RED’s FY24 cash earnings result was broadly in line with our estimates, however higher depreciation charges resulted in Ebit and NPAT missing our forecasts. Production and AISC guidance was provided for FY25 for the first time, and while our forecasts were within the ranges, we have lowered our production forecast to the middle of the range and AISC towards the upper end, largely due to a weaker outlook for Deflector. The forecast spend on capex, waste stripping, Sugar Zone and exploration in FY25 of A$172-190m was materially higher than we had anticipated. We have increased our capex and exploration spend to match guidance, which combined with adjustments to our production forecasts drive material cuts to our FY25 and FY26 earnings and reduces our price target 12% to A$0.45. We continue to see value in RED, with upside risk to our base case should RED expand the process plant at King of the Hills and reiterate our BUY rating.
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