Red Back Mining Inc

A Growing Gold Producer - Africa

Message: Red Back Mining and Moto Goldmines Enter Into Business Combination

Red Back Mining and Moto Goldmines Enter Into Business Combination

posted on Jun 01, 2009 09:39AM
June 1, 2009
Red Back Mining and Moto Goldmines Enter Into Business Combination
VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 1, 2009) -


Red Back Mining Inc. ("Red Back") (TSX:RBI) and Moto Goldmines Limited ("Moto") (TSX:MGL)(AIM:MOE) today announced that they have entered into an arrangement agreement pursuant to which each outstanding common share of Moto will be exchanged for 0.45 of a common share of Red Back.

Based on Friday's closing price of Red Back's common shares of C$10.45 per share, the transaction value is approximately C$513 million. This represents a premium to Moto shareholders of approximately 40% based on the 20-day volume-weighted average of both companies' common shares on the TSX.

Creates a Formidable African Mining House

The combination of Red Back and Moto creates a formidable African mining house and sets the stage for the development of the Moto Gold Project into a major African gold producer. Red Back is an experienced African gold miner with a significant and expanding production profile at both its Chirano Mine in Ghana and at its Tasiast Mine in Mauritania. The combination with Red Back brings the financing, development and operating expertise necessary to drive the Moto Gold Project to production.

Upon commissioning of the Moto Gold Mine, Red Back will achieve total gold production in excess of a million ounces per annum with cash operating costs well below the industry average. Red Back will be one of the largest African focused gold producers with a substantial expanding reserve base.

Commenting on the combination with Moto, Richard Clark, President and CEO of Red Back, stated: "We are delighted to have reached an agreement with Moto and look forward to developing the world class Moto Gold Project. The work done on the Project to date by Moto is first class and we welcome the opportunity to add our development, operating and financing expertise for the benefit of both Red Back and Moto shareholders. Combined with our expanding resource/reserve base at Tasiast and commencement of production at Akwaaba Deeps at the Chirano Mine, the addition of the Moto Gold Project confirms Red Back's commitment to aggressive growth in Africa based upon exceptional projects".

President and COO of Moto Goldmines, Andrew Dinning stated: "Moto is very pleased to have reached agreement with Red Back and with the combination of assets and the synergies between the two companies we see this transaction creating significant value for shareholders of both companies. Red Back is well funded and has an outstanding record of constructing and operating projects in Africa and with the inclusion of the Moto Gold project and dominant land and resource positions in both West and Central Africa we see the combined entity well positioned for significant growth going forward."


The transaction will be carried out by way of statutory plan of arrangement pursuant to which each outstanding common share of Moto will be exchanged for 0.45 of a common share of Red Back. On closing of the transaction Moto will become a wholly-owned subsidiary of Red Back. Red Back will have approximately 279 million shares issued and outstanding, of which approximately 82.3% will be held by existing Red Back shareholders and approximately 17.7% will be held by existing Moto shareholders.

The definitive agreement includes a commitment by Moto not to solicit or initiate discussions concerning alternative transactions, including the sale of material assets. Moto has agreed to pay a break fee of C$15,250,000 to Red Back in certain circumstances and has granted Red Back the right to match competing offers. Each party has also been provided with certain other rights, representations and warranties and covenants customary for a transaction of this nature. Following completion of the transaction, Moto will be entitled to nominate one person to the Board of Directors of the combined company.

The transaction has been approved by the Board of Directors of Moto and Moto's Directors and Officers (representing an aggregate of 2,782,472 million shares (2.5%) of Moto) have entered into voting agreements in respect of the transaction. Moto's Board of Directors recommends that the shareholders of Moto vote their shares in favour of the transaction. The transaction has also been approved by the Board of Directors of Red Back.

Full details of the transaction will be included in a Management Information Circular to be filed with the regulatory authorities and mailed to Moto shareholders in accordance with applicable securities laws. Moto expects to mail the Management Information Circular in late June 2009. The transaction is subject to the approval of not less than 66 2/3% of the outstanding shares of Moto being voted in favour of the transaction at a meeting of Moto shareholders and certain customary conditions, including receipt of all necessary court and regulatory approvals and third party consents and the satisfactory completion of confirmatory due diligence by each party. The transaction is expected to close in August 2009.

BMO Capital Markets has provided an opinion to the Special Committee of the Moto Board of Directors that the consideration to be received by the shareholders of Moto in connection with the transaction is fair, from a financial point of view. Red Back's legal counsel is Cassels Brock & Blackwell LLP. Moto's legal counsel is Lawson Lundell LP and Norton Rose LLP.

Conference Call

A conference call will be held June 1, 2009 at 11 am (Eastern Time) to discuss this transaction.

To participate in the conference call, please dial the following numbers approximately 10 minutes before the start of the call:

Ph. 1-416-644-3414 or Toll-Free in the U.S. and Canada: Ph. 1-800-733-7571

A replay will be available starting approximately two hours after the conclusion of the conference call until midnight on June 8, 2009.

Ph. 1-416-640-1917 or Toll-Free in the U.S. and Canada: Ph. 1-877-289-8525 Passcode: 21307764#

About Red Back

Red Back Mining Inc. is an unhedged African focused gold producer. It owns and operates the Chirano Gold Mine in Ghana (90% interest) and the Tasiast Gold Mine in Mauritania (100% owned). Major plant expansions at both Chirano and Tasiast are well advanced with commissioning underway. Aggressive exploration programs aimed at increasing the Company's resource and reserve base at both Chirano and Tasiast is continuing.

About Moto

Moto Goldmines is an emerging gold producer committed to developing its key asset, a 70% interest in the Moto Gold project which is one of the largest undeveloped gold deposits in Africa. The project is a Joint Venture between L'Office des Mines d'or de Kilo-Moto ("OKIMO") and Moto Goldmines and covers an area of approximately 1,841 km2 with significant mineral resources and growth potential. The company completed an Optimized Feasibility Study in February 2009 which contemplates an open pit and underground mining operation producing approximately 2.5 million ounces in the first five years of operation.
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