GHANA POWER COST INCREASES
June 27, 2008 (RBI
- TSX) ? Red Back Mining Inc. (the ?Company?
or ?Red Back?) wishes to advise that it believes that the cost of power from
the national grid in Ghana
will be increased as a result of higher world oil prices. The Company
understands that the increases will take effect on July 1, 2008.
To this point Red Back has not received any official
notification from the Electricity Company of Ghana
(?ECG?), the power supplier to the Company?s Chirano Gold Mine, of new
rates. However, it is our understanding that the cost of power could
increase from the current level of approximately $0.10 per kilowatt-hour (kWh)
to up to approximately $0.22 per kWh. At $0.22 per kWh power cost would
affect Chirano cash costs by approximately $40-$50 per ounce. On a Life of Mine
basis (using $0.22 per kWh for power) estimated cash costs are projected to be
approximately $430 per ounce, still at the lower end of the cost curve for gold
mining companies.
Red Back has not been party to any formal discussions
or negotiations with the ECG or any other government body and any increase, to
this point, has been determined without consultation with industry.
We have joined with the Ghana Chamber of Mines and other mining
companies in commencing discussions with the relevant governmental agencies
regarding the size of this increase and the apparent focus of this increase on
the mining sector.
Commenting on the expected power cost increase,
Richard Clark, President and CEO of Red Back, commented:
?The recent announcements in Ghana
regarding proposed increases in power costs for bulk users are unfortunate, as
a decision appears to have been made without any formal discussions with the
mining industry. We appreciate the situation which Ghana
faces regarding escalating oil prices and we remain ready to work with the
government towards adjusting to this reality. Through the Chamber of Mines we
look forward to reaching an acceptable compromise which takes into account Ghana?s
requirements and also recognizes the cost challenges to the gold mining
industry and the interests of our shareholders.?
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,
Richard P. Clark
President and CEO
For further information, please
contact Simon Jackson, VP-Corporate
Development or Sophia Shane, Investor
Relations at 604-689-7842