing or other issue that might materially affect this estimate of mineral resources. The projections, forecasts and estimates presented in the scoping study and PEA that will form part of the Technical Report constitute forward-looking statements, and readers are urged not to place undue reliance on such statements. Additional cautionary and forward-looking statement information is provided at the end of this press release.

The Qualified Persons (QPs) for the purpose of National Instrument 43-101, Standards of Disclosure for Mineral Projects for the PEA are included in Table 13:

Table 13: Qualified Persons

Phase One: CIL
Section Company Qualified
Person
Mineral Resources Arethuse Geology Remi Bosc*
Mineral Resource of additional Heap Leach Residue (after EOY 2009 statement) CSA Malcolm Titley^
Mine Design, Cost and Mining Inventory CSA Clayton Reeves*
Metallurgical Testwork, Process Design for the Plant, Power Supply and Water Pipeline Operating Costs and Capital Costs. Sedgman Ian Thomas*
Metal Production & Recovery, Residue Reclaim and G&A Operating Costs and Capital Costs and Economic Evaluation La Mancha Resources Inc. Bill Plyley*
     
Phase Two: VMS
Section Company Qualified
Representative
Mineral Resource Arethuse Geology Remi Bosc*
Geotechnical Review AMEC Minproc Adam Coulson*
Mine Design, Cost and Mining Inventory AMEC Minproc Graeme Baker^
Process Design, Metallurgical Testwork, Cost and Metal Production AMEC Minproc Dean David*
Economic Evaluation La Mancha Resources Inc. Bill Plyley*
* Have visited the site for this function
^ A qualified company representative has visited the site for this function

Remi Bosc – Geological Engineer (Geology), Director and Principal Consultant – Arethuse Geology (Malaysia). Remi is a member of the European Federation of Geologist. Remi has spent several weeks on site over a period of 3 years during the different stages of resources evaluation. Remi is responsible for resources estimates. Resources estimates of the Heap Leach Residue has been jointly estimated with CSA.

Malcolm Titley –BSc ( Geology & Chemistry), Director and Principal Consultant – CSA Global (UK). Malcolm is a member of the Australian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists.

Clayton Reeves – BSc. Engineering Hons. (Mining), Principal Mine Engineer – CSA Global. Clayton is a member of the South African Institute of Mining and Metallurgy. Clayton has spent in excess of 7 weeks on site at Hassai over a period of approximately 1 year. Clayton is responsible for Mine reserves, open pit designs and production planning of the open pits, Acidic SBR stockpiles and heap leach tailings for Phase One.

Ian Thomas, Bach App Sci, Metallurgy (MAusIMM), Process Consultant – Sedgman Ltd visited the Hassaï Mine site owned by Ariab Mining Company ( AMC) in December 2007. Ian is responsible for conduct of the metallurgical testwork at Amdel – Bureau Veritas Australia on heap leach residue and Kamoeb ore, process and plant design, Nile pipeline design and power line design and the associated capital and operating cost estimates.

Adam Coulson, B.Eng, M.Sc.(Eng), Ph.D.,P.Eng., ACSM, CIMM, Senior Associate Rock Mechanics Engineer, AMEC Earth and Environmental, a division of AMEC America's, visited the Ariab Mine site owned by Ariab Mining Company ( AMC) from March 8th to March 10th, 2010, to review core and rock mass conditions for the purpose of rock mechanics design for the Phase Two VMS project.

Graeme Baker B.Eng Mining (Hon), MAusIMM, Principal Mining Engineer, AMEC Minproc. Graeme is responsible for Mining Inventories, open pit designs, underground designs and productions schedules for the Phase Two VMS project

Dean David, BAppSc (Metallurgy), FAusIMM, Process Consultant, AMEC Minproc, a division of AMEC Minproc Growth Regions, visited the Ariab Mine site owned by Ariab Mining Company (AMC) from March 8th to March 10th, 2010, to review core, site conditions and current operations for the purpose of process design for the Phase Two VMS project.

W. F.(Bill) Plyley, BSc. Met. Eng., AusIMM, Chief Operating Officer of La Mancha Resources Inc., supervised the study and all of the information contained in this release.

Each of these qualified persons has reviewed and approved the information relevant to their part of the study contained in this release.

INVESTOR MEETING / CONFERENCE CALL

La Mancha will hold an investor meeting / conference call on Tuesday, September 7, 2010, at 3:30 PM (Toronto time) to discuss the results of the PEA and respond to questions from interested parties.

The meeting will be held at the offices of Fasken Martineau in Toronto, at 333 Bay Street, Suite 2400.

Those unable to attend in person can access the conference call by dialing: 416-981-9000 or toll free 1-800-895-8003 or by accessing the webcast through our web site at www.lamancha.ca.

An instant replay of the conference call will be available until September 21, 2010 at the numbers below:
1 416 626 4100 or toll free 800 558 5253 code# 21480553

An archived recording of the conference call will be available at www.lamancha.ca

ABOUT THE HASSAÏ MINE

The Hassaï mine is located in the Red Sea Hills desert of northeastern Sudan, some 450 km from Khartoum. Inaugurated in 1992, it is Sudan's first and only gold mine in production. Twelve pits have been mined over the years, generating a cumulative production of more than 2.1 million ounces of gold. La Mancha owns 40% of the mine through a subsidiary and is the mine operator. The Hassaï exploration licenses effectively encompass the entire geological district that extends over 24,000 square kilometres.

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 www.lamancha.ca.

Caution Concerning Forward-Looking Statements

This press release contains certain "forward-looking statements", including, but not limited to, statements regarding the Company's strategic plans, future commercial production, sales and financial results, development, construction and production targets and timetables, mining costs; statements regarding capital expenditures, development plans, and exploration programs, objectives and budgets; statements regarding the Company's expectations; statements regarding the capital costs associated to the development of the two phases of development of the Hassaï property, their economic viability and profitability. 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 2009 Annual Information Form filed with the Securities Commissions, as well as the Toronto Stock Exchange.

To view, "Figure 1 and 2: VMS Mining Inventory and Resources," please visit the following link: http://media3.marketwire.com/docs/lmafig12.pdf.

Table 14: Heap Leach residue mining inventory

Gold in Tailings Source for CIP Feed Heaps Number Classi-fication Ore,
t
Estima-
tion
Method
Assay Grade,
g Au/t
Gold,
kg
Gold
Rec,
kg
Reco-
very
 
Pre 2008 Resources 63A-113 M&I 6,677,000 Drilling, Block-
model
Fire
Assay
1.91 12,793 8,315 65% Leaching completed
Pre 2008 Resources 63A-113 Inf 1,178,000 Drilling, Block-
model
Fire
Assay
2.07 2,434 1,582 65% Leaching completed
2008 - 2009
Heap Residue
114-119 M&I 514,000 Metallur-
gical
balance
CN
soluble
0.91 469 412 88% Leaching completed
2008 - 2009
Heap Residue
120-129 Inf 847,000 Metallur-
gical
balance
CN
soluble
1.58 1,339 1,176 88% Leaching completed
                     
2008 - 2009
Heap Residue
130-136 Inf 482,000 Metallur-
gical
balance
CN
soluble
1.15 553 486 88% 2nd cycle leaching essentially complete -
mass
balance
as per
31st July
2010
                     
2010-2013 estimated production   Inf 2,550,000 Metallur-
gical
balance
CN
soluble
0.90 2,219 1,949 88% Expected metallur-
gical
balance 
CIL Feed (Heap Residue) at 1/1/2014     12,248,000     1.62 19,808 13,921 70%  
                     
                     

Table 15: Sensitivity Analysis

Phase 1                      
Gold Price (USD/oz) 750   850   950   1 150   1 250   1 350
NPV (in $ '000) 27,892   89,299   149,764   270,656   331,103   391,549
IRR 10%   21%   30%   47%   55%   62%
                       
Phase 2                      
NPV (in $ '000) $1.81/lb   $2.18/lb   $2.54/lb   $2.91/lb   $3.27/lb   $3.63/lb
$4,000/t   $4,800/t   $5,600/t   $6,400/t   $7,200/t   $8,000/t
US$750/oz -113,950   68,948   248,229   426,998   605,590   784,181
US$850/oz -86,305   95,830   274,906   453,647   632,238   810,830
US$950/oz -58,768   122,712   301,582   480,296   658,887   837,478
US$1150/oz -3,787   176,156   354,936   533,593   712,184   890,776
US$1250/oz 23,254   202,832   381,612   560,242   738,833   917,424
US$1350/oz 50,170   229,509   408,289   586,890   765,482   944,073
                       
IRR $1.81/lb   $2.18/lb   $2.54/lb   $2.91/lb   $3.27/lb   $3.63/lb
$4000/t   $4800/t   $5600/t   $6400/t   $7200/t   $8000/t
US$750/oz -4%   8%   17%   25%   32%   39%
US$850/oz -1%   10%   19%   26%   33%   40%
US$950/oz 1%   11%   20%   27%   34%   41%
US$1150/oz 4%   14%   22%   29%   36%   43%
US$1250/oz 6%   15%   23%   30%   37%   43%
US$1350/oz 7%   17%   24%   31%   38%   44%
   
   As per PEA assumptions
   As per current market conditions
 
Table 16: Reserves and Resources
 
As at Dec. 31, 2009              
(resources shown inclusive of reserves) Tonnes g/t Au     Ounces Cu % Cu t
Traditional Ore              
  Proven Reserves              
  Probable Reserves 1,893,000 4.67     284,000    
Subtotal 1,893,000 4.67     284,000    
  Measured Resource            
  Indicated Resources 5,650,000 4.46     810,500    
Total Measured and Indicated 5,650,000 4.46     810,500    
  Inferred Resources 3,286,000 3.35     354,500    
Heap leach residue (tailings)              
  Proven Reserves              
  Probable Reserves              
Subtotal              
  Measured Resource 3,832,000 1.87     231,000    
  Indicated Resources 2,846,000 1.97     180,000    
Total Measured and Indicated 6,677,000 1.92     411,300    
  Inferred Resources 1,178,000 2.11     80,000    
Acidic Ore              
  Proven Reserves              
  Probable Reserves 664,000 5.92     126,400    
Subtotal 664,000 5.92     126,400    
  Measured Resource              
  Indicated Resources 664,000 5.92     126,400    
Total Measured and Indicated 664,000 5.92     126,400    
  Inferred Resouces              
VMS              
  Proven Reserves              
  Probable Reserves              
Subtotal              
  Measured Resource              
  Indicated Resources 2,898,000 0.93     86,700 1.27 36,800
Total Measured and Indicated 2,898,000 0.93     86,700 1.27 36,800
  Inferred Resouces 48,480,000 1.33     2,078,000 1.19 576,000
Total              
  Proven Reserves - -     -   -
  Probable Reserves 2,557,000 4.99     410,400   -
Subtotal 2,557,000 4.99     410,400   -
  Measured Resource 3,832,000 1.88     231,000   -
  Indicated Resources 12,060,000 3.10     1,203,600   36,800
Total Measured and Indicated 15,890,000 2.81     1,434,000   36,800
  Inferred Resouces 52,944,000 1.48     2,512,000   576,000

Contact Information

  • La Mancha
    Martin Amyot
    Vice President Corporate Development
    (514) 987-5115 Ext: 25
    info@lamancha.ca