You have to go back further to the Final Feasibilty Study to get the company's true projections for the project as that was what borrowings to build the plant was based on.
I have attached the FFS from 2020 and the initial hedging announcement in 2021 which allowed RED to secure funding.
You will see the AISC for the first 6 years was $1335 poz.
The whole industry is experiencing higher costs across the board which is also being reflected in the gold price now as compared to 2 years ago when hedging between $2150-$2165 seemed reasonable. Unfortunately to get funding approved RED had to hedge and are paying a price for it as those initial hedges are likely to at best break even, hence the new higher hedging to allow for an average price of $2420.
Securing the latest hedging price was a very prudent move and removes some of the doubt about a short term cash squeeze.
I'm hoping the company just consolidates it's position now. Bank some cash and wait until the heat comes out of the market before undertaking any major expansion. And don't even think about a merger with anyone else. We don't need to inherit the problems of some underperforming company. We now have all the building blocks in place to prosper.
Feeding a 5mta plant with viable dirt is a huge undertaking. That's nearly 14,000t each day. An expensive exercise, but potentially very profitable if you get it right.
I've been adding to my position this last week. The market seems to be pricing RED based on the cash burn of last quarter. With the extra hedging in place, future production and costs guidance announced and the remnants of the last raising, RED should have enough of a cash buffer to see it through imo. Longer term, RED looks fantastic.
Just my opinion
RED Price at posting:
17.5¢ Sentiment: None Disclosure: Held
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