Firstly, I know what I'm talking about. I wont elaborate but I have extensive experience.
Secondly, I have lost many many multiples of $150k in this gold bear market. Red 5 isn't the only disaster story out there - indeed it is hard to find a gold stock not down 60%+ and a junior not down 75%+. This is a market issue largely, and one to wait out not get caught at the bottom by. We are 4 years into a bear market - this is very long by any historical standard. It is completely reasonable to expect a big move up in the short to medium term - even after the 1980 top this happened 2-3 years on.
Red 5 previous management were not so good in my view. I have followed it for many years. A lot of the mistakes were avoidable. The tailings failure possibly not - I tend to think this was bad luck.
There is a completely new management team on board in recent times, particularly when it comes to mining. To hold the new team to account for previous mess ups is very silly.
To assume that just because the history was bad the future will be bad is silly. The history of mis-execution was explainable with poor management decisions and insufficient expertise. It is very different now. To previous management credit, they did build a great mill generally within budget.
Also amateur investors generally underestimate the impact of price (and debt). This thing is being valued for virtually nothing - a tiny fraction of the build cost. It has no debt or hedging - that is a very big deal because it almost takes failure out the equation.
Building and developing a mine is risky and difficult. Running and improving a mine that has been built already is far less risky.
This mine is very low cost - it has high grade, lowish strip ratio and soft ore, decent recovery. Low cost mines are valuable and lower risk, easier to run.
Investor pessimism in the gold sector is massive now - stocks which have generated their market cap in cash flows only ran after the event (ie Dragon Mining and Unity Mining). Red 5 is similar to these but less risky because it isnt a short life, higher cost underground proposition.
The Red 5 mill sits in some of the most prospective gold country in the world - it is almost certain more ore sources will be found.
I have looked pretty hard at different opportunities in the gold sector and frankly, it is hard to see a more undervalued, lower risk opportunity than Red 5. It is a producer trading at the valuation of a developer or explorer. Even if these guys mess up again, the company will probably be bought by someone else for more than the current value.
It is sad that some like Holdonman sold their shares and probably capitulated near the lows - but this is the market because most people cant differentiate between the past and the future and simply apply the past to the future. If the tailings dam didnt fail, the company would probably be ok, perhaps with the debt it would have run into trouble, but in the end there was a whole lot of dilution - this is history, now is the time to look forward.
Recommissioning a mine or plant is never straight forward, but it isnt disastrous either. Expect hickups but don't get carried away with them.
Management that have been through a tailings dam failure and years of mess ups will be excessively conservative coming out. Expect excessively conservative forecasts but don't get carried away with their natural tendency to being nervous - anyone would be in their shoes.
I can see how this company could produce 100,000oz a year in a few years time at very low costs - if gold went up this could easily be worth $500m+. Yes even $1.5b if we get a gold bull market which gets the old guys their money back.
I look forward to making some serious money from this one. For those that doubt, do the maths based on some realistic forecasts - start with the previous feasibility and be more conservative. Dont get caught up in the fact it went wrong before so it will go wrong again - there is no fundamental reason for it to go wrong. There are some risks but they are manageable in my view.
Good luck, I'm done posting and wasting my time with this board. Hopefully you will have gained something from my work.
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