"Over the past 12 months there has been a lot of discussion about the consolidation in the Leonora region of the Eastern Goldfields of WA," Williams said recently.
"Well let me suggest to you the consolidation commenced six years ago when Red 5 in a unique big transaction bought the King of the Hills and Darlot gold mines on the same day."
Red 5 acquired KOTH from Raleigh Finlayson's then flagship Saracen Mineral Holdings (now part of Northern Star) and the Darlot mine from Gold Fields for an all up consideration of A$35 million.
Today, the two operations are good for combined annual production of more than 200,000 ounces underpinning the growth in Red 5's market cap from $65 million six years ago to $1.2 billion this week.
It has been the re-development of KOTH, 25km north of Leonora, as a large-scale bulk mining operation with an initial 14-year mine life and the region's newest, largest and lowest cost 5.5 million tonnes per annum processing plant, that has driven the value uplift.
Things were a bit wobbly at KOTH after the first gold pour in June 2022 but the project began to hit is straps in February this year in both the open cut and underground operation.
Add in the benefit of rising gold prices and Red 5's share price has been on the move since, rising from a low of 12.5c in February to this week's 34.5c.
While a big improvement, the share price upside remains constrained while an out-of-the-money hedge book is worked off, and the balance sheet is deleveraged over the next 12-18 months.
Free of its hedge book and with a deleveraged balance sheet, Red 5's market cap would be a lot higher than it is today based on the valuation metrics of its peers.
Until it enjoys the metrics of others, Red 5 will be vulnerable to being low-balled in further Leonora district consolidation moves.
After the recent flurry of consolidation moves - essentially the acquisition by Finlayson's new gold juggernaut Genesis Minerals of St Barbara's Leonora assets and Dacian Gold's Mt Morgans project - things have gone quiet on the region's consolidation story, seemingly so at any rate.
It is more like a pregnant pause.
Red 5 is working at delivering its FY24 guidance of 195,000-215,000oz at an all-in sustaining cost of $1850-2100/oz, and Genesis has set about its push to becoming a 300,000oz-a-year from its enlarged Leonora region asset base.
A future combination of Red 5 and Genesis is the next logical combination in the Leonora consolidation, with KOTH's processing capacity in a region long in gold resources but short of processing capacity a key attraction.
Following Newmont's takeover of Newcrest, the market is also short of investment options in the gold space, particularly in the mid-tier category of 500,000oz of annual production.
But, as suggested, Red 5 and Genesis are pretty much internally focussed at the moment.
That is not to say that Genesis won't takeover advantage of its more highly valued scrip to make a move on Red 5 before the latter secures a full market re-rate by clearing its hedge book and completing its balance sheet deleveraging (something gold's recent strength will accelerate at any rate).
Time will tell on that score but Genesis' nemesis, Silver Lake Resources, has flagged it thinks it is possibility through its recent acquisition of an 11.8% stake in Red 5.
Silver Lake went head-to-head against Genesis over ownership of St Barbara's Leonora assets, principally the historical Gwalia mine with its ever hungry 1.4Mtpa processing plant.
Now it's positioned to do the same at Red 5 if in fact a shoot-out develops.
Silver Lake does not have the advantage Genesis does in being an established Leonora player. But as its dogged tilt for St Barbara's Leonora assets demonstrated, the company is clearly determined to pursue its strategy of building a "larger, longer life and lower cost" business.
As it is, Silver Lake is currently a bigger producer than either Genesis or Red 5. But it has the smallest market cap of $995 million compared with Red 5's $1.2 billion and Genesis' $1.92 billion, the latter reflecting the premium for Finlayson's track record and the 300,000oz growth story at the company.
Red 5's best defence against being low-balled in any shoot-out for control between the logical acquirer Genesis and the pesky Leonora aspirant Silver Lake is to keep on doing what it has been doing in recent quarters - hit its production and cost targets.
A flying start
On that score, FY24 has got off to a flying start with production in the September quarter of 55,000oz representing an annualised rate above the upper end of guidance for the full year.
Costs for the quarter were helped by a stockpile adjustment but when added back, AISC of $1868/oz was at the low end of guidance.
Following the release of Red 5's September quarterly, Petra Capital placed a 40c price target on the stock.
"With KOTH at steady state in a robust Australian dollar gold price environment, we see strong free cash flow quickly improving the balance sheet and enabling dividends to be paid from FY2025."
"These factors, in addition to the highly strategic appeal of KOTH within a region undergoing rapid consolidation, will drive a continued share price re-rating," Petra said.
Red 5 will be hoping the re-rating is in place before either Genesis or Silver Lake come knocking.