Production Commences At Frog's Leg Mine

 

MONTREAL - La Mancha Resources Inc. produced 18,515 ounces of gold at an average cash cost of US $451 per ounce during the first quarter of 2009 compared to 16,260 ounces of gold at an average cash cost of US $534 per ounce in the same quarter last year. The increase in production is due to the start of production at the Australian Frog's Leg mine and an improved performance at the Ity mine in Africa, which together more than compensated for lower production from the Hassai mine and the gold recovered from the broken ore inventory at the White Foil pit in the first quarter of 2008.

Consolidated cash costs per ounce for the first quarter of 2009 were down 16% from the corresponding quarter of 2008 to US $451 per ounce. This decrease reflects the improved cash costs per ounce at the Ity mine and the commercial production from the Frog's Leg mine, which more than compensated for the slightly higher Hassai mine cash cost per ounce.

La Mancha's first quarter revenues totalled $24.7 million, due mainly to its stronger production and favourable changes in exchange rates. The Company's key financial indicators have strongly improved over the past twelve months. This first quarter of 2009 marks a milestone for La Mancha, with the Australian operation starting to contribute to the Company's operating cash flow capacity as the mine turned cash flow positive and profitable in the first quarter of 2009.

Michel Cuilhe, President and CEO of La Mancha, stated: "We are glad to report that all the pieces of the puzzle are finally falling into place for La Mancha. The combination of the improved performance from our African mines and the successful ramp-up of Frog's Leg, our new Australian mine, have allowed us to significantly increase our operating margin as our cash costs decreased. Consolidated cash costs of US $451 per ounce for the first quarter are 12% lower than the 2008 cash cost per ounce and 9% lower than the US $497 cash cost per ounce forecast for 2009. Moreover, it is important to note that we are on track to achieve our 2009 production target of 85,000 to 100,000 ounces, as our three producing mines achieved their first quarter targets. La Mancha is therefore well positioned to fast-track to the next level."

Given the $5.4 million improvement in its mine operating margin over last year, La Mancha recorded net earnings of $3.5 million during the first quarter of 2009, as each mine posted positive results. This compares to net loss of $2.4 million a year earlier. This performance was achieved despite a $0.5 million charge associated with the write-down of its commercial paper holdings, which was considered a "non-cash" item charge by nature.

The company’s address is 2001, rue University, bureau 400, Montreal, Quebec H3A 2A6, 514-987-5115, fax: 514-987-5119.