Red Back Mining Inc.

Red Back Mining Inc.

April 04, 2006 16:10 ET

Red Back Mining Inc.: Chirano Operations Update

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - April 4, 2006) - Red Back Mining Inc. (the "Company" or "Red Back") (TSX:RBI) reports that on March 15, 2006 one of two motors that operate the Semi Autogenous Grinding ("SAG") Mill at the Chirano Gold Mine experienced mechanical problems. The affected motor was shut down and removed from the plant and has been shipped to ABB Storvik in Sweden for repairs. Based upon the experienced and dedicated efforts of the Chirano process/mechanical team, this removal and shipment was accomplished in nine days. The problems with the motor have been determined and repairs are being affected. The estimated time for the return of the repaired motor to Chirano and installation in the process plant is the week of April 10, 2006.

The commercial effect of the SAG mill motor failure is a reduction in produced and shipped ounces for March and into April. Since the failure, the SAG mill has operated at a reduced capacity and the Chirano plant has been processing substantially oxide material. During this time high grade sulphide ore has been stockpiled on the Run of Mine ("ROM") pad for immediate processing upon return of full plant operations in mid April. Insurance claims are being pursued to minimize the financial effect.

In the March 2006 quarter, Chirano recovered 28,988 ounces against a budget of 34,575 ounces, a decrease of 16%. In April, Chirano now anticipates to recover 9,500 ounces against a budget of 12,556 ounces, a decrease for the month of 24%. With the Chirano plant again fully operational, these shortfalls are anticipated to be picked up by the end of the September quarter. Before the failure of the SAG mill motor, the Chirano plant was operating well above budgeted throughputs and these levels are expected to be quickly achieved again once the repaired motor is installed. The Company remains confident of its budgeted production forecast of 147,000 ounces for 2006.

Since commencement of production in October 2005 to the end of March 2006, Chirano has produced 59,235 ounces of gold. The financial position of the Company is strong with US$18 million in cash, positive cash flow from Chirano and project debt having already been reduced from US$43 million to US$37.5.

Red Back Mining Inc. is a Canadian mining company listed on the TSX under the symbol "RBI". The Company holds a 90% interest in the Chirano gold mine located in Ghana, West Africa. Targeted gold production for 2006 is 147,000 ounces. In addition to Chirano the Company has significant landholdings in Ghana both in proximity and along strike from the Chirano mine and regionally.

On behalf of the Board of Directors

Richard P. Clark, President

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.

Contact Information

  • Red Back Mining Inc.
    Sophia Shane
    (604) 689-7842