LA MANCHA MEETS ITS 2011 GOLD PRODUCTION FORECAST

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Highlights

  • Gold production of 121,446 ounces in 2011
  • Gold production target of up to 130,000 ounces for 2012
  • Average 2012 cash costs expected to be US $659 per ounce of gold
  • Production at Ity mine expected to increase significantly due to start of third milling and mining shift
January 19, 2012  - 

La Mancha Resources Inc. (TSX: LMA, hereinafter “La Mancha” or the “Company”) is pleased to announce that, in line with its production guidance, consolidated gold production for 2011 totalled 121,446 ounces compared to 122,571 ounces produced in 2010. Consolidated gold production remained stable as higher production at the Hassaï mine compensated for lower output at the White Foil and Ity mines, while production at the Frog's Leg mine remained essentially stable. 


Dominique Delorme, President and CEO of La Mancha, stated: “With attributable production of over 120,000 ounces of gold and total gold production under management of well above 250,000 ounces for a second year in row, La Mancha is once again solidifying its reputation as an operator that delivers in line with guidance, regardless of industry challenges. Solid performances by Frog's Leg and Hassaï throughout the year and Ity's strong comeback in the second half of the year allowed La Mancha to keep year-over-year production stable despite almost three months of lost production in Côte d'Ivoire. This consistent production level, diversified among four mines, provides a strong foundation on which to build shareholder value. The two-stage development of our VMS project at the Hassaï mine should allow La Mancha to increase annual production to 200,000 oz and then 350,000 oz by 2015.”


In 2012, La Mancha's consolidated production is expected to be in the range of 110,000 to 130,000 attributable ounces at an estimated average cash cost of US $659/oz (1).


The breakdown of La Mancha's attributable production is as follows:

Table 1

Attributable Production
(in oz)

2010 A
2011 A
2012 E
 Australian mines



  Frog's Leg (51%-owned)
66,444
66,505
60,000 - 65,000
  White Foil (100%-owned)
11,713
9,388
0 - 10,000(2)
African mines



  Hassaï (40%-owned)
27,374
28,692
22,100 - 24,000
  Ity (45.9%-owned)
17,040
16,860
27,900 - 31,000
Total
122,571
121,446
110,000 - 130,000


AUSTRALIAN OPERATIONS

In line with expectations, the Frog's Leg mine generated 66,505 ounces of gold net to La Mancha in 2011 compared to 66,444 ounces in 2010. The Frog's Leg mine plan was refined following the introduction of cemented backfill in 2010, resulting in less dilution. As a result, tonnage mined was lower in 2011, but grades were higher, thereby compensating for a lower toll-mill throughput. Overall, 50 individual stopes were mined during 2011, down to a depth of 375 metres below surface.


In 2012, the Company expects its share of Frog's Leg mine production to be in the range of 60,000 to 65,000 ounces of gold at an estimated cash cost of US $700 per ounce.


In the fourth quarter of 2011, the Frog's Leg mine generated 15,224 ounces of gold net to La Mancha, compared to 18,079 ounces in the same quarter of 2010. This variation is mainly due to the cyclical effect of toll-processing campaigns. At year-end 2011, La Mancha had a stockpile of 29,036 tonnes grading 5.3 g/t Au, representing 4,961 ounces of contained gold.


In 2011, La Mancha continued to top off its excess mill capacity at the nearby Greenfields plant with stockpiled White Foil ore. The mine's performance was, however, affected by the limited toll milling capacity in the Kalgoorlie area. As such, 99,334 tonnes were processed during the year compared to 191,330 tonnes in the 2010. However, due to a significant increase in gold grades (up to 3.2 g/t in 2011 from 2.1 g/t in 2010), White Foil produced 9,388 ounces in 2011 compared to 11,713 ounces in the 2010.


As 2012 processing capacity is yet to be confirmed for White Foil, La Mancha is presently unable to confirm any 2012 production for White Foil. However, the Company is examining milling options that could eventually allow the mine to generate up to 10,000 ounces of production in 2012. No cash costs estimates are provided for White Foil in 2012 as no milling agreement is confirmed to date. White Foil's cash costs for the first 9 months of 2011 amounted to US$821 per ounce. La Mancha expects to tender a mining contract for the second bench of the pit, representing approximately 310,000 tonnes of ore at an average grade of 2.0 g/t Au, as soon as processing capacity is confirmed.


White Foil production was nil in the fourth quarter of 2011 as the Frog's Leg ore was given priority at the Greenfields plant. This compares to 2,525 ounces of gold produced during the corresponding period of 2010.


AFRICAN OPERATIONS

The Hassaï mine exceeded expectations in 2011, producing a total of 71,731 ounces of gold (28,692 ounces attributable to La Mancha) compared to 68,434 ounces in 2010 (27,374 ounces attributable to La Mancha). The higher gold output was mainly due to a higher gold recovery rate and to a lesser degree to higher processed gold grades, which more than compensated for a lower mill throughput.


No major change in production is expected at the Hassaï mine until the current heap leach plant is upgraded to Carbon-In-Leach (“CIL”) technology. Consequently, Hassaï production is expected to be in the range of 55,250 to 60,000 ounces of gold (22,100 to 24,000 ounces attributable to La Mancha) in 2012 at an estimated cash cost of US $724 per ounce. As published in the 2011 Feasibility Study, the CIL plant is expected to produce on average 161,647 oz of gold per year once commissioned.  


In the fourth quarter of 2011, production at the Hassaï mine was 14,168 ounces of gold (5,667 ounces attributable to La Mancha) compared to 15,148 ounces of gold (6,059 ounces attributable to La Mancha) in the corresponding quarter of 2010.


The Ity mine produced a total of 36,733 ounces of gold in 2011 (16,860 ounces attributable to La Mancha). Despite a 10-week shutdown due to political tensions in Côte d'Ivoire in early 2011, the year's production compares favourably to the 37,125 ounces of gold (17,040 ounces attributable to La Mancha) produced in 2010, as a result of improvements made to the plant in 2010 and the addition of a third milling shift in the fourth quarter.


The above-mentioned optimizations, along with a major overhaul of the crusher that is scheduled to be completed in the first quarter of 2012, should generate a 50% increase in Ity's milling capacity, from 400,000 tonnes per annum to 600,000 tonnes per annum by March 2012. Ity production is therefore expected to be in the range of 60,784 to 67,538 ounces of gold (27,900 to 31,000 ounces attributable to La Mancha) in 2012 at an estimated cash cost of US $521 per ounce.


In the fourth quarter of 2011, production at the Ity mine was 13,436 ounces of gold (6,167 ounces attributable to La Mancha) compared to 8,892 ounces of gold (4,081 ounces attributable to La Mancha) in the corresponding quarter of 2010.


CORPORATE EVENTS

Investor Relations Calendar

La Mancha will be attending the Africa Mining Congress in Livingstone, Zambia from February 1st to 4th and Mining Indaba in Capetown, South Africa from February 5 to 7.  Management of La Mancha is available to meet with investors at both events.  The company will also be presenting at the BMO Capital Markets 2012 Global Metals & Mining Conference, held from February 26 to 29 in Hollywood, Florida.


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 Stock Exchange (TSX) under the symbol "LMA". For more information, visit the Company's 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 its related production and cash costs targets, its ability to increase its resources and its associated timetable, statements regarding development plans for the Company's VMS project along with statements regarding the project's economic viability, profitability, its ability to reach commercial production, associated development schedule, and its impact on the Company's global production; statements regarding the Company's ability to toll-treat the mined ore at the Greenfields plant along with the Company's ability to upgrade its current toll-milling agreement and find other milling options for White Foil ore; statements regarding ability to increase future production at Ity based on the positive impact of the new leaching pads and the third milling shift; statements regarding the Company's ability to operate the Ity mine at normal capacity. 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 upcoming development with respect to Côte d'Ivoire's political future and stability, 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.


(1) La Mancha's 2012 average cash costs per ounce do not include White Foil as no milling agreement has been signed to date.

(2) White Foil's production in 2012 remains subject to the conclusion of an acceptable toll milling agreement.


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