Red Back Mining Inc.
TSX : RBI

Red Back Mining Inc.

March 02, 2009 16:30 ET

Red Back Reports Record Net Income of $61.9 Million in 2008

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 2, 2009) - Red Back Mining Inc. (the "Company" or "Red Back") (TSX:RBI) is pleased to report record net income of $61.9 million for the year ended December 31, 2008. The 2008 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 $61.9 million (Earnings per share of $0.33)

- 76% increase in gold production to 260,847 oz

- 48% increase in average realized gold price ($866 per oz compared to $587 in 2007)

- Cash operating costs of $428 per oz

- 64% increase in proven and probable reserves at Tasiast

- 55% increase in proven and probable reserves at Chirano

- Commenced "owner-mining" at Tasiast

- Commenced plant expansions at Chirano and Tasiast

- Delivery of first ore from the Akwaaba Deeps underground development in the fourth quarter

- Commenced construction of a dump leach pad at Tasiast

- Completion of a Cdn. $60 million equity financing

Results of Operations

The table below summarizes the key operating statistics for 2008 and the last quarter of the year.



Year ended December 31,
2008 2007
Total
Chirano Tasiast Total (Note 2)
--------------------------------------------------------------------------
Ore tonnes mined ('000t) 3,094 2,522 5,616 2,562
Ore tonnes milled ('000t) 2,205 1,486 3,691 1,984

Average grade (g/t) 1.9 3.1 2.5 2.2
Average recovery 91.8% 93.6% 92.8% 90.3%

Gold produced (oz) (Note 3) 120,793 140,054 260,847 127,196
Gold sold (oz) 120,285 137,993 258,278 125,155

Realized gold price per oz $ 873 $ 860 $ 866 $ 587

Cash costs per oz (Note 4)
Operating $ 478 $ 384 $ 428 $ 378
Royalty $ 26 $ 26 $ 26 $ 21
Depreciation and
amortization per oz (Note 4) $ 105 $ 227 $ 170 $ 84
--------------------------------------------------------------------------

Three months ended December 31,
2008 2007
Total
Chirano Tasiast Total (Note 2)
--------------------------------------------------------------------------
Ore tonnes mined ('000t) 864 1,112 1,976 742
Ore tonnes milled ('000t) 539 394 933 494

Average grade (g/t) 2.0 3.7 2.7 2.2
Average recovery 91.9% 92.5% 92.2% 91.7%

Gold produced (oz) (Note 3) 31,346 41,318 72,664 32,525
Gold sold (oz) 28,778 40,719 69,497 32,666

Realized gold price per oz $ 783 $ 789 $ 786 $ 803

Cash costs per oz (Note 4)
Operating $ 497 $ 319 $ 393 $ 384
Royalty $ 26 $ 24 $ 25 $ 31
Depreciation and
amortization per oz (Note 4) $ 125 $ 224 $ 187 $ 100
--------------------------------------------------------------------------
Note 1: Production statistics may not calculate exactly due to rounding.
Note 2: Chirano operations only. Tasiast, acquired on August 2, 2007,
achieved commercial production at the beginning of 2008.
Note 3: 2007 production excludes 20,812 oz produced at Tasiast during
commissioning.
Note 4: This is a non-GAAP measure. It is calculated by dividing costs
on the statement of income and deficit by gold oz sold. For
Tasiast, approximately $128 per oz 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 two most significant contributing factors to Red Back's strong operating results in 2008 are:

1. Tasiast's 140,054 oz production in its first year of operation which contributed $119 million in revenues and $31 million in operating profits; and

2. a 49% increase in realized revenue per ounce at Chirano as a result of the unwinding of all forward gold sale contracts in late 2007 and increased gold prices.

Operating costs increased due to general cost pressures in the industry, driven primarily by high energy costs at both operations. In addition, costs at Chirano were also negatively impacted by ongoing crushing issues due to the hardness of the ore and the mining of lower grade ore following a pit wall failure at the higher grade Tano pit. The ore hardness issue will be solved with the commissioning of a new crushing circuit, due to commence before the end of the first quarter in 2009. The wall failure will be addressed as part of a pit wall cut back at Tano, starting in 2009.

Strong Financial Position

Total assets increased 26% in 2008 primarily due to the commencement of plant expansions at Chirano and Tasiast and the start of underground development of Akwaaba Deeps at Chirano. Once complete in 2009, these capital programs will facilitate Red Back increasing production to 400,000 oz in 2009 and 500,000 oz in 2010.

In 2008, Red Back financed its capital projects from treasury, cash flow from operations and an equity financing of Cdn. $60 million. At December 31, 2008, the Company had working capital of $47 million, including cash of $22 million. Subsequent to year end, Red Back closed a Cdn. $165 million bought-deal equity financing, disposed of its investment in Mineral Deposits Limited and repaid the related $28 million bank loan.

Red Back, with its strong treasury, expanding production profile and growing cash flow is well positioned to pursue other corporate and asset initiatives.

Tasiast, Outlook for 2009

Tasiast is forecast to produce 230,000 oz of gold in 2009, an increase of 64% over 2008. This production forecast includes 30,000 oz of gold from dump leach operations. Cash operating costs in 2009 are estimated at $320 per ounce.

Revised resource and reserve estimates will be completed before the end of the first quarter of 2009 and will include ore to be processed by dump leaching. Tasiast continues to demonstrate significant exploration upside and an aggressive initial $5.0 million six-month exploration program is underway to identify new resources in and around the existing ore bodies.

Chirano, Outlook for 2009

In 2009, operations at Chirano will include both open pit mining and the commencement of production from the higher grade underground deposit of Akwaaba Deeps, for total estimated production of 170,000 oz at cash operating costs of $480 per oz.

Akwaaba Deeps is expected to reach its full production rate of 100,000 tonnes per month in 2010. Coupled with the completion of the expansion of Chirano's processing plant facilities in 2009, this will lead to an increase in annual production to a rate of approximately 250,000 oz per annum in 2010 and decreasing cash costs.

Revised resource and reserve estimates are expected before the end of the first quarter of 2009. Exploration and evaluation below the optimized pits continues, in particular at Obra, Suraw, Akoti and Paboase, to identify additional high grade discoveries at depth.

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

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
    Website: www.redbackmining.com