Dioro, La Mancha Boost Frog’s Leg Reserves

VANCOUVER–Proven and probable reserves are up by 45% at the Frog’s Leg mine, a 51-49 joint venture between La Mancha Resources (LMA-T, LACHF-O) and Dioro Exploration (DIO-T, DIO-A).

The partners had previously estimated proven and probable reserves at 3.2 million tonnes grading 5.53 grams gold per tonne.

Through conversion of measured and indicated resources, however, proven and probable reserves now weigh in at 4.9 million tonnes grading 5.02 grams gold for 789,500 contained ounces gold.

The increase in reserves at Frog’s Leg, 25 km west of Kalgoorlie- Boulder, Western Australia, bodes well for production plans. Dioro reports that it and La Mancha expect to ramp up previously forecast yearly production by about 29% to just over 113,000 oz. gold starting in 2010.

The upgraded reserves boost mine life to 7.1 years from 5.9 years.

So far in 2009, Dioro reports that the joint venture mined nearly 154,760 tonnes of ore grading 4.2 grams gold in the quarter ending May 31.

Dioro estimated its share of gold produced at 12,148 oz. at a cash cost of US$486 per oz. gold.

The recent success of Frog’s Leg has helped spark a bidding war for Dioro. After first backing a sweetened bid by Avoca Resources (AVO-A, AVORF-O) that would see one Avoca share exchanged for every 2.3 shares of Dioro, the company endorsed a rival bid by Ramelius Resources in August. Ramelius is offering two of its own shares for each Dioro share.

Based on the closing price of Dioro, Avoca and Ramelius shares on the Australian Stock Exchange on Aug. 14, Dioro says the implied value of Avoca’s offer is A74.6¢ compared with Ramelius’s A98¢ per share. Dioro’s closing share price on the same day was A81.5¢.

At one point, after rejecting Avoca’s initial offer of one share for every 2.4 Dioro shares, Dioro was also in talks with Northgate Minerals (NGX-T, NXG-X), but no deal emerged.

At presstime, Dioro’s shares traded at 65¢ apiece in Toronto and La Mancha shares at $1.16. Respectively, Dioro and La Mancha have 91.6 million and 142 million shares outstanding.