La Mancha Continues to Generate Profits Into 2010
PARIS, FRANCE -- (Marketwire) -- 05/12/10 -- La Mancha Resources Inc. (TSX: LMA)
All amounts are expressed in CA dollars, unless otherwise indicated.
Unaudited
HIGHLIGHTS
-- Gold production up 17% to 21,654 ounces at an average cash cost of US
$614 per ounce
-- Cash flow from operating activities of $9.9 million
-- Revenues of $27.8 million
-- Net earnings of $3.7 million
-- Cash and short-term investments of $21.4 million
La Mancha Resources Inc. (TSX: LMA) (hereinafter 'La Mancha' or the 'Company') produced 21,654 ounces of gold at an average cash cost of US $614 per ounce during the first quarter of 2010 compared to 18,515 ounces of gold at an average cash cost of US $451 per ounce in the same quarter last year. The increase in production is due to the ramp-up of the Australian Frog's Leg mine and the improved performance of the Hassai mine in Sudan, which together more than compensated for lower production at the Ity mine in Cote d'Ivoire.
This stronger gold production drove La Mancha's first quarter revenues up to $27.8 million, marking a 13% increase over the corresponding period of last year, as the gold price in Canadian dollars remained fairly stable between the two periods.
Dominique Delorme, President and CEO of La Mancha, stated: 'La Mancha continues to progress in accordance with our business plan. While we are pleased with our strong first quarter results, they still do not fully reflect our achievements. For the second quarter, we expect the combined impact of increased mill capacity, increased ore production at Frog's Leg, and the recent start of production at White Foil to boost our gold production from Australia alone to over 31,000 ounces. We therefore remain confident that we will achieve our target 2010 gold production of up to 140,000 ounces.'
La Mancha's cash flows from operating activities totalled $9.9 million in the first quarter of 2010, down from $11.0 million in the corresponding period of 2009 as higher gold production did not compensate for the increase in cash cost per ounce. The Company's cash and short-term investments remained strong at $21.4 million as of March 31, 2010, while long-term debt decreased from $16.1 million to $14.3 million year over year.
La Mancha posted net earnings of $3.7 million for the first quarter of 2010, with each mine reporting positive results. This compares to net earnings of $3.5 million a year ago.
AUSTRALIAN OPERATIONS
The Frog's Leg mine generated 9,789 ounces of gold net to La Mancha from toll milling at an average cash cost of US $570 per ounce (AUD 631 per ounce) in the first quarter of 2010 compared to 6,115 ounces at an average cash cost of US $386 per ounce (AUD 562 per ounce) generated in the corresponding period of 2009.
The cash costs per ounce in Australian dollars increased by 12% over the corresponding period of 2009 mainly due to increases in both mining unit costs, as mining depth increased, and contracted toll milling costs. As shown above, the unfavourable foreign exchange rate fluctuation was the main reason for the cash cost variation expressed in US dollars per ounce.
Underground ore extraction continued to accelerate, once again setting a record, and even surpassing the average ore extraction rate in the upgraded mine plan published in the second half of 2009.
The following table shows the mine ramp-up:
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Three- Three- Three- Three- Three-
month month month month month
period period period period period
ended ended ended ended ended
March 31, June 30, Sept. 30, Dec. 31, March 31,
2009 2009 2009 2009 2010
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Underground ore
mined (t) 100% 142,834 149,764 169,400 148,235 174,532
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LMA share 72,845 76,380 86,394 75,600 89,000
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Apparent grade mined
(g Au/t) 4.23 4.22 5.16 5.28 4.82
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Apparent gold
content of ore
mined (oz) 100% 19,403 20,348 27,609 25,178 27,050
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LMA share 9,896 10,377 14,081 12,841 13,796
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A total of 55,660 tonnes of ore were processed in the first quarter of 2010, in line with the toll- milling agreement, while La Mancha's share of underground ore mined totalled 89,000 tonnes. Consequently, at quarter-end, the La Mancha stockpile had grown to 93,500 tonnes of ore, representing an approximate gold production equivalent of 13,3001 recoverable ounces. Gold production is expected to significantly increase in the second quarter as a minimum toll-milling capacity of 152,500 tonnes is reserved for La Mancha at the nearby Greenfields plant.
(1) Assuming a gold grade of 4.69g/t Au and a gold recovery rate of 94.5%
The 100%-owned White Foil mine is set to start contributing to La Mancha's consolidated gold production in the second quarter, as the mine celebrated its first gold pour on April 16, 2010. Mining operations, which began on March 4, 2010, continue to run on schedule, with the first 100,000 tonne milling campaign well underway. As of May 3, a total of 101,000 tonnes had been mined at a grade of 2.46 g/t Au.
AFRICAN OPERATIONS
Hassai mine production totalled 17,748 ounces of gold (7,099 ounces attributable to La Mancha) at an average cash cost of US $734 per ounce for the first quarter of 2010. This compares to 16,220 ounces of gold (6,485 ounces attributable to La Mancha) produced in the first quarter of 2009 at a cash cost of US $568 per ounce. Gold output increased due to a significant increase in mill throughput and a slight increase in the gold recovery rate, which more than compensated for the decreased average processed gold grade.
It is important to note the ongoing improvement of the quartz mill circuit, with downtime prevention efforts continuing to produce results. During the first quarter of 2010, over 130,000 tonnes were milled through the quartz ore line, marking a new record.
The following table shows the progress in tonnage milled through the quartz ore line over the past 12 months:
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Three- Three- Three- Three-
month month month month
period period period period
ended ended ended ended
June 30, Sept. 30, Dec. 31, March 31,
Data provided for 100% of the mine 2009 2009 2009 2010
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Quartz ore milled (t) 101,104 101,518 117,182 134,817
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Apparent grade milled (g Au/t) 4.16 4.23 3.89 4.06
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Apparent gold content of ore milled
(oz) 13,533 13,807 14,637 17,613
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The construction of the dust vacuum system on the quartz processing circuit is well underway. The system, which is expected to be operational in the third quarter of 2010, should further increase production by helping to reduce downtime.
Cash costs per ounce increased over the corresponding period of 2009, mainly due to a lower average processed gold grade. A total of 62,940 tonnes (25,175 attributable to La Mancha) of low- grade ore averaging 2.5 g/t Au was processed during the quarter to fill excess capacity on the SBR mill circuit.
The Ity mine produced a total of 10,380 ounces of gold (4,766 ounces attributable to La Mancha) at an average cash cost of US $527 per ounce during the first quarter of 2010, compared to 12,885 ounces of gold the previous year (5,915 ounces attributable to La Mancha) at an average cash cost of US $388 per ounce. Despite the higher gold grades milled, production decreased due to the combination of a lower mill throughput and a lower gold recovery rate.
As expected, mill throughput during the quarter was limited due to the narrowing of the leach areas. The planned investments announced earlier this year to replace the old heap leaching area are currently underway, and processing capacity should increase significantly once the upgrade is complete. The cash cost per ounce for the quarter was negatively affected by a decrease in gold recovery rates caused by the high concentration of copper and fresh sulphide in the ore treated, as more cyanide spraying and longer cycles were needed, and to a lesser degree by an unfavourable change in currency exchange rates. Gold production is expected to improve in the second half of the year as mining moves away from the current mining area and the new leach area is put into operation.
VMS DEVELOPMENT PROJECT
Results of the upcoming Preliminary Economic Assessment ('PEA') for the VMS project are expected at the beginning of the third quarter. The main objective of this PEA is to provide a first look at the economic viability of a VMS project at the Hassai property on the basis of a series of assumptions that include operating and development costs, and to provide a recommendation for the future of the project.
CORPORATE EVENTS
La Mancha will present at the NYSSA (New York Society of Security Analysts) 10th Annual Metals & Mining Industry Conference (New York, USA) to be held on June 2 and 3, 2010. Management of La Mancha will present at 1:45 pm on Thursday, June 3, 2010.
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 and profitability, development and construction of mine and production targets and timetables; statements regarding the increase in production of Frog's Leg; statements regarding the future production level of the quartz line in Sudan and the positive impact that will have the upcoming dust vacuum system; statements regarding the Company's ability to deliver a scoping study on the VMS project during the third quarter of 2010; statements regarding the positive impact of Ity's new leaching pads on 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 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
First Quarter ended
(unaudited) March 31,
(All amounts are in CDN dollars unless otherwise
noted) 2010 2009
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RESULTS (consolidated, in thousands of $)
Revenues 27 840 24 660
Cash flow from operating activities 9 946 10 963
Net earnings (loss) 3 663 3 477
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PER SHARE ($)
Net earnings (loss) 0,026 0,024
Basic weighted average number of common shares
outstanding (in thousands) 142 184 142 035
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ATTRIBUTABLE GOLD PRODUCTION
Number of ounces produced 21 654 18 515
Cash costs (US$ per ounce) 614 451
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March 31,December 31,
2010 2009
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FINANCIAL POSITION (in thousands of $)
Cash and short-term investments 21 390 21 535
Total assets 162 876 167 704
Shareholders' equity 114 166 115 832
Total number of shares outstanding (in thousands) 142 184 142 035
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First Quarter ended
GOLD PRODUCTION STATISTICS March 31,
2010 2009
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Frog's Leg (51%)
Attributable production (ounces) 9 789 6 115
Tonnage milled (t) 55 664 38 595
Grade milled (g Au/t) 5,9 5,4
Recovery rate (%) 93% 92%
Cash costs (US$ per ounce) 570 386
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Hassai (40%)
Attributable Production (ounces) 7 099 6 485
Tonnage milled (t)(1) 224 600 163 807
Grade milled (g Au/t) 3,6 4,6
Recovery rate (%) 69% 67%
Cash costs (US$ per ounce) 734 568
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ITY (45.9%)
Attributable Production (ounces) 4 766 5 915
Tonnage milled (t)(1) 99 132 123 407
Grade milled (g Au/t) 4,7 3,8
recovery rate (%) 70% 86%
Cash costs (US$ per ounce) 527 388
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(1) On a 100% basis
Contacts:
La Mancha Resources Inc.
Martin Amyot
Vice President Corporate Development
514-987-5115
info@lamancha.ca
www.lamancha.ca
Nicole Blanchard
Investor Relations
514-961-0229