Ann: King of the Hills set for stronger March Quarter, page-18

Following minor issues in the processing circuit and crusher which constrained production early in January,
the process plant finished the month strongly, with mill throughput averaging at the equivalent of 4.8Mtpa
for the final two weeks of the month.

Let me de-spin this for RED:

"Our equipment only operated correctly for 50% of the month, constraining production yet again".

And this follows a complete relining of the mill last year after only a few months of operation, among other plant operation problems. One begins to wonder whether construction was kept "on time and on budget" by reducing the quality of the construction materials used.

But of course MIS follows with his usual rose-coloured glasses diatribe about how good RED is progressing, including:

A run rate of 200k oz p.a.+ by July at an AISC of less than A$1950 should cause the long awaited "rerate" resulting in a substantial increase in MC.

Have you not read the last two reports? There are long periods of time that the processing plant fails to run correctly, resulting in either downtime or slower production. Until they can get it running consistently and without any downtime, talk of 200k oz p.a. is simply hyperbole IMHO.

Over the next 5 weeks the average grade is only going to be 1.2g/t. That's anaemic, and coupled with probable further equipment failures they'll be struggling to even reach an ASIC of $1,950 IMHO.

My guess is the recent selldown is because some instos got wind of the continued equipment failures and resulting lower throughput (= high AISC). No proof, but take a look at the special treatment insiders received from Elders recently. I highly doubt the same is not happening with RED and their favoured backers. Did RED give any (cough) "non-price sensitive" private briefings to their mates over the last month? 26 cents to 18 cents over the last month tells me "most likely".

No apologies for being "glass half empty" when it comes to gold stocks. Unlike MIS's "A+" grading for RED, I'd currently give it a "C+". Certainly not a fail, as teething problems are to be expected over the first 6 months of operation, but they need to get their finger out and get the plant running consistently if they're going to have any change of making their anaemic average grades of circa 1.3g/t profitable in today's high-cost environment.