Quarterly comments, page-48

Cheers for the replies dr spok and mardo.

Dr spok, I do understand that costs are way above what is planned once steady state production is in place, however, this quarter is still looking to be very expensive for RED. I simply worry that as we enter the wet season, where RED has had extra trouble since it started, that the guidance provided by the company might indeed be factoring in lower production during late 2015/early 2016.

I agree that all things going well, RED could indeed undertake the underground development, but... do they really need to? In the quarterly they mention they will be doing drilling to assist with modelling the underground potential, when we already know there is good gold down there? I would much prefer a small, cost effective exploration program for nearby targets over the next 2 years or so.

As for plant capacity, I have no worries about it, what is the concern is that they simply won't be able to fill the plant. The less its utilised, the less efficient overall costs are.

As for debt. Hmm... sorry but RED should know better, NO NO.. Never again. Much better to dilute IMHO. Soooo many gold stocks (and miners in general die a slow death because of it). That being said, IF they did take some up, I would only be even slightly interested if they bought some small hedging or more preferably, options to reduce the risk of repayments etc. I doubt any debt they could get would be cheap either.... at least cash from a capital raisings has no interest bearing on it.

As for the grade, that was largely because they included some of the low grade silt, which I assume they will do so again in the current quarter, so perhaps it will stay below the average for a while yet. I am sure RED is wanting to produce every ounce possible right now to generate cash, which, as I mentioned somewhat worries me that they won't have a sufficient stockpile of ore for the wet season ahead.Of course, it may not be needed if access to the pit is a sure thing....

btw - What amount of ore would you like to see stocked by RED by say, Oct/Nov?

RED has always had potential, if I do buy, I would be happy just to see RED cash flow positive, at least for this quarter. Sure, if POG goes up and RED producers more gold, then the upside is indeed there, but things like the pit slip means that RED has a bit less of a cash buffer than they planed for.

Mardo, that 330,000 ounces in the open pit is now in question, because of all the issues the company has faced. The upcoming LOM plan (end of September) is likely to dramatically shorten the open pits life. So perhaps 50k ounces for 3 years is all they are going to get? (I am hopeful that I am being too pessimistic). While I understand that this then makes my argument about not going straight ahead to the undergound somewhat counter, going underground has its own risks (and advantages as obviously it should not be affected by the weather).

I will keep pondering RED while I watch the rest of my watch lists. I always thought OGC would buy up RED after its pit collapse, but they have gone looking for bigger prey, which for now means that RED is probably not a target. MML has fallen very far, yet they are proven U/G miners, perhaps a friendly merger would further cut costs for both companies...? So strange that the gold sector has not seen many mergers... lots of asset purchases and sales.. but.. nothing else.