Red Back mining sell Aussie assets to focus on Ghana

Red Back Mining NL has sold its Australian gold and nickel projects to Yilgarn Mining Ltd in order to focus on bringing its Ghana gold project into production.

Perth-based Red Back said on Monday that divesting its Australian assets would allow it to focus on the development of its Chirano gold project in Ghana and explore its other assets in the African nation.

"The Yilgarn sale is the most appropriate means of creating shareholder value for the company's Australian assets whilst still providing the required focus on the Chirano development which will transform Red Back into a significant gold producer by 2005," the company said.

Last year a bankable feasibility study, based on a gold price of $US325 an ounce, indicated Chirano could produce over 140,000 ounces of gold a year for more than 6.5 years from an open pit operation.

Red Back said its Australian assets, all in Western Australia, included its 100 per cent owned Irwin Hills nickel and gold project and Deep Well gold project.

Yilgarn planned to list on the Australian Stock Exchange soon and raise funds to explore its new and old tenements.

In return for its Australian assets, Red Back will receive four million fully paid shares in Yilgarn to be distributed among Red Back shareholders.

Red Back shareholders will also each have a priority right to subscribe for 8,000 additional shares in the Yilgarn capital raising.

The deal is subject to shareholder and other approvals.

In its bid to develop its Ghana assets, Red Back has planned a merger with Champion Resources Inc to access North America's capital markets which have shown considerable interest in African gold projects.

The proposed new company would be called Red Back Inc and will be listed on the Toronto Stock Exchange.