Red Back Mining Inc.
TSX : RBI

Red Back Mining Inc.

July 11, 2005 13:56 ET

Red Back's Chirano Nears Gold Production

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 11, 2005) - Red Back Mining Inc. (TSX:RBI) (the "Company") is pleased to report on the progress of construction at its Chirano gold project located in Ghana, West Africa.

Gold production remains on schedule for early in the fourth quarter, 2005. As at July 1st progress at Chirano includes:

Plant and Infrastructure

- Project Design and Engineering 100% complete.

- All major construction contracts awarded.

- Procurement 98% complete.

- Concrete competed by the end of July.

- Leach tanks erected and complete.

- SAG Mill + Ball Mill shells and drive motors are in place.

- Primary crusher installation is complete.

- Overland high voltage power line construction well advanced with all (178) poles in place and wiring underway. Completion by the end of July.

- Water Storage Facility complete.

- Site earthworks complete.

- Tailings Storage Facility - main embankment complete.

- Structural steel, piping and electrical installation well underway.

Mining

As at July 1, 2005 three pits at Chirano (Obra, Obra South and Tano) have been developed and are in production. The ore stockpile on the ROM (Run of Mine) Pad currently stands at 222,000 tonnes, containing 12,587 ounces of gold. Ore delineated by grade control drilling for mining (375,000 tonnes) contains an additional 21,781 ounces. Combined, this represents a 22% increase in ounces compared to feasibility. This increase is a result of a material increase in grade and a higher specific gravity for the oxide ore.

Grade control drilling continues to confirm higher grade and tonnes in the oxide material, as well as new ounces in areas between the pits which were previously inaccessible during the exploration phase at Chirano. Based upon an extensive ongoing grade control drilling program, a reconciliation of reserves will be completed and restated by year end against revised gold pricing; the bankable feasibility study was calculated on a gold price of US$375 per ounce.

For new photos showing the development progress at Chirano please visit our website at: www.redbackmining.com.

Final Capital Cost and Private Placement

As is being experienced by the mining industry in general, Chirano has been subject to increased development costs, particularly in respect of commodity prices (steel, concrete, fuel), transportation costs, delivery timetables due to high global shipping demand and negative foreign exchange variations. Despite such major project impacts, the Company has contained such variations to a 19% increase over the original capital cost estimate of US$61.6 million. The Chirano project is now proceeding on a revised budget of US$73.4 million (including a contingency of US$5.5 million), of which US$51.6 million has been expended to date.

The principal debt facility (US$33 million) provided by Macquarie Bank Limited (MBL) has now been fully drawn. As per the draw down schedule, the Company will now draw on the second MBL facility (US$10 million). Under its agreements with MBL, the Company is required at this stage to satisfy the projected capital shortfall to project completion. To this end a non-brokered private placement has been arranged. The Company will sell up to an aggregate of 8 million units of the Company at a price of Cdn $1.70 per unit for gross proceeds of up to Cdn $13.6 million. The units will comprise one share and one-half of a share purchase warrant. Each whole warrant is exercisable over a period of two years into one common share at a price of Cdn $2.00 per share. The net proceeds will be used towards completion of the Chirano project. With this placement, all funding to commercial production is in place. The private placement is subject to regulatory approval.

Exploration at Chirano

A 6,000 metre drill program is currently underway at and around Chirano, concentrating on the Bibiani Shear Zone which hosts the +5million ounce Bibiani Mine 25 kms north of Chirano, and the Chirano Shear Zone (a splay off the Bibiani Shear) which hosts the Company's +1 million ounce Chirano Mine. Numerous targets have been identified and are being tested, including deep holes under the Obra and Tano pits.

A regional exploration update will be reported in a separate news release by the end of July, 2005.

The Chirano Gold Project is located in Ghana, West Africa with proven and probable reserves of 17.8 million tonnes grading 1.9 g/t gold for approximately 1.09 million ounces contained gold. There is significant resource and reserve upside through both brownfields and greenfields exploration. The Chirano Project is within the Bibiani gold belt 25 kms along strike from AngloGold Ashanti's (+5 million ounces) Bibiani gold mine. In addition to Chirano, the Company retains one of the largest mineral land positions in Ghana (5,000 sq. kms) and is systematically exploring this land holding.

The technical contents of this release have been reviewed by Ross Ashton, BSc, FAusIMM, a Qualified Person pursuant to NI-43101. Mr. Ashton is a Director of the Company. Samples are prepared and analyzed by fire assay using a 50 gram charge at the Analabs facility in Bibiani, Ghana in compliance with industry standards. Field duplicate samples are taken and blanks and standards are added to every batch submitted. Selected samples from this lab are check assayed each month at other Analabs laboratories worldwide.

On behalf of the Board of Directors

Richard P. Clark, President


Contact Information