Author Topic: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?  (Read 141812 times)

no_free_lunch

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #470 on: January 03, 2019, 06:31:57 AM »
I saw that announcement too.  I just wonder what the terms are.


sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #471 on: January 03, 2019, 02:16:15 PM »

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

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #472 on: January 10, 2019, 06:31:53 AM »
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

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #473 on: January 10, 2019, 07:12:48 AM »
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

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #474 on: January 10, 2019, 07:29:08 AM »
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 ;)

Cardboard

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #475 on: January 10, 2019, 08:39:59 AM »
It trades at a 30% discount to its NAV according to their math and you call that bad or not sufficient? If you compare to other gold stocks, that is a pretty noticeable discount and similar to other very cheap juniors such as LMC, AR and a few others. The group trades at a 10% premium to NAV by the way.

Moreover, free cash flow yield is anywhere from 20 to 30% as I mentioned before. So in around 5 years, the entire EV is in cash and the mines still have life left. And if you have followed at all gold miners, they always find ways to extend mine life with exploration leading to additional reserves.

Personally, I have never seen gold miners being this cheap. These things never had P/E's or they were sky high, rarely if ever traded below NAV. Goldbugs always paid a premium for gold shares due to high leverage on results on any improvement in the gold price. I think that it is a result of gold having been in a bear market for almost 8 years now and interest being extremely low.

Cardboard


petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #476 on: January 10, 2019, 08:47:26 AM »
It trades at a 30% discount to its NAV according to their math and you call that bad or not sufficient? If you compare to other gold stocks, that is a pretty noticeable discount and similar to other very cheap juniors such as LMC, AR and a few others. The group trades at a 10% premium to NAV by the way.

Moreover, free cash flow yield is anywhere from 20 to 30% as I mentioned before. So in around 5 years, the entire EV is in cash and the mines still have life left. And if you have followed at all gold miners, they always find ways to extend mine life with exploration leading to additional reserves.

Personally, I have never seen gold miners being this cheap. These things never had P/E's or they were sky high, rarely if ever traded below NAV. Goldbugs always paid a premium for gold shares due to high leverage on results on any improvement in the gold price. I think that it is a result of gold having been in a bear market for almost 8 years now and interest being extremely low.

Cardboard

I should have been clearer. I recently bought this as a 6-18 month holding. I like it. But:
1) While it looks very good on P/FCF it only looks good on P/NAV, in my view.
2) I think using a 5% discount rate to calculate NAVs is crazy. To my knowledge this is only done for precious metal stocks and I think it is wrong. But I have to accept it is how the market works.
3) Trading at a premium to a NAV calculated using a 5% discount rate is even crazier - but it is still how the market works.
4) I have not modelled it but FWIW consensus has it on 15% FCF not 20-30%.

I'm well aware of the tendency to extend mine life. It's one of the major (and few) structural attractions of the sector in my view.

I don't follow these stocks much but I also have the sense they are very cheap vs history. Mind you that may be because I wasn't investing in 1998 ;)




doc75

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #477 on: January 11, 2019, 09:56:59 AM »
An article today that might be of interest in relation to Dundee's Parq Vancouver holding:

https://www.cbc.ca/news/canada/british-columbia/b-c-casinos-money-laundering-foi-report-1.4972063

If the numbers are at all to be trusted, then the recent crackdown on suspicious cash transactions (ie. money laundering) may have been very material to the gambling ops. 


Rod

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #478 on: January 11, 2019, 10:39:59 AM »
An article today that might be of interest in relation to Dundee's Parq Vancouver holding:

https://www.cbc.ca/news/canada/british-columbia/b-c-casinos-money-laundering-foi-report-1.4972063

If the numbers are at all to be trusted, then the recent crackdown on suspicious cash transactions (ie. money laundering) may have been very material to the gambling ops.

To the extent that casino capacity has been built out to handle the money laundering then I think there could be some serious problems for the casinos in Vancouver as the crack down continues. Between River Rock and Parq, maybe Vancouver ex money laundering only needs one not two.

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #479 on: January 11, 2019, 12:38:56 PM »
Polar continues to buy...

Since the last report dated December 10, 2018, there has been a net increase of 210,800 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 0.36% 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 December 31, 2018, Polar, on behalf of client accounts over which it has discretionary trading authority, exercised control or direction over 8,766,890 Shares of the Issuer, representing approximately 15.12% of the issued and outstanding Shares.