gold sector analysis - incl red5, page-2

"Valuation/Comparatives
REDʼs current resource and reserve multiples of $120 and $190 suggest that the
stock is undervalued given its near term production status. While potential
commissioning risk leads us to be somewhat cautious, and further delays due to
tropical wet weather events may be possible, we believe a re-rating is likely once the
project is successfully commissioned at the end of the year.
Looking at REDʼs forward earnings also highlights its comparative value. Assuming
margins of $1,000/oz from production of 70,000 oz in 2012, RED is currently trading
on a 2012 EBITDA multiple of only 1.2x. Considering the high margins from good
grades and silver by product credits, REDʼs current share price offers significant
upside potential"