RED is a $1.2bn gold producer that entered the ASX200 after lithium names dropped out, illustrating the cyclical nature of commodity markets.
The “new” RED has been born out of its merger with Silver Lake (SLR); they recently agreed to merge via a Scheme of Arrangement. RED will acquire 100% of SLR, with SLR shareholders to receive 3.434 RED shares for every SLR share. We like the merger as it combines RED’s growth/long-term production with SLR’s balance sheet (mine life is only ~5 years) – a good move for RED.
- We are bullish on RED, initially targeting a break of 40c, or ~15% higher.
MM is bullish toward RED medium-term.
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