Red Back Mining Inc.
TSX : RBI

Red Back Mining Inc.

August 11, 2008 16:35 ET

Red Back Announces Second Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 11, 2008) - Red Back Mining Inc. (the "Company" or "Red Back") (TSX:RBI) 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.



--------------------------------------------------------------------------
Three months ended Six months ended
June 30, 2008 June 30, 2008
Chirano Tasiast Total Chirano Tasiast Total
--------------------------------------------------------------------------

Gold Revenue
($000) 27,373 33,023 60,396 59,095 55,715 114,810
Profit from
operations
($000) 9,934 9,236 19,170 23,655 14,185 37,840

Ore mined
(tonnes) 696,997 540,028 1,237,025 1,541,968 878,745 2,420,713
Ore milled
(tonnes) 595,516 373,760 969,276 1,139,817 697,882 1,837,699

Average
feed grade
(g/t) 1.70 3.02 2.25 1.86 2.95 2.35
Average
recovery 91.5% 93.0% 92.1% 91.3% 94.0% 92.3%

Gold
produced
(oz) 29,764 34,955 64,719 63,695 64,483 128,178
Gold sold
(oz) 30,354 36,735 67,089 64,365 60,912 125,277

Realized
gold price
per oz $902 $899 $900 $918 $915 $916

Cash costs
per oz
(Note 2)
Operating $431 $437 $434 $420 $417 $418
Royalty $ 38 $ 27 $ 32 $ 31 $ 27 $ 29
Depreciation
and
amortization
per oz
(Note 2) $103 $237 $183 $ 97 $236 $165
--------------------------------------------------------------------------

--------------------------------
Three Six
months ended
June 30, 2007
(Note 1)
--------------------------------

Gold Revenue
($000) 13,760 29,974
Profit from
operations
($000) 525 1,540

Ore mined
(tonnes) 602,106 1,120,541
Ore milled
(tonnes) 469,419 979,048

Average
feed grade
(g/t) 2.08 2.07
Average
recovery 88.4% 89.5%

Gold
produced
(oz) 28,297 60,906
Gold sold
(oz) 27,464 58,670

Realized
gold price
per oz $501 $511

Cash costs
per oz
(Note 2)
Operating $375 $386
Royalty $ 18 $ 18
Depreciation
and
amortization
per oz
(Note 2) $ 86 $ 77
--------------------------------

Note 1: Chirano operations only. Tasiast, acquired on August 2, 2007,
achieved commercial production at the beginning of 2008.
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.


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

Contact Information

  • Red Back Mining Inc.
    Simon Jackson
    VP-Corporate Development
    (604) 689-7842
    or
    Red Back Mining Inc.
    Sophia Shane
    Investor Relations
    (604) 689-7842
    Website: www.redbackmining.com