chartist, page-23

Holdonman

Why not make your views known to the Chairman and CEO? Ring or email your point of view.

In relation to the cost of production, RED can run on the smell of an oily rag if it can get the ore to the mill at sufficient quantity, they achieve a higher gold recovery rate (I think it supposed to be over 80%, but not sure what exactly, perhaps around 85%) versus the recent 69-72%, operates at 75k ounces per year rate, and process ore at 2.5 grams/tonne rather than the current 2/gms/tonne (a 25% increase in revenue just from just this improvement!).

Unfortunately RED can not force its contractor to deliver on how it maintains its excavating and earth moving equipment. That is why they are being replaced by Galeo in mid March. Until then the amount of ore fed to the mill will continue to be below the plants daily processing capacity of 3000t. I think they achieved around 2000-2100 tpd in the September quarter (from memory).

If you look at the presentation from early last year you can see that they planned to spend around 25m over 12 months to do waste stripping to allow more access to the ore and that would extend the size of the pit. Some of this has happened but not enough, I suspect (read the quarterlies over the last 9 months).

I would have a good look at the cash flow statement and note that they are able to cover the basic cost of production, but not the admin (pretty small amount compared to what other companies spend), or the big ticket item of waste stripping (around $7m? per quarter I think).

My rough as guts estimates suggest that RED should be able to meet its cost of production, admin and planned exploration costs in the March quarter from its mining operations, but will have to draw down on its loan funds for most of the cost of waste stripping.

The June and September quarters is the period when rain is much less of a problem and they should be in a position to mine and clear waste material on a fairly continuous basis - see following website

http://www.weather-and-climate.com/average-monthly-precipitation-Rainfall,Surigao,Philippines

So with a bit of luck the mine should be able to provide plenty of ore for the mill after end March. I am not sure when they will be able to access the high grade ore, to achieve an average 2.5grams/tonne.

The new CEO has the right background for this job, which is no doubt why he was picked.

I hope this post is of some help. The current share price is a disgrace to the way the company has operated.

loki