La Mancha Resources Inc LACHF

LMA.TO - The Numbers

[Framfond]

This year the company have a goal to produce up to 100.000 oz. Let´s say they manage 90.000 oz.
Their cash cost is around 500USD/oz. That leaves 440*90.000 USD = 39,6MUSD in cash flow from operations. Equals 50,8 MCAD in cashflow from operations (1CAD=0,78USD).

The company has 143Million shares fully diluted. at 50c/share they have a market cap of 71,5MCAD. Now we have a p/cf=1,4. p/cf=below 1,3 if they produce 100.000 oz this year.

The company has around 1,8 million oz resources (not including inferred). Their market cap was 71,5MCAD = 55,8MUSD. They are valued at around 32 USD/oz.

The company manages 3 producing operations in 3 countries without any problems and are having a great growth profile (71koz/2008, 90-100koz/2009, 130koz/2010, 150koz/2011, 180koz/2012) that they can execute with their cash flow, but because of the exceptional drop in share price in the exceptional hard time last year the company are still valued as companies in big trouble to startup their first mine and with no more money to take it into production.

I believe it will not take long (this summer?) until the company will be valued at least half way to their peers, maybe at p/cf=3-3,5 and 70-80USD/oz and we will see the share price at 1-1,50CAD. Maybe the financial reports will help the audience to see the real value of this company.

I recommend reading their presentation at:

https://www.lamancharesources.com/2/02-23-BMO_corp_presentation_website.pdf

[MontyHigh]

I like La Mancha and have done similar numbers, but the one thing I haven't figured out is:Why did they only cash-flow 800K for all of 2008 (pretty good gold prices) and only 1.8 million for Q4?Anyone looked into this and figured out why it will be different in 2009?The lack of a mill in Australia is a pretty big negative for the company in my view. The exploration competence, track record and

[Framfond]

Good Question Monty High!You´re numbers are for Q1-Q3 last year (not Q4)Let’s start with Australia:The first part of the puzzle is found here:https://www.lamancharesources.com/servlet/dispatcherservlet?selectedContentID=1174&lang=2&action=2Here we see Frog’s Leg had startup in Q2 and in the presentation at page 13...https://www

[Framfond]

Monty High! 4 million oz in 2011 is very interesting! Of course we need to think for ourself if it is just a number they threw out from the air or if there are any chance they might reach that number. Is it through acquisition of another company or is it from their own properties?There are 4million oz-companies out there with market caps of around a half billion dollar. So let

[Framfond]

All exploration during 2008 is probably not yet part of the latest resource calculation (1,8Moz) that we read in:https://www.lamancharesources.com/2/02-20_exploration_program_2009_Final_ANNEXES.pdfFrog’s Leg probably has another more than 200.000 oz that can show up during the next few weeks according to:https://www.lamancharesources.com/servlet/dispatcherservlet

[Framfond]

I forgot to mention one key detail why cash flow will be higher in 2009 than 2008. The USD strength towards other currencies last 6 months makes the cashcost in Australia and other countries dropping  maybe 30% in US currency.  The Q1-2009 numbers will be great in Australia having the costs in Aussi currency and being paid in US currency.I believe it is possible they can reach their

[Framfond]

When we are discussing cost reductions, of course we need to mention oilrelated costs that has been coming down significantly (more than 100USD)since Q2-2008. Some mining companies has 1/3 of their costs related to the price of oil.There is no need at all to doubt, there will be a huge change in cashflow for the company these days compared to what we read in the reports from 2008. The Q1

[Nergy]

Good summary Framfond, nice to see you so optimistic about The Ity mine, and their exploration targets in the Ivory coast.We all seem to get a fair price target in the range $1.20- $2 for 2009 assuming the company will reach their production guidance and gold stays between $800-$950. Adding further exploration success or a JV would of course ad some more to the share price. 

[RedHorizon]

This is a very good questions and I will give the answer which none of us will like.  The company has, what I consider relatively high corporate overhead costs, several million per year.  This is away from direct mine operations.  This consumes a significant amount of their "mine operating profits."  Furthermore they will expense some of their exploration costs and

[RedHorizon]

They have already stated that their expected cost for 2009 will be $497 US, this reflects the decline in the Australian dollar which you mention and it also reflects the lower price of diesel fuel.  I am hearing in my discussions with several juniors that they are observing that the cost of getting good technical personnel is coming down significantly as well as the cost of equipment.