Red Back Mining posts record net income in Q1

There aren’t many mining companies these days that are trading near the top of their 52-week price range but Red Back Mining (RBI-T, RBIFF-O) is one of them.

The company, which today reported record net income in the first quarter of US$25.3 million, is trading at $10.20 per share – at the high end of its $3.28-$10.95 per share range over the last year.

The gold producer holds a 90% interest in the Chirano gold mine, 100 km southwest of Kumasi, Ghana’s second-largest city, and a 100%-interest in the Tasiast gold mine, 300 km north of Mauritania’s capital city, Nouakchott.

The two mines produced a total of 70,408 oz. gold in the first quarter ended Mar. 31 at an average realized gold price of US$917 per oz. and average cash operating costs of US$389 per oz.

In February Red Back completed a bought-deal equity financing for $165 million at a price of $7.50 per share. The net proceeds were used to fully repay its US$28 million bank credit facility and for working capital and general corporate purposes.

At the end of the first quarter Red Back held US$135 million in cash, no debt, no hedging and solid operating cash flow.

All remaining capital costs for its plant expansions at Tasiast and Chirano, and at the Akwaaba Deeps underground development, are fully funded. Akwaaba Deeps is one of Chirano’s 11 deposits.

Tasiast produced 36,150 oz. gold in the three months to Mar. 31 at a cash operating cost of US$271 per oz. Lower processing costs contributed to lower-than-expected cash costs.

At Chirano, 34,258 ounces of gold were produced at a cash operating cost of US$509 per oz. The company forecasts full-year production will come in at 170,000 oz. gold at a cash operating cost of US$480 per oz.

Red Back is undertaking major plant expansions at both mines and commissioning has begun.

At Tasiast, the milling circuit will be commissioned in the second quarter. First commercial scale recoveries from dump leach operations are also expected in the second quarter.

Red Back forecasts 2009 production at Tasiast of 230,000 oz. gold at a cash operating cost of US$320 per oz.

At Chirano, the crushing circuit has been commissioned and commissioning of the expanded plant is scheduled for the third quarter.

The Akwaaba Deeps development remains on schedule with the first sub level cave production expected in the second quarter.

Earlier this month Red Back also reported that it had boosted resources and reserves at both of its open-pit mines in Africa.

Red Back added 39% more proven and probable reserves and 32% more measured and indicated resources at Tasiast.

Proven and probable reserves now total 49 million tonnes grading 1.45 grams gold per tonne for a total of 2.3 million oz. contained gold. Measured and indicated resources are 97.4 million tonnes at 1.19 grams gold per tonne for 3.7 million contained ounces gold.

Red Back acquired Tasiast from Lundin Mining (LUN-T, LMC-N) in August 2007.

At Chirano, Red Back estimated new inferred resources for two potential underground mineralized areas.

In the meantime, Red Back says it is pursuing exploration programs to enlarge the resource and reserve base at both mines.

The Vancouver-based company has 228.95 million shares outstanding.