La Mancha turns to the drill to cure political risk woes

Having a geographically diversified portfolio of mining projects is always a good idea, but it is especially so when one of your projects is in Côte d’Ivoire.

La Mancha Resources (LMA-T) had to suspend all gold mining and exploration activities in the country early this year due to the brief civil war there.

And while La Mancha is back on track in Côte d’Ivoire, having resumed operating activities on May 9 and expecting 2011’s gold production at its 45.9%-owned Ity gold mine to match last year’s output, its whole story consists of more than its Ivoirian assets.

Indeed, its share of Ity output only accounted for about 10% of the company’s total gold production in 2010.

But that’s not to say that the rest of the company’s assets are free from political risk.

While one of its two key assets lies in Australia, its flagship project, the Hassai gold mine, is in a country that has made headlines for its own political strife over the last decade: Sudan.

La Mancha, however, has been able to operate without interruption in the country. And going forward, Hassai looks to have significant expansion potential thanks to a volcanogenic massive sulphide (VMS) deposit on the site.

“Our objective is to double our VMS resource before initiating feasibility work; we are confident that this objective could be met before the end of 2011 with the current program,” Dominique Delorme, company president and CEO, said in a statement.

The company has already shown itself to be adept at adding ounces, as it upped its reserves to 612,835 oz. gold, and its measured and indicated resources to 1.94 million oz. gold in 2010.

Exploration work at its Frog’s Leg gold project in Australia generated 348,000 oz. gold to the mine’s resource, which represented twice as much as the company was targeting, and a new gold deposit was discovered on its wholly owned Kintore property, which sits 30 km northeast of Frog’s Leg.

Such results are motivating the company to ramp up exploration. In all, $23 million will be spent on exploration programs for 2011, of which $12.2 million is attributable to La Mancha.

More than half of those dollars will go to the VMS project at Hassai as seven rigs are set to drill 100,000 metres at the project this year.

La Mancha has a 40% stake in Hassai, which saw a preliminary economic assessment (PEA) completed last fall.

That PEA defined two phases of development with the first calling for the installation of a carbon-in-leach plant to optimize current gold production, while the second would see a flotation plant built to process the VMS ore.

The company’s most recent exploration program increased one of the pit’s measured and indicated resource to 146,300 oz. The company says a new reserve and life-of-mine plan for the pit will be part of an upcoming feasibility study.