Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?

[doc75]

DPM has been surging recently, up to a 52-week high today of $3.64    (compared to a low in the 2.60 range in September).

 

 

[Cardboard]

Yes, and what is also interesting is that it continued to move up today after a big up move yesterday while it was not the case at all for other gold stocks as gold retreated.

 

So to move in such fashion "against" your commodity, it means pretty good fundamentals/news coming up at the micro level.

 

Cardboard

 

 

[sculpin]

DPM has been surging recently, up to a 52-week high today of $3.64    (compared to a low in the 2.60 range in September).

 

At today's $3.65 price on Dundee Precious Metals, DC's investment is valued at $133 million.

 

 

[sculpin]

The clean up of Union Group continues. The sale of all of subsidiary Union Energy Group to Polaris....

 

https://www.newswire.ca/news-releases/polaris-infrastructure-acquires-union-energy-group-corp-699097351.html

 

The material terms of the UEG acquisition are as follows:

 

Polaris Infrastructure to acquire 100% of the shares of UEG;

 

Purchase consideration consists of:

 

At Closing: 600,000 common shares of the Company ("Shares") (equal to approximately 3.7% of proforma Shares outstanding);

 

Over the two-year period post-closing: 300,000 warrants exercisable at a 20% premium to the closing Share price;

 

Upon the completion of construction of the Generación Andina projects: 600,000 Shares and $396,000 in cash;

 

Fundamental restructuring of existing Generación Andina project debt (refer to Financial Restructuring section below; and

In exchange, the Company agrees to invest necessary capital to bring the Generación Andina projects to completion and will receive a 15% annual "preferred" return with respect to project-level cash flows.

 

[petec]

That’s great news - visibility on an asset coming back to life.

 

Pity the Aurora share price has round-tripped since it bought ICC. Was looking like a nice gain!

[wisowis]

"Drake says he was profiled, denied service at Vancouver’s Parq Casino"

https://globalnews.ca/news/4627271/drake-says-profiled-denied-service-at-parq-casino/

[sculpin]

"Accordingly, during 2017, the Corporation has impaired its carrying value in Union Group to its 40% share of the value of Union Group’s interest in ICC Labs Inc.  In determining its 40% share of the value of ICC Labs Inc., the Corporation applied a liquidity discount  of  30%  to  reflect  the  regulatory escrow  arrangements required under  the  rules  of  the  TSX  Venture  Exchange,  and  to accommodate  any  obligations  that  may  arise  that  would  otherwise  erode  value.    The  Corporation  anticipates  that  the determination of fair value may vary significantly in future periods, both as a result of changes in the price of ICC Labs Inc., and also  as  Union  Group  provides  third-party  evidence  of  the  value  of  its  underlying  assets.    There  can  be  no  certainty  as  to  the magnitude of these potential changes."

 

I think that 30% is a pretty significant discount now considering that Aurora is highly liquid (ICC transaction represents only 3.6% of shares of ACB), there is no hold period per the press release (unless there is in the agreement) and that Union Group other asset is a 5.3 MW hydropower plant in Peru (must be worth something).

 

What are Union Group liabilities is unclear but, I would say that if you write-off the power plant in full, that it should account for the accounting issues. The rest seems to be oil & gas land. There is no mention of debt anywhere.

 

So this asset would be worth (40 million shares of ICC at $1.95 held by Union Group) x 40% held by Dundee or $31.2 million. And this would be tax free since they bought their Union Group stake for $50 million U.S.

 

The bigger question IMO is can they force a liquidation of Union Group (they hold 40%) or force a distribution of ACB shares?

 

We would have to dig into the filings of Union Acquisition Corp. which is registered with the SEC (LTN on NYSE) to try to find out more about the structure of Union Group.

 

Cardboard

 

Union Group Energy sold to Polaris & closing of ICC to Aurora coming this quarter...

 

ICC Labs shareholders approve takeover by Aurora

 

2018-11-06 10:43 ET - News Release

Shares issued 137,600,910

ICC Close 2018-11-05 C$ 1.79

Also News Release (C:ACB) Aurora Cannabis Inc

 

 

Mr. Alejandro Antalich of ICC reports

 

ICC LABS ANNOUNCES SHAREHOLDER APPROVAL OF ARRANGEMENT WITH AURORA CANNABIS

 

At the special meeting of shareholders of ICC Labs Inc. held today, ICC shareholders overwhelmingly voted in favour of a special resolution to approve the previously announced plan of arrangement between ICC and Aurora Cannabis Inc. Subject to the terms and conditions of an arrangement agreement between ICC and Aurora dated Sept. 8, 2018, Aurora will acquire all of the issued and outstanding common shares of ICC. Obtaining approval from ICC shareholders is one of the conditions to completing the arrangement.

 

The arrangement resolution required approval by at least two-thirds of the votes cast by ICC shareholders present in person or represented by proxy at the meeting. The arrangement resolution was approved by approximately 98.74 per cent of the votes cast by all of the ICC shareholders eligible to vote at the meeting.

 

It is expected that ICC will apply for a final order of the Supreme Court of British Columbia on Nov. 8, 2018. Completion of the arrangement remains subject to other customary closing conditions, including the aforementioned court order and the receipt of certain Uruguayan regulatory approvals. Assuming that the conditions to closing are satisfied or waived, it is expected that the arrangement will be completed in the fourth quarter of 2018. Further information about the arrangement is set forth in the materials prepared by ICC in respect of the meeting which were mailed to shareholders of ICC and filed under ICC's profile on SEDAR.

 

[sculpin]

Strong results & outlook from Dundee Precious Metals (worth about $2.20 per DC.A share at current prices) ...

 

DUNDEE PRECIOUS METALS ANNOUNCES 2018 THIRD QUARTER RESULTS AND UPDATED 2018 GUIDANCE

 

Metals production - Achieved gold production of 49,644 ounces and copper production of 10.3 million pounds in the quarter. 2018 production guidance increased to reflect strong year-to-date production;

 

Smelter - Achieved record quarterly production of 68,431 tonnes. 2018 guidance updated to reflect strong year-to-date and planned fourth quarter performance;

 

Near term growth opportunities - Krumovgrad 82% complete and under budget, hot commissioning to commence in the fourth quarter, as planned, with first gold production expected in the first quarter of 2019;

 

Exploration success - Updated Mineral Resource estimate for the Timok gold project in Serbia and commenced scoping study;

Cash flow - Generated $34.5 million in cash flow from operating activities and $25.1 million in free cash flow(1);

 

Financial position - Ended the third quarter of 2018 with approximately $255 million of cash resources, including long-term revolving credit facility.

 

 

[Rod]

Q3 earnings release is next week. They may announce plans for the E prefs. I suppose if the plan is to convert to equity it will be done soon to save on the dividend costs.

 

Anyone expecting good news? The triumph of hope over experience??

[Cardboard]

I want to hear about Chad's first oil by Delonex. This is key and would be phenomenal news.

 

I could not find anything on the Net. Would have to get info from some government office in Chad or Delonex itself.

 

Cardboard

[sculpin]

Great to see Polar buying into the common of Dundee - over 10% now. They are very good investors...

 

 

State the designation of securities to which this report relates and the name and address of

the head office of the issuer of the securities.

Class A Subordinate Voting Shares (“Shares”) of Dundee Corporation (the “Issuer”), 1 Adelaide

Street East, 21st Floor, Toronto, ON, M5C 2V9.

 

State the name and address of the eligible institutional investor.

Polar Asset Management Partners Inc. (“Polar”)

401 Bay Street, Suite 1900

Toronto, Ontario

 

As at September 30, 2018, Polar, on behalf of client accounts over which it has discretionary

trading authority, exercised control or direction over 5,997,090 Shares of the Issuer, representing

approximately 10.34% of the issued and outstanding Shares.

[Rod]

I want to hear about Chad's first oil by Delonex. This is key and would be phenomenal news.

 

I could not find anything on the Net. Would have to get info from some government office in Chad or Delonex itself.

 

Cardboard

 

That would be great news, but wouldn't you expect a press release when any successful drilling has occured? I don't know that Dundee could just sit on the news and reveal it with their quarterly results.

[Cardboard]

Delonex is private if I am not mistaken and is this being considered material event as I consider it?

 

Cardboard

[Rod]

"Drake says he was profiled, denied service at Vancouver’s Parq Casino"

https://globalnews.ca/news/4627271/drake-says-profiled-denied-service-at-parq-casino/

 

Maybe Drake will buy Parq.

[petec]

Was there any news yesterday? 10% down on not much volume.

[Rod]

Was there any news yesterday? 10% down on not much volume.

 

I couldn't find any news. Q3 release is in two days. It's possible that information has leaked about the results and its not good. Or maybe someone just wants out before the results are announced. It seems a little desperate to crash the price to do so, but we will know in two days.

[petec]

Was there any news yesterday? 10% down on not much volume.

 

I couldn't find any news. Q3 release is in two days. It's possible that information has leaked about the results and its not good. Or maybe someone just wants out before the results are announced. It seems a little desperate to crash the price to do so, but we will know in two days.

 

Agreed.

[sculpin]

Was there any news yesterday? 10% down on not much volume.

 

I couldn't find any news. Q3 release is in two days. It's possible that information has leaked about the results and its not good. Or maybe someone just wants out before the results are announced. It seems a little desperate to crash the price to do so, but we will know in two days.

 

A large block has been overhanging the DC shares for some time now - it was crossed by TD this morning at $1.28...

 

79 CIBC K

12:27:17 T 1.30 -0.01 200 85 Scotia 80 National Bank K

12:27:17 T 1.30 -0.01 400 85 Scotia 1 Anonymous K

12:27:17 T 1.30 -0.01 300 85 Scotia 79 CIBC K

12:26:30 T 1.28 -0.02 2,140,900 7 TD Sec 7 TD Sec W

12:26:30 T 1.29 -0.02 200 80 National Bank 7 TD Sec K

12:26:30 T 1.29 -0.02 300 79 CIBC 7 TD Sec K

12:26:30 T 1.29 -0.02 600 9 BMO Nesbitt 7 TD Sec K

12:21:33 T 1.30 -0.01 1,400 2 RBC 1 Anonymous

 

[Lakesider]

Was there any news yesterday? 10% down on not much volume.

 

I couldn't find any news. Q3 release is in two days. It's possible that information has leaked about the results and its not good. Or maybe someone just wants out before the results are announced. It seems a little desperate to crash the price to do so, but we will know in two days.

 

Now up 15%, could have been a good day if someone added  :P

[Rod]

Maybe someone got a margin call.

[Lakesider]

http://dundee.financial/dc/-/media/DGC/DC/2018-11-14-Q3-results.pdf

 

 

[Rod]

http://dundee.financial/dc/-/media/DGC/DC/2018-11-14-Q3-results.pdf

 

Looks like a repeat of Q2. Parq still losing money and showing no sign of ramping up. Little in the way of asset sales and losses all over. No meaningful developments that I can see. Might hear something more significant on the conference call tomorrow.

[doc75]

Parq continues to underperform.  I was expecting a bump in revenue during high season but operations improved only marginally from Q2 to Q3.  Note that they quietly recorded another unrealized loss of $30M on their Parq holdings.  Smaller impairments all over the place. 

 

Hard to see how this doesn't hit new lows before year end, barring great revelations on the conference call tomorrow or a pleasant surprise from Chad.

 

 

[Lakesider]

If they hurry up with the divestitures we should start to see some value. Likely that they will use proceeds to purchase more poor investments however.

[Cardboard]

Goodman said the following in his opening remarks (sorry if not typed exactly but, I am sure it is close):

 

"Optimistic that good things will happen in next quarterly cycle."

 

Parq is being restructured and latest deal will likely be made with same financier who, if we tie the dots from what was said in the call, has signficant experience in hotels/restaurants.

 

DPM definitely looks like on the right track and gold finally seems to be catching a bid.

 

Chad could be enormous. Rig is now in place and drilling should start any time. They are talking potentially 100,000 bls/d with 5% royalty. China firm is right accross border with similar field and geology and producing.

 

And more liquidation of smaller holdings is likely.

 

So I expect some kind of turnaround events that could change things dramatically over next 3 months.

 

Cardboard