Red Back Mining Inc.

Red Back Mining Inc.

June 27, 2008 13:37 ET

Red Back Mining Inc.: Ghana Power Cost Increases

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 27, 2008) - Red Back Mining Inc. (the "Company" or "Red Back") (TSX:RBI) 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

Contact Information

  • Red Back Mining Inc.
    Simon Jackson
    VP-Corporate Development
    (604) 689-7842
    Red Back Mining Inc.
    Sophia Shane
    Investor Relations
    (604) 689-7842
    (604) 689-5452 (FAX)