Red Back Mining Inc.
TSX : RBI

Red Back Mining Inc.

October 13, 2005 08:26 ET

Red Back Mining Inc.: Reduction in Exercise Price of Certain Warrants

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 13, 2005) - Red Back Mining Inc. (TSX:RBI) (the "Company") announces that, subject to the approval of the Toronto Stock Exchange, and shareholder approval as required, it will offer the holders of certain of its outstanding share purchase warrants the opportunity to exercise their warrants at a reduced exercise price as an incentive for the holders to exercise their warrants immediately. The affected warrants are those exercisable for 1,999,999 common shares at a price of Cdn $2.25 per common share until December 4, 2005 and those exercisable for an additional 12,500,000 common shares at a price of Cdn $2.25 per common share until June 9, 2006. The warrants to purchase the 1,999,999 common shares were issued under separate agreements with individual warrantholders while the 12,500,000 warrants were issued under an indenture.

The Company is proposing an amendment to the terms of the individual warrants and to the warrant indenture that would reduce the exercise price of all of the warrants to Cdn $2.10 per common share for a period of five business days commencing at 8:00 a.m. on the effective date, October 26, 2005 and ending November 1, 2005 at 5:00 p.m. (Vcr time). All of the other terms of the warrants will remain unchanged. Holders of the 1,999,999 warrants not governed by the indenture will have the right on an individual basis to agree to the amendment or not. If the indenture is amended by the requisite majority of warrantholders to permit the reduced exercise price, then holders of those warrants may similarly elect on an individual basis whether or not to exercise their warrants at the reduced price. Any warrants not exercised within the five business day period at the reduced exercise price will thereafter be exercisable at the original exercise price of Cdn $2.25 per common share until their respective expiry dates.

Shareholder approval will be required for Belike Nominees Pty Ltd., an insider of the Company to exercise their 2,500,000 warrants. If Belike chooses to exercise their warrants the transaction will close in escrow until shareholder approval is received at the AGM scheduled to be held on November 24, 2005, Belike is not able to vote their shareholdings of 12,803,063 on this transaction. If shareholder approval is not received, Belike will be refunded.

If all applicable warrants are exercised at the reduced exercise price, the proceeds to the Company will be Cdn $30,449,998. Proceeds from this warrant exercise will be used for continuing exploration of the Company's Ghanaian exploration projects and for general working capital. In addition the early exercise of the warrants will give the Company the opportunity to assess proposed plant upgrades at the Chirano Gold Project to allow further optimization of operations given the current gold price environment. The reduction in the exercise price of the warrants minimizes further potential dilution to shareholders and eliminates some or all of the outstanding warrants.

On behalf of the Board of Directors

Richard P. Clark, President


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