sculpin

Dundee holding in Dundee Precious Metals now worth $191 million or $1.91 per share with DPM at $5.25 today. As well they have reported this position in Cantex back in March... Mr. John Vincic of Dundee reports ACQUISITION OF SHARES OF CANTEX MINE DEVELOPMENT CORP. Immediately following the acquisition of securities described in this report, Dundee owned or controlled 4,214,545 common shares and two million warrants of the company, representing an approximate 10-per-cent interest on an undiluted basis and a 14.1-per-cent interest on a partially diluted basis. If they still own this & own it wholly then....DC owns 4.2 million shares of Cantex (CD - TSXV) trading at $6.49 up from $0.80 in March. This is worth $27 million. They also own 2 million warrants - could be worth another $10mm. They have other spec gold mining positions as well but only know the ones that are above 10% reporting levels...

Great to be late! Buy at $0.80 and get all the worthless stuff for free. And maybe they will buy back the preferred at a big discount to the $120mm some day. Optionality... Couple of decent value investors... Roumell.... Factoring in the additional common shares and the elimination of the preferred stock liability, we estimate that the reported NAV will approximate $4.58. The shares currently trade at only $1.15 giving us an attractive 75% discount to reported NAV. Even under our most conservative scenario assumption, where we take certain significant haircuts to Management’s valuations and factor in future cash expenses, we believe the shares trade at about a 50% discount to NAV. Ravensource.... Free of emotional baggage carried by existing investors, we worked to determine whether there was opportunity within the chaos. With Dundee’s portfolio of ~100 names, we first performed triage to cull the smaller and speculative investments and focused our analytical rigour on the remaining few with tangible and obvious value. Our analysis concluded Dundee’s assets were worth in excess of the face value and 3x the market value of its preferred shares. We were also attracted to the preferred shares’ 12% dividend yield, equivalent to 15.7% interest on a bond factoring in the tax advantages of dividends. In the third quarter of 2018 we began buying the Series 2 & 3 preferred shares, based on a large margin of safety, healthy yield and potential catalysts for meaningful capital appreciation.

No idea but if Goodman would actually get rid of Blue Goose and a few other non cores and stop throwing money down the spec junior mining hole, Dumbdee could likely buy back the 40 million shares they issued to redeem the prefs below a $1. If nano cap dogs Reitman's & Input can make it happen, why not DC? Reitmans (Canada) Ltd. intends to make a substantial issuer bid pursuant to which the company will offer to repurchase for cancellation up to 15 million of its outstanding Class A non-voting shares at a purchase price of $3 per share from holders of such shares in Canada. If the offer is fully subscribed, the shares purchased would represent approximately 30.1 per cent of the total shares issued and outstanding at June 17, 2019, with 49,890,266 shares currently issued and outstanding. Input Capital Corp. has released the final results of its modified Dutch auction substantial issuer bid to purchase for cancellation up to $15-million of its outstanding common shares from shareholders for cash. Based on the final count by TSX Trust Company, as depositary for the offer, the company has taken up and paid for 16,088,083 shares at a price of 82 cents per share, for an aggregate purchase price of approximately $13,192,228 excluding fees and expenses relating to the offer. The shares purchased for cancellation under the offer represent approximately 20 per cent of the shares issued and outstanding before giving effect to the offer. After giving effect to the offer, approximately 65,933,877 shares are issued and outstanding.

DPM keeps marching higher. When is the substantial issuer bid coming? If Canaccord can do it... Canaccord to buy back up to $40M of shares 2019-06-28 12:36 ET - News Release Shares issued 117,827,294 CF Close 2019-06-27 C$ 5.19 Ms. Christina Marinoff reports CANACCORD GENUITY GROUP INC. ANNOUNCES SUBSTANTIAL ISSUER BID FOR UP TO $40.0 MILLION OF ITS COMMON SHARES Canaccord Genuity Group Inc. has authorized the initiation of a substantial issuer bid, pursuant to which the company will offer to repurchase for cancellation up to $40-million of its common shares. The Company expects to announce the terms of the Offer and commence the Offer on July 3, 2019 and that the bid will be completed by August 9, 2019, unless extended or withdrawn. "We are pleased to provide this opportunity for our shareholders, which reflects increased confidence in the sustainability and direction of our earnings," said Dan Daviau, President & CEO of Canaccord Genuity Group Inc. "In addition to our recently revised dividend policy, this initiative allows us to provide enhanced returns for our shareholders, while maintaining sufficient excess capital for disciplined investment in our ongoing strategic priorities." The Offer is expected to proceed by way of a modified Dutch auction, which will allow shareholders who choose to participate in the Offer to select the price, within a price range of not less than $5.50 and not more than $6.30 per Common Share (in increments of $0.10 per Common Share). Upon expiry of the Offer, the Company will determine the lowest purchase price (which will not be more than $6.30 per Common Share and not less than $5.50 per Common Share) that will allow the Company to purchase the maximum number of Common Shares properly tendered to the Offer, having an aggregate purchase price not exceeding $40.0 million. The directors and officers of the Company have advised that they will not tender any of their shares pursuant to the Offer. The Offer will not be conditional upon any minimum number of Common Shares being tendered. The Offer will, however, be subject to other conditions and the Company will reserve the right, subject to applicable laws, to withdraw or amend the Offer, if, at any time prior to the payment of deposited Common Shares, certain events occur.

Read the article, this pref doesn't reset until 2022... This resets in September 2022 with a spread of 3.65% over the benchmark of 5-year Canadian Treasury bonds.

TransAlta: Get An 8.4% Yield With 12x Dividend Coverage https://seekingalpha.com/article/4271674-transalta-get-8_4-percent-yield-12x-dividend-coverage Jun. 23, 2019 3:04 PM ET | About: TransAlta Corporation (TAC), Includes: BEP, TRSWF Trapping Value Trapping Value Deep Value, special situations, REITs, dividend investing (17,356 followers) Summary TransAlta got a rating downgrade due to an overaggressive shareholder return strategy. The common stock has held up on the belief a big buyback is coming. But the preferreds have got hammered as the rating downgrade has overshadowed the decent metrics. We explain why this is a terrific way to lock in a 8.4% yield. TransAlta Corp. (TAC) has struggled ever since Alberta decided to phase out coal use for electricity. In spite of receiving a healthy settlement for those provincial actions, the stock is down 45.75% over the past five years versus a 40.30% up move for the Utilities Select Sector SPDR ETF (XLU). ChartData by YCharts While we have focused our buying efforts on its controlled subsidiary, TransAlta Renewables (OTC:TRSWF), recent events have made a rather compelling investment case for a direct investment TransAlta. We make our investment case below. The Business TransAlta has a diversified mix of revenues, with "clean" energy forming a major subset. Source: TransAlta Presentation It is also diversified geographically with assets in Australia and the US in addition to its primary assets in Canada. While the renewables assets have delivered steady performance and the gas fired electricity plants have done relatively well, Alberta's attack on coal has hurt TransAlta's results. The company cut its dividend in 2016 and has focused its cash flow on debt repayment and also on converting its plants from coal to gas usage. Source: TransAlta Presentation These conversions significantly extend life of assets and are a big plus in the era of overabundant low natural gas prices on the AECO exchange. Source: TransAlta Presentation Recent events TransAlta's assets received a stamp of approval from none other than the Brookfield entity Brookfield Renewable Partners (BEP). Source: TransAlta Presentation BEP has agreed to invest $750 million in TransAlta and it was that news that really sparked a rally in the common shares from the December lows. Source: TransAlta Presentation TransAlta further scared the bears into hiding by revealing a more aggressive shareholder return strategy by planning to accelerate its share buybacks. The stock was thus up more than 75% at one point from the December lows. ChartData by YCharts Where is the opportunity? Okay, so if you are thinking that this seems rather off for our routine strategy of buying up beaten up shares, you are correct. We are not one to chase high flyers and we are not doing so here. TransAlta's attack on its common share price, though, was not seen too kindly by the rating agencies who would have rather TransAlta continued deleveraging. TransAlta also had rather subpar Q1-2019 results and its Chief Financial Officer left in May. The combination of these events led to a rating downgrade. "Calgary, Alberta-based TransAlta Corp.’s leverage is expected to remain elevated over the next two years following its agreement with Brookfield to borrow $350 million in subordinated debentures and planned $400 million preferred stock issuance (which we view as debt) to fund share repurchases, refinance debt, and accelerate coal-to-gas power plant conversion. We expect the company’s funds from operations (FFO) to debt to remain below 22% and debt to EBITDA above 3.5x (our downgrade thresholds for the rating) for a prolonged period. Consequently, we are lowering our issuer credit rating and senior unsecured issue-level ratings on TransAlta to ‘BB+’ from ‘BBB-‘. We are also lowering our preferred stock rating to ‘B+’ from ‘BB’ and our Canadian preferred stock rating to ‘P-4’ (high) from ‘P-3’. We are assigning our ‘3’ recovery rating to the company’s senior unsecured debt, reflecting our expectation of meaningful recovery in a default scenario." We view a lot of things wrong with this logic. First, S&P sees the preferred shares as debt. There is a good rationale for that, but it is obvious that TransAlta can stop paying its preferred dividends without stopping its interest payments. So downgrading its debt ratings was a bridge too far. Second, the debt to EBITDA that S&P considers "bad" is just 3.5X. Yes, TransAlta is still having issues modifying its asset base away from coal, but that 3.5X bar is a ridiculously low number for a utility. TransAlta will likely hover between 3.5X and 4.0X debt to EBITDA for the next two years as excess cash flow is directed towards coal to gas conversions and possibly some buybacks. We think that is unlikely to damage its ability to remain a very viable entity. Interestingly, the common stock has yawned at the news. But not the preferred shares. Their downgrade sent them hurtling lower and they are now very well priced. The preferred shares Several classes of TransAlta preferred shares exist and covering all their merits is beyond the scope of this article. We will focus on one that we are personally long though, TA.PR.H. Source: TMX The TA.PR.H shares currently pay C$1.30 in dividends and trade at $15.46 for a yield of 8.4%. This resets in September 2022 with a spread of 3.65% over the benchmark of 5-year Canadian Treasury bonds. Source: TransAlta Currently, the 5-year Canadian Treasury bonds yield 1.4%. So if the reset were today, the dividend would be reset $1.2625 ($25 par value X 5.05%), not materially different than what is being paid. Investors do have steady payments for the next 3 years at the current rate and the 8.4% yield is very well covered. TransAlta has been improving its results since the low energy prices of 2016, and in 2018, the preferred dividends were covered by a 13X margin. Source: TransAlta 10-K That is correct, free cash flow of C$524 million was 12X higher than the C$40 million required to pay preferred dividends. TransAlta's interest coverage was also a rather stunning 4.8X. Source: TransAlta 10-K None of this seems remotely distressful to us. But the rating agencies have decided that going above 3.5X debt to EBITDA is just too much with the Alberta weak power prices and have decided to take an axe to the ratings. We are happy to take the other side and buy the preferreds with a 12X dividend coverage. Conclusion We think the preferred shares are a strong buy. Think about the fact that the prime Brookfield entity BEP also believes that common shares are an incredible bargain and a case can certainly be made for that. But to us the preferred shares are a bulletproof way of getting a 8.4% yield that is likely to go up as interest rates rise in the longer term. The current underperformance of the preferred shares versus the common has opened up a rather big gap that we think gets filled by the preferred shares moving up by at least 20%. Source: TMX The catalyst for upside movement will come as TransAlta likely dials down its share repurchase plan and refocuses on restoring its investment grade rating. A much stronger upside might come if TransAlta decides to buy back its highly discounted preferred shares in the market (remember S&P is seeing this as debt) as that would create double whammy of reducing debt at a big discount and plus creating demand for the beleaguered preferred shares. TransAlta had floated a similar idea back in 2016, but it never materialized as TransAlta wanted them too cheap. So you can rest assured that the company is likely eyeing these again. Regardless whether they buy or not, rest assured that the Brookfield directors are also watching out for your investment. "As previously disclosed, Brookfield will invest $750 million in TransAlta through the purchase of exchangeable securities, which are convertible into an equity ownership interest in TransAlta’s Alberta hydro assets in the future at a value based on a multiple of the hydro assets’ future adjusted EBITDA. In connection with today’s initial closing, Brookfield invested $350 million in TransAlta in exchange for unsecured, subordinated debentures; the remaining $400 million will be invested in October 2020 in exchange for a new series of redeemable, retractable first preferred shares, subject to the satisfaction of certain customary conditions precedent. In connection with the transaction, TransAlta shareholders recently elected to its Board of Directors two experienced Brookfield executives, Harry Goldgut and Richard Legault, at its 2019 Annual and Special Shareholders’ Meeting."

New 52 week lows in all of the Canadian preferred ETF's. New low list on the TSX is chockers with pref's hitting new lows... http://prefblog.com/ It was a wild day, with new 52-week lows all over the place, but the cavalry arrived at 3:40pm to stave off disaster. TXPR closed at 596.46, down 0.34% on the day after touching a new 52-week low of 593.67 (down 80bp). Volume was 3.12-million, the highest of the past thirty days. CPD closed at 11.915, down 0.46% on the day, after hitting a new 52-week low of 11.85. Volume of 231,500 was the second-highest of the past thirty days – eclipsed only by yesterday. ZPR closed at 9.565, down 0.16% on the day, after hitting a new 52-week low of 9.47. Volume of 254,264 was the third-highest of the past thirty days, eclipsed only by yesterday and (just barely) May 31. Five-year Canada yields were down 4bp to 1.30% today. PerpetualDiscounts now yield 5.59%, equivalent to 7.27% interest at the standard equivalency factor of 1.3x. Long corporates now yield 3.60%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 365bp, a sharp widening from the 345bp reported May 29. https://www.penderfund.com/commentaries/pender-corporate-bond-fund-managers-commentary-may-2019/ The other source of weakness was in our fairly small weighting (approx. 4%) of rate reset preferred shares from issuers such as Bell Canada, Husky Energy and Brookfield Properties. The math behind the undervaluation of rate resets is very compelling here, although we have found arguing with a stampeding herd to have limited effect. Nevertheless, we added to these lines where we found pre- and estimated post- reset yields in the 6-7% range of issuers whose five-year bonds yield in the 2’s and 3’s. We also made significant additions to our holdings of the preferred shares of Husky Energy. We consider Husky, a smaller integrated oil and gas player, to be materially misunderstood by the market. Although the company’s upstream operations in the Canadian prairies are subject to the famous price discount that has become a recent “cause célèbre” in Canadian political circles, investors miss the degree to which Husky’s downstream operations, such as its refineries, benefit from low input costs from these areas. Husky is a strongly cash generative producer at much lower oil prices than those currently prevailing and its very strong balance sheet provides ample capacity to support fixed charges. With various preferred share series yielding well over 6%, even considering lower future resets, we like the combination of junk-type coupons and investment grade credit fundamentals that Husky preferreds represent.

Dundee Precious Metals - DC owns 36,381,552 shares @ $4.30 = $156.4 million or about $1.55 per DC.A share Paradigm Capital... "Many years of major investment are now behind DPM. It is positioned to generate $110–$150M/year in operating FCF in 2020–2024, net of sustaining capital, G&A, exploration and taxes (Krumovgrad’s FCF varies significantly year to year)." The Past and Promising Future in a Page Investment Thesis. DPM has the potential to achieve a substantial rerating, based on strong growth starting 2019, but first it must prove it can operate its Tsumeb smelter profitably, start up the new Krumovgrad mine and invest the $125-$150M/year of free cash flow wisely. We believe it can. Event Investors have often said to us that DPM is too complicated and its path to profitability too bumpy. We distill the past, 2003–2018, and its promising 2020–2024 outlook. Highlights  Chelopech I In 2003, DPM purchased Chelopech for $1, investing $220M through 2018, boosting ore production to 2.2Mtpy from 0.6Mtpy in 2004, generating $1,085M EBITDA net of sustaining capital, but before exploration and investment capital.  The Smelter – Tsumeb I One can’t look at Chelopech in isolation — it needed Tsumeb to process its 5%+ arsenic copper-gold concentrate. The original plan, nixed by the Bulgarian government, was to build a $300M autoclave at Chelopech. Tsumeb was Plan B. Purchased for $50M in 2010, an eight-year series of investments totaling $360M transformed Tsumeb into a modern, emissionscompliant smelter capable of processing 240Ktpy of concentrates, twice Chelopech's needs. From 2010 to 2018, Tsumeb's cumulative EBITDA, net of sustaining capital but before investment capital, was -$15M. Investors mostly remember the years of cash drain and bumpy performance; however, Chelopech would not have achieved what it has without Tsumeb.  Chelopech & Tsumeb Combined I Thus, from the initial $1 investment in 2003, Chelopech-Tsumeb have had total investment of $630M and generated cumulative EBITDA of $1,070M, net of sustaining capital and exploration. Not bad.  The Best Is Ahead I Years of investment are now behind DPM. Chelopech runs like a well-oiled machine. Maintenance quarters aside, Tsumeb has seen improving quarterly performance since early 2017. FCF projection for Chelopech and Tsumeb, based on DPM’s latest life-of-mine (LoM) (2019–2026), is $70– $80M/year, split ~80:20, respectively. Chelopech will be around for another decade, probably longer. Tsumeb could improve substantially with a low-cost expansion to >300Ktpy, once new high-arsenic-copper mines are built around the world, a foreseeable trend. The original Chelopech autoclave would never have offered this upside.  Krumovgrad Kicker I Add to this the 2020–2024 $70M/year FCF for Krumovgrad. Our sole reservation is short term – we think Krumovgrad’s start-up will take a few quarters, not just the one quarter predicted and expected by the market. Valuation & Conclusion Many years of major investment are now behind DPM. It is positioned to generate $110–$150M/year in operating FCF in 2020–2024, net of sustaining capital, G&A, exploration and taxes (Krumovgrad’s FCF varies significantly year to year). The FCF yield is compelling at over 18%, basis the $601M enterprise value. If DPM delivers on this potential, invests the cash flow wisely and returns some to investors, we believe it will be both a technological leader (a well-known fact in the mining industry, but not to investors) and positioned to earn a premium valuation multiple — a 180 from today’s discount valuation. We maintain our Buy recommendation and C$5.00 target.

http://www.ncfunds.com/dl/semiannual/813semiannual.pdf Dundee, DDEJF/DC’A-T. (All figures reported in Canadian dollars) Dundee reported a fourth quarter loss of $46.4 million, or $0.79 per share, due primarily to losses on legacy investments. While disappointing, we are not surprised as our own analysis had projected additional write-downs on certain legacy investments. As we have previously written, Dundee made several poor investments prior to 2018. In early 2018, a new CEO, Jonathan Goodman came on board to manage the portfolio and to divest non-core investments. The company reported that the number of total investments has gone from 100 to 40, and reduced its headcount from 90 to 45, over the past year. Reported Net Asset Value per share (NAV) as of December 31, 2018 was $6.87, a decline of about 9% during to quarter. On March 29, 2019, in conjunction with its earnings release, Dundee announced a transaction that will significantly change the reported NAV. It announced that it will be converting its $83.2 million of Series 5 Preferred Stock to Class A common shares. Under the terms of the Series 5 Preferred Stock, Dundee had the option to repay in cash or convert to Class A common at a conversion ratio of approximately $2.00 per common share. The retirement of the Series 5 Preferred stock will occur in May 2019 and will result in the issuance of approximately 42 million Class A common shares. While this conversion is dilutive to Dundee’s NAV, it is actually accretive in relation to the current trading price of the stock. Dundee is essentially issuing common stock at $2.00 per share when the stock actually trades well below that level. We support Management’s decision to exercise the conversion option rather than use cash resources to repay the Preferred Stock. The company also indicated it is reviewing a potential buy-back plan which if implemented would result in purchasing shares at a significant discount to the newly issued $2 shares and would be accretive to NAV. Factoring in the additional common shares and the elimination of the preferred stock liability, we estimate that the reported NAV will approximate $4.58. The shares currently trade at only $1.15 giving us an attractive 75% discount to reported NAV. Even under our most conservative scenario assumption, where we take certain significant haircuts to Management’s valuations and factor in future cash expenses, we believe the shares trade at about a 50% discount to NAV. We expect to see at least one meaningful asset sale in 2019 along with other modest sales and restructurings. These sales along with the elimination of the Series 5 Preferred Stock and the current $38 million cash balance will further buttress its liquidity and capital structure. There is no holding company debt and, post the May 2019 conversion, there is no preferred stock outstanding with defined maturities. In other words, the company is financed with permanent capital. This enhanced financial position should free up resources for potential repurchases of Class A common stock. Additionally, the considerable financial flexibility the company now has allows Management to prudently monetize its investments, which should close the NAV discount over time. As of February 28, 2019, the Fund held 5.2% in Dundee.

Speculates new partner at Parq is Westmont Group. Deep pockets... There has been speculation within the industry that the new partner is Westmont Hospitality Group. Westmont, which manages or operates over 500 hotels in North America, Europe and Asia, has Canadian offices in Mississauga, as well as in London, England and Tokyo, Singapore and New York. It is headquartered in Houston, Texas. The president and founder is former Vancouver executive Majid Mangali, who started the company in 1975. Its related companies have owned stakes in Vancouver properties such as the Pan Pacific Vancouver and the Fairmont Waterfront. Westmont has been associated with owning, running and selling Canadian chains such as Journey’s End, which became UniHost, and managed Quality Inn and Comfort Inn hotels. Mangali also founded and was the first chairman of InnVest REIT, which owned some 109 Canadian hotels when it was sold in 2016 for $2.1 billion to a Hong Kong-company reportedly related to Beijing-based Anbang Insurance Group Co. https://vancouversun.com/business/local-business/parq-casino-refinances-debt-and-secures-new-equity-partner

Dundee Corporation Announces Completion of Refinancing of Capital Structure by Parq Holdings L.P. TORONTO, May 10, 2019 (GLOBE NEWSWIRE) -- Dundee Corporation (TSX: DC.A) (the “Corporation” or “Dundee”) today announced that Parq Holdings Limited Partnership (“Parq Holdings”) has successfully completed the refinancing of its capital structure. This transaction includes the refinancing of the first-lien and second-lien loans with a fixed rate, long-term financing structure, thereby significantly reducing the interest payments and covenant requirements. Parq Vancouver is an integrated complex which is now fully operational and no longer encumbered with the onerous construction financing typically in place during the development phase. “The refinancing of its capital structure provides Parq Vancouver with the financial stability and flexibility needed to continue delivering world-class service to its customers,” said Jonathan Goodman, Chairman and CEO, Dundee Corporation. In conjunction with the refinancing, Dundee and PBC Group welcome a new equity partner which has acquired a stake in Parq Holdings. The new partner is a domestic Canadian company with hospitality holdings in several markets and which will assist in Parq Vancouver’s ramp up and optimization.

Dundee Precious Metals BUY DPM-TSX Last: C$4.11 Target: C$6.50 FLASH: Q1 earnings weaker than expected, but operationally a good quarter DPM reported Q1 results after pre-releasing production last month (refer to our FLASH note of April 8). Adj. EPS came in at a loss of $0.01 below our estimate of $0.04 (consensus at $0.04). This is largely explained by higher G&A (partly due to higher share-based compensation) and higher finance expense (as the company amended the RCF which accelerated amortization costs). That said; operating profit of $35.4mm was largely in line with our estimate of $33.4mm. CFPS before changes in working capital was $0.09 vs our forecast of $0.12 (consensus at $0.12). As pre-reported, in Q1 Chelopech produced 43k oz gold (39.5k oz in concentrates sold) and 8.0mm lbs copper (6.3mm lbs in concentrate sold). Cash cost of $628/oz gold sold in copper concentrates (inclusive of pyrite oz) was modestly higher than our estimate of $605/oz. At Tsumeb, 62.8kt of concentrate smelted in Q1 had a cash cost of $370/tonne smelted better than our estimate of $440/t (and also sequential better than $413/oz in Q4). The smelter generated strong EBITDA of $10.5mm. Timing of expenditures saw little capex spent this quarter (only ~$0.3mm), but the company is still guiding for full-year sustaining capex in the range of $14-18mm at Tsumeb. Annual maintenance shutdown is planned for Q4 based on the scheduled 18-month campaign. Guidance is unchanged: DPM reaffirmed guidance expecting production in the range of 155-187k oz gold and 33-39mm lbs copper at Chelopech and initial production of 55-75k oz at Krumovgrad. Consolidated AISC in the range of $675-$820/oz. Krumovgrad continues its ramp up towards commercial production in Q2 after first gold concentrate was achieved in mid-March. At the end of Q1, total capex incurred on the new mine was approximately $152mm, with an additional $12mm-14mm remaining (tracking well within budget of $164mm-$166mm). Impact: Slight negative on weaker than expected EPS and CFPS Given the weaker than expected EPS and CFPS, we would expect the stock to underperform today. That said, operationally, Q1 was a good quarter with operating profit largely in line with our expectations. A good start to the year with production and cash cost positioning DPM on-track with guidance. With Krumovgrad now ramping up, we expect production (and cash flow) to increase in the second half of 2019. Recommendation: Maintain BUY rating and C$6.50 target

A follow-up today: https://biv.com/article/2019/05/parq-vancouver-defers-key-interest-payment-credit-rating-slides-selective-default “Parq is solidly on track to close a new equity and finance package, replacing our existing development and construction financing.” She added in a subsequent email that the company’s debt holders “support” the potential refinancing and equity package. “We are very excited about Parq Vancouver’s future and look forward to building on the initial success of our unique and award-winning property,” she said in the first email. Hopefully this is achieved. Along with the common equitization of the pref liability, this will go a long way to further de-risk & remove uncertainty from DC.

https://www.bloomberg.com/news/articles/2019-04-29/vancouver-s-once-rollicking-casinos-hit-by-dirty-money-crackdown Meanwhile, Dundee has said it’s seeking to bring in a new partner to Parq by Tuesday. All told, investors had pumped more than C$1 billion in long-term debt and equity into Parq by the end of 2018, according to filings. Dundee, which put in C$142 million of that :o :o, has said it doesn’t expect to fully recover its investment and that it could take another year or two before Parq is closer to stable operations. "They don’t necessarily think they’re going to get their money back," said Hood. "But they do think that they’ll get a substantial portion back and that’s why they don’t just give up and sell it."

Year end commentary from the Ravensource Fund... https://www.ravensource.ca/financials.php?sub_name=2018 Dundee Corporation (“Dundee”) Dundee (TSX: DC.A) is a publicly listed holding company headquartered in Toronto. Founded in 1991, Dundee became one of the largest independent asset managers in Canada. In 2011, Dundee sharply pivoted from what worked in the past by selling its asset management and real estate crown jewels only to hastily spend the proceeds on speculative new investments across ~100 holdings mostly in industries in which Dundee had no expertise. These new investments have performed abysmally, causing Dundee to write-down approximately 70% of its invested capital only a few years after they were made. In turn, Dundee’s common shares has fallen in value by over 95% since its peak in 2013 while its Series 2 & 3 preferred shares tumbled to approximately 50 cents on the dollar despite being Dundee’s most senior securities. Across the capital structure, Dundee’s investors lost confidence, panicked and fled. Free of emotional baggage carried by existing investors, we worked to determine whether there was opportunity within the chaos. With Dundee’s portfolio of ~100 names, we first performed triage to cull the smaller and speculative investments and focused our analytical rigour on the remaining few with tangible and obvious value. Our analysis concluded Dundee’s assets were worth in excess of the face value and 3x the market value of its preferred shares. We were also attracted to the preferred shares’ 12% dividend yield, equivalent to 15.7% interest on a bond factoring in the tax advantages of dividends. In the third quarter of 2018 we began buying the Series 2 & 3 preferred shares, based on a large margin of safety, healthy yield and potential catalysts for meaningful capital appreciation.

Year end commentary from the Ravensource Fund... https://www.ravensource.ca/financials.php?sub_name=2018 Dundee Corporation (“Dundee”) Dundee (TSX: DC.A) is a publicly listed holding company headquartered in Toronto. Founded in 1991, Dundee became one of the largest independent asset managers in Canada. In 2011, Dundee sharply pivoted from what worked in the past by selling its asset management and real estate crown jewels only to hastily spend the proceeds on speculative new investments across ~100 holdings mostly in industries in which Dundee had no expertise. These new investments have performed abysmally, causing Dundee to write-down approximately 70% of its invested capital only a few years after they were made. In turn, Dundee’s common shares has fallen in value by over 95% since its peak in 2013 while its Series 2 & 3 preferred shares tumbled to approximately 50 cents on the dollar despite being Dundee’s most senior securities. Across the capital structure, Dundee’s investors lost confidence, panicked and fled. Free of emotional baggage carried by existing investors, we worked to determine whether there was opportunity within the chaos. With Dundee’s portfolio of ~100 names, we first performed triage to cull the smaller and speculative investments and focused our analytical rigour on the remaining few with tangible and obvious value. Our analysis concluded Dundee’s assets were worth in excess of the face value and 3x the market value of its preferred shares. We were also attracted to the preferred shares’ 12% dividend yield, equivalent to 15.7% interest on a bond factoring in the tax advantages of dividends. In the third quarter of 2018 we began buying the Series 2 & 3 preferred shares, based on a large margin of safety, healthy yield and potential catalysts for meaningful capital appreciation.

Beacon... Dundee Precious Metals Inc. (DPM-T) 12 Month Target: $7.40 (was $6.65) | Buy (unch) Site Visit Update Last week we attended a site visit to evaluate both of the company's operating mines in Bulgaria; Chelopech and Krumovgrad. We were extremely pleased with all aspects of both operations. At Krumovgrad, DPM has already won an award for the environmentally responsible mine design and we expect there will be many more awards to come. The process plant should be 100% finished by month end and will likely end up being $10m under budget. Despite being under budget, the plant utilizes the latest and greatest technology and we now expect the life of mine recoveries will be above forecast in the feasibility study. The gold concentrate produced could possibly even grade as high as 500 g/t once the mine is fully ramped up. At Chelopech, we were even more impressed. This is absolutely the best looking underground mine we've ever and seen and is why it has won so many awards. Additionally, the management structure and buy-in from the mining unions is unparalleled. This is reflected in its cost performance. The mine runs at about 6,100 tonnes a day and has mining costs of $14/t, processing costs of $8/t and all in costs (before royalties - which the company can't control) of about $32/t. Simply put, that is fantastic. There is also loads of available capacity throughout the mine and plant and thus the company is focusing a great deal of effort on in mine (and near mine) exploration. As a reminder, Chelopech has operated uninterrupted for over 65 years and currently has eight to nine years of life in reserves.

They were already sold... DAYTONA BEACH, Fla., April 10, 2019 (GLOBE NEWSWIRE) -- Consolidated-Tomoka Land Co. (NYSE American: CTO) (the “Company”) today announced that the Company repurchased a large block of shares of the Company’s common stock as part of the disposition of the entire position owned by its largest shareholder, which shareholder owned in the aggregate more than 28% of the Company’s outstanding shares. The Company acquired 320,741 shares (the “Block Share Repurchase”), or approximately 6% of the Company’s outstanding shares, for approximately $18.4 million. The remaining shares owned by the selling shareholder, totaling 1,232,334 shares, were acquired by multiple investors.

If they sell Blue Goose & CSX exchange holdings and succeed in refinancing Parq over the next 2 months would like to see them take the $30 to $40 million and do a substantial issuer bid in the range of $1.25 to $1.50 for 25 million shares. Once this is complete put in a normal course issuer bid to opportunistically buy back up to 10% of 75mm or so shares left outstanding after the Dutch auction bid.

https://princeoftravel.com/blog/review-jw-marriott-parq-vancouver

Roumell Opportunistic Value Fund Institutional Class Shares Portfolio Holdings as of 2/28/2019 Ticker Cusip Description Shares Market Value % of Portfolio TOIXX 60934N500 Federated Treasury O bligations Fund 14,416,240.830 $14,416,240.83 18.72% 912796RP 912796RP6 TREASURY BILL 05/09/2019 0% 7,550,000.000 $7,514,624.48 9.76% RUBI 78112V102 Rubicon Project Inc/ The 968,400.000 $5,684,508.00 7.38% DDEJF 264901109 Dundee Corp 3,680,240.000 $3,993,060.40 5.18% ENZ 294100102 Enzo Biochem Inc 1,109,870.000 $3,751,360.60 4.87% GSIT 36241U106 GSI Technology Inc 380,352.000 $3,080,851.20 4.00% MCC 58503F106 Medley Capital Corp 889,751.000 $3,078,538.46 4.00% ATEN 002121101 A10 Networks Inc 426,750.000 $2,978,715.00 3.87% PRTK 699374302 Paratek Pharmaceutic als Inc 442,467.000 $2,867,186.16 3.72% LQDT 53635B107 Liquidity Services I nc 411,479.000 $2,839,205.10 3.69% 912828J7 912828J76 US TREASURY N/B 3/31/2022 1.75% 2,500,000.000 $2,445,703.25 3.18% SWIR 826516106 Sierra Wireless Inc 186,950.000 $2,351,831.00 3.05% 55382940 553829409 MVC CAPITAL INC 11/30/2022 6.25% 87,340.000 $2,281,320.80 2.96% 912828P9 912828P95 US TREASURY N/B 3/15/2019 1% 2,000,000.000 $1,999,961.16 2.60% SAND 80013R206 Sandstorm Gold Ltd 302,400.000 $1,684,368.00 2.19% 05580M40 05580M405 B RILEY FINANCIAL IN C 12/31/2027 7.25% 65,080.000 $1,601,033.08 2.08% ZAGG 98884U108 ZAGG INC 130,690.000 $1,516,004.00 1.97% 26980940 269809406 EAGLE POINT CREDIT C O 9/30/2027 6.75% 46,433.000 $1,181,673.42 1.53% ALYA 01643B106 Alithya Group Inc 418,463.000 $1,127,757.79 1.46% 14050120 140501206 CAPITAL SOUTHWEST CO RP 12/15/2022 5.95% 43,875.000 $1,120,435.88 1.45% 69181V20 69181V206 OXFORD SQUARE CAPITA L CO 3/30/2024 6.5% 44,099.000 $1,111,912.19 1.44% SEAC 811699107 Seachange International Inc 765,650.000 $1,110,192.50 1.44% HCHC 404139107 HC2 Holdings Inc 327,880.000 $1,032,822.00 1.34% DXLG 25065K104 Destination XL Group Inc 385,124.000 $1,005,173.64 1.31% RST 777780107 ROSETTA STONE INC 56,724.000 $913,823.64 1.19% SD 80007P869 SandRidge Energy Inc 115,000.000 $893,550.00 1.16% EGO 284902509 Eldorado Gold Corp 185,948.000 $808,873.80 1.05% LEAF 52177G102 LEAF GROUP LTD 98,900.000 $804,057.00 1.04% 37654660 376546602 GLADSTONE INVESTMENT COR 8/31/2025 6.375 30,000.000 $765,180.00 0.99% 67401P20 67401P207 OAKTREE SPECIALTY LE ND 10/30/2024 5.875 27,183.000 $685,011.60 0.89% MCHX 56624R108 Marchex Inc 85,508.000 $370,249.64 0.48% COLOS/WS 94708109 COLOSSUS MINERALS 633,881.000 $6,338.81 0.01% Totals 38,812,677.830 $77,021,563.41

Not much but holding onto DPM and undertaking the process to simplify the conglomerate are steps in the right direction.

They have various alternatives... Cash bid for all of the E pref's at $17.50 would cost them $63mm cash. Use bank line & some cash from current holdings. Put forward an extension of the E's by a year or more Some combination of cash & common or other prefs to settle the E's Seems ridiculous to redeem them for common when the potential dilution is so high - believe this is only a bargaining tactic. Especially when they have $160mm in value sitting in DPM shares. My NAV calc right now ranges from $3.38/share to $5.00/share with the $3.38 valuing all prefs at par & the $5.00/share NAV taking current market prices for all prefs. This NAV assigns $0 value to the Parq development. Cash at the end of Sep was $26mm and they received $14.5mm from Union, $24 from Dundee Securities and probably burnt about $20mm in G&A and the pref dividends. So current cash absent other asset sales should be around $40mm.

Dundee Precious Metals BUY DPM-TSX Last: C$4.60 Target: C$6.50 FLASH: Krumovgrad now set for ramp-up after the new mine produces its first gold concentrate This morning, DPM announced a major milestone at its new Krumovgrad mine which produced its first gold concentrate. Commissioning is going well and with this recent milestone, the mine is now ramping up towards commercial production (still expected in Q2). At the end of February, construction was 97% complete with US$147mm incurred. Current budget to completion is US$164mm-$166mm, slightly lower than previously improved budget of US$164mm-$168mm. Original capex estimate was US$178mm. 2019 production guidance at Krumovgrad is between approx. 55k and 75k oz of gold in concentrate. It is a wide range, but there’s reasonable operational flexibility (mainly grade driven) in a ramp-up year to aim for the mid-to-top end of the range. At the end of 2018, the mine had built a stockpile of ~156kt, comprised of four stockpiles at different average grades (the highest-grade stockpile was averaging +10 g/t). The Krumovgrad is expected to add ~100k oz of annual production in the first five years. LOM annual production is expected to average ~85k oz at total cash cost of $404/oz. Impact: Positive Today’s news is a significant milestone that keeps the new mine on-track to achieve commercial production in Q2. Krumovgrad adds ~100k oz of annual production once fully ramped up (or ~50% increase to DPM’s current gold production run-rate). Despite a minor setback in the construction schedule last year, DPM is delivering well on its newest mine. We are encouraged with the different grade stockpiles built ahead of commissioning, which will provide operational flexibility as the mine ramps up. Krumovgrad currently contributes $2.08/sh to our US NAV (5%/$1,300 gold) of $7.12/sh. Recommendation: Maintain BUY rating and C$6.50 target

https://www.gurufocus.com/news/764799/value-idea-contest-dundee-corp Value Idea Contest: Dundee Corp Dundee Corp has rebuilt its balance sheet and trades at a deep discount to liquidation value. Fears that the company will be unable to redeem debt coming due in June 2019 are unfounded This article has taken me four years to write. Back in 2014 I promised a fellow GuruFocus contributor I would share my views on Dundee Corp. (TSX:DC.A)(OTCPK:DPMLF). The stock traded at 0.5x book and management had been compounding book value at double-digit rates for decades. Yet after reading some annual reports, I found that neither the assets nor the liabilities of the company were simple enough for me to understand. That meant the stock was (to me at least) unsafe. Thankfully, management has since rationalized the balance sheet. What’s more, the stock dropped from $13 to $1.50 per share. I guess now is as good a time as any to deliver on my promise. In sum, it is my view that at current prices, an investment in the stock of Dundee Corp. offers a fair chance of doubling within 12 months and a very low probability of a permanent loss of capital. Dundee Corp. trades on the Toronto Stock exchange in Canada as well as over-the-counter market in the U.S. Unless indicated otherwise, all amounts are in Canadian dollars. Business and history Dundee is a holding company with activities in the areas of investment advisory, corporate finance, energy, resources/commodities, agriculture, real estate and infrastructure. The corporation also holds a portfolio of investments in both publicly listed and private companies. Dundee traces its roots to 1957 when Ned Goodman and business partner Austin Beutel started an investment club. Goodman and Beutel capitalized on the club’s success by creating an investment counsel firm. By the 1990s, Goodman & Company Investment Counsel Ltd. was publicly traded as Dundee Wealth Inc. and managing $5 billion in assets. Assets under management at the Dynamic mutual funds division eventually grew to $50 billion. The company also had significant real estate operations. In 2011 the division managing the mutual funds was sold for over $2 billion to Scotiabank, and in 2014 the real estate operation (DREAM) was spun out to shareholders. This left a holding with hodge-podge assets including stakes in publicly traded and private companies. In his last years as CEO, Goodman held a strong conviction that the world would face hyperinflation and the U.S. dollar would devalue. This led him to invest heavily in commodity businesses (oil and gas, gold, mining and so forth). After decades of heading the company, the founder stepped down as CEO in 2014, handing over to his son, David. David Goodman restructured the organization into two divisions: wealth management and merchant capital. The wealth management division was an attempt to rebuild the wealth-management operation that had brought the company so much success in the past. The company was once again free to do this after the non-compete agreements with Scotiabank had ended. On the merchant capital side, Dundee continued providing capital to and supporting companies from incubation through to development, operation and monetization. The attempt at rebuilding the wealth management division did not sit well with Jonathan Goodman, Ned’s other son who worked at the company. Jonathan Goodman resigned. Rebuilding the wealth management business proved difficult. Many of the investments Ned Goodman made in his last years as CEO had to be written down, and the stock dropped 90%. Investors became increasingly concerned about Dundee’s ability to redeem its preferred series-five notes coming due in June 2019. With the company reporting massive losses and the stock trading at a steep discount to net asset value (NAV), David Goodman decided to reduce costs by scaling down the wealth management division and simplifying the balance sheet by culling the investment portfolio and paying down debt. This year, David Goodman took medical leave. His brother, Jonathan, returned to head the company. Jonathan is even more focused than David on simplifying the balance sheet. The company is aggressively selling non-core assets. Jonathan Goodman has been very clear that in his view Dundee is first and foremost an investment holding company. Financial strength For a holding, the balance sheet as reported under Generally Accepted Accounting Principles (GAAP) can be a poor indicator of the financial strength of the company. That is especially the case at Dundee. Dundee’s most recent financials show that the company has cash and investments of $415 million. At the holding level, liabilities stand at $110 million. The holding has excess liquid assets of more than $300 million! That is as strong a balance sheet as you’ll ever see. The highly leveraged subsidiary, Dundee Securities, has been eliminated in all but name. That was by far the largest and most problematic subsidiary. Now that the other highly leveraged subsidiary, Dundee Energy, has been sold, the balance sheet is much simpler and stronger. In 2014, total liabilities exceeded cash and investments by $200 million. Today, cash and investments exceed total liabilities by almost $ 200 million. Total liabilities (including the liabilities of the subsidiaries) are reported under GAAP at $341 million. That's including $83 million worth of series-five preferred notes. Unlike the other series of preferreds the series 5 are accounted for as debt. The sale of Dundee Energy eliminates another $115 million worth of debt at that subsidiary. Even if one assigns zero value to the assets of the remaining subsidiaries and elevates all liabilities to the holding level, Dundee has roughly $190 million worth of excess cash and investments. Profitability A balance sheet, with hundreds of millions worth of excess assets, is of no use if the company continues losing tens of millions of dollars per annum. This is exactly what has been going on at Dundee. Management made some dumb investments and one by one the mistakes within the investment portfolio are realised and become reported losses. The company has lost tens of millions each year since 2014 which is probably why the company trades at such a steep discount to liquidation value. The fact that shares trade at a clear discount to liquidation value is however irrational in light of the fact that the company is, for all intents and purposes, in liquidation. It has been for a number of years, selling hundreds of millions of non-core assets to pay down debt. The key is figuring out how much cash, if any, remains for shareholders after taking care of all liabilities. In his latest conference call, Jon Goodman indicated that he expects to generate $100 million to $200 million from the sale of non-core investments in the second half of 2018. That's excluding DPM. By Christmas, the company would then be left with: $110 million worth of debt at the corporate level (including the series-five preferreds). $130 million worth of cash at the corporate level. A 20% stake in publicly traded Dundee Precious Metals (DPM), worth $120 million. United Hydrocarbon, a royalty stream from oil produced in Chad by Delonex. A 40% stake in Parq Vancouver, two hotels and casino in Vancouver. Various subsidiaries, including Blue Goose, Agrimarine and Sustainable technologies. The first three items together result in $140 million worth of excess liquid assets after assigning no value whatsoever to the remaining investments, United Hydrocarbon, Parq Vancouver or Agrimarine. That's a lot of excess liquidity for a company with a market cap of $90 million. It is worth noting that United Hydrocarbon expects to collect $20 million to $50 million from Delonex if the wells that company is currently drilling in Chad actually produce some oil this year. What’s more, Dundee extended a $15.5 million loan to Parq Vancouver at 20%. That loan was due Oct. 1. Parq Vancouver recently announced an investment by a third party. There is a chance that the loan has been repaid, leaving Dundee Corp. with even more cash. Management Earlier this year, Jonathan Goodman left his job as CEO of DPM to fix the family business he previously left. Jonathan founded DPM in 1993. That company is publicly traded and worth $600 million (seven times more than Dundee Corp.). As its CEO he was earning $600,000 per annum, slightly more than the $550,000 he currently earns as CEO of Dundee Corp. Jonathan’s father Ned Goodman still owns roughly 10% of Dundee Corp. and his four sons -- Jonathan, David, Mark and Daniel -- through a company called Jodamada, jointly own another 10%. Taken together, the Goodman family owns roughly 20% of the company. Because they own almost all the super-voting “B“ shares, they control 85% of the votes. Jonathan Goodman has roughly four times his annual salary tied up in stock, and of course he has to answer to his siblings who are unable to easily bail out of their holdings. They look to him to salvage what’s left of the family fortune. All in all, this is not the best management team imaginable. Having said that, the current CEO is obviously capable and his interests are reasonably well aligned with the interests of minority shareholders. At current valuations management has to be both incapable and unlucky for investors to lose money. Jonathan Goodman is obviously not incapable. He is the inverse prodigal son who has returned to help out the family after leaving to create a fortune (hat tip to James Roumell). Value and Price At the holding level, Dundee has cash and investments of about $415 million, $120 million of which is in Dundee Precious Metals (DPM) stock. Jon Goodman has indicated he intends to generate $100 million to $200 million from the sale of some of the other investments in H2 2018. One core holding (DPM) has a mine producing 200,000 ounces of gold and is ramping up a second mine (expected to be in production by year-end) for an extra 100,000 ounces. These mines produce gold at an estimated all-in cost of roughly $500 per ounce. At current gold prices that’s $200 million to $300 million worth of cash flow for a company trading at $600 million. This single investment is worth more than the market cap of the entire holding. After closing the sale of Dundee Energy Limited Partnership (DELP), the company is left with $225 million worth of debt. That includes $115 million worth of debt that remains at the subsidiaries. A very conservative estimate of the excess cash of the holding is 415m-225m = 190m. per share that's 190/59 = $3.22. Excluding debt at the subsidiaries, the excess cash of the holding is 415m-110m = 305m. per share that's 305/59 = $7.17 It is important to note that the series-two and series-three preferred shares rank ahead of the A shares in liquidation. These preferreds are carried at par (roughly $120m) but never come due. One way to value this liability is at market value. The preferreds are publicly traded and currently trade at 0.5x par. The company could theoretically buy back the series-two and series-three preferred in the open market at a cost of $60 million. It is more conservative and realistic to value the preferreds as an annual expense of roughly 6% of $120 million. That's $7 million worth of future annual earnings that are perpetually siphoned off before the owners of A shares get paid. Of course, these preferreds have not stopped Dundee's management spinning out hunderds of millions worth of value to shareholders in the past. That is exactly what happened when the comany spun out Dundee Realty (now DREAM office REIT) in 2012. Spinning out the DPM stake in a similar fashion today would unlock $2 of per-share value in an instant. In short, management would have to be both incapable and unlucky to destroy this much value. Again, the current CEO is clearly quite capable. Catalysts One way or the other, by this time next year, the uncertainty surrounding the series-five preferred shares will be removed. DPM reports good progress on its new mine. Delonex starts producing some oil in Chad. The company announces share buybacks and/or buybacks of the series 5 preferred. Specific risk Cash diversion. Management may use excess cash to shore-up struggling subsidiaries that subsequently fail. Family affairs. The Goodman family quarrel, leaving the company with a leadership vacuum. Why is this cheap? The company was cheap before, but a lot of assets ultimately proved worthless. This is now percieved to be a value trap. Though the current assets are much more liquid and easier to value, the “usual” value vultures have lost confidence, leaving very few investors interested in the name. Disclosure This is not a recommendation to buy or sell anything. This is an expression of my views about Dundee Corp. with the intent of engaging in intelligent discussion about the company and its stock. At the time of writing, I owned shares of Dundee Corp. Any and all questions welcome as usual. About the author: batbeer2 I define intrinsic value as the price I would gladly pay to own the business outright. With current management in place. For most stocks, that value is 0. I can be reached at batbeer AT hotmail DOT com.