TORONTO, Nov. 12, 2023 (GLOBE NEWSWIRE) — Dundee Corporation (TSX: DC.A) (the “Corporation” or “Dundee”) today announced its financial results for the three and nine months ended September 30, 2023. All currency amounts in this press release are in Canadian dollars except as otherwise indicated.
THIRD QUARTER 2023 RESULTS
- Demonstrated significant progress in rationalizing non-core legacy portfolio by completing the sale of the beef division of Blue Goose Capital Corp. (“Blue Goose”) subsequent to quarter end for total proceeds of $71.1 million, including $8.1 million completed during the third quarter of 2023, and paid down $32.3 million in consolidated debt.
- Reduced total corporate G&A costs by 10% compared to the third quarter of 2020 (6% excluding stock-based compensation).
- Cash provided from operating activities was positive $0.9 million (2020 – negative $3.2 million)
- On a consolidated basis, the Corporation reported cash of $84.1 million as at September 30, 2023 (June 30, 2023 – $90.9 million).
- Generated consolidated revenues of $4.8 million (2020 – $5.1 million).
- Incurred a net loss attributable to owners of the Corporation of $48.2 million (2020 – earnings of $15.9 million), or a loss of $0.56 per share (2020 – earnings of $0.14 per share) including total non-cash items of $49.5 million.
Jonathan Goodman, President and Chief Executive Officer of Dundee Corporation, commented:
“Dundee made significant progress in the third quarter of 2023 against all three of our strategic pillars: doing more mining deals, rationalizing our legacy portfolio of non-core assets, and streamlining our cost structure.”
“I am pleased with the way our entire Dundee investment team remained active in identifying, de-risking, and investing in mining companies with solid value propositions during the third quarter. Despite slower deal flow across the mining sector in the quarter, the DGMP team were finders in a number of financings. We increased positions in high-quality, well-run mining companies such as Magna Mining and Mako Gold, with shares of Magna accumulated in the fourth quarter. While the mining equity markets experienced relative softness in the quarter, we remain focused on investing for the long-term and working with our investee companies as advisors and partners to maximize asset value and realize their full potential.”
Mr. Goodman continued, “We were extremely successful in further rationalizing our legacy portfolio by completing the sale of Blue Goose’s beef division, which closed after quarter end. Closing this deal represents a substantial milestone as Blue Goose was a major piece of our legacy portfolio. The aggregate proceeds of $71.1 million, including $8.1 in the third quarter, and subsequent repayment of debt significantly deleverages our balance sheet, reduces quarterly expenses, and frees up our team’s time and resources to focus more closely on our core mining investment business. We will continue to look for ways to further rationalize our non-core legacy portfolio and will update the market on our progress on an ongoing basis.”
“We made further progress in driving down our Corporate G&A run rate in the third quarter of 2023. We see a clear path to additional G&A improvements in leasehold costs, IT costs, insurance costs, and other items. We remain laser-focused on reducing run-rate G&A as well as funding to subsidiaries.”
Mr. Goodman concluded, “Dundee continues to execute on all aspects of our transformation strategy. I am encouraged by our ability to sustain and grow our momentum through the first three quarters of 2023 and I look forward to a strong finish to the year. Our team remains committed to growing the core business and setting Dundee up to deliver long-term, sustainable value for our stakeholders, shareholders, and partners.”
FINANCIAL RESULTS
Operating results during the third quarter of 2023 reflect a $42.5 million market depreciation (2020 – $23.5 million market appreciation) in certain of the Corporation’s investments that are carried in the consolidated financial statements at fair value through profit or loss. In addition, net income from investments during the third quarter of 2023 also includes $1.6 million (2020 – $0.7 million) dividend and interest income distributed from its portfolio investments. Of this decline, $33.4 million was attributed to the write down in our position in TauRx. Additionally, during the third quarter of 2023, the Corporation recognized a loss from its equity accounted investments, excluding real estate joint ventures, of $0.2 million (2020 – $2.0 million).
On August 9, 2023, the Corporation entered into amending agreements with Eight Capital to modify the terms of its loan which had an outstanding principal balance of $12.4 million. Pursuant to the amendments, Eight Capital will pay $15.0 million to settle its loan balance along with interest and royalty obligations over three installments. Of the aggregate $15.0 million, $12.4 million will be applied against the principal and $1.5 million represents an additional interest payment. The balance of $1.1 million was paid in August to settle the royalty obligation. The Corporation recognized a $1.5 million investment gain on the fair value remeasurement of the loan in the third quarter. The loan continues to bear interest at a rate of 10% per annum.
OPERATING SUBSIDIARIES’ PERFORMANCE
Goodman & Company, Investment Counsel Inc. (“GCIC”)
GCIC’s assets under management (“AUM”) decreased from $73.0 million at the end of June 2023 to $58.6 million at the end of September 2023. The decrease in AUM is mainly due to market depreciation of $14.4 million. During the third quarter of 2023, this segment recognized a net loss before taxes of $0.7 million (2020 – earnings of $0.1 million).
Blue Goose
Blue Goose completed the sale of its shares in Lambert Creek Organic Meats Ltd. (“Lambert Creek”), a regulated abattoir in British Columbia, and certain assets of The Blue Goose Cattle Company Ltd. (“BG Cattle”) in September 2023 for aggregate proceeds of $8.1 million. Subsequent to quarter end, Blue Goose closed the sale of BG Cattle for aggregate proceeds of $63.0 million, inclusive of $17.2 million required to repay BG Cattle’s debt, and recognized a loss of approximately $0.1 million, net of $5.3 million of transaction costs. Accordingly, the results of the beef division for the three and nine months ended September 30, 2023 and 2020 are classified as discontinued operations.
During the third quarter of 2023, Blue Goose reassessed the fair value of certain real properties and recognized an impairment loss of $5.0 million, reducing their carrying value to their estimated realizable amount.
Blue Goose generated a pre-tax loss of $0.8 million in the third quarter of 2023, of which $0.2 million was incurred by the discontinued operations (beef division) and excludes a loss on disposition and impairment charge of $0.3 million. This compares with $2.7 million pre-tax earnings generated in the same quarter of the prior year, of which $4.3 million was generated by discontinued operations (beef division).
TauRx Pharmaceuticals Ltd. (TauRx)
In the third quarter of 2023, the fair value of the Corporation’s investment in TauRx was adjusted to $35.8 million, generating a non-cash investment loss of $33.4 million. In determining the fair value of its interest, the Corporation used pricing from TauRx’s latest fully subscribed rights offering.
United Hydrocarbon International Corp. (“UHIC”)
UHIC reported a pre-tax loss of $2.3 million during the third quarter of 2023 (2020 – earnings of $1.7 million), as a result of the fair value change to its royalty interest and associated contingent bonus payments, owing to the increased uncertainty surrounding the Delonex strategic alternatives process and heightened geopolitical risks in the Republic of Chad.
Dundee Sustainable Technologies Inc. (“Dundee Technologies”)
Dundee Technologies incurred a pre-tax loss of $0.8 million (2020 – loss of $1.7 million) during the third quarter of 2023. Dundee Technologies continued to expand the provision of technical services in the mining industry to evaluate processing alternatives using its state-of-the-art metallurgy plant and skilled technical team. Third quarter 2023 revenue was $1.2 million (2020 – $0.9 million).
AgriMarine Holdings Inc. (“AgriMarine”)
As the market conditions associated with COVID-19 persist, AgriMarine has continued sales to alternative markets at lower prices in an attempt to maintain sales volumes.
During the third quarter of 2023, AgriMarine reported a pre-tax net loss of $0.9 million (2020 – $0.5 million) with sales revenues of $1.9 million (2020 – $1.5 million).
In early August, there was a temporary loss of power related to the swapping out of a generator at the company’s facility, which resulted in a subsequent lack of circulation and oxygen in the closed-containment tanks. As a result, AgriMarine reported an inventory loss due to fish mortality of $0.3 million, which is expected to negatively impact sales in future quarters.
SHAREHOLDERS’ EQUITY ON A PER SHARE BASIS
| Carrying Value as at | |||||||
| Sept 30, 2023 | Jun 30, 2023 | ||||||
| Operating subsidiaries | $ | 92,094 | $ | 86,635 | |||
| Equity accounted investments | 22,538 | 22,520 | |||||
| Investments carried at fair value through profit or loss | 167,243 | 209,171 | |||||
| Other net corporate account balances | 70,657 | 81,764 | |||||
| Total shareholders’ equity | 352,532 | 400,090 | |||||
| Less: Shareholders’ equity attributable to holders of: | |||||||
| Preference Shares, series 2 | (27,667 | ) | (27,667 | ) | |||
| Preference Shares, series 3 | (50,423 | ) | (50,423 | ) | |||
| Shareholders’ equity attributable to holders of Class A | |||||||
| Subordinate Voting Shares and Class B Shares of the Corporation | $ | 274,442 | $ | 322,000 | |||
| Number of Class A Subordinate Voting Shares and Class B Shares of the Corporation issued and outstanding | |||||||
| Class A Subordinate Voting Shares | 84,697,363 | 84,697,363 | |||||
| Class B Shares | 3,114,491 | 3,114,491 | |||||
| 87,811,854 | 87,811,854 | ||||||
| Shareholders’ Equity on a Per Share Basis | $ | 3.13 | $ | 3.67 | |||
THIRD QUARTER 2023 CONFERENCE CALL AND WEBCAST DETAILS
Dundee’s management will be hosting a conference call for interested investors on November 15, 2023 at 10:00 am ET. Analysts and investors are invited to participate using the following dial-in numbers or webcast link:
Participant Number (Local): 416-764-8659
Participant number (Toll-free): 1-888-664-6392
Conference ID: 01889650
Audience URL: https://produceredition.webcasts.com/starthere.jsp?ei=1509713&tp_key=8e41b0a10
A replay of the conference call will be available until 11:59 pm (ET) November 29, 2023, and can be accessed using the following dial-in numbers:
Encore (Local): 416-764-8677
Encore (Toll-free): 1-888-390-0541
Encore ID: 889650#
The Corporation’s unaudited interim consolidated financial statements as at and for the three and nine months ended September 30, 2023, along with the accompanying management’s discussion and analysis have been filed on the System for Electronic Document Analysis and Retrieval (“SEDAR”) and may be viewed by interested parties under the Corporation’s profile at www.sedar.com or the Corporation’s website at www.dundeecorporation.com
ABOUT DUNDEE CORPORATION:
Dundee Corporation is a public Canadian independent holding company, listed on the Toronto Stock Exchange under the symbol “DC.A”. Through its operating subsidiaries, Dundee Corporation is an active investor focused on delivering long-term, sustainable value as a trusted partner in the mining sector with more than 30 years of experience making accretive mining investments.
FORWARD-LOOKING STATEMENTS:
This press release may contain forward-looking information within the meaning of applicable securities legislation, which reflects Dundee Corporation’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dundee Corporation’s control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risk Factors” in the Annual Information Form of Dundee Corporation and subsequent filings made with securities commissions in Canada. Dundee Corporation does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
FOR FURTHER INFORMATION PLEASE CONTACT:
Greg DiTomaso
NATIONAL Public Relations
T: (416) 433-2801
E: [email protected]
