La Mancha reports net earnings of $5.0 million



    MONTREAL, April 2 /CNW/ -

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

    
    2006 HIGHLIGHTS

    -   Net earnings of $5.0 million ($0.049 per share)
    -   Cash flow from operating activities of $14.6 million
    -   Revenues of $60.2 million
    -   Total production of 62,300 ounces (at US$352 per ounce)
    -   Proven and probable reserves stand at 472,685 ounces
    -   Cash position of $48.0 million as of December 31, 2006
    

    La Mancha Resources Inc. (TSX:LMA, thereafter "La Mancha" or the
"Company") is pleased to report its first year-end financial results following
the closing of its reverse takeover (the "Transaction") by Compagnie Française
de Mines et Métaux ("CFMM") in September 2006. This transaction transformed
La Mancha into an internationally diversified gold producer with gold
producing and exploration assets in Australia, Côte d'Ivoire and Sudan.
    In 2006, La Mancha generated net earnings of $5.0 million (or $0.049 per
share), which compares to $6.3 million (or $0.07 per share) in 2005. Despite
an improved profitability at the Ity mine in Côte d'Ivoire, the weaker than
expected results recorded at our Hassai mine led to lower consolidated
profits. La Mancha recorded revenues of $60.2 million in 2006, compared to
$79.3 million a year earlier. The 2006 revenues were mostly impacted by the
end of open-pit production at the Frog's Leg mine in October 2005. Cash flow
from operating activities was $14.6 million in 2006 compared to $26.0 million
the previous year. As of December 31, 2006, the Company's cash position was of
$48.0 million.
    Total production reached 62,300 ounces at an average cash cost of US$352
in 2006. This performance compares to a production of 115,950 ounces at an
average cash cost of US$241 in 2005. The decrease in production observed in
2006 was due to the 20,000 ounces decrease of Hassai's production attributable
to La Mancha and to the end of the open-pit operations at Frog's Leg, who had
contributed 32,853 ounces of gold to the production of 2005. Both Hassai and
Ity have faced increases of their average cash costs per ounce between 2005
and 2006. This increase, coupled with the end of Frog's Leg low cash cost
production (US$206 per ounce in 2005) explain the strong increase of La
Mancha's consolidated average cash costs per ounce over that same period. In
2007, La Mancha anticipates to produce 75,900 ounces at an average cash cost
of US$397 per ounce.
    As of December 31, 2006, La Mancha's proven and probable reserves stood
at 472,685 ounces while its measured and indicated resources represented
1,238,288 ounces. The detailed breakdown of these reserves and resources is
presented in the mineral reserves and resources table at the end of this press
release.
    Mr. Michel Cuilhé, Chairman and Chief Executive Officer of La Mancha
stated : "Our transformation from an exploration company to an international
gold producer now involved in all the steps of the mining cycle is going
according to our expectations. La Mancha's 2006 operational and financial
performance will enable us to proceed to the advancement of our two Australian
advanced gold projects in accordance with our business plan. We now benefit
from a solid growth platform that will enable us to progress towards our
mid-term objective of producing over 150,000 ounces of gold per year."

    OPERATIONS

    The Hassai mine produced a total of 101,519 ounces (40,600 ounces
attributable to La Mancha) at cash costs of US$334 per ounce over the course
of 2006. This compares to a production of 153,000 ounces (61,200 ounces
attributable to La Mancha) at cash costs of US$230 per ounce in 2005. The
sharp decrease in production observed in 2006 was due to declining ore grades
and recoveries for silico-baritic ores (SBR) and to a series of long plant
stoppages due in part to the operational problems faced with the quartz
processing line. The ore processed at the mill over the course of 2006
averaged 4.43 g Au/t compared to 5.78 g Au/t in 2005. This important decrease
in production had a big impact in the average cash cost considering the high
fixed cost ratio of Hassai's operations. The appreciation of the Sudanese
currency rate, local inflation, higher costs of supplies and the lower grades
milled also played a role in the increase. As of December 31, 2006, Hassai's
proven and probable reserves stood at 231,753 ounces while measured and
indicated resources represented 248,658 ounces.
    The Company anticipates that Hassai's 2007 production will reach 110,000
ounces (44,000 ounces attributable to La Mancha) at a cash cost of US$371 per
ounce. La Mancha expects that the grade processed at the milled will average
4.5 g Au/t. These improvements, both on the costs side and in production
versus the 2006 performance, are expected, despite the continuous declining
trend of SBR ore grades and recoveries, due mostly to the optimization of the
quartz circuit, which should be completed in May of this year. La Mancha
estimates that the quartz circuit will have a positive impact of approximately
$60 per ounce once fully operational due to the higher recovery rate that it
should allow (from 73% to 79%) and higher head grades that it will allow to
process.
    The Ity mine recorded a production of 42,568 ounces (21,700 ounces
attributable to La Mancha) at an average cash cost of US$387 per ounce in
2006. This compares to a production of 42,921 ounces (21,900 ounces
attributable to La Mancha) at an average cash cost of US$321 per ounce. The
average grade milled in 2006 was 3.55 g Au/t compared to 3.82 g Au/t in 2005.
The level of production remained similar despite the lower grades milled due
to the higher recovery percentage achieved this year. As of December 31, 2006,
Ity's proven and probable reserves stood at 240,932 ounces while measured and
indicated resources represented 314,358 ounces.
    In 2007, La Mancha anticipates that the Ity mine will produce 42,000
ounces (21,400 ounces attributable to La Mancha) at an average cash cost of 
US$393 per ounce. The Zia pit and the Ity laterites will continue to be mined
throughout the year delivering the most part of the production in 2007. As for
the Flotouo pit, most of its reserves have now been mined. Therefore, it is
anticipated that the Flotouo pit will cease production at the end of the first
quarter. However, the new Mont Ity pit should start adding to the production
in the second half of the year. The pit design is currently being updated to
take in account the higher gold price and development work should start at the
beginning of the second quarter. An update on the impact that the new pit
design will have on reserves and resources should be expected before the end
of the second quarter.
    The government of Côte d'Ivoire recently modified its interpretation of a
key provision of its 1995 Mining Law that governs joint ventures between
foreign corporations and the government. As a result of this new
interpretation brought to the attention of the Company in the context of its
license renewal process, mining companies operating in Côte d'Ivoire must now
transfer to the government 10% of their interest in the project upon first
issuance or renewal of their mining permit.
    In light of this new interpretation, and in the context of the Company's
license renewal process, SMI began discussions with the government of Côte
d'Ivoire during the first quarter of 2007 in order to reach an agreement that
would protect the interests of its shareholders. As of today, the Company's
51% ownership interest in SMI (held through Cominor) remains unchanged with
SODEMI holding the remaining 49% interest in SMI. The outcome of these
discussions with the Ivorian government will be announced forthwith upon
conclusion of same. In the event the new interpretation prevails, the
resulting interests of La Mancha in the Ity mine would be reduced to 45.9%.

    PROJECTS DEVELOPMENT

    La Mancha will actively pursue the advancement of its two Australian
advanced gold projects. The Company intends to spend a total of $11.9 million
in 2007 for their development.
    The development of the White Foil advanced gold project remains on line
for the re-commencement of the operations during the fourth quarter of 2007.
De-watering of the pit has started in November 2006 and it is anticipated that
the pumping of the 4 million cubic meters of water contained in the pit will
be completed by the end of July 2007. A detailed assessment of the walls of
the pit will then be conducted and the necessary maintenance will be performed
as the pit is dewatered. La Mancha remains confident to resume the White Foil
open-pit operations by the fourth Quarter of 2007. The mine development
investments budget for White Foil goes as follow:

    
    2006A
      Dewatering of the pit                           $600,000
                                               Total  $600,000
    2007E
      Dewatering of the pit                           $1,200,000
      Reserve development                             $1,700,000
                                               Total  $2,900,000
    

    The Company anticipates that the return to production of White Foil
during the fourth quarter of 2007 will add 10,500 ounces of gold to La
Mancha's annual production, at an average cash cost of US$515.
    The Frog's Leg advanced gold project is enjoying significant positive
momentum. The resource update released on March 19th is showing a 35% increase
in measured and indicated resources to 369,000 ounces (188,000 ounces
attributable to La Mancha) and an 18% increase of the average grade to 8.19 g
Au/t. Moreover, Inferred resources have increased by 128% to reach 402,000
ounces (205,000 ounces attributable to La Mancha).
    Due to the success of the 2006 drilling program, a further phase of
drilling is now underway. A minimum of $4.4 million ($2.3 million attributable
to La Mancha) will be invested by the Joint Venture Partners to further
delineate the property during 2007. More than 6,400 additional meters have
been drilled on the property since September and we expect that approximately
20,000 meters more will be completed before the end of the year. This phase of
drilling intends to convert Inferred resources to the Indicated category and
to further extend the known mineral zone along strike and at depth.
    Mine development continues at Frog's Leg, in parallel to the drilling
program. The mine management team is preparing an update on the previous
positive Feasibility Studies, and is purchasing mine equipment. The updated
feasibility study is expected by the end of June 2007 and development of the
mine portal is scheduled to begin in the third quarter of 2007. The total
investment budget devoted by La Mancha to the Frog's Leg project goes as
follow:

    
    2006A
      Reserve Development                             $1,500,000
      Dewatering of the pit                           $600,000
                                               Total  $2,100,000
    2007E
      Reserve Development                             $2,200,000
      Dewatering of the pit                           $1,500,000
      Mine equipment                                  $5,300,000
                                               Total  $9,000,000
    

    The development of Frog's Leg remains aligned towards a commissioning of
the operations in the first quarter of 2008.

    EXPLORATION AND RESERVE DEVELOPMENT PROGRAMS

    La Mancha spent more than $9.6 million in 2006 in exploration and reserve
development program. The majority of this budget was spent in Australia. In
2007, La Mancha intends to spend a total of $8.9 million in reserve
development and exploration. An update on the Company's main programs should
be expected before the end of the second quarter.

    Australia:
    ----------

    La Mancha intends to spend $6.5 million in reserve development and
grassroots exploration in Australia over the course of 2007. The largest
percentage of this budget will once again be devoted to Frog's Leg and White
Foil's reserve definition programs which will benefit from $3.9 million. The
Company holds more than 2,778km(2) in exploration rights in Australia.

    Sudan:
    ------

    Exploration activities to be led in Sudan over the course of 2007 will
focus primarily on increasing reserves and resources in Hassai and on an
exploration program in the Nuba Montain area. The Company expects to publish
updated reserves and resources for its Hassai property before the end of the
second quarter. Budget for La Mancha's 2007 reserve development and
exploration programs in Sudan amounts to $1.6 million.

    Argentina:
    ----------

    In 2007, La Mancha has budgeted to spend $750,000 in exploration in
Argentina, mainly at its Ortiguita property in the San Juan province, close to
the Pascua Lama project owned by Barrick Gold.
    In March 2007, La Mancha received the assessment prepared by PG
Consulting Inc. on its Hualilan properties in Argentina updating the report
previously issued in April 2003 on the same properties. The March 2007
assessment updates the measured and indicated resources to 87,076 ounces of
gold and 334,900 ounces of silver. In 2003, the measured and indicated gold
resources had been estimated at 209,000 ounces.
    On the basis of these updated resources which were calculated on data
available prior to September 28, 2006 and the analysis proposed in this
assessment, La Mancha is not considering the development of this asset at this
time. Consequently, the fair value of the Hualilan properties together with
its attached mortgage, have been re-evaluated at a zero value, as of
September 28, 2006.

    CORPORATE DEVELOPMENT

    On February 5th 2007, the Company inaugurated its new offices in
Montreal. You should now direct your questions and enquiries to the management
at:
    2001, rue University
    Suite 400
    Montreal, Quebec
    H3A 2A6
    (514) 987-5115

    Consolidated Financial Statements
    ---------------------------------

    The management discussion and analysis, the audited consolidated
financial statements and the explanatory notes for the year ended December 31,
2006, are available in PDF format on La Mancha's website at
www.lamancharesources.com or through SEDAR at www.sedar.com.

    Restatement
    -----------

    The Company has restated its financial statements as at December 31, 2005
and for the year then ended. The Company has revised its measurement methods
for two categories of inventories in Sudan (stockpiles and heaps). The Company
came to the conclusion that this revision resulted from the correction of
errors due to the misuse of facts that existed at the time the 2005 financial
statements were prepared, as well as from changes in estimates.
    In addition, the Company had neither separately characterized the nature
nor appropriately determined the measurement method of certain local post
service benefits attributed to employees in Sudan that are similar to one-time
retirement benefits.

    Year-End 2006 Financial Results Conference Call
    -----------------------------------------------

    La Mancha will host a conference call on April 3, 2007 at 10:00 a.m.,
local time, to discuss its year-end consolidated 2006 audited financial
results. Investors and financial analysts are invited to participate in the
call by dialing 1 (866) 696-5910 code 3218709 followed by the number sign in
North America. Outside of North America, please dial (514) 861-2255 code
3218709 followed by the number sign. The conference call will be available for
replay for a period of 30 days by calling (514) 861-2272 code 3218709 followed
by the number sign.

    Record Date Set For La Mancha's
    -------------------------------
    Annual General and Meeting of Shareholders
    ------------------------------------------

    La Mancha announces that its board of directors adopted a resolution
fixing the close of business on April 11, 2007, as the record date for the
purpose of determining shareholders entitled to receive notice of its Annual
General Meeting of Shareholders. The Annual General Meeting of Shareholders of
La Mancha will be held at the Auditorium of the Montreal Exchange, in
Montreal, on Friday, May 11, 2007 at 10:30 a.m. (local time).

    ABOUT LA MANCHA RE

SOURCES Inc.: La Mancha Resources Inc. is an international gold producer based in Canada with operations, development projects and exploration activities in Africa, Australia and in Argentina. La Mancha's shares trade on the Toronto (TSX) under the symbol "LMA". For more information on the company, visit the web at www.lamancharesources.com 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, sales and financial results, development, construction and production targets and timetables, mine operating costs; statements regarding capital expenditures, development plans, and exploration programs, objectives and budgets; statements regarding the assumptions underlying the Frog's Leg feasibility study, conversion of its inferred resources into measured and indicated resources; statements regarding the re-commencement of White Foil production and its production target for 2007. 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 2006 Annual Information Form filed with the Securities Commissions, as well as the Toronto Stock Exchange. To view a link of La Mancha's financial statements, please view: http://files.newswire.ca/560/FinancialStatements.doc MINERAL RESERVES AND RE

SOURCES Mineral reserves and resources have been estimated by La Mancha's technical personnel for each property in accordance with definitions and guidelines adopted by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM "Standards on Mineral Resources and Reserves"). There are numerous uncertainties inherent in estimating proven and probable mineral reserves, including many factors beyond the Company's control. Reserve estimation is a subjective process, and the accuracy of any reserve estimate is a function of the quality of available data and engineering and of geological interpretation and judgment. Results from drilling, testing and production, as well as material changes in metal prices subsequent to the date of an estimate, may justify revision of such estimates. La Mancha qualified persons(1) responsible for the mineral reserve and resource calculations for each mine or project are as follows: ------------------------------------------------------------------------- NAME TITLE ------------------------------------------------------------------------- GOLD OPERATIONS - Hassai EDDIE, Trevor "Senior Mine Geologist, La Mancha Resources Australia" - Ity " " ------------------------------------------------------------------------- GOLD PROJECTS - Frog's Leg GUIBAL, Daniel Corporate Consultant, SRK Consulting - White Foil JENKS, John Consultant Geologist, La Mancha Resources Inc. - Hualilan PRECIADO, José Consultant Geologist, PG Consulting Inc. - Fetekro EDDIE, Trevor Senior Mine Geologist, La Mancha Resources Australia ------------------------------------------------------------------------- (1) Qualified person : an individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation, mineral project assessment, or any combination of these, has experience relevant to the subject matter of the mineral project and the technical reports, and is a member in good standing of a professional association. MINERAL RESERVES AND MINERAL RE

SOURCES Metallurgical Recovery and Cut-off Grade In calculating mineral reserves, cut-off grades are established using long-term gold price and foreign exchange assumptions, the average metallurgical recovery rates and estimated production costs over the life of the related operation. For an underground operation, a cut-off grade is calculated for each mining method, as production costs vary from one method to another. For a surface operation, production costs are determined for each block included in the relevant operation. The following table indicates the cut-off grade calculations and the average metallurgical recoveries at La Mancha's gold mining operations of the proven and probable mineral reserves. ------------------------------------------------------------------------- Mine Average Metallurgical Recovery Cut-off Grades (Gold %) (g Au/t) ------------------------------------------------------------------------- - Hassai Mine 63 to 89(1) 1.5 - Ity Mine 82.8 2.0 - Frog's Leg project N/A 3.5 - White Foil project N/A 1.2 ------------------------------------------------------------------------- (1) Varies depending on ore type %SEDAR: 00013309E

For further information:

For further information: La Mancha Resources Inc., Martin Amyot, Vice
President Corporate Development, Tel: (514) 987-5115, E-mail:
info@lamancharesources.com

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LA MANCHA RESOURCES INC.

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