La Mancha Resources

Published : July 20th, 2009

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

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

MONTREAL, QUEBEC -- 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

(Attributable to La Mancha)

December 2007 Feasibility Study

July 2009

New mining design*

Production:

 

 

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*

 

US $552/oz

(*) 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

(as at 1 April 2009)

Resources are inclusive of reserves

Tonnes

Grade
(g/t Au)

Ounces

Total

Attributable to La Mancha

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

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

Conversion of Resources to Reserves

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%



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

Year

Tonnes

Grade

(g/t Au)

Ounces of production

Total

Attributable to
La Mancha

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

Total

5,035,051

5.0

808,907

412,543


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 productio n 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

 

2007

2008

2009

Jan-Mar

TOTAL

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

Gold mined (oz)

2,763

39,605

19,403

61,771


 
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 unce rtainties, 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.

 

CONTACT INFORMATION:

La Mancha

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

Renmark Financial Communications Inc.
John Boidman: jboidman@renmarkfinancial.com
Maurice Dagenais: mdagenais@renmarkfinancial.com
Media - Fran�ois Tr�panier: ftrepanier@renmarkfinancial.com or
Vanessa Napoli: vnapoli@renmarkfinancial.com
Tel.: 514 939-3989 or 416 644-2020
www.renmarkfinancial.com

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La Mancha Resources

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CODE : LMA.TO
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La Mancha Res. is a gold producing company based in Canada.

La Mancha Res. holds various exploration projects in Argentina and in Australia.

Its main assets in production are WHITE FOIL, ITY, HASSAÏ and FROG'S LAKE in Australia, its main asset in development is FETEKRO in Australia and its main exploration properties are LA ORTIGUITA, BONDOUKOU, HUALILAN and ARIAB in Argentina and HASSAI VMS and PARK DAM in Australia.

La Mancha Res. is listed in Canada and in United States of America. Its market capitalisation is CA$ 499.5 millions as of today (US$ 500.2 millions, € 391.6 millions).

Its stock quote reached its lowest recent point on October 31, 2008 at CA$ 0.04, and its highest recent level on March 09, 2012 at CA$ 4.03.

La Mancha Res. has 142 716 000 shares outstanding.

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Annual Report
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4/2/2012ANNOUNCES CHANGES TO ITS BOARD OF DIRECTORS
5/4/2011Appoints New COO and CFO
2/26/2007New Appointments to the Board of La Mancha
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1/19/2012MEETS ITS 2011 GOLD PRODUCTION FORECAST
5/16/2011(Ity)POSITIVE FEASIBILITY STUDY FOR THE HASSA=C3=8F MINE: LA MANC...
5/9/2011(Ity)ITY MINE RESUMES OPERATION
3/29/2011(Frog's Lake)A Record Year for La Mancha in 2010 as Production Increases ...
2/24/2011(Ity)ITY Mine Update
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8/3/2010First Stages of Frog's Leg Drilling Extension Program Return...
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5/26/2009(Hassaï)Confirms the Presence of a Second Enriched Zone at the Hassa...
2/17/2009(Frog's Lake)Plans to Increase Production to up to 100,000 oz of Gold in ...
1/22/2009(Frog's Lake)2008 Year End Production Increases 33% to 71,550 Ounces
1/7/2009(Hassaï)Hassai Mine Tailings Begin Adding to La Mancha's Gold Resour...
1/5/2009(Ity)Resource at La Mancha's Ity Mine Jumps 50% on Excellent Dril...
12/10/2008(Hassaï)Recent VMS Drilling Suggests the Presence of a Supergene Zon...
7/30/2008(Hassaï)Preliminary Drill Results at La Mancha's Hassai Mine Suggest...
8/8/2008(Frog's Lake)Posts its Highest Quarterly Gold Production to Date
5/13/2008(Frog's Lake)Obtains a First Gold Pour From New Australian Frog's Leg Min...
4/23/2008(Frog's Lake)Reports Wide High-Grade Intercepts 150 Meters Below Current ...
7/5/2007(Frog's Lake)Frog?s Leg?s Resource Nearly Doubles
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8/28/2012ACKNOWLEDGES WEATHER II TAKEOVER OFFER SUCCESSFUL AND DECLAR...
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7/20/2012Offer Document Posted - La Mancha TSX:LMA
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6/11/2012(Ity)New Drill Results at La Mancha's Ity Mine Indicate That Mine...
5/15/2012REPORTS Q1 NET EARNINGS OF $7.9 MILLION
4/9/2012ANNOUNCES CHANGES TO ITS BOARD OF DIRECTORS
3/22/2012Proven and Probable Reserves Grow by 36% at La Mancha's Frog...
3/14/2012ANNOUNCES AUCTION PROCESS
2/22/2012VMS Resource Increases to 81MT Indicated and 37MT Inferred
1/31/2012Discovers a Mineralized Structure Extending Over 800M at Sis...
9/12/2011HASSA=C3=8F VMS DRILLING UPDATE: INTERSECTS 3.30M @ 94 g/t G...
7/11/2011HIGHLIGHTS IMPORTANT STEP FORWARD FOR SUDAN
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6/17/2011(Ity)Clarification on CIL Feasibility Study
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1/14/2011RECORD GOLD PRODUCTION IN 2010
7/22/2010Confirms the Discovery of a New Gold Mineralised Zone at its...
5/12/2010Continues to Generate Profits Into 2010
11/11/2009Reports Another Strong Quarter
8/7/2009Posts Record Quarterly Net Earnings As Gold Production Rises...
2/4/2009Takes Advantage of Strong Gold Prices
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5/28/2007Completes the Renewal of the Ity Mine's Mining Permit
5/16/2007Frog's Leg Results Exceed Expectations
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