Another investment newsletter article

  1. 1,533 Posts.
    This was on another forum. I do not know the source of this article to which the original poster referred:


    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

    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!
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