Author Topic: SRL - Scully Royalty  (Read 641 times)

bilo

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SRL - Scully Royalty
« on: December 09, 2019, 06:16:01 AM »
Has anyone looked at Scully Royalty?  Two excellent articles were written about it as Seeking Alpha over the last few months, and a well timed writeup at VIC under old name MFC BANCORP LTD last April 2019 - while the subsequent announcements generated a quick and satisfying pop, the security has now pulled back  in spite of what appears to be continued good news.  Tacora has made good progress (first seaborne shipment announced 8/1).  A comprehensive update was provided by Tacora in September:

https://www.tacoraresources.com/wp-content/uploads/2019/09/Scully-Mine-update-18-Sept-2019.pdf

Given their 15 yr off take agreements with Cargill it seems likely to be on *reasonably* solid footing if execution is good. 

There have been a number of developments with the other assets as well, particularly a non-recourse financing of the German real estate properties for 25M EUR as well as sale of two other minor businesses.  It appears they are cleaning up the very messy-distressed asset balance sheet.  3 investors - Peter Kellogg, Estate of  Lloyd Miller, and Nantahala Capital Management, LLC own about 55% of shares outstanding.  I am told a 4th investor (who I spoke with) owns enough to push that "shareholder friendly" group close to 60%,  while still under reporting levels.   I believe these 4 investors all want this to wrap this up and for the "value gap" too close - and are willing to push to make it happen if (for example) Smith starts going off course. 

As to valuation, with a 7% royalty on high quality 65% iron ore concentrate on mine rated at up to 6.5M tons production capacity, it is easy to see how the royalty asset alone could be worth more than the current market cap  even if one ignores all the other balance sheet assets.   I recommend Lee Farnam's articles to anyone who has further interest. 



bilo

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Re: SRL - Scully Royalty
« Reply #1 on: December 09, 2019, 06:17:50 AM »
One more note, I spoke with IR last week, who stated that we will be getting further reporting "some time in mid December" that will provide a status update, etc.

Foreign Tuffett

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Re: SRL - Scully Royalty
« Reply #2 on: December 09, 2019, 08:04:23 AM »
Probably worth noting that this is one of the scuzziest companies in existence outside of Greater China.

2016: Incorporated in British Columbia, Canada. HQ in British Columbia, Canada

2017: Incorporated in Cayman Islands. HQ in Dublin, Ireland

2018:  Incorporated in Cayman Islands. HQ in Hong Kong


Why did the company leave Canada? Perhaps fleeing from liabilities related to the Lexin Resources bankruptcy?

https://calgaryherald.com/business/energy/inside-months-of-chaos-at-a-shuttered-oil-and-gas-company

Clemens Scholl (no affiliation), probably knows as much as anyone in the world about the extremely complex history of this company and its CEO Michael J Smith.

https://seekingalpha.com/author/clemens-scholl/comments

Gregmal

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Re: SRL - Scully Royalty
« Reply #3 on: December 09, 2019, 08:27:34 AM »
If you like this you should just look at Mesabi Trust. Straight forward and no shenanigans.

bilo

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Re: SRL - Scully Royalty
« Reply #4 on: December 09, 2019, 10:41:06 AM »
Mesabi doesn't have the same type of situation at the moment.  This is more like Mesabi during the period where the distribution was canceled and about to restart.  If there wasn't a bit of crap on Michael Smith's shoes the stock price would be double what it is, that is significantly why it is a value stock with upside (and also why risks, etc).