Undervalued or overvalued?, page-68

Once those half billion shares come on the market the MC of RED will be around $420m at 21.5c with an extra $125m of that in cash but all of which is earmarked to be spent on future expansion.

So at least one can look at a likely NPAT taking into account that 40% is hedged at a point well below current prices , also taking into account that future debt funding will be required and currently being a rather small player in terms of production and decide whether we are at fair value , overvalued or undervalued..


For me RED has two valuations , a current value and a future potential value, IMO the current valuation is fair based on our known prodution and Gold price as of now, but very undervalued on its future potential. The best guide to potential future value is to compare with Companies who are producing now what we expect to be producing in two years time...however future potential is just that and comes with no guarantee.

Based on future potential risk / reward favours reward for me, so I invest accordingly on a long term basis.

In the meantime the price of Gold in A$ and the resulting effect of sentiment will be the biggest dictator of day to day movements in the shareprice IMO and that's a bit of a lottery.

Cheers Whisky