Red Back Advances Tasiast, Chirano

VANCOUVER– Solid drill results and positive metallurgical news from the Tasiast gold project in Mauritania combined with a resource boost at the Chirano gold mine in Ghana lifted Red Back Mining (RBI-T, RBIFF-O) more than 9% in three days, bringing the company’s shares to a new high.

Red Back bought Tasiast for US$225 million from Lundin Mining (LUN-T, LUNMF-O) in 2007, just as the mine was set to open. The company has increased gold reserves at Tasiast by almost 200% since then, but now drills are hitting new mineralization along strike from and below the defined reserves.

The Tasiast mine property hosts two deposits: Piment is the major deposit to the north that is currently being mined and West Branch is the smaller deposit to the south. Drills probing the 1-km gap between Piment and West Branch recently hit mineralization 175 metres north of the previous limit of the West Branch deposit. The intercept extended the strike length at West Branch to 750 metres.

Drills returned mineralized intercepts ranging from 17 to 105 metres in length, with grades from 0.86 gram gold per tonne to 4.56 grams gold. Hole 2235 cut 62 metres of 3.67 grams gold, hole 2224 returned 89 metres grading 3.14 grams gold, hole 2238 hit 32 metres of 4.44 grams gold, and hole 2316 cut 105 metres of 2.1 grams gold. Other significant intercepts included 98 metres of 2.37 grams gold, 84 metres of 2.07 grams gold, 28 metres of 4.56 grams gold and 94 metres of 2.43 grams gold.

The West Branch deposit remains open to the north and south along strike and downdip.

Red Back is not relying solely on drilling to expand its resource base, however. The Tasiast operation currently recovers gold through two processing streams: gold contained in high-grade sulphide ore is recovered in a carbon-in-leach plant while lower-grade gold in oxide ore is extracted through dump leaching.

The two processes, though, fail to provide a recovery route for gold in low-grade sulphide ore. Leaching recoveries from sulphide ore are too low for dump leaching. As such, Red Back is working through the metallurgical test work needed to design a third processing stream at Tasiast: a heap-leach operation.

The first phase of this test work showed that the application of high-pressure grinding rolls (HPGR) technology significantly improves recoveries. Alone, conventional crushing produced average recoveries of only 38%. With HPGR crushing, 59% of the gold within the low-grade sulphide ore was recovered in column leach tests.

Test work continues; Red Back intends to begin heap leaching ore in 2011. Based on the current resource estimate, the addition of a heap-leach operation could almost double the tonnage of sulphide ore that can be processed. The cutoff grade for the CIL plant is 0.8 gram gold per tonne; at that cutoff grade, the project’s sulphide resource is 49.7 million measured and indicated tonnes grading 1.81 grams gold plus 12.9 million inferred tonnes averaging 1.7 grams gold. But a heap-leach operation would likely use a cutoff grade of more like 0.4 gram gold; using that cutoff, Tasiast’s sulphide ore resource rises to 90.1 million measured and indicated tonnes grading 1.26 grams gold and 26.5 million inferred tonnes averaging 1.1 grams gold. In terms of contained gold, the resource increases by 1 million oz.

The oxide resource at Tasiast adds 37.5 million measured and indicated tonnes grading 0.83 gram gold and 7.9 million inferred tonnes grading 0.6 gram gold. Based on CIL and dump leach processing only, the mine’s proven and probable reserves total 67.5 million tonnes averaging 1.4 grams gold. Red Back expects to produce 230,000 oz. gold at Tasiast this year.

Red Back’s other piece of good news was a resource boost at the Paboose deposit, which is an untapped zone at its Chirano gold mine in Ghana. The new zone now hosts 1.74 million indicated tonnes grading 4.43 grams gold, as well as 3.2 million inferred tonnes averaging 5.9 grams gold.

The zone has not been fully explored and remains open along strike and at depth. Four drill rigs are currently turning onsite and Red Back expects to update the Paboose resource again in the first quarter of 2010, at which time the company will also make a development decision. In 2008, Red Back produced 121,000 oz. gold at Chirano.

Three good-news announcements in as many days lifted Red Back shares $1.20 to $14.44. The stock traded as high as $14.64, a new all-time high for the company. Red Back has 231 million shares outstanding.