ann out rights issue to recommence prod , page-43

As a former RED holder I read the announcement with a glass-half-empty feel for you guys.

I was closely involved in a similar situation with BSM (zinc mine in Tassie) and can offer a few insights/ speculations:

(1) IMO the rights issue is a last resort option after the lenders would not swap debt for equity and no corner stone, single investor solution was available.

(2) A rights issue is the least favoured option by a Board and due to the requirement to raise $35m minimum it is fraught with risk for investors. Their lack of confidence can be seen in the shortfall provision - i.e. if anyone, absolutely anyone, wants to give us money we'll take it !!

(3) For an investor of RED you must make a hard decision about whether to throw good money after bad or whether you ultimately think this is the final hurdle to overcome before sunny days and green pastures ensue...

(4) My poor decision in not being able to walk away from a $700k investment in BSM ultimately cost my company +$3m... be careful about being an optimist... a cynical jaundiced eye may serve you better here.

(5) IMO RED has a number of other issues that are still unresolved, not just the tailings facility. Water ingress into the mine is still an ongoing issue, the mill is still unproven and hasn't been run consistently at name plate production and the POG is certainly not heading in the right direction presently to provide confidence. There hasn't been enough history to know if the resource model matches that reporting to the mill, and as Happycats has kindly informed us there are geographical risks with the Philippines and infrastructure (grid power) deficiencies, not to mention the odd killer cyclone.

For those interested in seeing an analogous situation read through past BSM announcements to see a very similar situation that has unfolded here at RED.

Good luck with your decisions and I hope the above helps.

Cheers
John