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A Record Year for La Mancha in 2010 as Production Increases 30% and Net Earnings More Than Double


March 29, 2011 - PARIS

La Mancha Resources Inc. (TSX: LMA)

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

2010 HIGHLIGHTS

  • Record gold production of 122,571 ounces, up 30% compared to 2009
  • Net earnings more than double to reach $23.7 million
  • Cash flow from operating activities nearly doubles to reach $59.4 million
  • White Foil becomes La Mancha's fourth mine in production
  • Positive Preliminary Economic Assessment on VMS project paves the way for more growth
  • Corporate debt is fully repaid while cash position increases by $16.9 million to $38.4 million

The table below highlights La Mancha's improved performance since 2007, the Company's first full year of operation as a producer.


--------------------------------------------------------------------------
Change:
Twelve-month period ended Dec. 31, 2010 vs 2009
--------------------------------------
2007 2008 2009 2010
--------------------------------------------------------------------------
Attributable production
(in oz) 53,900 71,550 94,570 122,571 +30%
--------------------------------------------------------------------------
Revenues ($'000) 48,456 53,639 105,424 164,693 +56%
--------------------------------------------------------------------------
Gross cash margin (US
$/oz)* 215 358 457 578 +26%
--------------------------------------------------------------------------
Operating income / loss
($'000) (8,202) (43) 22,027 37,965 +72%
--------------------------------------------------------------------------
Net earnings / loss
($'000) (10,806) (5,408) 11,379 23,738 +108%
--------------------------------------------------------------------------
Operating cash flow
($'000) 486 3,062 30,937 59,354 +92%
--------------------------------------------------------------------------

*Realized sales price less total cash cost

Dominique Delorme, President and CEO of La Mancha, stated that: "The achievements of 2010 clearly demonstrate the gains made over the past four years. At nearly 123,000 ounces, gold production was up 30% year-over-year and 125% from four years ago. Much of this increase is attributable to Australia, where the March start-up of the White Foil mine, La Mancha's fourth mine, completed the first phase of development of our mining complex in this country. The resulting consolidated record gold production generated net earnings of roughly $24 million and an operating cash flow of nearly $60 million. With our successful track record, rapidly growing cash position and geographic diversification, La Mancha is now much stronger as we head into 2011 and our next growth phase. Bringing our VMS project on stream should allow us to become an intermediate producer at 200,000 ounces of gold per year by 2013 and 350,000 ounces by 2015."

La Mancha Resources Inc. (TSX: LMA) (hereinafter "La Mancha" or the "Company") is pleased to announce that its consolidated gold production for 2010 reached a record 122,571 ounces, compared to 94,570 ounces of gold for 2009. This 30% increase is due to the steady production ramp-up at the Frog's Leg mine in Australia, along with the successful start-up of the Company's fourth mine, White Foil, which more than compensated for slightly lower African production. In 2010, 64% of La Mancha's total gold production came from its Australian operations.

The 2010 consolidated cash costs amounted to US $653 per ounce of gold compared to US $510 per ounce in 2009. The 2010 consolidated cash cost was mostly impacted by the Australian operations, where the unfavourable Australian dollar exchange rate against the USD, coupled with the higher cost structure of the new White Foil mine, accounted for approximately 55% of the consolidated year-over-year increase. Nevertheless, the continued strong performance of the gold price over the course of 2010 enabled La Mancha to increase its gross cash margin per ounce by 26% to US $578, compared to US $457 in 2009.

La Mancha's revenues increased from $105.4 million in 2009 to $164.7 million in 2010 on the strength of its enhanced production profile and stronger gold prices.

Ongoing work on its highly prospective exploration tenements brought La Mancha's exploration expense to $7.3 million in 2010, compared to $5.2 million in 2009. The exploration programs continued to bear fruit in 2010. In Australia, resources at the Frog's Leg mine were significantly increased and a new gold deposit, Kintore, was identified. In Côte d'Ivoire, new resources were delineated at the Fetekro property while strong gold potential was demonstrated at the Bondoukou property. Finally, in Sudan, a new gold project was identified on the Nuba Mountains property. Together, these holdings constitute a pipeline of projects with the potential to feed our organic growth well into the future.

In 2010, La Mancha's consolidated net earnings more than doubled to reach $23.7 million, as all four gold mines continued to be profitable. This compares to net earnings of $11.4 million in 2009.

Despite increased exploration expenditures, La Mancha's 2010 cash flow from operating activities nearly doubled over the previous year to reach a record $59.4 million. Due to the strong performance of the Frog's Leg mine and the start-up of White Foil, the Australian subsidiary's cash flow from operating activities increased from $17.4 million in 2009 to $43.4 million in 2010, thereby solidifying its importance within the Company's portfolio.

In the first half of 2010, this cash influx enabled La Mancha to fully repay the outstanding $16.1 million on the debt facility contracted with AREVA in 2007. At year end, this fully repaid AREVA debt facility remained available for its full amount (AUD 22.0 million). The Company's cash and cash equivalents and short-term investments stood at $38.4 million as of December 31, 2010, marking an increase of $16.9 million since December 31, 2009.

During the fourth quarter ended December 31, 2010, La Mancha produced 30,744 attributable ounces of gold while generating revenues of $50.0 million, compared to production of 23,683 attributable ounces of gold and revenues of $24.2 million for the corresponding period in 2009. During the fourth quarter ended December 31, 2010, the Company recorded net earnings of $7.1 million, compared to a net loss of $1.2 million for the corresponding period in 2009, which had included a $1.1 million deferred tax expense adjustment at its Australian subsidiary.

AUSTRALIAN OPERATIONS
In line with the upgraded mine plan and increased milling capacity, the Frog's Leg mine continued to rapidly ramp-up production, generating 66,444 ounces of gold net to La Mancha in 2010 at a cash cost of US $602 per ounce compared to 46,120 ounces in 2009 at a cash cost of US $457 per ounce. Approximately half of the year-over-year cash cost per ounce increase was due to unfavourable foreign exchange rate fluctuations, while the remaining half was due to an increase in mining unit costs, which was expected in light of the increased mining depth, as well as toll milling cost increases.

As shown in the table below, underground mining activities continued to improve in 2010, with tonnage and gold grades increasing by 11% and 17% respectively year over year. It should be noted that underground gold grades mined during the fourth quarter of 2010 averaged a record 6.35 g/t Au.

Table: La Mancha's 51% share of Frog's Leg Underground Mining Schedule

----------------------------------------------------------------------------(on a 51% basis) 2009A 2010A 2011 E----------------------------------------------------------------------------Underground tonnage mined (t) 311,219 344,153 300,000 - 340,000----------------------------------------------------------------------------Gold grade (g/t Au) 4.73 5.52 5.91----------------------------------------------------------------------------Gold content (oz) 47,297 61,077 57,000 - 64,600----------------------------------------------------------------------------

As shown in the table above, the Frog's Leg mine performance should remain strong, with gold grades expected to increase further in 2011.

With the toll treatment of year end stockpiles, La Mancha expects its 2011 share of Frog's Leg mine production to be in the range of 65,000 to 70,000 ounces of gold at an estimated cash cost of US $617 per ounce.

In 2010, an extensive underground resource drilling program was conducted, involving 35,000 metres of diamond drilling across the entire 1,200-metre strike length of the deposit. This exploration program significantly surpassed expectations, as it allowed a total of 348,000 Measured and Indicated ounces of gold (177,480 ounces attributable to La Mancha)(1) to be added, significantly more than the 150,000 ounces (76,500 ounces attributable to La Mancha) originally targeted. The focus of the upcoming months will be to develop a new reserve and life-of-mine plan to demonstrate the potential to develop the mine down to the level of 600 metres below surface.

The 100%-owned White Foil mine, inaugurated in April 2010, became La Mancha's fourth producing asset and second mine to be put to production in less than two years. For its first year of operation, the mine produced 11,713 ounces of gold at a cash cost of US $928 per ounce. Cash costs per ounce were higher than expected, mainly due to unfavourable foreign exchange rate fluctuations and slightly lower-than-expected gold grades.

In accordance with the toll-milling capacity available, 282,104 tonnes were mined between March and August 2010, thereby successfully concluding the first bench mining operation. At year-end, the White Foil stockpile stood at 108,998 tonnes grading 1.94 g/t Au.

Production at the White Foil mine is expected to be in the range of 14,000 to 17,000 ounces of gold in 2011 at an estimated cash cost of US $1,082 per ounce. La Mancha expects to tender a mining contract in second quarter for the second bench of the pit, representing approximately 310,000 tonnes of ore at an average grade of 2.0 g/t Au. All of La Mancha's excess mill capacity at the nearby Greenfields plant is expected to be filled by the White Foil ore.

AFRICAN OPERATIONS
In line with expectations, the Hassaï mine produced a total of 68,434 ounces of gold in 2010 (27,374 ounces attributable to La Mancha) at a cash cost of US $731 per ounce, compared to 61,790 ounces of gold in 2009 (24,715 ounces attributable to La Mancha) at a cash cost of US $724 per ounce. While cash costs per ounce remained fairly stable, production increased notably due to improved mill throughput following the successful optimization of the quartz ore processing circuit.

No major change in production is expected at the Hassaï mine until the first phase of the volcanogenic massive sulphide ("VMS") project is commissioned in 2013. Consequently, Hassaï's production is expected to range from 60,000 to 70,000 ounces of gold (24,000 to 28,000 ounces attributable to La Mancha) in 2011 at an estimated cash cost of US $660 per ounce.

The Ity mine produced a total of 37,125 ounces of gold in 2010 (17,040 ounces attributable to La Mancha) at a cash cost of US $540 per ounce, compared to 51,710 ounces in 2009 (23,735 ounces attributable to La Mancha) at a cash cost of US $389 per ounce. Ity's operations were affected by a number of negative factors over the course of 2010.

Most of Ity's 2010 production shortfall was due to 1) the scheduled construction of the new heap leaching pads and the related plant relocation which necessitated a one-month suspension of milling activities and a several-month-long plant commissioning period, and 2) the extensive downtime caused by unusual amounts of heavy precipitation during the period from July to October. Furthermore, the forced temporary interruption of the mine's activities on December 17, 2010, due to the agitation surrounding the country's uncertain political future impaired the results of a quarter that was originally on track to be the mine's best quarter of the year.

The mine's cash costs per ounce were impacted by the lower production volume, caused by the aforementioned negative factors, along with lower processed gold grades and higher processing costs associated with treating ore from the recently-commissioned Mount Ity pit, which has characteristics that necessitate more cyanide spraying and longer leaching cycles.

Due to the higher capacity of the mine's recently-commissioned leaching pads, Ity could increase production to up to 52,290 ounces of gold in 2011 (24,000 ounces attributable to La Mancha). However, Ity's 2011 performance remains vulnerable to the country's political situation, changing security conditions around the mine and difficulties securing access to mine supplies. Consequently, the Company issued a production guidance of 26,140 to 43,570 ounces of gold (12,000 to 20,000 ounces attributable to La Mancha) for 2011 at an estimated cash cost of US $519 per ounce.

La Mancha's ability to quickly suspend and restart activities at the Ity mine gives it the flexibility to quickly adapt to an evolution of the political situation in Ivory Coast that would provide for satisfactorily financial arrangements and physical securities for employees. The mine was therefore able to resume production between mid-January and February 24, 2011, generating approximately 4,300 ounces of gold (2,000 ounces attributable to La Mancha) during that period.

VMS PROJECT
On September 7, 2010, La Mancha announced a positive Preliminary Economic Assessment ("PEA") for its Volcanogenic Massive Sulphide ("VMS") project at its 40%-owned Hassaï mine in north-eastern Sudan, in the highly-endowed Arabian-Nubian shield. The technical report was filed on SEDAR (www.sedar.com) on October 22, 2010.

The PEA defines two distinct phases of development. The first phase involves optimizing the operation by replacing the current heap leaching plant with a carbon-in-leach (CIL) plant. This should allow for higher gold recovery, lower production costs and a significantly longer mine life, due to the CIL plant's capability to economically reprocess the gold tailings accumulated since the mine's start-up, along with the large quantities of high-grade ores not easily treatable by the current plant. The second phase involves the construction of a flotation unit to enable the processing of the gold-copper VMS ore located under current open pits. Two pits have already been shown to host VMS deposits, forming the basis of the PEA VMS mining inventory, while at least four more targets are thought to have VMS potential.

Highlights of the study include:

----------------------------------------------------------------------------All amounts are in US dollars Phase 1: CIL Phase 2: VMS Global and for 100% of the project----------------------------------------------------------------------------Commissioning 2013 2015 --Yearly production* Gold (oz) 155,880 59,355 -- Copper (t) -- 51,516Initial capital cost $185.6 M $319.4 M $505.0 MAverage cash costs $ 482/oz Au $ 1.24/lb Cu*** -Internal rate of return 30% 11% 17%NPV @ 5% discount** $149.8 M $122.7 M $238.7 M----------------------------------------------------------------------------

*CIL: Excludes low production projected for the last year of operation, VMS: Rate for the first 5 years of operation (when project is running at design run-rate) **Using a gold price of US $950 per ounce and a copper price of $2.18 per pound. ***Including gold credit

The robust economic indicators for the CIL phase justified the immediate commencement of feasibility work for the first phase of the project, while the promising VMS upside potential justified the launch of an $18 million VMS exploration program with 100,000 metres planned over a 12-month period ending at the end of the third quarter of 2011. This program is aimed at converting the majority of the Inferred resource to the Measured and Indicated category while further increasing the resource.

The feasibility study for the first phase of the project is expected to be released within the coming weeks.

RESERVE AND RESOURCE UPDATE
As of December 31, 2010, La Mancha's Measured and Indicated resources ("M&I resources") had increased to 1.94 million ounces of gold and 14,720 tonnes of copper, as the Company was able to delineate more gold ounces than it mined during the year, while Proven and Probable reserves ("P&P reserves") stood at 612,835 ounces of gold. At December 31, 2009, the Company had P&P reserves of 766,200 ounces of gold while its M&I resources stood at 1.89 million ounces of gold and 14,720 tonnes of copper.

La Mancha's consolidated M&I resources are expected to reach 4 million ounces by year end in light of the drilling campaign, currently in progress, on the Company's VMS project.

CORPORATE EVENTS
The Company will be attending the European Gold Forum (Zurich, Switzerland) held from April 12 to 15. Management of La Mancha will be available for meetings and will present at 5:10 p.m. on Thursday, April 14.

Consolidated Financial Statements
The management discussion and analysis and audited consolidated financial statements with explanatory notes for the year ended December 31, 2010, 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/.

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 progression of Frog's Leg and the Company's view on higher mined gold grades in 2011, 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; statements regarding the positive impact of the new leaching pads at the Ity mine and its ability to increase future production; 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) Measured and Indicated resources of 1.75 MT at 6.2 g/t Au for 348,000 ounces (177,480 attributable to LMA)

(see table in attachment)

http://hugin.info/145163/R/1501205/436546.pdf

For additional information, please contact:

La Mancha Resources Inc.

Martin Amyot
Vice President Corporate Development
Tel: (514) 987-5115
Email: Email Contact


Nicole Blanchard
Investor Relations
(514) 961-0229


MarketWire

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