IN 2006, La Mancha Resources inherited two producing mines, two advanced projects and a portfolio of more than 30 assets in Africa, Australia and Argentina, through a reverse takeover by AREVA. Six years later, what had started as an exploration company with no production history has become a successful international gold producer with four operating gold mines and consistently increasing production rates.
In 2011, La Mancha’s consolidated net earnings reached a record $36.1 million, a 52 per cent increase on 2010’s results; the company attributed this to stronger gold prices and its ability to resist inflationary pressure on costs. In total, its revenues for 2011 totalled $184.7 million, compared to $164.7 million in 2010.
“In 2011, La Mancha made headlines within the investment community by demonstrating, through a DFS [definitive feasibility study] and increased resources, our potential to quickly grow into an intermediate gold producer,” La Mancha president and chief executive officer Dominique Delorme said.
“In addition to laying the groundwork for La Mancha’s future development, we continued to solidify our reputation…as an operator that delivers in line with guidance, regardless of industry challenges.
“The same rigour drove our financial results to record highs and our cash position to $100 million, leaving us very well positioned to fund future development plans and maximise shareholder value.”
La Mancha has five operations in Australia, all in WA: the flagship Frog’s Leg and White Tail mines, both in production; and the Park Dam, Kintore and Broads Dam projects, where exploration is ongoing.
Frog’s Leg mine
The Frog’s Leg mine is 20km directly west of Kalgoorlie within a tenement area owned by the Mungari East Joint Venture – comprised of partners La Mancha (51 per cent) and Alacer Gold (49 per cent) – and operated by La Mancha. Frog’s Leg is a structurally controlled orogenic gold deposit in the Yilgarn Craton’s Archaean Norseman-Wiluna Greenstone belt.
The deposit is within a set of parallel north to north-west trending faults associated with the Zuleika shear zone, a major regional fault, and along the Zuleika zone’s convergence with the Mungari shear zone. Mineralisation occurs along the faulted contact between volcaniclastic and catrock basalt rocks, ranging between 10m and 30m wide, and is sub-vertical to steeply west dipping.
Frog’s Leg has measured and indicated resources totalling 980,000oz (500,000oz attributable to La Mancha and 480,000oz attributable to Alacer)
grading 6.7 grams per tonne gold. Open-pit production at Frog’s Leg began in April 2004 and first gold was poured from the mine in July of that year. In December 2007 a feasibility study for an underground mine was completed, with first gold poured from the underground operation in May 2008. The current primary mining method at Frog’s Leg is underground mechanised longhole open stoping: stopes are backfilled with paste to ensure maximum recovery of ore without the need for pillars.
Gold production attributable to La Mancha for the 2011 calendar year was 66,505oz (Alacer’s share totalled 57,570oz) and La Mancha stated that it expected its attributable production for 2012 to be up to 65,000oz.
Traditionally, La Mancha has sent its ore from Frog’s Leg to be toll milled; the company stated, however, that in light of its expanding resources and sustained gold prices, it was studying the economics of building a mill on site. Alacer’s share of ore from Frog’s Leg is trucked to the company’s South Kalgoorlie operations where it is processed through the Jubilee processing plant.
Since entering production, Frog’s Leg has consistently met or exceeded its targets; in late 2011 La Mancha stated that, as mining continued downward, it would continue to explore the deposit below the mine workings.
“After exploring in 2010 and 2011 and generating a new resource estimate in 2011, we announced 36 per cent growth in the proven and probable reserves at the Frog’s Leg
mine, based on an updated mine plan early in 2012,” the company stated.
“Our exploration team is confident that we will be able to keep extending the resource at depth, and plans to drill 11,500 metres to a depth of 800 metres in 2012.”
The company’s resource delineation drilling program at Frog’s Leg was resumed in April, with the initial portion of drilling conducted from between 300m and 350m below surface, focussed on the area immediatel below the mine’s current production areas.
“The latter portion, with drilling conducted from 450 metres below surface, will focus on the inferred resource material and the area immediately below the existing resource, 600 metres to 750 metres below surface,” La Mancha stated.
White Foil mine
La Mancha’s 100 per cent owned White Foil open pit mine is 2km from its Frog’s Leg mine. Ore is contract-mined and custom-milled at the nearby Greenfields treatment plant. As of early 2012, the mine’s phase one pit was still in progress, with contained proven and probable reserves of 46,000oz of gold. As of December 31, 2011, the mine’s measured and indicated resources totalled 503,000oz grading 2.12 g/t gold. In 2011, La Mancha produced 9388oz of gold from White Foil; it reported an anticipated 2012 production of up to 10,000oz of gold.
On June 15, La Mancha released results from ongoing exploration at White Foil, stating that drilling results suggested mineralisation could extend more than 350m below the mine’s existing resource envelope.
Best intersections from the drilling included: 7m grading 12.8 g/t from 323m, including 1 m grading 77.43 g/t from 327m; 109m grading 1.5 g/t from 555m, including 1m grading 18.11 g/t from 641m; 50m grading 2.53 g/t from 492m, including 1m grading 18.52 g/t from 495m; 20m grading 2.36 g/t from 254m, including 1m grading 19.46 g/t from 257m; 23m grading 3.28 g/t from 343m, including 1m grading 40.94
g/t from 353m; and 57m grading 1.31 g/t from 580m, including 1m grading 24.75 g/t from 580m.
“The White Foil drilling program being conducted from the bottom of the pit floor and from surface is progressing on schedule, with approximately 70 per cent of the 10,000 metre drilling program completed as of 31 May, 2012,” La Mancha reported.
In a statement, Mr Delorme said that the good continuity of the White Foil mineralisation, coupled with the width of the ore body, meant that there was potential for a large cutback of the open pit and later extraction using bulk underground mining methods.
“Along with the ongoing feasibility study for a processing facility on site and the expansion of the White Foil open pit, these new drill results show the potential to extend the project life beyond what is defined by the existing resource and current toll milling arrangement,” Mr Delorme stated.
La Mancha has reported that it expected to complete the White Foil drilling program by the end of July, with full results released by the end of August and a new resource estimatefor the mine completed towards the
end of 2012.
“A feasibility study is underway for an on-site processing facility which should enable the expansion of the White Foil open pit to extract the current resources,” the company stated.
“Once the resource is updated to include these new drill results, a scoping study is expected to be done on mining of the new resource by open pit and possibly underground methods.”
Park Dam project
The trend along which the Frog’s Leg deposit lies extends into the Park Dam project area, which is operated as a JV between La Mancha (51 per cent) and Barrick Gold (49 per cent).
Park Dam covers an area of 9 square kilometres and La Mancha has reported that the project is part of its long-term plan to develop a mining complex around the Frog’s Leg mine.
“We also have several other Kalgoorlie-area tenements in close proximity to the Frog’s Leg project,” the company stated.
In 2011, La Mancha planned to carry out about $2.9 million of exploration on its Kalgoorlie-area tenements, including about 32,500m of drilling. Park Dam had an exploration budget for the year
of $880,000 and a target definition program was planned for the project. Kintore project
La Mancha owns 100 per cent of the Kintore prospect, which covers a concession area of 3.4sqkm, about 30km northwest of the Frog’s Leg mine on the prospective Kunanalling shear zone.
The zone hosts deposits estimated to contain a combined gold resource of more than 500,000oz, including the Mick Adams (233,000oz) and Burgundy (57,000oz) deposits.
La Mancha has reported that Kintore is a promising target for shallow, easily-accessible resources, presenting favourable geological features and some “interesting” shallow historical drill results.
“In 2010, a first drilling program outlined an initial indicated resource of 34,161 ounces of gold and inferred resource of 39,339 ounces of gold,” the company stated.
The Kintore project had an exploration budget of $800,000 for the 2011 calendar year.
Broads Dam project
La Mancha owns 51 per cent of the Broads Dam prospect, which covers 5.8sqkm in the highly-endowed Zuleika shear zone, close to the Kintore project. Broads Dam had a 2011 exploration budget of $300,000 and La Mancha reported that its 2011 exploration program included drilling to outline an initial resource on the project’s Morley target.