southern cross buy recommendation

Ok, it took a bit of time to get it together, but I think worthwhile:

Southern Cross Equities note to subscribers:

Under the heading of-

My spicy Friday idea is Red 5 (RED), an emerging small cap gold company with an updated valuation following higher gold price assumptions and improved exploration prospects.

SIANA GOLD PROJECT APPROACHES APPROVAL

All major submissions have been made and final approval for the Siana project is expected year end. This would be an enormous catalyst for the stock after the long period required for all of this preparatory work to be completed. We reinforce our speculative BUY recommendation for this emerging small cap gold company with an updated valuation, higher gold price assumptions and target price of $0.27 ($0.20).

HIGHLY LEVERAGED TO GOLD – AT $1,100/OZ NPV = 35 CENTS

Southern Cross initiated research coverage of RED 5 (RED) is 2008 with a speculative BUY recommendation when the stock was trading at 8cps. Since then the price has been volatile but has now moved substantially higher as approval approaches.

Our updated analysis paints RED as an undervalued gold stock, solidly supported by its NPV and target price of $0.27 (at US$850/oz long term). There is upside to this valuation from RED’s exploration prospects and great upside from higher gold prices. If we use a long term gold price of the current US$1,100/oz (AUD 0.93) the NPV becomes $0.35.

Risk remains with financing and FID yet to occur, however, we expect positive outcomes on these two fronts over the next 4 – 6 months.

RED is a high risk stock, but if you are looking for a highly leveraged speculative call option over the “peak gold” then RED is the answer. I encourage you to click here to download Peter Chapman’s full report and we recommend buying RED up to 16 cents.

[How can a stock recommended with a NPV to 35 cps be a BUY to ONLY 16 cents, Lol!!!]

(I will look at the full report and try to establish whether I can put it on or relevant parts of it)