Ann: Red 5 Ore Reserve and Mineral Resource Statement, page-12

Red 5 Limited (RED) - KOTH growth will support larger operation (Petra 8/9/22)

RED continues to grow the King of the Hills (KOTH) orebody, adding another 340koz to the reserve primarily within the open pit, and lifting the overall resource by 6% to a significant 4.75Moz. Whilst this has added 1-2yrs of mine life, we see further upside as drilling progresses (orebody remains open in all directions), operations are stabilised and further optimisation determines the ultimate processing rate. We see a pathway to 6-8Mtpa for minimal capex, which could deliver over 250kozpa for the first 5-6yrs and +200kozpa over the 16yr mine life.
Maintain BUY, $0.47/sh PT (prev. $0.48/sh) after updating for FY22 financial results and adjusting for cost inflation.

Global resources grow to 6.6Moz in a Tier-1 location

• RED’s overall resource position at KOTH & Darlot is up 10%, now standing at a significant 6.6Moz

• KOTH resources are up 6% to 4.75Moz, with the overall reserve up 13% to 2.7Moz (Figure 1)

• Confidence in the orebody is improving, with grade control drilling adding 110koz in the KOTH open pit (more tonnes at the same grade), indicating the initial resource estimate was conservative; optimisation of pit cut-backs has added a further 260koz (Figure 2)

• Darlot resource has grown 25% to 1.84Moz as drilling expands key underground mining areas, plus adding new deposit; whilst reserves are down after mining depletion, drilling & studies will grow reserves in FY23

A large orebody to underpin future expansions

• Further resource/reserve growth expected from:

1. re-optimisation of the open pit at a lower cut-off grade to convert substantial tonnage of “waste” into “ore” and reduce the strip ratio (Figs 3 & 4); 2Mtpa at 0.5g/t could be added to the mill feed
2. extending the underground mine life through resource to reserve conversion (only 20% currently) & ongoing extensional drilling (Figure 4)

• KOTH plant consistently at/above 4.7Mtpa nameplate, with steady-state operations expected in coming months once mixed ROM stockpiles are processed and a consistent feed of fresh open pit ore is supplied

• Optimisation study underway, with potential for 5.5-6Mtpa for minimal capital in the near term, and 7-8Mtpa for $50-60m in the medium term.
• An option to install a ball mill to expand up to 10Mtpa could be considered, however would be require additional sources of feed

Key Dates Ahead

• Oct. ‘22 – Sep. Q’22 production result

• Early Dec. ’22 – KOTH optimisation study