We are initiating coverage on RED 5 with a BUY rating and set a A$0.39 price target. RED has had a strong start to FY24 and looks well place to deliver on guidance. Buoyant gold prices and strong production should enable RED to rapidly de-gear its balance sheet in FY24 and FY25. Extending the life of the underground mines could see RED sustain a +190koz production rate for at least 13 years. Silver Lake Resources already has an 11% stake in RED, and we believe a move to take control of RED would likely become competitive, given the high production and long-life outlook for King of the Hills.
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