Quarterly comments, page-45

dr spok.
I keep coming back to RED, but every time I do I keep finding reasons not to buy.

Why do you view REDs future production growth should come from the underground pit? While I understand the grades are better than the open pit, the reality is that at a guess, it would cost around $20 million to gain access and start mining. That is a huge chunk of cash that RED simply does not have. If it were to try and raise that amount the SP would well and truly be obliterated. While I understand that management want to have a very clear direction for LOM etc. With many prospects to be drilled plus a proven resource a little further away, I would have thought it would be more prudent to simply focus on the open pit, even if it only has 3/4 years of production. Decline and access could be done in around 6-8 months if everything was organised and ready to go, thereby giving RED at least 2 years to prove they are nothing like what RED used to be. Also, a big cash pile would ensure downside risk would be covered, plus allow for some serious exploration.

While RED should be able to keep its cash position neutral for the next quarter, I worry that once we hit the wet season... will they have enough ore stacked to ensure its worth keeping the plant running.

I know that in perhaps 12 months, if RED meets its projections, capex will be much reduced (assuming they don't go head first into U/G mining) and costs (ASIC) will hopefully be around US $700800 which should see them sitting on perhaps $20-40 million in cash plus exploration on the go. If ... if RED can do this, their MC will be much closer to $100 million, hence why I keep looking at it.

Can you take a guess at how much extra capex will need to be spent over the next 9 months (current quarter is about $7 million I think).

Cheers for your posts btw.