RED (ASX) Ann: Siana underground mineral resource

Originally posted by Holdonman ↑

I thought it worthwhile to discuss how RED might finance this UG concept and what the estimated costs might be. As an engineer I know that almost anything can be engineered but at a cost.

Firstly the decline into the UG workings. I have been researching decline costs for another company that provides fruit here. Roughly a 1:8 6x5m decline ramp will cost $10,000 per metre of advance. Since the ground as described by RED is so mushy I can’t see the angle of the decline being any steeper than 1:8.

Do the math and to get down to say 400m then: 400m x 8 x $10k = $32m excluding services such as power, clean water, ventilation, communications etc.

To drain the water in advance of the working face (and the orebody at each level on the way down) they will need a substantial number of additional water bores. If they can’t keep the water from flooding the base of the pit now with 8 water bores and additional in-pit sump pumps let’s say they need another 16 water bores (or their equivalent) to keep the working face relatively dry. Note the word “relative”. Cost per water bore circa $0.5m each = $8m.

The development tunnels from the decline to the ore bodies are also a capital cost. With major levels at say 40m vertical spacing and sub-levels at 20m a 400m deep mine (from the top level of the UG ore) will have up to major 10 levels. Tunnelling out from the less mushy decline rocks to the really mushy rocks of the gold ore is probably going to need tunnels each of 100-200m at least. At about $4k minimum per metre of advance = $8m give or take.

Add services, ventilation shafts, equipment, etc at an estimated $12m the total is about $60m without mining equipment and drilling units since I have assumed this would be done with contractors. With a pay as they proceed basis there would be something like $20m upfront cost (vent shafts, services, water bores, etc) plus at least $10m per 100m of vertical advance. The contract would need some commitment for the whole of the job (less default clauses). This estimate excludes the cost of the ‘new’ tailings dam that has been promised for almost three years (things have gone quiet on that front).

Given RED has spent about $40m in the past 18 months on some minor additions to the processing plant (the thickener, paste plant and liners for the tailings dams) it’s easy to see a dollar estimate for such major UG works being much higher.

So with an estimate of $5.1m in cash at the end of this quarter based on RED’s announcements (last cash flow report and the production guidance) they would need at least another $30m ($20m + $10m) to commit to the first 100m of advance. I can see at least a $50m CR or a bank loan is on the horizon. I think a bank loan too risky since a hypothetical IM#3 UG would be curtains for these guys.

I seem to remember one poster extolling the virtues of RED’s cash management. If their $20.5m estimate for cash outgoings for this quarter blows out by the same percentage as last quarter (+37%) then the curtains will come sooner. And to think the estimate is provided to SH’s one month into the reporting quarter. Makes your mind spin.
No. On second thoughts the CR is probably coming sooner rather than later and that may be the reason for the “manipulation” colincj has recently suggested.

Good luck to the indoctrinated!

Expand

In a typical HoM post, evidence supporting his argument is cherry picked while other information that might undermine his argument is left out. Seemed to assume that there will be no cash flow for the next 18 months. Would think that with most of the pending issues now sorted out we can now get on with full production. Design capacity (1.1 mil tonnes a year @ 3.2 g/t is roughly 100,000 oz per year. Over 18 months this is about 150,000 oz. AISC over this period is predicted to be, on average US$765 per oz. My calcs (based on the closing POG yesterday) gives a total cash flow for this period of $95 mil. HoM costs for UG development is about $60 mil. Leaves $35 mil to spend on capital items for mine.
Once again I think that HoM is being a bit mischievous with his argument and the indoctrinated should do their own research after reading his posts.
Please check my calcs and as such need to be verified. Opinion based on these calcs is mine so DYOR.

No.	Vol.	Price($)
34	1243803	39.0¢

No.

Vol.

Price($)

1243803

39.0¢

Price($)	Vol.	No.
40.0¢	139143	5

Price($)

Vol.

No.

40.0¢

139143

No.	Vol.	Price($)
1	1871	0.430
1	25559	0.420
1	1250	0.400
2	2685	0.395
24	999587	0.390

No.

Vol.

Price($)

1871

0.430

25559

0.420

1250

0.400

2685

0.395

999587

0.390

Price($)	Vol.	No.
0.365	578	1
0.385	11015	4
0.390	7739	3
0.395	141962	2
0.400	377413	7

Price($)

Vol.

No.

0.365

578

0.385

11015

0.390

7739

0.395

141962

0.400

377413

(20min delay)
Last 39.5¢		Change -0.020(4.82%)		Mkt cap ! $2.686B

Open	High	Low	Value	Volume
40.5¢	41.0¢	39.0¢	$9.181M	23.04M

In a typical HoM post, evidence supporting his argument is...

Horizon firms up ore reserve for Boorara ahead of FY25 Q1 development decision

ASX Market Open: ASX200 to rise for Friday session | July 26

Monadelphous inks $200M contract with Woodside to help build Pluto LNG – but will it make Scarborough cheaper?

Tissue Repairs soars nearly 32% on TGA approval for wound healing gel

IGO kicks off earn-in copper drilling on-site Encounter's Yeneena play as it adopts new identity

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News

In a typical HoM post, evidence supporting his argument is...

Top Stories

Horizon firms up ore reserve for Boorara ahead of FY25 Q1 development decision

ASX Market Open: ASX200 to rise for Friday session | July 26

Monadelphous inks $200M contract with Woodside to help build Pluto LNG – but will it make Scarborough cheaper?

Tissue Repairs soars nearly 32% on TGA approval for wound healing gel

IGO kicks off earn-in copper drilling on-site Encounter's Yeneena play as it adopts new identity

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News