La Mancha Completes the Renewal of the Ity Mine's Mining Permit
Mining permit of the Ity mine is re-conducted until November 2013
La Mancha's ownership in Ity is reduced from 51% to 45.9%
La Mancha remains operator of the mine.
MONTREAL, QUEBEC -- May 28, 2007 - La Mancha Resources Inc. (TSX: LMA) (hereinafter "La Mancha" or the "Company") reports that an agreement was reached last Friday between the Company, SODEMI, its current co-owner of the Ity mine, and the Ivorian authorities regarding the terms and conditions of the Ity mine's permit renewal.
According to this agreement, the mining permit of the Ity mine will be re-conducted until November 2013 with the following changes for La Mancha:
In accordance with the Ivorian mining law of 1995 that governs the grant of mining permits, the co-owners of the Ity mine have agreed to transfer to the government 10% of their respective interest in the mine as of Friday. Consequently, La Mancha's ownership in the Ity mine is now reduced to 45.9%, SODEMI's ownership is reduced to 44.1% while the Ivorian government, gains a 10% ownership in the mine.
Following the reduction of La Mancha's participation in the mine, the Company's influential status will change from controlling company to joint control of the Ity mine with its partners. Therefore, the Ity mine financial results will be presented following a proportionate consolidation method starting at the signing date of the shareholder's agreement, in accordance with the Canadian GAAP. The previously released financial information should not be affected by this change in ownership.
La Mancha's attributable gold production target for the Ity mine in 2007 has been revised from 21,400 ounces to 19,800 ounces of gold and consequently, La Mancha's total attributable production target for 2007 is revised to 75,300 ounces of gold.
In order to minimize the impacts of this ownership re-organization on the performance of the mine, the three co-owners of the mine have entered into a management agreement detailing their respective roles and obligations. The key provisions of this management agreement are as follows:
For the first year, the General Manager of the mine will be appointed by the co-owners upon a proposal of La Mancha. After that period, the General Manager will be appointed upon a proposal of the Ivorian parties while the appointment of the Deputy General Manager will be based on La Mancha's proposal.
The main decisions will be taken by the Board of the mine by a qualified majority involving at least one representative of each side (La Mancha and Ivorian representative).
La Mancha will also appoint the Technical Director as well as the Controller.
Mr Michel Cuilhe, President and CEO of La Mancha noted: "This renewed long term stability at the Ity mine allows La Mancha to envisage new ways of unlocking the value of this high potential asset. We are looking forward to work with our two partners at increasing reserves and resources and at improving the performance of the mine."
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 in Argentina.The ITY mine, located in Cote d'Ivoire, was inaugurated in 1991 and has produced more than 650,000 ounces of gold to date. La Mancha's shares trade on the Toronto (TSX) under the symbol "LMA". For more information on the company, you may visit the web at 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, the terms and conditions of its Ivorian mining permit, it's future ownership in the Ity mine, it's ability to influence the management of the Ity mine, more importantly the appointment of its key managers, the future stability of La Mancha's Ivorian operations and the plans to pursue their development; the impact of the change in ownership on the Company's previous financial statements. 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 2006 Annual Information Form filed with the Securities Commissions, as well as the Toronto Stock Exchange.
La Mancha Resources Inc.
Vice President Corporate Development
RENMARK FINANCIAL COMMUNICATIONS INC.
JOHN BOIDMAN : JBOIDMAN@RENMARKFINANCIAL.COM
CHRISTOPHER WELLS : CWELLS@RENMARKFINANCIAL.COM
TEL. : (514) 939-3989
FAX : (514) 939-3717