Performance Last 12 months, page-9

With far too much spare time on my hands, I've been playing around with numbers to guess at what RED might achieve for the Quarter to 30/6/23.

If they meet managements minimum production guidance, they'll need to produce around 29,500 ounzes for the three months to 30/6/23.

I've been using AUS$2,750 per ounze for gold sold under spot and an AISC of $1,950 per ounze on all production (although this number will need to be around $1,850 per ounze if management's guidance for the full half year is to be achieved).

These numbers produce revenue for Q4 at about $140m and a margin after the AISC of about $33m. After other costs charged to P&L, the NPBT will obviously be lower.

However, attempting a bit of sensitivity analysis provides an interesting outcome (or maybe just a speculative outcome).

If I use a realised price for spot sales of $2,950 instead of the $2,750 I've been using, this adds around $6m to revenue (with an increase in royalty payments possibly being the only offsetting increase in costs). The AUD gold price has pretty much hovered around $3,000 for most of the current Quarter so maybe this isn't such an overly optimistic revised assumption.

If I use an AISC figure of $1,850 (for reasons set out above) instead of the $1,950 I've been using, this adds another $5.5m to the "margin" for Q4 above what I've been estimating.

These two "adjustments" combined, if they're realised, add a further $11.5m odd in margin for RED for the Quarter - nearly but not quite the amount the company needs to make on the quarterly payment of its loan.

If management actually overdelivers on their forecasts for this year's production and AISC, "margins" will actually expand even further than I've calculated above (although I can't find a precedent where RED's management has ever under promised and over delivered).

In looking at trading volumes over recent weeks, average daily turnover seems lower than it has been. I wonder if most investors are simply holding off making a decision on their RED shareholdings until things become a bit clearer after June Quarter results are released to the market.