Ann: Siana production update , page-25

Personally I read the announcement as positive for the critical elements.

In terms of downgraded Au production we know WHY and many here were anticipating it. However, for those not familiar with the history:

(i) Water ingress at a higher rate than anticipated into the pit meant that RED was delayed in accessing their preferred Au grade material.

(ii) They are mining ore that has a higher Ag content and lower Au content. Thus the lower Au oz production.

(iii) Modifications to the plant were required to ensure permanently efficient handling of sticky ore that, whilst causing handling problems, is soft and thus low cost to process relative to hard rock.

Now.. what about that water?

RED has planned for 6.8GL of water ingress p.a. and has infrastructure established for that.

Due to the abnormally high rainfall for this year on site (refer to past QR to see this plotted on chart) there is a higher ground water charge that needs to be pumped out. This is occurring.

For me the important stuff was:

(i) Plant processing ore as per plan and we are getting Au and Ag into a dore that is routinely been sold. Recovery percentages (as per last update) are good and anticipated to improve further showing no problems with metallurgy.

(ii) Water ingress is under control with water levels dropping and progressively additional parts of the pit are becoming accessible. This will include higher grade Au areas.

(iii) Reading between the lines it would appear that they have taken control of certain parts of the mining contractor operations to ensure that fleet availability is high and that maintenance is being carried out and spare parts are on-site to reduce any downtime.

(iv) Additional skill sets are being brought onto site as a permanent fix to identified problems as they occur.

(v) FY13 guidance looking very solid and on track.

(vi) Cash reserves will hold out until plant generating significant free cash flows.

(vii) I will defer to Happycats knowledge re political environment/ tax but all appears manageable.

Personally I am continuing to add to my holding at these prices. RED is becoming de-risked.

Whilst I have not suffered the RED journey for long I would suggest that bsredoje should perhaps looks elsewhere to invest as the risk/ reward ratio doesn't appear to be suitable for you.

Cheers
John