I have thought more about comments made during the week by some...

I have thought more about comments made during the week by some posters on RED, particularly in relation to the comment about sovereign risk with RED having its gold project in the Philippines.

Until recently us Philippines-focussed shareholders have endured a problem that many brokers and investors in the ASX marketplace, have tended to shy away from Philippines resources companies. There were few successes from the various ASX explorers involved, promising much and delivering little, despite the fantastic mineral wealth of the Republic that embraces a volcanic arc richly endowed with copper/gold occurrences along its length. Philippines was a world class gold and copper producer up until the end of the 1980's and nothing of significance (apart from the phenomenal Diwalwal gold mining project and substantial gold/copper resources of Tampakan) has eventuated since that time (apart from maybe the nickel laterite production and oil/gas discoveries offshore).

Now we have had the benefits of some signficant advances in the Philippines gold industry, with major gold production just coming on-line through Medusa Mining (MML) and CGA Mining (CGX). This has been reflected in a complete re-rating of Philippines risk and investment, with both MML and CGX enjoying substantial price and market cap re-ratings in the past 12 months.

RED has also gone through a significant (%age wise) re-rating from a company priced at its cash backing earlier on this year, to now a company with a market cap moving towards its promised gold production start-up in early 2011.

But what must also be considered in the re-rating of the Philippine based ASX listed gold producers, is that still the ASX does not fully understand or accept the risk profile, unlike for African countries, where for a number of years ASX listed companies with African exposure, INCLUDING THE CONGO REGION!, have managed to shake off this sovereign risk problem to a large degree.

MOST IMPORTANTLY both MML and CGA have huge international exposure due to them both being dual listed with ASX and TSE listings. In fact MML has earned its latest significant re-rating at the time of it being listed on the Toronto Stock Exchange. CGA has most of its top 20 investors being large North American funds and institutions, and MML is going the same way. CGA is now contemplating a move out from the ASX altogether, and might not just remain a North American listing but may consider a Hong Kong listing as well.

I can see the writing on the wall, that RED will continue to grind away on the ASX, whilst it completes the fund-raising over the next month or so. RED will be backed more and more with international investors (including some of the 31 instos that have taken up that first placement at 15.5 cents), investors that are more focussed on the more likely longer term scenario once RED begins moving into gold production and moves upwards beyond 100,000 ozs gold annually, that RED itself will become dual-listed. I believe therefore, that over the next year, RED will slowly move up price-wise, backed by those international buyers who will slowly take out aussie quick buck traders!
RED will get its full re-rating once it has more international exposure, and I will support any positive moves by management to consider such a dual listing as soon as they see the time is ripe to do so.

OF course, MAPAWA could inject a life way beyond any of our thoughts if those first drill holes start to show promise of a much bigger fish lying below 200 metres or so.