Red 5 Reports March 2019 Quarterly Activities And Cashflow; Stock Dives 8.7%

Red 5 Limited (ASX: RED), together with its subsidiaries, engages in the exploration, production, and mining of gold deposits and mineral properties in the Philippines and Australia. The company holds interests in the Siana Gold project located in the southern Philippine Island of Mindanao; King of the Hills Gold project located in the Eastern Goldfields of Western Australia; and Darlot Gold mine situated in the north-east of Perth in Western Australia.

The company has released its Quarterly Activities Report for the three months to March 2019. According to the report, the gold production for the period amounted to 24,187 ounces with ore sourced from the Darlot and the King of the Hills (KOTH) underground mines, slightly lower than 26,118 ounces recorded in the prior quarter ended December 2018.

Besides, the gold sales of 23,444 ounces were also lower than the previous quarter’s 27,149 ounces. The all-in sustaining costs (AISC) amounted to AUD 1,637 per ounce (inclusive of KOTH mine development costs), higher than AUD 1,547 per ounce in the prior quarter.

At the Darlot Gold Mine, airleg mining program continued to ramp up with four active airleg mining stopes now in production, at an estimated rate of 4,000t per month. It is being conducted concurrently with further engineering and geological assessments to identify additional opportunities for narrow vein mining. Meanwhile at the KOTH Project, bulk underground mining continued and is expected to deliver an increase in ore production together with improved operational efficiencies and lower operating costs. Bulk stope W4975 was mined early in the March 2019 Quarter and delivered 19,989 tonnes at an average mined grade of 4.5g/t.

In the Philippines, Red 5’s affiliated company, Greenstone Resources Corporation, also continued evaluation of the preferred plan and options for the Siana Gold Project, including a revised mining strategy for the Siana open pit mine and required funding for the potential future recommencement of operations.

Going forward, for the June 2019 Quarter, the production (gold recovered) is estimated to be in the range of 27,000 to 31,000 oz at an all-in sustaining cost of AUD 1,300 – AUD 1,450 per ounce.

The company’s hedging position amounts to 29.7K ounces at gold price of $1,791 per ounce.

Red 5 closed the quarter with net cash and cash equivalents of AUD 13.51 million. For additional working capital requirements, the company is planning $10-15 million debt facility arrangement.

The operating activities generated net cash inflows of AUD 5.05 million primarily in account of large receipts of AUD 40.57 million from customers. Meanwhile, the investing and financing activities resulted in net cash outflows of AUD 5.79 million and AUD 289k. This was due to extensive exploration and evaluation (~ AUD 1.35 million) at the KOTH project, the cost of development (AUD 3.51 million) and repayment of borrowings and interest.

To date, Red 5’s market valuation stands at AUD 142.96 million with ~ 1.24 billion shares. On April 23rd, 2019, the RED stock closed the day’s trading at AUD 0.105, nosediving by 8.7% with ~ 2.45 million shares traded. Recently, Regal Funds Management Pty Ltd increased purchased around 103.46 million ordinary shares, thereby earning 8.32% interest in the company.


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