Red Back Mining Inc.
TSX : RBI

Red Back Mining Inc.

February 26, 2010 08:00 ET

Red Back Reports Record Net Income of $109 Million in 2009

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 26, 2010) - Red Back Mining Inc. (TSX:RBI) (the "Company" or "Red Back") is pleased to report record net income of $109 million for the year ended December 31, 2009. The 2009 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 Year

  • Net income of $109 million (Earnings per share of $0.48)
  • 31% increase in gold production to 342,085 oz
  • 15% increase in average realized gold price ($996 per oz compared to $866 in 2008)
  • Cash operating costs of $391 per oz
  • 85% increase in proven and probable reserves to 3.05 million oz at Tasiast
  • Discovery of the Greenschist zone at Tasiast
  • Discovery of the Paboase underground deposit at Chirano
  • Completion of plant expansions at Chirano and Tasiast
  • Commencement of commercial underground mining of Akwaaba at Chirano
  • Commencement of dump leach operations at Tasiast

Red Back expects production to increase to between 485,000 - 525,000 oz in 2010, a projected 42 - 54% increase from 2009, at a cash cost of between $390 - $420 per oz on the strength of the expanded CIL plants, dump leach operations at Tasiast and the ramping up of underground mining of Akwaaba at Chirano.

Results of Operations

The tables below summarize key operating statistics of the Company for the last quarter and the year.

  Three months ended Three months ended
  Dec. 31, 2009 Dec. 31, 2008
  Chirano Tasiast Total Chirano Tasiast Total
Ore tonnes mined ('000t) 1,246 1,620 2,866 864 1,112 1,976
             
CIL Ore tonnes milled ('000t) 877 547 1,424 539 394 933
CIL Average grade (g/t) 2.2 2.8 2.4 2.0 3.7 2.7
CIL Average recovery 89.9% 90.2% 90.4% 91.9% 92.5% 92.2%
             
Gold produced, CIL (oz) 54,518 44,589 99,107 31,346 41,318 72,664
Gold produced, dump leach (oz) - 12,083 12,083 - - -
Gold produced, total (oz) 54,518 56,672 111,190 31,346 41,318 72,664
Gold sold (oz) (Note 2) 52,225 49,922 102,147 28,778 40,719 69,497
             
Cash costs per oz (Note 3)            
  Operating $445 $324 $386 $497 $319 $393
  Royalty $ 34 $176 $103 $ 26 $ 24 $ 25
Depreciation and amortization per oz (Note 4) $174 $275 $223 $125 $224 $187
Note 1: Production statistics may not calculate exactly due to rounding.
Note 2: 2009 gold sold at Chirano excludes 3,782 oz recovered from underground operations and capitalized during pre-production development.
Note 3: This is a non-GAAP measure. It is calculated by dividing costs on the statement of income and retained earnings by gold oz sold.
Note 4: For Tasiast, approximately $94 per oz ($128) 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.
  Year ended December 31, 2009 Year ended December 31, 2008
  Chirano Tasiast Total Chirano Tasiast Total
Ore tonnes mined ('000t) 3,723 4,817 8,540 3,094 2,522 5,616
             
CIL Ore tonnes milled ('000t) 2,718 1,684 4,402 2,205 1,486 3,691
CIL Average grade (g/t) 2.3 2.9 2.5 1.9 3.1 2.5
CIL Average recovery 90.4% 91.9% 91.0% 91.8% 93.6% 92.8%
             
Gold produced, CIL (oz) 183,425 142,260 325,685 120,793 140,054 260,847
Gold produced, dump leach (oz) - 16,400 16,400 - - -
Gold produced, total (oz) 183,425 158,660 342,085 120,793 140,054 260,847
Gold sold (oz) (Note 2) 165,052 154,720 319,772 120,285 137,993 258,278
             
Cash costs per oz (Note 3)            
  Operating $443 $336 $391 $478 $384 $428
  Royalty $ 30 $ 81 $ 55 $ 26 $ 26 $ 26
Depreciation and amortization per oz (Note 4) $123 $241 $180 $105 $227 $170
Note 1: Production statistics may not calculate exactly due to rounding.
Note 2: 2009 gold sold at Chirano excludes 17,786 oz recovered from underground operations and capitalized during pre-production development.
Note 3: This is a non-GAAP measure. It is calculated by dividing costs on the statement of income and retained earnings by gold oz sold.
Note 4: For Tasiast, approximately $93 per oz (2008: $128) 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.

The strong operating results in 2009 are driven by a combination of increased production and lower costs coupled with a 15% increase in average realized gold price.

Lower operating costs per oz compared to 2008 are principally due to higher production, lower power costs at Chirano and lower mining costs at Tasiast. Royalties are higher due to the inclusion of an $8 million expansion fee due to the government of Mauritania upon completion of the plant expansion at Tasiast. Higher depreciation and amortization are explained by the Company depreciating the costs of the plant expansions at Chirano and Tasiast and amortizing the underground development costs at Chirano in the fourth quarter of 2009.

Corporate activities contributed over $20 million to net earnings and include a termination fee received in relation to the Moto transaction, a gain on sale of marketable securities and realized foreign exchange gains.

Strong Financial Position

The Company stands at 31 December 2009 with a strong balance sheet, no debt, no hedging and $150 million in cash.

In 2009, Red Back financed over 75% of its capital projects (including underground development work at Akwaaba Deeps) and exploration programs from cash flow from operations with the balance coming from its treasury. Total assets increased 37% in the year primarily due to the plant expansions at Chirano and Tasiast, the development of Akwaaba Deeps at Chirano and a higher cash position.

Based on current gold prices and forecast production and cash operating costs, Red Back is poised to generate strong cash flows in 2010, well in excess of funds earmarked for its exploration programs and ongoing capital projects.

Tasiast, Outlook for 2010

Tasiast is forecast to produce 245,000 – 265,000 oz of gold in 2010. This production forecast includes approximately 60,000 oz of gold from dump leach operations. Cash operating costs are estimated at $325 - $350 per ounce.

The Greenschist zone is proving to be a remarkable new discovery at Tasiast. This zone remains open down dip and along strike to the north and the south. 2009 year end reserve estimates will be completed shortly.

An aggressive $22 million six-month exploration program is underway to identify new resources in and around the Greenschist zone. Continued exploration drilling and completion of heap leach test work is expected to lead to further significant reserve increases during 2010.

Chirano, Outlook for 2010

Operations at Chirano will include both open pit and underground mining. Underground mining of the higher grade ore from Akwaaba is scheduled to reach full production rate in mid 2010. Estimated 2010 production is 240,000 – 260,000 oz at cash operating costs of $460 - $490 per oz.

Development of Paboase, Chirano's second underground deposit, is expected to start early in the second quarter with mining of first ore forecast for mid-2011. Exploration and evaluation at Paboase and below other open pits will continue in order to identify additional high grade deposits at depth. A $6 million exploration program has been approved for the first half of 2010.

About Red Back

Red Back is an un-hedged African focused gold producer. It owns and operates the Chirano Gold Mine in Ghana and the Tasiast Gold Mine in Mauritania. Major plant expansions at both Chirano and Tasiast were completed in 2009. Aggressive exploration programs aimed at increasing the Company's resource and reserve base at both Chirano and Tasiast are ongoing.

FORWARD-LOOKING INFORMATION

This press release contains "forward-looking information" that is based on Red Back's current expectations, estimates, forecasts and projections. This forward-looking information includes, among other things, statements with respect to Red Back's plans, outlook and business strategy. The words "may", "would", "could", "should", "will", "likely", "expect", "anticipate", "intend", "estimate", "plan", "forecast", "project", and "believe" or other similar words and phrases are intended to identify forward-looking information.

Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause Red Back's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Such factors include, but are not limited to: uncertainties related to drilling results; the ability to raise sufficient capital to fund exploration; changes in economic conditions or financial markets; changes in prices for Red Back's mineral products or increases in input costs; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological or operational difficulties or inability to obtain permits encountered in connection with exploration activities; and labour relations matters.

This list is not exhaustive of the factors that may affect our forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. Red Back disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise.

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
    604-689-5452 (FAX)
    www.redbackmining.com