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Guys thanks for encouraging words to hang tight.

I noticed that recent Qtrly Cashflow was a few days after the Qtly Activities, whic is odd so I went looking at the details. It mentioned the issue of 28,000,000 shares to Merril Crowe and so I went to the April Appendix 3B where the total issue agreed is to be 40,000,000, with a first issue of 28M and the balance on "conditions precedent".

Theres' that phrase again.

Question - the "conditions precedent" for this Transfer arrangement would be different from those of the financing, so why hasn't it happened I wonder. We should obviously get these conditions precedent before finance to be arranged?

Any thoughts?
 
Hi Beatle, Anderbond and others. Well it has been a fantastic week or so and yesterdays continuation of the momentum was excellent.

Well Beatle, Anderbond the Mapawa drilling results are out. It seems like good news, especially if RED 5 management are comparing the mill grades with Boddington and cadia/ Cadia East operations. Of course your thoughts and contributions Beatle will be GREATLY appreciated as always.

Lets just hope new investors like the results and the current rocket up REDS bum will continue to burn. lol, Go RED Go !!!
 
Mapawa Shallow Drilling Announcement
RED5’s announcement regarding 6 relatively shallow holes (actually not so shallow!) confirm that the Mapawa LSY porphyry project remains on track as a likely future standalone gold (plus minor copper) operation. All drillholes have confirmed significant widths of profitable gold mineralisation based on a large scale high throughput operation. Importantly the latest drilling confirms that shallow mining will provide considerable ore feed at grades which will allow the development of a large open pit operation, unheeded by any need to mine excessive waste from surface.
Also, RED confirms that the silver content is reasonably low, which is indicative of alteration styles associated with porphyry systems some distant from the core of higher grade mineralisation ie it is highly probable that the best is yet to come! Notwithstanding that the core of the system may not have been located to date, the large tonnage potential already confirmed by drilling so far indicates that the project should be economic subject to metallurgy being confirmed as having typical recoveries and reagent consumptions, which is usually found as being the case in these systems.
To put things in perspective, the LSY footprint based on geophysical work to date, has confirmed the system to be extremely large and of world class potential. With gold grades located to date suggesting mineralisation around the 0.8 – 1.2 g/t Au there is no reason why Mapawa won’t develop into a large scale standalone project producing several hundred thousand ounces of gold per year. This will be an attractive project for larger gold producers, with potential to develop an overall resource of plus 3 million ounces of gold.
NO VALUE has been imputed into the current RED share price based on trading around 16.5 – 19 cents – Siana alone values RED at close to 40 cents per share based on a gold price around US$1,255/oz.
This announcement regarding Mapawa has strengthened my resolve to hold my shares for a much longer and higher move, and I hope other shareholders don’t weaken based on glib talk about low Mapawa grades etc, and note that the insto’s are not big sellers from announcements made to date, they are buyers!
RED also confirmed in this announcement that Siana remains on schedule for gold production as previously announced, this is very reassuring to shareholders and investors!
 
Crikey Beatle. I am stunned by your comments. What a beautiful situation to be in .................Siana nearing production so that will be in operation while they continue to explore and assess Mapawa. SP will get to a decent level at some stage, and plenty of blue sky beyond. I know I am an enthusiast but what a good goldie to own. I hope they look at additional listings once production occurs as the less risk averse off shore investors would surely drive it on. AB:)
 
Anderbond, I also am very biased on RED as its my baby, BUT I do have a very careful, considered and conservative approach to evaluating new projects, and I am delighted to hear of the recent shallow drilling results - I was getting a bit worried when there was no news forthcoming, but this announcement relieved me of those concerns.

The Mapawa drilling is a real plus for RED, and actually you make an interesting comment regarding the floating of a separate vehicle for it - I would like to consider that a bit more before making any comments on it (at this stage though RED still is yet to add real value to it and its yet to be confirmed to be a standalone project although the shallow drilling results adds to that case being more likely).

I am now more concerned that those posters seeking to play down RED's assets (for whatever reasons unknown to me other than frustration of the delays with finance that we all share) will play on the minds of the interested longer term holders and will drop shares at this critical time, at the pen-ultimate time for the funding being put to bed and a time when no value at all is being ascribed to Mapawa let alone a severe discount for Siana value.

What is also a real positive, and more due to luck than good planning, RED is likely to put together the funding package at a time when the gold price is at an all time high - I just hope that RED management heed the opportunity to put in some hedging at the time of the finance, preferably forwards that can be rolled (ie no cost to RED) or a gold loan, which will underpin any drop in gold over the next months (although I concede that the gold price does tend to be stronger as we approach Christmas - also with higher gold borrowing costs).
 
beatle what also needs to be mentioned in regards to gold price is America's new 300 billion dollar stimulus package that will be a boon for the gold price.....red5 could be pouring gold with a price of $1350 US and we could have a share price of .60......next week we should blast through .20..:rolleyes:
 
Why next week Fastbuck - why not tomorrow (lol). In fact I looked at the close of trading today and thought that it was very much a contrived market with the last couple of trades hitting 18.5 cents - it was as though the buyer was trying to make the technicals look good for RED with it closing at the top of the candlestick (thats about as much as I know about charts though!).

But the trading today, would have me thinking that its about ready to run again, and probably break through the 19.5 cents. At the moment each half cent is hard yards, with lots of sellers, and my concern remains that its the smaller shareholder that is selling out just as RED is about to break into a new price range. I am convinced that RED is due to complete its funding arrangement in the next couple of weeks (based on Anderbonds calendar) and at that time we may see a few more bigger buyers - especially if you recall I had referred to a Melb based insto that is interested to get some RED (around 5 - 6%, say no less than 50 million shares) once it completes the last of the hurdles to development of Siana (ie the finance outstanding).

RED will break new ground, those expecting it to continuously drop back into the old familiar cycle have seriously lost their chance this time I think.
 
Hi all, very much like the discussion all have had on this stock I have tried to read all 16 pages and get my head around it all .. And as a newcomer to the Sharemarket (only in the last few months) I was looking for a stock that has great potental to reward and having just brought a small parcel of these stocks, I really (hope) and believe that Red 5 Limited can deliver..My question as a newbie is how high can the share price go and what factors dictate them going higher..
 
Hi Dejosie, and welcome to RED share holding as well as to a poster on ASF.

Before I make any other comment you will realise that I am in love with RED therefore my comments will be seen as being very biased in terms of an investment in RED, and therefore you have to consider your own risk profile for any investment.

I am a fundamentalist, not having much knowledge regarding charting of stocks. I prefer to look at the assets of a company and derive some value from whatever basis and then establishment what might drive the share price up or down based on that value.

In terms of RED, it has completed a Bankable Feasibility Study for its 97.6% owned Siana gold project in the philippines. That BFS has been mostly completed by independent (and highly competent industry professional consultants), and that provides a good analysis of the Net Present Value of the project as it currently stands. That gives a value based on current gold price of US$1,246/oz of 41 cents per share for RED, compared to its current share price of around 17.5 cents! This suggests that over time the share price is likely to move up towards that price as it gets closer to first production at Siana, currently expected to be in April 2011. RED has got sufficient funds in house to continue the project construction, but needs to complete funding of another US$40 million (actually less than that but RED has indicated it will likely raise the funds to US$40 million) by way of either debt or equity or a mix of both.

I believe that if the funding is completed in the next few weeks, and that appears to be the timetable for the funding, then it is likely RED will start to move towards that NPV value of 41 cents per share (subject always to gold price at the time), and once in production likely to trade at a premium to that (similarly to Medusa which trades at a considerable premium to its established reserves based DCF, but has a successful low cost mining operation about 150 kms south of Siana). RED's Siana gold project is low cost (not as low as Medusa's) but much longer reserves life (currently 10 years).

Mapawa, which RED also owns 97.6% is located about 30 kms up the road from Siana, and is shaping up (albeit early days) as a possibly very large tonnage lower gold grade (plus minor copper) project, potentially around 3 million or more ozs gold. There is no real indication of value for Mapawa at this stage, but could put a value way above Siana's if its promise continues on the path to what might be expected from the first 9 odd holes of information by RED. If Mapawa continues as per its current indications then RED could become a target for takeover by much larger industry players if RED share price doesn't reflect the values of Mapawa and Siana, even though Siana is limited to be say a 1 - 2 million ounce prize.

The biggest risk for RED is IF the finance of US$40 million is not completed, particularly within the next few weeks, thus Siana will not be developed on time or delayed for much longer. Thats a big IF!!! Similarly if there is some other issue in developing Siana or it doesn't shape up once in production, it will have a significant impact on the value of RED, but its less likely a risk I would suggest as Siana commences as a stock standard gold operation initially as an open pit, with typical processing requirements.
If there was some level of insecurity within Philippines then that is also a risk for RED share price, but Medusa share price has no discounting factor included any more, now that it is in production.
 
Hi guys,

Just to add some more info (if not already posted..) to the brilliant Beatle-posts:

I have read two broker reports (Petra Capital july 12th and Wilson HTM aug 5th ) which both calculating all kinds of figures and indices mainly based upon Siana and no or a very small value for Mapawa.

Petra comes with a fully diluted very conservative NPV (Net Present Value) of 0,24 A$ and a minimal value of 5 Mln A$ for Mapawa(!), but indicates significant npv upside when drilling continue to yield positive assays (as it did per latest announcement).

Wilson comes with a valuation of 0,29 A$ and a 12-mnth target price of 0,34 A$

Most interesting is a comps table to compare some figures with other miners like Adamus,Integra,Regis,Avoca,Focus,Dominion,Kingsgate and even Newcrest.
At date of the report the EV of 58 mln (Enterprise Value= Market cap minus cash) divided by the Reserve of 0,7 Million Ounces) figure is 69.
The EV/Reserves of the others are a factor 2 to 7 times as big.
The P/E-ratios of 2012 and 2013 are around 3,7 whilst others have a 3 to 6-fold.
So at least a double or triple fold increase should be possible from 0,15 A$.

Need I say more ???? :)

I am a little biased as well, so do your own research or ask advise from a mentally and financially more stable person...

regards, klmarc

And yes, I do have some shares in RED5....
And no, I don't mind if the sp goes northbound...
 
Beatle..
Thank you for answering my Question in away a newbie as I can understand .. I acknowledge and appreciate the passion you have for this stock and have great expectations myself in the future of Red... as you and all who own shares in Red.. I am looking forward to see the price start moving up.. and I'm sure we will have a great ride when it does.. In fact I am considering getting a few more before it does..
 
Hi guys, thanks for your kind words. I would like to make a few comments about your observations Klmarc.

Klmarc – your comparison to other listed companies and the EV/Reserves ratio. It certainly is another good argument that RED is currently highly discounted. In general we are comparing the already producing gold miners with RED, recognizing that RED is yet to produce an ounce of gold. Therefore someone investing in RED now is really punting that production will commence at or close to the deadline of April 2011. Since RED has rarely been punctual with meeting certain deadlines in the past the perpetual doubters out there for RED are betting that finance will not be achieved in a timeframe to enable that April 2011 (or close to it!) to be met. That I believe is the reason for RED’s current discount in share price. IF we are to achieve the April or thereabouts production start-up RED needs to announce the final funding package within a short timeframe as the next phases of project capital need to be committed, and I for one believe that RED WILL get the funding package within that timeframe. If they don’t take up the Deutsche Bank offer then it may be a take up of equity funds from elsewhere (and my revised DCF models indicates that a value will drop if its done as equity instead of debt, but from 40 cps to more than 31 cps depending on the pricing of equity etc). I am yet to be convinced that they need or will take up a total US$40 million as that is more than necessary to complete Siana development and still maintain the momentum with Mapawa exploration.

By the way, personally I’m not concerned if the production was to commence in May or June or July 2011, as it still means RED will be a significant gold producer soon! (Having already waited more than 12 years, I can wait another 3 months!). (But newcomers, eg Desjosie, might have a different time expectation and risk profile).

Klmarc, I was very interested in the stock valuations or $0.24 and $0.29 by Petra and Wilsons respectively, and I would like to make a comment with regard to that:

I had previously seen a valuation (now considerably dated), by Southern Cross Equities valuing RED at the time, of something like $0.26 when my own valuation was mid-30’s (when gold price was much lower than it is now). In the case of SCE I could see how they had developed the valuation model. Why there was such a discrepancy between my value and SCE - 1. SCE assumed that the gold price would fall away over time to US$1,000 and below (of course they are allowed to put any price on their forecast, but I used a flat gold price as it currently stands). 2. SCE used the base case model that I used, then inflated costs an average of 10% ie operating cost of US$386/oz versus US$351/oz. It should be noted that the base case was developed by independent highly competent consultants which should be a good reliable model for estimating DCF (especially since they usually include their own conservative factors). Therefore any further conservatism on that model should be recognized as possibly being conservatism upon conservatism!

I have not seen the detailed models developed by Petra or Wilsons but clearly their assumptions in those models, need to be considered for things such as gold pricing expectation, operating costs, other contingency factors etc.

With regard to DCF analysis of gold miners, when in production most gold producers enjoy a considerable premium to the base case models based on ore reserves, and that premium tends to relate to operating margin, and reserve life. In the case of Medusa (also located in Mindanao and a good comparison for RED due to location, size of resources and expected production profiles plus exploration blue sky, but which has even lower gold production costs due to higher grade underground gold mining) that premium is huge – MML is capitalized at around $860 million at present (RED $171 million), and actually MML reserve is 5 years (RED is 9 years at present) – but MML operating cost is half of REDs at US$184/oz! I’m not trying to have a go at MML but suggest a reason why RED is likely to increase not just to the DCF model value but to some premium above that value!

I have previously suggested Mapawa could completely dwarf Siana in terms of value for RED once more information is received for exploration results, and in my view the latest drilling only continues to confirm that remains a strong possibility! I hope that RED is able to manage the exploration there without considering any other party coming involved at this stage. Mapawa is a most exciting project as its located within easy reach of infrastructure such as power, water, transport access, and a labour market, so will become a much more viable development than many high tonnage porphyries sitting in the back blocks of PNG or Indonesia. And its potential size becomes a magnet to major gold companies!

Desjosie, I would like to emphasise that its not a GIVEN that RED will get the funding bedded down in the next month or so, therefore if your very concerned about risk profile then maybe you should reconsider any further investments in RED till the funding is announced – some traders believe that RED is entrenched in a cycle that ranges between about 12 cents and 18.5 cents, therefore in that range we are already at the top, and the only way from here is down (of course I don’t need to say it, but I will, that I think that cycle and range will completely disappear as soon as funding is announced and production nears the horizon!)
 
Hi Beatle/Fastbuck,

Just tuned in on Hotcopper and realised I had to be at Aussiestock etc.
I am in Venice,Italy now, just had lunch and a couple of wines so take it easy on me, because now I understand why they need the siesta's.....
I agree your reasonings about the (under)valuations of RED. And I also think that once the production of Siana comes closer, the discounting will dissappear and an upward rerating will occur. And not to forget the possibilities of Mapawa.....
I will be inline in a couple of hours; just let me know if you need more info....
:);)


regards,

Klmarc
hotcopperklmarc at gmail.com
 
Wow Klmarc, sounds like a great place to be - I presume you are drinking RED wine (lol!).
I agree with your views entirely Klmarc, and was most interested to read your comparative stats on other companies. If you have any other comparative information I think readers would love to become aware of it. Do you have a copy of the Wilson report on RED available that you could post or refer to a URL address?

You might not have picked up on it yet but Baker Steel have put out another substantial shareholder notice this morning, they are picking up more stock at the moment, a mere half million dollar investment to move to 8.2% shareholding. I guess BakerSteel will be now the insto to push the price upwards towards that technical valuation, its good to get the backing of a credible insto at this critical time.
 
Furniture, I am grateful for your input re the valuation of Southern Cross Equities. I am referring to a report out by SCE dated 17 Nov 2009, with a 12 month target of 27 cents (actually I mentioned 26 cents in my past post, it should have been 27 cents).
 
Hi Beatle,

Just woke up and a busy day ahead.. Good to hear that bakersteel is broadening it's participation. They don't do that for fun..
I am not allowed to copy and paste here and I don't have an URL to refer to. But have a cryptic look in my other post for a way to get it;) Same goes for close RED folowers.
Have to go now;tonight I'm online again.

Cheers, klmarc
 
another great day for red, seems we may have a new surport base .17-.175 and hardly a peep over at h/c, even with the baker steel ann, this could be the lul before the huge storm,the months are rolling on and the sp has only 1 way to go, finance update must be soon.......i'm getting board waiting for a .40 sp........
 
fastbuck1 said:
another great day for red, seems we may have a new surport base .17-.175 and hardly a peep over at h/c, even with the baker steel ann, this could be the lul before the huge storm,the months are rolling on and the sp has only 1 way to go, finance update must be soon.......i'm getting board waiting for a .40 sp........
Click to expand...

On the contrary the sp can go either way.
You'd only be fooling yourself if you truely believe that!
I feel the market is waiting on news hence the lull & that will determine the direction.
 
I doubt whether there will be any fresh announcement on funding until the end of this month, given the break fees payable to DB were the company to elect to choose another option from another party. I believe the exclusivity agreement with DB expires at the end of this month. I for one would be particularly annoyed if there were to be any further dilution to existing shareholders, if management chose to issue further equity. With all that's happening in the gold space at present, I just don't see the need for it. If there are potential buyers out there, waiting to participate at a discount to the current price, because they believe there will be further equity issued, let them wait, or, pick up stock on market like anybody else. If the project is good enough, they would buy on market anyway, rather than via the back door.
 
Hi Hugh_Jarzz, you make some interesting points regarding the finance, especially regarding DB, and a break fee - has an amount been mentioned?

With regard to your comment about additional equity, I agree that we all would like (and previously expected) the final funding package to be a debt only arrangement, but since warrants were announced as part of the deal with DB I think we now might expect that additional equity will be issued, whether its part of a DB deal or if another alternative funding arrangement is finally put to bed. I have posted previously the impact of various mixes of debt plus equity on share price, and in any instance the outcome would remain above 31 cents per share regardless of how it was structured. Of course the ideal is an all debt arrangement that will result in something like 41cps for RED.

I also refer readers to a general article in a UK publication, posted on another website by Robs12, which refers to the trading experiences of some trader. I could read RED into various of those companies given as examples - the moral of the story was not to try to trade in and out of a selected stock which is being range traded, IF you believe it really has a considerably discounted share price based on fundamental valuation (precisely what RED is doing currently). The link is:
http://brokermandaniel.com/a-must-read-for-every-serious-private-investor/
 
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