dividend yield equates to 12%, page-23

Hi Rhodium,

Great post thanks.

I think you should push your underground capex out a couple of years possibly.

This comes from the recent Evans & Partners interview with RED CEO in May 2012.

Some key points:

- Reserve currently based on $650 oz

- Resource based on optimized open pit of $900 oz (recent)

- My take was that it can't be expanded past that level as there simply isn't enough room to store the strip waste on site (others agree?)

- 8 to 10 year open pit mine life (based on $900 oz pit design)

- A couple of years overlap open pit/ underground production

- 5 to 6 years underground mining

- Providing a 10 - 15 year mine life "MINIMUM"

- Plant utilization from other operations after mine depletion

From the above, I'd assume that if the capex for underground development was started, say, up to 2 years prior to production then it should start kicking in between years 4-6 of operations. Am I correct that your model shows it in Y3-4?

However, given the recent drill intercepts in the Eastern Wall of the pit (now that the water is drained and allowed drilling) it could appear that the open pit could have ore on the Eastern side too, underneath the historical waste.

In the 2004 Annual Report it stated that previous operators had two landslides in 1988 and 1990 on the Eastern Wall. It was suspected that underground mining from 1938-1960 had contributed to this... if correct, then that would imply that there are underground workings, and thus possible remaining ore present. This in turn would lead to further open pit years prior to underground development..

I'm interested in what your opex and POG assumptions are too.

Cheers
John