Quinsam Capital Corp

All right. Well, good morning, everyone, and welcome to the first quarter Quinsom conference call. It's only been a few weeks since the year-end call, so there's not a whole lot of news over the last number of weeks. The first quarter results are out. Best quarter we've had in a while. We made over a million dollars addition to NAB, and NAB is now nearing 12 cents a share. Second quarter is, at this point, also looking good. Obviously, there's still six weeks to go, but as of right now, our NAV has advanced from the end of the first quarter by another few hundred thousand dollars. Key performance drivers over the last number of months, probably the two most important, have been Nevada Organic Potash, which we've owned for quite a long time. We were kind of a seed investor there before it went public and have added since. You know, it's made a great deal of progress. When we started out, it had a, you know, $1 million valuation more or less. It now has just closed a financing of almost $5 million and is sitting with a $30, $40 million valuation. So that's been a very solid win for us. We've owned quite a lot of it. We've also sold quite a bit, but we did actually participate in the financing last week. Another key driver for us has been EDM Resources. This was a very modest purchase going back about two years ago. It's a Canadian mining company. They're looking at restarting a past producer in Nova Scotia. It's a very advanced situation. It's got a huge amount of capital that's being expended, and it's basically ready to go. It's just held up by really permitting issues. We put $150,000 in units with full warrants at $0.11, and the stock has lately been hovering around $0.50, which when you take the warrants into consideration, meaning this has been, you know, about a, you know, roughly an eight times return for us. That one we are, you know, we're quite optimistic about. The company has, you know, we think a great plan. They're basically waiting for the permitting to be done. They're going to update the preliminary economic assessment. This should all happen in the course of the next, short number of months, and the plan that they have at that point then is to sell. So, you know, they are optimistic that they're going to get a significant premium to the current price, and I think that that plan has attracted a lot of attention. It's what's been driving the price over the last number of months. Anyway, so that one is a key performer. One that was an important performer for us was Saturn Oil and Gas. You know, that obviously has done very well with the sudden increase in the oil price after the Iran conflict. We've exited that. At the current time, I think it is correct to say we haven't got any oil and gas exposure. So, as we look forward, probably the most important variable in the near term is the expected upcoming listing for Peninsula. Peninsula is a U.S. real estate rental business. They have bought thousands of single-family homes, mostly in the northeast U.S., and they're looking to set it up in a REIT-like way with a dividend and so on. They are in the process of doing their direct listing. Probably will trade, I'm going to guess, in July. It's possible June, but I'm guessing July. That is going to be quite a big holding for us. So, you know, where it trades is going to be quite important to NAV. We're carrying it at $1.30, which is where they last financed. And they have an NAV of around $1.90. And I understand they're looking to launch with a 3% dividend on the $1.90 NAV. So, you know, can't really predict where it's going to trade. You know, hopefully it's somewhere between the $1.30 and the $1.90, but that will be, you know, a very important thing to watch because it's probably nearing $0.02 of our NAV at this stage. So it's a big holding. It's an important event, and fantastic. I think the risk of it not listing is quite low. There's really at this stage nothing that should get in the way. We have two or three other companies that are also looking to list in the next, you know, number of months. Longview Gold, Pelican, which is Pelican AI, which is a technology play, Bond Intelligence, which is also a technology play. These are all, you know, relatively small investments and, you know, we think they'll all have a positive impact, but I wouldn't expect any of them to be hugely material just because they're not big enough to be hugely material. So that's, you know, that's really the lay of the land at this stage. Nothing to really report in terms of a significant transaction, but, you know, with Peninsula listing, that will be another big chunk of our longer-term private equities getting into the liquid stage. So that will put us in a much better position to act. And in the meantime, given current market conditions, we're optimistic that NAB will be on a positive trend. And with that, I guess, ask if there are questions.

Roger, good morning. Can you hear me? It's John Lewis. Good morning, John. Yeah, nice to see a positive quarter and a bump in the nav, so always good. And I appreciate that you did go into some of these mining. I wasn't sure at the time, but, of course, that's where all the money is right now, so nice to see we're participating there. I guess what I'm interested in is, and I assume you've thought about it, but, you know, what would be the, as far as a transaction goes, the ideal investment for an operating company? You know, what would it look like? Investment amount, industry, or is that just... Yeah.

Well, I mean, there's a couple of ways that things could go. We could do one transaction or we could do more than one. But, you know, in the traditional one transaction model, you know, we would, you know, basically merge with whatever that entity was. Let's say our NAV is $12 million. you know, we would end up with 12 million of shares in that entity. You know, in my ideal scenario, you know, we would end up with a, as a group, a very important state, but, you know, not so important that it means it's a very tiny company. So maybe it's a company with a $50 million value. We end up with a quarter of it and hopefully we would agree to purchase it on, terms that, you know, when it listed, we would get a bump over and above. So, if we could find, you know, like, for instance, a roll-up of a conventional business, you know, or, you know, just an operating entity where we're getting in at, you know, four times EBITDA, five times EBITDA, and on listing, it's able to trade at six, seven, eight times EBITDA, you know, that would be, you know, that would be an ideal kind of transaction. where we've got a nice operating company with a good outlook, cash generative, and so on. So that would be one kind of transaction. Another transaction might be a company with a more modest capital requirement. Maybe they would look to us for maybe a couple or $3 million of financing, which we could give to them And then we could take that equity investment and dividend it out to our quinsome investors, thereby giving them the distribution they need for a public listing. So something like that we could do a couple or three times potentially. You know, the trick is to find, again, something where we can get an investment where we think we're going to get a lift over and above NAB after the fact. You know, we... want to make sure if we do something like this that we're getting into a situation that is relatively low risk, you know, so not very interested in cash negative companies, you know, for instance, in, let's say, life sciences, but also, you know, mining is an area that is tricky. You know, right now it's very positive, but if you're in... pre-production and you're basically spending exploration dollars and your cash negative, if equity conditions can change, you can have a very sudden negative movement. So, I'm a little resistant to resources for our significant transactions. It's a different matter for making portfolio investments where you've got diversification. But if you're making one single very, very large investment, I'm not sure in the resource space, I would want to do that. You know, wouldn't rule it out, so don't want to say that, you know, it couldn't happen, but that's, you know, not the ideal transaction at this stage, given, you know, the options we're seeing. Okay, thanks for that.

I get that. It's because the resource can come and go We have a position in a company called California Nanotech. Now, I know you're a director of that company, but it's had a round trip and a lot of money has been made on it. The company, I'm just wondering if there's anything you can say in general to where the company is now.

Yeah, I mean, you know, it had a fabulous run. It probably got ahead of itself. And it's come a long way back. And, you know, at this stage, in my opinion, it's overcorrected significantly. You know, the company has, you know, a great portfolio of capabilities in nanomaterials. It's got two main businesses, spark plasma sintering and cryo milling. These are both very advanced technologies where, you know, for many years we, you know, had this great capability, but, you know, there haven't been that many commercial applications. And we've been doing a lot of research work with major aerospace companies, major industrial companies. You know, it's kind of a Fortune 500 list of customers. But, you know, the trick has always been to find the sustaining commercial applications. So, you know, we have not announced, you know, and we haven't got a significant sustaining commercial application as yet. But, you know, we're in discussions with a whole host of companies. And, you know, we've been in discussions with companies for 20 years at various stages. But we're of the opinion that these discussions are getting to be much, much closer to significant commerciality. We're seeing in a couple of industries in particular some really interesting things going on. And the one in particular right now is the small nuclear reactor business. So in the United States, Trump has said he wants the first small nuclear reactor to be commissioned by July 4th. Not sure if that's going to happen, but it is a huge amount of money going into the States. So we did some boron control rods for a company in November, Valor Atomics. And it was a funny situation. They came to us in September with this very advanced requirement for boron control rods and they wanted them in like two weeks. Anyway, we managed to get them to them in about three or four weeks in time for them to, you know, be able to do their test at one of the US nuclear facilities where a window had suddenly opened up and the rods were a success. We're now seeing a large number of these small nuclear companies looking for control rods and potentially other products. And we think we may be the only domestic source of supply of this product in the United States. And we think it could be a very interesting and lucrative product. So, you know, time will tell. You know, Valor Atomics, after we did the work for them in the fall, they just got an equity investment. I think it's $300 million or $400 million. I've forgotten which. But, you know, the amount of money coming at this industry is massive. And the commercial opportunity also looks extremely interesting. So, like, these are the sorts of nuclear reactors where they're talking about, you know, putting a small reactor in things like a data center. You know, so the market for these is potentially extremely large. You know, this is not like a large-scale industrial reactor like, you know, Bruce Nuclear or something like that. These are very, very different devices. So, you know, we think commerciality is coming. We think we'll have contract announcements in 2026. But, you know, that's what we think. It's not what we know at this stage.

Thanks for that, Roger. Pass it over to anybody else that might have questions.

Okay, well, if there are no further questions, thanks very much for your attendance, and feel free to call anytime.

Thank you.

Thanks.