Takeover (mooted) Resolute for Redback

  1. 4,330 Posts.
    lightbulb Created with Sketch. 1
    Perth gold and base metal exploration co. RBK, today announced a capital raising of $1.47 million comprising a placement of 9.83 million fully paid ordinary shares at 15c per share, a 1c premium to the last trade in Redback on Monday at 14c. Redback said the placement was made to new and existing major shareholders including 2.5 million shares to a London-based fund manager arranged by Loeb Aron & Company Ltd, 2 million shares to Macquarie Bank Ltd (MBL) and 4 million shares to African Lion Ltd . A total of 9 million shares will be placed immediately and 830,000 shares, comprising part of the placement to African Lion Ltd, will be issued subject to approval of shareholders at the Annual General Meeting of the Company on 23 November 2000. The placement will expand the issued capital of the Company to 71.31 million ordinary fully paid shares. The placement is expected to take place within 7 days of this announcement. Once completed quotation will be sought for the newly issued shares. The funds raised will be used mainly to complete stage two of the pre-feasibility study at the Chirano Gold Project in Ghana, West Africa, and to provide additional working capital to test new exploration targets outside the known Chirano resources. Redback shares last traded on Monday at 14c, 0.5c higher than Friday's close of 13.5c.




    Development decision on Chirano Gold Project expected in the current quarter with a number of development options under review
    Mining Lease and environmental permitting process underway in anticipation of early adoption of Ghana's Environmental Guidelines for Mining in Productive Forest Reserves
    Prefeasibility study virtually completed with development utilizing a second hand plant showing positive economics based on 1.5MTPA throughput over 6.6 year mine life with average 92% recoveries
    Total of 805,000 contained ounces optimized into 6 open pits with overall stripping ratio of 3.3 producing 113,000 ounces per annum at $200/ounce life-of-mine cash operating costs
    Further increase in Indicated and Inferred Resource to 21.5MT grading 2.2.g/t for 1.52 million ounces
    Probable Reserve of 9.9MT grading 2.4g/t for 707,000 recovered ounces
    Continuing exploration success highlights significant potential to further increase resource base at Chirano


    Website: http://www.redbackmining.com.au

    With the recent increase in the price of gold, many of the gold mining and exploration companies at the lower end of the market have made some rather substantial gains lately. Not all have merited the degree of price rise but the exuberance by some buyers has perhaps raised them to a level where some companies really need to bring out sustained quality results to provide any further substantial degree of upside.

    One company that still offers an excellent potential for further price gains is Redback Mining (ASX: RBK).

    Current price: 21 cents
    Year high: 23.5 cents
    Year low: 11 cents
    Shares On Issue: 75.2 million

    Michael Hunt (Non-executive Chairman)
    Partner in Hunt and Humphry, Project Lawyers in Perth, Western Australia. A commercial lawyer with Australian and international expertise in development of mining projects, mining law and native title.

    Ross Ashton (Managing Director)
    28 years mineral exploration experience in Australia and Africa. Founding Managing Director of Noble Resources NL (renamed Black Range Minerals NL). Major shareholder and founding Managing Director of Red Back Mining NL.

    Tom Meiklejohn (Non-executive Director)
    Broad experience in exploration, development and operation of large mining projects including the Kalgoorlie Superpit whilst Group General Manager for the Normandy Poseidon Group.

    Terry Ward (Non-executive Director)
    A director of AFL Management Limited, Terry is a mining engineer with over 30 years industry experience in Australia and Africa

    Red Back Mining NL.
    Along with most junior gold explorers in recent years, Redback's share price has languished at levels as low as 11 cents due to the lack of interest by investors in the gold market, certainly a long way off its 1999 highs of 42 cents. However, with the latest interest in gold producers and exploration companies, Redback has instilled renewed interest due to its Chirano gold project in Ghana.

    Recently released results (28/2/02) show that this project has the potential to exceed 1 million ounces and the possibility of converting three separate pits into a single 3 km. long pit. Work on a prefeasibility study has commenced and results are due to be reported in the second quarter of 2002.

    Although there are two small gaps in this area, the company believes there is continuous mineralization over the entire length, which could conceivably allow for a single pit resulting in significant savings in pit design and mining costs.

    The potential for further upside in Red Back's share price comes from at least three possible scenarios.

    Develop and mine Chirano as a standalone project
    Participate in a joint venture
    Takeover target
    To mine Chirano in their own right would need substantial capital and the company has intimated the possibility of taking its story to the Alternative Investment Market (AIM) in London, once a bankable feasibility study has been completed, to raise project equity.

    The possibility of a corporate play in the form of a joint venture or takeover must also be seriously considered. With Ashanti, who have already made a bid that was rejected, and Resolute in close proximity to the Chirano project, there could be advances made to the company by either party. Ashanti's Bibiani mine is close by and its mine life is slowly running out with remaining grades at low levels. The possibility of securing a resource that could produce 150,000 ounces a year for 6 or 7 years must be of interest.

    With only 75 million shares on issue and the backing of a debt facility from Maquaries, Redback is in a very good position to add value to their shareholders investment. With the $5 million Macquarie Bank Feasibility Finance Facility at their disposal, of which $2.5 million has been executed to assist with drill testing, Red Back are able to continue to look for opportunities to enhance the Chirano project. Macquarie have been good supporters of the company, currently holding 9% of the total share holdings and should they decide to exercise their 18 cent Options from the finance facility, would place them with a major share holding of 23%.

    Pit optimization studies for the Pre-feasibility Study completed in early 2001 identified 10.4MT grading, 2.4g/t for 742,000 recovered ounces in six open pits. Since then there has been a continued drilling program which has given very good results, leading to the most recent announcement indicating the possibility of the single open pit.

    Next quarter's resource update may be able to indicate that the project can develop into a 1 million + ounce mine and should that be the case, shareholders may be keen to see Red Back facilitate a standalone project which could add considerable value to the current share price.

    As a standalone project, there are numerous variables that can be used to cover capital cost, including the issue of new shares and the balance to be from debt. Using US$200 as operating costs and a gold price of $US$275, it is conceivable that RBK can attract a value in excess of 55 cents over the next 12 months excluding any potential blue sky.

    Red Back have a detailed and comprehensive website, http://www.redbackmining.com.au which gives the investor a complete overview to the current state of the company and its exploration results and can be highly recommended as a good starting point for further investor research.


    Red Back worth not less than 50c and still far from fully tested" - Alan Hill.

    Red Back Mining has released its eagerly anticipated quarterly, which confirms that the Ghana Ministry has approved RBK's going ahead with an Environmental Impact Statement for its Chirano Gold Project, which suggests mining within the 2% of Ghana's Productive Forest Reserves set aside for mining will be allowed.

    Also, the resource is also expected to top 1 million ozs, and highly anomalous gold in soil values of up to 3.2 gpt have been reported from the Enchi Project south of Chirano.

    State One managing director Alan Hill, a geologist (State One floated Red Back Mining) told OzEquities today, "At last they seem to be taking the bull by the horns and doing the amount of work commensurate with the property. There is still a lot of exploration upside. Red Back is worth not less than 50c and still far from fully tested".

    Alan Hill added that while the grades at first glance may seem a little low, it is still shallow holes. And 35k south of Chirano on the other side of the gold reserve the Enchi project is highly encouraging. "It's all coming together very nicely" he said.

    Meanwhile, there could be continuing corporate interest in Red Back, both from Ashanti and possibly from Resolute.
    RBK is currently 24.5 cents.



    RBK Red Back Mining was up 6% today to 27.5 on 307,000 shares. This is a very tightly held stock. Chart shows excellent uptrends in the daily and weekly so it is looking very good.



    Seems like CBA has finished their selling.



    t will only take a positive announcement and maintainance of current gold price for this stock to take off.


    App3Bx2 Chirano Gold Project:Ghana/Placement/Non.ren issue 16/4/02 10:23:30 AM
    Information or documents not available now must be given to ASX as
    soon as available. Information and documents given to ASX become
    ASX's property andmay be made public.
    Introduced 1/7/96. Origin Appendix 5. Amended 1/7/98, 1/9/99,
    1/7/2000.Name of Entity Red Back Mining NL ACN or ARBN 35 072 977 710
    We (the entity) give ASX the following information.
    PART 1 - ALL ISSUESYou must complete the relevant sections (attach sheets ifthere is not enough space).
    1. Class of securities issued Fully paid ordinary shares or to be issued
    2. Number of securities issued 6,000,000 or to be issued (if known) or maximum number which may be issued
    3. Principal terms of the securities N/A(eg, if options, exercise price and expiry date; if partly paid securities, the amount
    outstanding and due dates for payment; if convertible securities,
    the conversion price and dates for conversion)
    4. Do the securities rank equally Yesin all respects from the date of allotment with an existing class of quoted securities
    If the additional securities do not rank equally, please
    state: * the date from which they do * the extent to which they
    participate for the next dividend, (in the case of a trust, distribution) or interest payment * the extent to which they do
    not rank equally, other than in relation to the next dividend, distribution or interest payment
    5. Issue price or consideration $0.25
    ---------------------------------------------------------------------6. Purpose of the issue (if To find the Bankable issued as consideration for Feasibility Study for thethe acquisition of assets, Chirano Gold Project andclearly identify those provide working capital forassets) the Company.
    7. Dates of entering securities Estimated to be 18/04/2002
    into uncertified holdings or despatch of certificates
    8. Number and class of all 81,269,768 Fully paid ordinary
    securities quoted on ASX (including the securities in clause
    2 if applicable)
    9. Number and class of all 19,728,889 Optionssecurities not quoted on ASX (including the securities in clause 2 if applicable)
    10.Dividend policy (in the case Same as existing fully paid
    of a trust, distribution ordinary sharespolicy) on the increased
    capital (interests)
    You need only complete this section if you are applying for quotation
    of securities 34. Type of securities(tick one)(a) X Securities described in Part 1(b) All other securities Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiryor conversion of convertible securities Entities that have Ticked Box 34(a)Additional Securities Forming a New Class of Securities(If the additional securities do not form anew class, go to 43)Tick to indicate you are providing the information or documents
    35. If the securites are equity securities, the names of the 20 largest holders of the additional securities,and the number and percentage of additional securities held by those holders
    36. If the securites are equity securities, a distribution
    schedule of the additional securities setting out the
    number of holders in the categories1 - 1,0001,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - and over
    37. A copy of any trust deed for the additional securities
    (now go to 43)Entities that have Ticked Box 34 (b)Items 38 to 42 are Not ApplicableALL ENTITIES Fees 43. Payment method (tick one) Cheque attached Electronic payment made Note: Payment may be made electronically if Appendix 3B is given to ASX electronically at the same time.
    Periodic payment as agreed with the home branch has been arranged Note: Arrangements can be made for employee incentive
    schemes that involve frequent issues of securities.
    1. Quotation of our additional securities is in ASX's absolute
    discretion. ASX may quote the securities on any conditions it
    2. We warrant the following to ASX.
    * The issue of the securities to be quoted complies with the
    complies with the law and is not for an illegal purpose.
    * There is no reason why those securities should not be granted
    * An offer of the securities for sale within 12 months after
    their issue will not require disclosure under section 707(3)
    or section 1012C(6) of the Corporations Act.

    * Section 724 or section 1016E of the Corporations Act does not
    apply to any applications received by us in relation to any
    securities to be quoted and that no-one has any right to
    return any securities to be quoted under sections 737, 738 or
    1016F of the Corporations Act at the time that we request that
    the securities be quoted.
    * We warrant that if confirmation is required under section
    1017F of the Corporations Act in relation to the securities to
    be quoted, it has been provided at the time thatwe request
    that the securities be quoted.
    * If we are a trust, we warrant that no person has the right to
    return the securities to be quoted under section 1019B of the
    Corporations Act at the time that we request that the
    securities be quoted.
    3. We will indemnify ASX to the fullest extent permitted by law in
    respect of any claim, action or expense arising from or connected
    with any breach of the warranties in this agreement.
    4. We give ASX the information and documents required by this form.
    If any information or document not available now, will give it to
    ASX before quotation of the securities begins. We acknowledge that
    ASX is relying on the information and documents. We warrant that
    they are (will be) true and complete.
    L S Jackson COMPANY SECRETARY---16/04/2002

    In the first edition of Market Eye I reported on Redback Mining and mentioned that one of the possible scenarios could be an involvement with Resolute Gold (RSG). This now appears to be taking shape with the announcement this week stating that RSG will be becoming substantial shareholders in RBK. Along with that announcement came a 2:9 rights issue at 20 cents for RBK shareholders.
    I still maintain a buy recommendation on RBK and expect the company to announce a resource upgrade sometime in May. I would suggest shareholders definitely consider taking up the rights issue and maintain my view of a mid/long term hold.

    "At a cost of $15/per ounce (which is themarket cap divided by the total reserves), Red Back is one of the cheapest gold stocks on the Australian market."

    2002, Mar 12 Fat Profits
    2002, Jan 16 Red Back Mining NL: Environmental Hurdeles Being Lifted in Ghana
    2002, Jan 15 Jenny Prabhu's Hot & Spicy Curry Shop


    Chirano Gold Project

arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.