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All amounts are expressed in CA dollars, unless otherwise indicated.
Unaudited

LA MANCHA POSTS ITS HIGHEST
QUARTERLY GOLD PRODUCTION TO DATE

HIGHLIGHTS

  • Total production of 18,915 ounces of gold (up 47%)
  • Revenues of $13.1 million
  • Net loss of $2.6 million
  • Cash position of $10.6 million
  • 6,275 ounces of gold (La Mancha�s share) from the first two months of production at Frog�s Leg 
  • AU $15 million long-term debt financing agreement with Areva

Montreal, QC - August 8, 2008 - La Mancha Resources Inc. (TSX: LMA, hereinafter �La Mancha� or the �Company�) is pleased to report that its second quarter production reached 18,915 ounces of gold compared to the 12,855 ounces of gold produced in the same quarter last year. This increase in production is due to the early start of production at the Frog�s Leg mine and an improved performance at the Ity mine, which together compensated for lower production from the Hassa� mine and La Mancha�s reduced interest in the Ity mine. La Mancha�s interest in the Ity mine was reduced by 5.1% to 45.9% in May 2007 following the mine�s permit renewal. The average cash costs per ounce for the quarter amounts to US$612 per ounce compared to US$508 per ounce for the corresponding quarter of 2007. It is important to note however that Frog�s Leg production and costs are not taken into account in the calculation of the average cash costs for the quarter since the mine is still in its start-up phase.

�Along with the strong results generated by all our exploration programs and the resource increases at our White Foil project and Frog�s Leg mine since the beginning of the year, this year-over-year 47% increase in second-quarter gold production is yet another tangible demonstration that La Mancha is well engaged in the growth process. Moreover, this record quarterly production puts us 7.5% ahead of our production target for the first half of 2008,� said Michel Cuilh�, President and CEO of La Mancha.

Despite stronger production and higher gold prices, La Mancha�s second quarter revenues decreased slightly to $13.1 million from $13.3 million in the corresponding period of 2007. There are two reasons for this: A) cash inflows generated by the sale of Frog�s Leg production were applied against the capital cost of the mine rather than being considered as revenues, since the mine has not yet achieved �commercial production� status, and B) the reduction of La Mancha�s interest in the Ity mine, effective May 25, 2007, forces the Company to cease consolidating 100% of Ity�s results and begin consolidating them by the proportional method as of that date.

La Mancha recorded a net loss of $2.6 million during the second quarter of 2008, compared to net loss of $2.8 million a year earlier. Operating activities generated negative cash flow of ($1.8) million during the second quarter of 2008, compared to $1.2 million in the corresponding quarter of 2007. At June 30, 2008, La Mancha had cash and short-term investments of $10.6 million.

In June 2008, La Mancha signed a long-term debt financing agreement with Areva, its main shareholder. The AU $15 million revolving facility, of which AU $7.3 million were drawn as of June 30, 2008, will be used mainly to finance the balance of La Mancha�s share of the Frog�s Leg development. The facility is set to expire on December 31, 2011.

OPERATIONS    
The Frog�s Leg mine celebrated its first gold pour on May 13, 2008, two months ahead of schedule. The mine produced a total of 12,300 ounces of gold (6,275 ounces attributable to La Mancha). A total of 145,000 tonnes of ore at an average grade of 2.8 g Au/t were processed at during the quarter. Of that ore, 54,000 tonnes consisted of lower-grade surface ore mined from the bottom of the pit, while the remaining 91,000 tonnes were mined underground at an average grade of 3.67 g Au/t. The low grade surface ore was processed at the nearby Greenfield mill while the underground ore was processed at Jubilee.

Mining rates and grades are expected to increase over the next months as the mobile fleet grows and mine development progresses towards higher-grade sections of the deposit. The mine�s performance for June already showed some of this improvement, with 30,000 tonnes of ore mined at an average grade of 4.53 g Au/t.

As of June 30, 2008, most of the $35 million planned for the Frog�s Leg development had been spent. Management expects $two million to be required in additional investments before the end of the year to achieve �commercial production�, mainly for underground development and the second purchasing phase of mobile fleet equipment.

The Hassa� mine produced a total of 18,650 ounces of gold (7,460 ounces attributable to La Mancha) at an average cash cost of US $705 per ounce for the quarter ended June 30, 2008. This compares to 21,575 ounces of gold (8,630 ounces attributable to La Mancha) produced in the second quarter of 2007 at a cash cost of US $516. This counter performance, both in terms of ounces produced and cash costs per ounce, is essentially due to the breakage of the cone crusher of the quartz line (burnt motor).

The mining and milling plan calls for an increased volume of quartz ore to be treated as the grades of the SBR reserves decrease. Unfortunately, the quartz line experienced above-normal downtime during the quarter, forcing the plant to rely on a higher proportion of SBR ore than anticipated. This resulted in lower grades than anticipated and therefore higher cash costs. Of the 168,250 tonnes milled during the quarter, 104,540 tonnes were SBR (67% above the SBR target) at an average grade of 2.75 g Au/t, and 63,720 tonnes were quartz (47% of target) at an average grade of 5.0 g Au/t.

Although the quartz line, inaugurated during the summer of 2007, has proven its ability to perform in accordance to its design capacity of 2,000 tonnes per day, equipment reliability remains a serious issue. One of its main components, the cone crusher, has already been replaced three times over the last twelve months, thus shutting down the line 30 days out of 91 over the last quarter.

In order to quickly address these operational problems, La Mancha has retained the services of international engineering consultants and trainers to design a preventive maintenance program and provide the appropriate training to the workforce. The solutions selected and currently being implemented should allow the quartz line to increase its capacity to the point where it should represent 70% of tonnage processed at the plant by the end of the third quarter.

The Ity mine increased its total production by more than 30% to 11,285 ounces of gold (5,180 ounces attributable to La Mancha) during the second quarter of 2008, compared to 8,610 ounces (4,225 ounces attributable to La Mancha) the previous year. This significant increase in production is the result of the higher grades that are now being mined from the new Mount Ity pit and the increase in tonnage milled made possible by the recent adjustments made to the regulation system of the mill.

This increased level of production also benefited cash costs, which declined to US $477 per ounce during the second quarter of 2008 from US $493 per ounce in the corresponding quarter of 2007. As shown in Table 1, this represents the third consecutive quarterly decline in Ity cash costs. It should be noted that this improvement in cash costs per ounce was achieved despite the strengthening of the Euro, to which the Ivorian currency, the FCFA, is pegged.

Table 1.
Ity mine multi-currency cash costs evolution

 

2007

2008

% change

Q1

Q2

 

Cash Cost per ounce in US$

 

491

493

477

-2.2%

 

Cash Cost per ounce in Euro

 

358

329

306

-14.5%

On the exploration front, the drilling taking place on the mine site continued to return significant intercepts during the second quarter. The results of the 42 new holes completed on the Zia extension, Ity�s third exploration target since the program began, were made public on May 31, 2008. All the holes drilled returned positive results, and several high-grade zones were intersected, the best result being 31.00 m at 2.82 g/t Au from 9.00 m, including 3.00 m at 7.98 g/t Au from 28.00 m. Once again, the shallow depth of the high-grade intersections suggests that Ity�s upcoming resource update, expected to be released before the end of August, should benefit from these results. Moreover, many of the drill holes intersected anomalous zones from surface on down in lateritic material, which is very easy to mine and process.

DEVELOPMENT PROJECT
The White Foil advanced project saw its measured and indicated resource grow by 33% to 531,000 ounces of gold during the second quarter. This significant resource increase was the result of the drilling campaign that took place from June 2007 to March 2008 with the aim of updating the mine plan in light of current market conditions. This resource development update at White Foil and the recent start of production at the neighboring Frog�s Leg mine have triggered the preparation of a scoping study regarding the construction of a mill on the White Foil property. The construction of a mill on the White Foil property would considerably lower the milling costs of both projects, in addition to provide the perfect platform to develop a pre-eminent mining complex at La Mancha�s Kalgoorlie properties. Management expects this scoping study to be completed by the end of December 2008.

CORPORATE DEVELOPMENT
Investor Relations Calendar
September 7-10: Denver Gold Forum

Consolidated Financial Statements
The management discussion and analysis and unaudited consolidated financial statements with explanatory notes for the quarter ended June 30, 2008, are available in PDF format on La Mancha�s website at www.lamancha.ca and through SEDAR at www.sedar.com.

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/.

THIS PRESS RELEASE CONTAINS FINANCIAL TABLES.  CLICK HERE TO VIEW ORIGINAL PDF VERSION.

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 scoping study and La Mancha�s ability to deliver such scoping study before the end of the year; statements regarding the impact of the recent Ity drill results to positively influence the mine�s resources and reserves; statement regarding the accuracy of our resources; statements regarding the Company�s ability to improve the capacity of its Quartz line and to lower its cash costs; statements regarding the re-commencement of White Foil production and the potential to develop a mining district in the Kalgoorlie are a. 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.

For additional information, please contact:

La Mancha Resources Inc.

Martin Amyot,
Vice President Corporate Development
Tel: (514) 987-5115
E-mail: info@lamancha.ca

Renmark Financial Communications Inc.
John Boidman : jboidman@renmarkfinancial.com
Christopher Wells : cwells@renmarkfinancial.com
Tel. : (514) 939-3989
Fax : (514) 939-3717
www.renmarkfinancial.com

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CODE : LMA.TO
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