News: RED Red 5 Ltd Says $125 Million Share Placement Completed, page-34

Hey Gazza,

good pickup there, I must admit I just glanced through the most recent presentation.
The potential to increase plant processing to 6mtpa is a huge statement about their confidence that the current open pit reserve figures are going to increase. They basically explain that with 83% of the 4.1m ounces in resources in the open pit, that with more conversion, they will hopefully have a 8-10 year mine life, for what is getting closer to being a 'Tier 1' standalone project (which as I understand it is basically a project with a production rate of 300,000 p.a). At 6mtpa, using the current reserve grade of 1.24g/t, with a recovery rate of 92.8% - I get 222,720 on average, p.a.
Now, when I look at RRL and its 10mtpa processing capacity, and its lower grades, logical would dictate that with higher production, comes lower costs... so the current AISC of $1167 might even prove conservative.

RED is not there yet, however, with the raising now done, and as others have noted, the presentation, spells out where the cash will go.
$10m on KOTH growth and exploration (basically, increase the amount of rich ore, and hopefully, increase the grade (every 0.1 g/t is highly valuable).

The capital cost is not going to have to increase that much either, considering its really only an extra 2mtpa in processing capacity (my very rough guess would be approx $30m).

All of this excludes adding U.G ore to the plant in the future. I see no reason why bulk mining would not be a perfect fit for a plant of that size (pretty sure in the past this has already been discussed by the company, and perhaps SAR before RED?)

Then you can start to see why a 300,000p.a production profile is not so far off.

Add on Darlot and then you have what SAR basically just achieved, (before the super pit acquisition). Where their MC was approx $3 billion.....

Glad I kept some capital available for RED, as I feel much more comfortable purchasing now, that before the raising (I realise this is cold comfort to holders who bought higher, but just offering an opinion).