RED - Valuation and SWOT Analysis May 2019, page-7

I have held RED for some 3 years myself too and have rode the ups and downs and learning.

What I need to clarify is that to avoid issues relating to financial advice, which I do not have license to give, I take the current information and provide the perspective based on this. Now, it may seem a bit odd that I post my research saying RED is overvalued while I have a buy sentiment. Let me explain.

Based on current production and performance, the stock price is a bit high since the company has a market cap of around $136m. The company has limited cash reserves and production has been on the lower end of quarterly guidance. It does not look like a good case. BUT, when one considers the future potential, it does have a strong case for being a more established mid-tier in a similar manner as Ramelius Resources. However, what stands between RED and a $300m market cap is the 2.4Mt p.a. processing plant at King of the Hill and delivering 200 000oz p.a. at AISC of $1 300/oz or less. It is likely to just scrape 100 000oz for 2019 at AISC of around $1 500/oz. To call the stock being undervalued on what is seen based on what is yet to be seen may be the work of investment banks. So, I hope you do see where I come from.

As for my valuation ranges, you can go read three research articles I have written over the past year, which I will reproduce below for you:

ASX Gold Miners Valuation Report 180618.PDF
Valuation of ASX-Listed Gold Mining Companies and its Historical Range 180913.pdf
https://hotcopper.com.au/threads/research-analysis-of-factors-that-drive-valuation-and-stock-price-performance-of-asx-listed-gold-miners.4728004/

Do not take my overvaluation perspective as disparaging the stock. Far from it. However, I am adopting a more pragmatic view in that future outlook needs to be more substantiated before I can incorporate it into my valuation perspective. I do have a good sized stake and made some modest profits on this company. I look forward to making more in the years to come, and I know I am not alone. There's at least three of us here who are lined up!