Author Topic: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?  (Read 172233 times)

Cardboard

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #620 on: September 30, 2019, 05:35:41 AM »
"As part of this reassessment, the corporation intends to pay the full amount within the next two weeks in order to stop further interest from accruing. Additionally, the corporation intends to file an appeal of this reassessment within the required regulatory time frame."






petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #621 on: October 01, 2019, 02:45:20 AM »
"As part of this reassessment, the corporation intends to pay the full amount within the next two weeks in order to stop further interest from accruing. Additionally, the corporation intends to file an appeal of this reassessment within the required regulatory time frame."

Yes - perhaps I phrased the question badly - what I meant was, are any further reassessments outstanding (e.g. for other tax years) or is it one-and-done?

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #622 on: October 10, 2019, 09:21:47 AM »
We have a Research Note on Dundee Precious Metals Inc. (DPM – TSX).
 
Yesterday Dundee Precious Metals Inc. announced strong Q3/19 production results. Ada Tepe had a strong quarter as a result of higher grade processed. In Q3 the mill processed higher grades that were stockpiled during commissioning. Chelopech is on track to achieve guidance, while as anticipated due to lower grades, gold production and recovery in Q3 was slightly lower. DPM is maintaining its production guidance of between 180 Koz Au and 221 Koz Au; and 32 Mlbs Cu and 37 Mlbs Cu.

Production however was higher than our expectation, coming in at 66 Koz gold and 10 Mlbs copper. Still as a result of concentrate shipment timing, payable metals in concentrate sold for both mines were lower: 38 Koz gold and 6.6 Mlbs copper. DPM notes it will increase Q4/19 shipments. We highlight Chelopech and Ada Tepe are in line to meet FY19 guidance. The Ada Tepe Mine has successfully completed ramp-up and has been operating at full design tonnage of 2,500 tpd and 85% gold recovery.

DPM highlighted that construction of the integrated mine waste facility cells were completed and the settlement time of tailings has improved, allowing the plant design capacity to be achieved. DPM is constructing additional cells that will allow further flexibility. The focus should now shift to production optimization.

INVESTMENT THESIS

DPM produces gold and copper from two mines in Bulgaria: the Chelopech Mine and Ada Tepe. It also operates Tsumeb, a concentrate smelter in Namibia. In Q2/19, DPM declared commercial production at Ada Tepe and has just completed ramping up. Additionally, DPM has a PEA stage pipeline gold project, Timok, in Serbia and a portfolio of investments, including 10% of Sabina Gold & Silver Corp. (SBB:TSX).

·         DPM is positioned to be a long-term, low-cost gold producer with a strong resource and reserve base, a solid management team, near term production growth, and free cash flow from mining friendly jurisdictions. The Company has strong institutional backing. 

·         The Chelopech Mine (NAV: $762M) is DPM’s lower cost flagship mine  with annual production of ~200 Koz Au at a low cash cost of ~$400/oz and AISC of ~$650/oz. For the foreseeable future, Chelopech will continue to produce the lion’s share of DPM’s gold production and underpin its attractive valuation.

·         The Ada Tepe Mine (NAV: $327M) marked the beginning of a new chapter. DPM declared commercial production in July 2019 and has just completed ramp-up to 2500 tpd. Construction was completed under budget. It is a high grade (4.04 g/t Au) open pit gold mine. It is a harbinger for higher production and free cash flow growth. It is expected to produce ~100 Koz Au/yr over the first 5 years and ~85 Koz/yr at a low cash cost per ounce of $404 over LOM.

·         Tsumeb smelted 232 Mt (up from 219 Mt in 2017), at an improved cash cost to US$445/t, down from US$458 in 2017.

·         The Timok Gold Project is a pipeline project. In July, DPM completed a PEA showing robust economics, having an after-tax NPV5% of $105M, an IRR of 18.6%, a low cash cost and AISC of $618/oz and $717/oz, with average production of 75 Koz Au per year over LOM of 9 years.

·         Improved Production: FY18 revenue was $377M from the sale of 163.6 Koz of Au and 33.7 Mlbs of Cu. YoY production results were driven by higher gold and copper output from Chelopech.

·         Improved AISC: FY18 AISC, net by product, was $659/oz Au sold, down from $729 in the previous year.

·         Guidance (July 30, 2019): We expect DPM to sell 199 Koz in 2019 and produce 262 Koz in 2020. Guidance is between 180 Koz and 221 Koz for 2019 and no guidance has been given for 2020. DPM is guiding for 2019 AISC of between US$675 and US$820, payable copper between 32 and 37 Mlbs, and to process 210 to 230 Kt at the Tsumeb smelter. DPM is on pace to meet guidance.

·         DPM has improved performance throughout all its units.


Valuation: We maintain our BUY rating and 12-month target price of C$7.50/share. Our valuation is based on a 1.0x NAV based on l a long term gold and copper price of $1,400/oz and $2.75/lbs. DPM is trading at 0.6x our NAV estimate. Its 2019E P/CFPS of 5.3x and 2020E P/CFPS of 3.0x reflect a discount to mean peers at 8.4x and 5.7x, respectively.


T. 416.603.4343

F. 416.603.8608

E: research@mpartners.ca

www.mpartners.ca

70 York Street Suite 1500

Toronto, ON Canada M5J 1S9

 

sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #623 on: October 21, 2019, 12:33:52 PM »
Ravensource comment on DC & preferreds...

Dundee Corp. (“Dundee”)

Dundee (TSX: DC.A) is a publicly listed holding company headquartered in Toronto, with
investments in a number of sectors including mining, oil & gas, real estate, hotels / gaming and
agriculture. After a thorough due diligence process, Ravensource began investing in Dundee’s
Series 2 & 3 preferred shares – the most senior securities in its capital structure – in August 2018.

In March 2019, Dundee announced it would convert its $82 million of Series 5 preferred shares,
which had ranked equally with our preferreds, into equity which ranks behind us (the “Series 5
Equitization”). For us, this was a watershed event as it significantly expanded the intrinsic value of
our preferred shares while materially reducing their risk. In effect, we jumped the queue to
Dundee’s assets. To illustrate, Dundee’s most valuable asset is likely its $175 million stake in
publicly traded Dundee Precious Metals Inc (“DPM”). Prior to the Series 5 Equitization, there were
$212 million of Series 2, 3 and 5 preferred shares outstanding, meaning that the DPM stake covered
83% of the total preferred share face value. Post the Series 5 Equitization, only $130 million of
preferred shares remained outstanding. With first dibs on Dundee assets, the preferreds’ $25 face
value is now 135% covered by the DPM stake alone. Factoring in the other Dundee assets, we
conservatively believe that the face value of Dundee’s preferred shares is more than 230% covered.


As we only paid 48 cents on the dollar for our preferred shares, our purchase price is almost 5x
covered by Dundee’s assets. It is very rare to find an asset with as high a margin of safety as
Dundee’s preferred shares that also has a path to a very high potential return of 100%.

While the value of our investment increased substantially as a result of the Series 5 Equitization,
the market price of the preferreds did not. We capitalized on the disconnect by buying more. Our
objective is now to capture the difference between price and their value. To put a finer point on
this, the preferred shares ended the period trading at just under $13.00 per share. Contractually, we
are owed $25.00 per share and must receive this before any economic distribution flows to the common equity.
As we believe the $25.00 per share to be well covered by the assets, this $12.00
difference is our opportunity.

Capturing this gap is easier said than done, as unlike bonds, preferred shares have no maturity
date or mechanism to force repayment meaning that price and value can remain disconnected for
a long period of time. While this difference persists, we will earn an attractive 12.1% dividend yield
on our preferred shares, equivalent to 14.5% bond interest factoring in the tax advantage of
dividends.

Ultimately, the company / common shareholders will have to address the discount as
they cannot monetize their economic stake while it persists. As active investors, we are engaged
with various stakeholders to surface a solution that would both enhance Dundee’s shareholder
value and drive returns for Ravensource.

petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #624 on: November 18, 2019, 01:26:02 AM »
Interesting comments on the call about their confidence in Android and "indicative bids" on Blue Goose. I feel like the NAV continues very slowly to harden up.

Edit: also positive commentary on Android (growth in 2020), Parq (doing better and plenty more to come in knowhow from new partner), Blue Goose ("starting to make money"), Dundee Merchant Partners (fund launch planned for 2020 and reiterated that with junior mining valuations at bottom there is opportunity if you have good due diligence), head office costs (heading to $12m including cost of prefs).

2q commentary was also positive on Aquamarine (approaching ebitda breakeven after investment), Taurx (decent chance of a sale), and Delonex (Phase 1 drilling successful, planning Phase 2, will spend far more than committed).

Slowly I feel this is coming together.
« Last Edit: November 18, 2019, 06:06:01 AM by petec »


sculpin

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #626 on: November 27, 2019, 11:11:33 AM »
Some recent TauRX news:

https://www.biospace.com/article/new-study-by-taurx-shows-a-minimum-dose-of-hydromethylthionine-could-slow-cognitive-decline-and-brain-atrophy-in-mild-to-moderate-alzheimer-s-disease/


Dundee's holding in TauRX...

At September 30, 2019, the Corporation held an approximate 4% interest in TauRx. The Corporation has determined that the fair value of its investment at September 30, 2019 was $41.1 million. In determining the fair value of its interest, the Corporation applied a value per share of US$30.60, the equivalent of a 50% discount to the volume-weighted average price of shares issued from treasury during 2015 and 2016.

doc75

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #627 on: November 28, 2019, 05:13:34 PM »
Some recent TauRX news:

https://www.biospace.com/article/new-study-by-taurx-shows-a-minimum-dose-of-hydromethylthionine-could-slow-cognitive-decline-and-brain-atrophy-in-mild-to-moderate-alzheimer-s-disease/


Dundee's holding in TauRX...

At September 30, 2019, the Corporation held an approximate 4% interest in TauRx. The Corporation has determined that the fair value of its investment at September 30, 2019 was $41.1 million. In determining the fair value of its interest, the Corporation applied a value per share of US$30.60, the equivalent of a 50% discount to the volume-weighted average price of shares issued from treasury during 2015 and 2016.

Just to be clear, I'm only sharing the news.  I think TauRX is an eventual zero and I hope they'll be able to sell it into some renewed optimism for this current Phase 3.  TauRX has a history of overstating and hyping the outcomes of their previous trials, so I think there's little reason to put much faith in this latest company PR.  From what I've read, most experts think they're full of sh*t.    See the following overview:

https://www.alzforum.org/news/conference-coverage/tau-inhibitor-fails-again-subgroup-analysis-irks-clinicians-ctad

You don't even have to be an expert to notice their statistical comparisons are highly suspect.  Fingers crossed for a sale anywhere close to the carrying value. Those 2015/2016 shares were issued prior to the first Phase 3's missing their primary endpoints.


doc75

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #628 on: December 04, 2019, 07:09:03 AM »
DPM has been on a tear recently.  At the current DPM price ($6.00), the value of Dundee's investment has increased by approx $55M over end of Q3, or roughly $0.55 per DC.A share.   Taking the DPM stake alone and subtracting the prefs gives a NAV of $0.90 per DC.A share.  The current price of DC.A really speaks to their reputation and perceived quality of other assets.

petec

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Re: Dumbdee - The Goodmans, The Bad & The Ugly - 30% of NAV bargain?
« Reply #629 on: December 04, 2019, 07:35:50 AM »
The current price of DC.A really speaks to their reputation and perceived quality of other assets.

That - and the fact that DPM is highly volatile. It's been on 3 tears this year and gave back most (but not all) of the first two. Given Dundee seems to have no intention of selling or spinning DPM, it's reasonable that the DC.A share price doesn't immediately reflect what may be a temporary revaluation of DPM*.

*I happen to think it will end up being a permanent revaluation, I'm just trying to explain why it might actually be perfectly rational for the market not to immediately reflect DPM's bounce in DC.A's share price.