The candle was burnt at both ends;
At one end RED is signalling the impairment of $50-60m… a reduction of the carrying value of the project so that the total capitalised expenditure (in terms of D&A) is not greater than the estimated gross profit (GP) going forward. Whilst this is a non-cash item as reported, it signals RED believes that no additional GP other than that derived from the 181k oz in the new Ore Reserve can be delivered.
At the other end 100% of the underground Mineral Resource and 100% of the Ore Reserve has been now removed from the inventory based on their new concepts. This equates to a total loss of ~52% of the Mineral Resources and ~68% of the Ore Reserves including depletion to date on the project.
The open pit Resource extractable by the Reserve would be significantly lower than reported IMO since RED has reported a Resource to -165m Rl (5 metres below even the old 2009 pit design, or 35 metres below the new design). I can only think this was done to pad the Resource and reduce SH shock!
RED Price at posting:
6.7¢ Sentiment: None Disclosure: Not Held
(20min delay)