January 18, 2011 / 1:43 PM / 7 years ago

UPDATE 2-La Mancha says Ity mine ops gradually resume; shrs up

* Sees gold output of 115,000-135,000 oz in 2011

* 2010 output up 30 pct at 122,571 oz

* Sees 2011 cash costs at $671 per ounce

* Shares up 7 pct (Adds details, analyst comments, share movement)

By Gowri Jayakumar

BANGALORE, Jan 18 (Reuters) - La Mancha Resources Inc LMA.TO said activities at its Ity mine in Ivory Coast, which was shut down in December due to political tensions in the west African country, had gradually resumed and could reach normal capacity by the end of this month.

The company, which operates two producing gold mines in Africa and two in Australia, also forecast 2011 gold production of 115,000-135,000 ounces.

La Mancha shares, which have shed over 4 percent of their value since the mine shut down, rose 7 percent to C$2.30 in morning trade on Tuesday on the Toronto Stock Exchange.

“La Mancha is being extremely conservative as to when it expects Ity to come on line,” Stonecap Securities analyst Ovais Habib said, adding that he expects 2011 production to come in at the higher end of La Mancha’s range.

The Ity mine contributed about 14 percent of total 2010 production of 122,571 ounces. The mine was shut down on Dec. 17, 2010 as a precautionary measure after agitations increased in the Zouan Hounien region. [ID:nSGE6BG07N]

Habib, however, warned that higher cash costs at La Mancha’s new White Foil mine in Australia and a strong Australian dollar could eat into revenue in 2010 and 2011. The company expects average cash costs to be $671 per ounce in 2011. (Reporting by Gowri Jayakumar in Bangalore; Editing by Anne Pallivathuckal)

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