This was on another forum. I do not know the source of this article to which the original poster referred:
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Red Back
Macquarie Bank has increased its stake in Red Back Mining (ASX: RBK) from 8.87% to 19.8%, just short of the 20% level which triggers a takeover under Australian law. Resolute Mining also owns RBK stock.
RBK is offering shareholders registered as of June 13 the opportunity to buy 2 additional shares for every 9 currently held at a discounted price of A20c.
The company has just announced an increase in its Chirano Gold Project in Ghana to 22 million tonnes grading 2 grams per tonne for nearly 2 million ounces. The engineers believe that mining and milling would cost $14 a tonne and produce 140,000 ounces a year over a seven-year life-of-mine.
The projected cash flows discounted at 8%pa work out to about $73m compared with a current marketcap of $14m at A32c per share.
In our April 4 2002 article entitled What's Red Back And Gold? we mentioned that "Red Back Mining's Chirano Ghana gold project has encountered high grade intersections along strike from the known deposits. Work on an updated resource inventory and prefeasibility study has commenced. The company announced that new open pits likely to be developed at these prospects add to the six open pits and extend the strike length of the anomaly to 10km. RBK believes a single open pit could be developed over the central three kilometre-long zone resulting in significant economies in pit design and mining costs. The goal of 150,000ozpa production for seven years at a cash cost of $190 an ounce would appear promising with RBK trading at only A25cents."
Here is a statement by RBK CEO, Ross Ashton. "Red Back is an Australian company focused on the Chirano gold project in Ghana in which it has a 95% interest. This project is 25 kms south and along strike from Ashanti's 4 m oz Bibiani mine. Previous work was carried out on it by Placer Outokumpu Exploration and Reunion Mining and the company is confident that there is potential for a large tonnage, moderate grade open cut mine. Red Back is focussing on a 7km long mineralised granite which has only been partially drill tested. Best intersections to date include [email protected]/t at Obra, [email protected]/t at Tano and 36m @3.88g/t at Akoti North. Drilling metallurgy, engineering and groundwater studies are in progress to complete a prefeasibility study by August 2000. In February 2000 a revised resource estimate of over 1 million ozs was announced. Prefeasibility is in progress with completion expected by August 2000. Over 100 kms of the gold bearing Bibiani Shear Zone plus splay shears are within Red Back's tenements. An additional 80 kms of the gold bearing Bibiani Shear Zone plus splay shears are within Red Back's tenements which adjoin the Chirano project to the south. To maximise expenditure in Ghana its Australian gold projects have been joint ventured to major Australian gold producers. In January 2000, JV partner WMC Resources Ltd returned a 100% interest in the Irwin Hills nickel project to Red Back. Significant intersections of lateritic nickel mineralisation have been recorded from Irwin Hills."
The gold rush has had little effect on RBK shares, up a paltry A7c. Some of us Bears Bar people hold these shares but worry that short-sighted investors will roll over and accept any takeover bid - especially if it is pitched at a low enough price. What's a bet a takeover - and its naive supine complaisant acceptance, by those who listen to investment advisers that know the price of everything but the value of nothing - will ruin this stock for serious investors? Can't they read the signs of the times? The blind leading the blind!