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

[Rod]

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

 

It's hard for me to see value coming out of Parq at this point. Even if they start to improve it the ongoing losses to get there will pretty much erode any equity value. DPM is promising but anybody could buy that directly. So should it be valued above market? I don't believe so. I guess Chad is where the real potential is. But there must be risks between here and the promised land. How did Delonex get it for a comparatively low price if it is such an obvious winner? And where is the insider buying? Anyway, it looks like there will be lots of announcements to come. I'm still waiting it out in the B/D prefs until the E pref is dealt with and Parq and Blue Goose are restructured. And until the insiders start showing confidence in the stock with some purchases.

[petec]

Can we separate these two threads and put them in the investment ideas section?

[sculpin]

Roumell Annual Report. Includes discussion of investment in Dundee...

 

https://www.ncfunds.com/dl/annual/813annual.pdf

[ADcure]

Just read rcfunds report. Am I missing something? If Dundee has a market cap of $70 million, and marketable securities of $162 million, why doesn't someone buy Dundee and sell/liquidate it, double their money, and put it out of its misery?

[sculpin]

Just read rcfunds report. Am I missing something? If Dundee has a market cap of $70 million, and marketable securities of $162 million, why doesn't someone buy Dundee and sell/liquidate it, double their money, and put it out of its misery?

 

The Goodman's own all of the multiple voting shares which gives them full control of the Company. Can be no hostile bids. As well, they have a preferred share liability of $90mm coming due in June 2019.

[sculpin]

So will pull out about $24 million from capital & sale price in the 4th quarter....

 

Dundee Corporation Announces the Sale of Dundee Securities Ltd. to Echelon Wealth Partners Inc.

 

TORONTO, Dec. 14, 2018 (GLOBE NEWSWIRE) -- Dundee Corporation (TSX: DC.A) (the “Corporation” or “Dundee”) today announced the sale of Dundee Securities Ltd. (“Dundee Securities”) to Echelon Wealth Partners Inc. (“Echelon”) for total consideration of $4 million. This transaction is also expected to provide Dundee with additional liquidity from Dundee Securities of up to $5 million and ongoing cost savings. In October 2018, approximately $15 million of regulatory capital supporting Dundee Securities was provided to Dundee Corporation.

As part of this transaction, veteran investment professional Les Sherman and his team will be joining Echelon in their Toronto office.

 

“The sale of Dundee Securities is consistent with our strategy of streamlining our portfolio of investee companies and focusing our efforts on core businesses that are positioned to deliver long-term shareholder value,” said Jonathan Goodman, Chairman and CEO, Dundee Corporation. “Prior to the closing of this transaction, our capital markets team at Dundee Goodman Merchant Partners, which was operating as part of Dundee Securities, was transitioned to operate as part of Goodman & Company Investment Counsel.”

 

“We would like to thank Les and his team for their many years of dedication and wish them well as they transition their business to the Echelon platform,” said Robert Sellars, Executive Vice President, and Chief Financial Officer, Dundee Corporation.

 

All required regulatory approvals have been received and the transaction is due to close at the end of business on December 14, 2018

[sculpin]

Polar has added an additional 2.6 million shares since their last filing. Now almost up to 15%. One of the best small cap investors in Canada....

 

 

The requirement to file this report was triggered on November 13, 2018, when Polar, on behalf of client accounts over which it has discretionary trading authority, acquired 1,990,900 Shares of the Issuer.

 

Since the last report dated October 10, 2018, there has been a net increase of 2,559,000 Shares over which Polar, on behalf of client accounts over which it has discretionary trading authority, exercised control or direction, representing a net increase of 4.42% in the number of Shares over which Polar, on behalf of client accounts over which it has discretionary trading authority, exercised control or discretion.

 

As at November 30, 2018, Polar, on behalf of client accounts over which it has discretionary trading authority, exercised control or direction over 8,556,090 Shares of the Issuer, representing approximately 14.76% of the issued and outstanding Shares.

 

 

 

[Sportgamma]

I also noticed that Horizon Kinetics had acquired a stake through the Renn Fund (see filing). It's a tiny stake but seeing as Renn is just a fraction of their total AUM and since they took it over they have only added positions that they already hold in their other funds, it wouldn't surprise me if they are Dundee elsewhere in their portfolios.

[SafetyinNumbers]

Polar has added an additional 2.6 million shares since their last filing. Now almost up to 15%. One of the best small cap investors in Canada....

 

 

The requirement to file this report was triggered on November 13, 2018, when Polar, on behalf of client accounts over which it has discretionary trading authority, acquired 1,990,900 Shares of the Issuer.

 

Since the last report dated October 10, 2018, there has been a net increase of 2,559,000 Shares over which Polar, on behalf of client accounts over which it has discretionary trading authority, exercised control or direction, representing a net increase of 4.42% in the number of Shares over which Polar, on behalf of client accounts over which it has discretionary trading authority, exercised control or discretion.

 

As at November 30, 2018, Polar, on behalf of client accounts over which it has discretionary trading authority, exercised control or direction over 8,556,090 Shares of the Issuer, representing approximately 14.76% of the issued and outstanding Shares.

 

Are you or anyone else aware if they would have to disclose in this filing if they also had a position in the preferred shares?

[petec]

So will pull out about $24 million from capital & sale price in the 4th quarter....

 

Dundee Corporation Announces the Sale of Dundee Securities Ltd. to Echelon Wealth Partners Inc.

 

TORONTO, Dec. 14, 2018 (GLOBE NEWSWIRE) -- Dundee Corporation (TSX: DC.A) (the “Corporation” or “Dundee”) today announced the sale of Dundee Securities Ltd. (“Dundee Securities”) to Echelon Wealth Partners Inc. (“Echelon”) for total consideration of $4 million. This transaction is also expected to provide Dundee with additional liquidity from Dundee Securities of up to $5 million and ongoing cost savings. In October 2018, approximately $15 million of regulatory capital supporting Dundee Securities was provided to Dundee Corporation.

As part of this transaction, veteran investment professional Les Sherman and his team will be joining Echelon in their Toronto office.

 

“The sale of Dundee Securities is consistent with our strategy of streamlining our portfolio of investee companies and focusing our efforts on core businesses that are positioned to deliver long-term shareholder value,” said Jonathan Goodman, Chairman and CEO, Dundee Corporation. “Prior to the closing of this transaction, our capital markets team at Dundee Goodman Merchant Partners, which was operating as part of Dundee Securities, was transitioned to operate as part of Goodman & Company Investment Counsel.”

 

“We would like to thank Les and his team for their many years of dedication and wish them well as they transition their business to the Echelon platform,” said Robert Sellars, Executive Vice President, and Chief Financial Officer, Dundee Corporation.

 

All required regulatory approvals have been received and the transaction is due to close at the end of business on December 14, 2018

 

So they’ve already taken 15m of capital out, they’ll take 5 more, and then they’ll be paid 4? Am I reading that right?

[sculpin]

Polar has added an additional 2.6 million shares since their last filing. Now almost up to 15%. One of the best small cap investors in Canada....

 

 

The requirement to file this report was triggered on November 13, 2018, when Polar, on behalf of client accounts over which it has discretionary trading authority, acquired 1,990,900 Shares of the Issuer.

 

Since the last report dated October 10, 2018, there has been a net increase of 2,559,000 Shares over which Polar, on behalf of client accounts over which it has discretionary trading authority, exercised control or direction, representing a net increase of 4.42% in the number of Shares over which Polar, on behalf of client accounts over which it has discretionary trading authority, exercised control or discretion.

 

As at November 30, 2018, Polar, on behalf of client accounts over which it has discretionary trading authority, exercised control or direction over 8,556,090 Shares of the Issuer, representing approximately 14.76% of the issued and outstanding Shares.

 

Are you or anyone else aware if they would have to disclose in this filing if they also had a position in the preferred shares?

 

They would only need to declare an interest in the preferred shares if they were convertible into common.

[sculpin]

So will pull out about $24 million from capital & sale price in the 4th quarter....

 

Dundee Corporation Announces the Sale of Dundee Securities Ltd. to Echelon Wealth Partners Inc.

 

TORONTO, Dec. 14, 2018 (GLOBE NEWSWIRE) -- Dundee Corporation (TSX: DC.A) (the “Corporation” or “Dundee”) today announced the sale of Dundee Securities Ltd. (“Dundee Securities”) to Echelon Wealth Partners Inc. (“Echelon”) for total consideration of $4 million. This transaction is also expected to provide Dundee with additional liquidity from Dundee Securities of up to $5 million and ongoing cost savings. In October 2018, approximately $15 million of regulatory capital supporting Dundee Securities was provided to Dundee Corporation.

As part of this transaction, veteran investment professional Les Sherman and his team will be joining Echelon in their Toronto office.

 

“The sale of Dundee Securities is consistent with our strategy of streamlining our portfolio of investee companies and focusing our efforts on core businesses that are positioned to deliver long-term shareholder value,” said Jonathan Goodman, Chairman and CEO, Dundee Corporation. “Prior to the closing of this transaction, our capital markets team at Dundee Goodman Merchant Partners, which was operating as part of Dundee Securities, was transitioned to operate as part of Goodman & Company Investment Counsel.”

 

“We would like to thank Les and his team for their many years of dedication and wish them well as they transition their business to the Echelon platform,” said Robert Sellars, Executive Vice President, and Chief Financial Officer, Dundee Corporation.

 

All required regulatory approvals have been received and the transaction is due to close at the end of business on December 14, 2018

 

So they’ve already taken 15m of capital out, they’ll take 5 more, and then they’ll be paid 4? Am I reading that right?

 

That is correct. Also would like to know how much this has lowered annual op costs..."and ongoing cost savings" 

[doc75]

So will pull out about $24 million from capital & sale price in the 4th quarter....

 

Dundee Corporation Announces the Sale of Dundee Securities Ltd. to Echelon Wealth Partners Inc.

 

TORONTO, Dec. 14, 2018 (GLOBE NEWSWIRE) -- Dundee Corporation (TSX: DC.A) (the “Corporation” or “Dundee”) today announced the sale of Dundee Securities Ltd. (“Dundee Securities”) to Echelon Wealth Partners Inc. (“Echelon”) for total consideration of $4 million. This transaction is also expected to provide Dundee with additional liquidity from Dundee Securities of up to $5 million and ongoing cost savings. In October 2018, approximately $15 million of regulatory capital supporting Dundee Securities was provided to Dundee Corporation.

As part of this transaction, veteran investment professional Les Sherman and his team will be joining Echelon in their Toronto office.

 

“The sale of Dundee Securities is consistent with our strategy of streamlining our portfolio of investee companies and focusing our efforts on core businesses that are positioned to deliver long-term shareholder value,” said Jonathan Goodman, Chairman and CEO, Dundee Corporation. “Prior to the closing of this transaction, our capital markets team at Dundee Goodman Merchant Partners, which was operating as part of Dundee Securities, was transitioned to operate as part of Goodman & Company Investment Counsel.”

 

“We would like to thank Les and his team for their many years of dedication and wish them well as they transition their business to the Echelon platform,” said Robert Sellars, Executive Vice President, and Chief Financial Officer, Dundee Corporation.

 

All required regulatory approvals have been received and the transaction is due to close at the end of business on December 14, 2018

 

So they’ve already taken 15m of capital out, they’ll take 5 more, and then they’ll be paid 4? Am I reading that right?

 

That is correct. Also would like to know how much this has lowered annual op costs..."and ongoing cost savings"

 

This meshes with the $24M carrying value in the Sept 30 financials.

[sculpin]

New coverage on Dundee Precious Metals (DPM - TSX - $3.44) today with a NAV & target of $6.35. DC.A owns 36.4 million shares worth about $125million. At net asset value DC's 20% stake in DPM would be $230 million or about close to $4 per Dundee common share.

 

Dundee Precious Metals (DPM-T, Buy) – Analyst Jacob Willoughby is initiating coverage of Dundee Precious Metals with a Buy rating and a 12 month target of C$6.35 

 

Previously, DPM experienced a period of major capital investment at its three main assets (all 100% owned): its Chelopech and Krumovgrad mines and its Tsumeb smelter. Now, those major capital investments are complete and the company and its shareholders are set to be rewarded with free cash flow levels exponentially higher than in its past. DPM should produce about 190k oz. in 2018, but reach over 235k oz. in 2019 at cash costs well below $700/oz.  Production should average 275k oz. a year from 2020 to 2023. DPM is undervalued relative to its peers. 

 

We feel the market is assigning ZERO value to its Tsumeb smelter while also overstating the sovereign risk associated with operating in Bulgaria, making this an excellent buy at current levels.

 

The company also has a great balance sheet, with $35.5m in working capital, $25.8m in investments and only $39m in long term debt.

 

Our calculated NAV for DPM is C$6.34.  A multi asset company with its own smelter should trade at up to 1.0 its NAV.  Applying that 1.0x multiple to our NAV gives our share price target of C$6.35.

DPM-2018-12-17.pdf

[colinwalt]

@sculpin - Thanks!

[sculpin]

New coverage on Dundee Precious Metals (DPM - TSX - $3.44) today with a NAV & target of $6.35. DC.A owns 36.4 million shares worth about $125million. At net asset value DC's 20% stake in DPM would be $230 million or about close to $4 per Dundee common share.

 

Dundee Precious Metals (DPM-T, Buy) – Analyst Jacob Willoughby is initiating coverage of Dundee Precious Metals with a Buy rating and a 12 month target of C$6.35 

 

Previously, DPM experienced a period of major capital investment at its three main assets (all 100% owned): its Chelopech and Krumovgrad mines and its Tsumeb smelter. Now, those major capital investments are complete and the company and its shareholders are set to be rewarded with free cash flow levels exponentially higher than in its past. DPM should produce about 190k oz. in 2018, but reach over 235k oz. in 2019 at cash costs well below $700/oz.  Production should average 275k oz. a year from 2020 to 2023. DPM is undervalued relative to its peers. 

 

We feel the market is assigning ZERO value to its Tsumeb smelter while also overstating the sovereign risk associated with operating in Bulgaria, making this an excellent buy at current levels.

 

The company also has a great balance sheet, with $35.5m in working capital, $25.8m in investments and only $39m in long term debt.

 

Our calculated NAV for DPM is C$6.34.  A multi asset company with its own smelter should trade at up to 1.0 its NAV.  Applying that 1.0x multiple to our NAV gives our share price target of C$6.35.

 

Given that Jonathan Goodman is the Chairman of DPM and DPM has little net debt, perhaps they could pay out a substantial amount of operating cash flow as a special dividend in 2019....20% of $138mm US $ would be $36 million Cdn $.

 

We would also note that we expect DPM to generate $203m in EBITDA

and $138m in operating cash flow in 2019 and with a current EV of

approximately $465m, the shares are trading at an EV/EBITDA multiple of

2.3x and an EV/CF multiple of 3.4x. Thus we feel DPM has tremendous

upside We are initiating coverage of Dundee Precious Metals Resources

with a BUY recommendation.

 

In our model we are using $1,300/oz. for gold, $17/oz. for silver and

$2.75/lb. for copper. Our total NAV for DPM is C$896.6m or C$6.34 per

share and we are using a 1x NAV multiple to derive our target price of

C$6.35.

[petec]

Quite a bit going on here under the bonnet.

 

Dundee Securities sale is a nice monetiser and hardens up some BV.

 

Also I see the ICC/Aurora deal has closed and Union has also sold Peru power assets to PIF for shares. Those two stakes (assuming 1.2m shares of PIF, not the 2.5m potentially payable under some circumstances) are worth $40m at market today, but presumably deserve some discount as they are held through Union.

 

Does anyone have a sense of what else is in Union and whether there's any progress on Dundee actually being able to monetise it?

[Cardboard]

Thanks Sculpin for posting the DPM report. It made me take a deeper look at this and I would encourage others to do so as well.

 

This company is really cheap and I figure a FCF figure of $100 - $150 million U.S. in 2019. It has essentially no net debt if you take cash and Sabina shares into account.

 

This means a FCF yield of 20-30% on a company with no net debt, assuming zero bullishness on the gold price.

 

The company is one of the very few in the gold space which considers return of capital (dividends or other) as an option or see their latest presentation. There are other cheap gold companies but, none think about that or all too busy to reinvest in the next project (GCM is an exception but, they are repaying debt instead).

 

So I bought some. I think that precious metals could have a good year in 2019 but, even if nothing happens, this thing is too cheap.

 

Cardboard

[sculpin]

Great - keep cutting the superfluous overhead...

 

Dundee Corporation Announces Executive Departure

 

TORONTO, Jan. 02, 2019 (GLOBE NEWSWIRE) -- Dundee Corporation (TSX: DC.A) (the “Company”) today announced that Mark Goodman, President, has departed the Company.

 

“On behalf of the board of directors and fellow members of the executive management team, I would like to thank Mark for his dedication and contributions to Dundee Corporation,” said Jonathan Goodman, Chairman and Chief Executive Officer. “We would also like to wish Mark the best in his future endeavors.”

 

Mark Goodman’s responsibilities related to the resources portfolio and merchant capital activities at Dundee Corporation will be split amongst various executives at the Company.

[petec]

Yesterday they announced another 15m unsecured loan into Parq from an (I think the same) industry investor. Effectively it looks like Parq operating cost is now externally funded but its debt keeps growing. That may be the best equity/pref holders like Dundee can hope for at this point.

[no_free_lunch]

I saw that announcement too.  I just wonder what the terms are.

[sculpin]

 

http://prefblog.com/?p=37879

 

January 2nd, 2019

 

Dundee Corporation, which will have to make a decision soon about DC.PR.E, has announced (although not yet on their website): that Mark Goodman, President, has departed the Company.

 

“On behalf of the board of directors and fellow members of the executive management team, I would like to thank Mark for his dedication and contributions to Dundee Corporation,” said Jonathan Goodman, Chairman and Chief Executive Officer. “We would also like to wish Mark the best in his future endeavors.”

 

Mark Goodman’s responsibilities related to the resources portfolio and merchant capital activities at Dundee Corporation will be split amongst various executives at the Company.

 

This follows earlier news of:

 

the sale of Dundee Securities Ltd. (“Dundee Securities”) to Echelon Wealth Partners Inc. (“Echelon”) for total consideration of $4 million. This transaction is also expected to provide Dundee with additional liquidity from Dundee Securities of up to $5 million and ongoing cost savings. In October 2018, approximately $15 million of regulatory capital supporting Dundee Securities was provided to Dundee Corporation.

 

DC.PR.E closed today at 16.10 … while DC.A closed at 1.16. Assiduous Readers will remember that the issue has a hard maturity June 30, 2019, but the company can force conversion at the current redemption price of DC.PR.E (25.25) “together with all accrued and unpaid dividends up to but excluding the date fixed for conversion” into DC.A at “the greater of: (i) $2.00; and (ii) 95% of the weighted average trading price of the Subordinate Voting Shares on the TSX for the 20 consecutive trading days ending on the fourth day prior to the date specified for conversion or, if such fourth day is not a trading day, the immediately preceding trading day.”

 

The last dividend on DC.PR.E was payable December 31. Thus, the current $1.16 price of DC.A implies a conversion value of (25.25 / 2) shares of DC.A worth $1.16 each, or $14.64. This will be interesting!

[sculpin]

DPM moving higher...

 

 

Beacon

 

Dundee Precious Metals (DPM-T, Buy) – Announced Q4/2018 production results this morning… On a consolidated basis, Chelopech achieved another record year of gold production in 2018 and exceeded the Company’s guidance while copper production was in line with guidance. Payable gold production came in at 164k payable oz’s, Cooper production came in at 34M lbs and processed 232k tonnes of concentrate at its smelter, no costs disclosed look for that to be disclosed with year-end financial results. Analyst Jacob Willougbhy has a $6.25 target price, which is the highest on the street.

 

CIBC

 

Dundee Precious Metals

Incorporated

 

2019 A Transformative Year; Upgrading To

Outperformer

 

Our Conclusion

 

We see DPM shares re-rating in 2019 with the start-up of

Krumovgrad, while the company continues to build on a strong

operational year in 2018 at Chelopech and Tsumeb. Gold production

for Q4/2018 was 45.8koz, exceeding our expectations of 44.5koz. For

2019, we expect DPM to produce 240,000 ounces at AISC of $742/oz,

representing production growth of 20% Y/Y at comparable costs. As

of Jan. 9, we are upgrading DPM to Outperformer (from Neutral) and

increasing our price target to C$6 (from C$4).

 

Our price target is calculated using the average of short-term and

longer-term valuation metrics. The short-term valuation is calculated

at 6x the average 2019E-2020E CFPS of $0.92, while the long-term

valuation is calculated at 1x the $4.23/share in NAV (at a 5% discount

rate), both calculated using the CIBC price deck with a long-term

gold price of $1,300/oz. Target multiples for DPM have now been

recalibrated to be more in line with the trading multiples for the

intermediate group.

 

Implications

 

Krumovgrad is a high-grade, low-strip, open-pit gold mine, with a

reserve grade of 4.04 g/t and a 2.6:1 strip ratio. In the most recent

update, the start-up remains on time, with the introduction of ore to

the Krumovgrad process plant expected by mid-Q1/2019, and

production of first concentrate by the second half of Q1/2019.

Elsewhere, significant improvements were made at the Tsumeb

smelter in 2018, with 232,000 tonnes of complex concentrate

smelted in the year, meeting its improved guidance and representing

an increase of 6% Y/Y. We expect these positive operational

improvements to continue.

 

Valuation

 

For 2019, we expect DPM to generate >$100 million in FCF. At our

CIBC price deck, DPM shares currently trade at 0.7x P/NAV and 3.5x

2019 P/CF, at a discount to the group at 1.1x P/NAV and 7x P/CF.

 

 

 

 

[petec]

DPM looks superb on P/CF but not on P/NAV - beware P/FCF when the reserve life is short.

 

And that's with the NAV discounted at 5% which I always think is insane!

[petec]

The company is one of the very few in the gold space which considers return of capital (dividends or other) as an option or see their latest presentation.

 

Helps having a desperate parent ;)