PARIS--(Marketwire - May 18, 2011) - La Mancha (TSX: LMA)
All amounts are expressed in CA dollars, unless otherwise indicated.
Unaudited
Q1 HIGHLIGHTS
-- Gold production up 50% to 32,426 oz at an average cash cost of
US $622 per oz
-- Record cash flow from operating activities of $26.5 million, up 167%
-- Revenues up 55% to $43.0 million
-- Net earnings up 105% to $7.5 million
-- Cash and short-term investments of $60.0 million
-- Release of a positive feasibility study for the CIL plant upgrade at
the Hassaï mine
The table below highlights La Mancha's exceptional first quarter performance.
Change:
Quarter ended March 31, 2011 vs 2010
2011 2010
Attributable production (in oz) 32,426 21,654 +50%
Operating income ($'000) 10,903 5,902 +85%
Net earnings ($'000) 7,504 3,663 +105%
Average cash cost (US $/oz) 622 614 +1%
Operating cash flow ($'000) 26,541 9,946 +167%
Dominique Delorme, President and CEO of La Mancha, stated that: "La Mancha's success in the first quarter is the direct result of our capability to fully benefit from current record gold prices, by not only increasing production but also maintaining a firm grip on production costs. By keeping cash costs stable (+1%), La Mancha increased profit margin by 52% to US $762 per ounce. The result is record cash flow generation of $26.5 million, more than 2.5 times what we generated during the same period last year.
La Mancha Resources Inc. (TSX: LMA) (FRANKFURT: LMA) (hereinafter "La Mancha" or the "Company") produced 32,426 ounces of gold at an average cash cost of US $622 per ounce during the first quarter of 2011, compared to 21,654 ounces of gold at an average cash cost of US $614 per ounce in the same quarter last year. The increase in production is due to strong performances at the Frog's Leg mine in Australia and the Hassaï mine in Sudan, which together more than compensated for lower production at the Ity mine in Côte d'Ivoire.
This stronger gold production, combined with the increase in gold prices, drove La Mancha's first quarter revenues up to $43.0 million, marking a 55% increase over the corresponding period of 2010.
For the first quarter of 2011, La Mancha's consolidated net earnings more than doubled to reach $7.5 million. This compares to net earnings of $3.7 million for the first quarter of 2010.
The Company generated a record $26.5 million in cash flow from operating activities during the first quarter of 2011, compared to $9.9 million during the corresponding quarter of 2010. The table below highlights the cash flow from operating activities and its resulting impact on the net cash increase for the period.
For the
quarter
ended
Amounts shown in $'000 For the quarter of 2010 ended March 31,
March 31 June 30 Sept. 30 Dec. 31 2011
Cash flow from
operating activities* 9,946 18,927 9,613 21,099 26,541
Less acquisitions of
equipment (3,275) (3,427) (2,865) (1,443) (1,322)
Less mine development /
capitalized
exploration costs (3,272) (3,997) (3,104) (5,077) (3,974)
Less loan repayments (1,693) (13,932) 0 0 0
Other adjustments** (476) 3,373 5,490 (6,240) (3,169)
Net increase in cash 1,230 944 9,134 8,339 18,076
*Cash flow from operations are presented under IFRS, with the except of
the quarters ended June 30th, September 30th and December 31st, 2010, which
are reported under Canadian GAAP. **Includes investment proceeds and
acquisitions, and capital lease repayments
Dominique Delorme, President and CEO of La Mancha, added that: "Now that La Mancha's first expansionary phase is complete and the associated development loans have been repaid, La Mancha's corporate structure and minimal sustaining capital requirements allows for a significant portion of cash flow from operating activities to translate directly into a net increase in cash on our balance sheet. Thus, our first quarter operating cash flow of $26.5 million added $18.0 million in cash to our already strong balance sheet. With our solid cash balance of $60.0 million and other sources of available funds, we are well positioned to finance our next expansion phase."
The Company had a strong cash and short-term investment position of $60.0 million as of March 31, 2011, and was debt-free. This compares to cash and short-term investments of $21.4 million and an outstanding long-term debt of $14.3 million as of March 31, 2010. In addition to its cash and short-term investments, La Mancha's sources of funds available as of March 31, 2011, also included $7.2 million of investments in Asset Backed Commercial Paper ("ABCP") and an AREVA debt facility available for its full amount of AU $22.0 million.
AUSTRALIAN OPERATIONS
The Frog's Leg mine generated 22,291 ounces of gold net to La Mancha at an average cash cost of US $558 per ounce (AU $556 per ounce) in the first quarter of 2011 compared to 9,789 ounces at an average cash cost of US $570 per ounce (AU $631 per ounce) in the corresponding period of 2010. The 128% increase in gold production over the corresponding quarter of 2010 was mainly due to higher toll-milling capacity and higher gold grades.
Due to the aforementioned high gold grades and increased operating efficiency, the cash cost per ounce in Australian dollars for Frog's Leg decreased by 12% from the corresponding period of 2010; however, due to unfavourable foreign exchange rate variations, the cash cost in US dollars per ounce decreased by only 2%.
The available toll processing capacity at the nearby Greenfields plant was filled by higher grade ore from the Frog's Leg mine. As such, only 1,531 tonnes of White Foil ore were processed during the quarter, yielding 80 ounces of gold at an average cash cost of US $1,157 per ounce. Mining activities at White Foil started in March, 2010, while its first gold pour occurred on April 16, 2010.
Due to White Foil's stockpile of 108,998 tonnes of ore grading 1.94 g/t available at the beginning of the quarter, no mining was necessary during the quarter. Available processing capacity during the second quarter is expected to considerably reduce the White Foil ore stockpile. La Mancha expects to tender a mining contract later in the year for the second bench of the pit, which represents approximately 310,000 tonnes of ore at an average grade of around 2.0 g/t Au.
AFRICAN OPERATIONS
Hassaï mine production increased to 19,592 ounces of gold (7,837 ounces attributable to La Mancha) at an average cash cost of US $799 per ounce during the first quarter of 2011, due to the continued optimization of the processing plant. This compares to 17,748 ounces of gold (7,099 ounces attributable to La Mancha) produced in the first quarter of 2010 at a cash cost of US $734 per ounce.
On May 16, 2011, La Mancha announced a positive Definitive Feasibility Study ("DFS") for the proposed upgrade of its present Hassaï heap leach plant to Carbon-In-Leach ("CIL") technology.
The table below highlights the positive impact of upgrading the current plant to CIL technology.
Positive impact of upgrading the current plant to CIL technology as per DFS
Current Operation CIL Upgrade
(as of December 31, (as of March. 31,
2010) 2011)
Processing Plant
Process type Heap leaching CIL
Capacity per year (Mtpa) 0.8 - 1.0 3.0
Non-tailings: 70%, Non-tailings: 90%,
Design metallurgical recovery Tailings: < 30% Tailings: 63%
Production
Gold reserves (oz) 327,000 1,088,000
Yearly production (oz)* 68,434 161,647
Mine life (years) Until 2014 2013-2018
Average cash cost (US
$/oz)** 731 571
* Current operation: Realized 2010 production shown; CIL: Excludes low
production projected in last year of operation;
** Current operation: Realized 2010 cash cost shown, CIL: Cash cost
excludes capitalized mining costs associated to acidic ore stockpiles
As shown in the table above, the CIL upgrade should provide two major advantages to the mine: A) the CIL plant should allow the processing of ore that cannot currently be economically processed with the existing plant, thereby extending the mine life until 2018, and B) the new plant's increased capacity (3.0 Mtpa vs. 0.8 Mtpa) should allow the mine's average gold production to increase by 136% to 161,647 ounces of gold per year. Commissioning of the CIL plant is planned for early 2013.
Despite only being operational between mid-January and February 24, 2011, due to the temporary shutdown caused by Côte d'Ivoire's political situation, the Ity mine produced a total of 4,830 ounces of gold (2,218 ounces attributable to La Mancha) at an average cash cost of US $617 per ounce during the first quarter of 2011, which represents roughly half of the 10,380 ounces of gold (4,766 ounces attributable to La Mancha) produced in the corresponding quarter of 2010, at an average cash cost of US $527 per ounce.
In light of the recently improved political situation in Côte d'Ivoire, operating activities at the Ity mine successfully resumed on May 9, 2011. Management expects the downtime experienced at the beginning of the year to be offset by Ity's upgraded processing facility and its resulting improved production capacity. As seen early this year, the upgraded processing facility has increased its run-rate to roughly 4,350 ounces of gold per month (2,000 ounces attributable to La Mancha). This year's production should therefore be in line with last's year production, as management is now expecting the mine to produce 32,700 to 37,000 ounces of gold in 2011 (15,000 to 17,000 ounces attributable to La Mancha).
VMS PROJECT
La Mancha's VMS project involves development of the volcanogenic massive sulphide (VMS) deposits underlying the mined-out pits of the Hassaï mine in Sudan. To date, the VMS resource delineated on the Hassaï property includes an Inferred resource of 51.4MT (20.6MT attributable to La Mancha) at 1.31 g/t Au and 1.23% Cu. This Inferred resource has been delineated in the VMS lenses found under the Hassaï South and Hadal Awatib pits. The Hassaï property is a mining complex consisting of 18 mined pits, of which six have visually-identified VMS potential. Following the publication of a positive PEA on September 7, 2010, a 12-month, 100,000-metre drilling program was launched with the intent of upgrading the Inferred resource to the Measured and Indicated category, increasing the current resource at the first two targets, and testing the potential of the VMS structure identified at the third target. As of April 30, 2011, the campaign remained on schedule, with a total of 41,715 metres drilled. A total of seven drill rigs are currently in operation, with three rigs each at Hassaï and Hadal Awatib carrying out development and infill drilling and the seventh having started target delineation drilling at Hadayamet.
Consolidated Financial Statements
The management discussion and analysis and unaudited consolidated financial statements with explanatory notes for the quarter ended March 31, 2011, are available in PDF format through SEDAR at www.sedar.com.
CORPORATE DEVELOPMENT
La Mancha is pleased to announce the appointment Mr. Martin Amyot as Senior Vice President, effective May 18th, 2011.
ANNUAL GENERAL MEETING
The Annual General Meeting of La Mancha will be held in Montreal on May 18 at 11:00 am at the Club St-James.
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 production and profitability, production targets and timetables; statements regarding the Frog's Leg mine's ore mill schedule and grades; statements regarding White Foil's production and the possibility to treat its stockpiled ore at the Greenfields treatment plant; statements regarding the resumption on White Foil toll-mining in the second quarter of 2011; statements regarding the positive impact of Ity's new leaching pads on production; statements regarding the upgrade to CIL at Hassaï, its associated timetable and production schedules; statements regarding the outcome of the exploration program at Hassaï. 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 2010 Annual Information Form filed with the Securities Commissions, as well as the Toronto Stock Exchange.
(see table in attachment)
http://hugin.info/145163/R/1516808/453159.pdf
For additional information, please contact: La Mancha Resources Inc. Martin Amyot Vice President Corporate Development Tel: (514) 987-5115 ext 25 Email: Email Contact Nicole Blanchard Investor Relations (514) 961-0229
