Hi All RED holders, oh I have got a headache, lol! Sorry for the delayed reply, you gotta realise I'm not as young as I was and yesterday was an amazing day catching up with a lot of guys I hadn't seen in quite a while, and with a few other meetings held at the same function room (Celtic Club, which has a licence!)) during the day I now have a slight hangover (but I didn't have a red wine Moit, just to blend with some of my former colleagues, lol!).
Yes I agree with some of the comments of others who attended the meeting or noted points re the Chairman's address in ASF posts. The meeting was most informative, some guys asked a lot of questions and of course CJ and GE were very happy to accomodate with their open answers (as usual!). I wouldn't say there was a huge number of attendees, maybe around 20 or so, some in suits (Petra Securities analyst amongst them - he represents a lot of the various fund managers form an Australian context). Where to start....
1. Yes the first gold pour will be within the next week - just a small pour commissioning the gravity circuit - don't expect large stacks of gold in this and the following first CIL pour ie the low grade ore (left over from Suricon mining phase many years ago) is being used to commission the SAG mill and crushing circuit and it is being put through the first few CIL tanks (filling with water introduced from the mostly dewatered pit). At the same time ore from the small slot is being mined and delivered on the ROM pad in readiness for the first real ore production. The first (again small!!!) CIL gold pour will occur soon thereafter, within the next 2 weeks, once they have sufficient gold on carbon.
2. As has been noted in past posts, the commissioning has been going on for a short while and no major hiccups have occurred. Its now just ironing out the inevitable teething problems which is common practise, but with all the vendor reps onsite to assist there is no indication that any significant problems are affecting the processing facility in any way.
3. The mine grade control process has only just been established, utilising a combination of blast hole cuttings sample plus vertical trenching and there are no indications of any problems. The mine material movement has been around 30% above budget in most weeks over the past few months and thus the earthworks contractor has now got all equipment working efficiently with excess capacity (again there was some teething problems when they first commenced mining of waste many months ago but that is now behind them). I spoke with Mark Milazzo (the mining engineer on the board) and he was happy with the procedures that he has observed, both in the mining and grade control areas. He emphasised to me that he wants to make sure that all the areas of the operation, such as mine accesses, inpit areas, plant areas and facilities are all completely finished so that it assists in maintaining a good working attitude by all operators etc).
4. During the development stage RED employed up to 1,500 workers, predominantly from the local communities, and the majority of workers have been Filipinos, and it has been a careful process of making sure that the locals are well represented. During mining over the next 11 or 12 years (those were the number of years referred to, and not 10 years!) there will be around 500 workers onsite. Again mostly those permanent workers are from the local community. Yes, it was commented that 5 women who had never had even a car drivers licence are driving trucks - ahhh! But I have spoken to Greg in the past about this whilst onsite, and he assured me that the rigorous training program and testing separates those with the right credentials for operating the heavy equipment. And as was pointed out, so far after 5 million odd hours there has not been 1 lost time injury (fingers crossed as I type that!). RED continues to prioritise its safety and environmental record, as its all about being able to gain the acceptance of the local community. (I did have a quiet chat about that article Hugh_Jarzz referred to earlier, and GE confirmed that not only was it highly inaccurate it doesn't reflect in the true views of the local communities - I certainly agree with his point from what I have observed personally on the various past trips to site that I have had!).
5. Regarding exploration, again GE emphasised that the Manila laboratories are a major issue going forward. There were 2 labs but those have now been merged, with the result that there is simply no capacity to efficiently service all the exploration companies within the Philippines (I am not referring to the onsite mining/processing type assays that are serviced by RED's own lab onsite). Thus RED remains constrained with others for their exploration assays. There was a question asked about Mapawa and it appears that the exploration for the time being will remain on Siana (assisting resource extensions) and some of the southern targets. At this stage Mapawa is being left for a new program yet to be devised. Certainly it remains a priority but it won't be pursued for the time being.
6. An updated reserves statement, that are expected to follow from the recent resource upgrade, are not expected to be announced for 2 - 3 months. Thus in the interim the mine will follow the base case schedule as much as possible, utilising the US$650/oz pit shell, but noting that in due course the pit delimiter will be the US$900/oz pit shell. This will have the affect of requiring further cutbacks of the currently planned pit limits, but this won't occur during the next few months until the new reserves outline approved.
7. All indications of the mining to date suggests that the operating costs should be within cooee of past estimates. And noting that the local Filipino workforce, who are paid above the minimum levels for similar work elsewhere in Philippines, will assist the operation with tight cost control.
8. Regarding RED's theme of "The Board strategy is to focus on the development
of Siana" is yet to be replaced but in the coming months as production begins and ramps up (estimated to take 2 months to get to base case levels but noting the new SAG mill has a higher throughput rating than the previous mill, from 800,000 tpa up to 1.1 mtpa) the board will reconsider its opportunities. Apparently GE is seeing a lot of opportunities come across his desk on a daily basis within the general area and elsewhere in the Philippines, noting again that RED has demonstrated its capacity to get things through the rigorous (bureaucratic, lol) Philippines approval process, but RED is yet to decide whether it might also take on completely new directions in exploration/mining. Also note that RED is very much aware that it will possibly benefit to the extent of around US$80 - 100 million pa and it doesn't want to lose the opportunity of providing a reasonable dividend as soon as possible - in line with the insto's that it is seeking to bring on board due to the consolidation.
9. I did also seek out some private views of various directors about the consolidation. And whilst there may be some initial reduction in share price once consolidation occurs (yes Moit you are correct what happened on the first day of that announcement) its also possible that since the consolidation was clearly voted in by the big insto's they might let the share price fall just to take up more stock cheaply! So beware if you decide to sell out in the coming days with an aim to get back in subsequently at a lower price. Of course last nights sell off on the DOW complicates things, but I can't see RED coming off too much tomorrow once consolidation occurs. And as I say, its a danger if you do want to stay with RED for the longer term.
10. Mgm1a I did ask privately about NPA etc, and once again I was assured that Siana/RED is certainly in a very different position to Taganito, in many different respects. And the Japanese group certainly did have warnings, commencing some years ago. Their environmental record, noting that they strip mine the top lateritic layer after removal of forest, the tailings, etc are problematic and certainly very different to Siana, and also the employment/community programs are very different. RED has a very community oriented policy and remains central to all its activities and involvement. That is what I have also noted on each of my past visits.
Well I have covered as much as I can remember. Oh yes, I understand the official mine opening won't happen until after the new year, possibly as late as March due to the various holidays and activities that will occur during the next few months.
I remain (and probably more supportive now) very positive that RED will get its re-rating as I have expected for a while. But since RED is undergoing the consolidation, the ramp up over the next couple of months etc, maybe the full re-rating won't happen until within the next few months. But that re-rating will be maybe significantly more than I had expected if those second tier insto's start to buy in once it becomes clear that RED is making some serious money each month!