Red Back Mining Inc.

Red Back Mining Inc.

August 14, 2007 18:02 ET

CORRECTION FROM SOURCE: Red Back Announces Second Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 14, 2007) -

Due to multiple revisions this version of the release replaces all previous releases:

Red Back Mining Inc. (TSX:RBI) (the "Company" or "Red Back") is pleased to report its financial and operating results for the three months ended June 30, 2007. The consolidated financial statements together with management's discussion and analysis will be available on the Company's web site ( and on SEDAR (

Highlights of June 30, 2007 quarter

June 2007 Quarter June 2007 Half Year
Gold Production (oz) 28,297 60,906
Ore Tonnes Mined ('000t) 603 1,121
Ore milled ('000t) 469 979
Head grade (g/t) 2.08 2.07
Recovery (%) 88.4 89.5
Direct cash operating costs (US$/oz) 384 364

Gold Sales (US$'000) 13,760 29,974
Income from operations (US$'000) 525 1,540
Cashflow from operations (US$'000) 2,880 6,066
Net Loss (US$'000) (1,180) (2,657)

The net loss for the June 2007 quarter was $1.2 million. This result was adversely impacted by results from operations at the Chirano Gold Project ("Chirano") in Ghana.

For the second quarter Chirano produced earnings before interest, taxation, depreciation and amortization of $2.9 million.

Income from operations for the quarter were lower than anticipated due to higher costs of operations particularly related to increased crushing and processing costs, related to harder than expected ore, and by the fluctuation in the availability of power from the Ghanaian power utilities. These factors reduced the throughput at the Chirano mill thereby reducing quarterly gold production. The reduced gold production results in less ounces being available for sale at spot price, which reduces the average price per ounce realised due the effect of the forward contracts outstanding. The forward contracts were entered into as a condition of the original project finance.

To address the ore hardness issue a portable crushing unit was installed at Chirano pending installation of a more permanent facility. The new crushers reduce the size of the ore to a much smaller diameter than original design parameters. Installation of the portable crusher has realized a marked increase in production throughput. This improvement is expected to be reflected in 3rd Quarter results.

The Company is planning to dilute the effect of the forward sales contracts by adding unhedged ounces to its production profile. It is currently envisaged that increased production will come from both underground development at Chirano and from the recently acquired Tasiast Gold Project in Mauritania ("Tasiast").

The Chirano Gold Project - Ghana

At Chirano a major resource/reserve definition program was completed during the quarter optimizing open pit designs at a US$500 gold price. This program saw a 33% increase in ore reserves over the last estimate in 2004. As at April 30, 2007 surface ore reserves at Chirano are 24 million tonnes @ 1.6 g/t Au containing 1.2 million ounces. This is after mining almost 300,000 ounces since mid 2005. This new estimate was prepared by the Company's consultants AMC Consultants of Perth, Australia (News Release July 4, 2007).

During the quarter the Company also received an updated resource estimate from Hellman and Schofield of Perth, Australia in respect of the Akwaaba Underground Project. Concurrently with the Hellman and Schofield report, AMC Consultants delivered a scoping study on underground mining at Akwaaba. Hellman and Schofield reported a resource increase of 27% (245,000 ounces) from the last estimate in November 2006. Total resources now stand at 1.1 million ounces at Akwaaba (News Release July 12, 2007). This is in addition to the surface resources and reserves at Chirano.

The underground mining scoping study indicates that up to 1 million ounces of gold could be recovered from Akwaaba depending on the mining method used. A financial analysis of the mining methods recommended by AMC Consultants is underway and upon reaching a final decision in this regard the Company will tender the Akwaaba underground project for development, with the aim of commencing ground works before year end.

The Tasiast Gold Project - Mauritania

In early August 2007 Red Back exercised its option to purchase Tasiast (News Release August 2, 2007). Red Back paid the purchase price (US$225 Million) to Lundin Mining Corp., paid out the Tasiast debt facility (US$42.5 million plus US$0.3 million interest) and retired the Tasiast gold hedging structure (US$10.1 million). The result is that the Company is now the 100% owner of Tasiast, which is debt free and unhedged.

Tasiast was officially opened by the President of Mauritania, His Excellency Sidi Mohamed Ould Cheikh Abdallahi, on July 18, 2007 with representatives of the Company in attendance.

Tasiast is now in the commissioning stage with commercial production expected in the 4th Quarter 2007. Initial annual production rates are scheduled at 108,000 ounces of gold at an average grade of 3.25 g/t.

We are very pleased with the acquisition of Tasiast. This represents the first step in an aggressive growth strategy by the Company. The next steps are the development of the first underground operation at the Chirano gold mine in Ghana, the expansion of the Chirano processing facility, increasing resources and reserves at Tasiast, and the expansion of the Tasiast plant. The successful realization of these programs over the next 12-24 months will establish the Company as a significant mid-tier gold producer, well positioned for even further growth.

The Company is well funded to continue its growth objectives. Upon closing the Tasiast purchase the Company had approximately US$75 million in cash and only US$19 million in debt.

Conference Call

The Company will hold a telephone conference with 12:00 pm ET on August 16, 2007 to discuss financial results for the Second Quarter ending June 30, 2007.

Please call in 5-10 minutes before the conference starts and stay on the line (an operator will be available to assist you). The Call in number is (416) 644 3415 or 1 (800) 731 5774.

Approximately two hours after the call a replay of the telephone conference will be available at (416) 640-1917 or 1 (877) 289 8525, pass code 21243792#.

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

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