La Mancha Reports Q1 Net Earnings of $7.9 Million
PARIS -- (Marketwire) -- 05/15/12 -- La Mancha Resources Inc. (TSX: LMA) (FRANKFURT: LMA)
All amounts are expressed in CA dollars, unless otherwise indicated.
Unaudited
Q1 HIGHLIGHTS
- Cash and short-term investments up $55.5 million year-over-year to $115.5 million
- Gold production of 25,301 oz at an average cash cost of US $808 per oz
- Net earnings of $7.9 million compared to $7.5 million in 2011
- Revenues of $45.5 million compared to $43.0 million in 2011
- Cash flow from operating activities of $14.1 million compared to $26.5 million in 2011
- The process, announced on March 14, 2012, is following its course
Dominique Delorme, President and CEO of La Mancha, noted that: "We mined over 39,000 attributable ounces on a consolidated basis, which is nearly 25% better than in the strongest quarter of 2011. This excellent performance is, however, not yet reflected in our first quarter consolidated gold production of 25,301 attributable ounces and related financial results. With strong ore stockpiles accumulated by quarter-end, we remain in line with our consolidated production guidance and look forward to a very strong second quarter."
La Mancha Resources Inc. (TSX: LMA) (FRANKFURT: LMA) (hereinafter "La Mancha" or the "Company") is pleased to report its operating and financial results for the quarter ended March 31, 2012. La Mancha's consolidated production totalled 25,301 ounces of gold for the first quarter of 2012, compared to 32,426 ounces for the corresponding quarter of 2011. While the Company's African gold production rose by 17% from last year, consolidated production for the quarter was affected by anticipated lower Australian output arising from quarterly fluctuations in toll-milling production.
While the average cash costs for its African operations decreased by 1%, consolidated cash costs were affected by higher Australian cash costs. As a result, first quarter consolidated cash costs averaged US $808 per ounce of gold in 2012 compared to US $622 a year earlier.
La Mancha's first quarter revenues totalled $45.5 million, up 6% from last year as the Company continued to benefit from higher gold prices. The fluctuation of its Australian gold production also had an impact on La Mancha's cash flow from operating activities, which were down $12.4 million from the corresponding period of 2011, at $14.1 million.
The Company continued to build its cash and short-term investment position during the quarter, which reached $115.5 million as of March 31, 2012, $55.5 million higher than at March 31, 2011. In early 2012, La Mancha sold financial notes (Master Asset Vehicle II) for $7.3 million to further strengthen its cash position, realizing a gain of $0.5 million over book value. Trade receivables at March 31, 2012, were up $4.3 million from December 31, 2011, mainly due to a $3.7-million gold sale occurring at the very end of the quarter. Since the payment of this gold sale was received after quarter-end, the Company's cash and short-term investment position is expected to be favourably impacted for the second quarter. The Company remains debt-free.
Consolidated net earnings totalled $7.9 million for the first quarter compared to $7.5 million for the same quarter of 2011.
AUSTRALIAN OPERATIONS
The Frog's Leg mine generated 13,491 ounces of gold net to La Mancha at an average cash cost of US $848 per ounce in the first quarter of 2012, compared to 22,291 ounces of gold net to La Mancha at an average cash cost of US $558 per ounce in the corresponding period of 2011. The lower gold production was mainly due to lower gold grades, while cash costs were also affected by higher processing costs.
Due to the irregular nature of toll milling, La Mancha grew its ore stockpile to 25,360 tonnes containing 4,574 ounces of gold. Stockpiles are expected to be drawn down in the second quarter of 2012 in light of scheduled higher toll milling, which should have a positive impact on second quarter production. Management is therefore reiterating its annual production guidance for the Frog's Leg's mine.
While La Mancha continued to study milling options for the White Foil ore, an acceptable agreement has yet to be reached. Consequently, no White Foil ore was processed in the first quarter of 2012. In the first quarter of 2011, 1,531 tonnes of White Foil ore had been processed, which had yielded 80 ounces of gold at an average cash cost of US $1,157 per ounce.
AFRICAN OPERATIONS
Hassaï mine production totalled 15,798 ounces (6,319 ounces attributable to La Mancha) at an average cash cost of US $694 per ounce for the first quarter of 2012. This compares to 19,592 ounces of gold (7,837 ounces attributable to La Mancha) produced in the first quarter of 2011 at a cash cost of US $799 per ounce. Gold output decreased mainly due to lower gold grades and, to a lesser degree, a smaller mill throughput.
Despite a higher gold royalty expense arising from higher realized gold prices, cash costs fell 13% from the corresponding quarter of 2011, mainly due to a decreased stripping ratio.
Ity mine production totalled 11,963 ounces (5,491 ounces attributable to La Mancha) at an average cash cost of US $840 per ounce for the first quarter of 2012. This compares to 4,830 ounces of gold (2,218 ounces attributable to La Mancha) produced in the first quarter of 2011 at a cash cost of US $659 per ounce.
Production during the first quarter of 2012 and its related cash costs were negatively impacted by the scheduled downtime required for the major overhaul made to the crusher and improvements associated to the implementation of the third operating shift. Moreover, cash costs for the first quarter of 2012 were also negatively impacted by the inclusion of a provision for the government's proposed tax on super profits, which would effectively increase the gold royalty tax by 7%. In the first quarter of 2011, production was negatively affected by a temporary shutdown in response to C?'te d'Ivoire's political situation.
A 32,000-metre drilling program is currently in progress at the Ity mine with the goal of revising the geological model and growing the mine's resources. A new resource estimate is expected in the third quarter and the corresponding upgraded mine plan is expected by the fourth quarter of 2012.
Consolidated Financial Statements
The management discussion and analysis and unaudited consolidated financial statements with explanatory notes for the quarter ended March 31, 2012, are available in PDF format through SEDAR at www.sedar.com.
CORPORATE DEVELOPMENT
As announced on March 14, 2012, the Board of Directors of La Mancha, through its Special Committee comprised solely of Independent Directors, is conducting a process, the objective of which is to find parties interested in buying the Company or parts thereof. There is no assurance that the process will lead to binding proposals and that a transaction or transactions will be consummated.
To this date, the process is following it course. Announcements will be made as events and circumstances warrant them.
ANNUAL GENERAL MEETING
The Annual General Meeting of La Mancha will be held on May 15, 2012 at 11:00 at the Omni Hotel Mont-Royal, in Montreal, Canada.
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/.
QUALIFIED PERSONS AND DATA VERIFICATION
This press release was reviewed and prepared under the supervision of Nigel Tamlyn, Chief Operating Officer of La Mancha. By reason of his education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience Mr. Nigel Tamlyn is "qualified person" for the purposes of NI 43-101. Mr. Tamlyn has read National Instrument 43-101 and has ensured that this press release has been written in compliance with that instrument. He has read and approved the content of this news release, and has consented to publish the press release in the form and context in which it appears.
Nigel Tamlyn, Chartered Engineer (UK), Chief Operating Officer of La Mancha Resources Inc., is a member of the IMMM, and member of the SAIMM.
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 ore; statements regarding the improvements made at the Ity mine and their resulting impact on production; statements regarding the drilling program at the Ity mine and resulting positive impact on the mining plan; statements regarding the Company's auction process. 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 2011 Annual Information Form filed with the Securities Commissions, as well as the Toronto Stock Exchange.
See table in attachment
LA MANCHA REPORTS Q1 NET EARNINGS OF $7.9 MILLION : http://hugin.info/145163/R/1612397/513217.pdf
For additional information, please contact:
La Mancha Resources Inc.
Martin Amyot
Vice President Corporate Development
Tel: (514) 987-5115 ext 25
Email: info@lamancha.ca
Nicole Blanchard
Investor Relations
(514) 961-0229
