sudanLa Mancha

Company Profile and History

La Mancha was created in September 2006 following the fusion of the gold assets of AREVA NC , a large French multinational, with the exploration properties held by La Mancha Resources Inc., a Canadian-based gold exploration company. Areva is best known for its extensive operations in the uranium market. The deal with Areva took La Mancha from a mineral exploration junior on the TSX Venture exchange to a main board stock with 2 producing gold mines and over 30 exploration projects and cash flow. La Mancha's shares trade on the Toronto Stock Exchange (TSX) under the symbol "LMA".

La Mancha obtained the Hassaï permit in Sudan in1992. Twelve pits have been mined over the years, generating a cumulative production of more than 2.1 million ounces of gold. The Hassäi mine is mined under 10 licenses that cover 18.5 square kilometres; these exploration licenses effectively encompass the entire geological district that extends over 20,000 square kilometres

In Country Location

The Hassaï mine is located in the Red Sea Hills desert of north-eastern Sudan, some 450 km from Khartoum.

Services and Products

Gold exploration, exploitation and production

Number of Employees

475 employees

Financial Information

Gold production for 2008 amounted to 73,175 ounces (29,270 attributable to La Mancha) and originated essentially from the lower-grade SBR deposits on the property. In 2009, the Hassaï mine is expected to produce up to 75,000 ounces (30,000 ounces attributable to La Mancha) at an average cash cost of US $673.

Market Share

The Hassaï mine is Sudan's first and only gold mine in production

Business Objective

“To become a Mid-Tier Producer while increasing shareholder value”

Business Model

“Leverage our expertise to develop and operate mines under difficult conditions while mitigating political risk by pursuing our Australian development; accelerate our exploration programs in Australia and Africa; and leverage the expertise and business opportunities brought by AREVA.”

Ownership of Business

La Mancha owns 40 percent of the mine through a subsidiary, Ariab Mining Company (AMC) and is the mine manager. Areva is still the largest shareholder in the group, with around 63 percent of the issued capital

Benefits Offered and Relations with Government

In May 2007, AMC was notified by the Minister of Finance that the Company will be subject to the income tax rate of 10percent applicable to industrial companies. During the AMC Board which was held on January 2008, the Minister of Energy and Mining Activities and the State Finance Minister confirmed that the tax rate applying to AMC was 10 percent for the year 2007 and thereafter.

On February 26, 2008, the Minister of Finance and National Economy officially instructed the Tax Chamber to tax mining companies at 10percent similar to the industrial sector. In accordance with the instructions of the Minister of Finance, the 2007 Sudanese income tax was booked with a 10 percent tax rate.

On December 23, 2008, an amendment to the tax law announced that the new income tax rate applying for mining sector was 15 percent and AMC was notified by the Tax administration that the Company was reclassified in the Oil and Mining sector and would be subject to a 15 percent income tax rate for the year 2008.

In February 2009, the Company received copy of a letter from the Minister of Energy and Mining dated February 2, 2009 addressed to the Minister of Finance recommending a decision to be made by the Council of Ministers so that the mining sector is taxed at 10 percent. Moreover, the Sudanese Auditing Chamber approved the 2008 annual financial statements of AMC with a 10percent income tax rate.

As at March 31, 2009, the Company has not received any confirmation on the tax rate for the year 2008 and onwards. It is management’s opinion that this change in tax rate for the fiscal year 2008 is contrary to the agreement confirmed by the Minister of Energy and Mining Activities and the State Finance Minister on January and February 2008 so that it will be amended. In April 2009, AMC concluded an agreement with the Sudanese tax department on the settlement of the income tax for the year ended December 31, 2007. The Sudanese tax department accepted to settle the disputed amounts for a lump sum of $100 (€60) and to terminate the claim file.

Product Development

In September 2009 La Mancha Resources reported an initial inferred gold resource of one-million ounces at its Hassai property. La Mancha identified, and has been drilling, polymetallic volcanogenic massive sulphide (VMS) mineralisation below the pits of its 40percent-owned producing Hassaï mine, and has now completed its first NI 43-101 resource estimate. The estimate covers only the VMS mineralisation under the Hassai pit, which is the first of six visually identified VMS targets under existing pits on the property. To date, an inferred resource of 20, 15-million tons at 1,55g/t gold, 1, 48 percent copper and 0, 18 percent zinc has been delineated.

Delivering this resource estimate establishes the Hassai mine as one of the most promising properties in the prolific Arabo-Nubian shield. The firm is now preparing a $5-million, 40 000-m drilling programme to upgrade the inferred VMS resource at Hassai into the measured and indicated categories. La Mancha is also working on a resource estimate for a second target, the Hadal Awatib pit VMS lens. The company plans to publish the results of a scoping study early in the first quarter of 2010 that will summarise all the technical and economical aspects of the project.