La Mancha Increases Production in the First Quarter of 2008
Wed May 14, 1:15 PMMONTREAL, QUEBEC--(Marketwire - May 14, 2008) - La Mancha Resources Inc. (TSX: LMA.TO)(hereinafter "La Mancha" or the "Company") produced 16,250 ounces of gold at an average cash cost of US $534 per ounce during the first quarter of 2008 compared to 14,060 ounces of gold at an average cash cost of US$ 434 per ounce in the same quarter last year. The increase in production is due to improved performance at the Hassai and Ity mines and 1,910 ounces generated by preproduction activities in the White Foil pit. These additional contributions compensated for La Mancha's reduced interest in the Ity mine, which now stands at 45.9% compared to 51% in the first quarter of 2007.
Despite stronger production and higher gold prices, La Mancha's revenues decreased slightly to $13.4 million during the first quarter of 2008 from $13.6 million in the corresponding period of 2007. This can once again be attributed to the reduction in La Mancha's interest in the Ity mine effective May 25, 2007, which forces the Company to cease consolidating 100% of Ity's results and begin consolidating them by the proportional method as of that date. Despite a $2.1 million improvement in its mine operating margin, La Mancha recorded a net loss of $2.4 million during the first quarter of 2008, compared to net loss of $1.4 million a year earlier. This performance can mainly be attributed to a $1.5 million write down associated with its commercial paper holdings and a $1.2 million loss associated with a gold-denominated loan contracted on a non-recourse basis by its Argentinean subsidiary. Both items are considered "non-cash" by nature. Operating activities generated cash flow of $1.0 million during the first quarter of 2008, compared to $44,000 in the corresponding quarter of 2007. As of March 31, 2008, La Mancha had cash and short-term investments of $11.2 million. "The numerous initiatives taken over the course of 2007 to improve the Company's operational performance and profitability are starting to pay dividends," said Michel Cuilhe, President and CEO of La Mancha. "Not only is production starting to increase, but first quarter net earnings for our two producing mines, Hassai and Ity, grew by 285% year over year. Moreover, the exploration expenses incurred over the quarter are already generating some exceptional results and should prove to be very accretive. Similarly, the increased level of expenses required this year to launch of our Australian operations is about to pay off with the start of production of our Frog's Leg mine, where the first gold pour took place yesterday, nearly 2 months ahead of schedule." OPERATIONS Hassai mine production increased by 5% to total 23,150 ounces of gold (9,260 ounces attributable to La Mancha) at an average cash cost of US $538 per ounce for the first quarter of 2008. This compares to 22,150 ounces of gold (8,860 ounces attributable to La Mancha) produced in the first quarter of 2007 at a cash cost of US $418. The quantity of higher-grade quartz ore milled during the quarter increased to 69,820 tonnes over the quarter, up 32% from the last quarter of 2007. The quartz ore, which averages 5.45 g Au/t, represented 30% of all the ore processed during the first quarter of 2008, thus significantly contributing to increasing the average grade of ore milled for the quarter. Management expects the quartz ore to represent 70% of all the ore milled by the end of the third quarter, thereby further improving grades and gold production. As of March 31, 2008, 909,140 tonnes of quartz ore averaging 4.34 g Au/t were stockpiled near the plant, ready to be milled. The increase in cash costs per ounce of gold produced during the first quarter of 2008 can mainly be attributed to unfavourable fluctuations in currency exchange rates (+17%) and the increase in the price of consumables (+15%), partially offset by higher grades (+11%). As announced in November 2007, exploration began in February 2008 to confirm the presence of a Volcanic Massive Sulphide (VMS) bodies under some of the previously-mined pits. As of March 31, 2008, six holes representing 600 meters of reverse circulation drilling and 460 meters of diamond drilling had been completed. Preliminary visual indications show that the holes intersected the VMS zone to a depth of up to 150 meters below the bottom of the pit (250 meters below surface). Samples are currently being assayed by an independent lab and results should start to be available at the end of the second quarter. Based on preliminary observations, management decided to allocate a second drill rig to the program starting at the end of the month. Results indicating 5 to 10 million tonnes of enriched ores with grades of in the order of 2% Cu, 3% Zn and 1 g/t Au would trigger a scoping study. The Company intends to complete a first synthesis, including a preliminary economic assessment, during the third quarter of 2008. The Hassai mine area is considered to be one of the world's main prospects for VMS-type deposits. The Ity mine produced a total of 11,080 ounces of gold (5,090 ounces attributable to La Mancha) at an average cash cost of US $527 per ounce during the first quarter of 2008, compared to 10,200 ounces (5,200 ounces attributable to La Mancha) the previous year at an average cash cost of US $462 per ounce. However, this 9% increase in production was offset by the decrease in the Company's interest in the mine from 51% to 45.9% in May 2007 on renewal of the Ity mining permit for the next five years. The increase in production at Ity was essentially the result of a 27% increase in first quarter tonnage milled for 2008 compared to 2007. This improved pace at the mill, which essentially resulted from the introduction of a third work shift, compensated for a lower heap recovery rate arising from the higher sulphide content in the ore from the bottom of the Zia pit, which did not respond well to the cyanidation process. Management expects the recovery rate to improve over the next two quarters, as the lower sulphide content currently mined in the new Mount Ity pit should provide recoveries in the range of 75 to 80%. The pace increase in production obtained in Ity during the first quarter of 2008 has allowed economies of scale on mining and milling. These improvements were however totally offset by the lower recovery rate and the unfavourable fluctuations in currency exchange rates, which explained the higher cash cost per ounces recorded during the first quarter of 2008 compared the corresponding period of 2007. The exploration program initiated in November 2007 began generating results in the first quarter for some of the holes drilled on the Mount Ity extension and the Walter anomaly (see press releases dated February 22 and April 8, 2008). As of March 31, 2008, 76 holes totalling more than 5,000 meters had been drilled. The following table provides data for the holes drilled to date:
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Target # of # of Status
holes meters
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Results pending and should be
reported by the end of May
Zia extension 12 912 25 additional holes are being
drilled in
Q2
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Mount Ity
Extension 15 1,152 Released on Feb. 22, 2008
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First 8 holes were released on Feb
22, 2008
Tontouo 15 961 7 remaining holes to be released by
the end of May
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Released April 8, 2008
10 additional holes are being
Walter Anomaly 34 2,091 drilled during Q2
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Total 76 5,116
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"Our new exploration team's first few months at Ity proved to be very productive," noted Mr. Cuilhe. "The high grade and shallow depth of some of the recently-reported intercepts and the proximity of the explored areas to our mill indicate that we could rapidly increase our resource at the mine. To that effect, a resource update will be implemented during the rainy season, in the third quarter, when drilling operations stop temporally" DEVELOPMENT PROJECTS The Frog's Leg advanced project is well underway, as production started ahead of schedule and 46,000 tonnes of ore grading 3.43 g AU/t were already stockpiled on the surface by the end of March. The first load of ore was hauled to the Jubilee processing plant in April, and the first gold pour took place yesterday, on May 13, 2008. Frog's Leg is expected to produce 10,000 ounces of gold (5,100 ounces attributable to La Mancha) during second quarter of 2008. During the first quarter, a total of 23,700 tonnes of ore was mined at an average grade of 3.67 g Au/t. Inclusion of the 37% increase in the Frog's Leg resource announced on April 1st in a new mining plan is currently being evaluated and would significantly improve the profitability of the Frog's Leg project. To date, more than 3,000 meters of development have been completed at a capital cost to date of $21.8 million, 10% under budget. Development rates are expected to increase significantly from May onward with the commissioning of a third development drill (two-boom jumbo). During the first quarter, 1,910 ounces of gold were recovered from the White Foil pit as tonnage from the broken ore inventory was hauled to and treated at the Greenfields mill. A total of 24,630 tonnes of ore were milled. A resource definition program was completed and a resource estimate is scheduled to be completed by the beginning of May. This new resource estimate will be calculated to provide the basis for a new pit optimization and feasibility study. 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 (TSX) under the symbol "LMA". For more information on the Company, visit its 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, 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 2007 Annual Information Form filed with the Securities Commissions, as well as the Toronto Stock Exchange.
HIGHLIGHTS
(unaudited) First Quarter ended March 31,
(All amounts are in CDN dollars 2008 2007
unless otherwise noted)
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RESULTS (consolidated, in thousands of $)
Revenues 13,421 13,648
Cash flow from operating
activities 1,007 44
Net earnings (loss) (2,378) (1,435)
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PER SHARE ($)
Net earnings (loss) (0.017) (0.010)
Basic weighted average number of
common shares outstanding
(in thousands) 142,008 141,789
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ATTRIBUTABLE GOLD PRODUCTION
Number of ounces produced 16,260 (1) 14,060
Mine operating costs
(US$ per ounce) 534 434
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March 31, March 31,
2008 2007
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FINANCIAL POSITION
(in thousands of $)
Cash and short-term investments 11,248 43,838
Total assets 141,375 160,439
Shareholders' equity 111,657 119,084
Total number of shares
outstanding (in thousands) 142,008 141,918
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GOLD PRODUCTION STATISTICS First Quarter ended March 31,
2008 2007
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Hassai (40%)
Attributable Production
(ounces) 9,260 8,860
Tonnage milled (t) 237,870 249,290
Grade milled (g Au/t) 4.0 3.8
Recovery rate (%) 75 73
Cash costs (US$ per ounce) 538 418
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ITY (45.9%)(2)
Attributable Production
(ounces) 5,090 5,200
Tonnage milled (t) 121,086 95,300
Grade milled (g Au/t) 3.9 3.9
recovery rate (%) 72 85
Cash costs (US$ per ounce) 527 462
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(1) including 1,910 ounces of pre-production following the de-watering
of the White Foil mine
(2) La Mancha's interest in the Ity mine was reduced from 51% to 45.9 %
upon mine renewal in May 2007
ContactsMartin Amyot La Mancha Resources Inc.
Vice President Corporate Development
514-987-5115
info@lamancha.ca
2.28 (0.02%)