if $4,000 is the target gold price

To estimate the potential stock price of Red 5 Ltd based on a predicted gold price of $4,000 per ounce, we can follow these steps:

Step 1: Estimate Future Revenue

1. Projected Production:
   • Current production: 425,000 oz.
   • Additional production from Sugar Zone (once operational): 80,000 oz.
   • Total Future Production (assuming it ramps up to include Sugar Zone): Total Production=425,000 oz+80,000 oz=505,000 oz\text{Total Production} = 425,000 \, \text{oz} + 80,000 \, \text{oz} = 505,000 \, \text{oz}Total Production=425,000oz+80,000oz=505,000oz
2. Predicted Gold Price: $4,000 per ounce.

Future Revenue Calculation

Revenue Estimate

Future Revenue=Total Production×Predicted Gold Price\text{Future Revenue} = \text{Total Production} \times \text{Predicted Gold Price}Future Revenue=Total Production×Predicted Gold PriceFuture Revenue=505,000 oz×4,000 USD/oz=2,020,000,000 USD\text{Future Revenue} = 505,000 \, \text{oz} \times 4,000 \, \text{USD/oz} = 2,020,000,000 \, \text{USD}Future Revenue=505,000oz×4,000USD/oz=2,020,000,000USD

Step 2: Estimate Future Cash Flow

Assuming a cash flow margin of about 30%:

Cash Flow Estimate

Future Cash Flow=Future Revenue×Cash Flow Margin\text{Future Cash Flow} = \text{Future Revenue} \times \text{Cash Flow Margin}Future Cash Flow=Future Revenue×Cash Flow MarginFuture Cash Flow=2,020,000,000×0.30=606,000,000 USD\text{Future Cash Flow} = 2,020,000,000 \times 0.30 = 606,000,000 \, \text{USD}Future Cash Flow=2,020,000,000×0.30=606,000,000USD

Step 3: Calculate Market Cap and Stock Price

Assuming the company has around 600 million shares outstanding (adjust based on actual data if necessary):

Market Capitalization

Using a conservative valuation multiple of 5x cash flow:

Market Cap=Future Cash Flow×5\text{Market Cap} = \text{Future Cash Flow} \times 5Market Cap=Future Cash Flow×5Market Cap=606,000,000×5=3,030,000,000 USD\text{Market Cap} = 606,000,000 \times 5 = 3,030,000,000 \, \text{USD}Market Cap=606,000,000×5=3,030,000,000USD

Stock Price Calculation

Stock Price=Market CapShares Outstanding\text{Stock Price} = \frac{\text{Market Cap}}{\text{Shares Outstanding}}Stock Price=Shares OutstandingMarket Cap​Stock Price=3,030,000,000600,000,000=5.05 USD\text{Stock Price} = \frac{3,030,000,000}{600,000,000} = 5.05 \, \text{USD}Stock Price=600,000,0003,030,000,000​=5.05USD

Conclusion

Based on a predicted gold price of $4,000 per ounce, the potential stock price of Red 5 Ltd could be approximately $5.05 per share, assuming the company achieves its production targets and maintains a healthy cash flow margin.

This price reflects a significant potential upside, especially if the company successfully manages its costs and leverages its growth from the Sugar Zone project. Adjust the assumptions based on actual production figures and market conditions for a more tailored estimate.