Red Back hits new high on drill results from Tasiast, Chirano

Vancouver – Red Back Mining (RBI-T) keeps pulling gold-endowed core from the ground in its expansion efforts at both of its West African gold mines and the latest sets of results lifted the miner’s stock price by $2.10 or 9% to a new all-time high of $24.44.

Red Back stared producing gold at its Chirano mine in Ghana in 2005, where it is tapping into 11 deposits spread along 9 km of strike. All but one of the deposits will be mined using open pits; at Akwaaba Deeps the company is developing an underground, sub-level caving operation. The Chirano mine processes 2.1 million tonnes of ore annually, or 5,750 tonnes per day, though it is currently being expanded to accommodate 3.5 million tonnes annually or almost 10,000 tonnes per day.

And Red Back bought the Tasiast gold mine in Mauritania from Lundin Mining (LUN-T) in late 2007, just a few months after the mine was completed. The open pit operation also taps into a series of deposits spread along an under-explored gold belt and is also undergoing a mill expansion. Currently able to process 1 million tonnes each year, the mill will soon be able to handle 2.5 million tonnes annually to produce more than 200,000 oz. gold.

In 2010 the company expects to produce roughly 255,000 oz. gold at Tasiast and 250,000 oz. gold at Chirana.

And both operations are showing strong potential for resource expansion, with drills returning good lengths of gold mineralization. At Tasiast, Red Back is focused on probing the Greenschist zone, which is outside of the current resource. As the company describes it, “Drilling continues to show the remarkable continuity of the zone, confirming that both resources and reserves have the potential for significant expansion.”

The latest set of results includes a dozen intercepts with lengths ranging from 45 to 100 metres in length and grades between 1 to 3 grams gold per tonne. Hole 2324 cut 45 metres grading 3.02 grams gold from 247 metres depth followed 6 metres later by 61 metres of 1.77 grams gold. Hole 2235 returned 96 metres carrying 2.65 grams gold rom 224 metres depth.

Hole 2276 intercepted 100 metres of 1.8 grams gold from 289 metres downhole; the 95 metres starting midway through that intercept and extending beyond returned an average grade of 3.03 grams gold. Hole 2290 cut 98 metres averaging 2.59 grams gold from 385 metres depth, hole 2279 returned 93 metres of the same grade from 379 metres depth, and hole 2359 hit 88 metres of 3.15 grams gold from 389 metres downhole.

The Greenschist zone is a relatively new discovery; only 600 metres of Greenschist strike were incorporated in the last reserve estimate but drilling since the start of the year has extended the zone’s strike to 1.2 km.

Red Back has nine drills turning at Tasiast and has two more en route. The company’s primary focus is infill drilling along the project’s 10-km mineralized belt to upgrade inferred resources to measured and indicated status, enabling their inclusion in a new reserve estimate scheduled for the third quarter.

The company released its last reserve update for the mine only six weeks ago and the new estimate increased the proven and probable reserves at Tasiast by 64%. The mine is currently home to 115.2 million proven and probable tonnes grading 1.36 grams gold, for just over 5 million contained ounces of gold.

Over in Ghana, the focus at the Chirano mine is exploring the Paboase underground discovery to inform an initial reserve estimate for the new zone. In the latest news from Paboase, the deep zone returned high-grade gold hits from some 30 holes. All intercepts came from between 330 and 800 metres depth.

Hole 27 hit 15 metres grading 7.7 grams gold, including 8.3 metres of 11.14 grams gold. Hole 88 cut 45 metres carrying 4.39 grams gold. Hole 72 returned 41.9 metres averaging 7.48 grams gold, while nearby hole 72W1 intercepted 46 metres of 9.62 grams gold.

Hole 19W3 hit 54 metres of 7.53 grams gold, hole 83D returned 47.1 metres of 8.46 grams gold, and hole 85W1 cut 55 metres of 4.88 grams gold.

Red Back says Paboase is developing into a high-grade structure with an average true width of 12 metres. The deposit continues to expand laterally and remains open at depth. Red Back’s exploration efforts should produce a resource update and initial reserve estimate for the zone by the middle of the year. The deposits already hosts 1.74 million indicated tonnes grading 4.43 grams gold plus 3.2 million inferred tonnes averaging 5.9 grams gold.

Red Back’s share price added $2.10 in three days following the latest results from Tasiast and Chirano to reach $24.44, a new all-time high. A year ago the company’s shares were trading for as little as $6.62. Red Back has 232 million shares outstanding.