Ann: Update - Bullseye Takeover (Bidders Statement), page-13

I think that the past 4 years for RED has been a horrifying run and most people would have been clutching their safety blanket, even the most hardened of investors. You would put RED alongside the likes of PDN, SBM (till mid 2015), NCM and the like to not completely give up. I speak from experience and I hold PDN, saw through SBM (making a year's income out of them as it recovered, over 100% holding period return) and sold NCM too early (small loss on that having been a Lihir Gold shareholder prior to its merger).

Now, the target statement of RED really takes a pot shot at RED and I have some doubts too given the Q3 results for RED were also quite atrocious. I believe that Bullseye has exaggerated about RED having mining life no later than 2019 and that they are going to have little growth in the future as their operating costs are too high to be sustainable.

If I recall right, RED has increased the resources at Darlot since purchase and their combined resources of Darlot and King of the Hills are now 1.3Moz, up from 626koz when they were acquired. Darlot resources is up from 224koz to 895koz though reserves are not too high at 131koz as at Feb 2018 from the RIU presentation.

At a market cap of around $85m and $17m cash meaning an enterprise value of $68m, they are now trading very cheaply on an EV/Resources basis of $51/oz if we exclude Siana. They have no debt and the horrible March quarter only drained $4m from their cash reserves, so they can survive for another 9 months if things continue to be this bad.

I would think that RED may be a punt though one worth the same type of punt as RMS back in Nov 2014 when it was a dark hour. Now RMS is becoming quite a darling mid-tier gold miner.