Red Back’s Tasiast reserves grow by 64% to 5 million oz.

Red Back Mining (RBI-T) has bumped up its reserve figures by 64% at its Tasiast gold project in Mauritania, the company reports.

The new estimate replaces an earlier estimate completed in August 2009 and indicates that as of Dec. 31, Tasiast has total proven, probable and stockpiled reserves of 115.2 million tonnes grading 1.36 grams gold per tonne for contained gold of 5.03 million oz.

Ninety-two percent of the increase, Red Back points out, is due to an expanding mineral resource and just 8% is a result of optimizing the gold price from US$700 to US$800 per oz.

Since Dec. 31 Red Back has drilled 12 holes or 5,550 metres, extending Greenschist Zone to a strike length of 1.2 km. None of those holes have been incorporated into the updated reserve estimate and eight drills are currently at work at Tasiast.

Red Back says it plans to release yet another update to its reserves by the middle of 2010, which will include material to be processed by heap leaching. (The development of heap-leach facilities at Tasiast is scheduled to start before the end of the year.)

The new reserve represents a strike length of 7.7 km and includes just 600 metres of the Greenschist Zone. Mineralisation is open at depth and along strike to the north and south.

Rick Clark, Red Back’s president and chief executive, said in a press release that the jump in the reserve estimate shows that Tasiast is one of the largest new gold discoveries in West Africa.

Red Back has earmarked for Tasiast a US$22-million exploration budget for the first six months of 2010.

In late February, Red Back released healthy full-year financial results for 2009, driven by a combination of increased production, lower costs and a 15% increase in the average realized gold price.

Net income for the year reached a record US$109 million, or earnings of US48¢ per share, for the year ended Dec. 31. Red Back also notched a 31% increase in gold production to 342,085 oz. and recorded cash operating costs of US$391per oz.

As of Dec. 31, the unhedged gold producer had no debt and US$150 million in cash.

Last year was also notable because the Vancouver-based company discovered the Greenschist zone at Tasiast and the Paboase underground deposit at Chirano, and completed plant expansions at both projects. In addition, dump-leach operations began at Tasiast while commercial underground mining began at Akwaaba at Chirano.

This year Red Back forecasts production will increase to between 485,000-525,000 oz. gold, a 42-54% year-on-year increase, at cash costs of between US$390-$420 per oz. They are forecasting the increase based on the expanded carbon in leach plants, dump-leach operations at Tasiast and the ramping up of underground mining of Akwaaba at Chirano.

Red Back financed more than 75% of its capital projects (including
underground development work at the Akwaaba Deeps) and exploration programs, from cash flow from operations with the balance coming from its treasury.

This year Tasiast is forecast to produce 245,000-265,000 oz. gold, including about 60,000 oz. gold from dump-leach operations. Cash operating costs are estimated at US$325-$350 per oz.

Operations at Chirano will include both open pit and underground mining. Underground mining of the higher grade ore from Akwaaba is expected to reach full production by the middle of 2010. Estimated full-year production is 240,000-260,000 oz. gold, at cash operating costs of US$460-$490 per oz.

The development Chirano’s second underground deposit, Paboase, is expected to start early in the second quarter, with the mining of first ore forecast for mid-2011.

At presstime in Toronto, Red Back was trading at $21.80 per share. The Vancouver-based gold producer has traded in a range of $6.28-$21.33 per share over the last 52 weeks and has 232 million shares outstanding.