RED BACK ANNOUNCES SECOND QUARTER RESULTS
August 11, 2008 (RBI - TSX)
? Red Back Mining Inc. (the ?Company? or ?Red Back?) is
pleased to report its financial results for the second quarter ended June 30,
2008. The consolidated financial statements together with Management?s
Discussion and Analysis will be available on the Company?s web site (www.redbackmining.com)
and on SEDAR (www.sedar.com).
Highlights for the Second Quarter
The second
quarter of 2008 continues to track the Company?s strong operating performance
based on the significant steps taken in 2007 to achieve growth and
profitability. The Company, currently debt free and un-hedged, generates
revenues from its two operating mines and has a strong working capital position
to support the underground development of Akwaaba Deeps at Chirano and
expansions of both the Chirano and Tasiast production plants.
The Company?s highlights for the
second quarter were:
- Total gold
production of 64,719
oz (year-to-date: 128,178 oz)
- Average
realized gold price of $900 per oz (year-to-date: $916 per oz)
- Net income
of $23.5 million (year-to-date: $43.3 million)
- Average
monthly cash flow from operations of $9.3 million (year-to-date: $9.5
million)
- Cash
operating costs of $434 per oz (year-to-date: $418 per oz)
- New
discovery of high grade mineralization below the Paboase South open pit
deposit at Chirano
- Tasiast
moves to ?owner-mining? by acquiring the contractor?s mining fleet
- Ongoing
positive results from dump/heap leach testwork at Tasiast
In addition,
early in the third quarter, the Company confirmed that, at Chirano, proven and
probable reserves at Akwaaba Deeps increased to 1.04 million oz. Open pit reserves increased to 1.38 million oz.
Results of Operations
The
table below summarizes the key operating statistics of the Company?s for the
quarter.
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Three
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Six
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Three
months ended
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Six
months ended
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months
ended
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June 30,
2008
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June 30,
2008
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June 30,
2007
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Chirano
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Tasiast
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Total
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Chirano
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Tasiast
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Total
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(Note 1)
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Gold Revenue ($000)
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27,373
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33,023
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60,396
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59,095
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55,715
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114,810
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13,760
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29,974
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Profit from operations ($000)
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9,934
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9,236
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19,170
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23,655
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14,185
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37,840
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525
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1,540
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Ore mined (tonnes)
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696,997
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540,028
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1,237,025
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1,541,968
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878,745
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2,420,713
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602,106
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1,120,541
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Ore milled (tonnes)
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595,516
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373,760
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969,276
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1,139,817
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697,882
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1,837,699
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469,419
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979,048
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Average feed grade (g/t)
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1.70
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3.02
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2.25
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1.86
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2.95
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2.35
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2.08
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2.07
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Average recovery
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91.5%
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93.0%
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92.1%
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91.3%
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94.0%
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92.3%
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88.4%
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89.5%
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Gold produced (oz)
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29,764
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34,955
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64,719
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63,695
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64,483
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128,178
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28,297
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60,906
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Gold sold (oz)
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30,354
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36,735
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67,089
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64,365
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60,912
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125,277
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27,464
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58,670
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Realized gold price per oz
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$902
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$899
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$900
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$918
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$915
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$916
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$501
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$511
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Cash costs per oz (Note 2)
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Operating
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$431
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$437
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$434
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$420
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$417
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$418
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$375
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$386
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Royalty
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$
38
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$ 27
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$
32
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$
31
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$
27
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$
29
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$
18
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$
18
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Depreciation and amortization per oz (Note 2)
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$103
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$237
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$183
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$
97
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$236
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$165
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$
86
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$
77
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Note 1: Chirano
operations only. Tasiast, acquired on August 2, 2007, achieved commercial
production at the beginning of 2008.
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Note 2: This is a non-GAAP measure. It is calculated by dividing costs
on the statement of income and deficit by gold ounces sold. For Tasiast, $139
per oz of depreciation and amortization are due to the amortization of the
fair value excess on purchase of the Tasiast mineral properties on August 2,
2007.
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Chirano Gold Project, Ghana
In the second quarter, Chirano produced 29,764 oz at a cash
operating cost of $431 per ounce (year-to-date, 63,695 oz at $420 per
ounce). Operating costs for the second quarter have been affected by
rising material and fuel costs and lower than budgeted head grade. This,
coupled with an anticipated increase in electricity charges (News release: June
27, 2008), results in estimated 2008 annual cash operating costs at Chirano
increasing to approximately $450 per ounce. Annual production is forecast
to be approximately 130,000
oz.
Ore reserves at
Akwaaba Deeps have increased to 1.04 million oz (News Release: July 28, 2008)
and open pit reserves to 1.38 million oz. The development of Akwaaba Deeps is
well underway with first underground ore expected to be delivered to the mill
in the fourth quarter of 2008.
The Chirano plant
expansion to a nominal throughput of 3.5 Mtpa is continuing on schedule with
commissioning expected in the first quarter of 2009.
Exploration
drilling at depth along the Chirano shear zone has resulted in the discovery of
Paboase South Deeps, a new, high grade structure below the Paboase South open
pit (News release: June 10, 2008). This discovery, together with early positive
results under other surface deposits, confirms the potential for Chirano to add
further high grade reserves at depth.
Tasiast
Gold Project, Mauritania
In the second quarter, Tasiast produced 34,955 oz at a cash
operating cost of $437 per ounce (year-to-date, 64,483 oz at $417 per
ounce). Operating costs were higher than forecast due to rising fuel
costs. Notwithstanding this, Red Back anticipates that costs will
decrease over the second half of 2008 to average approximately $400 per oz for
the year. Cost reductions are expected from the move to owner mining and the
recent installation of a power generation plant that utilizes lower cost heavy
fuel oil. Tasiast is on track to exceed its forecast production for the year of
110,000 ounces.
During the
second quarter, Tasiast amicably terminated its third party mining contract and
negotiated the purchase of the related mining fleet for a price of
approximately $18 million. The move to owner mining should result in
substantially lower unit mining costs (approximately 30%) over the remaining
mine life thereby improving overall project economics.
The
expansion of the Tasiast processing facility to a nominal throughput of 2.5
Mtpa is continuing on schedule. Commissioning
of this facility is expected in the first quarter of 2009. Upon
completion of the expansion, Tasiast is expected to produce a minimum of 200,000 oz of gold per
annum.
The
Tasiast resource contains significant quantities of lower grade oxide material.
Ongoing heap leach test work at Tasiast continues to show that this resource
may be recoverable by conventional "dump" or "heap"
leaching providing an additional revenue stream for a small incremental capital
cost. This could have a significant positive impact on the economic cut off
grade and consequently reserves, annual production and overall project
economics. A development decision in this
regard is expected later in 2008.
About
Red Back
Red Back Mining
Inc. is an unhedged African focused gold producer. It owns and operates the
Chirano Gold Mine in Ghana (90% interest) and the Tasiast Gold Mine in
Mauritania (100% owned). Major plant expansions at both Chirano and Tasiast are
underway. An aggressive exploration program aimed at increasing the Company?s
resource and reserve base at both Chirano and Tasiast is continuing.
This
News Release contains forward looking statements which are subject to a variety
of risks and uncertainties which could cause actual events or results to differ
materially from those reflected in the forward looking statements. The Company
does not intend to update this information and disclaims any legal liability to
the contrary.
On
behalf of the Board of Directors:
Richard P. Clark, President
For
further information, please contact Simon Jackson, VP-Corporate Development or Sophia
Shane, Investor Relations at 604-689-7842