70koz to be hedged in March quarter as part of 340koz to be...

70koz to be hedged in March quarter as part of 340koz to be delivered by Sept 2026. RED just increased their hedged position by 125koz during the Dec quarter and will now have 363koz (including the 70koz) hedged - 23koz to be delivered, means 340koz will be hedged from March 2023 to Sept 2026 when the loan of $164m should be fully extinguished.

The company states they expect to produce 90k-105koz for this half year at $1750-$1950poz. If they manage 100koz at $1850poz ASIC for the half year, they will deliver about 48koz during this period at $2420poz based on 340koz/14 quarters= 24koz per quarter. The balance of ounces are unhedged each quarter.

If the company believes the hedged portion is around 35-40% of total production then they must be expecting to lift production to around 120oz per quarter from the start of FY2024.

It seems the company has to hedge to satisfy the lender as costs are higher than the bfs and leaves little room to make money when 168koz is hedged at around $2160poz, which would barely cover the AIC, let alone allow payment of debt (around $12m per quarter) and any further exploration. Then there is costs towards future expansion above 5mtpa.

Having 340koz with an average hedge of around $2420 poz, the recent higher hedged gold allows for a better spread of costs. 125koz at $2780 poz being fed into the next 14 quarters, along with another 70koz, means there is around twice as much hedging but with 50% only yielding $2160poz and the rest above $2750, allowing a higher average for the next 14 quarters until the debt is paid.

The company should be able to pay back the loan if they contain costs to guidance imo, but that doesn't mean they won't decide to take on more debt or raise more cash under the guise of expansion plans. In fact the sp is behaving as though that may well happen soon even though the last raising was partly for that purpose.

Just my opinion. Others may see the figures and future projections differently to me