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psyber

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29/05/23

15:15

Post #: 68017356
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Originally posted by loki01: ↑

You might want to carefully read the last quarterly report and consider such issues as;

1. full level of outlays, not just reported AISC (what outlays are not included there)
2. The $20m outlay on stockpiles that was taken out of the cost base when deriving the last Q AISC - this represented an additional $500+/ounce outlay and they plan to make this a feature of their production in the near term to selectively process only the higher grade ore - I suppose this outlay will be smaller in the future but I have no idea by how much.
3. $15m of their cash is restricted - as metioned in the conference call
4. terrible hedging arrangements - mentioned in the Q report
5 debt repayment - details in the Q report.
6. low grade ore currently being produced from one of their underground mines - doubt if that is economically viable, but perhaps this will/has improved.
7. low cash balance available when you consider the level of restricted cash and debt repayment ($22m June Q debt repayment).

RED may need to do another CR to clear more of its debt, IMO - but that will depend on lots of factors that I can not determine.

The positive is that the AUD POG is holding up well, and they seem to be on their way to expand processing capacity from 4.7mtpa to around 5.5 mtpa by end of this calendar year (which will mean more gold production, lower AISC, Higher revenue).

Read poster JoeKing2 recent comments - some useful insights there.

I am out again for now for a small profit after reflecting about REDs outlays and revenue. I may buy back in again, depending on circumstances and where the gold price is heading. RED is cheap for a good reason - perhaps it needs to be taken over by better managers.

This sell down in the share price is not just related to the sell in May and tax loss selling season. Its also about general risk reduction, concerns about the near term direction of the POG, costs, and profitability. Some goldies are doing much better - eg RSG and WGX, not that I am recommending them, its just an observation.

GL

loki

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Loki,

I don't see any reason for a CR. Some back of envelope calcs below

Closing cash $23.4m
Sales revenue $135m (see my post on 9/5)
less production cost (81.5m)
less corporate overheads (4m)
less finance cost (3.5m)
less royalties (5.4m)
add tranche 2 raising 32m
less loan repayment (22m)
less lease repayment (8m)

cash at end of June qtr $71.4m

Even if they spend $20m on exploration, there is a lot of cash sitting in the kitty.

RED Price at posting: 14.8¢ Sentiment: Buy Disclosure: Held
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