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Mauritania
Overview
Tasiast Gold Mine
Introduction
Location
Ownership
Geology/Mineralization
Development/Mining
Technical Reports
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Tasiast Exploration
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Tasiast Gold MineIntroduction Red Back acquired the Tasiast gold mine from Lundin Mining Corporation in July, 2007. The Company paid a purchase price of US$225 million to Lundin Mining, paid out the Tasiast debt facility with Macquarie Bank Limited (US$42.5 million plus US$0.3 million interest) and retired the gold hedging structure (US$10.1 million). The result is that the Company is now the 100% owner of Tasiast, which is debt free and unhedged. The Tasiast gold mine was officially opened by the President of Mauritania, His Excellency Sidi Mohamed Ould Cheikh Abdallahi, on July 18, 2007 with representatives of Red Back in attendance. Tasiast is now in commercial production. Initial annual production rates are scheduled at approximately 108,000 ounces of gold at an average grade of 3.25 g/t. The Tasiast deposit is within an extensive gold system that is largely under-explored. The deposit is open along strike and at depth. Tasiast is the first mine in the highly prospective 70 kilometre long by 15 kilometre wide north-south trending Archaen age Aoueouat greenstone belt, which is geologically similar to other Archaen greenstone belts in the world that host major gold deposits. The Tasiast property covers a 60 kilometre strike length of the Aoueouat greenstone belt, virtually encompassing an entire mining district in the country. The current mine plan only considers existing proven and probable reserves minable by conventional open pit methods. Mineralization remains open at depth as well as along strike. There is excellent potential for extension of the mine life based on the conversion of current resources into reserves. Red Back has commenced a significant drill program aimed at increasing the proven and probable reserves at Tasiast. Location The Company's land holdings in Mauritania consist of three permit areas totalling 16,222 km2 in area: the Tasiast, Ahmeyim-Tijirit and Karet. The Tasiast Permit Area is located in north-western Mauritania, approximately 300 km north of the capital Nouakchott and 162 kilometres east-southeast of the port city of Nouâdhibou. There is an established well equipped camp consisting of concrete block construction and container-type buildings at Tasiast that serves as the base from which all development and exploration activities are conducted. Tasiast is easily accessible from the Spanish Canary Islands, which are situated to the northwest of Mauritania. Ownership Upon the completion of regional reconnaissance exploration program carried out by the Office Mauritanien de Recherches Géologiques ("OMRG") in 1996, the areas within and around the Tasiast area were made available to third parties. As a result, Normandy LaSource Development Ltd. ("NLSD") (a subsidiary of Normandy Mining Ltd. of Australia) acquired the Tasiast area. In 2001, NLSD was acquired by Newmont Mining Corporation creating Newmont LaSource. Midas Gold plc ("Midas") was incorporated in England and Wales in 2002 for the purpose of acquiring Newmont LaSource's assets in Mauritania including the Tasiast Project as well as various other permit areas. Midas completed its acquisition of the Tasiast Project from Newmont LaSource on April 1, 2003 as per the terms of a 2002 sales agreement. In April 2003, Geomaque Explorations Inc. ("Geomaque") announced the acquisition of Midas and the extension of a loan allowing Midas to complete its acquisition of the Tasiast Project. The merger of Geomaque and Midas ultimately created a new entity - Defiance Mining Corporation. In June 2004 Rio Narcea acquired Defiance and took ownership of the Tasiast Project. Red Back Mining Inc. acquired the Tasiast project from Lundin Mining Corporation in August, 2007 following Lundin's acquisition of Rio Narcea Gold Mines, Ltd. See "Significant Acquisitions and Dispositions" herein. The Tasiast mine and the mining lease on which it is based are owned 100% Tasiast Mauritanie Limited S.A. ("TMLSA"). TMLSA is owned by the Corporation through Red Back Mining B.V., a Dutch company. The mining lease is exclusive to TMLSA and is not subject to any option or joint venture arrangement. No back-in rights are held by any party. The taxation of mining operations is legislated within the mining law of Mauritania and is not generally affected by changes to taxation in other areas. The corporate tax rate for mining companies is 25%. A royalty is payable to the Government of Mauritania equal to 3% of gross revenue. Geology / Mineralization
Gold mineralization occurs in two parallel trends: the Piment Zone, which is continuous over a 4.5 kilometer strike length, and the West Branch, which has been defined by soils, trenching and limited drilling over a 500 m strike length. The Piment zone hosts the bulk of the resources and all reserves with five open pits defined over the strike of the mineralisation. Mineralization dips to the east between 45° and 70° and the shoots plunge at about 30° in a southerly direction. Mineralization widths vary between 5 and 30 meters with a 20 to 25 meter width common in the strongly mineralized areas. The rocks are oxidized to a depth of approximately 40 meters. Development / Mining Tasiast has been developed as a simple open-pit mine with a standard plant flow sheet. Mineralization is open at depth and along strike. Tasiast is now in commercial production and is on schedule to produce approximately 100,000 to 110,000 oz gold in 2008. The Tasiast plant is being expanded to a throughput of approximately 2.5 million tones per annum. The expansion is expected to be completed in the fourth quarter of 2008. SENET, the EPCM contractor for the original construction of the Tasiast plant, has been awarded an EPCM contract for the plant expansion. The new contract covers all major work items for the expansion, including crushing circuit conveyors, an additional ball mill, installation of a gravity circuit and trash screen and the addition of an elution column. Following the installation of a new primary crusher in December 2007, new secondary and tertiary crushers were mobilized to site. The new ball mill is under construction and delivery to site is anticipated in the third quarter of 2008. The gravity circuit is now on site at Tasiast and studies have been commenced towards installation of the circuit in advance of the CIL expansion. The new Heavy Fuel Oil power plant is complete and commissioning is underway and is scheduled for full operation in the first quarter of 2008. Upon completion, expanded operations at Tasiast are expected to produce +180,000 ounces per annum. Resources The new mineral resource estimates for Tasiast, shown in the table below, are reported as at 31 December 2007 and updated June 2008 above a 1g/t cut off:
Numbers may not add correctly due to rounding.
The independent Ore Reserve estimate reported herein was undertaken under the supervision of Patrick Smith (Member of the Australasian Institute of Mining and Metallurgy), Principal Mining Engineer of AMC Consultants Pty Ltd with more than five years experience in Ore Reserve estimation. For the purpose of reporting under National Instrument 43-101 Patrick Smith is regarded as a Qualified Person. Quarterly Production Report
Operations Update Tasiast is now in commercial production and 13,768 oz have been produced this year to 19 February 2008. Tasiast remains on schedule to meet its production target of 110,000 oz for the year (News release: 8 January 2008). The Tasiast plant is being expanded to a throughput of approximately 2.5 million tones per annum (News releases: 3 December 2007 and 8 January 2008). The expansion is expected to be completed in the fourth quarter of 2008. SENET, the EPCM contractor for the original construction of the Tasiast plant, has been awarded an EPCM contract for the plant expansion. The new contract covers all major work items for the expansion, including crushing circuit conveyors, an additional ball mill, installation of a gravity circuit and trash screen and the addition of an elution column. Following the installation of a new primary crusher in December 2007, new secondary and tertiary crushers have now arrived on site and the upgrade of the crushing circuit is expected to be complete by the end of February. The new ball mill is under construction and delivery to site is anticipated in the third quarter of 2008. The gravity circuit is now on site at Tasiast and studies have been commenced towards installation of the circuit in advance of the CIL expansion. The new Heavy Fuel Oil power plant is complete and commissioning is underway and is scheduled for full operation by the end of this quarter. Technical Reports
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